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Apollo Education Group Inc. v. Henry

United States District Court, D. Arizona

December 17, 2015

Apollo Education Group Incorporated, et al., Plaintiffs,
Nicholas Henry, on behalf of minor child P.H., Defendant

          For Apollo Education Group Incorporated, Apollo Group Health Plan, Plaintiffs: John C West, LEAD ATTORNEY, Lewis Roca Rothgerber LLP - Phoenix Office, Phoenix, AZ.

         For Nicholas Henry, father of minor: on behalf of P.H., Defendant: Geoffrey Mark Trachtenberg, Michael Justin Henry, LEAD ATTORNEYS, Levenbaum Trachtenberg PLC, Phoenix, AZ.

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         Honorable Diane J. Humetewa, United States District Judge.

         This action is before the Court on Defendant's Motion to Dismiss (Doc. 9). Plaintiffs have filed a Response (Doc. 10) and Defendant has filed a Reply (Doc. 11). The Court has also considered Defendant's Notice of Supplemental Authority in Support of Motion to Dismiss (Doc. 12), Plaintiffs' Response (Doc. 13) thereto, and Defendant's Reply (Doc. 14).

         I. Background[1]

         Plaintiffs Apollo Education Group, Inc. and Apollo Group, Inc. Health and Welfare Plan initiated this action by filing a Complaint

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against Defendant Nicholas Henry, the father of minor child P.H., on January 27, 2015. Plaintiffs' health care plan (the " Plan" ) provides health care benefits to its participants and is an employee welfare benefit plan as defined by the Employment Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § 1001 et seq. At all relevant times, Defendant Nicholas Henry was a participant in the Plan and P.H. was a covered dependent under the Plan.

         On October 12, 2013, P.H. was injured in an accident involving an all-terrain vehicle. (Doc. 1 at 2). As of the date of the Complaint, the Plan had paid approximately $48,000.00 for medical expenses P.H. incurred as a result of the accident. ( Id. ). Following the accident, P.H. reached settlements with third parties and/or their insurers totaling at least $125,000.00 for injuries and damages resulting from the accident. ( Id. ). Because P.H. is a minor, any settlements are contingent upon approval by the Probate Court. ( Id. ).

         Plaintiffs assert that the terms and conditions of the Plan are set forth in the Master Plan Document entitled The Apollo Group, Inc. Health and Welfare Plan. (Doc. 1 at 3). Additionally, the Master Plan Document includes several other documents, referred to as " Incorporated Documents." ( Id. ). Among the " Incorporated Documents" is the " Summary Plan Description" (" SPD" ). ( Id. ). Plaintiffs assert that " [a]s an incorporated document, the terms and conditions of the SPD are incorporated into the Plan and made a part thereof." ( Id. ).

         Plaintiffs contend that a provision in the SPD requires a covered person whose medical expenses for an injury are paid under the Plan to reimburse the Plan if he or she receives compensation from a third party who caused the injury. ( Id. ). On January 10, 2014, Plaintiffs notified Defendant of their claim for reimbursement of medical expenses paid on behalf of P.H. for injuries sustained in the accident. ( Id. ). Plaintiffs seek reimbursement from the proceeds of the settlement agreements between P.H. and the responsible third parties. (Doc. 1 at 4). Plaintiffs allege that Defendant refuses to recognize the right to reimbursement under the Plan for the medical expenses paid on P.H.'s behalf. ( Id. ).

         Based on these facts, Plaintiffs raise three causes of action. In Count One, Plaintiffs raise a claim for equitable relief under 29 U.S.C. § 1132(a)(3)(B) to enforce the terms of the Plan. (Doc. 1 at 4-5). They contend that under the terms of the Master Plan Document, Defendant promised to reimburse the Plan if recovery was obtained from a third party. Plaintiffs allege that based on the terms of the Plan, they have an equitable lien by agreement for no less than $47,930.87, which they are entitled to enforce.

         In Count Two, Plaintiffs seek injunctive relief pursuant to 29 U.S.C. § 1132(a)(3)(A). (Doc. 1 at 5-6). Plaintiffs request an injunction enjoining Defendant from disbursing settlement funds received from third parties. Plaintiffs claim the funds should be ordered set aside and preserved to protect their right to reimbursement under the Plan.

         In Count Three, Plaintiffs seek declaratory relief. (Doc. 1 at 6-7). Plaintiffs allege that a dispute exists between them and Defendant regarding proper interpretation and application of the Plan. Plaintiffs therefore seek a declaration of rights, responsibilities and obligations under the Plan.

         For relief, Plaintiffs seek equitable relief in the form of enforcement of their reimbursement rights under the Plan, injunctive and declaratory relief as noted ...

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