PEPERA v. Aflac Inc et al
Filing
13
ORDER granting 2 Motion to Dismiss for Failure to State a Claim. Ordered by Judge Clay D. Land on 06/05/2012. (CGC)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
ROBERT J. PEPERA, JR.,
*
Plaintiff,
*
vs.
*
AFLAC INCORPORATED, and
AMERICAN FAMILY LIFE ASSURANCE
OF COLUMBUS,
*
CASE NO. 4:12-CV-47 (CDL)
Defendants.
*
*
O R D E R
Plaintiff Robert J. Pepera, Jr. (“Pepera Jr.”) brought this
action against Defendants AFLAC Incorporated (“AFLAC Inc.”) and
American
Family
Assurance
Company
of
Columbus
(“Aflac”)
(collectively, “Defendants”), contending that Aflac breached its
insurance contracts with Mr. Pepera’s father, Robert J. Pepera,
Sr.
(“Pepera
Sr.”).
Specifically,
Pepera
Jr.
contends
that
Pepera Sr. purchased three Hospital Intensive Care Unit policies
from Aflac and that each policy guaranteed benefits of $130 per
unit of coverage for each day spent in a hospital intensive care
unit.
Pepera Jr. asserts that Aflac unilaterally amended the
policies without Pepera Sr.’s consent once Pepera Sr. reached age
70, reducing benefits owed under the policies to $50 per unit of
coverage for each day spent in a hospital intensive care unit
without changing the amount of premiums charged.
Defendants
contend
that
Pepera
Jr.’s
Complaint
fails
to
state a claim because his state law claims are preempted by the
express preemption provision of the Employee Retirement Income
Security
Act
(“ERISA”),
29
U.S.C. §
1144(a),
and
Complaint fails to state a claim under ERISA.
because
the
Defendants also
assert that Pepera Jr.’s Complaint fails to state a claim because
the policy documents demonstrate as a matter of law that Aflac
did not breach the policies in the manner that was alleged in the
Complaint.
For the reasons set forth below, the Court concludes that
Pepera Jr.’s Complaint fails to state a claim.
Accordingly,
Defendants’ Motion to Dismiss (ECF No. 2) is granted.
MOTION TO DISMISS STANDARD
When considering a 12(b)(6) motion to dismiss, the Court
must
accept
complaint
as
and
true
limit
all
facts
its
consideration
exhibits attached thereto.
set
forth
in
to
the
the
plaintiff=s
pleadings
and
Bell Atl. Corp. v. Twombly, 550 U.S.
544, 556 (2007); Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949,
959
(11th
Cir.
2009).
complaint
must
true,
‘state
to
face.’”
contain
a
“To
survive
sufficient
claim
to
a
motion
factual
relief
that
to
matter,
is
dismiss,
accepted
plausible
on
a
as
its
Ashcroft v. Iqbal, 556 U.S. 662, 678 (quoting Twombly,
550 U.S. at 570).
The complaint must include sufficient factual
allegations “to raise a right to relief above the speculative
2
level.”
Twombly, 550 U.S. at 555.
“[A] formulaic recitation of
the elements of a cause of action will not do[.]”
the
complaint
must
contain
factual
allegations
Id.
that
Although
“raise
a
reasonable expectation that discovery will reveal evidence of”
the plaintiff=s claims, id. at 556, “Rule 12(b)(6) does not permit
dismissal of a well-pleaded complaint simply because ‘it strikes
a savvy judge that actual proof of those facts is improbable,’”
Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007)
(quoting Twombly, 550 U.S. at 556).
In support of his claims, Pepera Jr. relies on the three
Aflac
Hospital
father.
Intensive
Care
Unit
policies
purchased
Defendants submitted duplicates of the policies.
to Dismiss Ex. 1, ECF No. 4.
Pepera
Jr.
appears
to
his
Mot.
An Aflac employee certified that
each duplicate is a true and correct reproduction.
41.
by
acknowledge
that
Id. at 3, 22,
the
Court
consider the policies at this stage in the litigation.
may
See Pl.’s
Resp. to Defs.’ Mot. to Dismiss 3, ECF No. 8; see also Speaker v.
U.S.
Dep’t
(recognizing
of
Health
that
a
&
Human
district
Servs.,
court
623
may
F.3d
1371,
consider
a
1379-80
document
outside the pleadings in ruling on a motion to dismiss if the
document is “(1) central to the plaintiff’s claim, and (2) its
authenticity
is
not
challenged”)
(internal
quotation
marks
omitted); Bickley v. Caremark Rx, Inc., 461 F.3d 1325, 1329 n.7
(finding
no
error
when
district
3
court
considered
ERISA
plan
documents in ruling on a motion to dismiss).
The policies are
central to Pepera Jr.’s claims, and Pepera Jr. has not challenged
the
authenticity
of
the
duplicates
submitted
by
Defendants.
Therefore, the Court will consider the policy language in ruling
on Defendants’ Motion to Dismiss.
FACTUAL ALLEGATIONS
Pepera
Sr.
purchased
three
Insurance Policies from Aflac.
Hospital
Intensive
Unit
Notice of Removal Ex. A, Compl.
¶¶ 1, 26, ECF No. 1-1 [hereinafter Compl.].
the policies in 1978.
Care
Id. ¶ 26.
He purchased two of
Each of the 1978 policies
provided one unit of coverage at $130 per day spent in a hospital
intensive care unit.
Id.; accord Mot. to Dismiss Ex. 1 part 1,
Policy No. 0L875642 at 3, ECF No. 4 at 11; Mot. to Dismiss Ex. 1
part 2, Policy No. 0L875643 at 3, ECF No. 4 at 30.
purchased
an
additional
policy
in
1982.
Compl.
Pepera Sr.
¶ 26.
That
policy provided two units of coverage at $130 per unit per day
spent in a hospital intensive care unit.
Id.; accord Mot. to
Dismiss Ex. 1 part 3, Policy No. 0Z455995 at 2-3, ECF No. 4 at
48-49.
Each
policy
stated
that,
after
issue,
the
policy
would
“never be restricted by addition of any rider or changed in any
way without [the insured’s] consent.”
Compl. ¶ 24; accord Policy
No. 0L875642 at 1, ECF No. 4 at 9; Policy No. 0L875643 at 1, ECF
No. 4 at 28; Policy No. 0Z455995 at 1, ECF No. 4 at 47.
4
In the
same paragraph, each policy stated: “You are guaranteed the right
to renew this policy each term until the end of the term in which
you attain age 70.”
Policy No. 0L875642 at 1, ECF No. 4 at 9;
Policy No. 0L875643 at 1, ECF No. 4 at 28; Policy No. 0Z455995 at
1, ECF No. 4 at 47.
Each policy further provided: “Coverage for
the named insured and spouse shall terminate on the anniversary
date
following
their
respective
70th
birthdays.”
Policy
No.
0L875642 at 5, ECF No. 4 at 13; Policy No. 0L875643 at 5, ECF No.
4 at 32; Policy No. 0Z455995 at 5, ECF No. 4 at 51.
Pepera
Sr.
applied
for
the
three
Graphite Employee Federal Credit Union.
policies
through
U.S.
Notice of Removal Ex. B,
Mathis Aff. Ex. 2 at 1, New Business Transmittal, ECF No. 1-2 at
12; Mathis Aff. Ex. 2 at 5, Application for Hospital Intensive
Care Insurance, ECF No. 1-2 at 16.
through monthly payroll billing.
Pepera Sr. paid premiums
Notice of Removal Ex. B, Mathis
Aff. Ex. 2 at 2, Payroll Deduction Application, ECF No. 1-2 at
13; Mathis Aff. Ex. 2 at 3, Payroll Deduction Application, ECF
No. 1-2 at 14; Mathis Aff. Ex. 2, New Business Transmittal for
Cancer & HIC Applications, at 4, ECF No. 1-2 at 15.1
Sometime after it issued the policies, Aflac sent Pepera Sr.
an Endorsement for each of his three policies.
1
Compl. ¶ 25;
The exhibits to the Notice of Removal were also submitted in support
of Defendants’ Motion to Dismiss. E.g., Payroll Deduction Application,
ECF No. 4 at 8; Payroll Deduction Application, ECF No. 4 at 27; New
Business Transmittal for Cancer & HIC Applications, ECF No. 4 at 45.
The Court cites the exhibits to the Notice of Removal because they are
more legible than those attached to the Motion to Dismiss.
5
Endorsement to Policy No. 0L875642, ECF No. 4 at 18; Endorsement
to Policy No. 0L875643, ECF No. 4 at 37; Endorsement to Policy
No. 0Z455995, ECF No. 4 at 56.
all three policies.
The Endorsements are the same for
Each Endorsement “amends the policy” by
removing the language that the policy is “Guaranteed Renewable to
age 70.”
Endorsement to Policy No. 0L875642, ECF No. 4 at 18;
Endorsement to Policy No. 0L875643, ECF No. 4 at 37; Endorsement
to Policy No. 0Z455995, ECF No. 4 at 56.
Instead, under each
Endorsement, the policyholder is “guaranteed the right to renew
this policy for [his] lifetime by the payment of premiums at the
rate
in
effect
at
reduced at age 70.”
the
beginning
of
each
term
with
benefits
Endorsement to Policy No. 0L875642, ECF
No. 4 at 18; Endorsement to Policy No. 0L875643, ECF No. 4 at
37; Endorsement to
Policy
No.
0Z455995,
ECF No.
4 at
56.
Each Endorsement provides that the policy benefit is reduced
after the policyholder reaches age 70, from $130 per day to
$50 per day.
Compl. ¶ 25; Endorsement to Policy No. 0L875642,
ECF No. 4 at 18; Endorsement to Policy No. 0L875643, ECF No. 4 at
37; Endorsement to Policy No. 0Z455995, ECF No. 4 at 56.
premium for the policies did not change.
The
Compl. ¶ 28.
In February 2011, Pepera Sr. spent nine days in a hospital
intensive care unit.
Id.
Compl. ¶ 27.
Pepera Sr. later passed away.
Pepera Jr., the executor of Pepera Sr.’s estate, sought
payment of benefits from Aflac, and Aflac paid $1,800: $50 per
6
unit of coverage per day.
Id.
Pepera Jr. contends that Aflac
should have paid $4,680 ($130 per unit of coverage per day).
Id.
It is undisputed that Pepera Sr. was older than 70 when he was
hospitalized in 2011.
See, e.g., Payroll Deduction Application
for Policy No. 0L875643, ECF No. 4 at 27 (listing Pepera Sr.’s
year of birth as 1930).
DISCUSSION
The Court finds it unnecessary to reach the question whether
Pepera Jr.’s claims are preempted by ERISA’s express preemption
provision, § 514(a), 29 U.S.C. § 1144(a) because Pepera Jr.’s
Complaint fails to state a claim even if the claims are not
preempted
contention
by
ERISA.
that
Aflac
Pepera
Jr.’s
unilaterally
Complaint
reduced
policies without reducing the premiums.
centers
coverage
on
his
under
the
Compl. ¶¶ 28-29.
Pepera
Jr. asserts that the Endorsements to Pepera Sr.’s policies are
without any legal effect because Aflac promised that the policies
would “never be restricted by addition of any rider or changed in
any way without [the insured’s] consent.”
Compl. ¶¶ 24, 29;
accord Policy No. 0L875642 at 1, ECF No. 4 at 9; Policy No.
0L875643 at 1, ECF No. 4 at 28; Policy No. 0Z455995 at 1, ECF No.
4 at 47.
Pepera Jr. argues that without the Endorsements, Aflac
was required to pay $130 per unit of coverage per day Pepera Sr.
spent in a hospital intensive care unit and that Aflac was not
7
permitted to “reduce” the benefit to $50 per day while keeping
the premiums the same.
E.g., Compl. ¶¶ 28-29, 33, 38.
Pepera Jr.’s Complaint depends on his allegation that the
policies “provide that they renew upon payment for each term
indefinitely.”
Compl. ¶ 24 (emphasis added).
This allegation,
however, is directly refuted by the policies themselves.
The
policies expressly state that “[c]overage for the named insured
and
spouse
shall
terminate
on
the
their respective 70th birthdays.”
anniversary
date
following
Policy No. 0L875642 at 5, ECF
No. 4 at 13; Policy No. 0L875643 at 5, ECF No. 4 at 32; Policy
No. 0Z455995 at 5, ECF No. 4 at 51.
Furthermore, under the
policies, the insured was only “guaranteed the right to renew
this policy each term until the end of the term in which [the
insured] attain[s] age 70.”
Policy No. 0L875642 at 1, ECF No. 4
at 9; Policy No. 0L875643 at 1, ECF No. 4 at 28; Policy No.
0Z455995 at 1, ECF No. 4 at 47.
without
the
Endorsements,
the
Therefore, under the policies
three
policies
provided
for
no
coverage after Pepera Sr. reached age 70, and Aflac therefore did
not “reduce” any benefits owed under the policies by issuing the
Endorsements.
By issuing the Endorsements, Aflac offered Pepera Sr. an
opportunity to continue coverage with reduced benefits for the
same premium.
Again, under each Endorsement, the policyholder is
“guaranteed the right to renew this policy for [his] lifetime by
8
the payment of premiums at the rate in effect at the beginning of
each
term
with
benefits
reduced
at
age
70.”
Endorsement
to
Policy No. 0L875642, ECF No. 4 at 18; Endorsement to Policy No.
0L875643, ECF No. 4 at 37; Endorsement to Policy No. 0Z455995,
ECF
No.
4
at
56.
Pepera
Jr.
appears
to
argue
that
the
Endorsements are not valid because Pepera Sr. did not consent to
the
Endorsements,
premiums
for
even
each
though
policy
Pepera
after
the
Sr.
continued
Endorsements
to
were
pay
issued.
Pepera Jr.’s Complaint does not, however, seek rescission of the
Endorsements.
Under such a theory, Pepera Sr.’s estate would be
entitled to cancellation of the Endorsements and a refund of the
premiums paid under the Endorsements, but the estate must also
return the value it received under the Endorsements.
E.g., Brown
v. Garrett, 261 Ga. App. 823, 826, 584 S.E.2d 48, 51 (2003).
For
all
of
these
reasons,
the
Court
concludes
that
the
Complaint fails to state a claim for Breach of Contract or for
Money Had and Received based on Pepera Jr.’s theory that Aflac
“reduced” the benefits due under the original policies by issuing
the Endorsements.
As discussed above, based on the
original
policy documents, Aflac did not “reduce” the benefits owed under
the policies while keeping the premiums the same.
Rather, on the
face of the original policies, Aflac was not required to provide
any coverage to Pepera Sr. after he reached age 70; by issuing
9
the Endorsements, Aflac allowed Pepera Sr. to continue coverage
beyond age 70.
CONCLUSION
As discussed above, Pepera Jr.’s Complaint fails to state a
claim.
Accordingly, Defendants’ Motion to Dismiss (ECF No. 2) is
granted.
IT IS SO ORDERED, this 5th day of June, 2012.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
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