Health and Welfare v. James Ridler

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
No. 96-4031
HEALTH AND WELFARE PLAN FOR *
EMPLOYEES OF REM, INC.; DOUGLAS *
MILLER, Plan Administrator for *
the Health and Welfare Plan for *
Employees of REM, Inc., *
*
Plantiffs-Appellees, * Appeal from the United States
* District Court for the
v. * District of Minnesota.
*
JAMES B. RIDLER, * [NOT TO BE PUBLISHED]
*
Defendant-Appellant, *
*
VICKIE MADSON; RENVILLE COUNTY, *
*
Defendants. *
Submitted: June 13, 1997
Filed: September 10, 1997
Before LOKEN, REAVLEY* and JOHN R. GIBSON, Circuit Judges.
PER CURIAM.
James Ridler appeals the district court’s1 grant of summary judgment
to appellees, the Health and Welfare Plan for REM, Inc.
*
The HONORABLE THOMAS M. REAVLEY, United States Circuit Judge
for the United States Court of Appeals, Fifth Circuit, sitting by
designation.
1
The Honorable Richard H. Kyle, United States District Judge
for the District of Minnesota.
and the Plan Administrator. While an employee at REM, Ridler was severely
injured in a motorcycle accident, and the Plan expended over $400,000 in
medical care and wage loss benefits. Ridler sued those allegedly
responsible for the accident in state court. Pursuant to a settlement, two
of the defendants deposited their combined insurance policy limits
($450,000) into the state court pending resolution of the present action.
The Plan filed this suit in federal court seeking the deposited funds under
its subrogation agreement. The district court found that the Plan was
entitled to reimbursement in the amount of $406,114.50, and granted
appellees’ motion for summary judgment. We affirm.
Ridler contends that he settled the subrogation claim with the Plan.
On March 13, 1996, a representative of Great West Life and Annuity
Insurance Co., to whom the Plan Administrator delegated certain non-
discretionary Plan functions, offered to compromise the reimbursement claim
for $137,443.00, exactly 50% of the $274,886.39 in benefits paid into the
state court at that time. In a conversation between the representative,
Lavina Reis, and Ridler’s attorney, James Lord, on June 3, 1996, Lord
stated that $137,443.00 was not enough and suggested that Great West reduce
the $1 million cap by the amount paid. The representative informed him
that Great West would not consider a set-off in lieu of reimbursement.
Lord concluded the conversation by notifying the representative that since
the parties could not resolve their differences, Ridler would pursue action
in state court.
Lord told Reis, in essence, that the offer was not acceptable and
then suggested that Great West forgo reimbursement for a set-off. This was
an attempt to materially alter the terms of the offer, and constitutes a
counter-offer. The Restatement of Contracts states:
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(1) A counter-offer is an offer made by an offeree to his
offeror relating to the same matter as the original offer and
proposing a substituted bargain differing from that proposed by
the original offer.
(2) An offeree’s power of acceptance is terminated by his
making of a counter-offer, unless the offeror has manifested a
contrary intention or unless the counter-offer manifests a
contrary intention of the offeree.
RESTATEMENT (SECOND) OF CONTRACTS § 39 (1979).
Under Minnesota law, an acceptance that seeks to vary, add to or
qualify the terms of an offer is not positive and unequivocal, and
constitutes a counter-offer and a rejection of the original offer.
Travelers Ins. Co. v. Westridge Mall Co., 826 F. Supp. 289, 292 (D. Minn.
1992), aff’d. 994 F.2d 460 (8th Cir. 1993)(citing Hough v. Harvey, 410
N.W.2d 53, 55 (Minn. Ct. App. 1987)). The district court did not err by
finding that Lord’s uncontroverted statements presented a counter-offer and
a rejection, and terminated his power to accept the original offer.
Moreover, Ridler’s attempt to accept the offer on June 13th was not
within a reasonable time. Great West’s offer did not contain a specified
deadline for acceptance. Therefore, it lapsed after a “reasonable time.”
RESTATEMENT (SECOND) OF CONTRACTS § 41 (1979). According to both the Second
Restatement and Corbin on Contracts § 2.16, what constitutes reasonable
time is a fact question which depends on all the circumstances existing
when the offer and attempted acceptance are made. Great West’s
reimbursement interest was increased by $130,000 between the time the offer
was made and Ridler attempted acceptance. Despite the fact that only a
short period of time had lapsed, the circumstances surrounding the offer
had radically changed. The district court did not err by concluding that
even if Ridler had not rejected the offer, the acceptance was not made
within a reasonable time.
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Ridler challenges the amount of reimbursement to which the Plan is
entitled. However, Ridler has presented no evidence to support his
contention that a fact issue exists with respect to the proper amount, nor
does he even suggest a more appropriate figure. In his opposition to the
Plan’s motion for summary judgment, Ridler objected to the Plan’s
calculation of money expended because of double-charging on certain items.
The Plan took this into consideration and adjusted the total accordingly.
The district court adopted the adjusted amount. There was no error.
Ridler also challenges the Plan’s status as a self-funded benefits
plan subject to ERISA preemption. Specifically, Ridler asserts that there
is no ERISA preemption because the Plan obtained stop-loss coverage from
Great West. The Plan Administrator submitted an affidavit stating that the
Plan is a self-funded, employee welfare and benefit plan created and
maintained pursuant to ERISA. Ridler failed to present specific facts to
controvert this description, or any evidence showing that the Plan had even
obtained stop-loss insurance.2 Regardless, ERISA preempts the application
of state law even though the benefits plan holds stop-loss insurance.
Lincoln Mut. Casualty Co. v. Lectron Products, Inc. Health Plan, 970 F.2d
206, 210 (6th Cir. 1992); Thompson v. Talquin Bldg. Products Co., 928 F.2d
649, 653 (4th Cir. 1991); United Food & Commercial Workers & Employers
Arizona Health & Welfare Trust v. Pacyga, 801 F.2d 1157, 1161 (9th Cir.
1986).
2
Ridler suggests that the district court erred by denying him
the opportunity to conduct discovery on the nature of the Plan,
namely its relationship with Great West and whether it was self-
funded. However, Ridler failed to file any affidavits opposing the
motion for summary judgment showing why he needed to conduct
discovery, and thus did not meet the requirements of Federal Rule
of Civil Procedure 56(f) for obtaining discovery prior to a summary
judgment determination.
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Ridler also contends that Great West, not the Plan, has the right of
subrogation and, as an insurance company, is subject to state regulation.
The only basis Ridler presents for this assertion is that the subrogation
agreement states “[i]f the covered person has received benefits under this
Plan for an illness, a sickness, or a bodily injury caused by a third
party, then Great-West may [seek reimbursement].” Ridler presents no legal
authority to support the contention that Great West is the actual party in
interest and that ERISA preemption does not apply. More importantly, the
uncontroverted affidavits of the Plan Administrator and Lavina Reis show
that REM employs Great West to execute the nondiscretionary function of
recovering sums from third parties on behalf of the Plan.
Finally, Ridler argues that the district court erred by deferring to
the Plan Administrator’s interpretation of the Plan, and ruling that the
Plan’s subrogation interest need not be reduced by the amount of attorney’s
fees incurred in the underlying tort action. Judicial review of an
interpretation by a Plan Administrator in whom such power is vested is
reviewed for abuse of discretion. Shell v. Amalgamated Cotton Garment, 43
F.3d 364, 366 (8th Cir. 1994). Abuse of discretion means “extremely
unreasonable,” Kennedy v. Georgia-Pacific Corp., 31 F.3d 606, 609 (8th Cir.
1994), and is virtually the same as arbitrary and capricious. Lutheran
Medical Center v. Contractors, Laborers, Teamsters, and Engineers Health
& Welfare Plan, 25 F.3d 616, 620 n.2 (8th Cir. 1994).
There is nothing ambiguous about the terms of the Plan, which very
clearly set forth the Plan’s subrogation rights. The Plan states that it
may choose from four reimbursement scenarios “at its sole option,” one of
which is at issue here. The Plan placed participants on notice that it
could exercise such a reimbursement
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option. There is nothing in the Plan that qualifies the right to
reimbursement by reference to costs associated with recovery, nor is there
any reference to attorney’s fees in obtaining funds from third parties.
The district court did not err by finding that the Plan Administrator’s
interpretation was not an abuse of discretion.
Ridler asserts that the district court erred by not applying the
doctrine of equitable estoppel so as to allow for the recovery of
attorney’s fees. Ridler did not specifically assert or argue an equitable
estoppel defense before the district court, and we will not consider it
here. See Singleton v. Wulff, 428 U.S. 106, 120 (1976)(a federal appellate
court does not consider an issue not passed upon below).
Affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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