Court Opinion

ID: 2970976
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:26:13.09271+00
Date Added: 2024-06-11T15:01:25.686619
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RECOMMENDED FOR FULL-TEXT PUBLICATION
                Pursuant to Sixth Circuit Rule 206                        2     Community Health Plan                       No. 01-4095
        ELECTRONIC CITATION: 2003 FED App. 0372P (6th Cir.)                     of Ohio v. Mosser
                    File Name: 03a0372p.06
                                                                                              _________________
UNITED STATES COURT OF APPEALS                                                                     COUNSEL
                  FOR THE SIXTH CIRCUIT                                   ARGUED: J. Gerard Swank, SWANK & ASSOCIATES,
                    _________________                                     Newark, Ohio, for Appellant. Daran P. Kiefer, KREINER
                                                                          & PETERS, Cleveland, Ohio, for Appellee. ON BRIEF:
 COMMUNITY HEALTH PLAN             X                                      J. Gerard Swank, SWANK & ASSOCIATES, Newark,
 OF OHIO ,                          -                                     Ohio, William F. Goodrich, GOODRICH, GOODRICH &
             Plaintiff-Appellee, -                                        LAZZARA, Pittsburgh, Pennsylvania, for Appellant.
                                    -  No. 01-4095                        Daran P. Kiefer, Ted M. Traut, KREINER & PETERS,
                                    -                                     Cleveland, Ohio, for Appellee.
            v.                       >
                                    ,                                                         _________________
                                    -
 JOSEPH J. MOSSER,                  -                                                             OPINION
          Defendant-Appellant. -                                                              _________________
                                    -
                                   N                                        GWIN, District Judge. With this appeal, we examine
       Appeal from the United States District Court                       whether the district court erred when it granted Plaintiff-
      for the Southern District of Ohio at Columbus.                      Appellee Community Health Plan of Ohio (“CHPO”)
     No. 99-00961—George C. Smith, District Judge.                        summary judgment on its claims for specific performance
                                                                          and restitution against Defendant-Appellant Joseph J.
                   Argued: February 6, 2003                               Mosser (“Mosser”).

             Decided and Filed: October 21, 2003                            In reviewing Mosser’s appeal, we first consider whether
                                                                          the federal courts have jurisdiction over this case. Under
   Before: SILER and ROGERS, Circuit Judges; GWIN,                        the recent United States Supreme Court decision in Great-
                    District Judge.*                                      West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204,
                                                                          122 S. Ct. 708, 151 L. Ed. 2d 635 (2002), federal subject
                                                                          matter jurisdiction does not exist in this matter, and
                                                                          therefore, this case is not properly before the federal courts.
                                                                          Finding that the district court did not have jurisdiction over
                                                                          this case, we REVERSE and REMAND this case with
                                                                          directions that the district court dismiss this case for lack of
                                                                          subject matter jurisdiction.
    *
     The Ho norable James S. Gwin, United States District Judge for the
Northern District of Ohio, sitting by designation.

                                  1
No. 01-4095                    Community Health Plan        3    4    Community Health Plan                     No. 01-4095
                                   of Ohio v. Mosser                  of Ohio v. Mosser

  This case arises from efforts by an insurance company,         “Plan”). In this case, CHPO sued Mosser, a Plan
CHPO, to enforce its plan’s subrogation provision. The           participant, in the U.S. District Court for the Southern
subrogation provision requires those insured by CHPO to          District of Ohio, requesting specific performance and
cooperate with CHPO in its efforts to recover amounts            restitution. With its lawsuit, CHPO sought to recover
CHPO paid on the insured’s behalf. Although the                  medical benefits that CHPO paid on Mosser’s behalf.
subrogation provision states no explicit obligation to           Mosser incurred the medical expenses as a result of injuries
reimburse the insurer for monies received from tortfeasors,      he sustained in an automobile accident.
CHPO says such a duty should be found in the subrogation
provision.                                                         CHPO claimed that the Plan’s provision titled
                                                                 “Subrogation” gave CHPO the right to recover the money
  Appellant Mosser says that under the Supreme Court’s           paid on Mosser’s behalf because Mosser recovered money
recent holding in Great-West Life, the district court, and       in a settlement with the alleged tortfeasor. Responding to
this court, do not have jurisdiction to entertain this action.   CHPO’s complaint, Mosser asserted a counterclaim for bad
Arguing that federal courts are courts of limited                faith. Both parties moved for summary judgment. The
jurisdiction, not courts of general jurisdiction, Mosser says    district court granted CHPO summary judgment on its
that district courts are empowered to hear only those cases      claim for specific performance and restitution, and denied
that the Constitution and Congress have given them               Mosser summary judgment on his bad faith claim. Mosser
jurisdiction over. Insurance Corp. of Ireland, Ltd. v.           appeals the district court’s grant of the defendant’s motion
Compagnie des Bauxites de Guinee, 456 U.S. 694, 701, 102         for summary judgment. He does not appeal the district
S. Ct. 2099, 72 L. Ed. 2d 492 (1982); Sweeton v. Brown, 27       court’s denial of his motion for summary judgment on the
F.3d 1162, 1167 (6th Cir. 1994) (“Federal courts are courts      bad faith claim.
of limited jurisdiction and are empowered to hear only such
cases as are within the judicial power of the United States         In his appeal, Mosser claims that Pennsylvania law
as defined in Article III, § 2 of the Constitution.”).           applies to this matter and prohibits CHPO from obtaining
                                                                 subrogation or reimbursement from Mosser. Mosser also
  While Mosser denies that the district court had                claims that the Plan precludes CHPO from recovering the
jurisdiction over this action, Mosser says that even if the      funds it paid Mosser because the Plan’s “Subrogation
district court had jurisdiction, it incorrectly found the        Provision” is both ambiguous and not a reimbursement
subrogation provision required reimbursement. In addition,       provision. CHPO claims it is entitled to recover the funds
Mosser says the district court wrongly found that the            because Ohio law applies to this matter and the applicable
subrogation provision gave explicit notice that CHPO             Ohio law is preempted by ERISA. CHPO further argues
claimed a priority right to proceeds recovered from third-       that the plan’s subrogation provision is not ambiguous and
party tortfeasors and that CHPO claimed this right even          is, in fact, also a reimbursement provision.
when the injured insured had not been made whole for his
damages.                                                                                   History

 CHPO, an Ohio company, insures the Licking Memorial              On October 1, 1995, Joseph J. Mosser, an Ohio resident,
Hospital through its Employee Health Benefit Plan (the           was involved in an automobile accident in Murrysville,
No. 01-4095                  Community Health Plan           5   6     Community Health Plan                        No. 01-4095
                                 of Ohio v. Mosser                     of Ohio v. Mosser

Westmoreland County, Pennsylvania. A negligent                      On August 30, 2001, the district court awarded CHPO
Murrysville police officer caused the accident when he ran       summary judgment on its claims against Mosser. Mosser
a red light. As a result of the accident, Mosser sustained       filed a timely notice of appeal.
severe personal injury.
                                                                                       Standard of Review
  At the time of the accident, CHPO insured Mosser as a
Licking Memorial Employee Health Benefit Plan covered               We review the district court’s summary judgment
participant. As a covered participant, CHPO paid most of         decision de novo. Flint v. Kentucky Dep’t of Corr., 270
Mosser’s hospital and medical expenses. CHPO says it             F.3d 340 , 346 (6th Cir. 2001). Summary judgment is
paid $261,267.27 in medical expenses on Mosser’s behalf.         proper where no genuine issue of material fact exists and
                                                                 the moving party is entitled to judgment as a matter of law.
  Mosser later settled his claims against the City of            Fed. R. Civ. P. 56(c). In considering such a motion, the
Murrysville (the “Murrysville Settlement”). After the            court must view the evidence and draw all reasonable
Murrysville Settlement, Mosser did not reimburse CHPO            inferences in favor of the nonmoving party. Matsushita
for the monies that CHPO had paid on his behalf. In              Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587,
September 1999, CHPO filed a breach of contract claim            89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The central issue
against Mosser requesting specific performance and               is “whether the evidence presents a sufficient disagreement
restitution for medical payments made by CHPO on                 to require submission to a jury or whether it is so one-sided
Mosser’s behalf.                                                 that one party must prevail as a matter of law.” Anderson
                                                                 v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 91 L. Ed. 2d
  CHPO based its specific performance and restitution            202, 106 S. Ct. 2505 (1986).
claims on a provision within the CHPO Plan which states:
                                                                                            Analysis
                    SUBROGATION
                                                                   Defendant-Appellant Mosser raised the issue of subject
  CHPO has a right of recovery against any person, firm          matter jurisdiction for the first time in his reply brief. We
  or organization for medical, hospital or other health          generally will not hear issues raised for the first time in a
  services provided by the Plan to you or your                   reply brief. United States v. Crozier, 259 F.3d 503, 517
  Dependents. This applies to any money recovered by             (6th Cir. 2001). “Court decisions have made it clear that
  suit, settlement or otherwise. You must cooperate with         the appellant cannot raise new issues in a reply brief, he can
  the plan in all actions necessary to do this. If legal         only respond to arguments raised for the first time in
  collection costs are incurred on a contingency fee             appellee’s brief.” Id. (quoting United States v. Jerkins, 871
  basis, these costs will be deducted before the                 F.2d 598, 602 n.3 (6th Cir. 1989)).
  remaining sum is distributed to the Plan and the
  Enrollees.                                                       Despite the general rule that we will not hear issues
                                                                 raised for the first time in a reply brief, “[t]he existence of
                                                                 subject matter jurisdiction, moreover, is an issue that may
                                                                 be raised at any time, by any party or even sua sponte by
No. 01-4095                           Community Health Plan                7    8      Community Health Plan                                 No. 01-4095
                                          of Ohio v. Mosser                            of Ohio v. Mosser

the court itself.” Ford v. Hamilton Inv., Inc., 29 F.3d 255,                      To be authorized under § 1132(a)(3), CHPO’s claim must
257 (6th Cir. 1994). Any court may address the issue of                         be one “(A) to enjoin any act or practice which violates any
subject matter jurisdiction at any time, with or without the                    provision of this subchapter or the terms of the plan, or (B)
issue being raised by a party to the action. In re Millers                      to obtain other appropriate equitable relief (i) to redress
Cove Energy Co., Inc., 128 F.3d 449, 450 (6th Cir. 1997).                       such violations or (ii) to enforce any provisions of this
Therefore, we will hear Mosser’s subject matter jurisdiction                    subchapter or the terms of the plan.” Cmty. Ins. Co. v.
issue despite the fact that he raised it for the first time in his              Morgan, No. 99-6669, 2002 WL 31870325 at *11 (6th Cir.
reply brief.                                                                    Dec. 20, 2002).
  The Employee Retirement Income Security Act                                     CHPO, like Great-West in Knudson, does not seek
(“ERISA”) does not authorize actions brought by ERISA                           equitable relief, but rather “seek[s] legal relief – the
plan fiduciaries against plan beneficiaries to enforce plan                     imposition of . . . liability on respondents for a contractual
reimbursement provisions through money damages. Great-                          obligation to pay money.” Knudson, at 221; see also Cmty.
West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204,                          Ins. at *12. In Knudson, the Supreme Court noted that “the
122 S. Ct. 708, 151 L. Ed. 2d 635 (2002). In Knudson, an                        term ‘equitable relief’ in [29 U.S.C. § 1132(a)(3)] must
ERISA plan fiduciary brought an action against a plan                           refer to ‘those categories of relief that were typically
beneficiary to enforce a reimbursement provision in the                         available in equity. . . .’” Id. at 210 (quoting Mertens v.
plan and to compel that beneficiary to make restitution to                      Hewitt Assoc., 508 U.S. 248, 256 (1993)).
the plan from a recovery that she obtained from a
third-party tortfeasor. Id. The Supreme Court held that                            Mosser, like the petitioners in Knudson, seeks restitution.
when a fiduciary seeks to impose personal liability on a                        Id. at 212. In determining that the insurer’s restitution
plan beneficiary for a contractual obligation to pay money,                     claim was not cognizable under § 1132(a)(3), the Supreme
the action is an action at law, not an action in equity. Id. at                 Court in Knudson distinguished between restitution in
209-10. Since 29 U.S.C. § 1132(a)(3) only authorizes                            equity and restitution at law. Id. at 212-15. As the Court
actions seeking equitable relief, ERISA does not provide                        noted, “whether [restitution] is legal or equitable depends
jurisdiction for fiduciaries seeking to enforce a contract’s                    on ‘the basis for [the plaintiff’s] claim’ and the nature of
reimbursement provisions through money damages. Id. at                          the underlying remedies sought.” Id. at 213 (second
209-10.1                                                                        alteration in original) (quoting Reich v. Cont’l Cas. Co., 33
                                                                                F.3d 754, 756 (7th Cir. 1994)).

    1
      See also Cmty. Ins. Co. v. Morgan, No. 99-6669, 2002 WL
31870325 (6th C ir. Dec. 20, 200 2). Comm unity Insurance involved an               W e hold that Community, like Great-West, does not seek
Administrator of a motorist's health insurance plan filing suit under               equitable relief, but rather “seek[s] legal relief – the imposition
ERISA against the mo torist, the tortfeaso r, and the mo torist's autom obile       of . . . liability on respondents for a contractual obligation to pay
insurer. Id. at *2. The Ad ministrato r sought reimb ursem ent for b enefits        mon ey.” Knudson, 122 S. Ct. at 719. For that reason, as was the
paid by plan to motorist to cover his medical expenses resulting from               case with Great-W est, § 1132 (a)(3) does not authorize this
injuries he incurred in the moto r vehicle accident. Id. In deciding                action.
Comm unity Insurance, this Court held:
                                                                                Id. at *12.
No. 01-4095                           Community Health Plan               9    10       Community Health Plan                             No. 01-4095
                                          of Ohio v. Mosser                             of Ohio v. Mosser

  At oral argument, CHPO argued that subrogation is an                         remedies contemplated a situation in which “money or
equitable remedy, and therefore, its personal liability suit                   property identified as belonging in good conscience to the
against Mosser is justified. CHPO’s claim, however,                            plaintiff could clearly be traced to particular funds or
cannot be considered a subrogation claim. Equitable                            property in the defendant’s possession.” Knudson, 534
subrogation, also known as legal subrogation, is an                            U.S. at 213. CHPO did not, in its complaint, allege that it
equitable remedy that prevents the unjust enrichment of a                      had given certain funds to Mosser, trace those funds to the
defendant-obligor. Restatement (First) of Restitution § 162                    settlement funds from Murraysville, allege that Mosser was
(1937); 1 Dan B. Dobbs, Law of Remedies § 4.3(4) (2d ed.                       unjustly enriched by retaining the settlement funds, and
1993) (hereinafter Dobbs). Unjust enrichment is prevented                      seek the return of the settlement funds in Mosser’s
by granting the plaintiff a right to exercise those remedies                   possession.4 Rather, CHPO sought “restitution from the
that the obligee had before the obligation was discharged.                     Defendant for all covered services.” (R.1, Complaint, ¶ 13,
See Restatement (First) of Restitution § 162 cmt. a; 1                         J.A. at 9). Thus, the basis of CHPO’s claim was not an
Dobbs § 4.3(4). Applying that remedy here, CHPO would                          assertion of the right to possess certain settlement funds,
be granted Mosser’s rights against the city of Murraysville,                   but essentially a claim in contract (actual or implied) to
not a judgment of personal liability against Mosser.2 Thus,                    impose personal liability on Mosser. Such a claim is
the nature of equitable subrogation as a remedy, and the                       restitution at law and is not within the scope of §
parties involved, would not justify judgment against                           1132(a)(3). Knudson, 534 U.S. at 212-13.
Mosser under § 1132(a)(3).3
                                                                                 As CHPO’s claim is outside the scope of § 1132(a)(3),
  Nor would CHPO’s restitution claim be cognizable under                       subject matter jurisdiction is not proper under § 1132(e).
§ 1132(a)(3) as a claim for either a constructive trust or an                  See 29 U.S.C. § 1132. CHPO’s claim did not implicate any
equitable lien. As the Knudson court noted, at equity these                    other ERISA subsection that would permit this action, and
                                                                               federal question jurisdiction does not exist under 28 U.S.C.
                                                                               § 1331 if ERISA does not authorize the suit.5 See Bauhaus
    2
      CH PO attemp ts to blur the line between equitable subrogation and       USA, Inc. v. Copeland, 292 F.3d 439, 442 n.6 (5th Cir.
reimbursement to fit its claim within the scope of § 1132(a)(3). As we         2002); see also Unicare Life & Health Ins. Co. v. Saiter,
have noted in discussing conventional subrogation, the two doctrines are       No. 00-3856, 2002 WL 1301574, at **1-2 (6th Cir. June
distinct. See Hiney Printing Co. v. Brantner, 243 F.3d 95 6, 959 (6th Cir.     10, 2002). Finally, as the parties are not diverse,
2001).

    3
        Even if this were a true sub rogation claim, it is not clear whether
such a claim would be eq uitable for the p urpo ses of § 113 2(a)(3). See           4
Restatement (Third) of Restitution Un just En richment § 2 6 cm t. a                  W e need not decide whether or in what circumstance such a
(Tentative Draft No . 2, 2002) (“Neither the fact that the remedy of           restitution claim could result in the imposition of a constructive trust or
subrogation is equitable in o rigin, nor the fact that a claim under this      an eq uitable lien as a remed y.
Section will freque ntly be identified as a claim to ‘equitable subrogation’        5
should be taken as establishing that a claim under this Section is                   Subsection 1132(a)(3) is one subsection of three that permits a civil
necessarily ‘equitable’ rather than ‘legal.’ . . . So long as the claimant     action under ERISA by a plan fiduciary such as CHPO. 29 U.S.C.
seeks only money judgment against the defendant . . . a claim with § 26        § 1132. The other two subsections, § 1132(a)(2) and § 1132(a)(9), are not
. . . draws on sources that are at least as much legal as equitable.”).        implicated by CHPO’s claim.
No. 01-4095                  Community Health Plan          11
                                 of Ohio v. Mosser

jurisdiction is not proper under 28 U.S.C. § 1332. See 28
U.S.C. § 1332.
                        Conclusion
  For the foregoing reasons, we conclude that the district
court lacked subject matter jurisdiction over this matter,
and therefore we REMAND with instructions to DISMISS
this matter for lack of jurisdiction.