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Central States, Southeast and Southwest Areas Health and Welfare Fund v. Gerber Life Ins. Co.

United States District Court, S.D. New York

November 26, 2013

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREA HEALTH, AND WELFARE FUND, an Employee Welfare Benefit Plan, and ARTHUR H. BUNTE, JR., a Trustee thereof, in his respective capacity, Plaintiffs,
v.
GERBER LIFE INSURANCE COMPANY, and ADMINISTRATIVE CONCEPTS, INC., Defendants

For Central States, Southeast and Southwest Areas Health and Welfare Fund, an Employee Welfare Benefit Fund, Arthur H. Bunte, Jr., a Trustee thereof, in his representative capacity, Plaintiffs: Benjamin A. Karfunkel, LEAD ATTORNEY, Herbert New & David W. New, P.C., West Caldwell, NJ; Emily E Gleason, Timothy C. Reuter, LEAD ATTORNEYS, Francis J Carey, Juyon A Ham, PRO HAC VICE, Central States Law Department, Rosemont, IL.

For Gerber Life Insurance Company, Administrative Concepts, Inc., Defendants: Alicia G. Curran, LEAD ATTORNEY, Cozen O'connor, Dallas, TX; Melissa F. Brill, LEAD ATTORNEY, Cozen O'Connor, New York, NY; Raymond A. Kresge, PRO HAC VICE, Cozen O'Connor, Philadelphia, PA.

OPINION

Page 247

OPINION AND ORDER

NELSON S. ROMÁN, United States District Judge.

This lawsuit arises from insurance claims made on behalf of seven covered individuals in connection with high school athletic injuries that they sustained while they were covered by both Central States, Southeast and Southwest Areas Health and Welfare Fund (collectively " Central States" or the " Fund" ) and Gerber Life Insurance Company (" Gerber" ). Complaint, ¶ ¶ 8-11, and at Ex. B.

Defendants move to dismiss Plaintiffs' Complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons set forth below, Defendants' motion to dismiss is GRANTED.

Background

For purposes of this motion, this Court accepts as true the facts as stated in Plaintiffs' Complaint. Central States is an employee welfare benefit plan regulated under the Employee Retirement Income Security Act of 1974 (" ERISA" ), as amended 29 U.S.C. § 1001 et seq . that provides health benefits, including medical and hospital benefits, to participants in the Teamster Industry and their dependents. Complaint ¶ 4. Gerber is a private insurance company that has sold student accident medical insurance to the same seven covered individuals through various high schools and colleges. Complaint ¶ 6. Administrative Concepts, Inc. is a third party administrator that processed all of the claims at issue for Gerber. Complaint ¶ 7.

At the time of their injuries, the covered individuals were covered as dependents (immediate family members) of the Central States' participants. Complaint ¶ 4 and Exhibit B. The covered individuals were also covered directly by Gerber through their participation in the organizations to which Gerber sold insurance.

Page 248

Complaint ¶ 6. The injuries that gave rise to the claims at issue occurred while the covered individuals were participating in high school athletic activities covered by Gerber's student accident policies. Complaint ¶ ¶ 29-35 and Exhibit B. In total, the claims brought by the covered individuals and paid by Central States equal $101,686.07. Complaint ¶ 50.

When Central States receives claims for individuals who have overlapping insurance coverage, Central States' Plan establishes rules for determining coordination of benefit (" COB" ) rights. Complaint ¶ 21. Central States' Plan COB provisions provide, in pertinent part, that overlapping insurance carriers are considered the primary insurers if they have no coordination of benefits provision in their plans, or if they provide specific risk coverage, including but not limited to, premises liability or medical benefits coverage. Id. Additionally, Central States' COB provisions state that when another plan provides benefits to a person directly, as opposed to as a dependent, the other insurer has primary responsibility. Id.

Central States' Plan also sets forth Central States' right to reimbursement for any payments in excess of benefits payable under the terms of the Plan, from any responsible persons or entities. Complaint ¶ 20. The Plan authorizes Central States' Trustees to file suit on behalf of Central States against other plans to recover any such payments. Complaint ¶ 24. In addition, the Plan authorizes Central States' Trustees to seek a judicial declaration regarding the responsibility of other plans that are primarily responsible for the payment of benefits. Complaint ¶ 24.

Under Central States' COB rules, Central States maintains that the Defendants are primarily responsible for paying the covered individuals' medical expenses. Complaint ¶ 21. In an effort to avoid hardship to the covered individuals, Central States paid their medical expenses and sought reimbursement from the defendants. Complaint ¶ ¶ 29-35. However, defendants denied Central States' demands for reimbursement and claimed that the insurance policies that they issued were accidental injury excess policies that were meant to only provide excess coverage or coverage that is secondary to that provided by Central States. Complaint, Exhibit B. Plaintiffs then filed this lawsuit to enforce the terms of Central States' plan pursuant to Section 502(a)(3) of ERISA.

Defendants have moved to dismiss on the theory that Plaintiffs have failed to state a cause of action. Specifically, Defendants assert that Plaintiffs' claims are for monetary relief, which ...


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