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MBI Energy Services v. Hoch

United States District Court, D. North Dakota

February 28, 2018

MBI Energy Services, Plaintiff,
Robert Hoch, Defendant.


          Daniel L. Hovland, Chief Judge United States District Court

         Before the Court are the parties cross motions for summary judgment, as well as the Plaintiff's motion to dismiss the Defendant's counterclaim. See Docket Nos. 25, 30, and 36. For the reasons set forth below, the Court grants the Plaintiff's motions and denies the Defendant's motion.

         I. BACKGROUND

         Plaintiff MBI Energy Services (“MBI”) is a sponsor and administrator of the Missouri Basin Health Plan (“Plan”). The Plan is a self-funded health benefit plan subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Defendant Robert Hoch (“Hoch”) was a member and beneficiary of the plan. Hoch sustained injuries in an accident that occurred on December 20, 2012. MBI claims the plan paid $68, 210.38 in health benefits related to Hoch's injuries. Hoch settled a tort claim with the individual who allegedly caused the accident for $320, 000. See Docket No. 3-2, p. 4.

         MBI filed a complaint against Hoch and his attorney, Charles Kannebecker (“Kannebecker”), and the Law Office of Charles Kannebecker, LLC (“Law Office”) to recover the medical benefits MBI asserts the Plan paid on Hoch's behalf. MBI's complaint was accompanied by an itemized benefit statement showing the Plan paid a total of $68, 210.38. See Docket No. 1-1. MBI asserts the Plan requires members to reimburse the Plan for benefits it pays if a member obtains a recovery from a tortfeasor. The Summary Plan Description (“SPD”) contains a provision entitled “Rights of Subrogation, Reimbursement, and Assignment.” It states, in part:

If a member makes any recovery from a third party . . . whether by judgment settlement or otherwise, the Member must notify the Claims Administrator of said recovery and must reimburse the Claims Administrator on behalf of the Group to the full extent of any benefits paid by the Claims Administrator, not to exceed the amount of the recovery.

See Docket No. 1-2, p. 74. The Plan's claims administrator is Blue Cross Blue Shield of North Dakota (“BCBSND”). MBI entered into an Administrative Service Agreement (“ASC”) with BCBSND that sets forth various provisions regarding claims administration. See Docket No. 28-2, p. 18. The SPD is attached to the ASC as an exhibit. See Docket No. 32-1, p. 33.

         MBI, Hoch, and Kannebecker entered into a stipulation agreement on September 26, 2016. MBI agreed to dismiss its claim against Kannebecker and his Law Office without prejudice. In turn, Hoch and Kannebecker agreed to deposit $45, 473.59 (“the Disputed Funds”) with the Court pending resolution of MBI's claim. See Docket No. 7. Kannebecker deposited the Disputed Funds with the Registry of the Court on September 29, 2016. Hoch then reduced its reimbursement claim by one-third (for a total claim amount of $45, 473.59) to account for costs Hoch incurred due to his tort recovery efforts. See Docket No. 25, p. 2.

         MBI moved for summary judgment on March 29, 2017. Hoch brought a counter motion for partial summary judgment on April 13, 2017. On the same date, Hoch also brought a counterclaim. MBI moved to dismiss Hoch's counterclaim on April 27, 2017.


         MBI's summary judgment motion asserts the SPD's reimbursement language gives the Plan an equitable lien on Hoch's recovery proceeds. Hoch's counter motion for summary judgment argues the SPD is not a valid plan document and thus MBI has no right to reimbursement. Hoch's counterclaim asserts MBI breached fiduciary duties it owed to himself and other plan members. MBI, as fiduciary for the Plan, asserts it has a right to reimbursement pursuant to the SPD's reimbursement provision. MBI claims the SPD creates an equitable lien on a portion[1] of the proceeds Hoch recovered from the alleged tortfeasor. Hoch contends MBI is not entitled to reimbursement because the SPD is only a summary of the plan, and it conflicts with the ASC, which is the controlling plan document. Hoch also argues there are issues of material fact that preclude a grant of summary judgment in MBI's favor.


         Summary judgment is appropriate when the evidence, viewed in a light most favorable to the non-moving party, indicates no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, 490 F.3d 648, 654 (8th Cir. 2007); see also Fed.R.Civ.P. 56(a). Summary judgment is not appropriate if there are factual disputes that may affect the outcome of the case under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue of material fact is not the “mere existence of some alleged factual dispute between the parties.” State Auto Ins. Co. v. Lawrence, 358 F.3d 982, 985 (8th Cir. 2004). Rather, an issue of material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. The moving party always bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The non-moving party may not rely merely on allegations or denials; it must set out specific facts showing a genuine issue for trial. Forrest v. Kraft Foods, Inc., 285 F.3d 688, 691 (8th Cir. 2002). The court must view the facts in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

         B. MBI IS ENTITLED ...

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