United States District Court, E.D. New York
District Photo Inc. Health Care Plan, Plaintiff,
Dimitri Pyrros, M.D. and Zelen Pyrros, M.D., P.C., Defendants.
Plaintiff is represented by Alyse B. Heilpern and Gloria B.
Cherry of Braff, Harris & Su-koneck
Defendants are represented by Mark I. Fishman and Simon I.
Allen-tuch of Neubert, Pepe & Monteith, P.C.
MEMORANDUM AND ORDER
F. BIANCO United States District Judge
December 2, 2015, the Court denied both parties'
respective motions for summary judgment in an oral ruling
(the “Oral Ruling”). By motion filed February 11,
2016, defendants Dr. Dimitri Pyrros (“Dr.
Pyrros”), a thoracic surgeon, and his practice, Zelen
Pyrros, M.D., P.C. (“Zelen Pyr-ros”)
(collectively, “defendants”), requested that the
Court reconsider the Oral Ruling in light of Montanile v.
Board of Trustees of the National Elevator Industry Health
Benefit Plan, 136 S.Ct. 651 (2016), which abrogated the
case on which this Court relied in initially denying summary
judgment. See Id. (abrogating Thurber v. Aetna
Life Insurance Company, 712 F.3d 654 (2d Cir. 2013)).
The Court granted the motion for reconsideration. See
Dist. Photo Inc. v. Pyrros, No. 13-CV-4285(JFB)(SIL),
2016 WL 5407869, at *1 (E.D.N.Y. Sept. 28, 2016).
now move for attorneys' fees against plaintiff, arguing
that they prevailed on the merits and that the factors
enunciated in Chambless v. Masters, Mates & Pilots
Pension Plan, 815 F.2d 869 (2d Cir. 1987) favor an award
of fees. For the reasons set forth below, the Court, in its
discretion, denies the motion in its entirety.
Court assumes the parties' familiarity with the facts of
this case, which were set forth more fully on the record in
the Oral Ruling. (ECF No. 33 (“Ruling Tr.”).) The
Court reserves recitation of the relevant facts for the
30, 2013, plaintiff District Photo Inc. Health Care Plan
(“the Plan” or “plaintiff”), brought
this action, naming Dr. Pyrros and Zelen Pyrros as
defendants, pursuant to the Employment Retirement Income
Security Act (“ERISA”), 29 U.S.C. §
1132(a)(3), seeking restitution of overpaid benefits in the
amount of $140, 400, and alleging breach of contract and
unjust enrichment. In their October 18, 2013 Answer,
defendants asserted a counterclaim seeking to recover
additional funds not paid under settlement agreements with
9, 2014, both plaintiff and defendants filed their respective
motions for summary judgment. On December 2, 2015, the Court
granted defendants' motion for summary judgment to the
extent plaintiff sought to bring state law claims and denied
the cross-motions in all other respects. In denying summary
judgment with respect to plaintiff's ERISA claim, the
Court concluded that the Plan Document's provision
reserving the right to recover plan assets paid out by
mistake created an equitable right, and then reasoned that,
under Thurber, 712 F.3d 654, a claim for the return
of overpaid benefits constitutes an action appropriate for
equitable relief under 29 U.S.C. § 1132(a)(3). (Ruling
Tr. at 8-10.) The Court further noted that, under
Thurber, it was irrelevant that the money had not
been separated from general funds or could have been
dissipated. (Id. at 8-9.) The Court went on to
conclude that issues of fact existed as to whether the
initial payments to defendants were made in violation of the
Plan, given that the parties disputed whether Dr. Pyrros
served as a primary or assistant surgeon during the relevant
procedure. (Id. at 12-14.) As for defendants'
argument that plaintiff had settled via the letter agreements
(the “Settlement Letters”), the Court reasoned
that, under both ERISA and the Plan Document, if the
Administrator's payments clearly violated the Plan,
“ERISA would trump any agreement with the administrator
related to overpayment [and] would preempt any contractual
agreement that is plainly contrary to the plan terms.”
(Id. at 16.) Thus, the disputed issue of fact on Dr.
Pyr-ros's role in the surgery precluded summary judgment
on the basis of the Settlement Letters. (Id. at
Supreme Court subsequently abrogated Thurber.
See Montanile, 136 S.Ct. at 656 n.2, 658. Defendants
then brought a motion for reconsideration, arguing that they
were entitled to summary judgment based on the abrogation of
Thurber. (ECF No. 35-1 at 3-6.) They also argued,
for the first time, that (1) the alleged overpayment
did not create an “equitable lien” based upon
additional the language of the Plan Document; and (2) the
Settlement Letters did not violate the Plan because the Plan
Document's provision regarding “Emergency
Care” authorized the alleged overpayments. (Compare
Id. at 9- 11 (no equitable lien), 13-15 (payments
authorized by “Emergency Care” provision),
with ECF Nos. 19, 22, 25 (no mention of these
Memorandum and Order dated September 28, 2016 (the
“Reconsideration Order”), this Court granted the
motion for reconsideration. See Pyrros, 2016 WL
5407869, at *1. After concluding that Mon-tanile did
in fact abrogate Thurber, this Court found that
plaintiff did not have a claim for equitable relief under
Montanile because the funds from the settlement
payments to defendants were not traceable. Id. at
*2-3; see also Montanile, 136 S.Ct. at 658
(“[A] plaintiff [can] ordinarily enforce an equitable
lien only against specifically identified funds that remain
in the defendant's possession or against traceable items
that the defendant purchased with the funds (e.g.,
identifiable property like a car). A defendant's
expenditure of the entire identifiable fund on nontraceable
items (like food or travel) destroys an equitable
lien.”). The Court further held that the Plan Document
does not provide that “excess payments would be subject
to an equitable lien” because the “Rights of
Recovery section includes no . . . language regarding an
equitable lien or constructive trust, ” even though
another section of the Plan did so. Pyrros, 2016 WL
5407869, at *4-5. Moreover, the Court found that the alleged
overpayment did not violate the Plan Document because, under
the Plan Document's Medical Benefit section, emergency
care is paid “at the In-Network level of
benefits” for out-of-network providers such as
defendants, the “In-Network” reimbursement rate
for surgery is 90%, and defendants provided emergency care to
the beneficiary. Id. at *5 (quoting Plan Document
and Summary Plan Description, Ex. 1 to Fishman Aff., ECF No.
19-2 (“Plan Document and Summary Plan
Description”), at 24.) This entitled them to 90%
reimbursement. Id. Because they received $325, 500
through the Settlement Letters on a bill of $405, 000, the
Settlement Letters plainly complied with the Plan.
Id. Finally, the Court pointed out that, under the
Plan Document, the “Plan Administrator has the sole and
absolute discretion to construe and interpret the provisions
and terms of the plan, to resolve any disputes which may
arise under the plan and otherwise determine the operation
and administration of the plan.” Id. at *6.
(quoting Plan Document and Summary Plan Description at 61).
As such, the Court concluded that, “because by the
express terms of the Plan Document, the administrator had the
sole and absolute discretion to resolve the dispute with
Zelen Pyrros, the alleged overpayment [did] not violate the
Plan Document.” Id. For these reasons, the Court
granted summary judgment in defendants' favor.
this Court's decision on defendants' motion for
reconsideration, defendants filed the present motion for
attorneys' fees on November 1, 2016. (ECF No. 46.)
Plaintiff filed an opposition on November 18, 2016 (ECF No.
48), and defendants replied on December 6, 2016. (ECF No.
49.) The Court heard oral argument on January 3, 2017 and
requested supplemental briefing. (ECF No. 51.) Defendants
filed a supplemental brief on January 11, 2017, plaintiff
responded on January 16, 2017, and defendants replied on
January 31, 2017. (ECF Nos. 53, 55, 56.) The Court has fully
considered the parties' submissions.
argue that the Court should award attorneys' fees because
they succeeded on the merits of their summary judgment motion
and the Chambless factors favor an award of fees. As
set forth below, the Court concludes that, although
defendants did succeed on the merits, the Chambless
factors weigh ...