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Montefiore Medical Center v. Local 272 Welfare Fund

United States District Court, S.D. New York

March 31, 2017

Montefiore Medical Center, Plaintiff,
v.
Local 272 Welfare Fund and Marc Goodman in his capacity as Fund Manager of Local 272 Welfare Fund, Defendants.

          OPINION & ORDER ADOPTING REPORT & RECOMMENDATION

          Ronnie Abrams United States District Judge.

         Plaintiff Montefiore Medical Center ("Montefiore") brought this action against Defendants Local 272 Welfare Fund and Marc Goodman, in his capacity as Fund Manager of Local 272 Welfare Fund (together the "Fund"), alleging that the Fund violated ERISA by reimbursing Montefiore for hospital services it provided to the Fund's members and their dependents at substantially lower rates than what the Summary Plan Description ("SPD" or the "Plan") requires. The parties cross-moved for summary judgment. The motions were referred to Magistrate Judge Netburn, and on December 2, 2016, she issued a Report and Recommendation (the "Report"), which recommends that Montefiore's Motion for Summary Judgment be granted and the Fund's Motion for Summary Judgment be denied. On December 16, 2016, the Fund filed objections to the Report, and on December 30, 2016, Montefiore filed its response. For the reasons that follow, the Court adopts the thorough and well-reasoned Report in its entirety.

         LEGAL STANDARDS

         I. Standard of Review of a Magistrate Judge's Report and Recommendation

         A district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1). Under Federal Rule of Civil Procedure 72(b), a party may make "specific written objections to the proposed findings and recommendations" within fourteen days of being served with a copy of a magistrate judge's recommended disposition. Fed.R.Civ.P. 72(b). A district court must review de novo "those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). "However, when the objections simply reiterate previous arguments or make only conclusory statements, the Court should review the report for clear error." Brown v. Colvin, 73 F.Supp.3d 193, 197 (S.D.N.Y. 2014). "To accept those portions of the report to which no timely objection has been made, 'a district court need only satisfy itself that there is no clear error on the face of the record.'" Hunter v. Lee, No. 13-CV-5880, 2016 WL 5942311, at *1 (S.D.N.Y. Oct. 11, 2016) (quoting King v. Greiner, No. 02-CV-5810, 2009 WL 2001439, at *4 (S.D.N.Y. July 8, 2009)).

         II. Summary Judgment

         To prevail on a motion for summary judgment, the movant must show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "An issue of fact is genuine and material if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Cross Commerce Media, Inc. v. Collective, Inc., 841 F.3d 155, 162(2dCir. 2016). "The movant bears the burden of demonstrating the absence of a question of material fact." Chaparro v. Kowalchyn, No. 15-CV-1996, 2017 WL 666113, at *3 (S.D.N.Y. Feb. 17, 2017). "When a motion for summary judgment is properly supported by documents or other evidentiary materials, the party opposing summary judgment may not merely rest on the allegations or denials of his pleading; rather his response, by affidavits or otherwise as provided in the Rule, must set forth 'specific facts' demonstrating that there is 'a genuine issue for trial.'" Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009) (quoting Fed.R.Civ.P. 56(e)). In determining whether to grant summary judgment, the Court must "constru[e] the evidence in the light most favorable to the non-moving party and draw[] all reasonable inferences in its favor." Mitchell v. City of New York, 841 F.3d 72, 77 (2d Cir. 2016) (quoting Costello v. City of Burlington, 632 F.3d 41, 45 (2d Cir. 2011)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "Where, as here, there are cross-motions for summary judgment, 'each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration.'" Lumbermens Mut. Cas. Co. v. RGIS Inventory Specialists, LLC, 628 F.3d 46, 51 (2d Cir. 2010) (quoting Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001)).

         DISCUSSION

         The Court assumes familiarity with the facts outlined in the Report. The Fund makes three objections. First, the Fund contends that Montefiore does not have standing to challenge the Fund's interpretation of the Plan. Second, it argues that Judge Netburn applied the incorrect standard of review. Third, the Fund objects to the Report's interpretation of the Plan's provision regarding out-of-network providers. See Defs' Obj. at 1. For the reasons that follow, each of these objections is unpersuasive and the Report is adopted in its entirety. The Court holds that Montefiore does have standing, that the de novo standard of review is the appropriate one, and that Judge Netburn was correct in concluding that pursuant to the SPD, in calculating payment owed to out-of-network providers, "the Fund needs to determine what it pays its various in-network providers for a particular service, and then select the 'maximum, ' or highest, amount." Report at 13.

         I. Standing

         As an initial matter, the Fund argues that Montefiore does not have standing as the assignee of the Fund's participants to "object to [the] plan's interpretation rather than its plan provisions." Defs' Obj. at 13. The Court disagrees.[1]

         The Second Circuit has held that "a narrow exception to the ERISA standing requirements .... grants standing ... to healthcare providers to whom a beneficiary has assigned his claim in exchange for health care." Simon v. Gen. Elec. Co., 263 F.3d 176, 178 (2d Cir. 2001); see also I.V. Servs. of Am., Inc. v. Trustees of Am. Consulting Eng'rs Council Ins. Trust Fund, 136 F.3d 114, 117 n.2 (2d Cir. 1998) ("[U]nder federal common law, the assignees of beneficiaries to an ERISA-governed insurance plan have standing to sue under ERISA."). Nonetheless, Defendants contend that Montefiore does not have standing in this case because it is challenging "the Fund's interpretation of its SPD." Defs' Obj. at 13. In so doing, however, they cite no case law for the proposition that a healthcare provider cannot stand in the shoes of beneficiaries when advancing arguments regarding a plan's interpretation. Indeed, in I. V. Services of America, Inc., the Second Circuit held that a healthcare provider, "standing in [the beneficiary's] shoes" could raise arguments regarding the interpretation of a plan. 136 F.3d at 121-22 ("Mr. Whitehurst (or I.V. Services [the provider] standing in his shoes) should be able to claim that any contract ambiguities are to be interpreted against appellees who wrote the contract.")- The Court is thus satisfied that Montefiore has standing to raise the issues and arguments presented here.

         II. Standard of Review

         The Fund next argues that Judge Netburn erred by applying the de novo standard of review to the Fund's interpretation of the SPD. Defs' Obj. at 6-11. As the Report rightly recognized, the SPD contains an express grant of discretionary authority to the Board of Trustees, which would ordinarily mean that a court could reverse the administrator's decision only if the decision is arbitrary and capricious. Report at 8; see Firestone Tire & Rubber Co. v. Bruch,489 U.S. 101, 115 (1989); Zervos v. Verizon N.Y., Inc.,277 F.3d 635, 650 (2d Cir. 2002). Nonetheless, the Report concluded that de novo review should be applied in this case pursuant to the Second Circuit's decision in Halo v. Yale Health ...


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