Opinion
NO. 1:97cv15-D-D.
Filed Date: February 2, 1999.
OPINION
Presently before the court is the motion for summary judgment of the Defendant Cooper Tire Rubber Company. After considering the motion, the court finds that it should be granted.
Factual and Procedural Background
The Plaintiff is the widow and executrix of the estate of Lee Frazier. Mr. Frazier was an employee of the Defendant Cooper Tire Rubber Company for approximately thirty-six years until his death on June 28, 1995. In early June 1995, Mr. Frazier became ill and was hospitalized at Northwest Mississippi Regional Medical Center. After performing tests on Mr. Frazier, Jack Sartin, M.D., discovered that Mr. Frazier was suffering from some form of cancer. Dr. Sartin recommended surgery, and Mr. Frazier agreed to the procedure. Following surgery, Mr. Frazier never fully regained consciousness. Mr. Frazier remained hospitalized until his death.
After Mr. Frazier's death, Northwest Medical submitted to Cooper Tire a bill totaling approximately $128,000 for Mr. Frazier's treatment. Cooper Tire's benefits-plan administrator Larry Sheridan submitted Mr. Frazier's hospital records to Shanan Professional Review Services, Inc., with whom Cooper Tire had formed an agreement whereby Shanan reviewed hospital records inter alia to detect unnecessary procedures. After reviewing the records, Shanan informed Cooper Tire that it considered Mr. Frazier's medical services unnecessary. The individual who reviewed the records was J.L. Funkhouser, M.D., ShanAn's medical review physician. Dr. Funkhouser opined that Mr. Frazier's cancer was inoperable at the time of surgery. Accordingly, Shanan recommended that Cooper Tire not pay Northwest Medical's bill. Based on the recommendation of Shanan, Cooper Tire informed Northwest Medical that it refused to pay the bill.
Northwest Medical has not filed any action against Mr. Frazier's estate or against Mrs. Frazier. In fact, Cooper Tire has represented to Plaintiff's counsel that if any party files an action against Mr. Frazier's estate or against Mrs. Frazier for payment of the aforementioned hospital bill, then Cooper Tire will defend Mr. Frazier's estate or Mrs. Frazier in that action. (Deposition of Dorothy Frazier, pp. 40-41).
This case involves two disputes. One dispute is between the Plaintiff and Dr. Sartin for medical malpractice. The present motion for summary judgment does not affect the Plaintiff's claims against Dr. Sartin. In fact, the claims against Dr. Sartin have been severed from the claims against Cooper Tire for purposes of trial. The other dispute is between the Plaintiff and the Defendants Cooper Tire and the "1993 Pension and Insurance Plan" (collectively hereinafter "Cooper Tire"). The Plaintiff claims that Cooper Tire wrongfully refused to pay Northwest Medical for Mr. Frazier's medical services. The Plaintiff also claims that Cooper Tire breached its fiduciary duties under ERISA by not informing the Plaintiff about the denial of benefits and the existence of an administrative appeals process.
Originally, the Plaintiff filed this lawsuit against two additional defendants: (1) the United Rubber, Cork, Linoleum Plastic Workers of America, C.I.O., Local 556 (the Union), and (2) Northwest Medical. However, the Plaintiff later voluntarily dismissed the Union and reached a settlement agreement with Northwest Medical. Notably, in conjunction with settlement, Northwest Medical retained Plaintiff's counsel to represent Northwest Medical in its pursuit of payment by Cooper Tire for Mr. Frazier's medical services.
Discussion
In the present motion, Cooper Tire makes three arguments for summary judgment: (1) the Plaintiff has failed to exhaust her administrative remedies; (2) no reasonable fact-finder could conclude that Cooper Tire's denial of benefits was arbitrary and capricious; and (3) the Plaintiff's claim for breach of fiduciary duty fails as a matter of law because the statute she invokes is inapplicable in this case. The court is persuaded by Cooper Tire's first argument. Because the Plaintiff has failed to exhaust her administrative remedies, the court shall grant Cooper Tire's motion for summary judgment and dismiss the Plaintiff's claims against Cooper Tire without prejudice. At this juncture, the court shall not address Cooper Tire's second and third arguments for summary judgment.
"Although the text of ERISA does not expressly mention the exhaustion doctrine, it is well established that federal courts have the authority to require exhaustion of remedies in suits arising under ERISA." Freeman v. Sickness and Accident Disability Plan, 823 F. Supp. 404, 409 (S.D. Miss. 1993); accord Medina v. Anthem Life Ins. Co., 983 F.2d 29, 33 (5 th Cir. 1993); Simmons v. Willcox, 911 F.2d 1077, 1081 (5 th Cir. 1990).
The primary purposes of the exhaustion requirement are to: (1) uphold Congress' desire that ERISA trustees be responsible for their actions, not the federal courts; (2) provide a sufficiently clear record of administrative action if litigation should ensue; and (3) assure that any judicial review of fiduciary action (or inaction) is made under the arbitrary and capricious standard, not de novo. Accordingly, decisions of the trustees are disturbed only if they are arbitrary and capricious, not on the basis of what the district court would have done in the first instance. This is necessary to keep from turning every ERISA action, literally, into a federal case.
Denton v. First Nat'l Bank, 765 F.2d 1295, 1300 (5 th Cir. 1985).
Here, the relevant benefits plan provides that any Cooper Tire employee who has a benefits dispute must pursue an administrative remedy:
If any dispute . . . shall arise between the Company and any Employee . . . with reference to the application to him of this Agreement, . . . such dispute shall, as the exclusive means of settlement, be . . . handled in accordance with the Grievance Procedure provided for in the Basic Labor Agreement. . . .
Defendant's Motion for Summary Judgment, Exhibit "1," ("Pension and Insurance Program," article 13, p. 111) (also specifying which step of Grievance Procedure is starting point for resolving benefits disputes). The Defendant offers no evidence as to the content of the "Grievance Procedure provided for in the Basic Labor Agreement." However, whatever that procedure's content, the Plaintiff never utilized it. Sometime in 1996, the Plaintiff did inquire about the hospital bill with someone who worked with Mr. Frazier. Specifically, the Plaintiff approached Danny Meredith at a local restaurant to inform him that Cooper Tire refused to pay Northwest Medical for Mr. Frazier's medical services. Mr. Meredith told the Plaintiff that he would contact someone at the Union to "see what's up." (Deposition of Dorothy Frazier, p. 53). After this conversation, the Plaintiff never communicated with Mr. Meredith, and she does not know what Mr. Meredith discovered, if anything. Besides Mr. Meredith, the only individuals from Cooper Tire with whom the Plaintiff spoke were Mr. Sheridan and a woman named Peggy Sewell, and the Plaintiff did not attempt to file any sort of grievance with either of them.
In her response to the motion to summary judgment, the Plaintiff argues that she could not have pursued any grievance procedure because the administrative remedy provided in the benefits plan is available only to "any Employee, Pensioner, or former Employee." ("Pension and Insurance Program," article 13, p. 111). However, just as the Plaintiff has filed the present action as the executrix of Mr. Frazier's estate, the Plaintiff could have pursued the administrative remedy on his behalf. The Plaintiff also argues that she did not know about the grievance procedure, so she cannot be blamed for her failure to follow its steps. Addressing a similar argument, where a claimant was not provided with a summary of his benefits plan, the Fifth Circuit explained that claimants must "at the very least . . . make some effort to learn of the procedures applicable to them." Meza v. General Battery Corp., 908 F.2d 1262, 1279 (5 th Cir. 1990).
Of course, ruling that the Plaintiff has failed to exhaust her administrative remedies, the court shall only dismiss the Plaintiff's ERISA claims without prejudice. Once she exhausts the administrative remedies, she will be free to continue pursuing her ERISA claims in federal court. Furthermore, if the opportunity to pursue administrative remedies has somehow been foreclosed, the Plaintiff will still be free to continue pursuing her ERISA claims in federal court. The pursuit of an administrative remedy is not required "when it would be a useless formality." Rodriguez v. Pacificare of Texas, Inc., 980 F.2d 1014, 1016 n. 1 (5 th Cir. 1993) (quoting Offutt v. Prudential Ins. Co., 735 F.2d 948, 950 (5 th Cir. 1984)).
Conclusion
Because the Plaintiff has failed to exhaust the administrative remedies available to her under the Cooper Tire benefits plan, the court shall grant Cooper Tire's motion for summary judgment and dismiss the Plaintiff's claims against Cooper Tire without prejudice.
A separate order in accordance with this opinion shall issue today.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT, DISMISSING TWO DEFENDANTS WITHOUT PREJUDICE and DENYING AS MOOT MOTION TO STRIKE JURY DEMAND
Pursuant to an opinion issued today, it is hereby ORDERED that
the Defendant Cooper Tire Rubber Company's motion for summary judgment is GRANTED;
all of the Plaintiff's claims against Cooper Tire Rubber Company and 1993 Pension and Insurance Plan are DISMISSED WITHOUT PREJUDICE; and
the Defendant Cooper Tire Rubber Company's motion to strike jury demand is DENIED AS MOOT.