Providence Health & Services v. McLaughlin et al

Filing 5

ORDER by Judge Richard A Jones granting Plaintiff's 2 Motion for TRO. Defendants are restrained from disposing of or dissipating any portion of the disputed funds until 14 days from the date of this Order, unless otherwise ordered by the Court. Plaintiff to certify by noon on 1/9/2017, that it has served Defendant with copy of the complaint, moving papers, and this Order. Preliminary Injunction Hearing set for 1/18/2017 at 10:00 AM before Judge Richard A Jones. (PM)

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HONORABLE RICHARD A. JONES

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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PROVIDENCE HEALTH &
SERVICES,

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Plaintiff,

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v.

CASE NO. C17-24 RAJ
ORDER GRANTING
TEMPORARY RESTRAINING
ORDER

JAMES L MCLAUGHLIN, et al.

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Defendants.

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This matter comes before the Court on Plaintiff’s Motion for Temporary

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Restraining Order (“TRO”) and, upon Notice and Hearing, for Preliminary Injunction.
Dkt. # 2. Plaintiff requests that the Court enter the TRO without notice to Defendants.
Dkt. # 3. For the reasons that follow, the Court GRANTS Plaintiff’s TRO without
notice.
I.

BACKGROUND

Plaintiff Providence Health & Services (“Providence”) is the plan administrator
and plan fiduciary on behalf of a self-funded insurance plan (“Plan”) under the
Employment Retirement Income Security Act of 1974 (“ERISA”). Dkt. # 1, ¶ 2.
Defendant James McLaughlin is married to Donna McMillin, who is an employee of

ORDER GRANTING TEMPORARY RESTRAINING ORDER- 1

1 Providence. Id. at ¶ 3. Because Mr. McLaughlin is married to a Providence employee,
2 he is a beneficiary of the Plan. Id. Mr. McLaughlin’s medical plan “is self-funded by
3 Providence and claims are paid from Providence’s general assets.” Id. at ¶ 7.
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Providence alleges that Mr. McLaughlin suffered injuries as a result of a May 9,

5 2014 personal injury accident, for which the Plan paid his medical benefits. Id. at ¶¶ 8, 9.
6 Providence further alleges that Mr. McLaughlin settled his claims with a third party for
7 an amount greater than what Providence paid to Mr. McLaughlin. Id. at ¶ 11; see also
8 Dkt. # 2, p. 2. Providence now seeks to enforce the subrogation and reimbursement
9 provisions of the Plan.
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Providence alleges that “all or part of the settlement proceeds are in Defendants’

11 actual or constructive possession.” Dkt. # 1, ¶ 12. Providence further alleges that Mr.
12 McLaughlin’s attorneys have agreed to hold the disputed funds pending a settlement
13 agreement. Dkt. # 2, p. 4. Providence states that Mr. McLaughlin’s attorneys, Jeffrey
14 and Mercedes Donchez, communicated an unacceptable settlement ultimatum to
15 Providence. Id. Providence believes that Defendants “intend to imminently disburse the
16 Disputed Funds once Providence rejects McLaughlin’s settlement ultimatum, which it
17 must do next week.” Id., see also Dkt. # 3, p. 2.
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II.

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To obtain preliminary injunctive relief, Providence must “establish that [it] is

LEGAL STANDARD

20 likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence
21 of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction
22 is in the public interest.” Winter v. Natural Resources Defense Council, Inc., 129 S.Ct.
23 365, 374 (2008). The standard for a temporary restraining order is substantially the same.
24 ProtectMarriage.com - Yes on 8 v. Courage Campaign, 680 F. Supp. 2d 1225, 1228
25 (E.D. Cal. 2010) (citing Winter); Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240
26 F.3d 832, 839 n.7 (9th Cir. 2001) (noting that preliminary injunction and temporary
27 restraining order standards are “substantially identical”). The Ninth Circuit employs a

ORDER GRANTING TEMPORARY RESTRAINING ORDER- 2

1 “sliding scale” approach, according to which these elements are balanced, “so that a
2 stronger showing of one element may offset a weaker showing of another.” Alliance for
3 the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011).
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“Motions for temporary restraining orders without notice to and an opportunity to

5 be heard by the adverse party are disfavored and will rarely be granted.” Local Rules
6 W.D. Wash. LCR 65(b)(1). The Federal Rules further provide that
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The Court may issue a temporary restraining order without

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written or oral notice to the adverse party or its attorney only

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if: (A) specific facts in an affidavit or a verified complaint

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clearly show that immediate and irreparable injury, loss, or

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damage will result to the movant before the adverse party can

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be heard in opposition; and (B) the movant’s attorney certifies

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in writing any efforts made to give notice and the reasons

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why it should not be required.

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Fed. R. Civ. P. 65(b)(1). Unless these requirements are satisfied, “the moving

16 party must serve all motion papers on the opposing party before or contemporaneously
17 with the filing of the motion and include a certificate of service with the motion.” Local
18 Rules W.D. Wash. LCR 65(b)(1). After the motion is filed, the Court “may consider the
19 motion on the papers or schedule a hearing.” Local Rules W.D. Wash. LCR 65(b)(3).
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III.

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First, Providence has presented sufficient evidence that there is a likelihood of

DISCUSSION

22 success on the merits of its claims. As an initial matter, ERISA authorizes Providence to
23 bring an action to redress violations of the plan under 29 U.S.C. § 1132(a)(3). ERISA
24 further “provides for equitable remedies to enforce plan terms.” Sereboff v. Mid Atl.
25 Med. Servs., Inc., 547 U.S. 356, 363 (2006). The Supreme Court has concluded that the
26 relief sought here—in which Providence seeks reimbursement from “specifically
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ORDER GRANTING TEMPORARY RESTRAINING ORDER- 3

1 identifiable funds that [are] in the possession and control of the [Defendants]”—is
2 equitable. Id. at 362–63.
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Second, Providence will suffer irreparable injury if Mr. McLaughlin or his

4 attorneys disburse the funds because, in that case, Providence would be unable to pursue
5 the remedies available under ERISA. See Bilyeu v. Morgan Stanley Long Term
6 Disability Plan, 683 F.3d 1083, 1092–93 (9th Cir. 2012) (finding that “the reimbursement
7 agreement must ‘specifically identif[y] a particular fund, distinct from the [beneficiary’s]
8 general assets,’ from which the fiduciary will be reimbursed. . . [and] the funds
9 specifically identified by the fiduciary must be ‘within the possession and control of the
10 [beneficiary].’”) (internal citations omitted). Providence has presented further evidence
11 that immediate injury will result if the Defendants have notice of this Order. Dkt. # 3, p.
12 2 (certifying that there is a reasonable belief that Defendants will disburse the funds if
13 their settlement is rejected).
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Third, the balance of the equities weighs in favor of granting the TRO. In granting

15 Providence’s motion, the Court is maintaining the status quo until a forthcoming
16 preliminary injunction hearing. In light of such a dichotomy—risking the potential
17 disbursement of disputed funds versus maintaining the status quo—the balance of the
18 equities tips in favor of Providence.
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Finally, granting the TRO advances the public interest. As Providence contends,

20 enforcing reimbursement and subrogation provisions are beneficial to ensuring the
21 stability of ERISA plans.
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IV.

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Having considered Plaintiff’s verified complaint, motions, supporting certificate,

CONCLUSION

24 and governing law, the Court finds that the TRO without notice is appropriate in this
25 case. The Court GRANTS Plaintiff’s TRO (Dkt. # 2) without notice (Dkt. # 3). As such,
26 Defendants are RESTRAINED from disposing of or dissipating any portion of the
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ORDER GRANTING TEMPORARY RESTRAINING ORDER- 4

1 disputed funds until 14 days from the date of this Order, unless otherwise ordered by
2 the Court.
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This Order has been entered without notice to Defendants. Plaintiff shall

4 immediately serve Defendants with a copy of the complaint, moving papers, and this
5 Order by whatever means is best calculated to reach Defendants quickly. The Court
6 requires Plaintiff to certify no later than noon on Monday, January 9, 2017, that it has
7 served such documents on Defendants.
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Defendants may, on or before Friday, January 13, 2017, oppose the conversion of

9 the TRO into a preliminary injunction. No Reply will be considered. A preliminary
10 injunction hearing is set for 10:00 a.m. on January 18, 2017, before the Honorable
11 Richard A. Jones, where the Court will hear oral arguments of the parties. The matter of
12 bond shall be reserved until this hearing.
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Dated this 6th day of January, 2017.

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A
The Honorable Richard A. Jones
United States District Judge

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ORDER GRANTING TEMPORARY RESTRAINING ORDER- 5