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PRINCIPAL MUT. LIFE INS. CO. v. ROBERT DALE EADY

June 26, 1995

PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, Plaintiff,
v.
ROBERT DALE EADY, EADY'S SCALE CORPORATION, and CHARTER BARCLAY HOSPITAL, INC., Defendants.



The opinion of the court was delivered by: RUBEN CASTILLO

 This is a declaratory judgment action brought pursuant to the Employees' Retirement Income Security Act ("ERISA"), 29 U.S.C. ยง 1001, et seq. Plaintiff, Principal Mutual Life Insurance Company ("Principal"), seeks to determine whether or not health insurance coverage exists for Robert Dale Eady ("Eady"), under an employee welfare benefit plan issued to Eady's Scale Corporation ("Eady's Scale") by Principal. Charter Barclay Hospital, Inc. ("Charter Barclay") rendered medical services to Eady, and purports to hold an assignment over his benefits. *fn1"

 Principal moves for summary judgment against Charter Barclay on the grounds that Eady was not an employee of Eady's Scale as defined by the benefit plan. Principal also contends that summary judgment is appropriate because Charter Barclay failed to exhaust the administrative remedies provided for by the plan. For the following reasons, Principal's Motion for Summary Judgment is GRANTED.

 BACKGROUND

 The facts in this case have been gleaned from the parties' Rule 12(M) and 12(N) Statements. *fn2" Principal has underwritten an ERISA-defined group health insurance policy ("the plan"), through which participating employers are able to provide medical care benefits to their employees. Rule 12(M) P 1, 3. Effective November 1, 1991, Eady's Scale became a participating employer in the plan. Rule 12(M) P 2.

 In October, 1991, Eady applied for coverage under the plan, indicating that he was a full time employee of Eady's Scale. Rule 12(M) P 4. Principal accepted Eady as an eligible individual under the Plan. Rule 12(M) P 5. When he was accepted, Eady received a copy of the summary plan description issued by Principal to all eligible employees of Eady's Scale. Rule 12(M) P 6. The summary plan description explains the terms of the policy:

 
A Member's effective date for Member Medical Expense Insurance will be explained in this Article, if the Member is Actively at Work on that date. If the Member is not Actively at Work on the date insurance would otherwise be effective, such insurance will not be in force until the day of return to Active Work. However, this Actively at Work requirement may be waived.

 Rule 12(M) P 7. "Actively at Work" is defined as "the act or performance of all a Member's normal job duties at the Participating Unit's usual place or places of business." Rule 12(M) P8. Member refers to any person who is employed on other than a temporary or part-time basis and who is regularly scheduled to work for the participating employer for at least thirty hours a week. Rule 12(M) P9.

 On December 28, 1992, Principal notified Eady by letter that his claim for benefits had been denied because he was not eligible for coverage under the plan, and advised him that he had sixty days to request a review of the decision. Rule 12(M) P 14. Eady did not make such a request. Rule 12(M) P 14. However, Charter Barclay, through its agent Med-Services, Inc., did inquire into Principal's denial of coverage for Eady in a letter dated May 25, 1993. Rule 12(N) P 16. On July 7, 1993, Principal responded, stating that since Eady had not responded within sixty days to the December 28, 1992, letter, it considered its decision to deny Eady's claim for benefits final. Letter from Van Wyk to Arzate of July 7, 1993.

 This declaratory judgment action was filed by Principal on July 19, 1993. Rule 12(M) P 17. Eady's Scale subsequently entered into a stipulation whereby it agreed that "pursuant to the Summary Plan Description, Robert Dale Eady is not and was never eligible for coverage under the Plan." Rule 12(M) P 17. In accord with this stipulation, the Court entered judgment for Principal against Eady's Scale. Rule 12(M) P18. As a result of Eady's failure to appear and answer, default judgment was entered against him on July 14, 1994. Rule 12(M) P 19.

 DISCUSSION

 A. Standard for Summary Judgment

 Summary Judgment is proper if the record shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). A genuine issue of material fact is present "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "Only disputes over facts that might effect that outcome of the suit under governing law will properly preclude the entry of summary judgment." Id. The moving party has the burden to "show" that there is no evidence supporting the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. ...


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