Petition for Writ of Certiorari — Robert Ghiringhelli, et al., Petitioners v. The Assurance Group, Inc.

No.

IN THE

SUPREME COURT OF THE UNITED STATES

ROBERT GHIRINGHELLI, COLIN KEITH

HOLLEY, DERROLD NASH, ANTHONY

PETTITY, JR. and HARMON G. PYE, III

Petitioners,

Vv.

THE ASSURANCE GROUP, INC.,

Respondent.

On Petition for Writ of Certiorari to the

United States Sixth Circuit Court of Appeals

PETITION FOR WRIT OF CERTIORARI

WM. KENNERLY BURGER

BURGER, SCOTT & McFARLIN

12 Public Square North

Murfreesboro, TN 37130

Telephone: (615) 898-8933

Facsimile: (615) 893-5333

Tennessee Bar #37381

kenburger@comcast.net

Counsel for Petitioners

QUESTION PRESENTED

The case involves application of the “separate

accrual rule” to commissions earned by the Petitioners

and collected each month by the Respondent from

various insurance companies around the country, for

the benefit of the Petitioners. Petitioners are insurance

agents who have offered primarily Medicare-mandated

insurance products to customers in the States of

Tennessee, Georgia and South Carolina. Respondent is

a North Carolina corporation. The question is whether,

in a “diversity/borrowing statute” context, the “separate

accrual rule” should apply, compelling accrual of a new

statute of limitations commencement date with each

newly-computed, monthly installment received by the

Respondent. The United States District Court in

Nashville and the Sixth Circuit have ruled that the

agents’ alleged contractual agreement requires

application of North Carolina law (which does not adopt

the separate accrual rule), to all of the agents’ claims

(with a three-year statute of limitations defeating the

claim) since the agents became aware of what they

describe as “minor discrepancies” several years before

the suit was filed. Since the agents’ claims involve not

only breach of contract, but violation of various

Tennessee insurance statutes, and Medicare

regulations that compel regular accountings,

Petitioners believe the present rulings are erroneous.

Without confining the interpretive context to the

specific statutes involved, the United States Supreme

Court has previously determined that each newlycomputed monthly installment commences the running

of a new period of limitations for that discrete

installment through application of the “separate

accrual rule.” Petitioners respectfully insist that the

ii

rulings of the trial court and the Sixth Circuit are in

conflict with the following concise description of the

separate accrual rule, and that its application should

not be limited to the context of the copyright statute and

the ERISA statutes which were involved in the cases of

Petrella v. Metro-Goldwyn-Mayer, Inc., 184 S. Ct. 1962

(2014) and the earlier Bay Area Laundry and Dry

Cleaning Pension Trust Fund v. Ferbar Corporation of

California, Inc., 118 S. Ct. 542 (1997). Petitioners have

repeatedly emphasized throughout the litigation that

most of their insurance products (such a Humana) are

governed by Medicare regulations, which compel

regular accountings and payments to the agents. The

parties’ North Carolina contract should not defeat that

mandatory application of the federal Medicare

regulations.

The reasoning adopted in the attached opinion

(Appendix A) by the Sixth Circuit Court of Appeals on

May 23, 2018 is at odds with the following concise

statement noted in Petrella and discussed in Bay Area

Laundry:

“Because the _ first missed

payment in the series fell outside the

statute of limitations, the employer

argued that the subsequent missed

payments were also time barred. See

Id. at 206, 118 S. Ct. 542, 553 ... We

rejected that argument. The

remaining claims were timely, we

held, because each missed payment

created a separate cause of action

with its own six-year limitations

period. Ibid. Cf. Klehr, 521 U.S. 190,

iil

117 S. Ct. 1984.” Petrella, 184 S. Ct.

1962, at 1970.

“Like a_ typical installment

creditor, the plan has no right, absent

default and acceleration, to sue to

collect payments before they are due,

and it has no obligation to accelerate

on default. The employer and the

plan are thus in the same position as

parties to an ordinary installment

transaction. We see no reason to

apply a different limitations rule.”

Bay Area Laundry, 118 S. Ct. 542 at

553.

In the present suit, the focused discussion on the

diversity rules and the Tennessee borrowing statute in

the opinions below treat those concepts as exclusive and

preemptory of the other federal law considerations

arising from the agents’ sale of Medicare products in

Tennessee, Georgia and South Carolina.

iv

PARTIES TO THE PROCEEDING

Robert Ghiringhelli, Colin Keith Holley, Derrold

Nash, Anthony Petitti, Jr. and Harmon G. Pye, ITI were

the Plaintiffs in the District Court and Appellants in the

Sixth Circuit. Other initially-designated Plaintiffs

resolved their involvement in the case by settlement or

dismissal. The Defendant/ Respondent is a North

Carolina corporate entity, “The Assurance Group, Inc.”

TABLE OF CONTENTS

QUESTION PRESENTED 1

PARTIES TO THE PROCEEDING. iv

TABLE OF CONTENTS occ cceeeceseeeeeees v

TABLE OF AUTHORITIES Vii

OPINIONS BELOW occ cccccssesesseseesssneenses 1

CONCISE STATEMENT OF THE BASIS FOR

JURISDICTION occ cceccsseeeeseeeeeeeesneee 1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED oe 2

STATEMENT OF THE CASE 3

APPENDIX TABLE OF CONTENTS

Appendix A

Memorandum Opinion of the United

States Court of Appeals for the Sixth

Circuit, Robert Ghiringhelli, et_al. v. The

Assurance Group, Inc., No. 17-6236, filed

May 28, 2018, Document 25-2 la

vi

Appendix B

Memorandum of the United States District

Court for the Middle District of Tennessee

at Nashville, Eric Tuttobene, et al. v. The

Assurance Group, Inc., No. 3:10-cv-00978,

filed February 24, 2017, Document 195,

Page 1 of 33 Page ID

Appendix C

Order of the United States District Court

for the Middle District of Tennessee at

Nashville, Eric Tuttobene, et_al. v. The

Assurance Group, Inc., No. 3:10-cv-00978,

filed February 24, 2017, Document 196,

Page 1 of 2 Page ID #1639

vii

TABLE OF AUTHORITIES

Cases

Bay Area Laundry and Dry Cleaning Pension

Trust Fund v. Ferbar Corporation of

California, Inc., 522 U.S. 192 (1997)

2, 6,12, 18

Mackey v. Judy's Foods, Inc., 654 F. Supp.

1465, 1469 (M.D. Tenn. 1987),

affirmed. 867 F2d 325 (6 Cir. 1989) 10

Petrella v. Metro-Goldwyn-Mayer, Inc.,

134 8. Ct, 1962 (2014), 2, 6, 12, 138

Statutes

28 U.S.C. § 1882000 3, 7

28 U.S.C. § 1867 ccc cccccceseccesaneesennnnee 6

28 U.S.C. § 22010 10

Rules and Regulations

42 C.FLR. § 420.3038 11

42 C.F.R. § 423.2274 2,11

Rule 57 of the Federal Rules of Civil

Procedure 10

OPINIONS BELOW

The Sixth Circuit Opinion was filed May 23,

2018 (Appendix A). That Opinion affirmed the trial

court memorandum and order in the United States

District Court for the Middle District of Tennessee

filed February 24, 2017 (Appendix B and Appendix C),

CONCISE STATEMENT OF THE

BASIS FOR JURISDICTION

The Petition for Writ of Certiorari was

electronically and paper filed within ninety (90) days

from the filing of the May 28, 2018 Sixth Circuit

opinion. No Petition for Rehearing was filed. The

Court possesses jurisdiction pursuant to 28 U.S.C. §

1254(1). By letter of August 22, 2018, the Clerk

permitted sixty (60) days for clerical (nonsubstantive) corrections, pursuant to Rule 14(5).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The case ruling conflicts with the reasoning and result in

two (2) United States Supreme Court cases, Petrella v.

Metro-Goldwyn-Mayer, Inc., 184 S. Ct. 1962 (2014) and

Bay Area Laundry and Dry Cleaning Pension Trust Fund

v. Ferbar Corporation of California, Inc., 622 U.S. 192

(1997). Incidentally involved, and referenced in the trial

and appellate records, is the following Medicare provision

that is incidental to the agents’ assertion that federal

Medicare regulations require the accounting which they

have never been provided, which may not be preempted by

any state court period of limitations:

42 C.F.R. § 423.2274 (Broker and Agent

Requirements:

“(b)(3) Compensation structures must be

available upon CMS request including for

audits, investigations, and to resolve

complaints.

(e) ... Upon CMS request, the organization must provide CMS, in a form

consistent with CMS guidance, the

information necessary for it to conduct

oversight of marketing activities.”

STATEMENT OF THE CASE

The Petitioners are independently-licensed

insurance agents who have offered primarily

Medicare-mandated insurance products to residents

of the States of Tennessee, Georgia and South

Carolina in separate contractual arrangements with

the Respondent, The Assurance Group, Inc. Each of

the independent agents had entered into agreements

with The Assurance Group (“TAG”) that involved an

arrangement through which TAG collected from

around the country all of the commissions earned by

the independent agents, effectively as an

administrative or clerical convenience. From the

gross commissions earned for each agent, TAG would

then deduct any appropriate expenses or charges, and

was thereafter obligated to pay the net earned

commission to each agent. The Assurance Group is

headquartered in the State of North Carolina. The

insurance products sold by the independent agents in

their respective states, including Tennessee, included

both federally-mandated “Medicare Advantage”

policies (controlled by federal statutes) and standard

state-governed life insurance policies.

In their initial Complaint, the allegation of the

many agents involved is consistent and concise: A

claim that TAG collected their money, and thereafter

refused to provide regular accountings and payment

of the net proceeds.

Plaintiffs filed suit in the United States District

Court of Tennessee based upon diversity and the

amount claimed in controversy (28 U.S.C. § 1832). A

Complaint was filed October 18, 2010. Following the

resolution of extensive discovery disputes, Defendant

The Assurance Group, Inc. sought summary judgment

based primarily upon the claim that the statute of

limitations had commenced running when the first

discrepancy arose, and that, under North Carolina’s

three-year period of limitations, the statute of

limitations had expired as to each Plaintiff except Eric

Tuttobene. Myr. Tuttobene’s case was resolved by

agreement prior to the appeal. An interim order

granting Defendant's summary judgment request was

entered Febuary 24, 2017 (Docket Entry 196),

incorporating a contemporaneous Memorandum of

Law (Docket Entry 195). A final order (for F.R.C.P.

Rule 54 appeal requirements) was entered October 3,

2017 Docket Entry 212). That order was followed by

Plaintiffs/Appellants’ timely Notice of Appeal on

October 18, 2017 (Docket Entry 218).

Contemporaneously, a large group of agents in

North Carolina filed suit in state court in North

Carolina. Petitioners acknowledge that the agents

made similar allegations regarding TAG’s duty to

account for the commissions they had collected on

behalf of the agents. During the pendency of the

above-captioned matter, the North Carolina state

court proceedings were concluded, with a ruling in

that state that the claims of those North Carolina

agents would fail due to the undisputed fact that the

first observed discrepancies in the accounting

requirements occurred more than three (3) years

before the filing of the North Carolina suit, and due to

the applicable three-year contract period of

limitations in North Carolina. The North Carolina

Court of Appeals affirmed that decision, on a finding

that North Carolina does not recognize any “separate

accrual rule” for the past, present and future

installments being collected by TAG from the various

private and Medicare insurance providers from

around the country. Instead, a North Carolina

appellate court concluded that the first default

triggered commencement of the three-year statute of

limitations on past, as well as future, periodic

installments to be collected by TAG on behalf of the

agents. The North Carolina Supreme Court refused

to accept a Petition for Certiorari on that issue. The

North Carolina agents petitioned the United States

Supreme Court for certiorari, which was denied.

It is conceded that the issues presented by the

present Applicants are similar, but are certainly not

identical either factually or procedurally, as to

jurisdiction.

REASONS FOR GRANTING THE PETITION

In every context in which this Court has had

an opportunity to rule on the underlying legal issues

related to the “separate accrual rule,” the Court has

ruled that a plaintiff should not be required to know

the “unknowable.” Where separate periodic

computations are involved, which will vary from

month-to-month, the statute of limitations

commences when there is a precise, discrete,

identifiable figure that can be ascertained with some

certainty. The question, accordingly, is whether the

procedural status of the Petitioners places them in a

position which would require the United States

District Court for the Middle District of Tennessee at

Nashville (and the Sixth Circuit) to allow their claims

to go forward for an accounting and payment on

monthly installments that continue to accrue and

will accrue into the future.

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Conversely, are the District Court and the

Sixth Circuit rulings correct in their determination

that, because the agents (allegedly) signed contractual

documents that agreed that North Carolina law

should be applied to their case. Is that intermediate

level North Carolina appellate ruling (declined by the

North Carolina Supreme Court on certiorari

application) a sufficient basis for application in the

diversity context, to the exclusion of all other

statutory considerations, including the Tennessee

statutes which dictate otherwise, and, more

significantly, the federal Medicare statutes and

regulations which require regular accountings and

prompt payment for agent commissions earned from

those insurance products?

Two Supreme Court decisions arising in very

different factual and procedural settings, should leave

no doubt about the basis for reversal in the present

matter, unless it is concluded that, indeed, basic

diversity concepts, and the North Carolina contracts,

mandate the application of the North Carolina

intermediate appellate court, which is the direct

opposite of the Supreme Court rulings quoted above.

While the diversity issue is admittedly a factor

in the evaluation of the disputed issues, it is not the

sole basis of jurisdiction (supplemental jurisdiction,

28 U.S.C. § 1867). The rulings in the United States

District Court for the Middle District of Tennessee

and the Sixth Circuit Court of Appeals are in conflict

with the rulings of this Court in Petrella v. Metro-

Goldwyn-Mayer, Inc., 1384S. Ct. 1962 (2014), and Bay

Area Laundry and Dry Cleaning Pension Trust Fund

yv. Ferbar Corporation of California, Inc., 522 U.S. 192

(1997). Those cases arose in vastly different factual

settings and upon separate federal statutes. The

lower courts disallowed the significance by noting that

they arose under the cited copyright and ERISA

statutes. It is a difference, without legal distinction.

As Justice Ginsberg’s quote above suggests, the

broadly-applied separate accrual rule is not limited to

those statutes. It should apply to the Medicare

regulations and to Tennessee statutes as a matter of

federal preemption and public policy. At best, the

alleged contract provisions should (by the Tennessee

borrowing statute) defeat only the claims based upon

contract law, rather than federally-mandated public

policy requirements of the Medicare laws:

A federal court may have more than a single

basis to exercise jurisdiction over a dispute between

parties from a different state. Of course, one basis is

diversity (statute 28 U.S.C. § 1832) concededly

invoked by the Petitioners in the Nashville United

States District Court against the North Carolina

corporation with whom they had contracted as

independent agents. Petitioners will not rehash in

substantial factual detail the circumstances

surrounding that contract relationship, as disallowed

by both the trial and appellate courts. Contracts for

certain Plaintiffs were not signed, or apparently could

not be located by TAG, but Plaintiffs conceded that the

contracts were “similar” though not “identical.” For

purposes of the present Petition, Petitioners will not

attempt to challenge what the Petitioners perceive to

be patently incorrect evaluations of the “North

Carolina law” provisions in those contracts, and will,

instead, focus on the narrower, policy-significant

reasons why diversity considerations should not

mandate the three-year North Carolina statute of

limitations in the Nashville District Court.

First, the Complaint and Amended Complaint

clearly establish that “the contract” was certainly not

the sole basis of the claims against the Respondent.

The insurance sales occurred in states other than

North Carolina. Accordingly, the contract claims,

while appropriately founded under North Carolina

contract law do not defeat, by necessary preemption,

other cognizable remedies under the Tennessee

statutes that: (a) establish a statutory fiduciary duty

to account by such administrators; (b) permit

litigation in Tennessee state and federal courts on the

exclusive basis of those statutes; and, most

importantly, (c) application of the Medicare

regulations to the parties’ relationship. The policy

requirements behind those Medicare regulations may

not be contractually diminished or superseded by the

ruling of the North Carolina appellate court.

The cited U.S. Supreme Court cases that have

supplied consistent reasoning in support of the broad

application of the “separate accrual rule” in

evaluating any applicable statute of limitations

demonstrate a common thread. Regardless of the

statutory basis for the Plaintiffs’ substantive claim

(the copyright statute or ERISA), those cases stand

firmly for the proposition that a plaintiff may not be

required, for statute of limitation purposes, to “know

the unknowable,” and file a suit on an as-yet

unaccrued and non-computed net payment owed to

that plaintiff. Once computed and ascertained, the

statute of limitations commences. The fundamental,

unanswered question skirted by the trial court and

the Sixth Circuit is what reasoning would exist to

conclude that the underlying nature of the statutory

claim (i.e., copyright or ERISA) would control or

restrict a broad application of the “separate accrual

rule” to any discretely-identified claim for accounting

and payment. The Sixth Circuit’s exclusionary focus

on the North Carolina contract obligations for

application of North Carolina law gives no credence to

the idea that the contract, even if executed by all of

the Plaintiffs, may establish the parties’ rights and

remedies in_a contract action. But, the contract

itself, and the North Carolina interpretation of the

contract, does not abrogate the mandatory

requirements of Tennessee or Medicare statutes and

regulations which require that the Respondent has a

duty, once it collects the Petitioners’ money, to account

for that money and pay the Petitioners under the

terms of those statutes and regulations. Indeed, while

purporting to invoke an exclusive application of North

Carolina law to the contractual relationship, the

agreement “general provisions” references any “...

legal action ... at any time based on any controversy

or claim arising out of or relating to this

agreement ...” and thereafter limits such action to a

suit in the state court in North Carolina, and not

otherwise. The “severability” provisions of that same

agreement acknowledge that other remedies may

apply to the parties’ relationship, although they are

not specifically described.

In that context, the Petitioners sought a

remedy in the United States District Court for

Tennessee, based upon sales that occurred in states

other than North Carolina, of both general and

Medicare insurance products that produced

commissions to be paid from insurance companies

around the country. The legal claims were multiple:

“Conversion and breach of fiduciary duty;”

“breach of contract;” and “statutory/regulatory

10

violations” that were alleged to compel, as a

matter of public policy and _ regulatory

requirements, accountings and payment for

insurance business generated within the State

of Tennessee. The relief included not only a request

for “damages” but, declaratory judgment relief under

F.R.C.P. Rule 57 (incorporating 28 U.S.C. § 2201).

Petitioner Derrold Nash (for whom TAG could produce

no written contract) has specifically requested an

accounting for his “Medicare Advantage”

commissions. Similarly, the claims of Petitioner Colin

Keith Holley emphasize his sales emphasis with

Medicare products such as Humana, United

Healthcare and Universal Health. Petitioner Harmon

Pye’s commission sales were similarly produced

through Humana. Petitioner Robert Ghiringhelli

alleges an emphasis with Humana and United

Healthcare.

The trial court adopted the idea, endorsed by

the appellate decision, that Tennessee courts must

apply the statute of limitations of the contracted

forum as a procedural measure. Citing Mackey v.

dudy’s Foods, Inc., 654 F. Supp. 1465, 1469 (M.D.

Tenn. 1987), affirmed, 867 F.2d 325 (6% Cir. 1989).

The “contract obligations” may have accrued

under North Carolina law (if the contract defects are

overlooked), but the statutory violations did not. They

occurred in Tennessee, Georgia and South Carolina.

Lost in that diversity/borrowing statute debate

in both the trial and appellate opinions is any

explanation (if the “contract” wording is to envelope

all potential theories and remedies involved) as to how

an opinion by an intermediate North Carolina Court

1]

of Appeals may usurp Tennessee policy-related

statutes that address the handling of commissions

within the State of Tennessee, as well as federally

mandated Medicare regulations and requirements.

Paragraph 21 of the Petitioners’ Motion for

Summary Judgment at the trial level (Doc. 165, p. 31

of 35, Page ID #1282) specifically references the

Medicare provisions of 42 C.F.R. § 423.2274 (Broker

and Agent Requirements) which mandates a

prompt response by TAG, upon request by one of its

agents:

“(b)(3) Compensation structures must be available upon CMS

request including for audits, investigations, and to resolve complaints.

(e) ... Upon CMS request, the

organization must provide CMS, ina

forum consistent with CMS guidance, the information necessary for

it to conduct oversight of marketing

activities.”

Similarly, “access to books, documents, and

records of subcontractors” is addressed in 42 C.F.R. §

420.303 (HHS criteria for requesting books,

documents and records) and further provides a clear

statement of the uniform requirements related to the

financial relationship between The Assurance Group,

Inc. and its participating independent agents,

regardless of any “North Carolina contract” that TAG

may have insisted upon in creating its “contractual”

relationship with the independent agents. Obviously,

such a contractual provision may not usurp the

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authority of the Congress and the Medicare regulatory

agency. It is that fundamental point that should

control in evaluating both the diversity/borrowing

statute issue, as well as the entirely discrete

consideration of the fact that there are multiple bases

for the U.S.D.C. jurisdiction in Nashville, all of which

merely complemented the diversity basis.

Both the trial and intermediate appellate

decisions minimize the significance of Petrella and

Bay Area by noting that those “discrete accrual”

applications arose in the context of a federal copyright

and an ERISA statute. Significantly, neither

precedent opinion cites any wording within those

statutes as the basis for their adoption of the

“separate accrual rule.” No wording appears in either

of those decisions which predicates their application

of the “separate accrual rule” to any wording

contained in each of the statutes. Accordingly, it

appears that the “separate accrual rule” should apply

to any context, especially the statutory (ncluding

Medicare) issues set forth in the summary judgment

argument. This Court has uniformly applied the

“separate-accrual” analysis in every factual situation

in which future figures are to be computed based upon

as-yet unknown and unknowable figures.

Significantly, Petitioners’ argument is not a

form or application of the so-called “discovery” rule.

Instead, it is a recognition that claims in lawsuits may

not be predicated on figures that are not presently

knowable. A plaintiff may reasonably conclude that

an amount in issue, when a dispute is first recognized,

is relatively insignificant, and not worthy of litigation.

It is not an issue of fraudulent concealment, but one

of mathematical computation from a known set of

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figures that may not be acted upon legally until the

calculation is complete.

CONCLUSION

The Petition for Certiorari should be granted to

clarify the applicability of Petrella and Bay Area to

the “separate accrual rule” to all accounting claims

related to commission accountings owed under any

Tennessee or federal (Medicare) statute.

Respectfully submitted,

BURGER, SCOTT & McFARLIN

[s/

Wm. Kennerly Burger

12 Public Square North

Murfreesboro, TN 37130

Telephone: (615) 893-8933

Facsimile: (615) 893-5333

kenburger@comcast.net

Attorney for Petitioners