Tim Mackey; John Nesse, as Trustees of the Minnesota Laborers Health and Welfare Fund, Plaintiffs-Appellees,
Terri Lynn Johnson, as Trustee for the Heirs and Next of Kin of Timothy M. Scherf; Meshbesher & Spence, Ltd., Defendants-Appellants, The Duluth Clinic, Ltd., doing business as Essentia Health Deer River Clinic, Defendant-Appellee.
Submitted: February 9, 2017
from United States District Court for the District of
Minnesota - Minneapolis.
LOKEN, COLLOTON, and KELLY, Circuit Judges.
COLLOTON, CIRCUIT JUDGE.
Johnson brought a wrongful-death action against the Duluth
Clinic, alleging that the Clinic was negligent in its
treatment of her brother's lung cancer. Johnson's
brother was a participant in the Minnesota Laborers Health
and Welfare Fund, and the Fund paid for his medical
treatment. Johnson settled her claim with the Clinic. The
Fund then sued Johnson, her legal counsel Meshbesher &
Spence, and the Clinic under the Employee Retirement Income
Security Act, 29 U.S.C. § 1132(a)(3). The Fund alleged
that it had a right to a portion of the settlement
attributable to medical expenses. The district
court agreed and granted summary judgment for
the Fund in the amount of $236, 700.16. Johnson and
Meshbesher challenge the ruling, but we reject their
arguments and affirm the judgment.
March 2010, Timothy Scherf was admitted to the Duluth Clinic
with chest pressure. A chest x-ray revealed a "12mm
nodular opacity." Although the x-ray report recommended
a CT scan of Scherf's chest, Scherf alleged that he was
not informed of the abnormality or the need for follow-up
tests. In October 2011, Scherf was diagnosed with Stage IV
lung cancer and began treatment. Scherf was a participant in
the Minnesota Laborers Health and Welfare Fund. Under the
Fund's Plan, the Fund paid for Scherf's medical
treatment. The Plan also stated that if the Fund provided
medical benefits on behalf of a plan participant, and the
participant recovered payment for those benefits from a third
party, then the Fund had a first priority subrogation
interest in that payment.
March 2012, Scherf hired Meshbesher & Spence to bring a
medical negligence claim against the Clinic. Meshbesher
notified the Fund of the potential claim. The Fund responded
with a letter asserting a first priority right of subrogation
under the Plan, and later sent a subrogation agreement.
Scherf and Johnson, who had been given power of attorney over
Scherf's affairs, signed the subrogation agreement and
affirmed the Fund's subrogation right. In August 2012,
Scherf died from lung cancer. The Fund presented undisputed
evidence that it paid $236, 700.16 for Scherf's
represented by Meshbesher, commenced a wrongful-death action
against the Clinic on behalf of Scherf's heirs and next
of kin, seeking damages under Minnesota's wrongful-death
statute. See Minn. Stat. § 573.02. Before a
mediation, Johnson provided the mediator with a letter
outlining the relevant facts and a summary of potential
liability and damages. The "Damages" section of the
letter included "Medical Expenses: $220, 108.06
(subrogation interest asserted by the Minnesota Laborers
Health & Welfare Fund - a self-funded ERISA Plan)."
The letter also included claims for funeral expenses ($4,
178.66), lost earnings ($337, 000), and "[l]ost advice,
comfort, support, protection, companionship, etc."
(amount "[t]o be determined").
mediation, Meshbesher took the position that the Fund had no
subrogation interest in Johnson's wrongful-death claim,
and that the Clinic was "offering nothing with respect
to the med expenses." The Fund responded that it
disagreed, "especially in light of the fact that you
have included a claim for medical expenses, " and it
provided a copy of the Plan's subrogation provision.
Meshbesher replied: "Actually, for purposes of this
mediation, we are not including the claim for medical
expenses. As I told you, the defenses [sic] position
is that we have no obligation to repay your client a penny.
So medical expenses are not part of this mediation."
and the Clinic ultimately reached a settlement agreement. The
agreement provided that "[t]his settlement includes all
applicable medical liens and subrogation claims." A
handwritten note on the settlement agreement stated:
"Claimants deny that [the] Fund is entitled to any
portion of the settlement proceeds." A few months later,
the parties executed a more detailed settlement agreement and
release. The release discharged the Clinic from "any
claims, actions, causes of action and assertions of liability
of every type on account of, or in any way arising out of,
any and all injuries and damages, known or unknown . . .
suffered or sustained by [Johnson] as a result of the medical
care and treatment" rendered to Scherf by the Clinic
from March 2010 to August 2012. The settlement agreement also
provided that Johnson "acknowledges that [the Fund] has
asserted a lien and/or subrogation claim for certain medical
expenses, " and that she "represents, warrants and
agrees that she will satisfy [the Fund's] subrogation
rights, if any, as determined by a court of competent
the settlement, the Fund sued Johnson, Meshbesher, and the
Clinic under ERISA, alleging that Johnson had failed to
reimburse it for $236, 700.16 that the Fund paid for
Scherf's medical expenses. The Fund moved for summary
judgment and argued that it was entitled to the medical
expenses included in the settlement proceeds under the terms
of the Plan and the subrogation agreement. The district court
agreed and granted summary judgment for the Fund in the
amount of $236, 700.16. We review the district court's
grant of summary judgment de novo, viewing the
evidence and drawing all reasonable inferences in the light
most favorable to Johnson and Meshbesher. Malloy v. U.S.
Postal Serv., 756 F.3d 1088, 1090 (8th Cir. 2014).
and Meshbesher devote much of their argument to whether a
wrongful-death trustee can recover medical expenses in a
wrongful-death action under Minn. Stat. §§ 573.01
and 573.02. We think this issue is beside the point. A
settlement agreement is a contract. Dykes v. Sukup Mfg.
Co., 781 N.W.2d 578, 581 (Minn. 2010). Minnesota public
policy favors the freedom of contract, see Lyon Fin.
Servs., Inc. v. Ill. Paper & Copier Co., 848 N.W.2d
539, 545 (Minn. 2014), and parties can contract to settle any
claim, even if the claim has little support in the law. Here,
Johnson had at least a colorable argument based on the
statutory text of Minn. Stat. §§ 573.01 and 573.02
that she was entitled to recover Scherf's medical
expenses. The statutes allow for a wrongful-death trustee to
bring an action if the decedent could have brought an action
for an injury caused by the alleged wrongful act. This at
least suggests that the trustee could bring an action that
includes a claim for the decedent's medical expenses.
See Prescott v. Swanson, 267 N.W. 251, 258 (Minn.
1936) (rejecting argument that medical expenses were not
recoverable by next of kin in a wrongful death action under
predecessor statute with comparable text); see also
Ashley N. Biermann, Note, The Practical Effects of
Dickhoff v. Green on WrongfulDeath Actions in
Minnesota: Drawing a Line in the Sand or Committing to a Fair
Solution?, 40 Wm. Mitchell L. Rev. 1543, 1554-55 (2014)
("[A]ll necessary funeral, hospital, and medical
expenses are recoverable by ...