In Re: Diet Drugs , 200 F. App'x 95 ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
8-9-2006
In Re: Diet Drugs
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-4204
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NOT PRECEDENTIAL
IN THE UNITED STATES COURT
OF APPEALS
FOR THE THIRD CIRCUIT
NO. 05-4204
IN RE: DIET DRUGS (PHENTERMINE,
FENFLURAMINE, DEXFENFLURAMINE)
PRODUCTS LIABILITY LITIGATION
Elliot Palay,
Appellant
On Appeal From the United States
District Court
For the Eastern District of Pennsylvania
(MDL No. 1203)
District Judge: Honorable Harvey Bartle, III
Argued May 19, 2006
BEFORE: McKEE and STAPLETON, Circuit Judges,
and McCLURE*, District Judge.
(Filed August 9, 2006)
Susan B. Palay (Argued)
2458 Unicornio Street
Carlsbad, CA 92009
Attorney for Appellant
* Honorable James F. McClure, Jr., United States District Judge for the Middle District of
Pennsylvania, sitting by designation.
Andrew A. Chirls (Argued)
Christopher L. Soriano
Wolf, Block, Schorr & Solis-Cohen
1650 Arch Street - 22nd Floor
Philadelphia, PA 19103
Attorneys for Appellee, AHP Settlement Trust
Robert D. Rosenbaum
Arnold & Porter
555 12 th Street, N.W.
Washington, DC 20004
Peter L. Zimroth
Arnold & Porter
399 Park Avenue
New York, NY 10022-4690
Attorneys for Appellee, Wyeth Corporation
Arnold Levin
Michael D. Fishbein
Fred S. Longer
Levin, Fishbein, Sedran & Berman
510 Walnut Street
Suite 500
Philadelphia, PA 19106
Attorneys for Appellees, Plaintiffs’ Management Committee and Class Counsel
OPINION OF THE COURT
STAPLETON, Circuit Judge:
Elliot Palay (“Palay”), a claimant in the Multidistrict Diet Drugs Litigation, MDL-
1203, appeals an order of the District Court denying Palay’s motion to compel the AHP
2
Settlement Trust to audit Palay’s claim and to declare Palay’s age to have been 49 when
he was first diagnosed with a reduced left ventricular ejection fraction. For the reasons
that follow, we will affirm the District Court’s order.
I
We have previously set forth the facts of the diet drugs litigation. See, e.g., In re
Briscoe, 448 F.3d 201, 206 (3d Cir. 2006) (recounting facts of litigation and citing prior
cases). The primary risk from diet drug use for present purposes is valvular heart disease
(“VHD”). A symptom of VHD is regurgitation of blood through diseased heart valves.
This regurgitation can be detected through echocardiograms.
Pursuant to the Settlement Agreement, the AHP Settlement Trust (the “Trust”) was
established to administer the benefits to the settlement class. Members of the settlement
class may claim varying levels of benefits depending upon the severity of their injuries
and other factors. For claimants who have certain documented medical conditions,
including that they have demonstrated levels of valvular regurgitation (and are thereby
considered “FDA positive”), the Settlement Agreement provides for a system of matrix
benefits. Settlement Agreement at § IV.B.2. There are two matrices: the “A” matrix and
the “B” matrix. The “A” matrix provides for generally higher benefits. FDA positive
claimants are generally eligible for benefits under Matrix A, so long as they do not meet
the specified qualifications for Matrix B. Id. at § IV.B.2.d.1.
For claimants who claim benefits based on damage to their mitral valve, one of the
3
conditions that moves such claimants from Matrix A to Matrix B is “acute myocardial
infarction associated with acute mitral regurgitation.” 1 Id. at § IV.B.2.d.(2)(c)(ii)(c). If
claimants suffer from that condition and are unable to establish that the regurgitation
existed prior to the myocardial infarction, they are given benefits according to Matrix B,
and not under the more generous Matrix A.
Within the two matrices, benefits are determined according to two factors: 1) the
severity of the disease; and 2) “the age at which the Diet Drug Recipient is first diagnosed
as suffering from that level of disease severity.” Id. at § IV.B.2.b. The severity of the
disease determines one’s “Level” in the matrix (the matrix row). Benefits increase with
the level of severity. One’s age at first diagnosis of the particular level of severity
determines the age bracket used to calculate benefits (the matrix column). At a given
severity, benefits diminish the later in life one is diagnosed with the particular severity of
disease.
A claimant qualifies for Matrix Level III if, inter alia, the claimant’s “left sided
valvular heart disease requir[es] surgery.” Id. at IV.B.2.c.(3). A claimant qualifies for
Matrix Level IV if, inter alia, the claimant has “[s]ignificant damage to the heart muscle,
defined as . . . (b) a left ventricular ejection fraction < 40% six months after valvular
repair or replacement surgery in patients who have had such surgery.” Id. at
IV.B.2.c.(4)(c)(iv).
1
“Acute myocardial infarction” is commonly known as a heart attack.
4
Palay was prescribed Redux, one of the diet drugs at issue, in July 1996. In
November 1998, when Palay was 49 years old, Palay suffered acute myocardial
infarction. He was admitted to the hospital on November 9, 1998. An echocardiogram
performed the following day showed moderate mitral regurgitation and a left ventricular
ejection fraction of 25-35 percent. A test revealed severe three-vessel coronary artery
disease and Palay received coronary bypass surgery. An echocardiogram performed the
following day showed roughly similar levels of mitral regurgitation.
Palay filed a claim with the Trust in January 2000. The Trust initially determined
Palay to be payable on Matrix B at Level III. Further, because Palay was 49 at the time
he was diagnosed as requiring surgery, he was to be paid according to the 45-49 age
bracket.
Palay received a new echocardiogram in January 2001, when Palay was 52 years
old. This echocardiogram, taken more than two years after his surgery, established that
Palay had the required degree of reduced left ventricular ejection fraction six months after
his surgery making Palay eligible for Level IV benefits.
As a primary component of his claim, Palay submitted a “Green Form.” One of
the questions on the form asked whether Palay had “mitral regurgitation associated with
myocardial infarction.” Palay’s doctor answered this question “yes,” but added a
handwritten note stating, “Murmur appeared in setting of acute [myocardial infarction].
Relationship to [myocardial infarction] not known [with] certainty.” App. at 67.
5
On March 2, 2001, the Trust issued a final determination providing for benefits to
Palay under Matrix B at Level IV. The Trust determined that the affirmative answer
given by Palay’s doctor, despite the handwritten addition, established that the myocardial
infarction predated his moderate mitral valve regurgitation, and that that regurgitation was
not established until after the myocardial infarction.
Palay submitted additional correspondence and a supplemental Green Form. The
supplemental Green Form was attested to by a different doctor than the first form and
differed from the original Green Form by stating that Palay did not have myocardial
infarction associated with mitral valve regurgitation. The Trust ultimately concluded that
the supplemental form and other materials did not change its conclusion that Palay’s
benefits should be awarded according to Matrix B and not Matrix A. Palay appealed to
the arbitration panel.
On October 21, 2002, the Arbitrator affirmed the Trust’s determination. The
Arbitrator found that the Trust’s determination that Palay had not established that his
moderate mitral valve regurgitation pre-dated his myocardial infarction was not clearly
erroneous in light of the conflicting Green Forms and ambiguous correspondence from
Palay’s doctor.
Palay appealed the Arbitrator’s decision to the District Court. On November 26,
2002, while the appeal was pending, the District Court issued Pretrial Order (“PTO”) No.
2662, in which it ordered that “the [Trust] shall audit every claim for matrix level benefits
6
from Fund B that has not as of the date of this order been paid.” App. at 25. As of the
date of PTO No. 2662, Palay’s claim had not yet been paid.
On February 6, 2003, in response to a letter from Palay, counsel for the Trust
wrote in a letter that:
[T]he Trust intends to submit Mr. Palay’s claim through the medical audit
process that is imposed on the Trust pursuant to [PTO No.] 2662. . . . Once
the rules and procedures governing these audits are in place, the Trust
intends to apply the audits first to claims that were the subject of
determinations before [PTO No.] 2662 was entered. Mr. Palay’s claim is in
that category.
App. at 56.
On October 31, 2003, Palay submitted a new Green Form to support a
supplemental claim for Level V, Matrix A benefits. The details of this claim are sketchy
from the record on appeal, but according to the District Court, the Trust audited the
supplemental claim in May 2004. In July 2004, the Trust notified Palay that he was not
entitled to any additional benefits under this claim and issued a final determination
denying additional benefits on October 27, 2004. Palay appealed this determination to the
District Court, which, as required by the Settlement Agreement, issued a show cause
order in May 2005. As of the date of this opinion, the District Court has not yet resolved
Palay’s supplemental claim.2
On February 4, 2004, the District Court, in PTO No. 3336, affirmed the arbitrator’s
2
Palay’s present appeal does not encompass his supplemental claim and we express no
view as to its merits or to its permissible scope.
7
decision on Palay’s original claim. The order states:
[I]t is hereby ORDERED that the Award of the Arbitrator . . . is
AFFIRMED and that [Palay] is entitled to Matrix B, Level IV benefits and
not to Matrix A benefits. After a review of the record, we conclude that the
findings of the AHP Settlement Trust and the arbitrator were not clearly
erroneous and that there was no error of law.
App. at 42.
Around the time of the District Court’s decision in PTO No. 3336, the Trust
mailed Palay a series of letters that Palay now argues misled him into believing that his
claim was being audited by the Trust. Many of these letters make reference to Court
Approved Procedure No. 4 (“CAP No. 4"). See App. at 52 (letter of Jan. 27, 2004); id. at
51 (letter of Feb. 18, 2004); id. at 49 (letter of Feb. 25, 2004). Palay argues that CAP No.
4 is only relevant to claims in audit. In addition, a letter dated March 31, 2004
specifically states that “[t]he claim is out to audit.” App. at 46. It is unclear from the
record on appeal whether these letters refer to Palay’s original claim or to the
supplemental claim.
In June 2004, the Trust issued a new Final Determination Letter to Palay on his
original claim. The Trust’s letter indicated that Palay’s award would be roughly $2,400
less than had previously been represented to Palay. Rather than awarding Palay benefits
based on Matrix B, Level IV and the 45-49 age bracket, the award would be based on the
50-54 age bracket. The Trust explained that it had erred:
To qualify for a Level IV benefit, you must show that you have a reduced
left ventricular ejection fraction. Your earlier determination was based on
8
your surgery, qualifying you for a Level III benefit. On the date of your
surgery, November 11, 1998, you were in the 45-49 age bracket on the B
Matrix. However, you were not diagnosed with a reduced left ventricular
ejection fraction until your echocardiogram taken on January 18, 2001,
when you were 52 years of age. Although this reduced left ventricular
ejection fraction increases your payment from Level III to Level IV, your
payment must be reduced to account for the fact that you were 52 years of
age on the date of your diagnosis.
App. at 43.
On June 25, 2004, Palay filed a variety of motions with the District Court relating
both to his original claim and the supplemental claim. Among these motions were a
“motion to compel the Trust to produce the audit completed on or before January 27,
2004,” and a motion “to compel the Trust to audit this Claim under PTO No. 2662 . . .
[and] to declare claimant’s age as 49 when diagnosis of reduced left ventricular ejection
fraction was first made.” App. at 3.
In PTO No. 5575, issued on August 16, 2005, the District Court denied these
motions. With respect to the audit purportedly completed prior to January 27, 2004, Palay
relied on the above-cited letters to argue that the Trust conducted an audit of his claim
and determined that it was payable on Matrix A. The District Court determined that the
letters were not proof that an audit had actually taken place and denied the motion. Palay
does not appeal this issue, but makes reference to having been misled into believing that
an audit had taken place.
With respect to the motion to compel the Trust to audit Palay’s claim under PTO
No. 2662, the District Court ruled as follows:
9
Claimant contends that his original claim should be audited pursuant
to PTO No. 2662. As noted above, Palay appealed the Report and Award
of the Arbitrator finding that he was entitled to Matrix B, Level IV benefits.
In PTO No. 3336, we affirmed the arbitrator’s award and found that Palay
“is entitled to Matrix B, Level IV benefits and not to Matrix A benefits.”
Claimant did not appeal this decision. Under the Settlement Agreement, “if
an appeal from the report and award of the Arbitrator is taken, the decision
of the Court shall be final and binding.” Thus, Palay’s claim is closed and
he is not entitled to an audit pursuant to PTO No. 2662.
App. at 16-17.
The District Court also denied Palay’s motion to declare his age as 49 at first
diagnosis of reduced left ventricular ejection fraction. The District Court noted that the
Trust had originally awarded benefits according to the Matrix B, Level IV, and 45-49 age
bracket, and that this award had been affirmed by an Arbitrator and by the District Court
in PTO No. 3336. However, the District Court explained that under the Settlement
Agreement, “[t]o qualify for Level IV benefits, Palay needed to provide a diagnosis of
reduced left ventricular fraction six months after valve surgery.” App. at 17. The
District Court agreed with the Trust that 52 is the correct age of diagnosis because Palay
was 52 when he received the only echocardiogram taken at least six months after his
surgery. Accordingly, it denied Palay’s motion to declare Palay’s age as 49 when
diagnosis of reduced left ventricular ejection fraction was first made. In a footnote, the
District Court stated:
In PTO No. 3336, we affirmed an arbitrator[’]s decision that claimant
should be paid Matrix B, Level IV benefits based on his age at 49. The
Trust, however, modified its original determination after PTO No. 3336 was
issued and paid the benefit based on his age at 52. Even though [t]he Trust
10
was correct, it should have applied to the court to make this correction
rather than acting unilaterally.
Id. at 18 n.5.
II
Palay challenges the above-described post-judgment order, PTO No. 5575, issued
by the District Court. The order finally resolved the particular claims at issue and, even
though post-judgment proceedings are ongoing in the District Court, we may treat the
challenged order as final and exercise appellate jurisdiction under 28 U.S.C. § 1291. See
Ohntrup v. Firearms Center, Inc., 802 F.2d 676, 678 (3d Cir. 1986) (noting that
requirement of finality should be given a practical construction when post-judgment
orders are involved).
We review a District Court’s exercise of its equitable authority to administer and
implement a class action settlement for abuse of discretion. See In re Cendant Corp.
Prides Litig., 233 F.3d 188, 192 (3d Cir. 2000). “[T]o find an abuse of discretion the
District Court’s decision must rest on ‘a clearly erroneous finding of fact, an errant
conclusion of law or an improper application of law to fact.’” In re Nutraquest, Inc., 434
F.3d 639, 645 (3d Cir. 2006) (quoting In re Orthopedic Bone Screw Prods. Liab. Litig.,
246 F.3d 315, 320 (3d Cir. 2001)).
A
Palay first argues that he is entitled to an audit of his original claim pursuant to the
plain language of PTO No. 2662. PTO No. 2662 ordered the Trust to conduct audits on
11
all claims from Fund B that had not yet been paid as of the date of the order. Palay’s
claim had not yet been paid as of the date of the order. Therefore, Palay argues, he is
entitled to an audit under PTO No. 2662 and the District Court erred in denying Palay’s
motion to compel the Trust to conduct such an audit.
The plain language of PTO No. 2662 suggests that Palay’s claim should have been
audited at the time of PTO No. 2662's issuance. But when Palay presented this argument
to the District Court in his motion to compel, Palay was effectively asking the District
Court to order an audit on a claim that had been finally concluded. Palay filed his motion
to compel the Trust to conduct an audit several months after the District Court affirmed
the Arbitrator’s decision affirming the Trust’s determination that Palay was payable
according to Matrix B, and not Matrix A. Under the terms of the Settlement Agreement,
“if an appeal from the report and award of the Arbitrator is taken, the decision of the
Court shall be final and binding . . . .” Settlement Agreement at § VI.C.4.l. In addition,
the rules governing audits provide that “any final decision by the Trial Court on a Claim
in Audit shall close that Claim, with prejudice, as to any condition that has been claimed
or could have been claimed as of the date of the Attesting Physician’s signature on Part II
of the Green Form.” App. at 38. Under the audit rules, any audit the District Court
ordered would have been immediately closed because the District Court had already
issued a final decision on the claim. Accordingly, the District Court could not have erred
when it declined to order an audit for a claim that had already been finally determined
12
through the arbitration and appeal process.
Palay argues that he was misled by the Trust’s letters suggesting an audit was
imminent or ongoing. But many of the Trust’s letters that Palay points to were written
after the District Court’s decision in PTO No. 3336, in which the District Court affirmed
the results of the arbitration. Even assuming that these letters refer to Palay’s original
claim and not his supplemental claim, it was unreasonable for Palay, without filing an
appeal to protect his rights, to rely on these letters in the face of the Settlement
Agreement’s clear provision that orders of the District Court affirming arbitration awards
are final and binding.
Palay argues that the Settlement Agreement precludes appeals of final orders of the
District Court affirming arbitration awards. But the fact that the Settlement Agreement
provides that such orders of the District Court are “final and binding” does not mean that
appellate review of those orders in the Court of Appeals is precluded. Settlement
Agreement at § VI.C.4.l. Indeed, our jurisdiction is typically contingent on orders of the
District Court being “final.” See 28 U.S.C. § 1291.
B
Next Palay argues that the District Court erred when it approved the Trust’s
unilateral decision to modify the terms of Palay’s benefits after Palay’s award had been
affirmed, first in arbitration, and then by the District Court in PTO No. 3336. Palay
13
points out the inconsistency between that ruling and the District Court’s treatment of PTO
No. 3336 as conclusively closing Palay’s claim for purposes of resolving whether Palay
was entitled to an audit under PTO No. 2662. The Trust argues that the issue was not
properly before the District Court in the first place and that even were it, the District
Court merely exercised its authority under Fed. R. Civ. P. 60(a) to correct clerical errors
in prior judgments.
At the outset, it is clear that Palay should properly have been awarded Matrix B,
Level IV benefits based on the 50-54 age bracket. Palay qualifies for Level IV benefits
only because he has “[s]ignificant damage to the heart muscle, defined as . . . a left
ventricular ejection fraction < 40% six months after valvular repair or replacement
surgery in patients who have had such surgery.” Settlement Agreement at §
IV.B.2.c.(4)(c)(iv) (emphasis added). In other words, the condition that allows Palay to
claim Level IV benefits is that six months after his surgery he continued to suffer from a
left ventricular ejection fraction of less than 40 percent. The age at which Palay was
“first diagnosed as suffering from that level of disease severity” was 52. Id. at §
IV.B.2.b. Indeed, Palay concedes that six months after his surgery he was 50 years old.
See Rep. Br. Appellant at 19. It is factually impossible for Palay to have been 49 and
suffering from any condition at all six months after his surgery because he turned 50
within six weeks of his surgery.3
3
The Trust argues that because the District Court’s “finding of fact” regarding Palay’s
age at first diagnosis was not clearly erroneous, we must affirm. However, the question
14
The Trust argues that Palay’s exclusive remedy to challenge the Trust’s revised
final determination was through arbitration. The Settlement Agreement provides that
claimants may appeal final determinations made by the Trust by filing a Notice of Appeal
to Arbitration with the District Court within fifteen days of receiving notice of the
determination. Settlement Agreement at § VI.C.4.h. In addition, the Settlement
Agreement provides that “[i]f there is no appeal initiating an Arbitration process, then the
decision of the Trustees and/or Claims Administrator(s) with respect to the gross amount
to be paid . . . shall be final.” Id. at § VI.C.4.j. Accordingly, the Trust argues that by
filing the motion with the District Court, Palay violated the Settlement Agreement.
Further, because the time has now lapsed to file such an appeal, the Trust argues that
Palay has waived the argument.
Palay responds that he was barred from further arbitration because the rules
governing arbitration, approved by the District Court in PTO No. 2153, provide that “[a]ll
appeals related to a single Class member . . . shall be consolidated into a single
Arbitration proceeding and assigned to a single Arbitrator.” Rule 7, Rules Governing
Arbitration Process, PTO No. 2153 (Sept. 12, 2001). Palay implicitly argues that because
he had already been through one round of arbitration his only recourse was to the District
Court.
The District Court did not address the question of whether Palay’s motion was
of whether the Trust and the District Court were legally empowered to modify the terms
of the prior final judgment is a separate legal question subject to plenary review.
15
properly before it and addressed it on its merits.4 Indeed, the District Court suggested that
if any party was at fault for failing to follow proper procedure, it was the Trust for
unilaterally modifying Palay’s award after the District Court had issued PTO No. 3336.
We defer to the District Court’s decision to address the claim on its merits. The
Settlement Agreement does not appear to contemplate the unusual circumstance presented
here, wherein the Trust, following a full round of litigation, unilaterally issued a second
“final” determination reducing a claimant’s benefits under an outstanding District Court
order. It is unduly formalistic to require Palay to undertake a second round of arbitration
when all he seeks is for the Trust to abide by the District Court’s previous order affirming
the outcome of the first round of arbitration.
The Trust argues in the alternative that the District Court properly exercised its
authority to correct clerical errors under Rule 60(a). That rule provides:
Clerical mistakes in judgments, orders or other parts of the record and
errors therein arising from oversight or omission may be corrected by the
4
Wyeth, which filed a response to Palay’s motion below, but does not appear on
appeal, argued in a footnote to its brief below that
a motion before the Court is not procedurally appropriate to dispute a Final
Determination of the Trust. The Settlement Agreement provides that a
claimant may appeal a Final Determination of the Trust within fifteen days
of receiving notice of the determination by filing a Notice of Appeal with
the Trial Court. . . . The appeal of the age of diagnosis issue has expired
and Mr. Palay cannot raise it now to the Court.
Wyeth’s Response to Palay’s Motion to Compel, at 6 n.1 (July 13, 2004). The Trust
stated in its brief below that it “substantially agrees with Wyeth’s response,” but in its
own discussion of the age of diagnosis issue did not reference any procedural inadequacy
of Palay’s motion. AHP Settlement Trust’s Resp. Palay’s Mot. Compel at 1, 3 (July 15,
2004).
16
court at any time of its own initiative or on the motion of any party and after
such notice, if any, as the court orders.
Fed. R. Civ. P. 60(a). Wright, Miller and Kane explain that
[s]ubdivision (a) deals solely with the correction of errors that properly may
be described as clerical or arising from oversight or omission. . . . When
the change sought is substantive in nature, such as a change in the
calculation of interest not originally intended, the addition of an amount to a
judgment to compensate for depreciation in stock awarded, or the
broadening of a summary judgment motion to dismiss all claims, relief is
not appropriate under Rule 60(a). Thus a motion under Rule 60(a) can only
be used to make the judgment or record speak the truth and cannot be used
to make it say something other than what originally was pronounced.
11 Wright, Miller & Kane, Federal Practice & Procedure § 2854 at 240-41 (footnotes
omitted).5
Our court has similarly stated that Rule 60(a) “is limited to the correction of
‘clerical mistakes’; it encompasses only errors ‘mechanical in nature, apparent on the
record, and not involving an error of substantive judgment.’” Pfizer Inc. v. Uprichard,
422 F.3d 124, 129-30 (3d Cir. 2005) (quoting Mack Trucks, Inc. v. Int’l Union, UAW, 856
F.2d 579, 594 n.16 (3d Cir. 1988)); see also United States v. Stuart, 392 F.2d 60, 62 (3d
Cir. 1968). We have approvingly quoted the Fifth Circuit’s articulation of the test for
Rule 60(a)’s permissible application:
5
Rule 60(b), by contrast, is broader in scope and allows district courts to relieve a party
from a judgment on motion and upon such terms as are just for reasons of mistake,
inadvertence, surprise, excusable neglect, and other reasons, including “any other reason
justifying relief from the operation of the judgment.” The Trust does not argue that the
District Court operated under the authority of Rule 60(b), perhaps because it is undisputed
that the Trust never moved the Court for such relief and the Rule explicitly requires a
motion to be made within one year of the order.
17
[T]he relevant test for the applicability of Rule 60(a) is whether the change
affects substantive rights of the parties and is therefore beyond the scope of
Rule 60(a) or is instead a clerical error, a copying or computational mistake,
which is correctable under the Rule. As long as the intentions of the parties
are clearly defined and all the court need do is employ the judicial eraser to
obliterate a mechanical or mathematical mistake, the modification will be
allowed. If, on the other hand, cerebration or research into the law or
planetary excursions into facts is required, Rule 60(a) will not be available
to salvage [a party’s] blunders. Let it be clearly understood that Rule 60(a)
is not a perpetual right to apply different legal rules or different factual
analyses to a case. It is only mindless and mechanistic mistakes, minor
shifting of facts, and no new additional legal perambulations which are
reachable through Rule 60(a).
Pfizer, 422 F.3d at 130 (quoting In re W. Tex. Mktg., 12 F.3d 497, 504-05 (5th Cir.
1994)).
The Trust argues that “the $2,400 correction in benefit payments was a mechanical
error that is obviously apparent from the fact that Palay was 52 at the time of the 2001
echocardiogram. No substantive judgment is at issue.” Br. Appellee at 23. Palay
counters that the claims administrator made a substantive judgment when it calculated
Palay’s age to be 49 at the time of first diagnosis and that this goes beyond the type of
“clerical error” Rule 60(a) is designed to address. He argues that the Claims
Administrator determined that the “condition” relevant for purposes of calculating the age
at diagnosis under the Matrix calculation is a reduced left ventricular ejection fraction of
less than 40 percent. Under his argument, the Claims Administrator determined that
Palay suffered from this “condition” at age 49, as demonstrated by the first two
echocardiograms. Moreover, he argues that this determination was implicitly affirmed by
18
both the Arbitrator and the District Court. As noted previously, this argument is wrong
on the underlying merits because it overlooks the fact that for purposes of qualifying for
Level IV benefits, a claimant must have suffered from the reduced left ventricular
ejection fraction six months after surgery. Palay was 50 years old six months after his
surgery and was first diagnosed as continuing to suffer the reduced left ejection fraction
six months after surgery when he was 52 years old.
However, Rule 60(a) does not authorize the District Court to correct any and all
wrongly decided substantive issues after the fact. The correction here goes beyond the
correction of a “mindless and mechanistic mistake.” In re W. Tex. Mtkg., 12 F.3d at 505.
In its analysis, the District Court was required to review the details of the Settlement
Agreement, interpret the Agreement, and apply it to facts of Palay’s case that had not
been at issue in the prior proceeding. The District Court’s analysis entailed both
“cerebration” and “planetary excursions into facts.” Id. Accordingly, we reject the
Trust’s argument that the District Court properly exercised its authority under Rule 60(a)
to correct clerical errors in prior judgments.
On the other hand, the District Court did not purport to exercise authority under
Rule 60(a) or even to modify the prior judgment at all. Rather, all the District Court did
was deny Palay’s motion “to declare [Palay’s] age as 49 when diagnosis of reduced left
ventricular ejection fraction was first made.” Claimant’s Mot. Compel at 1 (June 25,
2004). In his prayer for relief, Palay asked the Court to “[c]ompel the Trust to determine
19
that Mr. Palay was 49 years of age at the time of diagnosis of a markedly reduced left
ventricular ejection.” Id. at 4. And finally, in the proposed order he submitted with his
motion, Palay asked the Court to enter an order reading, “The Court compel[s] the Trust
to determine that Mr. Palay was 49 years of age at the time of diagnosis of a markedly
reduced left ventricular ejection.” Proposed Order at 2, Claimant’s Mot. Compel.
Even had the District Court granted Palay exactly what he asked for, a declaration
that Palay was age 49 at the time of diagnosis of a reduced left ventricular ejection, that
would not have necessarily impacted Palay’s award. It is true enough that Palay was 49
years old at the time of such a diagnosis. However, as discussed, the mere diagnosis of a
reduced left ventricular ejection fraction of less than 40 percent at age 49 does not qualify
one for inclusion in the age 45-49 Matrix age bracket. One must be diagnosed with that
condition six months after surgery and at age 49.
Had Palay asked, Palay may well have been entitled to an order compelling the
Trust to abide by the District Court’s judgment in PTO No. 3336, in which the District
Court affirmed the Trust’s and Arbitrator’s determination that Palay was entitled to
receive benefits under Matrix B, Level IV, and the 45-49 age bracket. The Settlement
Agreement explicitly provides that
if an appeal from the report and award of the Arbitrator is taken, the
decision of the Court shall be final and binding with respect to: (a) the
Gross amount to be paid on account of a Claim for Matrix Compensation
Benefits unless there is a documented change in the physical condition of
the Diet Drug Recipient after the submission of the claim which justifies
consideration for a greater level of Matrix Compensation Benefits.
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Settlement Agreement at § VI.C.4.l. Palay came closest to requesting this relief when, in
the body of his motion, he “request[ed] the Court to order the Trust to readjust the Gross
Matrix Compensation to reflect the diagnosis of Mr. Palay’s reduced left ventricular
ejection fraction at the correct age of 49 years.” Claimant’s Mot. Compel at 12.
However, as stated above, a diagnosis of reduced left ventricular ejection fraction at 49
years does not translate into a readjustment of the Gross Matrix Compensation.
Thus, the Trust seems to have violated the Settlement Agreement when it
unilaterally modified Palay’s award after the District Court had issued a final binding
affirmance of Palay’s original award. As the District Court explicitly noted, the Trust
should have moved the District Court, perhaps under Fed. R. Civ. P. 60(b), to correct the
District Court’s prior judgment. On the other hand, the District Court did not err when it
denied Palay the relief he requested. The District Court denied Palay’s entreaty to enter
an order that was legally irrelevant. We cannot say that this was abuse of discretion.
Accordingly, we will affirm the District Court’s order.
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