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Central States, Southeast and Southwest Areas Health and Welfare Fund v. Student Assurance Services, Inc.

United States District Court, D. Minnesota

May 16, 2014

Central States, Southeast and Southwest Areas Health and Welfare Fund, an Employee Welfare Benefit Plan, and Arthur H. Bunte, Jr., a Trustee thereof, in his representative capacity, Plaintiffs,
v.
Student Assurance Services, Inc., Columbian Life Insurance Co., and Security Life Insurance of America, Defendants.

Emily E. Gleason, Esq., and Timothy C. Reuter, Esq., Central States Funds Law Department, Rosemont, IL, and Michael D. Reif, Esq., and Richard B. Allyn, Esq., Robins, Kaplan, Miller & Ciresi, LLP, Minneapolis, MN, on behalf of Plaintiffs.

Sarah E. Crippen, Esq., and Jennifer A. Nodes, Esq., Best & Flanagan LLP, Minneapolis, MN, on behalf of Defendants.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

On April 8, 2014, the undersigned United States District Judge heard oral argument on Defendants Student Assurance Services, Inc. ("Student Assurance"), Columbian Life Insurance Company ("Columbian Life"), and Security Life Insurance of America's ("Security Life") (together, "Defendants") Motion to Dismiss Plaintiffs' First Amended Complaint [Docket No. 39]. Plaintiffs Central States, Southeast and Southwest Areas Health and Welfare Fund, and Arthur H. Bunte, Jr. (together, "Central States"), oppose the motion. For the reasons set forth herein, the motion to dismiss is granted.

II. BACKGROUND

Central States is an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). Am. Compl. [Docket No. 28] ("Compl.") ¶ 1. Central States provides medical coverage for Teamsters union members and their eligible dependents. These benefits are governed by the Central States Health and Welfare Fund Plan Document (the "Plan"). Id . ¶ 4, Ex. A.

Between 2008 and 2012, 13 children of union members covered by the Plan (the "Covered Individuals") suffered injuries while playing team sports at their respective junior high schools, high schools, and universities. In all 13 instances, Central States paid medical benefits on behalf of the Covered Individuals in connection with the injuries. Id . ¶¶ 30-42. Central States paid a total of $137, 204.88 on behalf of the Covered Individuals. Id . ¶ 57.

In addition to coverage under the Plan, the Covered Individuals also had student accidental medical insurance provided by either Security Life or Columbian Life. Id . ¶¶ 30-42. Student Assurance, a third-party administrator based in Minnesota, processes insurance claims on behalf of Security Life and Columbian Life. Student Assurance administered the policies insuring the Covered Individuals in this case. Id . ¶¶ 9-10.

After paying the Covered Individuals' benefits, Central States sought reimbursement for the payments from Defendants. Central States concluded that under the Plan's "Coordination of Benefits" section, Defendants had primary responsibility for paying the 13 student injury claims at issue. See id. ¶ 22. The Plan confers subrogation rights to Central States for benefits paid, and allows Central States to assert a lien for the recovery of those expenses. Id . ¶¶ 26-28. Applying this provision, Central States filed Notices of Liens against Student Assurance, seeking reimbursement for the amounts Central States paid on behalf of the Covered Individuals. Id . ¶ 43. Defendants refused to reimburse Central States, concluding that the student insurance policies they provided were secondary policies meant only to provide coverage in excess of the maximum benefit amount paid by Central States. Id . ¶¶ 10, 11.

On May 7, 2013, Central States filed this action against Defendants. Central States alleges four claims: (1) declaratory judgment finding Defendants liable for present and future expenses; (2) declaratory judgment finding Defendants liable for past expenses; (3) restitution for the $137, 204.88 paid to the Covered Individuals; and (4) the imposition of an equitable lien or constructive trust on Defendants in the amounts paid to the Covered Individuals. Id . ¶¶ 48-66.

This is not the first case Central States has filed regarding the coordination of benefits between insurance policies. Central States argues in its memorandum opposing dismissal that neither the United States Supreme Court nor the Eighth Circuit Court of Appeals have addressed how to coordinate benefits when an ERISA plan and a private insurance plan conflict. As a result, Central States acknowledges that it has filed six actions across the country, including this one, as part of a larger strategy to obtain judicial review.[1] Pls.' Mem. Opp'n Dismissal [Docket No. 44] ("Pls.' Opp'n") 6.

III. DISCUSSION

A. Applicable ...


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