Patterson v. Am. Family Ins. Co.
178 N.E.3d 573
Ohio Ct. App.2021Background:
- Laura Patterson was injured in a car accident; Swagelok’s employee health plan paid her medical benefits and sought reimbursement from any recovery from the tortfeasor.
- The Pattersons sued the tortfeasor and filed a declaratory-judgment claim against Swagelok seeking a declaration that Swagelok had no contractual subrogation/reimbursement right; Swagelok counterclaimed for subrogation.
- The parties completed discovery and cross-moved for summary judgment; the Plan Document (wrap) and a Summary Plan Description (SPD) were central to the dispute; Swagelok produced the SPD earlier and produced the Plan Document later in discovery; Swagelok asserted the SPD contained a subrogation clause incorporated into the Plan.
- The trial court granted summary judgment to the Pattersons, holding Swagelok had no contractual right to subrogation (the SPD could not add terms to the Plan Document), and denied the Pattersons’ motion for sanctions under Ohio R.C. 2323.51.
- On appeal, Swagelok argued (1) it did not waive ERISA preemption by failing to plead it, (2) the Pattersons’ declaratory claim was removable to federal court as an ERISA §1132(a)(3) claim, and (3) the SPD supplied the plan’s subrogation right; the Pattersons cross-appealed the denial of sanctions.
- The appellate court affirmed: it held the preemption defense is jurisdictional (not waivable) but the Pattersons’ claim fell within ERISA §1132(a)(1)(B) (state-court concurrent jurisdiction), and the SPD could not supply a subrogation right absent incorporation into the Plan Document; sanctions denial affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Swagelok waive ERISA preemption by not pleading it? | Patterson: Swagelok waived the defense by not affirmatively pleading it. | Swagelok: Subject-matter jurisdiction defenses (ERISA preemption) cannot be waived. | Court: Jurisdictional defenses are not waivable; trial court erred to say waiver, but error harmless because claim found not preempted. |
| Is the Pattersons’ declaratory action an ERISA §1132(a)(1)(B) (state court concurrent jurisdiction) or §1132(a)(3) (federal-exclusive)? | Patterson: The suit seeks to enforce/clarify plan rights → §1132(a)(1)(B). | Swagelok: The suit seeks to enjoin the plan’s reimbursement practice → §1132(a)(3), thus exclusively federal. | Court: Claim can be properly characterized under §1132(a)(1)(B); state court had concurrent jurisdiction; not preempted. |
| Can the SPD’s subrogation clause add a contractual right to the Plan Document (i.e., is SPD the controlling plan instrument)? | Patterson: SPD is a summary only; plan document controls; no Plan/Governing Documents support subrogation. | Swagelok: SPD is a governing/planning document incorporated into the wrap and supplies subrogation/reimbursement rights. | Court: SPD is a summary and cannot add terms to the Plan Document; Swagelok produced no Governing Documents showing subrogation; no contractual right to subrogation. |
| Did Swagelok’s delay in producing the Plan Document and related statements merit sanctions under R.C. 2323.51? | Patterson: Delay and misstatements were frivolous, caused unnecessary expense, and warranted sanctions. | Swagelok: Good-faith belief the SPD served as the plan document; delay not frivolous; produced Plan Document before deposition. | Court: Magistrate and trial court did not abuse discretion; failure to produce earlier not frivolous under the circumstances; sanctions properly denied. |
Key Cases Cited
- Temple v. Wean United, Inc., 50 Ohio St.2d 317 (summary judgment standard)
- Dresher v. Burt, 75 Ohio St.3d 280 (burden-shifting on summary judgment)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (de novo review of summary judgment)
- Richland Hosp., Inc. v. Raylon, 33 Ohio St.3d 87 (ERISA limits state-court actions against benefit plans)
- Girard v. Youngstown Belt Ry. Co., 134 Ohio St.3d 79 (presumption favoring concurrent federal/state jurisdiction)
- Jim’s Steak House, Inc. v. City of Cleveland, 81 Ohio St.3d 18 (affirmative defenses waived if not pleaded)
- CIGNA Corp. v. Amara, 563 U.S. 421 (SPD statements do not themselves constitute plan terms)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (principles for interpreting ERISA plans)
- US Airways, Inc. v. McCutchen, 569 U.S. 88 (look to plan terms and manifestations of intent)
- Board of Trustees v. Moore, 800 F.3d 214 (6th Cir.) (circumstances where SPD functioned as plan document)
- Alday v. Container Corp. of America, 906 F.2d 660 (11th Cir.) (SPD functioning as plan document)
- Rhea v. Alan Ritchey, Inc. Welfare Benefit Plan, 858 F.3d 340 (5th Cir.) (SPD functioning as both SPD and written instrument)