Ashley Healthcare Plan v. Michael Dillard

177 So. 3d 175, 2015 Miss. LEXIS 390, 2015 WL 4658711
CourtMississippi Supreme Court
DecidedAugust 6, 2015
Docket2014-CA-00322-SCT
StatusPublished
Cited by8 cases

This text of 177 So. 3d 175 (Ashley Healthcare Plan v. Michael Dillard) is published on Counsel Stack Legal Research, covering Mississippi Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ashley Healthcare Plan v. Michael Dillard, 177 So. 3d 175, 2015 Miss. LEXIS 390, 2015 WL 4658711 (Mich. 2015).

Opinions

KITCHENS, Justice,

for the Court:

¶ 1. O.D., a minor child, filed a petition in Pontotoc County Chancery Court for approval of a settlement her parents had negotiated with car insurance companies for injuries she had suffered in a car accident. On the day of the hearing, Ashley Healthcare Plan, O.D.’s health insurance coverage provider, which had a subrogation lien against the proceeds of O.D.’s claim, removed the case to federal court, arguing that the Mississippi law which required the chancery court’s approval of O.D.’s settlement claims, Mississippi Code Section 93-13-59, was preempted by the federal Employment Retirement Income Security Act of 1974 (“ERISA”). The United States District Court for the Northern District of Mississippi held that ERISA did not preempt the state law and remanded the case to the chancery court without awarding attorney’s fees to O.D. On motion from O.D.’s parents, the Ponto-toc County Chancery Court awarded O.D. attorney’s fees, holding that Ashley Healthcare Plan’s removal to federal court was contrary to clearly established law and that it was done for the purpose of delaying litigation. Although O.D. could have sought recovery of attorney’s fees under Rule 54 of the Federal Rules of Civil Procedure, frivolous removals to federal court also are subject to the Mississippi Litigation Accountability Act. Miss.Code Ann. §§ 11-55-1 to 11-51-15 (Rev.2012). Furthermore, Ashley Healthcare Plan’s removal to federal court was contrary to two decades of case law which uniformly held that Mississippi’s law requiring chancery court approval of minors’ settlements is not preempted by ERISA and that Ashley Healthcare Plan was seeking a remedy in federal court that was unavailable to it under the ERISA Civil Enforcement Clause. We therefore affirm the judgment of the chancery court because its award of attorney’s fees on this basis was not an abuse of discretion.

FACTS AND PROCEDURAL HISTORY

¶2. On March 6, 2011, Mercedes Na-varette failed to yield the right-of-way to oncoming traffic on Highway 278 in Ponto-[178]*178toe County and struck a car driven by Kimberly Dillard. Dillard’s three-year-old daughter, O.D., was in the back seat. As a result of the collision, O.D. suffered significant injuries. Her right leg was fractured, and she had bruises on her face, scalp, neck, and thigh. O.D. was airlifted to Le Bonheur Children’s Hospital in Memphis. For the treatment of her leg, O.D. spent three nights in the hospital and had two separate surgeries.

¶ 3. Later that summer, on August 21, 2011, O.D.’s parents, Kimberly Dillard and Michael Dillard, petitioned the Pontotoc County Chancery Court for appointment as O.D.’s general guardians.1 The Chancery Court granted that petition. The purpose of the Dillards’ guardianship over O.D. was to pursue a claim for the child’s personal injuries and medical care. As the court-appointed general guardians for O.D., the Dillards engaged in settlement negotiations with Allstate Insurance Company, Navarette’s insurance carrier. The Dillards submitted, for the Pontotoc County Chancery Court’s approval, a compromise settlement of $25,000, Naverette’s liability insurance policy’s maximum limit of applicable coverage. The Dillards also made an uninsured/underinsured claim against their own automobile insurance carrier, State Farm Insurance Company. The Dillards obtained a settlement offer from State Farm for $50,000, its policy limit.

¶ 4. In accordance with Mississippi law regarding minors’ legal settlements,2 on October 13, 2011, the Dillards filed a Petition for Authority to Settle and Compromise Doubtful Claim of Minor. The Dil-lards sought approval from the Pontotoc County Chancery Court of the settlement of O.D.’s claims against both State Farm Insurance and Allstate Insurance for a total of $75,000, which was all of the available liability insurance coverage.

¶ 5. In addition to informing the chancery court of the settlement offers, the petition averred that Ashley Furniture Industries maintained an employer-funded healthcare plan and that the plan was established under the Employee Retirement Income Security Act of 1974 (ERISA). Because O.D. was a minor child and dependent of her father, Michael Dillard, an employee of Ashley Furniture Industries at its Ecru factory, O.D. was a covered beneficiary of the plan. During the course of O.D.’s car-wreck-related medical treatment, the Ashley Healthcare Plan (“the plan”) had paid $33,683.58 toward O.D.’s medical bills. The plan previously had asserted its intention to enforce a subrogation lien, contained within the language of the plan, for the amount of all of O.D.’s medical bills against all sums O.D. might receive from the automobile insurance companies. The Dillards requested of the chancery court that the car insurance settlement proceeds be distributed for the minor’s exclusive benefit,- i.e., paid to the [179]*179minor. To this end, the Dillards also sought denial of reimbursement to the plan for the medical expenses paid on her behalf on account of the accident.

¶ 6. On October 14, 2011, the Dillards served on the plan a summons under Rule 81 of the Mississippi Rules of Civil Procedure, along with their Petition for Authority to Settle and Compromise Doubtful Claim of Minor. The summons directed Ashley Healthcare Plan to appear at a hearing at 9:30 a.m. on November 14, 2011, at the Pontotoc County Chancery Court to assert its claimed subrogation lien against O.D.’s settlement.

¶7. On November 14, 2011, the day that the Pontotoc County Chancery Court was to conduct the hearing on settlement of O.D.’s insurance claims, the plan removed the case to the United States District Court for the Northern District of Mississippi, asserting that O.D.’s “claim against [Ashley Healthcare Plan] falls within the scope of ERISA’s civil enforcement statute ... and is completely preempted and is therefore removable.”

¶ 8. On November 17, 2011, the Dil-lards filed a Motion to Remand the case, arguing that the United States District Court for the Northern District of Mississippi has “held that the Employment Retirement Income Security Act of 1974 (‘ERISA’) does not preempt Mississippi law, which requires chancery court approval for the administration of a minor’s estate. Therefore this case must be remanded to state court for lack of subject matter jurisdiction.” The Dillards further alleged that “this case was removed for the improper purpose of avoiding or delaying the finality of the administration of the minor’s estate currently pending in the Chancery Court of Pontotoc County, Mississippi.” The Dillards also moved under 28 U.S.C. § 1447 for attorney’s fees incurred by them as a result of Ashley’s removal of the case to federal court.

¶ 9. On December 12, 2011, the plan filed a Response to the Dillards’ Motion to Remand, arguing that “[t]he only question before the Court is whether or not Plaintiffs’ well-pleaded complaint filed in state court raises a claim within the federal subject matter jurisdiction of this Court.” Again, the plan averred that O.D.’s claim in chancery court fell squarely within ERISA’s enforcement provisions and that her claims were completely preempted by federal law.

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Bluebook (online)
177 So. 3d 175, 2015 Miss. LEXIS 390, 2015 WL 4658711, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ashley-healthcare-plan-v-michael-dillard-miss-2015.