Poole v. Life Insurance Company of North America, et al
Filing
29
MEMORANDUM OPINION AND ORDER: It is ORDERED that Defendants' motions (Docs. 12 , 18 ) are GRANTED IN PART and DENIED IN PART as follows: (1) To the extent that Mr. Poole has alleged in Count III that McKesson is subject to statutory penalties under 29 U.S.C. § 1132(c) for McKessons failure to furnish documents other than the governing policy and SPD, these claims fail as a matter of law and McKessons motion to dismiss is granted. In all other respects, McKessons motion to dismiss is denied, and Counts II and III survive against McKesson. (2) Because LINA is not the plan administrator subject to statutory penalties under 29 U.S.C. § 1132(c), LINAs motion to dismiss Count III, which the court construes as a motion for judgmen t on the pleadings, is granted. In all other respects, LINAs motion for judgment on the pleadings is denied, and Counts I and II survive against LINA. Signed by Chief Judge William Keith Watkins on 10/25/2013. (Attachments: # 1 Civil Appeals Checklist)(dmn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
RICHARD POOLE,
Plaintiff,
v.
LIFE INSURANCE COMPANY
OF NORTH AMERICA, et al.,
Defendants.
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CASE NO. 2:13-CV-181-WKW
[WO]
MEMORANDUM OPINION AND ORDER
Plaintiff brings this suit pursuant to the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Before the court is
Defendant McKesson Corporation’s Motion to Dismiss (Doc. # 12), which
Defendant Life Insurance Company of North America has joined (Doc. # 18).
Plaintiff has responded to the original motion and the joinder (Docs. # 20, 25,
respectively), and each Defendant has replied (Docs. # 23, 27, respectively). After
considering Mr. Poole’s complaint, the parties’ briefs, and the relevant law, the
court concludes that Defendants’ motions are due to be granted in part and denied
in part.
I. JURISDICTION AND VENUE
The court exercises subject matter jurisdiction over Mr. Poole’s ERISA
claims pursuant to 28 U.S.C. § 1331. This case involves federal questions arising
under ERISA, over which the court has original jurisdiction pursuant to 29 U.S.C.
§ 1132(e). The parties do not contest personal jurisdiction or venue.
II. STANDARDS OF REVIEW
When evaluating a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6), the court must “take the facts alleged in the complaint as true
and construe them in the light most favorable to” the plaintiff. Danley v. Allen,
540 F.3d 1298, 1304 (11th Cir. 2008). To survive Rule 12(b)(6) scrutiny, “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“[F]acial
plausibility” exists “when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550 U.S. at 556).
Judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c)
is proper “when there are no material facts in dispute and the moving party is
entitled to judgment as a matter of law. All facts alleged in the complaint must be
accepted as true and viewed in the light most favorable to the nonmoving party.”
Scott v. Taylor, 405 F.3d 1251, 1253 (11th Cir. 2005) (internal citation omitted).1
1
For reasons explained in Section IV.A. of this opinion, the court construes LINA’s
joinder motion to dismiss as a motion for judgment on the pleadings.
2
III. BACKGROUND
A.
Factual allegations
Plaintiff Richard Poole alleges the following facts in his complaint against
Defendants Life Insurance Company of North America (“LINA”) and McKesson
Corporation. (Doc. # 1.) McKesson formerly employed Mr. Poole and offered
him the option to participate in its Group Long Term Disability Plan (the “Plan”).
McKesson is the Plan Administrator. Mr. Poole participated in the Plan, which
provides for monthly disability benefit payments in the event that participating
employees become disabled in the course of their employment.
In May 2009, Mr. Poole was in an auto accident while working for
McKesson. The accident rendered him a quadriplegic, and he is unable to work.
Mr. Poole applied for and began receiving long term disability benefits under the
Plan. He also sued Ford Motor Company, and received a settlement, the terms of
which are confidential. The complaint does not state the date of the settlement, but
it was apparently entered before April 13, 2011. (Doc. # 1, at 6 ¶ 19.)
From February 2011 to April 2011, Mr. Poole and his attorney and
McKesson’s attorney communicated orally and in writing concerning the potential
effects that Mr. Poole’s settlement might have on his participation in the Plan.2
During the discussions, Mr. Poole submitted a written request to McKesson for a
2
In its motion to dismiss, McKesson identifies the attorney as Shawn Cole, Esq.
3
copy of the insurance policy governing his long term disability claim offered
through Cigna Group Insurance.3
Mr. Poole claims that McKesson responded to his request by providing a
“Long Term Disability Summary Plan Description” effective January 2004 (the
“2004 SPD”), which McKesson represented was “in effect” for his claim. Mr.
Poole sought further confirmation from McKesson that the 2004 SPD applied to
his claim. (Doc. # 1, at 4 ¶ 13.) Mr. Poole then relied upon the provisions of the
2004 SPD when negotiating the terms of his settlement with Ford. Mr. Poole
alleges that McKesson failed to provide a copy of the governing Plan documents –
a Policy and Group Disability Insurance Certificate, both effective January 1, 2006
(collectively the “2006 Policy”) and a Long Term Disability Summary Plan
Description effective January 1, 2010 (the “2010 SPD”) – or to even make him
aware that the documents existed. McKesson did not provide Mr. Poole with the
2006 Policy or 2010 SPD until September 22, 2011, long after his reliance on the
2004 SPD when negotiating his settlement with Ford.
On April 13, 2011, Praxis Disability Consulting, an agent of Cigna,
contacted Mr. Poole indicating that, pursuant to the governing Plan documents, it
would impose a constructive trust or equitable lien on any monies paid to Mr.
Poole as a result of his settlement with Ford. Cigna’s asserted rights to Mr. Poole’s
3
Cigna is a trade name or affiliate company of LINA. (Doc. # 1, at 4.) LINA denies this
allegation. (Doc. # 13, at 4 n.1.)
4
settlement proceeds surprised Mr. Poole, who claims that he lacked knowledge of
the existence of and provisions within the 2006 Policy and 2010 SPD entitling
Cigna to his settlement proceeds.4
In addition to McKesson’s alleged failure to furnish Mr. Poole with the 2006
Policy or the 2010 SPD in February 2011, Mr. Poole claims that, at various times
from August 2011 through May 2012, he requested from both Defendants copies
of various documents including the summary plan description documents
governing his claim, his claim file, Cigna’s claim manual, Cigna’s Book of
Knowledge. Mr. Poole says that Defendants have failed to furnish most of the
requested information.
On October 13, 2011, Mr. Poole appealed Cigna’s decision to assert a
subrogation interest or equitable lien on his settlement proceeds. He furnished a
copy of the appeal to McKesson. McKesson responded by letter in November
4
The 2004 SPD, which Mr. Poole consulted when negotiating with Ford, does not
include as “other income” any amounts recovered from product liability litigation or settlement;
neither does it contain subrogation language concerning applicability of the “make-whole”
doctrine which Mr. Poole claims would preserve Cigna’s right to subrogation. On the other
hand, the 2006 Policy does provide that Cigna has the right to subrogation or reimbursement for
“any amounts paid because of loss of earnings or earning capacity through settlement . . . where
a third party may be liable, regardless of whether liability is determined.” (Doc. # 1, at 6–7
¶ 21.) But like the 2004 SPD, the 2006 Policy does not discuss applicability of the make-whole
doctrine. The 2010 SPD has language that both covers as “other income” any settlement
proceeds and discusses the make-whole doctrine.
The make-whole doctrine is “[t]he principle that, unless [an] insurance policy provides
otherwise, an insurer will not receive any of the proceeds from the settlement of a claim, except
to the extent that the settlement funds exceed the amount necessary to fully compensate the
insured for the loss suffered.” Black’s Law Dictionary (9th ed. 2009).
5
expressing its disagreement with Mr. Poole’s allegations in his appeal.
McKesson’s letter did not identify any further administrative remedies that Mr.
Poole should exhaust.
In December 2011, Cigna indicated again that it would claim an offset
against Mr. Poole’s long term disability benefit, per the 2006 Policy, and it
demanded production of the settlement agreement with Ford. Cigna further stated
that it would reduce Mr. Poole’s monthly insurance benefit to $50 per month in
January 2012. In a response letter to Cigna dated December 16, 2012, Mr. Poole
disputed the benefit reduction on the grounds that (1) the 2006 Policy did not
specifically exclude the make-whole doctrine, (2) McKesson had provided him
with an outdated Plan document, and (3) he had relied on the outdated Plan
document when negotiating his settlement with Ford. He also pointed out that
Cigna had not decided his appeal within the time period prescribed by ERISA.
Cigna responded with two more letters explaining that it would reduce Mr. Poole’s
benefits to $50 per month in March 2012.
After Cigna reduced the benefit payments, Mr. Poole appealed a second
time, citing the same evidence submitted in his prior appeal. In a May 31, 2012
letter, Cigna again denied Mr. Poole’s second appeal on the basis of the terms of
the 2006 Policy. Mr. Poole asserts that all of Cigna’s decisions that have been
6
adverse to him have been based upon language in the 2006 Policy and not the 2004
or 2010 SPDs.
As a consequence of Cigna and McKesson’s wrongful actions, Mr. Poole
claims that he has suffered significant hardship. He alleges that he has exhausted
all available administrative remedies, or alternatively, that it would be futile to
pursue additional administrative remedies.
B.
Procedural History
On the basis of these facts, Mr. Poole brings this action in which he asserts
three claims arising under ERISA. In Count I of the complaint, he seeks recovery
against LINA for “long term disability benefits, damages, and attorney’s fees.”
(Doc. # 1, at 10.) In Count II, he seeks equitable relief5 and attorney’s fees for
McKesson and LINA’s breaches of their fiduciary duties. And in Count III, Mr.
Poole seeks statutory damage penalties and attorney’s fees against McKesson and
LINA for their individual failures to timely furnish him, per his requests, with
copies of various Plan documents and other information supporting his claims.
McKesson has moved to dismiss the complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6). It argues that Count I is due to be dismissed because Mr.
Poole “failed to timely perfect his appeal of benefits denial or sufficiently plead his
5
Count II demands an award of restitution against McKesson and an injunction and
reformation of the 2006 Policy against LINA.
7
benefits claim.” (Doc. # 12, at 1.)6 McKesson urges that Count II is due to be
dismissed because a breach of fiduciary duty claim under ERISA is invalid where,
as here, the plaintiff has an ERISA remedy for denied benefits (i.e., Count I). It
further argues that Count II fails to satisfy Federal Rule of Civil Procedure 8.
Lastly, McKesson contends that Count III is due to be dismissed because Mr.
Poole sought documents improperly by directing his request to McKesson’s lawyer
representing McKesson in his workers compensation subrogation case and not in
that lawyer’s capacity as representative of McKesson’s administration of an
ERISA plan. Additionally, McKesson argues that Mr. Poole is not entitled to
statutory penalties for McKesson’s failure to provide numerous documents that
ERISA does not require plan administrators to furnish.
LINA answered the complaint the same day that McKesson filed its motion
to dismiss, and LINA’s original answer did not assert as a defense that Mr. Poole
failed to state claims upon which relief could be granted. (See Doc. # 13.) But
seventeen days after McKesson filed its motion to dismiss and LINA filed its
original answer, LINA amended its answer to include Rule 12(b)(6) defenses on
Counts II and III. (Doc. # 19.) It contemporaneously filed a joinder motion
adopting and incorporating by reference McKesson’s arguments and asserting
6
LINA does not join this portion of McKesson’s argument and admits that the complaint
“substantively alleges claims for additional LTD benefits under [ERISA] in Count I.” (Doc.
# 18, at 2.)
8
some of its own positions.
LINA’s motion is most notably different from
McKesson’s in that LINA attacks only Counts II and III. (Doc. # 18.)
IV. DISCUSSION
A.
Timeliness of LINA’s Joinder Motion
First, it must be decided whether LINA’s joinder motion to dismiss is
properly before the court because Mr. Poole criticizes LINA’s motion to dismiss as
being untimely. The defense that a complaint “fail[s] to state a claim upon which
relief can be granted,” like “every defense,” “must be asserted in the [answer] if
[an answer] is required.” Fed. R. Civ. P. 12(b). However,“[a] motion asserting
any [Rule 12(b)] defenses must be made before pleading [an answer] if a
responsive pleading is allowed.” Id. (emphases added). Mr. Poole contends that
“if LINA intended to file a motion to dismiss, it should have done so before filing
its [answer].” (Doc. # 25, at 2 (citing various Eleventh Circuit cases).)
LINA replies that pursuant to Federal Rule of Civil Procedure 15(a)(1), it
had the right to amend its answer within 21 days of filing its original answer, and it
therefore properly raised the 12(b)(6) defense in its amended answer. It further
argues that while Rule 12(b)(2)–(5) defenses can be waived, see Fed. R. Civ. P.
9
12(h)(1), the 12(b)(6) defense may be raised “throughout the course of litigation,
even at trial.” (Doc. # 27, at 3 (citing Fed. R. Civ. P. 12(h)(2)).)7
While LINA is correct that it had the right to timely amend its answer to
assert any 12(b)(6) defenses, and that by raising the defenses in the amended
answer, it effectively preserved those defenses, LINA ignores Rule 12’s
requirement that “[a] motion asserting any of the[ 12(b)] defenses must be made
before pleading.” Fed. R. Civ. P. 12(b). See also Leonard v. Enter. Rent a Car,
279 F.3d 967, 971 n.6 (11th Cir. 2002) (“After answering the complaint, the
defendants filed Rule 12(b)(6) motions to dismiss the plaintiffs’ claims. Under
Rule 12(b), these motions were a nullity; by filing an answer, the defendants had
eschewed the option of asserting by motion that the complaint failed to state a
claim for relief.” (emphasis added)). Therefore, while LINA preserved its right to
assert as a defense that Counts II and III fail to state a claim upon which relief can
be granted, it forsook the right to assert the defenses in a motion to dismiss. See
United States v. Ala. Dep’t of Mental Health, & Mental Retardation, No. 2:08-cv1025-MEF, 2010 WL 447399, at *4 (M.D. Ala. Feb. 9, 2010) (Fuller, J.).
However, in the interest of judicial economy, the court will treat LINA’s
untimely motion to dismiss as a Rule 12(c) motion for judgment on the pleadings.
7
Rule 12(h)(2) allows a defendant to assert the 12(b)(6) defense “(A) in any pleading
allowed or ordered under Rule 7(a); (B) by a motion under Rule 12(c); or (C) at trial.”
10
See Keller v. Strauss, 480 F. App’x 552, 554 n.2 (11th Cir. 2012) (citing Skrtich v.
Thornton, 280 F.3d 1295, 1307 n.13 (11th Cir. 2002)); Fed. R. Civ. P. 12(h)(2).
B.
Merits of Defendants’ Motions
1.
Count I – Claim for Benefits
McKesson emphasizes that the 2004 and 2010 SPDs each provided Mr.
Poole with 180 days to appeal a denial of benefits. Mr. Poole’s complaint alleges
that he received notice from Cigna of his denied claim on April 13. Then, he filed
his appeal on October 13, 2011, 183 days later.8 Hence, McKesson argues that
dismissal of Count I is proper because Mr. Poole failed to exhaust administrative
remedies. (Doc. # 12, at 3.) McKesson also contends that Count I fails to plead
facts in support of his allegation that his third-party settlement with Ford did not
make him whole. (Doc. # 12, at 4–5.) Specifically, McKesson criticizes Mr.
Poole’s failure to plead the amount he received from Ford for settlement.
McKesson continues to develop these arguments in its reply brief.
Mr. Poole responds with several arguments, but he most fundamentally
objects that Count I does not implicate McKesson, and therefore McKesson’s
argument is “moot to the extent [McKesson] seeks to dismiss itself from Count I.”
(Doc. # 20, at 2.) Indeed, Count I is against LINA, not McKesson. Moreover,
while LINA denies liability, “LINA admits that [Mr. Poole]’s Complaint
8
Mr. Poole argues that it was actually just 181 days. (Doc. # 20, at 3.) Either way, he
was late, if his October 13, 2011 response counts as a relevant “appeal.”
11
substantively alleges claims for additional LTD benefits under § 1132(a)(1)(B) . . .
in Count I.” (Doc. # 18, at 2.) Therefore, McKesson’s motion to dismiss Count I
will be denied as moot.
2.
Count II – Claims for Breach of Fiduciary Duty
Next, McKesson argues that Mr. Poole may not seek equitable relief under
§ 1132(a)(3) because he has an adequate legal remedy under § 1132(a)(1)(B).9
(Doc. # 12, at 5–6.) McKesson asserts that this rule governs even if Mr. Poole is
unsuccessful on his § 1132(a)(1)(B) claim for benefits. See Ogden v. Blue Bell
Creameries U.S.A., Inc., 348 F.3d 1284, 1286–88 (11th Cir. 2003) (citing Varity
Corp. v. Howe, 516 U.S. 489, 515 (1996)); Katz v. Comprehensive Plan of Grp.
Ins., 197 F.3d 1084, 1088–89 (11th Cir. 1999) (same).10 Additionally, McKesson
repeats the challenge it lodges against Count I that Mr. Poole failed to plead
adequate facts showing the Ford settlement did not make him whole.
9
Section 502 of ERISA is codified at 29 U.S.C. § 1132. Section 502(a)(1)(B) is 29
U.S.C. § 1132(a)(1)(B); Section 502(a)(3) is 29 U.S.C. § 1132(a)(3). The court will use “§ 502”
and “§ 1132” interchangeably because the parties and the cases they cite vary in the usage of
“§ 502” and “§ 1132.”
10
In Varity, the Supreme Court decided that § 502(a)(3), the remedial provision of
ERISA for equitable relief, empowered a beneficiary to bring a cause of action for breach of
fiduciary duty. The Court remarked in dicta that “where Congress elsewhere provide[s] adequate
relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in which
case such relief normally would not be ‘appropriate.’” 516 U.S. at 515. In Katz and Ogden, the
Eleventh Circuit interpreted Varity’s dicta to mean that § 502(a)(3) is merely a “catchall
provision” that provides relief only for injuries not otherwise adequately provided for by ERISA.
Katz, 197 F.3d at 1088; Ogden, 348 F.3d at 1287.
12
LINA adopts McKesson’s arguments, cites the same authorities, and argues
that “LINA’s alleged wrongdoing” in Count II “is the same wrongdoing alleged in
Count I.” (Doc. # 18, at 2.) LINA further argues, in the reply brief, that the breach
of fiduciary duty claim is really against McKesson, not LINA. (Doc. # 27, at 3–4.)
Mr. Poole responds that McKesson has neglected to cite another Eleventh
Circuit case examining a complaint like his in light of Varity and Katz. In Jones v.
American General Life and Accident Insurance Co., 370 F.3d 1065, 1069 (11th
Cir. 2004), the court considered “[w]hether the district court erred in dismissing
the [plaintiffs’] Section 502(a)(3) breach of fiduciary duty claim under Rule
12(b)(6), finding that Section 502(a)(1)(B) afforded [plaintiffs] with an adequate
remedy.” The Eleventh Circuit held that the district court erroneously dismissed
the plaintiffs’ Section 502(a)(3) claim and advised that “the district court should
have considered whether the allegations supporting the Section 502(a)(3) claim
were also sufficient to state a cause of action under Section 502(a)(1)(B).” Id. at
1073. According to Jones, a district court should dismiss a § 502(a)(3) claim when
the allegations supporting the § 502(a)(3) claim could also support a
§ 502(a)(1)(B) claim, regardless of the relief sought. Id.; see also Tebbetts v. Blue
Cross Blue Shield of Ala., No. 2:07-cv-925-MEF, 2009 WL 1850537, at *4 (M.D.
Ala. June 26, 2009) (Fuller, J.).
13
Mr. Poole likens his case to Jones and claims that he has pleaded “two
factually distinct claims.” (Doc. # 20, at 9 (“[Mr. Poole’s (a)(1)(B)] benefits claim
is based solely on LINA’s actions of reducing his monthly benefit due to language
contained in the Plan, and [he] claims that this violates the make-whole doctrine.
However, . . . [his (a)(3)] breach of fiduciary duty claim is based solely on
McKesson’s actions of providing inaccurate and/or incorrect Plan documents to
[him], when he would have structured his third-party settlement differently had he
been given the correct Plan document.”).) Mr. Poole “intended to plead Count II in
the alternative to Count I,” (Doc. # 20, at 10), and is willing to concede that “he
has no legal entitlement to benefits [under (a)(1)(B)] for purposes of his [(a)(3)]
breach of fiduciary duty claim,” (Doc. # 20, at 11 n.8). If the court finds his
complaint to be deficient in pleading Count II as an alternative claim for relief
should his Count I claim fail, Mr. Poole requests that he be permitted to amend his
complaint to plead Count II as an alternative to Count I. (Doc. # 20, at 10 n.6.)
Similarly, Mr. Poole disagrees with LINA’s position that Count II against
LINA is a repackaging of his claims against LINA in Count I. (Doc. # 25, at 4
(“While the harm to [Mr. Poole] is admittedly the same in Counts I and II (i.e.
reduction in his disability income to $50 a month, causing financial distress), the
wrongful conduct involved is not [the same], nor are the potential remedies.”).)
Mr. Poole cites several Supreme Court cases that have held that ERISA plaintiffs
14
may seek the same equitable remedies that he seeks in a § 502(a)(3) claim (i.e.,
reformation, restitution, and injunction), so long as the equitable relief claims are
not “duplicative and based on the same allegations” as the § 502(a)(1)(B) claim for
benefits. (Doc. # 25, at 5–6.)
a.
Whether Count II Is a Re-characterization of Count I
According to Jones, the relevant question is whether the allegations
supporting Mr. Poole’s § 1132(a)(3) breach of fiduciary duty claim would also
support a cause of action under § 1132(a)(1)(B). See Jones, 370 F.3d at 1073
(citing Varity, 516 U.S. at 512, 515).11 The factual predicate for Mr. Poole’s
11
Count I of the complaint “seeks to recover long term disability benefits, damages, and
attorney’s fees” from LINA for Cigna’s wrongful reduction of Mr. Poole’s long term disability
claim to $50 per month. (Doc. # 1, at 10–11.) It then demands judgment against LINA as
follows:
a. For the sum of all past due long term disability benefits in an amount which
does not take into account Mr. Poole’s third-party settlement;
b. For reinstatement of Mr. Poole’s claim to all present and future disability
benefits in an amount which does not take into account his third-party settlement;
C. For an award of attorney’s fees;
d. For interest on all past due benefits; and
e. For such other further or different relief as may be just and proper under 29
§ U.S.C. 1132(a)(1)(B).
(Doc. # 1, at 11.)
Count II of the complaint discusses McKesson’s fiduciary duty as Plan Administrator to
provide Mr. Poole with correct Plan documents upon his request, its failure to provide the
relevant documents, Mr. Poole’s detrimental reliance upon the incorrect documents, and the
prejudice that Mr. Poole has suffered (i.e., Cigna’s reduction of his monthly benefit payment to
$50 per month and its claim on his settlement proceeds). (See Doc. # 1, at 12–13.) Count II also
15
§ 1132(a)(3) claim against McKesson is that McKesson breached its fiduciary
duties as Plan Administrator by failing to furnish the relevant Plan documents that
Mr. Poole needed to make an informed decision to settle with Ford. Contrary to
McKesson’s argument, these allegations would not support a cause of action under
29 U.S.C. § 1132(a)(1)(B) for “benefits due to [Mr. Poole] under the terms of his
[P]lan,” “enforce[ment of] his rights under the terms of the [P]lan,” or
“clarif[ication of] his rights to future benefits.”
It is also significant that Mr. Poole concedes that he is not entitled to
recovery under both Counts I and II. See Jones, 370 F.3d at 1071 (noting that the
plaintiffs “plead in the alternative and assume that they cannot recover under
alleges that Cigna breached its duty by failing to provide Mr. Poole with a copy of either the
2006 Policy or the 2010 SPD prior to his negotiation of his settlement, even though he presented
a written request for the documents. (Doc. # 1, at 12 ¶ 47.) Count II then demands judgment
against McKesson and LINA under 29 U.S.C. § 1132 (a)(3) as follows:
a. For equitable relief requiring McKesson to make restitution or otherwise make
Mr. Poole whole for the wrongful conduct which has been prejudicial to his long
term disability claim;
b. For an injunction preventing LINA from reducing Mr. Poole’s monthly
disability benefit by his third-party settlement;
c. For reformation of the 2006 Policy to prevent LINA from reducing Mr. Poole’s
monthly disability benefit by his third-party settlement, in accordance with the
terms of the 2004 SPD upon which he relied;
d. For an award of attorney’s fees; and
e. For such other equitable relief as may be just and proper under 29 U.S.C.
§ 1132(a)(3).
(Doc. # 1, at 13–14.) The Complaint does not expressly plead Count II as an alternative claim to
Count I, but Mr. Poole says that was his intent. (Doc. # 20, at 9–10.)
16
Section 502(a)(1)(B)”); id. at 1074 (reasoning that “[the plaintiffs] concede for
purposes of [the (a)(3)] claim that they are not entitled to [benefits] under the terms
of their plan”). Mr. Poole affirms that Count II is an alternative to Count I, (Doc.
# 20, at 10–11), and because Varity and other case law requires this result
notwithstanding Mr. Poole’s admission, the court will not require him to amend his
complaint to expressly plead Count II as an alternative to Count I. Assuming that
no benefits are due to Mr. Poole from LINA and that Count I fails, Mr. Poole
would be left without a remedy under ERISA if the court now dismissed Count II
against McKesson. The Eleventh Circuit has rejected such a result. See Jones, 370
F.3d at 1073–74. Therefore, McKesson’s motion to dismiss Count II is due to be
denied.12
As for LINA, Mr. Poole alleges that LINA owed him a fiduciary duty as the
Claims Administrator (Doc. # 1, at 2 ¶ 7), and that LINA (actually, Cigna) did not
“provide him with a copy of the 2006 Policy, or the 2010 SPD” prior to his
settlement with Ford, (Doc. # 1, at 12 ¶ 47).13 These are the allegations supporting
Mr. Poole’s claim to equitable relief (injunction and reformation) against LINA for
breach of fiduciary duty. Admittedly, the relief sought in Count II would be
12
Because McKesson has not raised the issue, the court does not address whether, under
the alleged facts, restitution is an available equitable remedy under the circumstances of this
case. See Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356 (2006).
13
LINA ignores Paragraph 47 of the complaint when it argues that Count II is entirely
about McKesson’s alleged wrongdoing. (Doc. # 27, at 4.)
17
similar, although not identical, to the relief requested in Count I. That is, Count I
seeks reinstatement of Mr. Poole’s benefits under the Plan, and Count II requests
injunctive relief and reformation of the 2006 Policy to prevent LINA from
reducing his benefits.
But the relevant question is “whether the allegations
supporting the Section 502(a)(3) claim [a]re also sufficient to state a cause of
action under Section 502(a)(1)(B), regardless of the relief sought.” See Jones, 370
F.3d at 1073. The allegations that LINA has breached a fiduciary duty are distinct
from the allegations that LINA has failed to pay benefits owed to Mr. Poole.
For the reasons given above regarding McKesson’s motion to dismiss Count
II, Mr. Poole will be permitted to plead that he is entitled to equitable relief
pursuant to § 1132(a)(3) from LINA if it is determined that he is not entitled to the
relief he seeks under § 1132(a)(1)(B). Consequently, LINA’s untimely joinder
motion to dismiss Count II, construed as a motion for judgment on the pleadings, is
due to be denied.
b.
Whether Count II Fails to Satisfy Iqbal
McKesson complains that Mr. Poole “has not provided sufficient facts to
show that he was not ‘made whole’ by the Ford settlement,” (Doc. # 12, at 7), so as
to substantiate his claim that “[he] would have structured his settlement in a
different manner and/or would not have settled the third-party lawsuit” had he
known about the relevant Plan documents, (Doc. # 12, at 7 (citing Doc. # 1, at 12
18
¶ 46)). LINA joins this argument without elaborating on it. (Doc. # 18, at 1.) Mr.
Poole responds to McKesson’s nearly identical argument in support of dismissal of
Count I by contending “[t]here is no requirement that [he] plead every fact or legal
conclusion related to the ‘make-whole doctrine.’” (Doc. # 20, at 6.) He further
posits that Defendants have been on notice that he was not made whole by the Ford
settlement, but if the court finds his pleading to be inadequate, that he requests
leave to amend it to state “the extent to which he was not made whole.” (Doc.
# 20, at 4 n.6.)
Federal Rule of Civil Procedure 8(a)(2) requires “a short and plain statement
of the claim showing that the pleader is entitled to relief.”
“[T]he pleading
standard Rule 8 announces does not require detailed factual allegations, but it
demands
more
than
an
unadorned,
the-defendant-unlawfully-harmed-me
accusation. A pleading that offers labels and conclusions or a formulaic recitation
of the elements of a cause of action will not do.” Iqbal, 556 U.S. at 677–78
(quotations and citations omitted) (emphasis added).
Mr. Poole’s complaint alleges that Defendants each owed fiduciary duties to
Mr. Poole, that in failing to furnish him with Plan documents they breached their
duties, and that he has been harmed because he entered a third-party settlement illadvisedly. (See Doc. # 1, at ¶¶ 6–7, 10–17, 42–49.) The alleged factual content
supporting Count II “allows the court to draw the reasonable inference that the
19
defendant is liable for” the alleged breaches of fiduciary duties. Iqbal, 556 U.S.
at 678. To the extent that Defendants’ motions request dismissal or judgment on
Count II on the grounds that it is insufficiently pleaded, the motions will be denied.
3.
Count III – Claims for Statutory Penalties
a.
McKesson’s Liability as Plan Administrator
Lastly, McKesson argues that Mr. Poole’s statutory penalty claim under 29
U.S.C. § 1132(c) should be dismissed for Mr. Poole’s failure to properly request
plan documents from McKesson. According to McKesson, Mr. Poole’s attorney
corresponded with Shawn Cole, the attorney representing McKesson in Mr.
Poole’s action for workers compensation.
McKesson protests that Mr. Poole
should not have contacted Ms. Cole but rather “McKesson Corporation, c/o Vice
President, Compensation and Benefits.” (Doc. # 12, at 8.) McKesson further
argues that ERISA does not require it to furnish Mr. Poole with “a complete copy
of his claim file, CIGNA’s claims manual, and all documents, records and other
information relevant to his claim for benefits.” (Doc. # 12, at 10 (citing Doc. #1, at
15–16 ¶¶ 57, 59, 61).)
Mr. Poole counters that McKesson is the Plan Administrator, and “Ms. Cole
was in fact an agent of McKesson.” (Doc. # 20, at 14.) Even if Ms. Cole was not
McKesson’s agent, Mr. Poole says that McKesson still received Mr. Poole’s
February 2011 request for Plan documents. As for McKesson’s second argument
20
that ERISA does not require plan administrators to furnish many of the documents
Mr. Poole later requested, Mr. Poole says that there is no authoritative answer in
the Eleventh Circuit explaining which documents must be furnished to a requesting
beneficiary.
McKesson replies that under Alabama law, Ms. Cole had a limited capacity
to act as agent for McKesson concerning only Mr. Poole’s workers compensation
case. Further, McKesson asserts that the SPD furnished by Ms. Cole identifies
McKesson Corporation’s Vice President as the proper plan administrator, and thus,
Mr. Poole was informed about the proper party charged with supplying requested
plan documents. (Doc. # 23, at 20–21 (citing Hiney Printing v. Brantner, 243 F.3d
956, 961 (6th Cir. 2001).)
Section 1132(c)(1) of ERISA provides that
Any administrator . . . who fails or refuses to comply with a request
for any information which such administrator is required by this
subchapter to furnish to a participant or beneficiary . . . may[,] in the
court’s discretion[,] be personally liable to such participant or
beneficiary in the amount of up to $100 a day from the date of such
failure or refusal, and the court may[,] in its discretion[,] order such
other relief as it deems proper.
29 U.S.C. § 1132(c)(1).14 The Eleventh Circuit recently held in an unpublished
decision that “[a] plan administrator is either ‘the person specifically so designated
by the terms of the instrument under which the plan is operated, . . . or a company
14
The daily penalty has increased from $100 to $110. 29 C.F.R. § 2575.502c-1.
21
acting as a plan administrator.” Lockhart v. Blue Cross Blue Shield of Tenn., 503
F. App’x 926, 928 (11th Cir. 2013) (internal quotations and citations omitted).
29 U.S.C. § 1024(b)(4) provides that “[t]he administrator shall, upon written
request of any participant or beneficiary, furnish a copy of the latest updated
summary,[sic] plan description, and the latest annual report, any terminal report,
the bargaining agreement, trust agreement, contract, or other instruments under
which the plan is established or operated.” (Emphasis added). The SPD should
inform participants of the “circumstances which may result in disqualification,
ineligibility, or denial or loss of benefits.” Id. at § 1022(b).
The complaint alleges that Mr. Poole requested relevant plan documents
from McKesson, which is undisputedly the plan administrator, in February 2011.
(Doc. # 1, at 3–4 ¶ 12.) To prove its defense that Mr. Poole failed to properly
contact
McKesson,
McKesson
asks
the
court
to
consider
evidentiary
correspondence not described or referenced in Mr. Poole’s complaint, namely Mr.
Poole’s attorney’s emails to Ms. Cole, and her emails with McKesson’s
employees, concerning which documents governed Mr. Poole’s claim. (See Doc.
# 12-6.) Consequently, McKesson’s motion to dismiss Count III on the ground
22
that Ms. Cole was not the proper contact or agent for McKesson “must be treated
as one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d).15
McKesson explains that Ms. Cole was not acting as an agent for McKesson
with regard to Mr. Poole’s long term disability benefits claim. But in her emails,
Ms. Cole does not indicate any reservation about the scope of her representation of
McKesson. (See Doc. # 12-6.) The emails show that she responded to the requests
by communicating with McKesson employees about the documents governing Mr.
Poole’s claim. Thus, at a minimum, a dispute of material fact exists as to whether
it was proper for Mr. Poole to request documents from Ms. Cole and whether it
was proper for Mr. Poole to rely on her representations to him when she furnished
the 2004 SPD to Mr. Poole. Consequently, even if the court considered this issue
under Rule 56’s standard, McKesson’s motion for summary judgment on this
ground would fail.
But as for McKesson’s argument that it had no obligation to furnish copies
of Mr. Poole’s claim file, Cigna’s claim manual, and all other records and
information relevant to Mr. Poole’s claim for benefits, McKesson’s motion to
dismiss is well-taken.
ERISA requires plan administrators to furnish, upon
15
But cf. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir.
1997) (“[W]here the plaintiff refers to certain documents in the complaint and those documents
are central to the plaintiff's claim, then the [c]ourt may consider the documents part of the
pleadings for purposes of Rule 12(b)(6) dismissal, and the defendant’s attaching such documents
to the motion to dismiss will not require conversion of the motion into a motion for summary
judgment.”).
23
request, copies of the SPD and “other instruments under which the plan is
established or operated.” 29 U.S.C. § 1024(b)(4) (emphasis added). But this
requirement does not extend to “other instruments” in general. See Fox v. Blue
Cross and Blue Shield of Fla., Inc., 517 F. App’x 754 , 757 (11th Cir. 2013)
(affirming dismissal of similar § 1132(c) claim).16
Mr. Poole’s demands for
documents other than the governing policy and SPD were not requests for
instruments under which the Plan was “established or operated.” See 29 U.S.C.
§ 1024(b)(4).
Hence, Mr. Poole’s 29 U.S.C. § 1132(c) claim against McKesson survives as
it pertains to Mr. Poole’s written request(s) for copies of the policy and SPD
governing his long term disability benefit rights, but Mr. Poole’s § 1132(c) claim is
due to be dismissed insofar as Mr. Poole alleges that McKesson violated ERISA by
failing to provide other documents or to use its position of authority to compel
Cigna to produce other documents. (Doc. # 1, at 15–16 ¶¶ 54, 59, 61.)17
16
Although it seems plausible to the court that an insurer’s claims manual is an
instrument under which a plan is operated, the Fox panel apparently would have rejected that
argument. See Fox, 517 F. App’x at 757 (citing Brown v. J.B. Hunt Transp. Servs., Inc., 586
F.3d 1079, 1088 (8th Cir. 2009) (“Nothing in [ERISA] requires plan administrators to disclose
claims manuals to plan participants.”)).
17
Additionally, Mr. Poole’s complaint avers that the Secretary of Labor has promulgated
regulations requiring plan administrators to furnish certain documents to plan participants upon
request. (Doc. # 1, at 15 ¶ 53 (citing 29 C.F.R. § 2560.503–1).) 29 C.F.R. § 2560.503–
1(h)(2)(iii) requires that every employee benefit plan must provide a “[f]ull and fair review” by,
among other things, “provid[ing], upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claimant’s claim for
benefits.”).) Mr. Poole does not argue in his responsive briefing that Defendants’ failure to
24
b.
LINA’s Liability as Claims Administrator or “De Facto”
Plan Administrator
LINA adopts McKesson’s arguments and adds that it was not a plan
administrator, and therefore, it cannot be held liable under § 1132(c). (Doc. # 18,
at 8 (citing Adair v. Johnston, 221 F.R.D. 573, 580 (M.D. Ala. 2004) (Thompson,
J.) (“[O]nly plan administrators can be sued for violations of ERISA’s notice and
reporting requirements.”); (Doc. # 27, at 9 (citing Byars v. Coca-Cola Co., 517
F.3d 1256, 1270–71 (11th Cir. 2008) (“[Defendant insurance company] was not
subject to [§ 1132(c)(1)] document withholding penalties, as the statute only
permits an award of penalties against the plan administrator.”) (emphasis added)).)
Mr. Poole responds that LINA acted as a de facto plan administrator by
taking on administrative duties and responding to requests for relevant documents.
(See Doc. # 25, at 7–10 (citing Rosen v. TRW, Inc., 979 F.2d 191, 193–94 (11th
Cir. 1992) (holding that “if a company is administrating the plan, then it can be
held liable for ERISA violations, regardless of the provisions of the plan
document”)).18 He asserts that the governing Plan documents, referenced in his
comply with the Secretary’s regulations constitutes an ERISA violation under § 1132(c). Even
so, the court notes that “[w]ithout clear Eleventh Circuit precedent mandating the award of
statutory penalties,” other courts have been unwilling to exercise any discretion [they] might
have to award statutory penalties for a violation of 29 C.F.R. § 2560.503-1(h)(2)(iii).”
Montgomery v. Metro. Life Ins. Co., 403 F. Supp. 2d 1261, 1266 (N.D. Ga. 2005).
18
Mr. Poole’s argument is consistent with his pleading. (See Doc. # 1, at 15 ¶ 55
(alleging Cigna has an obligation as an entity assuming the duties of “‘any administrator,’ the
25
complaint, give LINA the authority and discretion to determine benefit eligibility
on claims and appeals. (See Doc. # 12-2). He points out that LINA made the same
argument in another district court on another § 1132(c) claim at the motion to
dismiss stage, and that the district court found that dismissal of the § 1132(c) claim
was improper where LINA had allegedly acted as a claims fiduciary, made a
decision on the plaintiff’s claim, and notified the plaintiff of its decision. See
Cheal v. Life Ins. Co. of N. Am., 330 F. Supp. 2d 1347, 1356–57 (N.D. Ga. 2004).
Consequently, Mr. Poole argues, “discovery is warranted to determine exactly
what level of authority or control LINA exercised [over his] claim. Dismissing
[Count III] against LINA would be premature at this point in the litigation.” (Doc.
# 25, at 10.)
LINA replies that Mr. Poole “essentially contends that LINA qualifies as de
facto Plan Administrator because [LINA] served as Claims Administrator for the
Plan.” (Doc. # 27, at 9.) LINA further replies that Mr. Poole’s allegations that
LINA is a de facto plan administrator are conclusory and therefore subject to
dismissal.
LINA is, according to the complaint, a claims administrator with fiduciary
obligations. (Doc. # 1, at 2 ¶ 7, 15 ¶ 55.) But claims administrators are distinct
from plan administrators, and only plan administrators are subject to the ERISA
claim administrator, the appointed claims fiduciary, or the de facto plan administrator, to comply
with Mr. Poole’s requests for information”).)
26
penalties set out in 29 U.S.C. § 1132(c). “Liability under § 1132(c) cannot . . . be
imposed on a claims administrator such as [LINA], given the express language of
[ERISA.]” Kennedy v. Metro. Life Ins. Co., 357 F. Supp. 2d 1346, 1349 (M.D. Fla.
2005); see also Byars, 517 F.3d at 1270–71; Adair, 221 F.R.D. at 580–81. Further,
the Eleventh Circuit authority upon which Mr. Poole relies, Rosen, is
distinguishable. In Rosen, the designated plan administrator “was an inactive
entity,” and the defendant seeking dismissal was acting as plan administrator. 979
F.2d at 195. Here however, McKesson is undisputedly the designated and acting
plan administrator. (Doc. # 1, at 15 ¶ 54.) Accordingly, LINA’s motion to dismiss
Mr. Poole’s § 1132(c) statutory penalty claim against it, which the court construes
as a motion for judgment on the pleadings, is due to be granted.
V. CONCLUSION
Accordingly, it is ORDERED that Defendants’ motions (Docs. # 12, 18) are
GRANTED IN PART and DENIED IN PART as follows:
(1) To the extent that Mr. Poole has alleged in Count III that McKesson is
subject to statutory penalties under 29 U.S.C. § 1132(c) for McKesson’s failure to
furnish documents other than the governing policy and SPD, these claims fail as a
matter of law and McKesson’s motion to dismiss is granted. In all other respects,
McKesson’s motion to dismiss is denied, and Counts II and III survive against
McKesson.
27
(2) Because LINA is not the plan administrator subject to statutory penalties
under 29 U.S.C. § 1132(c), LINA’s motion to dismiss Count III, which the court
construes as a motion for judgment on the pleadings, is granted. In all other
respects, LINA’s motion for judgment on the pleadings is denied, and Counts I and
II survive against LINA.
DONE this 25th day of October, 2013.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
28
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