United States District Court, C.D. Illinois, Rock Island Division
PLUMBERS AND PIPEFITTERS LOCAL NO. 25 WELFARE FUND, and MARIE HAASE, as Administrative Manager, Plaintiffs,
WES SEDAM, Defendant.
SARA DARROW, District Judge.
This case involves Plaintiff Plumbers and Pipefitters Local No. 25 Welfare Fund's ("Fund") claim against a Fund participant, Defendant Wes Sedam, for allegedly failing to reimburse the Fund according to the terms of its benefits plan. Defendant counterclaimed, alleging that the Fund wrongfully denied him benefits. Plaintiff has moved to strike Defendant's affirmative defense and dismiss his counterclaim. For the reasons set forth below, Plaintiff's Motion to Strike Affirmative Defense, ECF No. 17, is GRANTED and Plaintiff's Motion to Dismiss Counterclaim, ECF No. 17, is DENIED.
The Fund is an employee welfare benefit plan, as defined by the Employee Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Compl. ¶ 2, ECF No. 1. The benefit plan was established under a collective bargaining agreement between Local No. 25 and certain employers. Id. The Fund provides medical benefits to participants, which cover portions of the cost of medical bills, hospitalization expense, medical treatments and medical supplies. Id. at ¶ 4. The agreement between the Fund and a participant-titled "Plan Document and Summary Plan Description" ("governing document")-provides that, if a participant recovers medical expenses from a third party, any benefits provided by the Fund must be reimbursed, at least to the extent of the participant's recovery from the third party. Compl., Ex. 3 at 3-5, ECF No. 1-3. The Fund's right of reimbursement must be satisfied before the participant's third party recovery is reduced to pay for court costs or expert, attorney, or filing fees, or other costs of litigation, absent the prior written consent of the Fund. Id. at 5.
On July 1, 2008, Sedam was injured in an automobile accident. On December 18, 2008, he signed a "Reimbursement Acknowledgment" in which he allegedly agreed to reimburse the Fund for medical expenses it covered from any legal action or settlement arising from the accident. Compl., Ex. 4, ECF No. 1-4. The signed Acknowledgment provided that "Written Verification From the Attorney Must Be Attached, " but the Fund did not secure the signature of the attorney identified by Sedam. Affirm. Def. ¶¶ 3-5, ECF No. 14. The Fund then provided Sedam with medical-expense payments and disability benefits totaling $51, 602.17. Compl. ¶ 8. On January 18, 2012, Sedam allegedly obtained a settlement based on the automobile accident, but refused to reimburse the Fund. Id. at ¶¶ 9-10. Sedam alleges that he has personally paid for, or been forced to forego, medical treatment the Fund wrongfully failed to cover. Answer ¶ 10, ECF No. 12. He has counterclaimed for the medical costs and/or injury he claims he incurred as a result of the Fund's failure to provide medical benefits in accordance with the agreement between Sedam and the Fund. Countercl. ¶¶ 5-9, ECF No. 11.
On September 12, 2013, the Fund moved to strike Sedam's affirmative defense, arguing that the Fund has a right to reimbursement regardless of the validity of the Reimbursement Acknowledgment. Mot. Strike & Dismiss ¶¶ 5-7, ECF No. 17. The Fund simultaneously moved to dismiss Sedam's counterclaim, arguing that under ERISA and the terms of the benefits plan, Sedam has no right to benefits for conditions caused by a third party for which a settlement was obtained. Mot. Strike & Dismiss ¶¶ 9-10.
I. Motion to Strike Affirmative Defense
Sedam maintains that any obligation he has to reimburse the Fund is rendered unenforceable by the Fund's failure to obtain his attorney's authorization, contrary to the express requirement in the Reimbursement Acknowledgment. Affirm. Def. ¶ 8. The Fund argues that this affirmative defense fails as a matter of law because the obligation to reimburse the Fund stems from the plan's governing document, not the Reimbursement Acknowledgment. Mem. Supp. Mot. Strike 3-4, ECF No. 18. Sedam does not deny his participation in the plan. Likewise, he does not dispute that the governing document includes a duty to reimburse advances following third-party recoveries, although he does deny the provision's applicability to his case. Answer ¶¶ 1-5. His only challenge is based on the Reimbursement Acknowledgment.
A. Legal Framework
1. Striking Affirmative Defenses
The Federal Rules of Civil Procedure provide that a court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). Affirmative defenses presenting "substantial questions of law or fact" should not be struck. ConocoPhillips Pipe Line Co. v. Rogers Cartage Co., No. 3:11-cv-497, 2012 WL 1231998, at *1 (S.D. Ill. 2012) (citing U.S. v. 416.81 Acres of Land, 514 F.2d 627, 631 (7th Cir. 1975)). A motion to strike may not be granted "if the insufficiency of the defense is not clearly apparent on the face of the pleadings, nor can be reasonably inferred from any state of facts in the pleadings." 416.81 Acres of Land, 514 F.2d at 631. The purpose of this strict standard is to provide a party with the opportunity to prove a defense if there is a possibility that it may succeed after a full hearing on the merits. Id. (citation and internal quotation marks omitted).
2. ERISA Plans
ERISA permits a qualifying plan's participant, beneficiary, or fiduciary to bring a civil action "(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or terms of the plan." 29 U.S.C. § 1132(a)(3). Reimbursement from a plan participant following a third-party recovery, as required under the terms of an ERISA benefits plan, qualifies as ...