Williams et al v. National Union Fire Insurance Company of Pittsburgh, PA et al
Filing
217
OPINION and ORDER granting 174 Defendant Catamaran Health Solutions, LLC's Motion for Summary Judgment and granting 175 Defendant National Union Fire Insurance Company of Pittsburgh, PA's Motion for Summary Judgment. Signed by Judge Thomas W. Thrash, Jr. on 2/24/2016. (bdb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RANDY WILLIAMS, et al.,
Plaintiffs,
v.
CIVIL ACTION FILE
NO. 1:14-CV-309-TWT
NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA
doing business as
National Union Fire Insurance
Company, et al.,
Defendants.
OPINION AND ORDER
This case is about the marketing and sale of allegedly illusory insurance
policies. It is before the Court on the Defendant National Union Fire Insurance
Company of Pittsburgh, PA’s Motion for Summary Judgment [Doc. 175], and the
Defendant Catamaran Health Solutions, LLC’s Motion for Summary Judgment [Doc.
174]. For the reasons set forth below, the Defendant National Union Fire Insurance
Company of Pittsburgh, PA’s Motion for Summary Judgment [Doc. 175] is
GRANTED, and the Defendant Catamaran Health Solutions, LLC’s Motion for
Summary Judgment [Doc. 174] is GRANTED.
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I. Background
In 1999 or 2000, the Plaintiffs Randy Williams, Mary Williams, Larry Lake,
and Linda Lake enrolled in the HealthExtras Benefit Program.1 The Benefit Program
was marketed, sold, and administered by the Defendants National Union Fire
Insurance Company of Pittsburgh, PA and Catamaran Health Solutions, LLC.2 The
Benefit Program provided two types of disability insurance: accidental and permanent
disability insurance and emergency accident and sickness medical expense insurance.3
The Plaintiffs paid premiums on their insurance policies from 2000 until 2013.4 On
January 1, 2005, the Defendant National Union became the underwriter for the
Permanent Disability Benefit.5
The Plaintiffs contend that the HealthExtras Benefit Program was illegal under
Georgia law.6 Additionally, the Plaintiffs claim that the Benefit Program was
worthless because the Defendants never intended to pay out claims.7 Specifically, the
1
Am. Compl. ¶¶ 36, 41.
2
Id. ¶ 19
3
Id. ¶ 49.
4
Id. ¶ 52.
5
Id. ¶ 50.
6
Id. ¶ 58.
7
Id. ¶ 19.
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Plaintiffs assert that the majority of premium payments were used to cover marketing
expenses or were converted into profits for the Defendants.8 And, according to the
Plaintiffs, the Defendants denied valid claims, forcing insureds to sue for their
benefits.9 Importantly, though, the Plaintiffs never claim that they personally filed a
claim and were denied benefits. The Plaintiffs filed suit, asserting claims for unjust
enrichment, breach of the duty of good faith and fair dealing, and violations of the
Georgia Racketeer Influenced and Corrupt Organizations (“RICO”) Act. The
Defendants now move for summary judgment, primarily arguing that the Plaintiffs
lack standing.
II. Legal Standard
Summary judgment is appropriate only when the pleadings, depositions, and
affidavits submitted by the parties show that no genuine issue of material fact exists
and that the movant is entitled to judgment as a matter of law.10 The court should view
the evidence and any inferences that may be drawn in the light most favorable to the
nonmovant.11 The party seeking summary judgment must first identify grounds that
8
Id. ¶ 54.
9
Id. ¶ 56.
10
FED. R. CIV. P. 56(c).
11
Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970).
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show the absence of a genuine issue of material fact.12 The burden then shifts to the
nonmovant, who must go beyond the pleadings and present affirmative evidence to
show that a genuine issue of material fact does exist.13 A “mere ‘scintilla’ of evidence
supporting the opposing party’s position will not suffice; there must be a sufficient
showing that the jury could reasonably find for that party.”
III. Discussion
The Defendants contend that the Plaintiffs have not suffered a cognizable injury
and thus lack standing. Under Article III, the jurisdiction of federal courts is limited
to “Cases” and “Controversies.”14 To satisfy the case-or-controversy requirement, the
plaintiff must establish standing.15 This requires the plaintiff to show that: (1) he
suffered an “injury in fact” that is concrete and particularized and actual or imminent,
not conjectural or hypothetical; (2) the injury is fairly traceable to the complained of
conduct of the defendant; and (3) it is likely that the requested relief will redress or
remedy the alleged injury.16 Here, the Defendants are specifically challenging the first
12
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
13
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
14
Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992).
15
Steel Co. v. Citizens For a Better Env., 523 U.S. 83, 102 (1998).
16
Id. at 103.
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requirement: whether the Plaintiffs have suffered an injury in fact. An injury in fact
is an invasion of a legally protected interest which is both “concrete and
particularized,” and “actual or imminent, not conjectural or hypothetical.”17
The Defendants first argue that the Plaintiffs cannot establish a cognizable
injury based on the theory that the insurance policies were illegal or void. The Court
agrees. As the Defendants correctly point out, the Court has already held that the
insurance policies were valid and enforceable, even if the insurance policies violated
Georgia insurance laws.18 Specifically, the Court stated in its Order denying the
Defendant National Union’s Motion to Dismiss that “the insurance policies they
received were not ‘illusory.’ To the contrary, if the Plaintiffs had been entitled to any
benefits under the policies, the Defendants would have been legally obligated to
provide them.”19 Accordingly, the Plaintiffs cannot demonstrate a cognizable injury
based on the theory that the insurance policies were illegal or void.
Next, the Defendants contend that the Plaintiffs cannot establish standing based
on the theory that the Defendants never intended to pay out claims. Because none of
17
Lujan, 504 U.S. at 560-61; Bischoff v. Osceola Cty., Fla., 222 F.3d 874,
883 (11th Cir. 2000).
18
See Order Denying Defendant National Union’s Motion to Dismiss
[Doc. 98], at 7.
19
Id. at 5.
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the Plaintiffs submitted claims, the crux of the Plaintiffs’ standing argument is the
contention that if they had submitted claims, the Defendants would have denied their
claims and forced them to sue for their benefits. Thus, according to the Plaintiffs, they
paid for insurance policies that were virtually worthless. But this argument is mere
speculation. It is impossible to know whether the Defendants would have denied their
claims. Indeed, when asked whether the Defendants would have paid out their claims
if they had submitted them, several of the Plaintiffs testified that they would be
speculating if they answered.20 Moreover, as proof that the Defendants would not have
automatically denied their claims, the Defendants has put forth evidence that National
Union “paid over $8 million in benefits since 2005,” and “[o]nly four claims have
resulted in litigation or arbitration.”21 Consequently, the Plaintiffs cannot establish a
concrete injury based on the theory that the Defendants never intended to pay out
claims.
In other cases challenging this same insurance scheme, courts have reached
analogous conclusions.22 For example, in Giercyk v. National Union Fire Insurance
20
Statement of Undisputed Material Facts in Supp. of Def. National
Union’s Mot. for Summ. J. ¶¶ 50-51, 64.
21
Def. National Union’s Mot. for Summ. J., at 16-17.
22
See, e.g., Waiserman v. National Union Fire Ins. Co. of Pittsburgh, Pa.,
2:14-CV-00667-SVW, 2014 U.S. Dist. LEXIS 183642, at *5-6 (C.D. Cal. Oct. 24,
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Co. of Pittsburgh, Pa., the District of New Jersey held that the plaintiffs lacked
standing because the policies were enforceable under New Jersey law and “any
suggestion that Defendants would not honor Plaintiffs’ claims is mere speculation, and
not a concrete harm.”23 Likewise, in Bush v. National Union Fire Insurance Co. of
Pittsburgh, Pa., the Eastern District of North Carolina, reversing its previous order,
held that because the insurance policies were valid under North Carolina law and the
plaintiffs never made a claim under the policies, the plaintiffs could not demonstrate
an injury in fact.24
In response, the Plaintiffs allege that they have demonstrated a cognizable
injury under the Georgia RICO statute. Under this statute, “[i]t shall be unlawful for
any person, through a pattern of racketeering activity . . . to acquire or maintain . . .
any interest in or control of any . . . personal property of any nature, including
2014); Campbell v. National Union Fire Ins. Co. of Pittsburgh, Pa., No.: 14-0892(RC),
2015 WL 5449791, at *8 (D.D.C. Sept. 16, 2015). But see Williams v. National
Union Fire Ins. Co. of Pittsburgh, Pa., 94 F. Supp. 3d 719, 726 (D.S.C. 2015) (holding
that the court could not tell from the face of the pleadings that the plaintiffs were not
harmed by the defendants’ supposedly worthless insurance policies).
23
No. 13-6272, 2015 WL 7871165, at *5 (D.N.J. Dec. 4, 2015).
24
No. 5:12-CV-113-FL, 2015 WL 5042874, at *10 (E.D. N.C. May 22,
2015).
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money.”25 A “racketeering activity” – also called a “predicate act” – is the
“commission of, [or] the attempt to commit . . . a ‘crime which is chargeable by
indictment’ under one of forty categories of offenses.”26 But to have standing under
Georgia’s RICO Act, “a plaintiff must not only show a pattern of racketeering activity,
but also ‘a direct nexus between at least one of the predicate acts listed under the
RICO Act and the injury [the plaintiff] purportedly sustained.’”27
Here, the Plaintiffs have failed to demonstrate that they suffered any injury
caused by a RICO violation. First, the Plaintiffs’ arguments regarding the RICO
predicate acts of theft by taking and deception are without merit. The Plaintiffs state
that the theft by taking “statute’s language providing that theft may occur ‘regardless
of the manner in which the property is taken or appropriated’ defeats NUFIC’s
argument that theft requires a disability claim to have been made and denied.” No, it
does not. The Plaintiff’s property was not misappropriated by the Defendants. The
Plaintiffs could have enforced their rights under the insurance policies if they had filed
25
O.C.G.A. § 16-14-4(a).
26
Wylie v. Denton, 323 Ga. App. 161, 164 (2013) (citing O.C.G.A. §
16-14-3(9)(A)(i)-(xli)).
27
Rosen v. Protective Life Ins. Co., 817 F. Supp. 2d 1357, 1381 (N.D. Ga.
2011) (quoting Schoenbaum Ltd. Co. v. Lenox Pines, LLC, 262 Ga. App. 457, 470
(2003)).
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a claim, meaning they received what they paid for.28 With regard to the theft by
deception claim, the Plaintiffs contend that the Defendants deceived them by creating
the false impression that legitimate claims would be paid out without litigation. But
– once again – this argument is pure speculation. How could the Plaintiffs know
whether the Defendants intended to pay out a claim if the Plaintiffs never filed a
claim? Evidence that the Defendants operated the insurance scheme at a loss and
disputed or denied several claims filed by other insureds does not fix the speculative
nature of their argument.
Finally, the Plaintiffs’ arguments under the predicate acts of mail and wire fraud
are equally unavailing. The Plaintiffs argue that they were injured because the
Defendants sent them notices that failed to state that claims would not be paid out
unless the insured threatened litigation. However, like the Plaintiffs’ previous
arguments, this assertion is based on the conjecture that the Defendants would have
denied the Plaintiffs’ claims if they had filed them. The Plaintiffs, therefore, have
28
See Maio v. Aetna, Inc., 221 F.3d 472, 490 (3d Cir. 2000) (holding that
a group of insureds could not establish a RICO injury absent any allegations that the
defendants denied them benefits or failed to perform under the contract); Weaver v.
Aetna Life Ins. Co., 370 Fed. App’x 822, 823 (9th Cir. 2010) (holding that the
plaintiff lacked standing because she “did not allege that she made a claim for which
payment was not received during the time that she paid premiums or that the policy
for which she and other members of the purported class paid was worth less than they
paid for it”).
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failed to adequately allege a RICO injury. Because the Plaintiffs have failed to create
an issue of fact regarding whether they have suffered an injury, the Court lacks subject
matter jurisdiction. Thus, the Defendants’ Motions for Summary Judgment should be
granted.
IV. Conclusion
For these reasons, the Court GRANTS the Defendant National Union Fire
Insurance Company of Pittsburgh, PA’s Motion for Summary Judgment [Doc. 175]
and the Defendant Catamaran Health Solutions, LLC’s Motion for Summary
Judgment [Doc. 174].
SO ORDERED, this 24 day of February, 2016.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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