Preview:

IN THE DISTRCT COURT OF THE UNITED STATES
FOR THE DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
Betty H. Lominick, as Personal Representative                                                          )
of the Estate of Henry Wayne Lominick, Deceased, )
                                                                                                       )
Plaintiff,                                                                                             )
                                                                                                       )   OPINION and ORDER
versus                                                                                                 )
                                                                                                       )   C/A No. 8:11-945-TMC
Michelin Tire, Michelin PPO, United States                                                             )
Postal Services, and Blue Cross Blue Shield                                                            )
Federal Employee Program,                                                                              )
)
Defendants.                                                                                            )
This matter comes before the court pursuant to that Motion for Summary Judgment filed
by Defendant, Blue Cross Blue Shield Federal Employee Program (hereinafter referred to as
“BCBS”) (Dkt. # 18); that Motion for Summary Judgment filed by Michelin PPO and Michelin
Tire (hereinafter collectively referred to as “Michelin”) (Dkt. # 20); and that Motion to Dismiss
filed by the United States Postal Services (hereinafter referred to as “USPS”) (Dkt. # 28).
For the reasons set forth below, the court determines that said Motions should be granted.
BACKGROUND
The Plaintiff is the duly appointed Personal Representative of the Estate of Henry Wayne
Lominick, deceased.   Plaintiff filed an action in the Probate Court for Newberry County, South
Carolina, seeking a determination as to responsibility for certain debts owed to various health
care entities which provided services to the decedent.   Said providers have filed claims against
the estate in the Probate Court.   The Plaintiff alleged that the decedent, during his lifetime, had
been employed with a tire company which was ultimately acquired by Michelin Tire, as well as
the USPS.   The action was removed to the United States District Court for the District of South
Carolina by Defendant, Michelin, with the consent of the other Defendants. (Dkt. # 1).  The basis




for removal was preemption of the Plaintiff’s claim by § 502(a) of the Employee Retirement
Income Security Act of 1974, as amended (hereinafter referred to as “E.R.I.S.A.”), 29 U.S.C. §
1132(a).
The Plaintiff initially brought this action as Personal Representative of the Estate of Mr.
Lominick seeking benefits that she claims the Estate is owed by the Defendants based upon
medical expenses incurred while he was employed by Michelin and USPS.   There is no dispute
that Mr. Lominick was a retiree of a predecessor company to Michelin and that he was eligible to
participate in a welfare benefit plan through Michelin that provided medical and prescription
drug benefits to eligible retirees and their eligible dependents.
Prior to his death, Mr. Lominick was also employed by the USPS for a period of time
and, while employed with USPS, was enrolled in the Federal Employee Health Benefit Plan.
Pursuant to an agreement with the federal government, Blue Cross Blue Shield of South Carolina
administered the plan.
LEGAL STANDARD
Summary Judgment.  Summary judgment is appropriate “if the pleadings, the discovery
and disclosure materials on file, and any affidavits show there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.”   Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317 (1986).   The court, in considering a motion for
summary judgment, must view the facts in the light most favorable to, and draw all reasonable
inferences in favor of, the non-moving party.   EEOC v. Central Wholesalers, Inc., 573 F. 3d 167
(4th Cir. 2009).
Rule 12(b)(1) Motion.  The Plaintiff has the burden of proving that subject matter exists.
When a Defendant challenges subject matter jurisdiction pursuant to Rule 12(b)(1), Fed. R. Civ.




P.,  the  district  court  may  consider  evidence  outside  the  pleadings  without  converting  the
proceeding to one for summary judgment.   The court should grant such a motion to dismiss
“only if the material jurisdictional facts are not in dispute and the moving party is entitled to
prevail as a matter of law.”   Richmond, Fredericksburg & Potomac R. Co. v. United States, 945
F.2d 765, 768 (4th Circ. 1991).
MOTION FOR SUMMARY JUDGMENT FILED BY BCBS
Defendant, BCBS, asserts that it is entitled to summary judgment as a matter of law
because the Plaintiff’s claims relate to the payment of benefits under a Federal Employee Health
Benefit base plan, such that any disputes relating to claims made to the plan are preempted by the
Federal Employee Health Benefit Act (FEHBA).  The court is inclined to agree.
The  Federal  Employee’s  Health  Benefit  Program  is  administered  by  the  Office  of
Personnel Management (hereinafter referred to as “OPM”) pursuant to the FEHBA, 5 U.S.C.
Section 8901-8914, which authorizes the OPM to contract with private carriers to offer various
plans to federal employees.   OPM has contracted with Blue Cross Blue Shield Service Benefit
Plan, administered by local Blue Cross Blue Shield companies, such as Blue Cross Blue Shield
of South Carolina, for claims administration services.
In the event of a dispute concerning a claim for benefits, the regulations implementing
the FEHBA require the exhaustion of administrative remedies by covered individuals, both with
the carrier and OPM, before seeking judicial review.                                                    5 C.F.R. Section 890.105(a)(1); 5 C.F.R.
Section                                                                                                 890.1.107(d)(1).    The  OPM’s  administrative  review  process  for  denied  claims  is
mandatory.  Caudill v. Blue Cross and Blue Shield, 999 Fed. 2d. 74 (4th Cir. 1993).
Plaintiff’s allegations that BCBS has improperly denied benefits due the decedent under
his FEHBA-Health Benefit Plan must be pursued through appropriate administrative remedies.




Once such administrative remedies are exhausted, if the claimant desires to pursue litigation, that
litigation must be pursued against OPM, and BCBS is not a proper party to such litigation.
Pursuant to the FEHBA, litigation to review final action by OPM must be brought against OPM
and not the health benefits carrier.                                                                    5 U.S.C. Section  8912, Burgin v. Office of Personnel
Management, 120 F.3rd 494 (4th Cir. 1997).   Accordingly, BCBS should be dismissed as a party
to this action.
MOTION FOR SUMMARY JUDGMENT FILED BY MICHELIN
The Motion for Summary Judgment filed by Michelin is grounded upon the assertion that
the relief sought by the Plaintiff falls under the mandate of the Employees Retirement Income
Security Act of 1974 (E.R.I.S.A.), 29 U.S.C. Section 1001, et seq.   The court finds that the
Complaint against Michelin, which alleges only state law claims, is preempted by E.R.I.S.A and
must be dismissed.
The decedent was, at one time, an employee of a company which was acquired by
Michelin Tire North America, Inc. and, as a retiree of a predecessor company to Michelin, was
eligible to participate in the company’s welfare benefit plan providing medical and prescription
drug benefits to eligible retirees and dependents.   It is undisputed that said plan is an E.R.I.S.A.
governed welfare benefit plan.
E.R.I.S.A.  provides  the  exclusive  remedy  for  an  employee  contesting  a  decision
regarding benefits under an employee welfare benefit plan.   Pilot Life Insurance Company v.
Dedeaux, 481 U.S. 41 (1987).    Because this case involves a challenge to a decision concerning
benefits under an employee welfare benefit plan, it is governed by E.R.I.S.A, which preempts
and supersedes  “any and all state laws insofar as they may now or hereafter relate to any
employee benefit plan”.                                                                                 29 U.S.C. Section 1144(a).   The United States Supreme Court has held




that E.R.I.S.A. and federal law provide the exclusive remedy for an employee contesting a
decision regarding benefits under an employee benefit plan.   Pilot Life, 41 U.S. at 52.   The court
has held that E.R.I.S.A is the exclusive vehicle for actions by E.R.I.S.A.-plan participants and
beneficiaries asserting improper processing of a claim for benefits.    An E.R.I.S.A. welfare
benefit plan participant must both pursue and exhaust plan remedies before gaining access to the
federal courts.   Makar v. Health Care Corp., 872 F.2d 80 (4th Cir. 1989).   Accordingly, the
Motion for Summary Judgment should be granted.
MOTION TO DISMISS BY USPS
USPS  also  asserts  that  pursuant  to  Fed. R.  Civ.  P.  12(b)(1),  the  action  should  be
dismissed because the Plaintiff has failed to exhaust her administrative remedies under the
FEHBA.   As required by 5 C.F.R. Section 890.105 and pursuant to 5 C.F.R. Section 890.107(c),
suits contesting the denial of health benefits under the FEHBA must be brought against OPM
and not against the carrier or the carrier’s subcontractor.   USPS asserts that it is not a proper
party to this action as a matter of law.
As previously noted, the decedent was at one time, an employee of the United States
Postal Service.   While employed with USPS, Mr. Lominick enrolled in the Federal Employees
Health Benefit Plan (FEHBA).   Pursuant to a contract with the federal government, Blue Cross
Blue Shield of South Carolina administered the plan.   FEHBA was enacted by Congress to
establish a comprehensive program to provide federal employees and retirees with subsidized
health care benefits.   In enacting the FEHBA, Congress delegated authority to OPM to negotiate
health benefit contracts with carriers to promulgate regulations and to administer the program.        5
U.S.C. Section  8906,  8909.    Pursuant to the provisions of the FEHBA, the OPM is given




responsibility for contracting with private carriers and interpreting plans to determine carrier
liability in an individual case.                                                                          5 U.S.C. 8901, et seq.
To make a claim for payment, a covered person must submit a claim to the carrier of the
plan.  If the plan denies benefits, the claim is submitted for reconsideration.   If reconsideration is
denied, the beneficiary may seek review by OPM.   If OPM denies the claim, the claimant may
seek judicial review of the decision.                                                                     5 C.F.R. Section 890.105(a)(1), et seq.   In such actions for
judicial review, the OPM is the proper party, not the employer.   The Plaintiff’s dispute as to
payment or nonpayment of benefits is not a matter to be determined by the United States Postal
Service, which is the former employer of the decedent.   Litigation seeking review of final action
by OPM, once administrative remedies are exhausted, must be brought against OPM and not
against the carrier, the carrier’s subcontractor or agency employer.  Until administrative remedies
are exhausted through appropriate channels and until OPM has denied such benefits, this court
lacks subject matter jurisdiction to entertain the Plaintiff’s claim.                                     5 C.F.R. Section 890.107(c).
Accordingly, the Motion of USPS should be granted.
PLAINTIFF’S RESPONSE
In her response to the Motions for Summary Judgment and the Motion to Dismiss filed
by the Defendants, the Plaintiff acknowledges that under the Code of Federal Regulations
enacted pursuant to the FEHBA, the proper administrative procedure for the filing of claims was
not followed.   The Plaintiff asserts that it would be inequitable and contrary to the notions of
justice and fair play to deny coverage, alleging that the insurers erroneously believed the
decedent was covered by Medicare.   Plaintiff also argues excusable neglect.   The Plaintiff cites
no legal authority upon which the court might rely to avoid dismissal of her claims in light of the




applicable law cited by the Defendants.   The Plaintiff also concedes that BCBS and USPS are
not proper parties to the action.
This court expresses no opinion, for purposes of entry of this Order, as to the coverage or
non-coverage of the decedent’s claims by the plans in effect at the time of his employment with
the respective entities identified herein.   The court is not unsympathetic to the Plaintiff’s plight.
However, the court is constrained by the controlling law governing her claims.
CONCLUSION
For the reasons stated above, the court has determined, pursuant to the standards set forth
herein, that the Motions for Summary Judgment and Motion to Dismiss must be granted.
Accordingly, the Motion for Summary Judgment by Blue Cross Blue Shield Federal Employee
Program (Dkt. # 18) is GRANTED.   Further, the Motion for Summary Judgment by Michelin
PPO and Michelin Tire (Dkt. # 20) is GRANTED.   Further, the Motion to Dismiss filed by the
United States Postal Service (Dkt. # 28) is GRANTED.
Provided, however, this Order shall be without prejudice to the right of the Plaintiff to
pursue to such remedies, if any, as may be available under appropriate administrative remedies
and/or applicable law.
IT IS SO ORDERED.
s/Timothy M. Cain
Judge, United States District Court
Greenville, SC
January 25, 2012

Download 22141.pdf

South Carolina Law