Hepp v. The Paul Revere Life Insurance Company et al

Filing 27

ORDER denying 11 motion to dismiss; denying 11 Motion for More Definite Statement; denying 11 Motion to Strike. The defendant has 10 days to answer the complaint. Signed by Judge Elizabeth A. Kovachevich on 8/5/2014. (SN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

WALTER R. HEPP, M.D.,
Plaintiff,
vs.

CASE NO. 8:13-CV-02836-EAK-TBM

THE PAUL REVERE LIFE INSURANCE
COMPANY, PROVIDENT LIFE AND
ACCIDENT INSURANCE COMPANY,
and THE UNUM GROUP,
Defendants,
/

ORDER ON DEFENDANT’S MOTION TO DISMISS COMPLAINT
THIS CAUSE comes before the Court on Defendants, The Paul Revere Life
Insurance Company, Provident Life And Accident Insurance Company, and The Unum
Group’s, Motion to Dismiss Plaintiffs Complaint or in the alternative for More Definite
Statement and/or Motion to Strike. (Doc. 11). After careful consideration of the parties’
submissions, together with the well-pleaded allegations of the Complaint, the Court
concludes that Defendant’s Motion to Dismiss is DENIED. Defendant’s Motion to Strike
Portions of the Complaint is DENIED. The remaining portions of the Complaint are
ABATED. All other Motions are DENIED.
BACKGROUND AND PROCEDURAL HISTORY
Plaintiff, Dr. Walter R. Hepp, is a board certified Electrophysiologist. Doc. 1 6.
Electrophysiology is a subspecialty within cardiology that, inter alia, diagnoses and

treats heart arrhythmias. Doc. 1 H 7. Defendant Unum operates as an insurance holding
company of Defendant Paul Revere and Provident, and is responsible for all claims
handling for its subsidiaries including Paul Revere and Provident. Doc. 1 1 2 . The
Defendants, The Paul Revere Life Insurance Company, Provident Life And Accident
Insurance Company, and The Unum Group, are foreign corporations, operating
principally outside of Florida but authorized to conduct business in Florida. Doc. 11 at 3.
Plaintiff properly invokes diversity jurisdiction, alleging an amount in controversy in
excess of $75,000.00. The facts set out are considered facts only for resolving the
motions herein.
Beginning on or about June 4,1992, Dr. Hepp, purchased disability policy no.
01025591750 for long-term, “own occupation,” disability insurance from the Defendant.
Doc. 1. H 72. On or about September 19,1994, Paul Revere issued disability policy no.
52-05103794 to Plaintiff (collectively the “Policies”). Doc. 1

73. As of May 2011, Dr.

Hepp suffered from cervical and lumbar spine deterioration and is no longer able to
practice Electrophysiology Doc. 1

73. On June 5, 2011, Plaintiff submitted a claim to

Provident and Paul Revere. Doc. 1. U 122. On June 10, 2011, the Insurer Defendants
acknowledged receipt of Plaintiffs claim. Doc. 1.

124. On or about June 30, 2011,

Plaintiff provided the Insurer Defendants completed claim forms and other documents
requested. Doc.1.1J125. On July 27, 2011, the Insurer Defendants denied the claim
advising Hepp that he was not totally disabled as an Electrophysiologist under the
Policies. Doc. 11 at 4.
In the complaint Hepp alleges nine counts of misconduct by his insurer in the
claim settlement process. These include (1) Breach of Contract, (2) Violation of Florida

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Statute § 624, (3) Breach of Fiduciary Duty, (4) Beach of Good Faith and Fair Dealing,
(5) RICO - 18 U.S.C. § 1962(a), (6) RICO - 18 U.S.C. § 1962(b), (7) RICO - 18 U.S.C.
§ 1962(a), (8) Fraud as to statements and omissions in the nature and quality of the
policy, and (9) Fraud as to occupational determination, CPT Code analysis, and Claim
Determinations.
Defendant moves to dismiss for failure to state a claim, or alternatively moves for
a more definite statement and to strike certain allegations in the complaint as
scandalous and impertinent. Doc. 11. The motion is based on multiple grounds: First,
that Plaintiff’s Complaint represents impermissible “shotgun” pleading; second, counts
5, 6 and 7 for RICO should be dismissed; third, counts 8 and 9 should be dismissed
because they have not met the heightened pleading requirement of Fed.R.Civ.P. 9(b);
fourth, fraud counts 2 and 3 are premature bad faith claims; fifth, count 4 should be
dismissed because under Florida law a claim for breach of the covenant of good faith
and fair dealing must be brought as a bad faith claim under Florida Statute §624.155;
and sixth, count 3 for breach of fiduciary duty has no ground because no such
relationship exits between an insured and an insurer under Florida law. Doc. 11.
Defendant also moves to strike the allegations based on television reports and
case authority based on claim handlings prior to 2003, the prayer for relief in Counts 1,
2, 3, 4, 8 and 9 for the reinstatement of monthly benefits, attorneys’ fees and for a
refund of premiums. Doc. 11.

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ANALYSIS
A. Motion to Dismiss
To survive a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss, a
plaintiff’s complaint must include “enough facts to state a claim to relief that is plausible
on its face.” Bell Atlantic Corp. v. Twomblv, 550 U.S. 544, 570 (2007). The claim must
be dismissed if a plaintiff fails to allege sufficient facts to support a claim. Id. Twomblv’s
plausibility standard requires that the allegations be more than merely conceivable. Id.
Dismissal of a complaint is warranted “when plaintiffs have not nudged their claims
across the line from conceivable to plausible.” ]cL at 555.
1. Plaintiffs Complaint as a shotgun pleading in violation of Fed.R.Civ.P.
8(a)(2).
This Court found in the Order on motion to dismiss second amended complaint,
Nataraian v. Paul Revere Life Ins. Co.. 720 F. Supp. 2d 1321, Case 8:04-cv-02612EAK-TGW (M.D. Fla. 2010) (Doc. 85 at 3) (citing Maquluta v. Samples. 256 F.3d 1282
(11th Cir. 2001)) that “attacking a complaint for “shotgun” pleading should not be filed as
a motion to dismiss for failure to state a claim; this Court will treat it as a motion for a
more definite statement. Accordingly the Court must DENY Defendant’s motion to
dismiss on this basis.
2. RICO Claims
The four elements of a RICO claim are: (1) conduct; (2) of an enterprise; (3)
through a pattern; (4) of racketeering activity. Williams v. Mohawk Indus.. Inc.. 465 F.3d
1277, 1282-83 (11th Cir. 2006). These elements have been developed by a number of
courts to mean, “[a] RICO enterprise exists where a group of persons associates,
formally or informally, with the purpose of conducting illegal activity.” Jackson v.

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BellSouth Telecomm.. 372 F.3d 1250, 1264 (11th Cir. 2004). The court also explained
that a successful “pattern of racketeering activity” charges that “(1) the defendants
committed two or more predicate acts within a ten-year time span; (2) the predicate acts
were related to one another; and (3) the predicate acts demonstrated criminal conduct
of a continuing nature.” id.
A plaintiff must allege: “(1) the precise statements, documents, or
misrepresentations made; (2) the time, place, and person responsible for the statement;
(3) the content and manner in which these statements misled the Plaintiffs; and (4) what
the defendants gained by the alleged fraud.” Brooks v. Blue Cross & Blue Shield of Fla.,
Inc., 116 F.3d 1364, 1380-81 (11th Cir. 1997) (applying the requirements to a RICO
fraud complaint). The plaintiff must allege facts with respect to each defendant's
participation in the fraud. ]d
The Court will now address Defendants' arguments that the RICO counts must
be dismissed because Plaintiff’s claim: (1) fails under the plausibility pleading standard;
(2) are based on claim practices from the decade prior to 2003; (3) distinctness of the
RICO enterprise from the RICO defendant; (4) fails to show how his injury was caused
by racketeering activity; and (5) how each defendant participated in the RICO scheme.
In the instant case, while the Defendant alleges that the claim is based on
practices from the decade prior to 2003; the complaint contains allegations regarding
the “who, what, when, where, and how” of the alleged fraud as required by Rule 9(b).
Mizzaro v. Home Depot. Inc.. 544 F.3d 1230, 1237 (11th Cir. 2008). The Plaintiff alleges
that the start of the fraudulent scheme beginning in the late 1990’s and claims that
Defendant continues the improper claims practices to the present: “Defendants have not

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stopped these practices ten years later and have done the exact same thing to Plaintiff.”
Doc. 1 U 46. Plaintiff also asserted that Defendant’s conduct continues to the present in
48, 63, 64. In U 164 Plaintiff also states: “Since this is EXACTLY what Defendants
did to Plaintiff and ten years after that report they are still doing the same....”. Doc. 1.
164. In the Order on Summary Judgment for Nataraian v. Paul Revere Life Ins. Co., this
Court found that Defendant’s sole use of a CPT code analysis to classify medical
specialists out of their occupation is a plausible RICO scheme. 720 F. Supp. 2d 1321,
Case 8:04-cv-02612-EAK-TGW (M.D. Fla. 2010) (evidence could plausibly show that
Defendants’ intent was to single out high reserve own-occupation disability insurance
policies for termination).
Plaintiff has not failed to allege facts that would establish a pattern of
racketeering activity. Plaintiff has alleged at least five different instances of mail and
telephone communications, which can establish a pattern of racketeering. Doc. 1.
124, 127,129, 133, 149, referencing Unum letters dated 6/10/11, 7/22/11, 7/27/11,
11/19/11, and 3/6/13.
Defendant alleges that Plaintiff fails to properly distinguish the RICO enterprise
from the RICO person. The Court notes “distinctness is a fact-intensive inquiry that is
not driven solely by formal legal relationships.” Lockheed Martin Corp. v. Boeing Co..
314 F.Supp.2d 1198, 1212 (M.D. Fla. 2004).
Generally,
the RICO enterprise must be distinct from the RICO defendant person.
RICO forbids the imposition of liability where the enterprise is nothing
more than a subdivision or part of the person. In short, a plaintiff can sue
under RICO an individual or corporate employee who engages in a pattern
of racketeering activity through his or her corporate enterprise.

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Smart Science Laboratories. Inc. v. Promotional Mktq. Servs.. 2008 U.S. Dist. LEXIS
118270, at *15 (M.D. Fla. June 27, 2008) (internal citations omitted). The Supreme
Court has explained, “[t]he corporate owner/employee, a natural person, is distinct from
the corporation itself, a legally different entity with different rights and responsibilities
due to its different legal status. And we can find nothing in the [RICO] statute that
requires more ‘separateness' than that.” Kushner Promotions. Ltd. v. King. 533 U.S.
158,163 (2001). The Court further remarked, “[a] corporate employee who conducts the
corporation's affairs through an unlawful RICO pattern of activity uses that corporation
as a ‘vehicle’ whether he is, or is not, its sole owner.” id. at 165.
However, the 11th Circuit has held that even closely held subsidiaries are
separate and distinct entities for purposes of a RICO enterprise when
each...corporation is a separate and distinct corporation. Each is
incorporated in a separate state. Each is a separate ongoing business
with a separate customer base. Each is free to act independently and
advance its own interests contrary to those of the other two
corporations...[Corporations are distinct persons for the purposes of 18
U.S.C. § 1962(c) and that each...corporation is distinct from the
association consisting of the union of all three...corporations which
comprises the enterprise for the purposes of § 1962(c).
United States v. Goldin Indus.. Inc.. 219 F.3d 1271, 1277 (11th Cir. 2000). Unum is
described as a separate and distinct holding company for its subsidiaries Paul Revere
and Provident according to the Plaintiff and Defendant. See Doc. 1 Doc. 11 at 3.
12;
The Court determines that further analysis of the distinctness requirement may be
raised by Defendants, if appropriate, at the summary judgment stage.
Defendant also alleges that Plaintiff fails to show how his injury was caused by
racketeering activity. Plaintiff is not required to show reliance on the misrepresentation
of the Defendant, yet he does allege that he relied on the information that insurance

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agents provided him to enter into the insurance plan and continue playing premiums.
See Bridge v. Phoenix Bond & Indemnity Co.. 553 U.S. 639, 649 (2008) (“no showing of
reliance is required to establish that a person has violated § 1962(c) by conducting the
affairs of an enterprise through a pattern of racketeering activity consisting of acts of
mail fraud”). In Sedima v. Imrex Co.. Inc., 473 U.S. 479 105 (1985), the court held that
“there is no requirement that a plaintiff in a private action establish a “racketeering”
injury as opposed to an injury resulting from the predicate acts themselves.” Id at 478.
Defendant seeks dismissal of the RICO counts because Plaintiff fails to plead
how each defendant participated in the RICO scheme. In Nataraian v. Paul Revere Life
Ins. Co.. this Court found that a similar RICO claim with similar defendants was
sufficient for response because it alleged that Unum Provident was not only the parent
company of Paul Revere Life Insurance Company but also responsible for all denials
made by Paul Revere. 720 F. Supp. 2d 1321, Case 8:04-cv-02612-EAK-TGW (M.D.
Fla. 2010) (Doc. 62. at 6-7). The court reasoned that if this relationship was in anyway
inaccurate, it was still sufficiently definite to dignify a response since Plaintiff based
much of his argument on a theory of joint venture capable of response, jd.
Since Plaintiff has alleged a RICO person different from the RICO enterprise and
the enterprise is comprised of separate and distinct entities, Defendant’s motion to
dismiss allegations under §1962(c) should be DENIED.
3. Count 8 (Fraud as to Statements and Omissions Regarding Nature and
Quality of Policy); Count 9 (Fraud as to occupational determination, CPT
Code analysis, and Claim Determinations).
Defendant argues counts 8 and 9 should be dismissed for failure to allege a false
statement upon which Plaintiff relied on with specificity. “[Wjhen a complaint is

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grounded in fraud..., as it appears plaintiffs’] complaint is, the complaint must comply
with Fed.R.Civ.P. 9(b)’s heightened pleading requirement that [i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or
mistake.” Doc. 11 at 21 (citing Roundtree v. Countrywide Home Loans, Inc.. 2009 U.S.
Dist. LEXIS 120687, at *4 (M.D. Fla. 2009)). In the instant case, Plaintiff alleges
sufficient particularity to put Defendant on notice of the facts upon which his claims for
relief are based. See Bell Atlantic Corp. v. Twomblv. 550 U.S. at 555, 127 (2007) (“to
survive a motion to dismiss, a complaint must show allegations that are ‘enough to raise
a right to relief above the speculative level, on the assumption that all the allegations in
the complaint are true”).
Plaintiff alleges fraudulent statements and omissions by Defendant with
specificity in ffl] 67, 70, 104, 105, 310, 313, 314, 315, 319, and explains how the Plaintiff
relied on that information and continued making payments to his premium based on that
information. Doc. 17 at 16. Therefore, Defendant’s motion to dismiss claim for failure to
allege a false statement should be DENIED.
4. Counts 2 and Count 3 (Violation of Chapter 624 of the Florida Statutes Bad Faith); Count 4 (Breach of Covenant of Good Faith and Fair Dealing)
Defendant seeks to dismiss counts 2-4 as premature. Doc. 11 at 25-26.
Dismissal is improper here because Plaintiff creates significant issues of fact, which
have no bearing if Defendant did not breach the contractual agreement. For that reason,
the interests of judicial efficiency and justice compel this Court to resolve these claims
rather than in separate proceedings once the court has determined the breach of
contract claim. Order on Motion to Dismiss Amended Complaint, Nataraian v. Paul
Revere Life Ins. Co.. 720 F. Supp. 2d 1321, Case 8:04- cv-02612-EAK-TGW (M.D. Fla.

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2010) (Doc. 62, page 3). Accordingly, the motion to dismiss on these counts is
ABATED until a breach of contract has been established.
5. Count 3 (Fiduciary Duty)
Plaintiff claims that Unum owed him a fiduciary duty and breached that duty.
(Doc. 1 U 210). Defendants argue in response that there can be no fiduciary relationship
between Hepp and Unum, an insurance holding company, as a matter of law. (Doc. 11
at 27).
The elements necessary to establish breach of a fiduciary duty are: 1) the
existence of a fiduciary duty; 2) the breach of that duty proximately caused damages to
plaintiff; and 3) damages flowing from the breach. Gracev v. Eaker, 837 So.2d 348, 353
(Fla. 2002); Miller v. Miller. 89 So.3d 962, 2012 WL 1365064 (Fla. 5th DCA 2012). In
Florida, a fiduciary relationship may be express or implied. Hogan v. Provident Life and
Acc. Ins. Co.. 665 F. Supp. 2d 1273, 1287 (M.D. Fla. 2009) (citing Maxwell v. First
United Bank. 782 So. 2d 931, 933 (Fla. 4th DCA 1994)). Express fiduciary relationships
are created by contract or legal proceedings. Id. Implied fiduciary relationships “are
premised upon the specific factual situation surrounding the transaction and the
relationship of the parties” and exist where “confidence is reposed by one party and a
trust accepted by the other.” id. (quoting Capital Bank v. MVB. Inc.. 644 So. 2d 515, 518
(Fla. 3d DCA 1994)).
There is no fiduciary relationship between an insurer and an insured under
Florida law. See Time Ins. Co.. Inc. v. Burder. 712 So. 2d 389, 391 (Fla. 1998) (“unlike
the fiduciary relationship existent in a third-party claim, the relationship between the
[insured and insurer] is that of debtor and creditor.”); Cardenas v. Miami-Dade Yellow

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Cab Co., 538 So. 2d 491, 495 n.3 (Fla. 3d DCA 1989) (“the insurer and the insured
(first-party claimant), as debtor and creditor, stand at arm’s length with respect to claims
arising out of the insurance contract.”). Therefore, it is appropriate to first determine
whether Unum, as an insurance holding company, is also an insurer.
Even though a claim of breach of fiduciary duty by an insurance holding company
such as Unum is lawful, the facts alleged by Hepp must plausibly establish each
element of the cause of action.. Hogan v. Provident Life and Acc. Ins. Co.. 665 F.
Supp. 2d 1273, 1287 (M.D. Fla. 2009) (citing Iqbal, 129 S. Ct. at 1949). Plaintiff reasons
he paid his premiums to Unum who acted as a holding company to its subsidiary
insurance companies, and “as a holding company was entrusted with the management
of Plaintiff’s premiums” Doc. 17 at 19.
Accordingly, Hepp’s allegations state a plausible cause of action that a fiduciary
relationship was created and that damages resulted from breach of that fiduciary duty.
Defendant’s motion to dismiss claim for breach of fiduciary duty is DENIED.
B. Motion For A More Definite Statement
Rule 12(e) provides that a motion for a more definite statement may be granted if
the pleading “is so vague or ambiguous that a party cannot reasonably be required to
frame a responsive pleading.”
1. Plaintiff’s Complaint As A Shotgun Pleading In Violation Of Fed.Civ.P.
8(A)(2)
To properly state a claim, Federal Rule of Civil Procedure 8(a)(2) calls for “a
short and plain statement of the claim showing that the pleader is entitled to relief.”
Federal Rule of Civil Procedure 12(e) provides that a motion for a more definite
statement may be granted if the pleading “is so vague or ambiguous that a party cannot

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reasonably be required to frame a responsive pleading.” Anderson v. District Bd. of
Trustees of Cent. Fla. Community College. 77 F.3d 364, 367 (11th Cir. 1996). The
Eleventh Circuit has found “shotgun pleadings are those that incorporate every
antecedent allegation by reference into each subsequent claim for relief or affirmative
defense.” Wagner v. First Horizon Pharmaceutical Corp.. 464 F.3d 1273,1279 (11th
Cir. 2006) citing Magluta v. Samples. 256 F.3d 1282, 1284 (11th Cir. 2001) (per
curiam). However, in Lockheed Martin Corp. v. Boeing Company the District Court for
the Middle District of Florida found that plaintiff’s complaint was not a shotgun pleading
because although he repeatedly incorporated into each Count all of the general
allegations, he also reiterated the particular relevant portions of those general
allegations. 314 F. Supp. 2d 1198, 1207 (M.D. Fla. 2004).
While the Complaint in the instant case re-alleges and incorporates all of the
general allegations in every count, each count is supported by additional particular
facts. This makes the complaint analogous to the complaint at issue in Lockheed Martin
Corp. v. Boeing Company and the Court adopts the same finding, holding that it was not
a shotgun pleading, jd. The Complaint follows a logical manner and clearly states each
count and the appropriate facts. Accordingly, the motion for a more definite statement in
the alternate is DENIED.
C. Motion to Strike
Defendant moves to strike Plaintiff’s complaint under Fed.R.Civ.P. 12(f) arguing
that some statements should be stricken because they are (1) prejudicial; (2) prayer of
relief should be stricken; (3) prayer of relief seeking attorney’s fees and a refund of
premiums should also be stricken.

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Rule 12(f) of the Fed.R.Civ.P provides that upon a party’s motion, “the court may
order stricken from any pleading any insufficient defense or any redundant, immaterial,
impertinent, or scandalous matter.” In addressing a Motion to Strike, “a court will not
exercise its discretion...unless the matter sought to be omitted has no possible
relationship to the controversy, may confuse the issues, or otherwise prejudice a party.”
Dennis v. Northwestern Mutual Life Insurance Co.. 2006 U.S. Dist. LEXIS 19578 at 4
(M.D. Fla. 2006) (citing Nankivil v. Lockheed Martin Corp.. 216 F.R.D. 689, 691 (M.D.
Fla. 2003).
Defendant moves to strike Plaintiff’s allegations based on television reports, state
investigations and case authority relating to defendants’ claims handling up to and
including 2003 claiming they are immaterial, impertinent, scandalous and unduly
prejudicial. Although the reports, investigations and history of the company may not
represent the Defendant in the most favorable light they are not deemed redundant,
immaterial, impertinent or scandalous. See Nankivil v. Lockheed Martin Corp., 216
F.R.D. at 691.
Plaintiff’s prayer for relief seeking reimbursement for all premiums paid on the
policies should not be stricken at this time. The Plaintiff alleges sufficient facts in the
complaint to sustain, prior to discovery, this prayer for relief. The proof of what the
damages could be will come after discover. Accordingly the motion to strike is DENIED
on this issue. See Nataraian v. Paul Revere Life Ins. Co., 720 F. Supp. 2d 1321, Case
8:04-cv-02612-EAK-TGW (M.D. Fla. 2010) (Doc. 85 at 5)
As to the Motion to Strike attorneys’ fees and premiums in Counts 2-4, 8, and 9.
Florida generally follows the American Rule requiring litigants to pay their own

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attorneys’ fees. “If the party seeking attorneys’ fees can demonstrate the specific,
certain and conclusive existence of malice or fraud, attorneys’ fees are available.” Cook
v. Deltona Corp.. 753 F.2d 1552, 1564 (11th Cir. 1985) (citing Bava v. Central and
Southern Florida Flood Control Dist.. 184 So.2d 501, 502 (Fla. 2nd App. 1966)). It would
be premature to strike attorneys’ fees when Plaintiff alleges fraud. Therefore, the Motion
to Strike is DENIED. Accordingly, it is:
ORDERED that Defendant’s Motion to Dismiss is DENIED; Defendant’s Motion
For A More Definite Statement is DENIED; Defendant’s Motion to Strike is DENIED.
The Defendant’s have ten (10) days to answer the complaints.

DONE and ORDERED in Chambers in Tampa, Florida this
2014.

Copies to: All parties and counsel of record.

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,

August,