Humana Health Plan, Inc. v. Nguyen et al
Filing
46
MEMORANDUM OPINION AND ORDER granting 41 MOTION for Summary Judgment, denying 44 Cross Motion for Summary Judgment. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
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HUMANA HEALTH PLAN, INC.,
Plaintiff,
v.
PATRICK NGUYEN, DAVID ABNEY,
and CRADY, JEWETT, &
MCCULLEY, LLP,
Defendants.
CIVIL ACTION NO. H-13-1793
MEMORANDUM OPINION AND ORDER
Plaintiff,
action
Humana Health Plan,
asserting
claims
Inc.
against
("Humana"),
defendants,
Patrick
("Nguyen"), David Abney ("Abney"), and Crady, Jewett,
LLP
Plan
filed this
Nguyen
& McCulley,
("Crady"),
to enforce the terms of the API Employee Benefits
("Plan"),
and for equitable relief pursuant to the Employee
Retirement Income Security Act
~
Inc. 's
("ERISA"),
29 U.S.C. §§ 1001, et.
Pending before the court are Plaintiff Humana Health Plan,
Motion
for
Summary
Judgment
(Docket
Entry No.
41),
and
Defendant Patrick Nguyen's Response to Motion for Summary Judgment
and Cross Motion for Summary Judgment (Docket Entry No. 44).
Also
pending are Nguyen's objections to Humana's evidence and request
for a continuance to conduct discovery.
below,
Humana' s
motion
Nguyen's
objections
Nguyen's
cross
continuance
to
motion
will
be
for
summary
Humana's
For the reasons stated
judgment
evidence
for
summary
denied,
and
judgment
the
court
will
will
and
will
be
be
granted,
overruled,
request
enter
a
for
a
final
judgment ordering the Clerk to disperse settlement funds
in the
registry of the court to Humana, and ordering Nguyen to remit to
Humana
any
additional
funds
recovered
in
connection
with
his
accident on April 14, 2012, up to $274,607.84.
I.
Standard of Review
Summary judgment is authorized if the movant establishes that
there is no genuine dispute about any material fact and the law
Fed. R. Civ. P.
entitles it to judgment.
material
facts
are
"genuine"
if
the
56(c).
evidence
Disputes about
is
such
that
a
reasonable jury could return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2511 (1986).
The
Supreme Court has interpreted the plain language of Rule 56(c) to
mandate the entry of summary judgment "after adequate time for
discovery and upon motion,
showing
sufficient
to
against a party who fails to make a
establish
the
existence
of
an
element
essential to that party's case, and on which that party will bear
the burden of proof at trial."
S.
Ct.
"must
2548,
(1986).
'demonstrate the
fact."
1994)
2552
Celotex Corp.
v.
Catrett,
A party moving for summary judgment
absence
of a
genuine
issue
of material
Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(en banc).
requires
106
(5th Cir.
If the moving party meets this burden, Rule 56(c)
the nonmovant
to present admissible
genuine issues of material fact for trial.
-2-
Id.
evidence
creating
II.
Undisputed Facts
Nguyen is a participant in the API
("Plan") .
~
The Plan is governed by ERISA,
Employee Benefits Plan
29 U.S.C.
§§
1001,
et
On July 13, 2009, API and Humana executed a Plan Management
Agreement ("PMA") pursuant to which Humana is the Plan Manager and
API
is the
Plan Administrator with discretion to interpret the
terms of the Plan. 1
In April of 2012 Nguyen was injured in an automobile accident
("accident").
$274,607.84
accident. 2
From April 14, 2012 to April 5, 2013, the Plan paid
in
medical
expenses
Nguyen recovered
for
Nguyen
arising
the
from a third party settlement funds
of $255,000.00 for damages sustained in the accident.
Nguyen to reimburse the
from
Humana asked
Plan for benefits paid on his behalf.
Nguyen refused Humana's request, and this action ensued. 3
lSee Plan Management Agreement,
Exhibit 1 attached to
Declaration of Brian Bargender, Exhibit A attached to Memorandum in
Support of Plaintiff Humana Health Plan, Inc.'s Motion for Summary
Judgment
("Memorandum in Support of Humana's Motion for Summary
Judgment"), Docket Entry No. 42-1, pp. 128-61, and Exhibit 3 to
Defendant Patrick Nguyen's Response to Motion for Summary Judgment
and Cross Motion for Summary Judgment ("Nguyen's Response"), Docket
Entry No. 44-4, Article I, ~ 1.8 (designating as Plan Administrator
the person establishing the Plan, i.e., API), ~ 1.9 (designating
Humana as Plan Manager), and Article II, ~ 2.3 (providing that the
Plan Administrator, not the plan Manager is ultimately responsible
for interpreting provisions of the Plan).
2Consolidated Statement of Benefits,
Complaint, Docket Entry No.1-I.
Exhibit
1 to Verified
3S ee Factual Background, Nguyen's Response, Docket Entry
No. 44, pp. 3-4 ~~ 8-11, and Statement of Undisputed Material
Facts, Memorandum in Support of Humana's Motion for Summary
(continued ... )
-3-
III.
Procedural Background
On June 16, 2013, Humana filed a Verified Complaint
Entry No.1)
(Docket
seeking to enforce the terms of the Plan,
and to
receive equitable relief in the form of the settlement funds that
Nguyen received from a third party under 29 U.S.C. § 1132(a) (3).
On June 20, 2013, the court entered a Temporary Restraining Order
(Docket Entry No.6), restraining defendants and others acting in
concert with them from disposing of any of the settlement funds.
On July 2, 2013, the court signed an Agreed Preliminary Injunction
(Docket Entry No. 13) pursuant to which the settlement funds were
deposited into the registry of the court.
On July 3, 2013, Humana
filed a Notice of Voluntary Dismissal of David Abney and Crady,
Jewett & McCulley, LLP (Docket Entry No. 18), and the court signed
an Order
against
(Docket
those
Entry No.
defendants
19)
with
dismissing
prej udice.
the
claims
Nguyen
is
asserted
the
only
remaining defendant.
On July 18, 2013, Nguyen filed a Counterclaim (Docket Entry
No. 21) against Humana for breach of fiduciary duty.
On October 15,
2013,
Humana filed
Plaintiff Humana Health
Plan, Inc.'s Motion for Summary Judgment (Docket Entry No. 41), and
Memorandum
in
Support
of
Plaintiff Humana
Health
Motion for Summary Judgment (Docket Entry No. 42).
Plan,
Inc.' s
On November 12,
2013, Nguyen filed Defendant Patrick Nguyen's Response to Motion
3( ••• continued)
Judgment, Docket Entry No. 42, pp. 2-6.
-4-
for Summary Judgment and Cross Motion for Summary Judgment (Docket
Entry No.
44),
and on November 22,
2013,
Humana filed Plaintiff
Humana Health Plan, Inc.'s Reply in Support of Motion for Summary
Judgment and Response in Opposition to Defendant's Cross Motion for
Summary Judgment ("Humana's Reply," Docket Entry No. 45).
IV.
Analysis
Humana argues that it is entitled to summary judgment on its
claims to enforce the terms of the Plan and for equitable relief
because the 2009 Summary Plan Description ("SPD") and the 2012 SPD
both clearly state that the Plan is entitled to reimbursement.
4
Humana argues that Nguyen's breach of fiduciary duty counterclaim
should be dismissed "because
[Nguyen]
does not deny that he has
adequate relief through a claim for benefits,"S and because Nguyen
"has not - and cannot - prove either that Humana would be unjustly
enriched or that [Nguyen] has been harmed.,,6
Nguyen argues that he
is entitled to summary judgment on Humana's claims because Humana
lacks necessary authority from the
Plan to
seek recovery, 7 and
4Memorandum in Support of Humana's Motion for Summary
Judgment, Docket Entry No. 42, pp. 8-13; Humana's Reply, Docket
Entry No. 45, pp. 1-8.
SHumana's Reply, Docket Entry No. 45, p. 1.
~~
7Nguyen's Response,
12-15.
Docket Entry No.
-5-
44,
pp.
1
~
1, and 4-5
because Humana is trying to enforce the wrong Plan document. B
Alternatively, Nguyen argues that Humana has breached its fiduciary
duty by pursuing claims that the Plan Administrator does not wish
to pursue. 9
A.
Applicable Law
Federal common law governs the construction of ERISA plan
Todd v. AIG Life Ins. Co.,
provisions.
47 F.3d 1448,
1452 n.
1
(5th Cir. 1995); Jones v. Georgia Pacific Corp., 90 F.3d 114, 116
(5th Cir.
In construing an ERISA plan,
1996).
courts give Plan
language its ordinary and generally accepted meaning.
Provident
Life & Accident Insurance Co. v. Sharpless, 364 F.3d 634, 641 (5th
Cir. 2004).
'unless
the
Courts "construe the terms of the [ERISA] plan de novo
benefit
plan
gives
the
administrator
or
fiduciary
discretionary authority to determine eligibility for benefits or to
construe the terms of the plan.'"
Co., 129 F.3d 814,
Rubber Co.
v.
818
Bruch,
Wegner v.
(5th Cir. 1997)
109 S.
Ct.
948,
Standard Insurance
(quoting Firestone Tire &
956-57
(1989)).
See also
Metropolitan Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008).
The
Fifth Circuit has held Bruch's principles applicable not only to
benefit determinations brought by plan participants, but also to a
plan's assertions of rights to
BId. at 6-7,
~~
16-19.
9Id. at 9-10
~~
reimbursement and subrogation.
23-24.
-6-
Sunbeam-Oster Company,
Inc. Group Benefits Plan for Salaried and
Non-Bargaining Hourly Employees v. Whitehurst, 102 F.3d 1368, 1373
(5th Cir. 1996).
standard
of
In Whitehurst the Fifth Circuit applied a de novo
review
because
parties
the
agreed
that
the
administrator had not been vested with discretionary authority to
interpret
the
In this
Plan.
case,
however,
there
is
no
dispute that the Plan Administrator was vested with discretionary
authority to interpret the Plan.
When a plan administrator has been vested with discretionary
authority to interpret a plan, courts review the administrator's
decisions
Health,
only for
Inc.,
abuse of discretion.
683 F.3d 182, 187
See Koehler v.
(5th Cir. 2012)
Aetna
Application of
the abuse of discretion standard may involve a two-step process.
See Wildbur v.
1992).
ARCO Chemical Co.,
See also Duhon v.
n. 3 (5th Cir. 1994)
Texaco,
974
F.2d 631,
Inc.,
637
15 F.3d 1302,
(5th Cir.
1307-08
&
(recognizing that "the reviewing court is not
rigidly confined to [Wildbur's] two-step analysis in every case").
First,
courts
may
determine
if
the
plan
interpretation of the plan was legally correct.
at 637.
was
administrator's
Wildbur, 974 F.2d
Second, if the administrator's interpretation of the plan
not
legally
correct
administrator's decision was
courts
an abuse
determine
whether
of discretion.
the
In
determining whether the plan administrator's interpretation of the
plan
was
legally
correct
courts
consider:
(1)
administrator gave the plan a uniform construction,
-7-
::;-=:
whether
the
(2) whether the
interpretation is consistent with a fair reading of the plan, and
(3) unanticipated costs.
Id. at 638.
In determining whether the
plan administrator has abuse his discretion courts consider:
(1)
(2 )
any
relevant
questions
formulated
appropriate administrative agencies, and
(3)
B.
the internal consistency of the
administrator's interpretation,
plan
under
the
by
the
the factual background of the determination and any
inferences of lack of good faith.
Humana is Entitled to Summary Judgment on Its Claims
Enforcement of Plan Terms and for Equitable Relief
for
Citing 29 U.S.C. § 1132(a) (3), Humana alleges that
19.
. the Plan seeks equitable relief, including, but
not limited to, equitable lien by agreement, equitable
lien to enforce ERISA and the terms of the Plan,
restitution, and imposition of a constructive trust with
respect to the Disputed Funds.
20.
By refusing to cooperate with the Plan to protect
its rights and refusing to reimburse the Plan to the
extent of benefits paid out of the amount [Nguyen]
recovered, [Nguyen has] violated the terms of the Plan.
21.
Since these acts and/or practices violate the Plan's
terms, this Court should enter an order enforcing the
terms of the Plan and requiring [Nguyen] to reimburse the
Plan in the amount of $274,607.84. 10
Humana also seeks declaratory judgment requiring Nguyen to turn
over to the Plan up to $274,607.84. 11
10Verified Complaint, Docket Entry No.1, p. 5
llId. at 6.
-8-
~~
19-21.
1.
Humana Is a Plan Fiduciary with Standing to File and
Prosecute Reimbursement Claim Against Nguyen
"The express grant of federal jurisdiction in ERISA is limited
as to whom Congress
to suits brought by certain parties
presumably determined that
a
right
to
enter
necessary to further the statute's purpose."
federal
court
was
Franchise Tax Board
of the State of California v. Construction Laborers Vacation Trust
for
Southern California,
103
S.
Ct.
2841,
2852
(1983)).
"certain parties" include plan fiduciaries. 29 U.S.C.
§
These
1132 (a) (3).
Humana alleges that it is a Plan fiduciary with standing to bring
this action. 12
Nguyen argues
that
he
is
entitled to
summary
judgment
on
Humana's claims because pursuant to the PMA, Humana is not a plan
fiduciary but is, instead, only the Plan Manager; API is the Plan
Administrator, and the Plan Administrator - not the Plan Manager retains discretion to interpret the terms of the Plan. 13
Citing the
affidavit of Amy Manuel, Nguyen argues that "Ms. Manuel is the Plan
12Id.
at 1
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