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Anderson v. University of Utah

United States District Court, D. Utah

February 26, 2018

KYLE MIXON, Intervenor.


          Ted Stewart United States District Judge

         This matter is before the Court on the Court's request for supplemental briefing concerning whether this matter is ripe for declaratory judgment. The parties have filed their respective briefing in compliance with the Court's Order issued on December 14, 2017. For the reasons discussed below, the Court will dismiss Plaintiffs' Complaint without prejudice.

         I. BACKGROUND

         Plaintiffs are the named Trustee-Fiduciaries of the Utah-Idaho Teamsters Security Fund, which administer the employee benefit plan (“the Plan”) at issue in this action. The Plan is a self-funded “employee welfare benefit plan” as defined in 29 U.S.C. § 1002(1) and covered under the Employee Income Security Act of 1974 (“ERISA”) pursuant to 29 U.S.C. § 1003(a).

         On September 28, 2014, Intervenor Kyle Mixon[1] (“Mixon”), a “covered person” under the Plan, was seriously injured in a car accident involving Patricia Headley (“Headley”). Mixon was treated by Defendant University of Utah Hospital (“Defendant”). Plaintiffs paid all of the covered claims submitted by Defendant pursuant to the Plan, totaling more than $300, 000.

         Following the accident, Mixon brought several claims against Headley. Headley's insurance company, Farmers Insurance Company (“Farmers”), has allegedly agreed to pay $100, 000 in insurance policy limits to settle Mixon's claims against Headley. Plaintiffs and Defendant both claim first rights to the $100, 000. Defendant filed an amended hospital lien for $23, 835.32 in the Third District Court, Salt Lake County, Utah, in relation to the services it provided to Mixon, which, Defendant argues, gives it first rights to the settlement funds. Plaintiffs claim the subrogation provisions included in the Plan entitle them to “an unqualified express first dollar (priority) subrogation right and claim to the $100, 000.”[2] Plaintiffs claim that Farmers is aware of the dispute and will not disperse the settlement funds until a determination as to who has first rights is reached.

         As a result of Farmers' refusal to distribute the funds, Plaintiffs filed an action for declaratory judgment in this Court. In its Amended Complaint, Plaintiffs seek a declaratory judgment as follows:

As to Defendant, that Utah's Hospital Lien Law and Defendant's Hospital Lien asserted thereunder, are pre-empted by ERISA and Defendant has no rights thereunder in the $100, 000.00.
As to Mixon 1) that he has no rights in the $100, 000.00 . . . and 2) Under the Plan Document, Plaintiffs have the independent rights to “sue, compromise, or settle” with third parties in their own names or in the name of . . . Mixon “to the full extent of the fringe benefit payments made to or on behalf of . . . Mixon.”[3]

         In his Motion to Intervene, Mixon alleged that his agreement with Farmers to settle the claims in exchange for $100, 000 is merely an oral agreement and that “Mixon has not signed a formal settlement agreement or release, nor has he received the settlement amount from Farmers.”[4] Mixon further contends that “[i]t is within [his] discretion to reject Farmers' settlement offer and/or decide not to pursue his claims against Headley and Farmers.”[5]

         As a result of Mixon's statements regarding the settlement, the Court issued an Order on December 14, 2017, requesting supplemental briefing on whether the matter was ripe for declaratory judgment. The Court noted that, “[i]f Mixon's representations are true, then there may never be a settlement to which the subrogation provisions of Plaintiffs' benefit plan or Defendant's lien might apply, and the Court would be left issuing an advisory opinion rather than declaratory relief.”[6] Defendant and Plaintiffs submitted the requested briefing to the Court on January 10, 2018, and January 11, 2018, respectively. Mixon filed a brief joining Defendant's brief on February 2, 2018.


         Plaintiffs request declaratory judgment on the following two issues: first, the parties' respective rights to the alleged settlement funds; and second, whether the language of the Plan grants Plaintiffs the right to file suit or seek settlement, in its own name or in the name of Mixon.

         The Declaratory Judgment Act grants district courts discretionary jurisdiction[7] to issue a declaratory judgment only “[i]n a case of actual controversy within its jurisdiction.”[8] In considering a request for declaratory judgment, the Court must, therefore, first determine whether “a case of actual controversy” is presented and then may decide whether to exercise its discretion and hear the matter.

         The Supreme Court has held that a matter amounts to a case of actual controversy where “there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”[9] Part of this analysis requires finding that the conflict is “ripe for determination.”[10] In other words, “[t]he disagreement must not be nebulous or contingent but must have taken on fixed and final shape so that a court can see what legal issues it is deciding, what effect its decision will have on the adversaries, and some useful purpose to be achieved in deciding them.”[11] “Whether or not a ...

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