UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
November 14, 2006
JOHN VACCA, ET AL., PLAINTIFFS,
TRINITAS HOSPITAL, DEFENDANT.
The opinion of the court was delivered by: Joseph F. Bianco, District Judge
MEMORANDUM AND ORDER
Defendant now moves, under Federal Rule of Civil Procedure 56, for summary judgment Plaintiffs John Vacca, Mark Ruggiero, dismissing all of plaintiffs' claims. For the Dennis Perry, Alan Isaacs and Jeffrey Isaacs, reasons that follow, defendant's motion for (trustees on behalf of Health Fund 917) and summary judgment on the ERISA claims is Benefit Services of PA (third-party claims granted in its entirety. Further, the Court administrator of the Fund and agent for the exercises its discretion to decline jurisdiction trustees) (collectively, "plaintiffs") filed the over the remaining state claims, and thus instant action pursuant to the Employee dismisses the state claims without prejudice. Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1191,and Plaintiffs move under Rule 56 for New York State law, seeking recovery of an summary judgment in their favor. Plaintiffs' alleged overpayment to defendant Trinitas motion for summary judgment is denied. Hospital ("Trinitas") for medical benefits provided to a plan beneficiary.
Patient psychiatric treatment for participant under the plan at a daily rate of $550, for a Maximum of 30 days. (Id.) The participant remained hospitalized at Trinitas for 30 days Plaintiff Health Fund 917 ("the Fund") is and was discharged on June 13, 2001. (Id. ¶ a self-insured, multi-employer employee 29-30.) The total charge approved by TCS for benefit plan providing medical benefits to his stay was $16,500. (Id. ¶ 27.) approximately 2,000 employees located in New York and New Jersey. (Plaintiffs' On June 29, 2001, Trinitas billed the Fund Statement of Undisputed Material Facts ¶¶ 1- $68,553.51 for medical services that had been 2.) Plaintiffs Vacca, Ruggiero, Perry, Alan provided to participant. (Id. ¶ 31.) On August Isaacs and Jeffrey Isaacs are trustees of the 2, 2001, plaintiffs re-priced the amount due as Fund.*fn1 (Id. ¶ 3.) Benefit Services of if Trinitas were an in-network provider. (Id. Pennsylvania, Inc. is the third-party claims ¶ 32.) Benefit Services, the Fund's third-party administrator for the Fund and agent for the claims administrator, paid $55,290.13 to Trustees. (Id. ¶ 5.) Trinitas, a difference of $38,790.13 more than the pre-approved charge of $16,500 for On May 14, 2001, a participant participant's psychiatric services. (Id. ¶ 33.) ("participant") in Group 4CC of the Fund's Upon discovering the overpayment, both the healthcare plan was admitted to the Fund trustees and the Fund third-party claims emergency room of Trinitas Hospital's facility administrator contacted Trinitas in an attempt on East Jersey Street in Elizabeth, New to recover the $38,790.13 paid in error. (Id. ¶ Jersey. (Id. ¶ 16; Defendant Trinitas 34-35.) Trinitas refused to return the funds. Hospital's Response to Plaintiff's Statement (Id. ¶ 35.) of Undisputed Material Facts ¶ 16.)
B. PROCEDURAL HISTORY
All medical benefits to be provided to the participant were to be pre-approved by the On January 24, 2005, plaintiffs "CareReview" division of the Fund. (Id. ¶ commenced the instant action pursuant to 11.) Psychiatric benefits for participant were Section 502(a)(3) of ERISA, 29 U.S.C. § to be pre-approved by the "Teamsters Center 1132(a)(3). Plaintiffs also allege pendent Services" ("TCS") division of the Fund. (Id. state claims for breach of contract and unjust ¶ 12.) On May 22, 2001, Trinitas Hospital enrichment. ("Trinitas") contacted "CareReview" to obtain pre-certification for medical services that On September 12, 2006, defendant moved were being provided to participant; the request to dismiss this action for lack of subject-was denied. (Id. ¶ 25.) Trinitas then matter jurisdiction, pursuant to Federal Rules contacted TCS to obtain pre-certification for of Civil Procedure 12(h) and 12(b)(1). psychiatric services that were being provided Defendant asserted that plaintiffs' claims for to participant. (Id. ¶ 26.) TCS approved in- money damages were not cognizable under ERISA Section 502(a)(3), and therefore did.
II. SUMMARY JUDGMENT
Plaintiffs cross-moved for summary judgment on the same date. Following oral argument on October 27, 2006, this Court Defendants in the instant case move for permitted defendant to convert the motion to summary judgment against plaintiffs pursuant dismiss for lack of subject matter jurisdiction to Fed. Rule Civ. P. 56, arguing that plaintiffs to a cross-motion for summary judgment have no basis for an ERISA claim under under Fed. R. Civ. P. 56, without objection by Section 502(a)(3) because the statute only plaintiffs. On October 31, 2006, defendant provides for equitable remedies and does not Trinitas cross-moved for summary judgment permit recovery of the alleged overpayment. against plaintiffs, incorporating the arguments made in their prior pleadings.*fn2
The standards for summary judgment are pleadings, depositions, answers to summary judgment. Id. at 247-48. Thus, the interrogatories, and admissions on file, nonmoving party may not rest upon mere together with affidavits, if any, show that conclusory allegations or denials, but must set there is no genuine issue as to any material forth "concrete particulars" showing that a fact and that the moving party is entitled to trial is needed. R.G. Group, Inc. v. Horn & judgment as a matter of law." Fed. R. Civ. P. Hardart Co.,751 F.2d 69, 77 (2d Cir. 1984) 56(c); Globecon Group, LLC v. Hartford Fire (internal quotations omitted). Accordingly, it Ins. Co.,434 F.3d 165, 170 (2d Cir. 2006). is insufficient for a party opposing summary The moving party bears the burden of judgment "merely to assert a conclusion showing that he or she is entitled to summary without supplying supporting arguments or judgment. See Huminski v. Corsones,396 facts." BellSouth Telecomms., Inc. v. W.R. F.3d 53, 69 (2dCir. 2005). The court "is not Grace & Co.,77 F.3d 603, 615 (2d Cir. 1996) to weigh the evidence but is instead required (internal quotations omitted). to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in SECTION 502(a)(3) favor of that party, and to eschew credibility assessments." Amnesty Am. v. Town of West Under Section 502(a)(3) of the ERISA Hartford,361 F.3d 113, 122 (2d Cir. 2004); statute, a civil action may be brought by a Anderson v. Liberty Lobby, Inc.,477 U.S. plan participant, beneficiary or fiduciary: "(A) 242, 248, 106 S.Ct. 2505, 91 L.Ed. 2d 202 to enjoin any act or practice which violates (1986) (summary judgment is unwarranted if any provision of this subchapter or the terms "the evidence is such that a reasonable jury of the plan, or (B) to obtain other appropriate could return a verdict for the nonmoving equitable relief (i) to redress such violations party."). or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 Once the moving party has met its burden, U.S.C. § 1132(a)(3) (2006). Plaintiffs argue the opposing party "must do more than simply that this clause of ERISA permits them to show that there is some metaphysical doubt as recover the alleged overpayment made by the to the material facts . . . . [T]he nonmoving Fund to Trinitas. In this case, the question is party must come forward with specific facts whether the remedy sought by plaintiffs falls showing that there is a genuine issue for within the "appropriate equitable relief" trial." Caldarola v. Calabrese,298 F.3d 156, authorized by the statute. The complaint 160 (2d Cir. 2002) (quoting Matsushita Elec. demands repayment of the $38,790.13 Indus. Co. v. Zenith Radio Corp.,475 U.S. allegedly overpaid to Trinitas, plus interest, 574, 586-87, 106 S.Ct. 1348, 89 L.Ed. 2d attorneys' fees, and litigation costs. 538 (1986)). As the Supreme Court stated in Anderson, "[i]f the evidence is merely Money awards under Section 502(a)(3) colorable, or is not significantly probative, are only rarely permitted, and generally are summary judgment may be granted." 477 given in circumstances that are not applicable U.S. at 249-50 (citations omitted). Indeed, here. The Second Circuit has held that "the mere existence of some alleged factual compensatory and punitive damages are dispute between the parties" alone will not "never included within 'other appropriate defeat a properly supported motion for equitable relief.'" Gerosa v. Savasta & Co., Inc.,329 F.3d 317, 321 (2d Cir. 2003) depends upon the basis for the claim and the (emphasis added) (citing Lee v. Burkhart,991 nature of the remedies sought by the plaintiffs.
B. AVAILABILITY OF RELIEF UNDER F.2d 1004, 1011 (2d Cir. 1993)). Citing the Id. at 213 (internal citation omitted).
The Supreme Court's decision in Great-West Life Supreme Court distinguished equitable & Annuity Ins. Co. v. Knudson,534 U.S. 204 restitution "in the form of a constructive trust (2002), the Second Circuit cautioned against or an equitable lien" on money or property suits "purporting to seek equitable relief while belonging to the plaintiff that could be clearly also seeking monetary damages": traced to particular funds or property in the defendant's possession, from legal restitution "Almost invariably . . . suits seeking in cases "in which the plaintiff 'could not (whether by judgment, injunction, or assert title or right to possession of particular declaration) to compel the defendant property, but in which nevertheless he might to pay a sum of money to the plaintiff be able to show just grounds for recovering are suits for 'money damages,' as that money to pay for some benefit the defendant phrase has traditionally been applied, had received from him.'" Id. since they seek no more than compensation for loss resulting from Plaintiffs argue that because they can the defendant's breach of legal duty." identify the specific checks that were paid to Bowen v. Massachussetts,487 U.S. defendants, as well as the bank accounts into 879, 918-919, 108 S.Ct. 2722, 101 L. which the checks were deposited, the Ed. 2d 749 (1988) (Scalia, J., overpayment to Trinitas can be traced with dissenting). And "money damages enough particularity to establish an equitable are, of course, the classic form of legal lien over the funds. However, plaintiff's relief." Mertens v. Hewitt Associates, interpretation of equitable restitution would 508 U.S. 248, 255, 113 S.Ct. 2063, encompass nearly every payment between two 124 L.Ed. 2d 161 (1993). parties in which the source and destination of the funds paid could be identified. Plaintiff's Frommert, v. Conkright,433 F.3d 254, 270 approach was rejected by the Second Circuit (2d Cir. 2006). in Nechis v. Oxford Health Plans, Inc.,where the court held that no claim in equity could be In Gerosa, where trustees of an ERISA established where the defendant was not plan sued its actuarial firm for negligence, the required to segregate the monies upon which Second Circuit reiterated that in the case of plaintiff sought to impose a trust, and where non-fiduciary defendants, the "'only there was no allegation that the funds were conceivable equitable claim' for cash money kept in a separate account. 421 F.3d 96, 103 lies under the antique equitable remedy of (2d Cir. 2005). Similarly, there is no restitution." 329 F.3d at 321. In determining indication or argument that the alleged whether a claim for restitution may stand overpayment in this case was retained under Section 502(a)(3) of ERISA, the separately from defendant's other funds. Supreme Court noted that "not all relief Although plaintiffs have framed their claim falling under the rubric of restitution is for restitution as an equitable one, "the available in equity." Knudson,534 U.S. at gravamen of this action remains a claim for 212. Under Knudson,the determination of money compensation and that, above all else, whether restitution is legal or equitable dictates the relief available." Frommert,433 F.3d at 270; see Gerosa,329 F.3d at 321 ("In enrichment" claims to be valid under ERISA determining the propriety of a remedy, we Section 502(a)(3) involve fact patterns in must look to the real nature of the relief which a plan fiduciary seeks repayment from sought, not its label."). a beneficiary who has improperly received a windfall in violation of the plan's terms. See Unum Life Ins. v. Lynch,No. 04 Civ. 9007 (CLB), 2006 U.S. Dist. LEXIS 7160.
C. UNJUST ENRICHMENT
Plaintiffs also assert that they are entitled (S.D.N.Y. Jan. 31, 2006) (finding valid claim to recovery pursuant to federal common law for unjust enrichment where fiduciary sought because Trinitas has been "unjustly enriched" reimbursement of disability benefits pursuant by the accidental overpayment. However, to a repayment provision in its policy from a within the Second Circuit, "courts cannot turn beneficiary who had also received federal to Federal common law to fill gaps in Social Security disability payments); Blanck, ERISA's civil remedy provisions." Blanck v. No. 02 Civ. 7718, 2006 U.S. Dist. LEXIS Consolidated Edison Retirement Plan,No. 02 2460, at *6 ("[T]here is no dispute that [the Civ. 7718 (LTS) (DCF), 2006 U.S. Dist. beneficiary] wrongfully received additional LEXIS 2460, *4 (S.D.N.Y. Jan. 24, 2006); payments from the Plan as a result of clerical Gerosa, 329 F.3d at 323, n.6 ("Nor do we errors; it would thus appear that a fiduciary mean to say that common-law principles are would have a cause of action for restitution on never relevant to questions involving the Plan's behalf."). Although plaintiffs have remedies. We hold only that the limited text framed their claim as one of "unjust of ERISA's civil remedies is inconsistent with enrichment," they have failed to distinguish it judicial discovery of new liabilitites.") from an ordinary collection action; in the (internal citations omitted). As plaintiff's absence of any indication that equitable relief is limited to the civil remedies provided restitution would be an appropriate remedy, by ERISA, rather than a broader notion of recovery for such a claim is not permissible "federal common law," restitution for unjust under Section 502(a)(3). enrichment must fall within the parameters of "appropriate equitable relief" as set forth in Sereboff v. Mid Atlantic Medical Svcs., Section 502(a)(3) and defined in Knudson. Inc.,126 S.Ct. 1869, 164 L.Ed. 2d 612 See Mead v. Arthur Andersen, LLP, 309 F. (2006), cited by the plaintiffs, is inapposite. Supp. 2d 596, 599 (S.D.N.Y. 2004) ("The fact In Sereboff, the beneficiaries of an ERISA that [plaintiff's] claim is framed as an unjust plan received medical benefits following a car enrichment (versus breach of contract) does accident, then initiated a tort suit against not affect the Knudson analysis, which several third parties. Id. Pursuant to a focuses on 'nature of the relief sought,' not subrogation clause in the plan agreement, the the theory supporting that relief."). plan fiduciary asserted a lien on the anticipated proceeds from the suit, for the Plaintiff is unable to identify any cases in medical expenses that the plan had paid on the this Circuit in which equitable restitution was beneficiaries' behalf. Id. awarded to an ERISA plan fiduciary for a disputed overpayment to a health care The Supreme Court held that the plaintiffs provider. The few existing examples of could recover money damages because the Second Circuit courts finding "unjust plan fiduciary "sought its recovery through a constructive trust or equitable lien on a judicial economy, convenience, comity and specifically identified fund, not from the fairness to litigants are not violated by [plaintiffs'] assets generally." Sereboff,126 refusing to entertain matters of state law, it S.Ct. at 1874. Because the plaintiffs in should decline supplemental jurisdiction and Sereboff had asserted a lien on the anticipated allow the plaintiff to decide whether or not to tort award before it was even acquired, the pursue the matter in state court.").
Court found that the plan fiduciary was a "trustee" of the funds and had established an equitable lien pursuant to the reimbursement provision contained in the ERISA plan. Id. at For the reasons stated above, defendant's 1876-77 (holding that the action to enforce the motion for summary judgment is granted as to reimbursement provision "qualifies as an plaintiffs' ERISA claims. Further, the Court equitable remedy because it is declines to exercise jurisdiction over the indistinguishable from an action to enforce an remaining state claims. The state claims are equitable lien established by agreement"). dismissed without prejudice. Plaintiff's cross-This Court finds plaintiffs' citation of Sereboff motion for summary judgment is denied. to be unavailing, as no such lien or specific identification of funds or property is present here. Thus plaintiffs' claims under Section 502(a)(3) of ERISA are dismissed.
III. STATE CLAIMS
Having dismissed plaintiffs' federal United States District Judge claims pursuant to 29 U.S.C. 1132(a)(3), this court declines to exercise supplemental jurisdiction over the state claims alleged. 28 Dated: November 14, 2006 U.S.C. 1167(c)(3). The claims are dismissed Central Islip, NY in their entirety. This court may, in its discretion, "decline to exercise supplemental *** jurisdiction over state law claims once it has dismissed all claims over which it has original Plaintiffs are represented by Daniel T. jurisdiction." Kolari v. New York Campbell and Gene M.J. Szuflita, of Belson Presbyterian Hospital,455 F.3d 118, 121-22 Campbell & Szuflita, 11 Park Place, 10th (2d Cir. 2006) (quoting 28 U.S.C. § Floor, New York, New York 10007, as well as 1367(c)(3)) (internal quotation marks omitted) by Jane Blair Jacobs, Joan E. Rothermel, ("If the federal law claims are dismissed Laurence Jay Lebowitz and Khristan Anne before trial . . . the state claims should be Heagle, Esqs., of Klein, Zelman Rothermel & dismissed as well."); Karmel v. Liz Claiborne, Dichter LLP, 485 Madison Avenue, New Inc.,No. 99-3608, 2002 U.S. Dist. LEXIS York, New York 10022. Defendants are 12842, *11 (S.D.N.Y. Jul. 15, 2002) ("Where represented by Philip C. Chronakis and a court is reluctant to exercise supplemental Lauren Levine, Esqs., of Garfunkel, Wild & jurisdiction because of one of the reasons put Travis PC, 111 Great Neck Road, Great Neck, forth by § 1367(c), or when the interests of NY 11021.
JOSEPH F. BIANCO