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Publix Super Markets, Inc. v. Figareau

United States District Court, M.D. Florida, Tampa Division

June 12, 2019

PUBLIX SUPER MARKETS, INC., Plaintiff,
v.
PATRICIA FIGAREAU, et al., Defendants.

          REPORT AND RECOMMENDATION

          Anthony E. Porcelli United States Magistrate Judge.

         Plaintiff Publix Super Markets, Inc. (“Publix”) initiated this action as Plan Sponsor and Plan Administrator of the Group Health Benefit Plan (the “Plan”), pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(3), and to 28 U.S.C. § 2201, against Defendants Patricia Figareau (“Figareau”) and Frantz Paul (“Paul”), individually and on behalf of L.P. (“L.P.”), a minor; Maria D. Tejedor (“Tejedor”); and Diez-Arguelles & Tejedor, P.A. (the “Firm”).[1] Essentially, Publix seeks to remedy violations of an employee welfare benefit plan established and maintained by Publix for the purpose of providing medical expense benefits to eligible Publix employees and their eligible dependents. By the instant motion, Publix seeks entry of a preliminary injunction (Doc. 13), which Defendants oppose (Doc. 25). For the following reasons, it is recommended that Publix's Motion for Preliminary Injunction (Doc. 13) be granted.

         I. Background

         Figareau and Paul are the natural parents of L.P., who is a minor child.[2] Paul works for Publix, and he and his eligible family members, including L.P., remain enrolled in the Plan. Publix operates as Plan Sponsor and Plan Administrator for the Plan, which functions as a self-funded employee welfare benefit plan, as opposed to a plan insured through the purchase of a health insurance policy from a commercial carrier, within the meaning of ERISA.

         Following a brachial plexus injury sustained at L.P.'s birth, Figareau and Paul initiated a medical malpractice action, entitled Armondo R. Payas, Guardian ad Litem for L.P., a minor, Patricia Figareau and Frantz Paul, individually and on behalf of L.P., a minor v. Bond & Steele Clinic, P.A., d/b/a The Bond Clinic and Vincent Gatto, M.D. and Jennifer Salamon, M.D., No. 53-2011CA-006192-0000-LK, in the Tenth Judicial Circuit, in and for Polk County, Florida (the “Medical Malpractice Action”). The Attorney Defendants represented Figareau, Paul, and L.P. in the Medical Malpractice Action. Prior to the conclusion of the Medical Malpractice Action, the Plan paid $88, 846.39 in medical expense benefits to or on behalf of L.P. in connection with the brachial plexus injury suffered at L.P.'s birth. Subsequently, the Attorney Defendants obtained a settlement in the Medical Malpractice Action in 2018, which resulted in a fund that exceeded the value of the Plan's $88, 846.39 reimbursement interest (Doc. 47).[3] Despite this recovery, Publix alleges that Defendants refused to reimburse Publix the medical expense payments that the Plan made for services rendered in connection with the brachial plexus injury allegedly caused by the negligence of medical providers. According to Publix, Defendants withheld certain funds from the gross settlement of the Medical Malpractice Action, which currently remain in the Attorney Defendants' trust account. Indeed, during several hearings in this matter, defense counsel represented and reiterated that the funds remain in a trust account.

         Defendants voluntarily dismissed with prejudice the Medical Malpractice Action. Following dismissal, Defendants initiated another action in probate, entitled In Re: The Qualified Settlement Funds Trust, in the Ninth Judicial Circuit, in and for Orange County, Florida, No. 2015-CP-333521 (the “Probate Action”). In the Probate Action, Defendants seek to reduce the Plan's lien interest. To that end, on April 12, 2019, Defendants filed an Amended Motion to Allocate Settlement Recovery and Motion to Reduce Collateral Source Lien (the “Allocation Motion”) (Doc. 13, Ex. A). The Allocation Motion indicates that Defendants seek to reduce Publix's $88, 846.39 ERISA lien interest to $5, 915.00 (Doc. 13, Ex. A). The Allocation Motion also urges the probate court to apply state-law principles, most of which concern the Medicaid program, to a self-funded ERISA plan.[4] At the same time they filed the Allocation Motion, Defendants scheduled an evidentiary hearing on the Allocation Motion to occur on May 8, 2019 (Doc. 13, Ex. A). Notably, Defendants did not name Publix as a party in the Probate Action.

         Given the pending Probate Action and Publix's perceived inability to protect the Plan's interests in that proceeding, Publix initiated this action under Section 502(a)(3) of ERISA to obtain appropriate equitable relief to enforce the Plan's reimbursement provisions.[5] More specifically, Publix seeks reimbursement of the settlement funds and equitable relief in the form of a constructive trust or equitable lien on the amounts held or controlled by Defendants as a result of the settlement of the underlying Medical Malpractice Action. According to Publix, it seeks to impose a constructive trust on a specifically identifiable fund - proceeds Figareau and Paul received on behalf of L.P. when they settled the Medical Malpractice Action.

         By the instant motion, Publix seeks entry of a preliminary injunction against Defendants (Doc. 13). In doing so, Publix contends that ERISA authorizes injunctive relief to prevent a violation of the Plan's rights under the express terms of the Plan and its rights under ERISA, the Anti-Injunction Act does not preclude this Court from enjoining the Probate Action, and Publix satisfied each of the factors required for issuance of a preliminary injunction. Defendants respond in opposition (Doc. 25). Essentially, Defendants argue that Publix failed to meet its burden for obtaining injunctive relief, Publix failed to demonstrate that it is the real party in interest entitled to enforce its lien claim, and injunctive relief is inappropriate since the underlying settlement involves claims brought by a minor and must therefore be supervised by a Florida court.

         Following two hearings on related matters, the undersigned conducted a hearing on the Motion for Preliminary Injunction (the “Injunction Hearing”). During the Injunction Hearing, the parties presented oral argument regarding the merits of injunction relief in this action. The parties also indicated that Defendants scheduled a hearing on the Allocation Motion to occur on July 2, 2019 in the Probate Action, with Defendants not willing to cancel or postpone the hearing on the Allocation Motion. Nothing in the record indicates that Defendants canceled, rescheduled, or postponed the hearing on the Allocation Motion or that Defendants' intention to proceed with the hearing has wavered.

         II. Standard of Review

         The decision to grant or deny a preliminary injunction falls within the discretion of the district court. Int'l Cosmetics Exch., Inc. v. Gapardis Health & Beauty, Inc., 303 F.3d 1242, 1246 (11th Cir. 2002) (citation omitted); Carillon Importers, Ltd. v. Frank Pesce Int'l Grp. Ltd., 112 F.3d 1125, 1126 (11th Cir. 1997) (citation omitted). In determining whether a preliminary injunction should issue, the court considers whether the moving party demonstrated (1) a substantial likelihood of success on the merits; (2) irreparable harm to the moving party unless the injunction issues; (3) that the threatened harm to the moving party outweighs the potential harm the proposed injunction may cause the opposing party if the injunction issues; and (4) if issued, the injunction would not disserve or be adverse to the public interest. Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000) (citations omitted). Since a preliminary injunction is an extraordinary and drastic remedy, a court should not issue a preliminary injunction unless the moving party clearly establishes the burden of persuasion as to each of the four prerequisites. Four Seasons Hotels and Resorts, B.V. v. Consorcio Barr, S.A., 320 F.3d 1205, 1210 (11th Cir. 2003).

         III. Discussion

         A. Likelihood of Success on the Merits

         The first factor in determining whether a preliminary injunction should issue is whether Publix can show a substantial likelihood that it will prevail on the merits of its claims. Based on the record before the Court, Publix demonstrated a substantial likelihood of success on the merits of its claims. Namely, Publix asserts a claim for injunctive relief and reimbursement pursuant to § 502(a)(3), 29 U.S.C. § 1132(a)(3), to enjoin Defendants from dissipating or disposing of the settlement funds pending final determination by this Court that the Plan's terms should be enforced as written. Under § 502(a)(3), a plan beneficiary, participant, or fiduciary may bring a civil action to enjoin any act or practice which violates any provision of ERISA or the terms of the plan, or to obtain other equitable relief to redress such violations or to enforce any provisions of ERISA or the terms of the plan. 29 U.S.C. § 1132(a)(3). Publix demonstrated a likelihood of success on its § 502(a)(3) claim for imposition of a constructive trust to accomplish reimbursement of medical expense payments made on behalf of L.P. in the Medical Malpractice Action.

         It is well-settled that a plan fiduciary may bring a civil action seeking equitable relief under § 502(a)(3) of ERISA to enforce the terms of its plan and ERISA through the imposition of a constructive trust on a specifically identifiable fund. Montanile v. Bd. of Trs. of Nat'l Elevator Indus. Health Benefit Plan, 136 S.Ct. 651, 658 (2016); U.S. Airways v. McCutchen, 133 S.Ct. 1537, 1545 (2013); Sereboff v. Mid Atlantic Med. Srvs., Inc., 547 U.S. 356, 361-63 (2006). In Sereboff, the Supreme Court held that, where an ERISA plan creates an “equitable lien by agreement, ” a plan fiduciary may seek equitable relief under § 502(a)(3). 547 U.S. at 364-65. The plan in Sereboff included an “Act of Third Parties” provision, which required beneficiaries to reimburse the plan from “[a]ll recoveries from a third party (whether by lawsuit, settlement or otherwise), ” and applied when a beneficiary received benefits due to an illness or injury resulting from “the act or omission of another person or party.” Id. at 359. In that case, the Sereboffs were involved in an automobile accident and subsequently settled their claims against several third parties. Their fiduciary of the health plan, Mid Atlantic Medical Services, Inc. (“Mid Atlantic”), filed a § 502(a)(3) action seeking to recover medical expenses incurred by the plan on the Sereboffs' behalf from the settlement fund. Id. at 360. The Sereboffs' lawyer had already distributed the settlement proceeds before Mid Atlantic filed suit, but the parties agreed to preserve a portion of the fund in an investment account pending the resolution of the lawsuit. Id. The Supreme Court concluded that Mid Atlantic could proceed with its § 502(a)(3) claim, noting that the fund sought by Mid Atlantic was “specifically identifiable” and “within the possession and control of the Sereboffs.” Id. at 362-63. The Court affirmed that Mid Atlantic properly sought “equitable relief” under § 502(a)(3). Id. at 369.

         Relying on the Supreme Court's holding in Sereboff, the Eleventh Circuit in Popowski v. Parrot, 461 F.3d 1367 (11th Cir. 2006), examined the terms of the United Distributors Inc., Employee Health Benefit Plan document to find the presence of a lien by agreement. The Eleventh Circuit recognized the legitimacy of the claim under § 502(a)(3) because the United Distributors Inc., Employee Health Benefit Plan document specified both (i) the particular fund out of which reimbursement must be made and (ii) the specific portion of the fund that was due to be returned to the Plan. Id. at 1373. Publix seeks the same equitable relief to obtain the return of specific funds as the Supreme Court authorized in Sereboff and the Eleventh Circuit endorsed in Popowski. Mainly, as in Popowski, the language of the Member Handbook identifies both the fund out of which reimbursement must be made (i.e., a settlement effectuated with a third party) and the portion due the Plan (i.e., the amount of medical expense benefits paid by the Plan on behalf of the participant) (Doc. 1, Ex. B, at 44-45).[6] As a condition of receiving benefits under the Plan, participants agree to “immediately reimburse the Plan, out of any recovery made from another party, the amount of medical, prescription or other health care benefits paid for the injury or illness by the Plan . . . and without reduction for attorney's fees, costs, comparative negligence, limits of collectability or responsibility, or otherwise.” (Doc. 1, Ex. B, at 44). The Member Handbook unambiguously provides that Publix is entitled “to first and full priority reimbursement out of any recovery to the extent of the Plan's payments” (Doc. 1, Ex. B, at 45).

         The Member Handbook also addresses what happens “When a Member Retains an Attorney” (Doc. 1, Ex. B, at 45). The Member Handbook explains that, when an attorney obtains possession of settlement funds that constitute a recovery for an injury for which the Plan has paid benefits on behalf of a participant, “the member's attorney holds the recovery as a constructive trustee for the Plan, because neither the member nor the member's attorney is the rightful owner of the portion of the recovery subject to the Plan's lien” (Doc. 1, Ex. B, at 45) (emphasis added). By virtue of the Plan's provisions, Publix's ERISA equitable lien attached as soon as Defendants reached a settlement agreement to resolve the underlying Medical Malpractice Action. See Sereboff, 547 U.S. at 366 (stating “the fund over which a lien is asserted need not be in existence when the contract containing the lien provision is executed”); see also Diamond Crystal Brands, Inc. v. Wallace, Civil Action No. 1:07-CV-3172-JTC, 2010 WL 1525536, at *7 (N.D.Ga. Feb. 11, 2010) (“Once the parties settled these [tort] claims for $900, 000.00, the plan language created an equitable lien for the full amount of the medical bills the Plan paid on behalf of [the participant], which Plaintiff could enforce in equity pursuant to Section 503(a)(3) of ERISA.”) (citation omitted).

         As in Sereboff, equity allows Publix to follow the recovery into Defendants' hands as soon as the settlement fund was identified and to impose on that fund a constructive trust or equitable lien. 547 U.S. at 363-65. Indeed, courts have imposed constructive trusts to enforce a plan's equitable lien by agreement on settlement proceeds held by a trustee of his wife's special needs trust, Admin. Comm. of Wal-Mart Stores, Inc. Assocs.' Health & Welfare Plan v. Shank, 500 F.3d 834 (8th Cir. 2007), and by a conservator acting as a trustee for a trust account, Admin. Comm. for Wal-Mart Stores, Inc. Assocs.' Health & Welfare Plan v. Horton, 513 F.3d 1223 (11th Cir. 2008). Accordingly, the Plan is not limited to pursing its equitable claim against Figareau and Paul. The Plan may also pursue its § 502(a)(3) claim against the Attorney Defendants. Horton, 513 F.3d at 1229 (“The fact that Ms. Werber holds the funds as a third party does not defeat the Administrative Committee's claim” for an equitable lien or constructive trust under the plan). What matters is not the identity of the defendant but “that the settlement proceeds are still intact, and thus constitute an identifiable res that can be restored to its rightful recipient.” Id.; see also, e.g., Spinx Company, Inc. v. Goeddel, No. 6:09-cv-1771-Orl-35GJK, 2009 WL 10670808, at *2 (M.D. Fla. Oct. 23, 2009) (restraining the same Attorney Defendants who are named in this action because they “ha[d] the ability, unless restrained, to dissipate the funds . . . and place them beyond the reach of the Court and Plaintiff, thereby preventing the Court from imposing final equitable relief in this matter.”); Siemens Corp. v. Johnson, CIVIL ACTION FILE NO. 1:15-CV-694-MHC, 2016 WL 10689704 (N.D.Ga. May 19, 2016) (imposing an injunction preventing the participant and her personal injury counsel from disbursing, disposing, or otherwise dissipating annuities believed to be ...


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