McHugh et al v. Trinity Health System et al

Filing 89

Memorandum Opinion and Order: For the reasons set forth herein, plaintiffs' objections to the report and recommendation are overruled and the report and recommendation is accepted (Doc. No. 85 ) with respect to defendant UPMC Presbyteria n Shadyside's motion to dismiss (Doc. No. 56 ) and defendant Trinity's motion to dismiss (Doc. No. 60 .) Furthermore, there were no objections to the other motions at issue in the report and recommendation, and, finding no errors on indep endent review, the Court accepts the report and recommendation with respect to defendants Medical Mutual of Ohio, Medical Mutual Services, and Multiplan Services Corporation. This case will proceed solely with respect to the claim for breach of fiduciary duty under ERISA against Medical Mutual Services. Judge Sara Lioi on 9/20/2018. (P,J)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

SHARON McHUGH, et al.,
PLAINTIFFS,
vs.

TRINITY HEALTH SYSTEM, et al.,

DEFENDANTS.

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CASE NO. 1:17CV1413
JUDGE SARA LIOI

MEMORANDUM OPINION
AND ORDER

Before the Court is the report and recommendation (“R&R”) (Doc. No. 85) of Magistrate
Judge George J. Limbert, recommending that the Court grant defendant University of Pittsburgh
Medical Center Presbyterian Shadyside’s (“UPMC Presbyterian Shadyside”) motion to dismiss
(Doc. No. 56) in its entirety and dismiss all of plaintiffs’ claims against defendant UPMC
Presbyterian Shadyside with prejudice; grant defendant Medical Mutual of Ohio’s (“MMO”)
motion to dismiss (Doc. No. 58) in its entirety and dismiss all of plaintiffs’ claims against
defendant MMO with prejudice; grant defendant Medical Mutual Services, LLC’s (“MMS”)
motion for partial judgment on the pleadings (Doc No. 59) in its entirety and dismiss all of
plaintiffs’ state law claims against defendant MMS with prejudice, leaving only Count I (breach
of fiduciary duty under ERISA) remaining at issue in this case; grant defendant Trinity Health
System’s (“Trinity”) motion to dismiss (Doc. No. 60) in its entirety and dismiss all of plaintiffs’
claims against defendant Trinity with prejudice; and deny defendant Multiplan Services
Corporation’s (“MSC”) motion to dismiss (Doc. No. 61) as moot, since MSC has already been

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dismissed from this action. Plaintiffs’ objections to the R&R (Doc. No. 86 [“Obj.”]) challenge the
ruling only with respect to the finding that neither UPMC Presbyterian Shadyside nor Trinity is a
fiduciary of the Fund. Defendants UPMC Presbyterian Shadyside and Trinity filed separate
oppositions to plaintiffs’ objections (Doc. No. 87 [“UPMC Presbyterian Shadyside Opp’n”] and
Doc. No. 88 [“Trinity Opp’n”]). Pursuant to Fed. R. Civ. P. 72(b)(3), the Court has conducted its
de novo review of the matters properly raised in the objections. For the reasons discussed herein,
plaintiffs’ objections to the R&R are OVERRULED and the R&R is ACCEPTED.
I.

BACKGROUND
Plaintiff Fleet Owners Insurance Fund (“the Fund”) is a nonprofit Taft-Hartley

multiemployer health and welfare insurance fund formed by Teamsters Local 964 and participating
employers with collective bargaining agreements. (Doc. No 48, Amended Complaint [“Am.
Compl.”] ¶ 3.) Plaintiff Charles McHugh belongs to a union that collectively bargained on his
behalf for a portion of his wages to be contributed to Fleet in exchange for medical coverage under
one of its health and welfare plans. (Id. ¶¶ 2, 16–19.) As the wife of plaintiff Charles McHugh,
plaintiff Sharon McHugh (“McHugh”) is a covered person under the plan. (Id. ¶ 20.)
The primary provider network for McHugh’s health plan is the SuperMed network, which
is owned and operated by MMO. (Id. ¶ 21.) Fleet chose SuperMed as its provider network, in part,
because MMS is the administrator of Fleet’s plans and thereby agreed to adjudicate health-care
claims made against Fleet’s members and their families. (Id. ¶¶ 26–27.).
On March 19, 2016, McHugh presented at an emergency room operated by Trinity, a nonSuperMed network health-care provider. (Id. ¶¶ 67–69.) After one hour of care, McHugh was
transferred via air ambulance to a facility operated by UPMC Presbyterian Shadyside, also a non-

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SuperMed network health-care provider, due to concerns that she had contracted sepsis. (Id. ¶¶ 75,
83.)
McHugh received treatment at UPMC Presbyterian Shadyside’s facility for several weeks.
During that time, McHugh was billed in excess of $1,000,000.00 for her stay at UPMC
Presbyterian Shadyside’s facility. (Id. ¶¶ 109–15.) After her release from UPMC Presbyterian
Shadyside’s facility in April 2016, McHugh returned to UPMC Presbyterian Shadyside’s facility
for a number of surgeries and further treatments. (Id. ¶¶ 116–17.) As of the filing of the amended
complaint on November 29, 2017, MMS has used funds from the Fund in excess of $1,200,000.00
towards UPMC Presbyterian Shadyside’s bill. (Id. ¶ 122.) MMS, MMO, and UPMC Presbyterian
Shadyside are seeking additional payments from plaintiffs in excess of $500,000.00. (Id. ¶ 123.)
Plaintiffs filed their complaint on July 5, 2017, and amended it on November 29, 2017.
Shortly thereafter, the instant motions were filed. Following briefing, the parties stipulated to
dismissal without prejudice of all claims against defendants Center for Emergency Medicine of
Western Pennsylvania, Inc. (“CEMWP”) and MSC. (Doc. No. 75.) Additionally, plaintiffs
dismissed Count IX of the amended complaint (hospital malpractice) against UPMC Presbyterian
Shadyside without prejudice. (Id.)
On February 14, 2018, the matter was referred to Magistrate Judge George J. Limbert, who
issued the R&R regarding the dispositive motions filed by all remaining defendants. Plaintiffs filed
two objections to the R&R, challenging only the finding that neither UPMC Presbyterian
Shadyside nor Trinity is a fiduciary of the Fund. UPMC Presbyterian Shadyside and Trinity filed
separate responses to plaintiffs’ objections. The matter is ripe for the Court’s de novo review.

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II.

STANDARD OF REVIEW
Under 28 U.S.C. § 636(b)(1)(C), “[a] judge of the court shall make a de novo determination

of those portions of the report or specified proposed findings or recommendations to which
objection is made.” Powell v. United States, 37 F.3d 1499 (Table), 1994 WL 532926, at * 1 (6th
Cir. Sept. 30, 1994) (“Any report and recommendation by a magistrate judge that is dispositive of
a claim or defense of a party shall be subject to de novo review by the district court in light of
specific objections filed by any party.”). “An ‘objection’ that does nothing more than state a
disagreement with a magistrate’s suggested resolution, or simply summarizes what has been
presented before, is not an ‘objection’ as that term is used in this context.” Aldrich v. Bock, 327 F.
Supp. 2d 743, 747 (E.D. Mich. 2004). See also Fed. R. Civ. P. 72(b)(3) (“[t]he district judge must
determine de novo any part of the magistrate judge’s disposition that has been properly objected
to”); LR 72.3(b) (any objecting party shall file “written objections which shall specifically identify
the portions of the proposed findings, recommendations, or report to which objection is made and
the basis for such objections.”). After review, the district judge “may accept, reject, or modify the
recommended disposition; receive further evidence; or return the matter to the magistrate judge
with instructions.” Fed. R. Civ. P. 72(b)(3).
In its de novo review of plaintiffs’ objections, the Court applies the motion to dismiss
standard. In the context of a motion to dismiss under Rule 12(b)(6), the Court must construe the
complaint in the light most favorable to plaintiffs and accept all well-pleaded material allegations
in the complaint as true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S. Ct. 1955, 167
L. Ed. 2d 929 (2007).
The sufficiency of the complaint is tested against the notice pleading requirements of Fed.
R. Civ. P. 8(a)(2), which provides that a complaint must contain “a short and plain statement of

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the claim showing that the pleader is entitled to relief[.]” Although this standard is liberal, Rule 8
still requires a complaint to provide the defendant with “enough facts to state a claim to relief that
is plausible on its face.” Twombly, 550 U.S. at 570. Thus, “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true,” to state a plausible claim.
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Twombly,
550 U.S. at 570). A claim is facially plausible “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. (citing Twombly, 550 U.S. at 556). Plausibility “is not akin to a ‘probability requirement,’ but
it asks for more than a sheer possibility that a defendant has acted unlawfully.’” Id. “[W]here the
well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,
the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Id. at
679 (quoting Fed. R. Civ. P. 8(a)(2)). In such a case, the plaintiff has not “nudged [his] claims
across the line from conceivable to plausible, [and the] complaint must be dismissed.” Twombly,
550 U.S. at 570; see Iqbal, 556 U.S. at 683 (citation omitted).
A complaint need not set down in detail all the particulars of a plaintiff’s claim. However,
“Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with nothing more than
conclusions.” Iqbal, 556 U.S. at 678–79 (This standard requires “more than an unadorned, thedefendant-unlawfully-harmed-me accusation.”). “Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.” Id. at 678 (citing Twombly, 550
U.S. at 555); see Gregory v. Shelby Cty., 220 F.3d 433, 446 (6th Cir. 2000) (the court should not
accept conclusions of law or unwarranted inferences couched in the form of factual allegations).
The complaint “must contain either direct or inferential allegations respecting all the material
elements to sustain a recovery under some viable legal theory.” Scheid v. Fanny Farmer Candy

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Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988) (internal quotations marks omitted), abrogated on
other grounds by Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res.,
532 U.S. 598, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001).
III.

DISCUSSION
Plaintiffs object solely to the R&R’s conclusion that Count I of the amended complaint

should be dismissed with prejudice as to both UPMC Presbyterian Shadyside and Trinity because
neither is a fiduciary under ERISA which provides1:
[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any
discretionary authority or discretionary control respecting management of such plan or
exercises any authority or control respecting management or disposition of its assets, (ii)
he renders investment advice for a fee or other compensation, direct or indirect, with
respect to any moneys or other property of such plan, or has any authority or responsibility
to do so, or (iii) he has any discretionary authority or discretionary responsibility in the
administration of such plan.
29 U.S.C. § 1002(21)(A). “A fiduciary within the meaning of ERISA must be someone acting in
the capacity of manager, administrator, or financial advisor to a ‘plan’ . . . .” Pegram v. Herdrich,
530 U.S. 211, 222, 120 S. Ct. 2143, 147 L. Ed. 2d 164 (2000). When determining whether a
fiduciary duty was breached under ERISA, “the courts ‘must examine the conduct at issue to
determine whether it constitutes “management” or “administration” of the plan, giving rise to
fiduciary concerns, or merely a business decision that has an effect on an ERISA plan not subject
to fiduciary standards.’” DeLuca v. Blue Cross Blue Shield of Mich., 628 F.3d 743, 747 (6th Cir.
2010) (emphasis added) (quoting Hunter v. Caliber Sys., Inc., 220 F.3d 702, 718 (6th Cir. 2000)).
“[T]he threshold question is not whether the actions of some person employed to provide services
under a plan adversely affected a plan beneficiary’s interest, but whether that person was acting as

Plaintiffs’ objections to the R&R with respect to UPMC Presbyterian Shadyside and Trinity are identical, except for
one additional minor objection raised in regards to UPMC Presbyterian Shadyside. As such, the Court will address
the objections against both defendants together.
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a fiduciary (that is, performing a fiduciary function) when taking the action subject to complaint.”
Pegram, 530 U.S. at 226. At common law, “fiduciary functions” characteristically involved
financial decisions about “managing assets and distributing property to beneficiaries.” Id. at 231.
A. Defendants UPMC Presbyterian Shadyside and Trinity as fiduciaries of the Fund
The R&R concluded that UPMC Presbyterian Shadyside and Trinity were not fiduciaries
to the Fund within the meaning of ERISA and recommended that the Court dismiss Count I of
plaintiffs’ amended complaint as it pertains to these defendants. (R&R at 1338, 1363.2) In support
of this finding, the R&R commented that “[p]laintiffs do not identify any case law extending
fiduciary duties under ERISA to third-party medical providers who simply submitted bills for
services rendered.” (Id. at 1336). The R&R noted that neither UPMC Presbyterian Shadyside nor
Trinity had any relationship with plaintiffs before McHugh arrived at each defendant’s respective
facility for treatment. (Id. at 1338, 1363.) Additionally, while recognizing that the definition of a
fiduciary under ERISA is intended to be broader than the common law definition, the R&R found
that plaintiffs’ position “extends this broadness beyond the intentions of ERISA.” (Id. at 1337,
1363 (citing Smith v. Provident Bank, 170 F.3d 609, 613 (6th Cir. 1999)).) The R&R expressed
concern that plaintiffs’ “overly broad” definition of fiduciary under ERISA would “essentially
convert healthcare providers into ERISA fiduciaries whenever transacting with an ERISA fund.”
(Id. at 1338, 1363.) Further, with respect to UPMC Presbyterian Shadyside, the R&R rejected
plaintiffs’ claim that UPMC Presbyterian Shadyside had discretionary control over the Fund’s

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All page number references are to the page identification number generated by the Court’s electronic docketing
system.

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assets when UPMC Presbyterian Shadyside was still seeking additional money from plaintiffs. (Id.
at 1336.)
In their objections to the R&R, plaintiffs contend that the ruling that UPMC Presbyterian
Shadyside and Trinity are not fiduciaries as defined by ERISA is incorrect. Plaintiffs argue that,
prior to McHugh arriving for treatment at the defendants’ individual facilities, both defendants had
entered into “fast pay” arrangements that third-party network administrators—PHCS and MMO’s
SuperMed—entered into on the Fund’s behalf. (Obj. at 1370–71.) In essence, plaintiffs argue that
defendants are fiduciaries of the Fund within the meaning of ERISA because UPMC Presbyterian
Shadyside and Trinity both had payment arrangements with the Fund that allowed the defendants
to receive prompt payment for their respective set prices. (Id. at 1371.) Further, with respect to
UPMC Presbyterian Shadyside, plaintiffs claim that it is noteworthy that any outstanding amounts
were originally paid when simply demanded by UPMC Presbyterian Shadyside, and were only
retracted later by the Fund’s trustees. (Id.) Plaintiffs equate this with the “discretion” that defines
a fiduciary relationship.
Finally, plaintiffs oppose the R&R’s finding that a broader definition of fiduciary is against
public policy, contending that the Court must adopt a broader definition of fiduciary to protect
Taft-Hartley funds from hospitals with “nearly immediate access” to funds’ assets. (Id. at 1372.)
Plaintiffs’ argument that UPMC Presbyterian Shadyside and Trinity are fiduciaries to the
Fund under ERISA is unavailing. Plaintiffs have failed to allege any facts in the amended
complaint to support their assertion that either defendant had discretion or control over the Fund’s
assets within the meaning of “fiduciary” in ERISA. Plaintiffs allege only in conclusory statements
that, “Trinity through its relationship with Multiplan or PHCS exercises authority or control over
the assets of the Fund,” and, “Trinity is a fiduciary of the Fund’s Plans.” (Am. Compl. ¶¶ 49–50.)

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Likewise, plaintiffs allege only the same conclusory statements that “UPMC [Presbyterian
Shadyside] through its relationship with Multiplan or PHCS exercises authority or control over the
assets of the Fund,” and, “UPMC [Presbyterian Shadyside] is a fiduciary of the Fund’s Plans.”
(Am. Compl. ¶¶ 61–62.) Plaintiffs fail to provide any factual allegations that support their
conclusions that UPMC Presbyterian Shadyside and Trinity are fiduciaries of the Fund. That is,
plaintiffs fail to allege facts that either of these defendants acted in the capacity of a manager,
administrator, or financial advisor to the Fund.
Plaintiffs insist that both defendants had individual discretion or control over the Fund’s
assets simply because each defendant’s “fast pay” arrangement with the Fund allowed the
defendants to receive prompt payment for their respective set prices. (Obj. at 1370.) But even if
this were true, this type of business arrangement, which addresses the timing of payments, does
not transform the defendants into fiduciaries of the Fund. In fact, as plaintiffs point out in their
objection, the payment terms were negotiated with defendants through third-party network
administrators acting on the Fund’s behalf. Further, plaintiffs allege in their amended complaint
that, “Pursuant to ERISA and the contract [with MMS], MMS is obligated [to] review and analyze
all medical claims presented to it for payment out of the Fund’s assets.” (Am. Compl. ¶ 30.)
Therefore, taking as true plaintiffs’ allegation that there was a “fast pay” arrangement, any such
arrangement did not affect whether defendants would be paid (which would arguably suggest
control of the Fund’s assets), but only when they would be paid if claims were approved.
Additionally, with regard to UPMC Presbyterian Shadyside, plaintiffs state in their
objections that: “All Defendant UPMC Presbyterian Shadyside needed to do was demand an
amount, and it received that amount from Fleet.” (Obj. at 1371.) Yet, in the amended complaint,
plaintiffs state that UPMC Presbyterian Shadyside is owed thousands of dollars from Fleet. (Am.

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Compl. ¶ 123.) Contrary to plaintiffs’ suggestion in their objection, this specific allegation appears
to negate plaintiffs’ conclusory allegation that UPMC Presbyterian Shadyside exercised control
over management of the Fund’s assets. Very simply, plaintiffs have failed to provide any factual
support in the amended complaint to support their claim that UPMC Presbyterian Shadyside had
control of the Fund as a fiduciary within the meaning of ERISA.
Finally, the Court rejects plaintiffs’ contention that the Court should expand the definition
of fiduciary under ERISA to include UPMC Presbyterian Shadyside and Trinity. As plaintiffs
concede, there is no case law that defines third-party health-care providers as fiduciaries under
ERISA. (Obj. at 1370.) It is Congress’s role to expand the definition of fiduciary within the
meaning of ERISA—not the Court’s.
For these reasons, plaintiffs’ objections to the R&R as they pertain to defendants UPMC
Presbyterian Shadyside and Trinity are overruled.
B. Dismissal of all claims against defendants MMO, MSC and dismissal of state law
claims against defendants MMS, UPMC Presbyterian Shadyside, and Trinity
Plaintiffs did not object to the R&R’s recommendation of dismissal with respect to all
claims against MMO or the state law claims against MMS, UPMC Presbyterian Shadyside, and
Trinity. By failing to object to these portions of the R&R, plaintiffs have thereby waived any right
to de novo review as well as their right to appeal those matters. See Thomas v. Arn, 474 U.S. 140,
147–48, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985) (“[B]y precluding appellate review of any issue
not contained in objections, [the court] prevents a litigant from ‘sandbagging’ the district judge by
failing to object and then appealing.”).
On independent review, the Court finds no errors with the R&R’s findings. As such, all
claims against defendants MMO are dismissed as are the state law claims against MMS. Moreover,
in addition to the dismissal of the ERISA claims against Trinity and UPMC Presbyterian
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Shadyside, discussed above, the state law claims against UPMC Presbyterian Shadyside and
Trinity are dismissed as well. Additionally, plaintiffs have voluntarily dismissed all claims against
CEMWP and MSC. (Doc. No. 75.) Thus, the only matter left pending in this action is the claim
for breach of fiduciary duty under ERISA against MMS.
IV.

CONCLUSION
For the reasons set forth herein, plaintiffs’ objections to the R&R are OVERRULED and

the R&R is ACCEPTED with respect to defendant UPMC Presbyterian Shadyside’s motion to
dismiss (Doc. No. 56) and defendant Trinity’s motion to dismiss (Doc. No. 60.) Furthermore, there
were no objections to the other motions at issue in the R&R, and, finding no errors on independent
review, the Court ACCEPTS the R&R with respect to defendants MMO, MMS, and MSC.
This case will proceed solely with respect to the claim for breach of fiduciary duty under
ERISA against MMS.
IT IS SO ORDERED.
Dated: September 20, 2018
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE

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