The opinion of the court was delivered by: H. Kenneth Schroeder, Jr. United States Magistrate Judge
In accordance with 28 U.S.C. § 636(c), the parties have consented to have the undersigned conduct all further proceedings in this case, including entry of final judgment. Dkt. #23.
Currently before the Court is Third Party Defendant HealthNow New York, Inc.'s ("HealthNow's"), motion for summary judgment and attorney's fees. Dkt. #17. For the following reasons, HealthNow's motion is granted in part.
On July 27, 1993, Wayne Gang was injured while working in the course of his employment at Outokumpu American Brass ("American Brass"), sustaining partial amputation of both of his feet. Dkt. #36, ¶ ¶ 4-5. Mr. Gang commenced a personal injury action against the manufacturer of the machine involved, ADS Machinery Corp. ("ADS Machinery"), which impleaded Mr. Gang's employer, American Brass. Dkt. #36, ¶¶ 6-7. The action was settled before trial for the sum of $1,130,000, with American Brass waiving its Workers' Compensation lien but exercising its right of offset.*fn1 Dkt. #36, ¶ 9; Dkt. #38, ¶ 5.
Mr. Gang's wife, Margaret Gang, affirms that she discussed her husband's work-related injury with representatives of HealthNow, doing business as Blue Cross & Blue Shield of Western New York ("Blue Cross"), and was advised that her husband could "obtain full coverage under [her] family coverage" through her employer, Mercy Hospital. Dkt. #37, ¶ 6. In reliance upon this representation, Mrs. Gang obtained health insurance coverage for her husband through her employer's plan with Blue Cross. Dkt. #37, ¶ 8.
The health benefits contract contains the following exclusion:
Workers' Compensation. We will not pay for any injury, condition or disease if payment is available under a Workers' Compensation Law or similar legislation. We will not make any payments even if you do not claim the benefits you are entitled to receive under the Workers' Compensation Law. Also, we will not make payments even if you bring a lawsuit against the person who caused your injury or condition and even if you receive money from that lawsuit and you have repaid the hospital and other medical expenses you received payment for under the Workers' Compensation Law or similar legislation.
Dkt. #12, ¶ 6; Dkt. #13-2, p.23; Dkt. #38, ¶ 6. The health benefits contract also provides that any lawsuit against HealthNow pursuant to the contract must be commenced within one year from the date the service was provided. Dkt. #13-2, p.33. In addition, the health benefits contract affords HealthNow the right to develop or adopt standards which describe in more detail when we will make or will not make payments under this Contract and administrative rules pertaining to enrollment and other administrative matters. We shall have all the powers necessary or appropriate to enable us to carry out our duties in connection with the administration of this Contract, including without limitation thereto, the power to conduct utilization review and quality review, the power to construe this Contract, to determine all questions arising under this Contract and to make and establish (and thereafter change) rules and regulations and procedures with respect to this Contract. If you have a question about the standards which apply to a particular benefit or the administrative rules, you may contact us and we will explain the standards or rules.
By letter dated September 21, 1999, HealthNow advised Mr. and Mrs. Gang that it would not provide benefits for "any services rendered which are related to the injury or condition as a result of Workers' Compensation case number 094-94082." Dkt. #14-2, p.27. On May 19, 2000, Mr. Gang obtained an Order to Show Cause from the Hon. Patrick NeMoyer, Justice of the Supreme Court of the State of New York, ordering HealthNow to show cause why Mr. Gang should not be provided "unrestricted medical insurance coverage, including treatment related to and for his partial feet [sic] and the injuries sustained while an employee of American Brass . . . ." Dkt. #14-2, pp.1-2. HealthNow moved the action to the United States District Court for the Western District of New York on June 2, 2000, and moved to dismiss the order to show cause. Dkt. #14-3, p.1. The transcript of the proceeding before the Hon. William M. Skretny, U.S.D.J., on July 28, 2000, reveals that Mr. Gang withdrew his application, resulting in the dismissal of the action. Dkt. #14-7.
Plaintiff, Buffalo Anesthesia Associates, P.C. ("Buffalo Anesthesia"), commenced this action against defendant, Wayne Gang, by Summons and Complaint filed in Buffalo City Court, seeking payment of $840.00, plus interest at 9% from September 24, 2001, for services rendered. Dkt. #1-3, pp.3-4. Mr. Gang and HealthNow agree that the services rendered by Buffalo Anesthesia related to Mr. Gang's feet. Dkt. #12, ¶ 3; Dkt. #38, ¶ 3. HealthNow asserts that it denied payment for this treatment because Mr. Gang was eligible for payment for this condition affecting his amputated feet, and in fact received payment for this condition, under the Workers' Compensation Law. Mr. Gang accepted a Workers' Compensation settlement for the injury to his lower legs and feet. Under the Health Benefits Contract, Mr. Gang is responsible for medical bills for treatment related to the injuries he sustained to his lower legs and feet during the course of his employment, not HealthNow.
Dkt. #13, ¶ 9. HealthNow affirms that Mr. Gang was sent an Explanation of Benefits dated October 11, 2001, informing him that the treatment provided by Buffalo Anesthesia was not covered under the health benefits contract because the injury was "eligible for workers' compensation" and that Mr. Gang did not appeal HealthNow's denial. Dkt. #13, ¶ 10; Dkt. #13-4, p.4.
On February 23, 2005, Mr. Gang commenced a third party action against Healthnow, alleging that he was insured by HealthNow at the time the health services were provided to him by Buffalo Anesthesia and that HealthNow breached its contract by failing to ...