[24 FSM R. 208]

CIVIL ACTION NO. 2015-1009

Hearing: January 24, 2023
Decided: August 1, 2023

APPEARANCES:

For the Plaintiff:            Johnny Meippen, Esq.
                                     P.O. Box 705
                                     Weno, Chuuk FM 96942

For the Defendant:       Stephen V. Finnen, Esq.
                                     P.O. Box 1450
                                     Kolonia, Pohnpei FM 96941

HEADNOTES

Civil Procedure – Summary Judgment

The standard for granting a summary judgment motion is whether the pleadings, depositions, answers to interrogatories, and admissions on file, taken together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law. The burden is on the movant, and the court, in reviewing a motion for summary judgment, must view the facts, and any inferences deduced therefrom, in the light most favorable to the party opposing the summary judgment. Before summary judgment will be granted it must be clear what the truth is, and any doubt as to the existence of a genuine issue of material fact will be resolved against the movant. Chuuk Health Care Plan v. College of Micronesia-FSM, 24 FSM R. 208, 212 (Chk. 2023).

Civil Procedure – Summary Judgment – Procedure

The order of burdens in a summary judgment motion is that the movant has the initial burden of showing, through the pleadings, depositions, etc., that there are no triable issues of fact. Once the movant has done this, the burden shifts to the non movant. It is not enough for the non movant to simply disagree with the movant and attempt to show, through affidavits or otherwise, that there is a triable issue. The party opposed to the motion must show that there is enough evidence supporting his position to justify a decision upholding his claim by a reasonable trier of fact. If the evidence, affidavits, and pleadings present a sufficient disagreement to require submission to a fact finder, then the motion should be denied. If, however, the evidence is so one sided that one party must prevail as a matter of law, then the motion should be granted. Chuuk Health Care Plan v. College of Micronesia-FSM, 24 FSM R. 208, 212-13 (Chk. 2023).

Constitutional Law – Chuuk; Insurance – Health Insurance

The Chuuk Constitution requires that the state government provide for the establishment and administration of a comprehensive system of medical or health insurance which is mandatory for all employed residents of the state while present in the State. Chuuk Health Care Plan v. College of Micronesia-FSM, 24 FSM R. 208, 213 (Chk. 2023).

Insurance – Health Insurance

The Chuuk Health Care Plan automatically covers all Chuuk residents, employed or not, except noncitizens who are not employed and are not dependents of enrollees, including persons stationed on Chuuk who are employed by a national government entity. Coverage may be extended, by agreement with other governments or entities, to otherwise ineligible persons, such as non-Chuukese who are not present on an ongoing basis (and thus aren't Chuuk residents) or non-citizen residents who are not employed, such as retirees. Chuuk Health Care Plan v. College of Micronesia-FSM, 24 FSM R. 208, 214 (Chk. 2023).

Insurance – Health Insurance; Insurance – Premiums

By its express terms, the 2001 financing mechanism for the Chuuk Health Care Plan is only imposed on private sector employers and employees and Chuuk State government and its employees and fails to impose charges on FSM entities or their employees. Chuuk Health Care Plan v. College of Micronesia-FSM, 24 FSM R. 208, 215 (Chk. 2023).

Statutes – Construction

Courts apply the plain meaning whenever possible to the interpretation of statutes. Chuuk Health Care Plan v. College of Micronesia-FSM, 24 FSM R. 208, 215 (Chk. 2023).

COURT'S OPINION

DENNIS L. BELCOURT, Associate Justice:

This is a collection action in which Plaintiff, Chuuk State Health Care Plan ("the Plan") is seeking to obtain payment of unpaid health insurance premiums and an award of interest and penalties from Defendant, College of Micronesia-FSM (COM-FSM), under Chuuk State Law No. 2-94-06 ("the Act"). This matter is before this Court on cross-motions for summary judgment. The Court denies the Plan's motions and grants COM-FSM's motion in part. My reasoning is as follows.

I. BACKGROUND

The Plan brought this action on August 3, 2015. In its complaint, it asserts that COM-FSM is an employer under the Act of seventy (70) persons in Chuuk, obligating it to "enroll or otherwise cause to be enrolled" said employees and to pay health care premiums by withholding the employee's share and paying it and the employer's share to the Plan. The Plan asserts that COM-FSM has refused to make such payments for the period 2009 to the date of the action, and is accordingly liable for premiums in the amount of $79,040¹ and interest, at 10%, in the amount of $47,424, plus an additional ten-fold statutory penalty for discouraging or otherwise preventing employees from enrolling in the basic or the first level of optional coverage. With the penalty, the total prayer for relief seeks $1,264,640, plus attorneys' fees.

COM-FSM answered the complaint on September 10, 2015, admitting and denying allegations thereof, including denying liability as an employer, and asserting ten affirmative defenses (there are two "seventh affirmative defenses") which are 1. Failure to state a claim upon which relief may be granted; 2. Failure to mitigate damages; 3. Claims are barred by the statute of limitations; 4. Claims are barred by laches, estoppel, waiver, and COM-FSM has detrimentally relied "on the fact that it provided the same or better insurance coverage than offered by plaintiff, to employees temporarily or permanently based in Chuuk"; 5. Payments of claims by COM-FSM's other insurance coverage offsets the claims made in this action; 6. COM-FSM was acting in a good faith effort in the protection of a legally cognizable interest; 7. COM-FSM did not receive notice from the Plan that it is a functioning entity and that it has been established, solvent and is up and running per the Act; 8. Plaintiff is a non-solvent entity and COM-FSM should not be obligated to purchase; 9. Plaintiff does not have to participate because it has provided other coverage; and 10. Some of COM-FSM's employees have dependent coverage through the Plan and should not be required to obtain individual coverage.

On October 14, 2015, the Plan moved for summary judgment on the issue of liability, stating, among other things, that the Plan became operational in 2002, imposing premiums, offering benefits and incurring obligations. It stated that COM-FSM Employees residing in Chuuk are automatically enrolled in the plan by operation of law, thereby subjecting the defendant COM-FSM to its statutory responsibility to pay over employee and employee contributions. The Plan attached as exhibit A an affidavit of Karsom Enlet, Executive Director of the Plan, dated October 24, 2015, which in turn attached and incorporated "as if fully set forth in length [sic] . . . copies "of all regulations adopted in order to get the Plan into operation."² Included is Chapter III, part 1.3.8, which, under the heading "Financing of Premium" imposes "on the gross wages of all employed residents of the State of Chuuk which shall be payable by employers and employees in accordance with the following:"

On October 28, 2015, COM-FSM filed a motion to enlarge time to file a responsive pleading to the motion for summary judgment, until the passage of ten days after receipt of "full and complete discovery responses from" the Plan. On November 30, 2015, COM-FSM filed a motion to deem requests for admissions admitted and to compel responses to discovery (interrogatories and requests for productions of documents).

On October 28, 2015, COM-FSM filed a motion to enlarge time to file a responsive pleading to the motion for summary judgment, until the passage of ten days after receipt of "full and complete discovery responses from" the Plan. On November 30, 2015, COM-FSM filed a motion to deem requests for admissions admitted and to compel responses to discovery (interrogatories and requests for productions of documents).

On April 1, 2016, COM-FSM moved for summary judgment that, as a national government entity, it "is not subject to claims for premiums and mandatory enrollment by" the Plan. COM-FSM contends that it is excluded from liability by the Act and the regulations adopted by the plan. The Act specifies that regulations set the contributions, and those regulations (Part 1.3.8 of Chapter III of the regulations, supra), refer only to a medical security tax that is imposed on Chuuk State Government, its employees, and private sector employers and their employees.

COM-FSM also reads section 3-2 of the Act and regulation Part 1.05, authorizing the Plan's Board "to enter into agreements with the National Government, international organizations, or other entities to extend the benefits of this Act to persons within Chuuk not otherwise eligible therefor," as implying that National Government employees are only eligible by agreement. COM-FSM further contends that as it is not required to enroll its employees, it is not liable for penalties for its failure to do so.

On April 28, 2016,³ the Plan served on counsel for COM-FSM an opposition and counter motion for summary judgment "on the issue of whether defendant is exempted from paying premiums." In its opposition and counter motion, the Plan contends that Article X, section 7 of the Chuuk Constitution and Title III, sections 1-4 and 3-1 of the Act, COM-FSM employees who are physically employed in or employed residents of Chuuk, are covered. There is no exception for those employed by a National Government entity. Part 1.3.8 of the regulations cannot exclude employees from National Government entities. The Plan interprets Chapter III, Part 1.3.8 to extend to all employees.

On May 16, 2016, COM-FSM filed a reply supporting its motion for summary judgment, contending that Part 1.3.8 of the regulations, if it does not extend the premium charge to FSM or FSM entity employees, is nevertheless binding on the Plan until changed.

On April 28, 2017, COM-FSM filed an opposition to the Plan's October 14, 2015 motion and April 28, 2016 counter motion for summary judgment (having previously sought an enlargement of time until the Plan completed discovery responses). After reciting interrogatories, answers, and responses to requests for admissions, COM-FSM notes its objection to the Plan as an unreasonable burden on interstate businesses and commerce, and again raises the issue in its own summary judgment motion that a national entity cannot "under the current statutes and regulations of" the Plan be compelled to join the Plan. COM-FSM then analyzes its affirmative defenses, concluding that they are not overcome by the Plan's motion, contending also that the Plan never complied with the requirement that it bill COM-FSM, and that the Plan is applying the law retroactively in violation of due process.

On June 18, 2018, the Plan filed a renewed motion for partial summary judgment on the issue of liability in which it addresses COM-FSM's affirmative defenses. For example, it counters COM-FSM's estoppel argument by saying that there is no injustice in the Plan's enforcing Chuuk's constitutional mandate by paying for the coverage, that COM-FSM officials Joakim Peter knew of the Plan and had informed COM-FSM President Spensin James thereof; and that a tax (or fee) as imposed on residents of Chuuk who are employed there is not a burden on interstate commerce.

On November 7, 2019, the then presiding justice, Chief Justice Yamase, held a hearing on pending motions and a status conference. In the order entered⁴ on the hearing/status conference, the Court took note of an amendment to the regulation that was purportedly promulgated in 2012, apparently broadening who would have to pay the premiums set by regulations from Chuuk State Government to public sector employers and employees. The Court stated that "[r]esolution of the pending motions in this case will largely turn on whether amended CSHCP regulations that were purportedly promulgated in 2012 obligated COM-FSM in Chuuk to pay the premiums set by that regulation."The Court took the motions under advisement. The purported 2012 regulation was not discussed in the hearing.

On November 21, 2019, COM-FSM filed a brief to supplement the Summary Judgment Motions, purportedly as requested by the Court at the November 7, 2019 hearing. The brief discussed the issue of whether the premium charge was a (1) tax or fee, and (2) whether it regulates or restricts interstate commerce in violation of the FSM Constitution. COM-FSM's contention seems to be that the tax or fee burdens interstate commerce because a COM-FSM employee who moves between states would need to have coverage in each state.

On March 25, 2020, COM-FSM filed a request for clarification on the Court's determination, set forth in its January 17, 2020 order, to hold an evidentiary hearing on whether the 2012 amendment was properly promulgated, applies to COM-FSM, since the plan has never argued the alleged amendment applies in this case.

On November 17, 2022, the Plan once again filed a renewed motion for partial summary judgment. In its renewed motion, the Plan refers to the 2012 amendment but asserts it did not change things. According to the Plan, the references in the original Chapter III, Part. 1.3.8 only to Chuuk State and private sector employees was not intended to exempt FSM entity employees.

On December 5, 2022, COM-FSM responded to the Plan's November 22, 2022 renewed motion. Besides reiterating its prior positions, COM-FSM objected to and moved to strike any mention of the 2012 amendment, as it was not previously raised. A January 24, 2023 status conference was held concerning a number of Plan cases against FSM entities and instrumentalities.

At the January 24, 2023 status conference, a hearing was scheduled concerning the purported 2012 regulations in litigation involving the Plan and other FSM entities, but the Plan and COM-FSM agreed to have this matter separate from those other matters. The Plan does not argue the 2012 amendment as a basis for applying the tax to COM-FSM, and it is a question for the Court to determine whether that point has been waived.

II. SUMMARY JUDGMENT

A. Standard

The standard for granting a motion for summary judgment is whether

"the pleadings, depositions, answers to interrogatories, and admissions on file, taken together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FSM Civ. R. 56(c). See also Bank of Guam v. Island Hardware, Inc., 2 FSM Intrm. 281, 284 (Pon. 1986). Moreover, the burden is on the movant, and the Court, in reviewing a motion for summary judgment, must view the facts, and any inferences deduced therefrom, in the light most favorable to the party opposing the summary judgment. Id. Of course, before summary judgment will be granted it must be clear what the truth is, Poller v. Columbia Broadcasting Sys., Inc., 368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458 (1962), and any doubt as to the existence of a genuine issue of material fact will be resolved against the movant.

Berman v. Santos, 7 FSM R. 231, 235 (Pon. 1995).

The order of burdens in a motion for summary judgment is as follows:

[T]he moving party has the initial burden of showing, through the pleadings, depositions, etc., that there are no triable issues of fact.

Once the moving party has done this, however, the burden shifts to the non moving party. It is not enough for the non moving party to simply disagree with the moving party and attempt to show, through affidavits or otherwise, that there is a triable issue. The party opposed to the motion "must show that there is enough evidence supporting his position to justify a decision upholding his claim by a reasonable trier of fact.

. . . If the evidence, affidavits, and pleadings present a sufficient disagreement to require submission to a fact finder, then the motion should be denied. If, however, the evidence is so one sided that one party must prevail as a matter of law, then the motion should be granted.

Alik v. Kosrae Hotel Corp., 5 FSM R. 294, 295-96 (Kos. 1992) (citations omitted).

In summary, a movant for summary judgment needs to prove its prima facie factual case as to why it is entitled to judgment as a matter of law; to defeat a motion for summary judgment where the movant has proven a prima facie case, the opponent needs to establish, at least, that a genuine issue of material/triable fact exists, i.e., that a factual element of movant's prima facie case is in genuine dispute.

B. The Plan's Prima Facie Case For COM-FSM's Liability for Fees

The Plan's October 14, 2015 Motion for Summary Judgment on the Issue of Liability contends the following as its case for partial summary judgment that COM-FSM owes it fees for the period 2009-2015: (1) established by the Act (Chuuk State Law No. 2-94-06), the Plan since 2002 has imposed premiums, offered benefits, and incurred obligations; (2) COM-FSM employs more than fifty (50) employees at its Chuuk campus; (3) "COM-FSM's employees physically residing in Chuuk (a) are automatically enrolled in the Plan by operation of law," Motion at 3; (b) "thereby subjecting the defendant COM-FSM to its statutory responsibility to" pay over employer and employee shares of premiums; id., (4) through various means, including a letter to COM-FSM President Spensin James and a letter dated 2008, and a letter from the Chuuk Attorney General in 2010, COM-FSM has been put on notice "that it is mandated by the Chuuk Constitution to enroll in the Health Care Plan"; id. at 2; and (5) COM-FSM has not paid health insurance premium contributions, even though the Plan has already paid for medical treatment incurred by some of COM-FSM's employees residing in Chuuk;" id. (citing Ex. "A" thereto, aff. of Karsom Enlet).

C. COM-FSM Disputes the Law, Not the Facts

COM-FSM does not deny that it has employed persons in the State of Chuuk without withholding or remitting money to the Plan. Rather, in both its April 1, 2016 motion for summary judgment and its April 28, 2017 opposition to the Plan's October 14, 2015 motion and April 28, 2016 counter motion for summary judgment, it disputes whether it, as a National Government entity, is exempt from Plan enrollment. Further, citing Section 1.3.8 of Chapter III of the regulation adopted by the Plan, COM-FSM contends that it is exempted by that regulation from liability for remitting premiums. For answers to COM-FSM's contentions, we turn to the legal framework of the Act.

D. The Legal Framework

Health Care Coverage

Section 7 of Article X of the Chuuk State Constitution, which took effect in 1989, reads as follows:

The State Government shall provide for the establishment and administration of a comprehensive system of medical or health insurance which is mandatory for all employed residents of the State of Chuuk while present in the State. All revenues received under this system of medical or health insurance, and all other revenues received by the Health Department as payment for medicine and medical services, shall be separated from any general fund established by the Legislature and used only for medical purposes.

The Chuuk State Legislature enacted Chuuk State Law No. 2-94-06 (the "Chuuk Health Care Act of 1994" ("the Act")) to

improve the provision and quality of health to residents of the State of Chuuk, to establish a financial system to provide universal coverage of an essential level of health care for all eligible enrollees and to create a means for collection of health care premiums for additional coverage.

Chk. S.L. No.2-94-06, § 1-2.

Section 3-1 of the Act mandates coverage for residents of Chuuk as follows:

Every resident of Chuuk shall be enrolled in and shall be eligible to receive benefits as provided under this Act, except that unemployed noncitizens residing in the State who are not dependents of enrollees are not eligible, except as provided in Section 3-2 of this Act.

Section 3-2 of the Act, in pertinent part as follows, permits the Plan, through its Board, to enter into agreements to cover persons who in Chuuk but are not employed Chuuk residents, as follows:

The Board is authorized to enter into agreements with the National Government, international organizations, or other entities to extend the benefits of this Act to persons within Chuuk not otherwise eligible therefor.

The plain meaning of Section 3-1 and 3-2 of the Act, read together, is that the Plan automatically covers all Chuuk residents, employed or not, except noncitizens who are not employed and are not dependents of enrollees. Chuuk Health Care Plan v. Department of Educ., 18 FSM R. 491, 496 (Chk. 2013). According to the clear terms of those provisions, the class of persons who are automatically enrolled includes persons stationed on Chuuk who are employed by a National Government entity, such as COM-FSM. Section 3-2 does not apply to resident employees of FSM entities who are already covered by operation of section 3-1. Rather section 3-2 is in the law to allow coverage to be extended, by agreement with other governments or entities, to otherwise ineligible persons, such as non-Chuukese who are not present on an ongoing basis (and thus aren't Chuuk residents) or non-citizen residents who are not employed, such as retirees.

Financing

For purposes of financing, the Act divides coverage into two categories: (1) universal coverage for essential care, as provided for by regulation, for which the Plan Board assesses the requisite amounts and sources and receives payments, and (2) additional levels of coverage, for which the Board determines the premium amounts to be charged by the Plan, bills and receives payments thereon. Sections 4-7, 5-1 and 5-2. The assessment and determination of premium amounts to be charged are done by regulation. Id. The Act contemplates that financing of the essential level of health insurance coverage would be pursuant to a proposal submitted by the Board to the legislature. Section 8-2. The Act further provides that "no level of coverage may be extended, no mandatory premiums may be imposed, nor obligation to provide benefits deriving therefrom may be undertaken prior to the enactment of a financing system for coverage of persons under the essential level of care pursuant to Title VII⁵ of this act." Section 10-1. In other words, the Plan is to be operative only on the enactment of the financing system for the essential level of health insurance mandated by the law.

On May 16, 2001, the Governor of the State of Chuuk signed regulations approved by the Plan Board, which included a provision taxing private sector employers, private sector employees, Chuuk State, and Chuuk State employees on the employees' gross wages at the rate of 2.5% for the employer's share and 2.5% for the employee's share. This financing mechanism is in Chapter III, part 1.3.8 of Chuuk State Health Care Plan Regulations submitted with the Plan's October 14, 2015 motion for summary judgment ("the Regulations"). The funds received from the tax are to be deposited in the Trust Fund established by the Act. Part 1.3.3 of the Regulations and the Act, section 6-1(1) and (2). In the Regulations, the Board, with the Governor's approval, also set premiums for additional coverage. Part 2.0.3(3).

The financing mechanism in Chapter III, Part 1.3.8 of the Regulations, as adopted in 2001, by its express terms is only imposed on private sector employers and employees and Chuuk State government and its employees. By its terms, that provision fails to impose charges on FSM entities or their employees.⁶ As COM-FSM is undisputedly an FSM entity, the provision does not apply to it.

The Plan urges that this Court read Chapter III, Part 1.3.8 of the Regulations as promulgated in the 2001 regulations to apply the tax to all employers and employees, noting the intent of Article X, section 7 of the Constitution and the Act to provide universal coverage to Chuuk employees and their dependents.

Article X, section 7 does not speak to who pays for the program it requires to be established, only that the program must be provided to all employed residents present in Chuuk and funds received must be kept separate:

The State Government shall provide for the establishment and administration of a comprehensive system of medical or health insurance which is mandatory for all employed residents of the State of Chuuk while present in the State. All revenues received under this system of medical or health insurance, and all other revenues received by the Health Department as payment for medicine and medical services, shall be separated from any general fund established by the Legislature and used only for medical purposes.

Id.

In sections 5-1 and 5-2, the Act sets certain requirements for billing for premiums for additional coverages, which premiums are provided for in Chapter III, Part 2.0.3 of the Regulations. Given the precise wording of the Act and its differentiation between assessments for the essential level of coverage and premiums for additional coverage, I find that the references to premiums in sections 5-1 and 5-2 do not apply to assessments for the essential level coverage.

On the other hand, there are requirements that the amount necessary to fund the essential level coverage be assessed by regulation and that "[t]he aggregate of all universal coverage payments and premium amounts, along with other sources of income for the Plan, shall be sufficient to pay all costs of benefits under the Plan, the costs of administering the Plan and unexpected demands on the Plan for payment and other purposes." Section 5-1(1).

These requirements do not justify this Court in rewriting Chapter III, Part 1.3.8 as enacted in the 2001 regulations to reach beyond what its plain meaning provides. Courts apply the plain meaning whenever possible to the interpretation of statutes. Rodriguez v. Bank of the FSM, 11 FSM R. 367, 378 (App. 2003); FSM v. Wainit, 12 FSM R. 105, 111 (Chk. 2003) (when the statute's language is plain and unambiguous, it declares its own meaning and there is no room for construction). So it is with regulations as well. FSM v. Nifon, 14 FSM R. 309, 313 (Chk. 2006). Unable to construe Chapter III, Part 1.3.8 to apply to COM-FSM and its employees in Chuuk, I find that the Plan is not entitled to summary judgment as to liability of COM-FSM under the Complaint for the period 2009-13.

The 2012 Regulation Amendment

In its order dated January 17, 2020, this Court deferred action on COM-FSM's motion to dismiss because it did not know whether the 2012 Regulation Amendment was the law, and, without so knowing, it could not determine whether good grounds exist for the motion. On March 25, 2020, COM-FSM objected to inclusion of the purported amendments in this case, contending that the Plan had not argued for their applicability.

My reading of the arguments of the Plan in this case is that the Plan's first line of argument is that the Act and the 2001 Regulations do not exempt COM-FSM from the tax set forth in Chapter III, Part 1.3.8. Had it prevailed in its first line of argument, COM-FSM would (subject to other defenses it may have) be facing liability for the entire period from 2009 to 2015. This first line of argument, if it failed (as it has), was not to the exclusion of the possibility that a back-up argument would apply, i.e., that the 2012 Regulation applied the tax in Chapter III, Part 1.3.8 to COM-FSM.

As the evidentiary hearing on the 2012 Regulation Amendment has not been held, my decision on the COM-FSM's motion for summary judgment is to grant it in part at this time, covering the time period from 2009 to the date to be determined later if and when the 2012 Regulation Amendment became the law, and my ruling on the time period after that date will await the outcome of the evidentiary hearing. I will likewise defer ruling on whether the Plan is entitled to partial summary judgment to after that hearing.

III. CONCLUSION

COM-FSM's motion is granted in part. The Plan's motions are denied. The Court will receive evidence and hear argument as to the 2012 Regulation Amendment at the evidentiary hearing on August 22, 2023, at 10:00 am.

Footnotes:

¹ Premiums are calculated as follows: for years 2009-1013, $9,500 biweekly salary x 26 pay periods x 4 years; for years 2013 to 2015, $9,500 biweekly x 6% x 26 pay periods for 2 years.

² The motion attached most of the 2001 Regulations but did not attach any amendments thereto.

³ However, it appears that the Plan's opposition and counter motion was not officially filed with the court until August 28, 2016. Given that COM-FSM filed a motion to enlarge time to respond on May 16, 2016.

⁴ The order was entered on January 17, 2020.

⁵ This appears to be a typo, and should instead be Title VIII.

⁶ Note that the Plan claims reimbursement rights as to other coverage of FSM National Government employees residing in Chuuk (such as through MiCare). See Regulations, Chapter V, Part 3.0.1 (coordination of benefits).