Nolen v. Trustmark Life Insurance Company

Filing 28

ORDER granting 8 Motion to Dismiss ; denying 16 Motion to Remand: The Court grants Plaintiff leave to file an amended complaint to properly plead an ERISA cause of action by July 21, 2011. Failure to file a timely amended complaint will result in this action being dismissed with prejudice and entry of judgment. Signed by Judge Michael J. Reagan on 6/30/11. (caa)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
DEIDRE NOLEN,

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Plaintiff,
v.
TRUSTMARK LIFE INSURANCE
COMPANY,
Defendant.

Case No. 11-cv-0256-MJR

MEMORANDUM and ORDER
REAGAN, District Judge:
A. INTRODUCTION
On February 17, 2011, Deidre Nolen filed a complaint against Trustmark Life
Insurance Co., in the Circuit Court of Perry County, Illinois. Served on March 4, 2011, Trustmark
timely removed the action to this federal district court on April 1, 2011, pursuant to 28 U.S.C.
§§ 1441 and 1446. Nolen brings claims against Trustmark for vexatious and unreasonable delay
for failure to pay benefits within the meaning of the Illinois Insurance Code, 215 ILCS 5/155, and
for interest under § 215 ILCS 5/357.9.
Nolen, an employee of Perry County Counseling Center, Inc., was provided group
health insurance through Trustmark. Trustmark employed Star Marketing and Administration
Inc., (Star) as a third-party administrator of the group health plan and ACS Recovery Services,
Inc., (ACS) to make collections on its behalf of amounts claimed to be due to Trustmark as
subrogation or reimbursement from third-party recoveries by Trustmark’s insureds.

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On March 4, 2008, Nolen was involved in a motor vehicle accident resulting in
medical expenses for diagnosis and treatment of her injuries. Nolen’s personal automobile
insurance provided $10,000 in medical benefits, which amount was exhausted by payment of
$10,000 to Arch Air for emergency helicopter transportation on the day of the accident.
The core of Nolen’s complaint is that between March 4, 2008, and December 14,
2010, Trustmark refused or delayed payment of its obligations for Nolen’s health care because
of potential payment from her automobile insurance medical coverage. But, according to
Nolen, Trustmark, through its agents, ACS and Star, knew or had reason to know by February
16, 2009, that her medical benefits from this source had been exhausted. Nolen claims that
because of the $97,214.92 in unpaid medical bills (as of January 25, 2010), she was required to
file a motion for adjudication of liens under the Illinois Healthcare Lien Act - and did so on
January 25, 2010.
Nolen submits that because of Trustmark’s unreasonable and vexatious delay in
making or refusal to make payments, refusal to make timely payments, reversals of payments
allegedly previous made and overcharges for reimbursement, her attorneys have been required
to act in matters which would not have been necessary, or which would not have been so
lengthy and complicated.
Nolen seeks attorney’s fees, costs and sanctions pursuant to 215 ILCS 5/155 and
interest at 9% from February 16, 2009, to the dates of each payment, as itemized within the
complaint.

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Now before the Court are Trustmark’s motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) (Doc. 8) and Nolen’s motion to remand (Doc. 16). The motions
are fully briefed and ready for disposition.
B. DISCUSSION
1. Rule 12(b)(6) Legal Standard
Dismissal of a claim is warranted under Rule 12(b)(6) if the complaint fails to set
forth “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v.
Twonbly, 550 U.S. 544, 570 (2007); EEOC v. Concentra Health Services, Inc., 496 F.3d 773,776
(7th Cir. 2007). In deciding a motion to dismiss, the District Court takes as true all well-pled
factual allegations in the complaint and draw all reasonable inferences in the non-movant’s
favor. Tricontinental Industries, Inc., Ltd. v. Price Waterhouse Coopers, LLP, 475 F.3d 824, 833
(7th Cir. 2007).
The Court of Appeals for the Seventh Circuit has explained that even after Bell
Atlantic retooled federal pleading standards, notice pleadings is all that is required. Tamayo v.
Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). A plaintiff need provide only enough detail to
give defendants fair notice of what the claim is and the grounds upon which it rests and
through the plaintiff’s allegations show that it is possible, rather than merely speculative that
the plaintiff is entitled to relief. Id. Nevertheless, the Seventh Circuit has emphasized that
conclusory statements of law and their unwarranted inferences are not sufficient to defeat a
motion to dismiss for failure to state a claim. Northern Trust Co. v. Peters, 69 F.3d 123, 129
(7th Cir. 1995).

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Federal Rule of Civil Procedure 8(a) requires complaints to contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a).
A complaint consisting of nothing more than "'naked assertion[s]' devoid of 'further factual
enhancement,'" must be dismissed for failing to meet the requirements of Rule 8. Walton v.
Walker, 364 Fed. Appx. 256, 258 (7th Cir. 2010)(quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 557 (2007)).
2. Whether the plan at issue is governed by ERISA and properly
removed

29 U.S.C. § 1002(a) defines ERISA policies as:
Any plan, fund, or program which was heretofore or is hereafter established or
maintained by an employer or by an employee organization, or by both, to the extent
that such plan, fund, or program was established or is maintained for the purpose of
providing for its participants or their beneficiaries, through the purchase of insurance or
otherwise
(A) medical, surgical, or hospital care or benefits, or benefits in the event
of sickness, accident, disability, death or unemployment, or vacation
benefits, apprenticeship or other training programs, or day care
centers, scholarship funds, or prepaid legal services,
29 U.S.C. § 1002(1)(A).
Consequently, the plan at issue would fall under the auspices of ERISA if the
following elements are satisfied: (1) a plan, fund, or program; (2) established or maintained; (3)
by an employee organization; (4) for the purpose of providing medical, surgical, or hospital care
or benefits in the event of sickness, accident, disability; (5) to participants or their
beneficiaries.” Cler v. Illinois Educ. Ass'n, 423 F.3d 726, 730 (7th Cir. 2005) (citing Ed Miniat,
Inc. v. Globe Life Ins. Group, 805 F.2d 732, 738 (7th Cir. 1986); Postma v. Paul Revere Life Ins.
Co., 223 F.3d 533, 537 (7th Cir. 2000)). “ERISA plans are governed by written documents that
define their scope; the statute requires that ‘*e+very employee benefit plan ... be established
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and maintained pursuant to a written instrument.’” Neuma, Inc. v. AMP, Inc., 259 F.3d 864,
872-73 (7th Cir. 2001) (citing 29 U.S.C. § 1102(a)(1)). Employers must provide these documents
to their employees to protect the employees’ interests as participants in employee welfare
plans. Id. at 873 (citing Panaras v. Liquid Carbonic Indus. Corp., 74 F.3d 786, 788 (7th Cir.
1996) (citing 29 U.S.C. § 1001(b)).
The Court is satisfied that all five of the above elements are met and that ERISA
applies to the matter sub judice. Nolen argues that there is no “plan,” but the documents
offered sufficiently describe the contours of the benefits to which Nolen is entitled under the
certificate of group insurance underwritten by Trustmark (Doc. 3-1). In sum, it is a plan
established or maintained by Perry County Counseling Center for the purpose of providing
medical coverage to participants or their beneficiaries. Given that all five elements are met,
the plan at issue herein is an ERISA plan, and this Court has jurisdiction under the statute.
Nolen’s state law claims are pre-empted by ERISA. As part of ERISA’s regulatory
scheme, guiding administration and enforcement, 29 U.S.C. § 1144(a) states, “except as
provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of
this chapter shall supersede any and all State laws insofar as they may now or hereafter relate
to any employee benefit plan.” 29 U.S.C. § 1144(a) (emphasis added). The Supreme Court in
Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), explained, “*w+hen the federal statute
completely pre-empts the state-law cause of action, a claim which comes within the scope of
that cause of action, even if pleaded in terms of state law, is in reality based on federal law.”
542 U.S. at 208 (citing Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8 (2003)). ERISA wholly

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displaces the state-law cause of action, so the state claim can be removed. Id. at 207 (citing
ibid.).
Expanding on its analysis, the Court observed that ERISA is a statute that wholly
displaces a state-law cause of action because (1) *ERISA’s+ purpose is to provide a uniform
regulatory regime, and (2) ERISA includes expansive pre-emption provisions, such as ERISA §
502(a)'s integrated enforcement mechanism, which are intended to ensure that employee
benefit plan regulation is "exclusively a federal concern." Id. at 208 (citing Alessi v. RaybestosManhattan, Inc., 451 U.S. 504, 523 (1981)). Therefore, any state-law cause of action that
duplicates, supplements, or supplants ERISA's civil enforcement remedy conflicts with the clear
congressional intent to make that remedy exclusive, and is therefore pre-empted. Id. at 20809.
Three factors identified by the Seventh Circuit as relevant for determining
whether a claim is completely pre-empted by ERISA are: “*W+hether the plaintiff *is+ eligible to
bring a claim under [ERISA § 502(a)]; whether the plaintiff's cause of action falls within the
scope of an ERISA provision that the plaintiff can enforce via § 502(a); and whether the
plaintiff's state law claim cannot be resolved without an interpretation of the contract
governed by federal law.” Klassy v. Physicians Plus Ins. Co., 371 F.3d 952, 955 (7th Cir. 2004)
(citing Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1488 (7th Cir. 1996)).
These factors support the conclusion that Nolen's claims are completely preempted by ERISA. Nolen has made a claim for benefits under the plan. Her claim is properly
characterized as a claim related to an employee benefit plan and arising under ERISA. Finally,
the Court would have to interpret the contract because her claim is that Trustmark’s conduct
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was unreasonable and vexatious – a determination which can only be made by applying the
terms of the contract to Trustmark’s conduct. Because all three of the Klassy factors are met,
Nolen’s claims are pre-empted by ERISA.
Lastly, relief under 215 ILCS 5/357.9, which, inter alia, entitles the insured to 9%
interest per annum for the insurer’s failure to pay within 30 days after receipt of proof of loss, is
not available to Nolen under her group insurance policy. In relevant part, 5/362a provides:
Non-application to certain policies. The provisions of sections 356a to 359a, both
inclusive, shall not apply to or affect … any group policy of insurance (unless otherwise
specifically provided);… 215 ILCS 5/362a.
Since the policy at issue is a group policy of insurance, the provisions of 5/357.9
do not apply.
C. Conclusion
For the foregoing reasons, the Court FINDS that the plan at issue is an ERISA
plan and that the state law claims are pre-empted by the statute. As a result the Court DENIES
Nolen’s motion to remand (Doc. 16) and GRANTS Trustmark’s motion to dismiss (Doc. 8)
without prejudice. The Court GRANTS Nolen leave to file an amended complaint to properly
plead an ERISA cause of action by July 21, 2011. Failure to file a timely amended complaint will
result in this action being dismissed with prejudice and entry of judgment.
IT IS SO ORDERED
DATED this 30th day of June, 2011

s/Michael J. Reagan
MICHAEL J. REAGAN
United States District Judge
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