Court Opinion

ID: 4152146
Source: CourtListenerOpinion
Date Created: 2017-03-13 20:01:02.717618+00
Date Added: 2024-06-11T07:46:33.425881
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            MAR 13 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

MedCath Employment Health Care Plan,             No.   15-15267

              Plaintiff-Appellant,               D.C. No.
                                                 CV-14-08099-PCT-NVW
 v.

Dustin Stratton, et al.,                         MEMORANDUM*

              Defendants-Appellees.

                    Appeal from the United States District Court
                             for the District of Arizona
                      Neil V. Wake, District Judge, Presiding

                      Argued and Submitted February 14, 2017
                             San Francisco, California

Before: GOULD and BERZON, Circuit Judges, and GARBIS,** District Judge.

      MedCath Incorporated Health Care Plan (“the Plan”), which is governed by

ERISA, 29 U.S.C. § 1001 et seq., asserts a right of subrogation to settlement

proceeds from a wrongful death action brought by the surviving children and

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Marvin J. Garbis, United States District Judge for the
District of Maryland, sitting by designation.
mother of Ms. Tracie Stratton. See 29 U.S.C. § 1132(a)(3). The Plan appeals the

district court’s order dismissing its complaint with prejudice for failure to state a

claim. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

      1.     Ms. Stratton was insured by the Plan and, prior to her death, filed a

medical malpractice claim in state court for alleged negligent care. After Ms.

Stratton died, the Stratton family intervened in Ms. Stratton’s suit and replaced the

medical malpractice claim with a wrongful death action pursuant to Arizona

Revised Statutes § 12-612(A). The Plan was notified of this action and did not

seek to intervene to present a claim on behalf of Ms. Stratton’s estate (the “Estate”)

as subrogee. The family eventually settled its claim.

             We agree with the district court’s conclusion that the Plan’s

contractual rights of subrogation do not apply to the settlement received by the

family because the settlement did not compensate the family for Ms. Stratton’s

injuries or medical expenses. See Barragan v. Super. Ct. of Pima Cty., 470 P.2d
722, 725 (Ariz. Ct. App. 1970) (“[W]here a death statute provides a new right of

action, not based on survival, and makes no specific provision for recovery of

medical expenses, they are not recoverable by a beneficiary unless he has paid

them or is liable therefor.”); see also Gartin v. St. Joseph’s Hosp. & Med. Ctr., 749
P.2d 941, 943–44 (Ariz. Ct. App. 1988) (holding that a decedent’s liabilities,

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including a hospital lien to secure payment for services, do not attach to settlement

proceeds paid for a wrongful death claim not brought on behalf of the decedent’s

estate). A wrongful death action is “original and distinct,” not a “continuation of a

claim existing in the decedent.” Barragan, 470 P.2d at 724. Thus the Plan is not

entitled to any part of the family’s recovery and has failed to state any ERISA

claim.

         2.   The Plan also argues that its right of subrogation remains against the

Estate; however, the Plan did not allege that the Estate received any settlement

proceeds. The Estate was not a party to the wrongful death action, nor did it

continue the medical malpractice action under the Arizona survival statute.

         3.   The district court correctly held that further amendment would be

futile. The Plan was put on notice that the Estate was not continuing the survival

action on behalf of Ms. Stratton. Pursuant to the terms of the subrogation

provision, the Plan then had the opportunity to present a claim in the Estate’s place.

See Medical, Prescription Drug and Vision Plan at 51 (“This assignment allows the

Plan to pursue any claim that the Covered Person may have, whether or not the

Covered Person chooses to pursue that claim.”). The Plan failed to exercise its

right to pursue a claim for medical expenses on behalf of the Estate in state court.

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Any amendment to the complaint in this case could not cure that failure, and so

would be futile.

      AFFIRMED.

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