United States District Court, S.D. New York
June 22, 2005.
CLINTON SEWELL, M.D. and CARICARE MEDICAL SERVICES, P.C., Plaintiffs,
THE 1199 NATIONAL BENEFIT FUND FOR HEALTH AND HUMAN SERVICES, Defendant.
The opinion of the court was delivered by: JED RAKOFF, District Judge
By this lawsuit, plaintiffs Clinton Sewell, M.D. and Caricare
Medical Services, P.C. claim that the defendant, The 1199
National Benefit Fund for Health and Human Services (the "Fund"),
breached a contract between the parties entitled the Physician
Participation Agreement (the "Agreement"), which was entered into
on January 19, 1999. See Physician Participation Agreement,
January 19, 1999, attached as Exhibit A to Plaintiffs' Motion for
Summary Judgment. Under the Agreement, plaintiffs were to provide
medical services to Fund participants (called "Members") and be
compensated in accordance with the Fund's schedule of allowances.
See id. ¶ 5; Memorandum of Law in Support of
Defendant/Cross-Plaintiff's Motion for Summary Judgment of
Plaintiffs/Cross-Defendants' Claims ("Def. Mem.") at 2. Following
a "utilization analysis" in November, 2003 that concluded that
plaintiffs had overbilled the Fund by $220,356, see Affidavit
of Ralph Ullman, January 21, 2005 ("Ullman Aff."), ¶¶ 5-9,
defendant, between January and November, 2004, withheld payment
of $205,955.12 in claims submitted by plaintiffs, see id. ¶¶
10-11. Plaintiffs then brought this suit, alleging that these sums had been wrongly
withheld and that they suffered other damages as well.
On October 16, 2004, the Court denied defendant's motion to
dismiss for lack of standing, finding that plaintiffs were proper
assignees of the Members of the Plan. See Order dated October
15, 2004. On November 4, 2004, defendant filed its Answer and
Counterclaims ("A&C"), claiming that plaintiffs were liable to
defendant for fraud, unjust enrichment, and breach of contract.
See A&C ¶¶ 62-170. Following discovery, both sides moved for
summary judgment. In addition, defendant raised two objections to
the Court's jurisdiction. See Def. Mem. at 10-14.
With one exception, these motions lack merit. As to the
jurisdictional objections, it is beyond question that the Court
has subject matter jurisdiction over this action and that
plaintiffs have standing to sue. As the Court already explained
at length during oral argument on the motion to dismiss, see
transcript, October 15, 2004, defendant is a multi-employer,
self-administered benefit fund, as defined in ERISA,
29 U.S.C. § 1002, and the presence of a private contract does not erase the
fact that ERISA governs. Under § 502(a)(1)(B) of ERISA, health
plan participants and beneficiaries are authorized to bring
federal civil enforcement actions in order to recover plan
benefits, 29 U.S.C. § 1132(a)(1)(B), and it is settled law in
this Circuit that assignees of those participants and
beneficiaries have standing to sue under ERISA to recover for
medical expenses incurred. See, e.g., Simon v. General
Electric, Co., 263 F.3d 176, 178 (2d Cir. 2001). Moreover, defendant has produced no
evidence to suggest that plaintiffs are not valid assignees of
the participant Members of the Fund.
As for defendant's further argument that the Court lacks
jurisdiction because plaintiffs failed to exhaust their
administrative remedies in the form of the Fund's internal review
and appeal process, the Fund's procedures place the onus on the
Fund, and not plaintiffs, to request an internal review, and
defendant has produced no evidence of any such request. Further,
the document upon which defendant relies as mandating an internal
review, namely, the "Summary Plan Description," clearly applies
to the relationship between the Plan and the Plan's Members, and
not to the relationship between plaintiffs and defendant. See
Summary Plan Description, attached as Exhibit B to Plaintiffs'
Motion for Summary Judgment. Finally, the internal appeals
process is triggered by a written notice from the Plan
administrator denying payment of benefits, and defendant has
produced no evidence of such a written denial.
As to the parties' cross-motions for summary judgment on the
substantive claims, genuine issues of material fact remain that
preclude summary judgment on any claim except for defendant's
counterclaim for unjust enrichment. Unjust enrichment is an
equitable claim that, under New York law (which governs this
claim here), will not lie where the rights and relationships on
which it is premised is governed by an express contract. See,
e.g., Clark-Fitzpatrick, Inc. v. Long Island Rail Road Co.,
70 N.Y.2d 382, 388 (N.Y. 1987); Elias v. Albanese, 00 Civ.
2219, 2000 U.S. Dist. LEXIS 11929, at *13 (S.D.N.Y. Aug. 21, 2000). Here, it is
undisputed that the Agreement fully governs the rights and
relationships on which the unjust enrichment counterclaim is
premised. Accordingly, that counterclaim must be dismissed.
In sum, the Court hereby grants plaintiffs' motion for summary
judgment dismissing defendant's unjust enrichment counterclaim,
and hereby denies the parties' summary judgment motions in all
other respects. The parties are reminded that trial will commence
promptly at 9 a.m. on September 6, 2005 in Courtroom 14-B, 500
Pearl Street, New York, NY.
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