Keller v. Kaiser Permanente Insurance Company et al

Filing 58

ORDER by Judge Hamilton Granting in Part and Denying in Part #44 Motion to Dismiss (pjhlc2, COURT STAFF) (Filed on 9/1/2010)

Keller v. Kaiser Permanente Insurance Company et al

Doc. 58

1 2 3 4 5 6 7 8 9 10 THOMAS A. KELLER, Plaintiff, v. KAISER PERMANENTE INSURANCE COMPANY, et al. Defendants. _______________________________/ Defendant's motion to dismiss came on for hearing before this court on August 18, 2010. Plaintiffs Thomas A. Keller ("plaintiff"), appeared through his counsel Shannon M. Stone. Defendant The Western Prelacy of the Armenian Apostolic Church of America, Inc., dba KZV Armenian School ("KZV School") appeared through its counsel, Ara Jabagchourian. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court DENIES in part and GRANTS in part defendant's motion, for the reasons stated at the hearing, and summarized as follows. 1. Defendant KZV School's motion to dismiss plaintiff's COBRA cause of action No. C 09-6088 PJH ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

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is DENIED. Although plaintiff has failed to plead individualized wrongful conduct or the breach of a specified duty by defendant KZV School with a high degree of clarity, plaintiff's allegations at a minimum give rise to a reasonable inference that defendant's wrongful conduct consisted of failing to take appropriate action, together with defendant Kaiser Foundation Health Plan, in reinstating plaintiff's continuation coverage in February 2006. Amended Complaint, ¶¶ 15, 18, 24-25. Furthermore, the heart of the dispute between the

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parties is whether defendant KZV School's failure to pay its monthly premium ­ and Kaiser's resulting discontinuance of defendant's health plan ­ terminated KZV School's obligation to provide continuing benefit coverage to plaintiff, where defendant's initial failure to pay its premium was ultimately remedied with the reinstatement of insurance coverage. There is a lack of legal guidance on this issue, and a complete evidentiary record is required before a decision on the merits of this issue may be made. Thus, dismissal of plaintiff's COBRA claim is not appropriate. 2. Defendant's motion to dismiss plaintiff's Cal-COBRA claim is GRANTED.

Following the hearing on the motion to dismiss, and per the court's instruction, the parties submitted letter briefs as to the viability of plaintiff's claim. Both parties continue to agree that continuation coverage under Cal-COBRA terminates when the "qualified beneficiary moves out of the plan's service area," and they furthermore concede that the amended complaint alleges both plaintiff's relocation from California to Minnesota in June 2005, and his pre-move enrollment in defendant's health plan in April 2005. See Cal. Health & Safety Code § 1366.27(a)(8); Amended Complaint, ¶ 14. However, plaintiff contends that the amended complaint sufficiently alleges that plaintiff remained within the plan's service area ­ notwithstanding his relocation to Minnesota ­ since (1) the complaint alleges that defendant continued to provide continuation coverage for months after plaintiff moved; and (2) alternative allegations referencing plaintiff's relocation outside Kaiser's service area relate only to individual plan coverage, not defendant's group plan. Amended Complaint, ¶¶ 15, 17. As defendant correctly points out, however, the complaint is less than clear. At best, the complaint is totally silent as to whether plaintiff continued to be within the service area of the Kaiser plan offered by defendant when he moved to Minnesota. At worst, the complaint does in fact raise the reasonable inference that plaintiff moved outside the service area of the plan offered by defendant, since Kaiser informed plaintiff that he did not qualify for Kaiser's coverage (albeit individual coverage) since he was no longer a resident 2

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of California. Amended Complaint, ¶ 17. Thus, because plaintiff has failed to affirmatively allege that plaintiff continued to remain within the service area of defendant's group plan, because the complaint further raises the inference that plaintiff did not remain within the requisite service area, and because Cal-COBRA expressly provides that coverage is normally terminated whenever the beneficiary moves out of the plan's service area, plaintiff has failed to allege a viable claim under Cal-COBRA. The claim is accordingly dismissed. Leave to amend is granted, however, so that plaintiff may attempt to cure the deficiencies noted herein. Any amended complaint shall be filed no later than September 30, 2010. Defendant's response to the amended complaint shall be due no later than 21 days thereafter.

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12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 IT IS SO ORDERED. Dated: September 1, 2010 ______________________________ PHYLLIS J. HAMILTON United States District Judge