Jeld-Wen Master Welfare Benefit Plan v. Tri-City Health Care District, No. 3:2012cv00197 - Document 33 (S.D. Cal. 2013)
Court Description: ORDER Denying 27 Plaintiff's Motion to Alter or Amend Judgment.. Signed by Judge Gonzalo P. Curiel on 5/6/2013. (srm)
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Jeld-Wen Master Welfare Benefit Plan v. Tri-City Health Care District Doc. 33 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JELD-WEN MASTER WELFARE BENEFIT PLAN, 12 13 vs. CASE NO. 12cv197-GPC(RBB) ORDER DENYING PLAINTIFF’S MOTION TO ALTER OR AMEND JUDGMENT Plaintiff, 14 15 16 TRI-CITY HEALTH CARE DISTRICT, a California Health Care District dba TRI-CITY MEDICAL CENTER, 17 [Dkt. No. 27.] Defendant. 18 19 Before the Court is Plaintiff’s motion to alter or amend judgment pursuant to 20 Federal Rule of Civil Procedure 59(e) and reconsideration under Local Civil Rule 21 7.1(i). (Dkt. No. 27.) Plaintiff seeks a reconsideration of the Court’s order granting 22 Defendant’s motion for summary judgment filed on November 27, 2012. (Dkt. No. 23 24.) Defendant filed an opposition on February 8, 2013 and Plaintiff filed a reply on 24 February 22, 2013. (Dkt. Nos. 29, 30.) Based on a review of the parties’ briefs, the 25 record and the applicable law, the Court DENIES Plaintiff’s motion to alter or amend 26 judgment. 27 28 Procedural Background On January 24, 2012, Plaintiff Jeld-Wen Master Welfare Benefit Plan (“Jeld-1- [12cv197-GPC(RBB)] Dockets.Justia.com 1 Wen”) filed a complaint for declaratory relief against Defendant Tri-City Health Care 2 District (“Tri-City”). (Dkt. No. 1.) On February 1, 2012, Plaintiff filed an ex parte 3 application seeking an order staying arbitration proceedings that were ongoing until the 4 instant action was resolved. (Dkt. No. 3.) On February 7, 2012, the Court denied 5 Plaintiff’s ex parte application for stay of arbitration proceedings. (Dkt. No. 6.) On 6 February 21, 2012, Defendant filed a motion to dismiss. (Dkt. No. 8.) On April 9, 7 2012, Plaintiff filed an opposition. (Dkt. No. 14.) Defendant filed a reply on April 16, 8 2012. (Dkt. No. 16.) 9 On March 15, 2012, Plaintiff filed a motion for summary judgment, or 10 alternatively, motion for partial summary judgment. (Dkt. No. 9.) On April 18, 2012, 11 the Court vacated the hearing on Defendant’s motion to dismiss and took the motion 12 under submission and granted in part and denied in part Defendant’s ex parte 13 application to continue Plaintiff’s motion for summary judgment. (Dkt. No. 18.) 14 Specifically, the Court vacated the May 7, 2012 hearing date on the motion for 15 summary judgment and stated that the hearing would be rescheduled after issuance of 16 a written ruling of Defendant’s motion to dismiss, if deemed necessary. (Id.) 17 On April 20, 2012, Plaintiff filed a request for oral argument on the motion to 18 dismiss. (Dkt. No. 19.) The Court granted Plaintiff’s request for oral argument and 19 held a hearing on May 7, 2012. (Dkt. No. 21.) On October 23, 2012, the case was 20 transferred to the undersigned judge. (Dkt. No. 23.) On November 27, 2012, the Court 21 construed Defendant’s motion to dismiss as a motion for summary judgment under 22 Federal Rule of Civil Procedure 56 as both parties submitted matters outside the 23 pleading. (Dkt. No. 24.) In the order, the Court granted Defendant’s motion for 24 summary judgment as to all causes of action in the complaint. (Id.) Plaintiff seeks 25 reconsideration of that order. (Dkt. No. 27.) 26 Factual Background 27 In December 1997, Plaintiff Jeld-Wen entered into a Participating Hospital 28 Agreement (“Agreement”) with Defendant Tri-City. (Dkt. No. 1, Compl. ¶ 8.) The -2- [12cv197-GPC(RBB)] 1 purpose of the Agreement was to establish rates and terms for financial reimbursement 2 from Jeld-Wen to Tri-City for eligible and appropriate health care services rendered at 3 Tri-City on behalf of eligible and qualified beneficiaries under Jeld-Wen’s Health 4 Benefit Plan (“Plan”). (Id.) 5 On November 18, 2008, a patient (“Patient S”), then a potential eligible Plan 6 participant, completed a Pre-Existing Condition Questionnaire. (Id. ¶ 10.) Patient S 7 indicated he had a “pre-existing heart condition.” (Id.) Under the Plan’s guidelines, 8 a pre-existing condition is defined as “any medical condition that [Patient S] was 9 diagnosed or treated for in the six months period immediately prior to the first day of 10 coverage Eligibility Date.” (Id.) The Plan provides for an exclusion period for any 11 pre-existing condition such that “[c]overage will be excluded for any Pre-existing 12 Conditions for 12 months following the coverage Eligibility Date . . . .” (Id.) Because 13 Patient S had not previously “opted in” for the medical coverage portion of the Health 14 Benefit Plan, his initial medical eligibility date was January 1, 2009. (Id. ¶ 11.) 15 Therefore, under the Plan, Patient S would be excluded from coverage on any treatment 16 rendered for a heart condition from January 1, 2009 to December 31, 2009. (Id.) On 17 or about July 12, 2009, within the exclusion period described above, Patient S went to 18 the Emergency Department at Tri-City, suffering from a heart related condition. (Id. 19 ¶ 12.) Patient S was admitted to Tri-City and underwent a heart-related procedure on 20 or about July 16, 2009. (Id.) Patient S was discharged from Tri-City on or about July 21 21, 2009. (Id.) 22 Tri-City submitted a claim for benefits for reimbursement to Jeld-Wen under the 23 terms of the Agreement for services rendered in the care and treatment of Patient S. 24 (Id. ¶ 13.) Thereafter, consistent with the provisions of the Agreement and the Plan, 25 the Plan Administrator made an evaluation of eligibility and relying on the plain terms 26 of the Plan, the Plan Administrator denied reimbursement to Tri-City because Patient 27 S was suffering a pre-existing condition during the exclusionary period. (Id.) Because 28 Patient S was not eligible for benefits due to his pre-existing condition, there could be -3- [12cv197-GPC(RBB)] 1 no claim for reimbursement of expenses for treatment under any circumstances since 2 the Plan first determines and governs eligibility. (Id. ¶ 14.) If a beneficiary is eligible, 3 then and only then is the Agreement analyzed to determine the amount of 4 reimbursement, if any. (Id.) The Agreement specifies that Jeld-Wen “has the sole 5 authority and responsibility for determination of eligibility under the health benefit 6 plan, determination of coverage within the plan, claims payment, and such other benefit 7 administration functions for which Payer [JELD-WEN] is responsible.” (Id.) After the 8 Plan Administrator denied the benefits based upon the Plan’s “pre-existing conditions” 9 exclusion, the beneficiary had the right to appeal that determination under terms and 10 conditions set forth in the Plan. (Id. ¶ 15.) Neither Patient S nor Tri-City (as assignee 11 of Patient S) filed an appeal and the Plan Administrator’s determination became final. 12 (Id.) 13 In its motion to dismiss, Tri-City presents additional facts relevant to the instant 14 motion. On July 13, 2009, Tri-City contacted Shasta Administrative Services 15 (“Shasta”), Jen-Weld’s third party administrator and agent, to verify the patient’s health 16 care coverage. Ruth, the customer service representative at Shasta, indicated that the 17 patient did not require precertification as he presented through the emergency room and 18 that the patient’s plan would pay 80% of billed charges and that the patient had a $500 19 co-pay. (Dkt. No. 8, Mot. at 6-7.) 20 On July 15, 2009, Tri-City contacted Innovative Care, Jen-Weld’s utilization 21 review company and agent, to obtain further authorization for the hospitalization of the 22 patient. Later that same day, Tri-City received a telephone call from Patti at Innovative 23 Care authorizing the patient’s stay until July 20, 2009. (Id. at 7.) On September 18, 24 2008, Tri-City contacted Shasta and was informed for the first time that the claim was 25 pending for a pre-existing condition. (Id.) Based on the authorization of treatment and 26 verification of coverage provided to Tri-City by Jeld-Wen and its agents, Tri-City filed 27 a Demand for Arbitration seeking reimbursement in accordance with the rates found 28 in the Agreement. (Id.) -4- [12cv197-GPC(RBB)] 1 Around December 29, 2010, Defendant served a Demand for Arbitration 2 (“Demand”) with the American Arbitration Association (“AAA”). (Dkt. No. 8-2, 3 Huezo Decl., Ex. A.) The Arbitration Demand stated the nature of the dispute as: The claim for patient S.S. identified on the attached Exhibit 1 had been improperly denied and inappropriately unpaid pursuant to the Interplan agreement at 20% discount off billed charges due to preexisting condition. However, services were authorized and patient’s benefits were verified and no pre-existing condition exclusions were communicated. Interest has yet to be paid on this claim pursuant to Health and Safety Section 1371.35. The payor, Jen-Weld, Inc. owes Claimant, Tri-City Medical Center the total sum of $159,287.20. 4 5 6 7 8 9 Id. 10 After engaging in a preliminary hearing, Plaintiff filed a motion for summary 11 judgment on September 12, 2011 arguing that the patient was suffering from a pre- 12 existing condition within the exclusionary period and that Tri-City’s claims were 13 preempted by ERISA. (Dkt. No 14-1, Freestone Decl., Ex. A.) On October 5, 2011, 14 after hearing oral argument, the Arbitrator denied Jeld-Wen’s motion for summary 15 judgment. (Id., Ex. B.) The Arbitrator also ordered that Tri-City provide Jeld-Wen 16 with a Detailed Specification of Claims. (Id.) Around October 21, 2011, Tri-City 17 provided a Detailed Specification of Claims to Jeld-Wen. (Compl. ¶ 18.) After receipt 18 of the Detailed Specification of Claims, in a letter dated December 2, 2011, Jeld-Wen 19 notified the Arbitrator that the “new” claims did not arise out of the Agreement but 20 were claims not subject to the very narrow arbitration clause. (Dkt. No. 14-2, 21 Freestone Decl., Ex. C.) It informed the Arbitrator that the claims were not arbitrable 22 and only a court of law could determine which claims are subject to arbitration. (Id.) 23 Tri-City objected to Jeld-Wen’s position arguing that the Arbitrator has authority to 24 determine the arbitrability of the dispute and the entire dispute falls within the 25 arbitration clause and is not preempted by ERISA. (Id.) 26 On December 28, 2011, the Arbitrator issued an Order on Respondent’s 27 Objections to Arbitrability of Claims and Request for a Stay. (Dkt. No. 8-4.) In the 28 order, the Arbitrator concluded that it has power under AAA Rule R-7(a) to rule on its -5- [12cv197-GPC(RBB)] 1 jurisdiction, including any objections to the scope of the arbitration agreement and 2 denied Jeld-Wen’s request for a stay. (Id.) The Arbitrator also concluded that the 3 claims asserted in the Demand and Specification relate to and arise out of the alleged 4 conduct of Shasta in the performance of the “authorization” and “verification” 5 processes under the Agreement. (Id.) The Arbitrator also concluded that the claims 6 asserted are not preempted by ERISA citing Marin Gen. Hosp. v. Modesto & Empire 7 Traction Co., 581 F.3d 941 (9th Cir. 2009). (Id.) 8 In the complaint, Plaintiff seeks declaratory relief that a court of law, not an 9 arbitrator, determines the arbitrability of claims; that Defendant’s assertion of new 10 claims are not subject to arbitration; and that the claims in the Demand and Detailed 11 Specification are preempted by ERISA, 29 U.S.C. § 1001 et seq. (Compl. ¶¶ 22, 25, 12 29.) 13 In the Court’s order granting Defendant’s motion for summary judgment, it 14 concluded that Plaintiff Jeld-Wen Master Welfare Benefit Plan does not have standing 15 to bring the complaint. (Dkt. No. 24.) However, even if the Court determined that 16 Plaintiff had standing, the Court further held that Jeld-Wen waived its right to 17 challenge the arbitrability of the dispute by participating in the arbitration. (Id.) It also 18 granted summary judgment as to all three causes of action for declaratory relief. (Id.) 19 Discussion 20 A. Legal Standard on Motion for Reconsideration 21 Federal Rule of Civil Procedure 59(e) provides for the filing of a motion to alter 22 or amend a judgment. Fed. R. Civ. P. 59(e). A motion for reconsideration, under 23 Federal Rule of Civil Procedure 59(e), is “appropriate if the district court (1) is 24 presented with newly discovered evidence; (2) clear error or the initial decision was 25 manifestly unjust, or (3) if there is an intervening change in controlling law.” School 26 Dist. No. 1J, Multnomah County, Or. v. AcandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 27 1993); see also Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir. 2011). 28 In addition, Local Civil Rule 7.1(i)(1) provides that a motion for reconsideration -6- [12cv197-GPC(RBB)] 1 must include an affidavit or certified statement of a party or attorney “setting forth the 2 material facts and circumstances surrounding each prior application, including inter 3 alia: (1) when and to what judge the application was made, (2) what ruling or decision 4 or order was made thereon, and (3) what new and different facts and circumstances are 5 claimed to exist which did not exist, or were not shown upon such prior application.” 6 Local Civ. R. 7.1(i)(1). The Court has discretion in granting or denying a motion for reconsideration. 7 8 Fuller v. M.G. Jewelry, 950 F.2d 1437, 1441 (9th Cir. 1991). A motion for 9 reconsideration should not be granted absent highly unusual circumstances. 389 10 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). “A motion for 11 reconsideration cannot be used to ask the Court to rethink what the Court has already 12 thought through merely because a party disagrees with the Court’s decision. Collins 13 v. D.R. Horton, Inc., 252 F. Supp. 2d 936, 938 (D. Az. 2003) (citing United States v. 14 Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Az.1998)). 15 B. Conversion of Rule 12(b)(6) Motion to a Rule 56 Motion 16 Plaintiff argues that the Court erred in converting Defendant’s Rule 12(b)(6) 17 motion to a Rule 56 motion for summary judgment without notice to Plaintiff and an 18 opportunity for Plaintiff to present all material relevant to the motion. Defendant 19 argues that the Court was not required to give notice to Plaintiff and that it presented 20 57 pages of exhibits to the Court in its opposition. 21 If a district court looks beyond the pleadings, the motion must be treated as one 22 for summary judgment. Grove v. Mead Sch. Dist. No. 354, 753 F.2d 1528, 1532 (9th 23 Cir. 1985). The parties must be given notice of the motion for summary judgment and 24 an opportunity to respond. Id. While the majority of the circuits require strict 25 compliance with the notice requirement of Rule 56(c) when the court converts a motion 26 under Rule 12(b)(6) into one for summary judgment, the Ninth Circuit does not adopt 27 the rule of strict adherence to the formal notice requirements. Garaux v. Pulley, 739 28 F.2d 437, 438-39 (9th Cir. 1984) (citations omitted). Instead, the Ninth Circuit requires -7- [12cv197-GPC(RBB)] 1 that courts examine the record in each case to determine “whether the party against 2 whom summary judgment was entered was ‘fairly apprised that the court would look 3 beyond the pleadings and thereby transform the 12(b) motion to dismiss into one for 4 summary judgment.’” Id.; see also Mayer v. Wedgewood Neighborhood Coalition, 707 5 F.2d 1020, 1021 (9th Cir. 1983). Formal notice is not necessary if parties are 6 represented by counsel. Grove, 753 F.2d at 1533. “Notice occurs when a party has 7 reason to know that the court will consider matters outside the pleadings.” Id. “A 8 represented party who submits matters outside the pleadings to the judge and invites 9 consideration of them has notice that the judge may use them to decide a motion 10 originally noted as a motion to dismiss, requiring its transformation to a motion for 11 summary judgment.” Id.; In re Rothery, 143 F.3d 546, 549 (9th Cir. 1998). In Grove, 12 the plaintiff was fairly appraised that the Court would consider matters outside the 13 pleading as plaintiff submitted matters outside the pleading, the parties agreed that the 14 judge should then read The Learning Tree, plaintiff then submitted affidavits of her 15 witnesses and at the hearing, the judge relied on plaintiff’s affidavits in deciding the 16 motion. Grove, 753 F.2d at 1532; see also Olsen v. Idaho State Bd. of Medicine, 363 17 F.3d 916, 922 (9th Cir. 2004) (district court’s decision to treat motions to dismiss as 18 motions for summary judgment was not error as much of the extra complaint material 19 relied on was attached to appellee’s answer to the amended complaint and Plaintiff 20 herself included extraneous material in her opposition to appellee’s motions to 21 dismiss); Murray Co. v. Liberty Mutual Ins. Co., 11 Fed. Appx. 722, 723 (9th Cir. 22 2001) (because court considered declarations in support of the parties’ respective 23 positions, plaintiff was fairly apprised that the motion to dismiss was subject to 24 conversion and the district court did not err in converting motion to one of summary 25 judgment). 26 Here, in support of their positions on Defendant’s motion to dismiss, both parties 27 submitted materials outside the pleadings. While Defendant presented exhibits 28 consisting of 17 pages, Plaintiff filed 61 pages of documentary support. Moreover, at -8- [12cv197-GPC(RBB)] 1 the hearing on the motion to dismiss, both parties referenced exhibits attached to the 2 briefs. (Dkt. No. 26.) Plaintiff’s counsel even acknowledged that, this motion to dismiss, I think counsel has tried to turn this into a motion for summary judgment and try to get you to rule on the merits of each of these declaratory judgment actions. And the reason that I requested oral argument is we sort of fell into that trap in the briefing and argued substantively some of the merits of the various actions. 3 4 5 6 7 8 9 10 11 12 13 (Dkt. No. 26, Mot. Hearing Transcript at 11:12-18.) He further stated, “[a]t this stage in the proceedings, at the pleading stage, the only matter before the court is, have we properly stated a claim under these various causes of action.” Id. at 18-20. Plaintiff’s counsel was aware and had concerns that the motion may turn into a motion for summary judgment. Although he told the Court that at the pleading stage, the Court need only determine whether the complaint has stated a claim, the fact that numerous exhibits were attached to Plaintiff’s opposition provided it with notice that the Court may use them in deciding the motion. See Grove, 753 F.2d at 1533. 14 15 16 17 18 19 20 21 The Court concludes that Plaintiff was “fairly apprised” that the Court would look beyond the complaint and convert the 12(b)(6) motion into a motion for summary judgment. See Grove, 753 F.2d at 1532-33. Accordingly, the Court DENIES Plaintiff’s motion to alter or amend judgment on this issue. C. Remaining Arguments Because the Court properly treated Defendant’s motion to dismiss as a motion for summary judgment, Plaintiff’s remaining arguments are unavailing.1 It seeks the Court to reconsider the merits of the motion based on documents it now attaches to the 22 23 1 24 25 26 27 28 Plaintiff contends that Jeld-Wen Master Welfare Benefit Plan has standing to bring the complaint. In the instant motion, Plaintiff submits the Preamble to the Plan which states that Jeld-Wen Health Benefit Plan and Jeld-Wen Flex Plan were consolidated into a single plan to be known as JeldWen Master Welfare Benefit Plan. (Dkt. No. 27-2, Rogers Decl. attached.) While Plaintiff argues that if the Court provided it with notice of its intent to convert the motion into one for summary judgment, it would have presented evidence that Plaintiff was the proper party to bring the action. However, it is not clear why this Preamble was not submitted in opposition to Defendant’s motion to dismiss to demonstrate it had standing. Plaintiff was in possession or aware of the Preamble since 2004. On reconsideration, Plaintiff cannot bring evidence that it already had in its possession at the time of the prior motion. In any event, the issue is moot as the Court alternatively considered the merits of the motion. -9- [12cv197-GPC(RBB)] 1 motion to alter judgment. Plaintiff is essentially rearguing its opposition to the motion 2 for summary judgment. Plaintiff has not presented any newly discovered evidence, any 3 intervening change in controlling law or has not shown clear error or manifest injustice. 4 See School Dist. No. 1J, Multnomah County, Or., 5 F.3d at 1263; Local Civ. Rule 5 7.1(i)(1). Conclusion 6 7 Based on the above, the Court DENIES Plaintiff’s motion to alter or amend 8 judgment pursuant to Federal Rule of Civil Procedure 59(e) and motion for 9 reconsideration under Local Civil Rule 7.1(i). 10 IT IS SO ORDERED. 11 12 DATED: May 6, 2013 13 14 HON. GONZALO P. CURIEL United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 - [12cv197-GPC(RBB)]
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