L v. Scottsdale Healthcare Corporation Health Plan et al

Filing 43

OPINION AND ORDER that Plaintiff's 37 Motion to Dismiss and Motion to Strike is granted in part and denied in part as stated in this opinion. Defendants are granted leave to file an amended answer within 20 days. Signed by Judge Robert E Jones on 12/06/11.(ESL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
ELLEN LEMBERG,

)
)
Plaintiff,
)
)
v.
)
)
SCOTTSDALE HEALTHCARE CORPORATION )
HEALTH PLAN; ET AL.,
)
)
Defendants.
)
Daniel L. Bonnett
Jennifer L. Kroll
Susan J. Martin
MARTIN & BONNETT PLLC
1850 N. Central Avenue, Suite 2010
Phoenix, AZ 85004
Attorneys for Plaintiff
Barry D. Halpern
Jefferson R. Hayden
Joseph G. Adams
SNELL & WILMER LLP
1 Arizona Center
400 E. Van Buren
Phoenix, AZ 85004-2202
Attorneys for Defendants

Civil No. 2:11-cv-00271-REJ

OPINION AND ORDER

JONES, Judge:
Plaintiff brings this action against defendants Scottsdale Healthcare Corp. Health Plan,
Plan Administrator of the Scottsdale Healthcare Corp. Health Plan, and Scottsdale Healthcare
Corp., alleging claims for breach of contract, recovery of benefits, and enforcement of
rights under various provisions of the Employment Retirement Income Security Act (“ERISA”)
and under the terms of the Scottsdale Healthcare Corp. Health Plan.
The case is now before the court on plaintiff’s motion (# 37) to dismiss defendants’
counterclaims and to strike defendants’ affirmative defenses. For the reasons explained below,
plaintiff’s motion is granted in part and denied in part.
DISCUSSION
1.

Motion to Dismiss Counterclaims
Defendants allege two counterclaims: common law breach of contract (Count One); and

violation of ERISA § 502(a)(3)(A), 29 U.S.C. § 1132(a)(3)(A) (Count Two). Both counterclaims
allege that plaintiff received erroneously paid benefits and seek reimbursement of the net amount
of $17,115.65.
I agree with plaintiff that ERISA preempts defendants’ federal and/or state common law1
breach of contract claim (Count One). See Pacificare Inc. v. Martin, 34 F.3d 834, 836 (9th Cir.
1994) (“the Ninth Circuit has expressly refused to create federal common law causes of action
under ERISA”); and Aetna Health Inc. v. Davila, 542 U.S. 200, 208-09 (2004) (“any state-law
cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy

1

Defendants do not specify state or federal common law in their counterclaim.

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conflicts with the clear congressional intent to make the ERISA remedy exclusive and is
therefore pre-empted.” (citation omitted)).
I disagree, however, with plaintiff’s contention that defendants’ counterclaim Count Two
“seeks relief not available under ERISA.” Plaintiff’s Motion, p. 6. Courts, including the Ninth
Circuit, have tackled and clarified the law in this area since the Supreme Court decision in GreatWest Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), on which plaintiff primarily
relies. A claim for restitution under ERISA § 502(a)(3)(A), such as the one defendants assert
here, can qualify as a claim for equitable relief as opposed to a legal claim for personal liability,
as recognized in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356, 363-65 (2006),
where, as here, the Plan contains a repayment provision. See Defendants’ Counterclaim
Count Two, ¶ 11; Defendants’ Response, Exhibit A, p. 62. Moreover, there is no requirement, as
plaintiff contends, that defendants must be able to trace the money they claim to a particular fund
or asset held by plaintiff. See, e.g., Sereboff, 547 U.S. at 365; Mayhew v. Hartford Life and Acc.
Ins. Co., ___ F.Supp.2d ___, 2011 WL 5024648 (N.D. Cal. Oct. 21, 2011); DeBenedictis v.
Hartford Life and Acc. Ins. Co., 701 F.Supp.2d 1113, 1134 (D. Ariz. 2010).
Consequently, I grant plaintiff’s motion with respect to counterclaim Count One and deny
plaintiff’s motion with respect to Count Two.
2.

Motion to Strike Affirmative Defenses
Defendants allege five affirmative defenses: (1) failure to state a claim; (2) statute of

limitations; (3) contributory negligence/comparative negligence; (4) third party fault; and (5)
failure to mitigate. Plaintiff moves to strike all five defenses, arguing that defendants’
allegations are insufficient to meet the basic pleading requirements of Rule 8, that the defenses
3 - OPINION AND ORDER

be stated in “short and plain terms.” Fed. R. Civ. P. 8(b). In response, defendants state that they
withdraw the defense of failure to state a claim, which they correctly assert can be raised at any
time, Fed. R. Civ. P. 12(h)(2), and which is not, in any event, a proper affirmative defense. See,
e.g., Scott v. Federal Bond and Collection Service, Inc., 2011 WL 176846 at *6 (N.D. Cal. Jan.
19, 2011).
With respect to the remaining four defenses, “‘[t]he key to determining the sufficiency of
pleading an affirmative defense is whether it gives plaintiff fair notice of the defense.’”
Simmons v. Navajo County, 609 F.3d 1011, 1023 (9th Cir. 2010) (quoting Wyshak v. City Nat’l
Bank, 607 F.2d 824, 827 (9th Cir. 1979)).
With respect to defendants’ statute of limitations defense, courts are split on whether
reference to a specific statute of limitations is required to provide fair notice. See Schwarzer,
Tashima & Wagstaffe, RUTTER GROUP PRAC. GUIDE: FED. CIV. PRO. BEFORE TRIAL,
¶ 8:1050.1 and .2 (The Rutter Group 2011) (collecting cases). In Wyshak, the Ninth Circuit
suggested, by its reasoning in that case, that defendants’ conclusory allegation that “[p]laintiff’s
claims, and each of them, are barred by the applicable statutes of limitations” is insufficient. See
Wyshak, 607 F.2d at 827 (defendants conclusory allegation sufficient where memorandum in
support of motion to amend answer mentioned specific statute). Consequently, I reject
defendants’ argument in this case and will require reference to a specific statute. I note also that
most of plaintiff’s claims arise under ERISA. As the Ninth Circuit has instructed, the controlling
statute of limitations for an action to recover benefits under ERISA is the state statute for claims
on written contracts. Wetzel v. Lou Ehlers Cadillac, 222 F.3d 643, 648 (9th Cir. 2000). Arizona
has a six-year statute of limitations. See Ariz.Rev.Stat. § 12-548. Defendants would be well4 - OPINION AND ORDER

advised to consider plaintiff’s allegations against that time frame in determining whether a
limitations defense to her ERISA claims is appropriate.
I agree with plaintiff that the remaining affirmative defenses, if appropriate at all in this
case, do not, as phrased, give her fair notice of the substance of the defenses. In view of the
above, I grant plaintiff’s motion to strike defendants’ second through fifth affirmative defenses,
and grant defendants leave to amend their answer in accordance with this decision within 20
days.
CONCLUSION
Plaintiff’s motion (# 37) is granted in part and denied in part as stated in this opinion.
Defendants are granted leave to file an amended answer within 20 days.
DATED this 6th day of December, 2011.

/s/ Robert E. Jones
ROBERT E. JONES
U.S. District Judge

5 - OPINION AND ORDER