SMITH v. WALMART STORES, INC. ASSOCIATES HEALTH AND WELFARE PLAN
Filing
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ORDER granting Defendants' 13 Motion to Dismiss. An application of the appropriate provisions of the Plan leads to only one conclusion: that Smith was too late in notifying the Plan Administrator of his disability. Defendants' Motion to Dismiss, having been converted to a Motion for Summary Judgment, is therefore GRANTED. Judgment shall issue accordingly. **SEE ORDER** Signed by Judge Larry J. McKinney on 10/9/2014. (AH)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
TERRE HAUTE DIVISION
JAMES E. SMITH,
Plaintiff,
vs.
WALMART STORES, INC. ASSOCIATES
HEALTH AND WELFARE PLAN,
Defendant.
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No. 2:14-cv-00118-LJM-MJD
ORDER ON DEFENDANT’S MOTION TO DISMISS
This case began in the Vigo County Superior Court as a declaratory judgment
action. Therein, Plaintiff James E. Smith (“Smith” or “Plaintiff”) requested that the court
declare that his insurance company could not seek reimbursement from his settlement
amount because he was totally and permanently disabled. The case was removed to this
court by Defendant Walmart Stores, Inc. Associates Health and Welfare Plan
(“Defendant” or the “Plan”). Defendant asserted that because Smith was making a claim
against the administrator of the plan (the “Plan Administrator”) under the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”), the
provisions of ERISA preempt any state claim.
Smith’s claims do in fact arise out of his participation in the Plan, which is a selffunded employee welfare plan. Plaintiff Smith has not opposed this position and rightfully
so. Pursuant to Aetna Health v. Davila, 532 U.S.200 (2004), this dispute is governed not
by state law but by the provisions of ERISA. See Heimeshoff v. Hartford Life & Accident
Ins. Co., 134 S. Ct. 604, 612 (2013). Smith clearly could have brought his claim under
29 U.S.C. § 1132. Therefore, this suit is properly in federal court.
I. BACKGROUND FACTS
Smith was injured in an automobile accident. He incurred medical bills in the
amount of $367,820.26. At that time he was an insured participant in the Plan. The Plan
provided him with benefits of at least $165,398.00. The Plan Administrator learned of the
settlement of the law suit between Smith and the driver of the other vehicle. Smith was
notified on August 25, 2011 (the “Notice”), of the Plan Administrator’s intention to seek
reimbursement pursuant to the provisions of the Plan. The Administrator sent the 2011
Associates’ Benefits Book’s (the “Benefit Book’s”) Subrogation and Reimbursement
provisions along with the Notice.
Under the terms of the Plan, if the insured is totally disabled, the Plan Administrator
will not seek reimbursement. Also under the terms of the Plan, if Smith believed that his
settlement was not subject to reimbursement, he had twelve months from the receipt of
the Notice to submit his claim. Smith asserts both that he is disabled and that he notified
the Plan Administrator with his claim of exemption from the reimbursement rule within the
time limits required.
Defendant asserts that Smith’s response to its notice of
reimbursement regarding Smith’s claim was not received until July 31, 2013, with a cover
letter dated May 21, 2013. Thus, Smith’s response was more than nine months beyond
the one-year deadline.
After the initial Notice of Lien was sent on August 25, 2011, setting out a lien
amount of $26,734.27, Smith’s attorney sent a September 26, 2011, letter to the Plan
acknowledging the Notice of Lien and asking for a detailed itemization of the claim. In
June of 2012, at the request of the Plan Administrator, Smith’s attorney agreed to protect
the lien.
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In February of 2013 Smith’s attorney faxed the Plan asking for an update of the
amount of the lien. Not until February 27, 2013, did Smith’s attorney notify the Plan that
Smith had been told by his doctor that he was totally and permanently disabled and
reminded the Plan Administrator that the Benefits Book provided that the Plan would not
seek reimbursement if the claimant was totally and permanently disabled.
Smith’s
attorney did not provide the Plan Administrator with any written conclusions from the
doctor.
Smith avers that his attorney additionally notified the Plan on April 8, 2013, that
Smith was awaiting the disability determination from his doctor.
The disability
confirmation was received by Smith on May 5, 2013, and Smith’s Attorney sent a note to
the Plan Administrators in May 2013, which Defendant asserts it did not receive until July
31, 2013. The Plan responded to Smith’s attorney on August 15, 2013, indicating that
the claim was denied because it was untimely.
The initial August 15, 2013, denial was appealed and a final denial was issued on
January 14, 2013. Smith acknowledges that his attorney received a Lien Update in the
amount of $166,780.25 on December 17, 2013. Smith’ s position is that the December
17, 2013, correspondence is in fact a Notice of Lien and should be considered as having
triggered a new twelve-month claim period.
II. STANDARD
Defendant has moved to dismiss on the grounds that Smith failed to exhaust his
administrative remedies under the Plan prior to filing this suit. The parties do not dispute
any facts necessary to determine whether or not Smith’s notice to the Plan was late and,
in fact, both parties rely on matter outside of the pleadings to support their positions. See
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Dkt. Nos. 13 & 29. Although notice is usually required before conversion of a motion to
dismiss to one for summary judgment, Fed. R. Civ. P. 12(d), here, each party has been
given the opportunity to and did respond to the other’s evidence. Therefore, it is clear
that the parties considered this issue ripe for summary judgment and that would be the
standard the Court would apply to the issue. Under these circumstances, the Court , sua
sponte, converts Defendant’s Motion to Dismiss to one for summary judgment. Cf.
Fleischfresser v. Dirs. of Sch. Dist. 200, 15 F.3d 680, 684-85 (7th Cir. 1994) (discussing
situations in which every party has reason to know when a court will convert a motion to
dismiss to one for summary judgment); Hi-Way Dispatch, Inc. v. United States, 858 F.
Supp. 880, 881 (N.D. Ind. 1994).
As stated by the Supreme Court, summary judgment is not a disfavored procedural
shortcut, but rather is an integral part of the federal rules as a whole, which are designed
to secure the just, speedy, and inexpensive determination of every action. See Celotex
Corp. v. Catrett, 477 U.S. 317, 327 (1986); see also United Ass’n of Black Landscapers
v. City of Milwaukee, 916 F.2d 1261, 1267–68 (7th Cir. 1990). Motions for summary
judgment are governed by Rule 56(a) of the Federal Rules of Civil Procedure, which
provides in relevant part: "The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law."
Once a party has made a properly-supported motion for summary judgment, the
opposing party may not simply rest upon the pleadings but must instead submit
evidentiary materials showing that a fact either is or cannot be genuinely disputed. Fed.
R. Civ. P. 56(c)(1). A genuine issue of material fact exists whenever “there is sufficient
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evidence favoring the nonmoving party for a jury to return a verdict for that party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears
the burden of demonstrating that such a genuine issue of material fact exists. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986);
Goodman v. Nat’l Sec. Agency, Inc.. 621 F.3d 651, 654 (7th Cir. 2010). It is not the duty
of the Court to scour the record in search of evidence to defeat a motion for summary
judgment; rather, the nonmoving party bears the responsibility of identifying applicable
evidence. See Goodman, 621 F.3d at 654; Bombard v. Fort Wayne Newspapers, Inc.,
92 F.3d 560, 562 (7th Cir. 1996).
In evaluating a motion for summary judgment, the Court should draw all
reasonable inferences from undisputed facts in favor of the nonmoving party and should
view the disputed evidence in the light most favorable to the nonmoving party. See Berry
v. Peterman, 60 F.3d 435, 438 (7th Cir. 2010); Estate of Cole v. Fromm, 94 F.3d 254, 257
(7th Cir. 1996). The mere existence of a factual dispute, by itself, is not sufficient to bar
summary judgment. Only factual disputes that might affect the outcome of the suit in light
of the substantive law will preclude summary judgment. See Anderson, 477 U.S. at 248;
JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or
unnecessary facts do not deter summary judgment, even when in dispute. See Clifton v.
Schafer, 969 F.2d 278, 281 (7th Cir. 1992). If the moving party does not have the ultimate
burden of proof on a claim, it is sufficient for the moving party to direct the Court to the
lack of evidence as to an element of that claim. See Green v. Whiteco Indus., Inc., 17
F.3d 199, 201 & n.3 (7th Cir. 1994). “If the nonmoving party fails to establish the existence
of an element essential to his case, one on which he would bear the burden of proof at
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trial, summary judgment must be granted to the moving party.” Ortiz v. John O. Butler
Co., 94 F.3d 1121, 1124 (7th Cir. 1996).
III. DISCUSSION
First, Smith’ s position is that the December 17, 2013, correspondence from the
Plan Administrator is in fact a Notice of Lien and should be considered as having triggered
a new twelve-month claim period. But, the Court finds such a position untenable because
the correspondence is clearly delineated as a “Lien Update.” Second, from the agreed
upon evidence, there is no material question of fact that Smith’s notice to the Plan that he
was disabled was in fact not provided within the twelve-month window of opportunity from
the Notice of Lien. To be timely, such a claim should have been filed by August 24, 2012.
The earliest the Plan Administrator was told of the possibility of total and permanent
disability was April of 2013, several months before the claim was filed.
Under ERISA, the parties to a plan can contract for a limitations period and for that
time at which the limitations period commences. See Heimeshoff, 134 S. Ct. at 611. This
Plan clearly provides those limitations and Smith has made no argument that the
limitations period is otherwise unreasonable. An application of the appropriate provisions
of the Plan leads to only one conclusion: that Smith was too late in notifying the Plan
Administrator of his disability. Defendants’ Motion to Dismiss, having been converted to
a Motion for Summary Judgment, is therefore GRANTED.
Judgment shall issue
accordingly.
IT IS SO ORDERED this 9th day of October, 2014.
________________________________
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana
Distribution attached.
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Distribution:
Sean T. White
HOOVER HULL LLP
swhite@hooverhull.com
John Gordon Howard
LAWRENCE & RUSSELL PLC
gordonh@lawrencerussell.com
Thomas H. Lawrence
LAWRENCE & RUSSELL, LLP
toml@lawrencerussell.com
J. Gordon Howard
LAWRENCE & RUSSELL, PLC
gordonh@lawrencerussell.com
Christopher B. Gambill
WAGNER CRAWFORD GAMBILL & TROUT
cgambill@wagnerlawfirm.biz
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