Opinion
Civil Action No: 01-2201 Section: "J"(5)
October 16, 2001
Before the Court are (1) Transitional Hospitals Corp. of Louisiana, Inc.'s ("THC") Motion to Dismiss Counterclaim (Rec. Doc. 5), set for hearing without oral argument on October 10, 2001; and (2) Advantage Health Plan, Inc.'s ("Advantage") Motion for Leave to File Amended and Restated Counterclaim. Both motions are opposed. Having considered the various memoranda and the applicable law, the Court concludes, for the reasons that follow, that Advantage's Motion for Leave to File Amended Counterclaim is GRANTED, and THC's Motion to Dismiss is, therefore, DENIED as moot.
BACKGROUND
Plaintiff, THC, brought this action against Advantage and DBL North American, Inc. ("DBL"), in its capacity as assignee of ERISA plan benefits and as an independent party under state law theories of recovery. THC operates a long-term, acute-care facility in New Orleans, which accepted Angela McKendall as a patient in 1998. According to THC's Complaint, Angela McKendall is covered on her father's group healthcare benefit plan through his employer, Domino's Sugar Company, which contracted with DBL to administer the employee healthcare plan. DBL, in turn, contracted with Advantage to provide administration and clinical determinations and assessments for plan members.
THC, in its capacity as assignee of Angela McKendall's ERISA plan benefits, asserts in its complaint that DBL and Advantage arbitrarily and capriciously breached their duty to Angela McKendall by failing to satisfy claims in accordance with payment schedules governing the plan. THC, in its capacity as an independent third-party and non-ERISA entity, argues that Defendants breached the terms of the Hospital Service Agreement, entered into by the parties and providing for certain reimbursement for care and treatment rendered to Angela McKendall.
Advantage answered the complaint and alleges in a counterclaim that it has no responsibility for the payment of the cost of health expenses under the terms of the Domino Sugar Company health plan for any medical services rendered by THC on behalf of Angela McKendall. Advantage urges in the counterclaim that it has offered adequate proof of such to THC, and that THC has unjustly and wrongfully sued Advantage. Accordingly, Advantage seeks in its counterclaim to recover any and all legal expenses related to the suit.
Thereafter, THC filed its Motion to Dismiss Advantage's Counterclaim (Rec. Doc. 5). THC argues that the counterclaim fails to set forth a cognizable legal theory and fails to allege sufficient facts to support a legal theory, noting that the only factual allegation made in the counterclaim is that Advantage previously informed THC that it has no responsibility for payment in this case. THC further argues that a counterclaim is not the proper remedy for seeking legal expenses and that Advantage cites no statutory authority that would allow such recovery in this case.
In an opposition, Advantage explains that its counterclaim for attorneys' fees is based on the fact that it has been wrongfully sued and named as a defendant by THC, and that it presented THC with adequate documentation demonstrating its lack of liability prior to THC filing the instant suit. Furthermore, Advantage argues that ERISA permits attorneys' fees to be awarded to the prevailing party at the Court's discretion.See 29 U.S.C. § 1132 (g)(1). Because this Court has discretion to award attorneys' fees to either party in this ERISA matter and Advantage has been sued by THC because it allegedly owes the cost of ERISA benefits in this case, Advantage asserts that its counterclaim clearly states a claim under 29 U.S.C. § 1132 (g)(1).
In addition, Advantage filed a motion for leave to file an amended counterclaim, which specifies that attorneys' fees are being sought pursuant to 29 U.S.C. § 1132 (g)(1). The amended counterclaim also asserts a new cause of action against THC, based on alleged overpayments made by Advantage to THC for a former Advantage Medicare member, Lula Vanderson. Advantage argues that the amended counterclaim would cure any defects in the original counterclaim, and, therefore, asks the Court to permit the filing of the amended counterclaim and deny THC's motion to dismiss.
THC opposes the Court granting leave to Advantage to file the amended counterclaim, because Advantage allegedly failed to comply with Local Rule 7.6E by not obtaining THC's consent and by subsequently failing to certify that THC was contacted in order to obtain that consent. THC avers that it has a clear interest in opposing the amended counterclaim.
DISCUSSION
While Advantage's original counterclaim may be vague as to the grounds for its claim for legal costs, the proposed amended counterclaim remedies that problem, as it specifies that attorneys' fees are being sought pursuant to ERISA's provisions. See 29 U.S.C. § 1132 (g)(1). While THC argues that a counterclaim is not the proper method for seeking attorneys' fees, parties frequently file counterclaims seeking fees under ERISA, when they believe they have been wrongfully sued or that the lawsuit is frivolous or brought in bad faith.
See, e.g., Astor v. International Business Machines Corp., 7 F.3d 533, 537 (6th Cir. 1993); Plumbers and Steamfitters Local No. 150 Pension Fund v. Vertex Const. Co. Inc., 932 F.2d 1443, 1451 (11th Cir. 1991); Audit Services, Inc. v. Morning Star Enterprises, Inc., 881 F.2d 1083, 1989 WL 88334, *2 (9th Cir. 1989).
Federal Rule Civil Procedure 15(a) provides that "leave (to amend] shall be freely given when justice so requires." It would contravene the liberal pleading presumption of Rule 15(a) for the Court to deny leave to Advantage to file the amended counterclaim, where the underlying facts or circumstances relied upon by Advantage may be a proper subject of relief. See Coghlan v. Wellcraft Marine Corporation, 240 F.3d 449, 452 (5th Cir. 2001); Therefore, the Court concludes that Advantage should be allowed to file the amended counterclaim.
Accordingly;
IT IS ORDERED that Advantage's Motion for Leave to File Amended and Restated Counterclaim is GRANTED. Because the amended counterclaim remedies any defects in the original counterclaim, THC's Motion to Dismiss should be and is hereby DENIED without prejudice.
The Court recognizes that Advantage's amended counterclaim adds a new cause of action against THC and that THC has indicated that it will seek dismissal of that claim as well if the counterclaim is filed into the record. THC may re-urge its motion to dismiss with respect to Advantage's new claim.