Baxter et al v. The Prudential Insurance Company of America
Filing
31
OPINION AND ORDER denying 24 Motion to dismiss. Signed by Judge John E. Steele on 9/17/2012. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
HARRY
BAXTER,
JEANNE
BAXTER,
JENNIFER WEIL, and CLAIRE BAXTER
FITZGERALD, as beneficiaries of
KATHRYN BROOKE BAXTER,
Plaintiffs,
vs.
Case No.
2:11-cv-401-FtM-29DNF
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA c/b/a SERVICE MEMBERS' GROUP
LIFE INSURANCE, and the UNITED
STATES
DEPARTMENT
OF
VETERAN'S
AFFAIRS,
Defendants.
___________________________________
OPINION AND ORDER
This matter comes before the Court on the government’s Motion
to Dismiss (Doc. #24) filed on January 13, 2012.
a Response (Doc. #30) on April 12, 2012.
Plaintiffs filed
For the reasons set forth
below, the motion is denied.
I.
The Second Amended Complaint (Complaint) (Doc. #20) alleges
that Kathryn Brooke Baxter (Baxter) was insured under a group life
insurance policy issued by The Prudential Insurance Company of
America d/b/a Servicemembers’ Group Life Insurance (Prudential).
The Prudential policy provided for payment of death benefits when
an insured passes away on active duty training or inactive duty
training.
The Complaint alleges that Baxter was on inactive duty
training on the date she passed away in Tanzania, that her last
paycheck stated that she had $400,000.00 in life insurance with
Prudential, and that as the beneficiaries, plaintiffs are entitled
to recover the policy amount. Plaintiffs filed Claim No. 10999578,
which was denied by Prudential. Plaintiffs seek damages, including
the payment of the death benefit, from Prudential for breach of the
policy.
Plaintiffs also sue the United States Department of Veteran’s
Affairs
(VA),
which
they
allege
is
charged
with
determining
coverage and compensability of such a claim. The Complaint alleges
that the VA is in breach of the contract of insurance for failing
to approve coverage and find compensability to pay the death
benefit under the terms of the policy.
Plaintiffs demand judgment
for damages, including the payment of the death benefit, from the
VA.
The VA’s motion to dismiss states a facial challenge to the
subject matter jurisdiction of the court.
(Doc. #24, p. 5.)
A
motion challenging the subject-matter jurisdiction of the court is
brought pursuant to Rule 12(b)(1).
subject-matter
complaint.
Cir. 2003).
jurisdiction
based
A facial attack challenges
on
the
allegations
in
the
Morrison v. Amway Corp., 323 F.3d 920, 924 n.5 (11th
“A plaintiff defending against a facial attack on
jurisdiction enjoys ‘safeguards similar to those retained when a
Rule 12(b)(6) motion to dismiss for failure to state a claim is
raised,’ . . .”
Mulhall v. Unite Here Local 355, 618 F.3d 1279,
-2-
1286 n.8 (11th Cir. 2010)(quoting McElmurray v. Consol. Gov’t of
Augusta-Richmond County, 501 F.3d 1244, 1251 (11th Cir. 2007)). The
Court must accept all factual allegations in a complaint as true
and take them in the light most favorable to plaintiff.
Erickson
v. Pardus, 551 U.S. 89 (2007); Christopher v. Harbury, 536 U.S.
403, 406 (2002); Bingham v. Thomas, 654 F.3d 1171, 1175 (11th Cir.
2011).
“To survive dismissal, ‘the complaint’s allegations must
plausibly suggest that the [plaintiff] has a right to relief,
raising that possibility above a ‘speculative level’; if they do
not, the plaintiff’s complaint should be dismissed.’”
James River
Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270, 1274 (11th Cir.
2008)(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56
(2007)). See also Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th
Cir. 2010).
Thus, the Court engages in a two-step approach: “When
there are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give rise
to an entitlement to relief.”
Ashcroft v. Iqbal, 129 S. Ct. 1937,
1950 (2009).
II.
The United States asserts that it is immune from suit in a
coverage dispute because it has consented to be sued only in
actions in which there is an alleged breach of an obligation
undertaken by the United States.
(Doc. #24, p. 2.)
The government
asserts that coverage determinations under the insurance policy is
-3-
the exclusive responsibility of the private insurer, not the United
States, and therefore Prudential is the only proper defendant.
(Id.)
The Servicemembers’s Group Life Insurance Act, 38 U.S.C. §
1965 et seq. (SGLIA), directs the Administrator of Veterans’
Affairs to purchase insurance coverage from an eligible insurer for
service
members.
38
U.S.C.
§
1966(a).
Service
members
are
presumptively enrolled unless they opt out, and premiums are
deducted from
the
1967(a); 1969(b).
service
member’s
paychecks.
38
U.S.C.
§§
The current default amount of coverage for a
service member is $400,000.
38 U.S.C. § 1967(a)(3)(A)(I).
Thus,
Servicemember’s Group Life Insurance is a contract between the
United States government and approved insurers for the benefit of
the insured servicemen.
Shannon v. United States, 417 F.2d 256,
262 (5th Cir. 1969)1(citing Johnson v. Prudential Ins. Co. of Am.,
182 Neb. 673, 674, 156 N.W. 2d 812, 813 (1968)).
As such, it is
well-established that the obligation to pay insurance proceeds is
exclusively
upon
the
insurer
(here
Prudential).
See,
e.g.,
Williams v. United States, No. 08-5081, 2009 WL 799974 (E.D. La.
Mar. 19, 2009); Mosby v. United States, 423 F. Supp. 689 (N.D. Ohio
1976); Jackson v. United States, 398 F. Supp. 607, 609 (N.D. Miss.
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.
1981) (en banc) the Eleventh Circuit adopted as binding precedent
all the decisions of the former Fifth Circuit handed down prior to
the close of business on September 30, 1981.
-4-
1975); Riggans v. United States, 315 F. Supp. 1405 (W.D. Pa. 1970);
and Kercher v. United States, 300 F. Supp. 1125 (D. Mont. 1969).
The government, however, has extensive statutory involvement
and control over portions of the program.
a duty based upon such obligations.
The government may have
E.g., Shannon v. United
States, 417 F.2d 256, 262 (5th Cir. 1969).
Thus, “[a]ctions at law
or in equity to recover on the policy, in which there is not
alleged any breach of any obligation undertaken by the United
States, should be brought against the insurer.”
See also 38 U.S.C. § 1975.
38 C.F.R. § 9.13.
Actions which allege a breach of an
obligation undertaken by the United States may be brought against
the United States in district court.
“The district courts of the
United States shall have original jurisdiction of any civil action
or claim against the United States founded upon this subchapter.”
38 U.S.C. § 1975.
The crux of the issue is whether the Second Amended Complaint
alleges the breach of an obligation undertaken by the United
States.
The Complaint alleges that the VA breached its duty to
accurately decide whether Baxter was covered under SGLI, which
resulted in non-payment by Prudential.
Count II alleges that the
VA “is charged with determining coverage and compensability of a
claim”, doc. #20, ¶28, and that the VA breached its duty “by
failing to approve coverage and find compensability to pay the
death benefit to Plaintiffs as required by the terms of said
-5-
policy,” id. at ¶29.
This breach of duty occurred despite the fact
that Baxter’s last paycheck stated she had $400,000.00 in life
insurance
coverage
through
Prudential.
(Id.
at
¶24.)
The
Complaint adequately alleges an obligation undertaken by the United
States because “[d]eterminations of the Department of Veterans
Affairs are conclusive under the policy with respect to” coverage.
38 C.F.R. § 9.7.
See also Doc. #20, Exh. A, p. 23.
Therefore, the
Complaint also plausibly alleges a breach of that obligation.
While damages may not be the equivalent of the insurance amount,
damages can be sought.
Therefore, the facial challenge to the
Second Amended Complaint fails.
Accordingly, it is now
ORDERED:
The government’s Motion to Dismiss (Doc. #24) is DENIED.
DONE AND ORDERED at Fort Myers, Florida, this
September, 2012.
Copies:
Counsel of record
-6-
17th
day of
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