Weigandt v. Farm Bureau General Insurance Company of Michigan et al
Filing
27
OPINION AND ORDER denying 10 Motion to Dismiss. Signed by District Judge David M. Lawson. (MOre)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
SHELBY WEIGANDT,
Plaintiff,
Case Number 14-12078
Honorable David M. Lawson
v.
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN, VHS
SINAI-GRACE HOSPITAL, INC.,
DETROIT MEDICAL CENTER, DETROIT
MEDICAL CENTER HEALTH CARE BENEFITS
PLAN, and DMC BENEFITS COMMITTEE,
Defendants.
__________________________________________/
OPINION AND ORDER DENYING MOTION TO DISMISS
Plaintiff Shelby Weigandt, injured in a car crash in 2012, has filed this lawsuit to establish
which of two sources is responsible to pay her medical costs — her ERISA-governed employee
benefit plan or her no-fault insurer — and to enjoin her benefit plan from seeking reimbursement
from any recovery that does not compensate her for those medical expenses. Defendant Farm
Bureau General Insurance Company, Weigandt’s no-fault insurer, has filed a motion to dismiss the
case for want of subject matter jurisdiction. Farm Bureau argues that because Wiegandt seeks only
“legal” relief, that is, the enforcement of her alleged right to avoid the contractual obligation to
reimburse her employer for her medical expenses, ERISA’s enforcement statute cannot support her
recovery. Farm Bureau reasons, therefore, that absent a claim for equitable relief, this Court has no
federal question jurisdiction over the complaint. However, the precise question presented here was
decided in the plaintiff’s favor by the Sixth Circuit eight years ago. See Rodriguez v. Tennessee
Laborers Health & Welfare Fund, 463 F.3d 473 (6th Cir. 2006). The Court will deny the motion
to dismiss for want of jurisdiction.
I.
The facts of the case are uncomplicated. At the time of the automobile accident, Weigandt
was employed by DMC and participated in the company’s employee benefit plan, identified as the
Detroit Medical Center Health Care Benefits Plan. The plan is governed by the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. Weigandt also purchased nofault automobile insurance from Farm Bureau. The policy included coverage for under-insured and
uninsured motorist claims.
Weigandt alleges that she was seriously injured in a two-car motor vehicle accident on
November 21, 2012. The other driver was uninsured. Weigandt contends that the other driver
caused the accident, and that her injuries exceeded the threshold necessary for her to recover
compensation from the other driver under Michigan law. See Mich. Comp. Laws § 500.3135.
However, Michigan’s no-fault law prohibits her from recovering her medical expenses from that
driver; she must seek compensation for those from her own insurance company. See Mich. Comp.
Laws § 500.3107. Weigandt’s medical expenses also were covered by the DMC Health Care
Benefits Plan.
As it turns out, both the Plan and Farm Bureau paid some of Weigandt’s medical expenses.
But the way she reads the Plan documents and her insurance policy, she concludes that the Plan is
primarily responsible for any motor vehicle accident-related medical expenses. The Plan also
contains a provision entitling it to reimbursement for those expenses from any recovery arising out
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of the accident. The Plan also has a right of subrogation with respect to any expenses which the Plan
paid.
Weigandt has filed a lawsuit in state court against Farm Bureau under the uninsured motorist
policy provisions to recover damages for non-economic loss that she suffered in the accident. That
lawsuit is pending presently, and Weigandt has not realized any recovery yet. The damages she
seeks in that case do not include reimbursement for medical expenses; Michigan’s no-fault insurance
law does not allow her to recover those from the tortfeasor, and therefore they would not be included
in any recovery under the uninsured motorist coverage. She fears, however, that if she wins a
recovery in that case, the Plan will attempt to take some of those funds for reimbursement of medical
expenses, even though the recovery would not include payment for medical expenses.
Weigandt contends that the language of the reimbursement and subrogation clauses in the
Plan is ambiguous and conflicting, but no matter how it is interpreted, she should not have to
reimburse the Plan or Farm Bureau from medical expenses from any recovery in her uninsured
motorist case. She filed the present lawsuit “to . . . [d]eclare Plaintiff’s right to benefits and the
priority of coverage under § 502(a)(1)(B) of [ERISA] and the Michigan No-Fault Act, [and to]
[e]njoin certain acts and practices and to obtain other appropriate equitable relief under § 502(a)(3)
of ERISA, 29 U.S.C. § 1132(a)(3).” Compl. ¶ 1. In her prayer for relief, Wiegandt asks that the
Court “declare the rights and duties of the parties regarding payment of Plaintiff’s benefits and the
priority of coverage under the terms of [the DMC Health Plan] and the terms of the Farm Bureau
[] policy, pursuant to the applicable provisions of ERISA and the Michigan No-Fault Act.” Compl.
¶ 9. She further prays that the Court enjoin the DMC defendants from “pursu[ing] reimbursement
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or subrogation from any third-party tort or [uninsured motorist] recovery she may obtain.” Compl.
¶ 10.
In its motion to dismiss, Farm Bureau, relying on Federal Rule of Civil Procedure 12(b)(1),
contends that the complaint raises claims beyond the subject matter jurisdiction of the Court because
Weigandt seeks only “legal” relief in the form of her alleged right to avoid the contractual obligation
to reimburse DMC for her medical expenses. According to Farm Bureau, such a claim is not
authorized by ERISA because Weigandt is not seeking to compel payment of benefits or to
“enforce” any provision of the DMC Health Plan, but merely wants to avoid a contractual obligation
to pay back money already disbursed on her behalf. Farm Bureau argues that such a claim is
precluded under the holding of Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002),
in which the Supreme Court instructed that claims seeking to recover sums allegedly due under a
contract or to obtain “legal” restitution are not permitted under the authority of 29 U.S.C. §
1132(a)(1)(B) or (a)(3). Weigandt disagrees. The Court heard argument on the motion on October
9, 2014.
II.
Rule 12(b)(1) “provides for the dismissal of an action for lack of subject matter jurisdiction.”
Cartwright v. Garner, 751 F.3d 752, 759 (6th Cir. 2014). Such a motion can focus solely on the
pleadings, amounting to a “facial attack,” or may probe deeper into the underlying facts of the case,
which is a “factual attack.” Ibid. (citing United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994)).
“A facial attack goes to the question of whether the plaintiff has alleged a basis for subject matter
jurisdiction, and the court takes the allegations of the complaint as true for purposes of Rule 12(b)(1)
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analysis,” but “[a] factual attack challenges the factual existence of subject matter jurisdiction.”
Ibid.
Farm Bureau’s motion mounts a facial attack. The “[p]laintiff bears the burden of
establishing that subject matter jurisdiction exists.” Id. at 760 (citing DLX, Inc. v. Commonwealth
of Kentucky, 381 F.3d 511, 516 (6th Cir. 2004)).
“‘The purpose of ERISA is to provide a uniform regulatory regime over employee benefit
plans.’” Sherfel v. Newson, No. 12-4285, --- F.3d ---, slip op. at 2 (6th Cir. Sept. 30, 2014) (quoting
Aetna Health, Inc. v. Davila, 542 U.S. 200, 208 (2004)). “ERISA is a statute unique in its
preemptive effect,” and its “purpose is among the broadest, if not the broadest, recognized by the
Supreme Court.” Ibid. “‘Congress intended’ ERISA’s civil-enforcement provision, 29 U.S.C. §
1132(a), ‘to be the exclusive remedy for rights guaranteed under ERISA[.]’” Id. at 6 (quoting
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 144 (1990)). “‘[T]he detailed provisions of §
[1132](a) set forth a comprehensive civil enforcement scheme that represents a careful balancing
of the need for prompt and fair claims settlement procedures against the public interest in
encouraging the formation of employee benefit plans.’” Ibid. (quoting Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 54 (1987)). Section 1132(a) states that “[a] civil action may be brought . . .
by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the
terms of the plan,” 29 U.S.C. § 1132(a)(1)(B), or “by a participant, beneficiary, or fiduciary (A) to
enjoin any act or practice which violates any provision of this subchapter or the terms of the plan,
or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any
provisions of this subchapter or the terms of the plan,” 29 U.S.C. § 1132(a)(3). “Except for actions
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under subsection (a)(1)(B) [], the district courts of the United States . . . have exclusive jurisdiction
of civil actions [under ERISA] brought by the Secretary or by a participant, beneficiary, fiduciary
[or certain other persons],” and “State courts of competent jurisdiction and district courts of the
United States . . . have concurrent jurisdiction of actions under [subsection (a)(1)(B)]” 29 U.S.C.
§ 1132(e)(1).
Farm Bureau insists that the plaintiff’s claims are not authorized by ERISA’s enforcement
provisions. It states, accurately, that the Supreme Court held in Great-West that a plaintiff may not
recover under section1132(a) on claims seeking only legal relief. But even if that is true in this case,
subject matter jurisdiction is not affected. The Sixth Circuit has warned that attacks on the merits
should not be confounded with jurisdictional challenges, admonishing courts to be more exacting
when addressing challenges that are phrased as an attack on jurisdiction. Primax Recoveries, Inc.
v. Gunter, 433 F.3d 515, 518-19 (6th Cir. 2006) (“‘Clarity would be facilitated . . . if courts and
litigants used the label “jurisdictional” not for claim-processing rules, but only for prescriptions
delineating the classes of cases (subject-matter jurisdiction) and the persons (personal jurisdiction)
falling within a court’s adjudicatory authority.’” (quoting Eberhart v. United States, 546 U.S. 12,
16 (2005) (per curiam), and citing Kontrick v. Ryan, 540 U.S. 443, 453 (2004))).
In the present context, the Sixth Circuit has held that the form of relief sought is a
“substantive element” of the plaintiff’s claim that is “not jurisdictional.” Russell v. Catholic
Healthcare Partners Emps. Long Term Disability Plan, --- F.3d ---, 2014 WL 3953722, at *2 (6th
Cir. Aug. 14, 2014) (quoting Daft v. Advest, Inc., 658 F.3d 583, 587, 590-91 (6th Cir. 2011)). In
Primax, the court of appeals rejected its own previously binding decisions holding “that a federal
court has no subject-matter jurisdiction over an action ostensibly brought under 29 U.S.C. §
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1132(a)(3) apparently for solely legal relief,” and held that “in such cases, a federal court has
subject-matter jurisdiction, even if the plaintiff is unable to state a claim upon which relief can be
granted.” Primax Recoveries, 433 F.3d at 517. The Court explained that this reversal was mandated
by then-recent decisions of the Supreme Court that instructed the lower federal courts to “use the
term ‘jurisdiction’ with more precision.” Id. at 518. The court of appeals acknowledged the rule
announced in Great-West, in which the Supreme Court held that 29 U.S.C. § 1132(a)(3) “authorizes
only equitable, not legal, relief.” Ibid. But the Sixth Circuit nevertheless held that “an action under
29 U.S.C. § 1132(a)(3) seeking only legal relief does not fall outside a federal court’s subject-matter
jurisdiction, but instead raises the question whether a party has failed to state a claim upon which
relief can be granted.” Id. at 519; see also Citizens Ins. Co. of Am. v. MidMichigan Health
ConnectCare, 449 F.3d 688, 690-91 (6th Cir. 2006) (“[A] priority dispute arising between an ERISA
plan and a no-fault policy is resolved pursuant to federal common law,” and “[s]ubject matter
jurisdiction [therefore] is proper under [ERISA] and 28 U.S.C. § 1331.”).
Farm Bureau relies on Reynolds Metals Co. v. Ellis, 202 F.3d 1246 (9th Cir. 2000), in which
the Ninth Circuit held that an action brought by an employer as plan fiduciary under ERISA, where
the employer sought reimbursement for medical expenses paid from the employee’s recovery in tort,
properly was dismissed by the district court. But the Ninth Circuit’s holding in Reynolds is in accord
with Primax and not in conflict, because in Reynolds the defendant employee sought, and was
granted, dismissal of the employer’s complaint for failure to state a claim under Rule 12(b)(6), not
for lack of subject matter jurisdiction under Rule 12(b)(1). Reynolds Metals Co. v. Ellis, No.
97-6153, 1997 WL 33539501 (C.D. Cal. Nov. 26, 1997).
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However, even if the defendant’s motion had invoked the proper rule, it still would have to
be denied, because the Sixth Circuit consistently has held, on the same or nearly the same facts, that
the claims Weigandt has asserted in her complaint are cognizable and proper under section
1132(a)(3). In Rodriguez v. Tennessee Laborers Health & Welfare Fund, 463 F.3d 473 (6th Cir.
2006), the Sixth Circuit discussed at length — and rejected — all of the defendant insurer’s
arguments in support of its position that a complaint substantively identical to Weigandt’s should
be dismissed because it sought only non-equitable legal and declaratory relief. In that case, like the
present one, the plaintiff’s ERISA plan paid medical expenses after the plaintiff was injured in an
automobile accident. When the plan sought reimbursement from the plaintiff’s tort recovery, the
plaintiff filed a declaratory judgment action in federal court. The plan moved for dismissal for lack
of jurisdiction. The court of appeals sustained the trial court’s rejection of that motion, noting that
in many declaratory judgment actions, “‘the realistic position of the parties is reversed. The plaintiff
is seeking to establish a defense against a cause of action which the declaratory defendant may assert
in the [state] courts.’” 463 F.3d at 474 (quoting Public Service Commission v. Wycoff Co., 344 U.S.
237, 248 (1952)). Quoting Wycoff further, the court explained:
“Where the complaint in an action for declaratory judgment seeks in essence to assert
a defense to an impending or threatened state court action, it is the character of the
threatened action, and not of the defense, which will determine whether there is
federal-question jurisdiction in the District Court.” Id. (emphasis added).
...
The key issue then in determining whether the federal courts have jurisdiction over
a claim for declaratory relief is whether the impending or threatened action would
raise a federal question. In other words, the question is whether the federal courts
would have subject matter jurisdiction over the threatened claim. Here, although the
precise content of the threatened claim is uncertain, it is clear that the Fund could
have brought suit under § 1132(a)(3) to seek reimbursement.
...
We therefore conclude that the relevant threatened claim was in the nature of a claim
by the Fund for reimbursement under ERISA, an action over which the federal
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courts, per the teaching of Primax, would have subject matter jurisdiction. It follows
that the district court had subject matter jurisdiction over plaintiff’s § 1132(a)(3)
claim seeking declaratory relief.
Rodriguez, 463 F.3d at 474-77
Subject matter jurisdiction exists in this case as well over the plaintiff’s claim under section
1132(a).
In its reply brief, Farm Bureau slipped in an additional jurisdictional argument: that because
the plaintiff admitted that its recovery in her uninsured motorist state court case is “potential,” the
present declaratory judgment action is not ripe. Arguments raised for the first time in a reply brief
are not favored. Balsley v. LFP, Inc., 691 F.3d 747, 773 (6th Cir. 2012) (“Issues raised for the first
time in a reply brief are not properly before this court” (quoting United States v. Perkins, 994 F.2d
1184, 1191 (6th Cir. 1993))). Nonetheless, ripeness is an essential feature of Article III jurisdiction,
so the Court will address it. See FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990) (holding
that Article III courts have an independent obligation to determine whether subject matter
jurisdiction exists).
Article III of the Constitution permits federal courts to adjudicate only actual cases and
controversies. U.S. Const. art. III, § 2. The concept of ripeness is one of several justiciability
doctrines “drawn both from Article III limitations on judicial power and from prudential reasons for
refusing to exercise jurisdiction.” Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993).
The “basic rationale” of the ripeness doctrine “is to prevent the courts, through avoidance of
premature adjudication, from entangling themselves in abstract disagreements . . . and also to protect
. . . from judicial interference until a[] . . . decision has been formalized and its effects felt in a
concrete way by the challenging parties.” Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967).
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“A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as
anticipated, or indeed may not occur at all.” Texas v. United States, 523 U.S. 296, 300 (1998)
(internal quotation marks omitted).
The Declaratory Judgment Act authorizes federal courts, “[i]n a case of actual controversy
within its jurisdiction . . . [to] declare the rights and other legal relations of any interested party
seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a).
When determining whether a declaratory judgment action is ripe for adjudication, “[t]he test to be
applied . . . ‘is whether . . . there is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’”
Lake Carriers’ Ass’n v. MacMullan, 406 U.S. 498, 506 (1972) (quoting Maryland Casualty Co. v.
Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)). “In order to determine whether a claim is ripe,
this court examines (1) the likelihood that the harm alleged will ever come to pass; (2) whether the
factual record is sufficiently developed to allow for adjudication; and, (3) hardship to the parties if
judicial review is denied.” Norton v. Ashcroft, 298 F.3d 547, 554 (6th Cir. 2002) (citing Adult Video
Ass’n v. United States, 71 F.3d 563, 568 (6th Cir. 1995)).
The plaintiff alleges in this case that she is a participant in the DMC Plan, that the Plan
contains a requirement that she reimburse it for medical expenses paid for her care for injuries
sustained in the car crash from funds recovered, that the Plan in fact paid medical expenses, and that
she presently is seeking recovery from a third-party source for accident-related injuries. The
plaintiff has alleged that the other driver was at fault for the accident and that she has uninsured
motorist coverage in effect. Her likelihood of a recovery from a third-party source is more than
conjectural, and the Plan’s intention to enforce its reimbursement rights is virtually certain. The
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decision requires an interpretation of the Plan and insurance documents; therefore, the factual record
is more than adequate. And the plaintiff’s litigation decisions in her state court case may turn on
her assessment of the net recovery she could receive, which would be affected substantially by
whether the Plan could obtain a share of the recovery. The plaintiff has presented a live controversy
that is ripe for adjudication. Moreover, refraining from adjudicating the claim runs counter to “‘a
federal court’s obligation to hear and decide’ cases within its jurisdiction[, which] ‘is virtually
unflagging.’” Susan B. Anthony List v. Driehaus, --- U.S. ---, ---, 134 S. Ct. 2334, 2347 (2014)
(quoting Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. ---, ---, 134 S. Ct. 1377,
1386 (2014)).
III.
The Court has subject matter jurisdiction over the plaintiff’s claim for declaratory and
injunctive relief under 29 U.S.C. § 1132(a)(1) and (3).
Accordingly, it is ORDERED that the motion by defendant Farm Bureau General Insurance
Company to dismiss the case for want of subject matter jurisdiction [dkt. #10] is DENIED.
s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: October 9, 2014
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on October 9, 2014.
s/Marilyn Orem
MARILYN OREM
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