Tim Mackey v. Terri Lynn Johnson
2017 U.S. App. LEXIS 16014
| 8th Cir. | 2017Background
- Timothy Scherf was treated at the Duluth Clinic for a 2010 chest abnormality and later (Oct 2011) diagnosed with Stage IV lung cancer; he died in Aug 2012.
- Scherf was a participant in the Minnesota Laborers Health and Welfare Fund (the Fund), which paid $236,700.16 for his medical treatment and asserted a Plan subrogation interest in recoveries from third parties.
- Scherf (through counsel Meshbesher & Spence) and Terri Johnson (as wrongful-death trustee) sued the Clinic for wrongful death; Meshbesher informed the Fund and a subrogation agreement was signed acknowledging the Fund’s asserted interest.
- Mediation materials by Johnson listed medical expenses and noted the Fund’s subrogation claim; at mediation counsel at times disclaimed pursuing medical-expenses recovery but documents were inconsistent.
- Johnson and the Clinic executed settlement agreements/releases that variously referenced inclusion of medical liens/subrogation claims and Johnson’s agreement to satisfy the Fund’s subrogation rights “if any” as determined by a court.
- The Fund sued under ERISA § 1132(a)(3) seeking reimbursement from the settlement for the medical expenses it paid; the district court granted summary judgment for the Fund for $236,700.16 and the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement between Johnson and the Clinic included payment for Scherf’s medical expenses | Johnson: settlement did not actually resolve medical-expense claims; at mediation counsel disclaimed medical-expense recovery | Fund/Clinic: settlement language, mediator materials, and prior acknowledgments show the settlement encompassed medical liens/subrogation | Settlement documents and admissions rendered the agreement ambiguous, but extrinsic evidence and admissions show the parties settled the medical-expenses claim; affirmed inclusion |
| Whether the Fund’s ERISA subrogation interest covers the amount recovered in settlement | Johnson: Fund should be limited to medical expenses causally attributable to Clinic’s negligence | Fund: Plan grants first-priority subrogation in any recovery for medical expenses; not limited by causation | Plan’s subrogation clause covers “any recovery”; Fund entitled to the portion of settlement attributable to medical expenses regardless of causation limitation asserted by Johnson |
| Whether a wrongful-death trustee can recover decedent’s medical expenses under Minnesota law (germane to settlement validity) | Johnson: wrongful-death trustee cannot recover decedent’s medical expenses under Minn. Stat. §§ 573.01–.02 | Fund: trustee could at least colorably assert medical-expense damages; parties free to settle debatable claims | Court: statutory text and precedent support at least a colorable claim for medical expenses; public policy favors enforceable settlements of debatable claims |
| Whether summary judgment for the Fund was appropriate | Johnson: factual ambiguity and legal challenge over scope of recovery preclude summary judgment | Fund: undisputed evidence of payment, subrogation agreement, settlement language and admissions support recovery | De novo review: record supports that medical-expense claim was settled and Plan entitles Fund to the recovery; summary judgment affirmed |
Key Cases Cited
- Malloy v. U.S. Postal Serv., 756 F.3d 1088 (8th Cir. 2014) (standard for reviewing summary judgment)
- Dykes v. Sukup Mfg. Co., 781 N.W.2d 578 (Minn. 2010) (settlement agreements interpreted under contract principles; ambiguity rules)
- Ryan Contracting Co. v. O’Neill & Murphy, LLP, 883 N.W.2d 236 (Minn. 2016) (look to agreement language to determine parties’ intent)
- Prescott v. Swanson, 267 N.W. 251 (Minn. 1936) (historic recognition that medical expenses can be recoverable in wrongful-death context)
- Johnson v. Consolidated Freightways, Inc., 420 N.W.2d 608 (Minn. 1988) (addressing viability of certain wrongful-death claims)