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Saunders v. TJX Co., Inc.

United States District Court, E.D. Michigan, Northern Division

December 15, 2017

CHARLENE SAUNDERS, as guardian and conservator of THOMAS SAUNDERS, Plaintiff,



         This case arises out of a car accident that occurred on January 9, 2015. Thomas Saunders was crossing the street in a crosswalk at the corner of Saginaw Road and Main Street in Midland, Michigan, when he was struck by a vehicle owned and operated by Daniel James Girard. Thomas Saunders suffered catastrophic injuries leaving him incapacitated. He received extensive medical treatment at Mary Free Bed Rehabilitation Hospital, Mary Free Bed Medical Group, and Covenant Medical Center (collectively, the “Medical Providers”). Between February 2015 and May 2016, the Medical Providers collectively incurred approximately $750, 000 in charges for Thomas Saunders' treatment.

         Charlene Saunders is Thomas Saunders' mother, legal guardian, and appointed conservator. Charlene Saunders pursued a third party no-fault action for noneconomic damages against Mr. Girard on behalf of Thomas Saunders, and ultimately reached a settlement agreement. On October 31, 2016, the Midland County Probate Court issued an order approving the settlement of the tort claim against Mr. Girard. Mr. Girard's liability insurer was Citizens Insurance Company of the Midwest.

         Ms. Saunders was a participant in her employer's health benefit plan, the TJX Companies, Inc. FlexPlus Plan (the “TJX Plan” or “TJX”). Thomas Saunders was a covered individual under the TJX Plan. Ms. Saunders was also insured under a no-fault automobile insurance policy issued by Citizens Insurance Company of the Midwest (the “Citizens Policy”) pursuant to the Michigan No-Fault Act, M.C.L 500.3101 et seq. Thomas Saunders was also a covered individual under the Citizens Policy. Both the TJX Plan and the Citizens Policy contain coordination of benefits (COB) provisions purporting to exclude coverage for benefits covered under other plans.

         TJX entered into an administrative services contract (ASC) with Blue Cross and Blue Shield of Massachusetts, Inc. (BCBSMA), under which BCBSMA acted as TJX's third party claims administrator. Between April and August of 2015, the Medical Providers sent BCBSMA billing forms, itemized statements, and medical records documenting the claim for Mr. Saunders' treatment. BCBSMA paid some of these charges before it determined that Mr. Saunders' was covered under a no-fault auto insurance policy with Citizens, though the amount paid is not reflected in the parties' papers. The Medical Providers also furnished Citizens with billing forms, itemized statements, and medical records documenting the claim for Mr. Saunders' treatment. Citizens did not furnish payment for these charges.



         This case involves two separate actions: one initiated by Charlene Saunders (the Saunders Action) (16-14176) and one initiated the Medical Providers (the MFB Action) (17-10826). On September 13, 2017, well into the proceedings, the parties stipulated to consolidate the cases. ECF No. 29. Both actions involve at least the same core legal question: whether the TJX Plan or Citizens is the primary insurer responsible for Saunders' medical expenses. All parties have filed their own substantive claims for relief addressing the priority issue including: Saunders' complaint against TJX and Citizens; TJX's crossclaim against Citizens; Citizens' crossclaim against TJX; and the Medical Providers' complaint against TJX and Citizens. The following is a brief summary of the pleadings.

         On November 29, 2016, Plaintiff Charlene Saunders (Saunders), as guardian and conservator for Thomas Saunders, filed a complaint against the TJX Plan and Citizens. Compl., ECF No. 1. Count I seeks to enforce the terms of the TJX Plan pursuant to ERISA, 29 U.S.C. § 1132 and seeks a determination of whether Citizens' PIP coverage or the TJX Plan is the primary insurer. Id. at 12. Count II seeks to enjoin the TJX Plan from asserting any right to reimbursement from funds Saunders' obtained in his third party tort action against the driver, Mr. Girard. Id. at 14. Count III seeks a determination that, if Saunders must reimburse the TJX Plan from his tort recovery, Saunders is entitled to reimbursement from Defendant Citizens for any expenses he must repay to the TJX Plan. Id. at 16.[2]

         On December 8, 2016, The Medical Providers filed a separate action in the Midland County Circuit Court, which was removed to this Court on March 15, 2017. ECF No. 1. The Medical Providers also seek a determination as to whether Citizens or the TJX Plan is primary. Additionally, the Medical Providers seek a money judgment against the party deemed primary, directing them to pay past due medical expenses, interest, costs, and fees. ECF No. 17.

         On August 28, 2017, Citizens filed a crossclaim against the TJX Plan. Counts I and II seeking declaratory relief that the TJX Plan is first in priority. ECF No. 22. Count III seeks a declaration that, if Saunders must reimburse the TJX Plan out of his tort recovery, that Citizens is not liable to Saunders for reimbursement. Id. at 17.[3]

         On August 28, 2017, the TJX Plan filed its own crossclaim against Citizens.[4] ECF No. 23. The TJX Plan seeks declaratory relief that Citizens is primarily liable for the payment of Saunder's medical expenses, and seeks to recover reimbursement from Citizens for all amounts paid for Saunders' medical expenses.[5] TJX also asserts a counterclaim against Saunders to recover the medical expenses BCBSMA paid for Saunders' treatment. ECF No. 24.[6] TJX argues it is entitled to reimbursement for those medical expenses from Saunders' tort recovery.


         All four of the parties' dispositive motions address the priority issue. On March 24, 2017, Defendant TJX Plan moved to dismiss count I of the Saunders Complaint for failure to state a claim.[7] ECF No. 13. TJX argues that the TJX Plan contains a coordination of benefits (COB) provision that excludes coverage for benefits payable under any other health plan. TJX states that the TJX Plan is a self-funded ERISA plan governed by ERISA and federal common law. As such, TJX contends that the Michigan No-Fault act is preempted by ERISA, that the TJX Plan's COB provision controls, and that Citizens is primarily liable for the Medical Provider's charges. The TJX Plan then moved for judgment on the pleadings with respect to the crossclaim for declaratory relief on the priority issue. ECF No. 27. The brief in support of TJX's motion for judgment on the pleadings is substantially identical to the brief in support of its motion to dismiss Saunders' complaint.

         On September 21, 2017, Citizens moved for summary judgment on counts I and II of its crossclaim.[8] ECF No. 34. Citizens does not contest that ERISA preempts the Michigan No Fault Act, and that the Citizens Policy's COB provision would be preempted by a conflicting, unambiguous provision in an ERISA plan. Id. at 12. Citizens does contend that, applying the federal common law of contract construction, the TJX Plan is ambiguous. Id. at 15-20. Citizens contends the Preferred Provider/Benefit Description of the TJX Plan conflicts with the Summary Plan Description (SPD) Id. at 21-24. Citizens also argues that neither TJX's SPD nor the TJX Plan Benefits Description expressly disavow primary coverage or subordinate itself to a Michigan no-fault policy. Id. at 21-24. Accordingly, Citizens argues that its COB provision controls, and that the TJX Plan is primarily liable for payment of Saunders' medical expenses. Id.

         On October 12, 2017, the Medical Providers moved for summary judgment on their claims against TJX and Citizens, seeking to recover from the entity deemed primary. ECF No. 41. The Medical Providers argue that their charges are not in dispute. They also seek penalty interest under M.C.L. 500.3142 if Citizens is found to be the primary insurer, as a non-fault insurer cannot delay payment based on a priority dispute without subjecting itself to penalty interest.

         The following two motions will be addressed first: Defendant TJX and BCBSMA's motion for judgment on the pleadings with respect to the crossclaim (ECF Nos. 27, 32); and Defendant Citizens' motion for summary judgment with respect to the crossclaim. (ECF No. 34). The adjudication of these two motions will resolve the priority dispute. Accordingly, Defendant TJX's motion to dismiss Saunders' complaint (ECF No. 13) will be denied as moot. Finally, Plaintiff Medical Providers' motion for summary judgment on its claims against Citizens, BCBSMA, and TJX (ECF No. 41) for payment of medical expenses, interest, costs, and fees will be addressed.[9]



         TJX moves for judgment on the pleadings with respect to its crossclaims. “The standard of review for a [motion for] judgment on the pleadings [under rule 12(c)] is the same as that for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).” E.E.O.C. v. J.H. Routh Packing Co., 246 F.3d 850, 851 (6th Cir. 2001). Courts must view the pleadings in the light most favorable to the nonmoving party, accept the well-pled factual allegations as true, and determine whether the moving party is entitled to judgment as a matter of law. Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007). It is well established that, when a document is referred to in the pleadings and is integral to the claims, it may be considered by the court without converting a motion to dismiss into one for summary judgment. Id.


         TJX moves to dismiss Saunders' complaint for failure to state a claim. A pleading fails to state a claim under Rule 12(b)(6) if it does not contain allegations that support recovery under any recognizable legal theory. Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009). In considering a Rule 12(b)(6) motion, the Court construes the pleading in the non-movant's favor and accepts the allegations of facts therein as true. See Lambert v. Hartman, 517 F.3d 433, 439 (6th Cir. 2008).

         The pleader need not have provided “detailed factual allegations” to survive dismissal, but the “obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In essence, the pleading “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face” and “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678-79 (quotations and citation omitted).


         Citizens moves for summary judgment on counts I and II of its crossclaim, and the Medical Providers move for summary judgment on their amended complaint. A motion for summary judgment should be granted if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the initial burden of identifying where to look in the record for evidence “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         The burden then shifts to the opposing party who must set out specific facts showing “a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (citation omitted). “The party opposing summary judgment cannot rest on its pleading or allegations, to prevail, they must present material evidence in support of their allegations.” Leonard v. Robinson, 477 F.3d 347 (6th Cir. 2007) (citing Celotex Corp v. Catrett, 477 U.S. 317 (1986)). The Court must view the evidence and draw all reasonable inferences in favor of the non-movant and determine “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52.


         Both the TJX Plan and the Citizens Policy contain a COB provision purporting to exclude coverage for benefits covered under other plans.


         An attachment to the Citizens Policy contains the following language describing the policy holder's option to choose from full coverage (uncoordinated) or excess coverage (coordinated):

Personal Injury Protection - Medical Options - You may choose between full and excess coverage. Full coverage is for those who have no other health benefit coverage, as well as those covered under Medicare. Excess coverage is for those who have other health coverage and choose to collect from that coverage first in case of an auto accident. Excess coverage is offered at a reduced premium.

Citizens Mot. Summ. J., Ex. A at PGID 1671. The Personal Auto Policy Declarations reflect that Ms. Saunders chose excess (coordinated) coverage: “Personal Injury Protection: Medical Excess $300 Deductible.” Id. at PGID 1677. Accordingly, the Personal Injury Protection Coverage contains the following COB provision:

B. We do not provide Personal Injury Protection Coverage for:
1. Medical expenses for you or any “family member” when Excess Benefits for medical expenses is indicated in the Declarations:
a. To the extent any similar benefits are paid, payable or required to be paid under the provision of any valid and collectible:
i. individual, blanket or group accident or disability insurance, health maintenance organization, or similar ...

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