Tebbetts et al v. Blue Cross Blue Shield of Alabama et al

Filing 81

MEMORANDUM OPINION AND ORDER directing that: (1) def Blue Cross and Blue Shield of Alabama's Motion to dismiss 54 is DENIED; (2) def Carecore National, LLC's Motion to dismiss plfs' amended complaint 55 is DENIED. Signed by Hon. Chief Judge Mark E. Fuller on 6/26/09. (Attachments: # 1 Civil Appeals Checklist)(djy, )

IN THE UNITED STATES DISTRICT COURT FOR T H E MIDDLE DISTRICT OF ALABAMA N O R T H E R N DIVISION D A V ID ALLEN TEBBETTS, et al., P la in tif f s , v. B L U E CROSS BLUE SHIELD OF A L A B A M A , et al., D e f e n d a n ts. ) ) ) ) ) ) ) ) ) )

C A S E NO. 2:07-cv-925-MEF (W O - Do Not Publish)

M E M O R A N D U M OPINION AND ORDER A s of the date of this decision, this case is a case brought pursuant to the Employee R e tire m e n t Income Security Act of 1974, 29 U.S.C. § 1132(a) ("ERISA") by plan p a rtic ip a n ts for alleged breach of fiduciary duty and equitable estoppel. This cause is before th e Court on two motions to dismiss: Defendant Blue Cross and Blue Shield of Alabama's M o tio n to Dismiss (Doc. # 54) filed on October 24, 2008 and Defendant Carecore National, L L C 's Motion to Dismiss Plaintiffs' Amended Complaint (Doc. # 55) filed on October 24, 2 0 0 8 . Plaintiffs oppose the motions. For the reasons set forth below, the Court finds that the m o tio n s are due to be GRANTED. F A C T S AND PROCEDURAL HISTORY P la in tif f Cynthia Ingram Tebbetts ("Mrs. Tebbetts") is an employee of Montgomery Im a g in g , LLC. Mrs. Tebbetts purchased a Blue Cross Blue Shield family health insurance p la n entitled "Medical Association of the State of Alabama Group Health Care Plan" (" M A S A " ). This plan provided coverage to Mrs. Tebbetts and her husband, Plaintiff David

Tebbetts ("Mr. Tebbetts"). The MASA policy was issued by Defendant Blue Cross Blue S h i e l d ("Blue Cross") and administered in part by Defendant CareCore National, LLC (" C a re C o re " ). M o n tg o m e ry Imaging chose MASA as the sole health insurance plan offered to its e m p lo ye e s . Montgomery Imaging established eligibility requirements its employees must m e e t in order to qualify to purchase the plan, including working at least thirty-two hours per w e e k and having worked for Montgomery Imaging for at least sixty days. In addition, M o n tg o m e ry Imaging pays 100% of the employee's individual premium. If an employee e le c ts family coverage, the employee pays the incremental premium for that additional c o v e ra g e through payroll deduction. Montgomery Imaging also distributes enrollment forms a n d plan descriptions, which are provided by Blue Cross, to its employees. Blue Cross in v o ic e s Montgomery Imaging for all of its employees' premiums each month, and M o n tg o m e ry Imaging remits a check to Blue Cross each month to pay the premiums. O n September 13, 2006, Mr. Tebbetts consulted with a doctor because he was e x p e rie n c in g pain in his abdomen, and the doctor ordered a CT scan of Mr. Tebbetts' a b d o m e n . The doctor sought pre-approval from Defendants of the CT scan, but Defendants d e c lin e d coverage. Several days later, Mr. Tebbetts was taken to the hospital where a CT s c a n and ultrasound revealed that Mr. Tebbetts had a cyst on his pancreas that had caused his s p le e n to rupture. Mr. Tebbetts' spleen was surgically removed. O n September 10, 2007, Plaintiffs filed the Complaint in the Circuit Court for

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Montgomery County, Alabama, for damages arising out of Defendants' failure to approve th e original request for a CT scan. Plaintiffs alleged that the claims they were bringing were o u ts id e the preemptive scope of ERISA. Consequently, Plaintiffs sought damages for breach o f contract, bad faith, negligence and wantonness, loss of consortium, fraudulent m isre p re s e n ta tio n , fraudulent suppression, and conspiracy under Alabama law. Blue Cross f i l e d its Notice of Removal in this Court on October 15, 2007. Plaintiffs unsuccessfully s o u g h t remand arguing that the MASA group health insurance policy is not an "employee b e n e f it plan" within the meaning of ERISA, and that Defendants' removal was procedurally d e f e c tiv e . On September 2, 2008, this Court denied the motion to remand. O n September 15, 2008, Defendants filed a dispositive motion in which they argued th a t ERISA provides the exclusive remedy available to Plaintiffs with regard to a d m in is tra tio n of the plan. Defendants argued that because all of Plaintiffs' claims, as then a rtic u la te d , arose under Alabama law they were preempted. After Plaintiffs filed the A m e n d e d Complaint, which is discussed in greater detail below, this initial dispositive m o tio n was denied as moot. Plaintiffs filed the Amended Complaint (Doc. # 51) on October 6, 2008. The factual p r e d i c a t e set forth in the Amended Complaint is largely unchanged. Plaintiffs allege that D e f e n d a n ts caused them harm by denying coverage under the Plan for a CT scan in S e p te m b e r of 2006. Plaintiffs now alleged that the denial of the requested CT scan resulted f ro m a scheme and conspiracy to change the manner in which benefits for CT scans, MIRS

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and other diagnostic procedures are pre-approved in order to increase Defendants' profits. T h e Amended Complaint sets forth only two counts: breach of fiduciary duty under 29 U .S .C . § 1132(a)1 and judicial estoppel. The Amended Complaint changed the type of relief s o u g h t by this suit from damages to declaratory and injunctive relief. Specifically, Plaintiffs n o w seek the following: (1) the removal of Defendants from their fiduciary roles in the a d m in is tra tio n of the Plan involved and the appoint of a special master, neutral committee, o r other independent neutral body to substitute for those removed fiduciaries in the making o f all determinations as to the entitlement of Plan benefits; (2) an injunction against D e f e n d a n ts prohibiting them from further breaches of fiduciary duties and directing them to e x e rc ise reasonable care, skill, prudence and diligence in the administration of the Plan; (3) a n order finding Defendants jointly and severally liable for breach of fiduciary duty as d e s c rib e d in the Amended Complaint; (4) an order requiring the reopening of each claim a d m in is te re d by CareCore and to re-administer such claims according to the terms of the Plan a n d to accurately determine whether the claimants are entitled to benefits according to the te rm s of the Plan; (5) an order establishing an administrative committee to audit and review D e f e n d a n ts ' compliance with any injunctive or equitable relief and to further oversee and e n s u r e that Plaintiffs and the class members receive a full, fair, and equitable review as

It is worth noting that the Amended Complaint fails to specify which subsection or s u b s e c tio n s of 29 U.S.C. § 1132(a) are invoked. Nonetheless, Plaintiffs' arguments in o p p o sitio n to the motions to dismiss have made it plain that the only claim pursuant to 29 U .S .C . § 1132(a) which they are making is one pursuant to 29 U.S.C. § 1132(a)(3). 4

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required by any ruling of this Court; (6) an order requiring each fiduciary to disgorge all p ro f it made as a result of the violations of 29 U.S.C. §§ 1104, 1105 and the terms of the Plan; (7 ) an award of reasonable attorneys' fees and costs and expert fees; (8) any other equitable re m e d ie s allowed under the statute; and (9) any other such relief as may be deemed just and p ro p e r. The Amended Complaint also purports to seek relief on behalf of Plaintiffs and a

p ro p o s e d class of similarly situated individuals including all plan participants and b e n e f ic ia rie s of the MASA group health insurance policy. After the Plaintiffs filed the Amended Complaint, Defendants filed their motions to d is m is s . Those motions are now fully briefed and ready for ruling. JURISDICTION AND VENUE T h is Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. §§ 1 3 3 1 , 1332(a), and 29 U.S.C. § 1132(e). Venue is proper in the Middle District of Alabama in that a substantial part of the events or omissions giving rise to the claims occurred within th is district. See 29 U.S.C. § 1132(e)(2). LEGAL STANDARDS

A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Prior to the
S u p re m e Court's decision in Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007), a motion to dismiss could only be granted if a plaintiff could prove "no set of facts . . . which would e n title him to relief." See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Hishon v. K in g & Spalding, 467 U.S. 69, 73 (1984); Wright v. Newsome, 795 F.2d 964, 967 (11th Cir.

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1986). Now, in order to survive a motion to dismiss for failure to state a claim, the plaintiff m u s t allege "enough facts to state a claim to relief that is plausible on its face." Twombly, 1 2 7 S. Ct. at 1974. While the factual allegations of a complaint need not be detailed, a

plaintiff must nevertheless "provide the `grounds' of his `entitlement to relief' and a formulaic recitation of the elements of a cause of action will not do." Id. at 1965. A
p la in tif f 's "[f]actual allegations must be enough to raise a right to relief above a speculative le v e l on the assumption that the allegations in the complaint are true." Id. It is not sufficient th a t the pleadings merely "le[ave] open the possibility that the plaintiff might later establish s o m e set of undisclosed facts to support recovery." Id. at 1968 (internal quotation and a lte ra tio n omitted). In considering a defendant's motion to dismiss, a district court will

accept as true all well-pleaded factual allegations and view them in a light most favorable to the plaintiff. See Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1057 (11th Cir. 2007). Accord, Nelson v. Campbell, 541 U.S. 637, 640 (2004) (where a court is considering dismissal of a complaint at the pleading stage, it must assume the allegations of the complaint are true).
D IS C U SS IO N

A. Count One Defendants contend that Count One of the Amended Complaint must be dismissed b e c a u s e Plaintiffs are not entitled to relief under 29 U.S.C. § 1132(a)(3)2 because 29 U.S.C.

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This provision is also known as § 502(a)(3) of ERISA. 6

§ 1132(a)(1)(B)3 afforded Plaintiffs an adequate remedy. Plaintiffs dispute this contention a n d insist that they are entitled to elect to proceed only with a claim pursuant to 29 U.S.C. § 1132(a)(3). For the reasons that follow, the Court finds that Defendants' contention is c o rre c t in the circumstances of this case. ERISA is a comprehensive legislative scheme with integrated systems of procedures f o r enforcement which provides a uniform regulatory regime over employee benefit plans. See Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004). As part of that scheme, § 1 1 3 2 (a )(3 ), the provision which Plaintiffs invoke, provides: A civil action may be brought by a participant, beneficiary, or fiduciary (A) to e n jo in any act or practice which violates any provision of this title or the terms o f the plan, or (B) to obtain other appropriate equitable relief (i) to redress s u c h violations or (ii) to enforce any provisions of this title or the terms of this p la n . 2 9 U.S.C. § 1132(a)(3). Congress intended this provision to be a "catchall" that would act " a s a safety net, offering appropriate equitable relief for injuries caused by violations that § 5 0 2 does not elsewhere adequately remedy." Varity Corp. v. Howe, 516 U.S. 489, 512 (1 9 9 6 ). This provision authorizes some individualized claims for breach of fiduciary duty, b u t under precedents handed down by the Eleventh Circuit Court of Appeals, not where p la in ti f f s had a cause of action based on the same allegations under § 1132(a)(1)(B) or E R IS A 's other more specific remedial provisions. See, e.g., Jones v. Am. Gen. Life & A c c id e n t Ins. Co., 370 F.3d 1065, 1073-74 (11th Cir.), reh'g denied, 116 Fed. Appx. 24 (11th

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This provision is also known as § 502(a)(1)(B) of ERISA. 7

Cir. 2004); Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284, 1286-88 (11th Cir. 2 0 0 3 ); Katz v. Comprehensive Plan of Group Ins., ALLTEL, 197 F.3d 1084, 1088-89 (11th C ir. 1999) reh'g denied 209 F.3d 726 (11th Cir. 2000). Accord, Nolte v. BellSouth Corp., N o . 1:06-cv-762-WSD, 2007 WL 120842, *3-*7 (N.D. Ga. Jan. 11, 2007).4 In light of these c a s e s , it is clear that this Court must determine whether the allegations supporting the § 1 1 3 2 (a )(3 ) claim were also sufficient to state a cause of action under § 1132(a)(1)(B), re g a rd le s s of the relief sought. 370 F.3d at 1073. Thus, the fact that Plaintiffs have recast th e relief they seek from claims for damages into claims for equitable relief, the Court must f o c u s on whether the factual predicate for their claim could have supported a cause of action u n d e r § 1132(a)(1)(B). That section provides: A civil action may be brought - (1) by a participant or beneficiary-... (B) to r e c o v e r benefits due to him under the terms of his plan, to enforce his rights u n d e r the terms of the plan, or to clarify his rights to future benefits under the te rm s of the plan. 2 9 U.S.C. § 1132(a)(1)(B). The Supreme Court has explained that [t]his provision is relatively straightforward. If a participant or beneficiary b e lie v e s that benefits promised to him under the terms of the plan are not p ro v id e d , he can bring suit seeking provision of those benefits. A participant o r beneficiary can also bring suit generically to "enforce his rights" under the p la n , or to clarify any of his rights to future benefits.

While not decided under the Eleventh Circuit Court of Appeals' application of the re le v a n t precedents, it is also noteworthy that other courts have reached a similar result. See, e .g ., Estate of Spinner v. Anthem Health Plans of VA, 589 F. Supp. 2d 738, 746-49 (W.D. Va. 2 0 0 8 ); Gallagher v. CIGNA Healthcare of ME, Inc., 538 F. Supp. 2d 286, 296-97 (D. Me. 2 0 0 8 ); 8

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Davila, 542 U.S. at 210. Moreover, immediately upon the denial of benefits under an E R IS A -g o v e rn e d health care plan, a participant or beneficiary can pay for the treatment th e m s e lv e s and seek reimbursement through a § 1132(a)(1)(B) action or can seek a p re lim in a ry injunction in a suit filed pursuant to that provision. Id. at 211. In the case at hand, it is plain that all of Plaintiffs' complaints against Defendants arise o u t of a denial of coverage for a CT scan. Upon that denial, Plaintiffs could have paid for th e test themselves and then sought reimbursement through a § 1132(a)(1)(B) action or file s u c h an action seeking a preliminary injunction. They could have filed suit pursuant to § 1 1 3 2 ( a )(1 )(B ) seeking clarification of their rights to future benefits under the terms of the p la n . Plaintiffs elected not to pursue their remedies under § 1132(a)(1)(B), but the remedies w e re available to them. Because Plaintiffs had an adequate remedy under § 1132(a)(1)(B), th e y cannot assert a § 1132(a)(3) claim even if their § 1132(a)(1)(B) has been lost. See O g d e n , 348 F.3d at 1287; Katz, 197 F.3d at 1089. Thus, Plaintiffs' claim pursuant to § 1 1 3 2 (a )(3 ) is due to be DISMISSED. B . Count Two - Equitable Estoppel D e f e n d a n ts contend that Count Two of the Amended Complaint must be dismissed b e c a u s e Plaintiffs have failed to sufficiently plead the necessary facts to support a claim for e q u ita b le estoppel. Plaintiffs make no response in opposition to this contention. "This

c irc u it has created a very narrow common law doctrine under ERISA for equitable estoppel." Katz, 197 F.3d at 1090 (citing Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347

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(11th Cir. 1994) and Kane v. Aetna Life Ins., 893 F.2d 1283, 1285-86 (11th Cir.), cert. d e n ie d , 498 U.S. 890 (1990)). Such a claim for equitable estoppel under ERISA is "only a v a ila b le when (1) the provisions of the plan at issue are ambiguous, and (2) representations a re made which constitute an oral interpretation of the ambiguity." Id. Having reviewed

th e Amended Complaint, the Court cannot find that Plaintiffs have alleged enough facts to s ta te a claim of equitable estoppel under ERISA to show that relief that is plausible on this c l a im and they have certainly not presented a complaint which on its face provides the

grounds of their entitlement to relief on this claim. Accordingly, the motions to dismiss are due to be GRANTED as to Count Two of the Complaint.
CONCLUSION F o r the reasons set for above, it is hereby ORDERED that (1 ) Defendant Blue Cross and Blue Shield of Alabama's Motion to Dismiss (Doc. # 5 4 ) is DENIED. (2 ) Defendant Carecore National, LLC's Motion to Dismiss Plaintiffs' Amended C o m p la in t (Doc. # 55) is DENIED. D O N E this the 26th day of June, 2009. /s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE

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