Nancy G. Atkins, Liquidator of Ky. Health Coop., Inc. v. Cgi Techs. & Solutions, Inc.

339 F. Supp. 3d 619
CourtDistrict Court, E.D. Kentucky
DecidedSeptember 11, 2018
DocketCivil No: 3:16-cv-0037-GFVT
StatusPublished
Cited by6 cases

This text of 339 F. Supp. 3d 619 (Nancy G. Atkins, Liquidator of Ky. Health Coop., Inc. v. Cgi Techs. & Solutions, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nancy G. Atkins, Liquidator of Ky. Health Coop., Inc. v. Cgi Techs. & Solutions, Inc., 339 F. Supp. 3d 619 (E.D. Ky. 2018).

Opinion

Gregory F. Van Tatenhove, United States District Judge

This Court has an obligation to exercise jurisdiction granted to it by Congress. Having determined that such jurisdiction exists, and, having determined that Kentucky law does not reverse preempt the *624Federal Arbitration Act, the Liquidator asks this Court to abstain from exercising jurisdiction. However, no "exceptional circumstances" exist in this case where such abstention would be appropriate. For the foregoing reasons, CGI's Motion to Compel Arbitration is GRANTED and the Liquidator's Motion to Dismiss is DENIED.

I

The Kentucky Health Cooperative (KYHC) sought approval from the Center for Medicare and Medicaid Services (CMS) to offer health plans to Kentucky citizens in 2011 and 2012. Shortly thereafter, KYHC contracted with CGI Technologies and Solutions, Inc., whereby CGI would provide administrative services as an independent contractor for KYHC. [R. 71-1.] This Administrative Services Agreement included a section where parties agreed to arbitrate claims and disputes arising under or relating to the Agreement. [R. 9-2 at 27-28.]

Similarly, KYHC contracted with Milliman, Inc., for Milliman to perform actuary and consulting services to KYHC [Milliman, Inc., v. Roof , 3:18-cv-000012-GFVT, R. 1-2], and around the same time, KYHC contracted with Beam Partners, LLC, for Beam to provide management and support services to KYHC [Beam Partners, LLC v. Atkins , 3:17-cv-00004-GFVT; R. 4-2].

KYHC issued its initial health plan policy on January 1, 2014, but by late 2015, KYHC was insolvent and placed into rehabilitation by Franklin Circuit Court in Franklin County, Kentucky. [R. 9-1 at 3.] Pursuant to KRS § 304.33-010 et seq. , Franklin Circuit Court placed KYHC into liquidation on January 15, 2016, and appointed H. Brian Maynard, Commissioner of the Kentucky Department of Insurance, as the Liquidator. Id. Jeff Gaither and David Hurt were appointed as Special Deputy Liquidators. Pursuant to the Liquidation Order,

The Liquidator and the Special Deputy Liquidators are hereby authorized to deal with the property, business, and affairs of KYHC and KYHC's estate, and in any necessary forum, to sue or defend for KYHC, or for the benefit of KYHC's policyholders, creditors, or shareholders in the courts and tribunal, agencies or arbitration panels of this states and other states, or in any applicable federal court in the Liquidator's name as Commissioner of the Kentucky Department of Insurance, in his capacity as Liquidator, or a Special deputy in his capacity as Special Deputy Liquidator, or in the name of KYHC.

[R. 34-6 at 9.] Since that time, Nancy G. Atkins has replaced H. Brian Maynard as Commissioner of the Kentucky Department of Insurance, and thus also as the Liquidator. See KRS § 304.33-200. Donald Roof was also appointed as a Deputy Litigator for KYHC on August 14, 2017. [Milliman, Inc., v. Roof , 3:18-cv-00012-GFVT, R. 1 at 2.]

On May 13, 2016, the Liquidator sued CGI in Franklin Circuit Court for breach of contract and negligence. [R. 71-1 at 2.] The Liquidator refused to honor the arbitration clause, so CGI removed that claim to this Court and filed a Petition to Compel Arbitration. Id. These actions were consolidated here. [R. 8.] Six months later, the Liquidator sued Beam Partners and Terry Shilling, along with Janie Miller,1 Joseph E. Smith,2 the Officers and Board of Directors of KYHC, and CGI for similar breach of contract and tort claims. [Beam Partners, LLC v. Atkins , 3:17-cv-00004-GFVT; R. 4-4.] The Liquidator again refused to arbitrate, and CGI removed that action to this Court. [Jeff Gaither, Deputy *625Liquidator of Kentucky Health Cooperative, Inc. v. Beam Partners, LLC, et al. , 3:16-cv-00094-GFVT, R. 1.] Beam Partners then filed a Petition to Compel Arbitration. [Beam Partners, LLC v. Atkins , 3:17-cv-00004-GFVT; R. 1.]

In this case, the Liquidator sought remand to Franklin Circuit Court. KYHC is a Kentucky non-profit corporation with a principal place of business in Kentucky, while CGI is a business incorporated in Delaware with a principal place of business in Virginia. [R. 1 at 1.] The amount in controversy exceeds $75,000. Id. Accordingly, under a traditional analysis of diversity jurisdiction, this Court has requisite authority and subject-matter jurisdiction. 28 U.S.C. § 1332(b). However, the Liquidator sought remand for reverse preemption. [R. 49 at 3-4.] Early in 2017, this Court determined that federal diversity jurisdiction was not reverse preempted by application of the Kentucky Insurers Rehabilitation and Liquidation Law (IRLL) through the McCarran-Ferguson Act. Id. at 16. Accordingly, the Liquidator's Motion to Remand was denied. Id.

Meanwhile, in Gaither v. Beam , the Liquidator sought remand for the contract and tort action. In Gaither , however, there was not complete diversity, as both plaintiffs and several defendants were residents of Kentucky. [Jeff Gaither, Deputy Liquidator of Kentucky Health Cooperative, Inc. v. Beam Partners, LLC, et al. , 3:16-cv-00094-GFVT, R. 44 at 6.] Ultimately, this Court declined to sever the claims against the nondiverse parties and remanded for lack of jurisdiction. Id. at 30.

After these developments, this Court denied CGI's Motion to Compel Arbitration without prejudice and directed the parties to re-brief the issue based on the significantly altered procedural posture, as Gaither v. Beam had now been remanded but Atkins v. CGI Techs. & Sols., Inc. , had not. [R. 63.] Instead, CGI appealed the Court's Order to the Sixth Circuit Court of Appeals. [R. 67.]

On February 9, 2018, the Sixth Circuit vacated this Court's Order denying CGI's Motion to Compel Arbitration and remanded for further proceedings. Atkins v. CGI Techs. & Sols., Inc. , 724 F. App'x 383 (6th Cir. 2018). The Court of Appeals reviewed only this Court's denial of the Motion to Compel Arbitration and did not review any decision involving abstention. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
339 F. Supp. 3d 619, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nancy-g-atkins-liquidator-of-ky-health-coop-inc-v-cgi-techs-kyed-2018.