Tippie v. OneBeacon America Insurance Company
Filing
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MEMORANDUM AND ORDER denying 10 defendant's Motion to Dismiss for Failure to State a Claim. Signed by District Judge J. Thomas Marten on 5/25/2011. (mss)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
CLYDE J. TIPPIE,
Plaintiff,
vs.
Case No. 11-2066-JTM
ONE BEACON AMERICA INSURANCE
COMPANY ,
Defendant .
MEMORANDUM AND ORDER
Before the court is defendant OneBeacon America Insurance Company’s Motion to Dismiss
(Dkt. No. 10). For the following reasons, the court denies the motion.
I. Factual Background
Plaintiff entered into an independent contractor agreement for employment with Greatwide
Dedicated Transport (Greatwide) on March 7, 2007. OneBeacon American Insurance Company
(OneBeacon) issued Policy No. 216000000170 to Greatwide for occupational accident insurance
coverage for the period beginning February 20, 2009. Plaintiff alleges he sustained injuries on May
31, 2009, while working on the tractor trailer he drove for Greatwide. OneBeacon denied plaintiff’s
claim for disability on the grounds he was not under dispatch at the time he sustained the injuries.
On January 18, 2010, plaintiff filed a petition for breach of contract in the District Court of
Crawford County, Kansas, arguing he was under dispatch when injured as defined by the OneBeacon
policy. On February 3, 2011, defendant removed the case to this court contending the claim is
preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001
to § 1461. Defendant filed this Motion to Dismiss on March 15. Defendant argues plaintiff’s state
law cause of action is preempted under Section 502(a)(1)(B), which provides the exclusive civil
enforcement mechanism for beneficiaries to recover benefits under a covered employee benefit plan.
Plaintiff argues the employee benefit plan at issue is not covered by ERISA and, thus, the state law
claim is proper.
II. Legal Standard: 12(b)(6)
Fed. R. Civ. P. 8(a)(2) provides that a complaint must contain “a short and plain statement
of the claim showing that the pleader is entitled to relief.” The complaint must give the defendant
adequate notice of what the plaintiff’s claim is and the grounds of that claim. Swierkiewicz v. Sorema
N.A., 534 U.S. 506, 512 (2002). This simplified notice pleading rule is justified because of the liberal
discovery rules and availability of summary judgment to dispose of unmeritorious claims. Id.
“In reviewing a motion to dismiss, this court must look for plausibility in the complaint . .
. . Under this standard, a complaint must include ‘enough facts to state a claim to relief that is
plausible on its face.’” Corder v. Lewis Palmer Sch. Dist No. 38, 566 F.3d 1219, 1223-24 (10th Cir.
2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949 (2009) (clarifying and affirming Twombly’s probability standard). Allegations that raise the
specter of mere speculation are not enough. Corder, 566 F.3d at 1223-24. The court must assume
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that all allegations in the complaint are true. Iqbal, 129 S. Ct. at 1936-37. However, a complaint that
only states conclusions or a “formulaic recitation of the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555. “The issue in resolving a motion such as this is ‘not whether [the]
plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the
claims.’” Bean v. Norman, No. 008-2422, 2010 WL 420057, at *2 (D. Kan. Jan. 29, 2010) (quoting
Swierkiewicz, 534 U.S. at 511). The Tenth Circuit utilizes a two-step process when analyzing a
motion to dismiss. Hall v. Witteman, 584 F.3d 859, 863 (10th Cir. 2009). First, the court must
identify conclusory allegations not entitled to the assumption of truth. Id. Second, the court must
determine whether the remaining factual allegations plausibly suggest the plaintiff is entitled to
relief. Id.
III. Analysis
Key to this 12(b)(6) motion is whether plaintiff’s state law cause of action is preempted by
ERISA. ERISA governs “employee benefit plan[s].” 29 U.S.C. § 1003(a) (2006). One form of
employee benefit plan is an “employee welfare benefit plan.” Id. § 1002(3). An “employee welfare
benefit plan is:
[A]ny 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, or (B) any benefit described in section 186(c) of this title
(other than pensions on retirement or death, and insurance to provide such pensions).
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Id. § 1002(1). Section 502(a)(1)(B) of ERISA provides the exclusive civil enforcement measure for
beneficiaries to recover benefits under a covered plan. See 29 U.S.C. § 1132(a)(1)(B) (2006) (“A
civil action may be brought—by a participant or beneficiary—to recover benefits due to him under
the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future
benefits under the terms of the plan”); see also Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 6263 (1987). ERISA preempts state law causes of action that “relate to” an employee benefit plan under
the act. 29 U.S.C. § 1144(a) (2006).
“This [Tenth Circuit] court has adopted five criteria that must be established for an
‘employee welfare benefits plan’ to fall within ERISA’s scope: ‘(1) a ‘plan, fund, or program’ (2)
established or maintained (3) by an employer (4) for the purpose of providing health care or
disability benefits (5) to participants or their beneficiaries.’” Sipma v. Mass. Cas. Ins. Co., 256 F.3d
1006, 1009 (10th Cir. 2001) (quoting Gaylor v. John Hancock Mut. Life Ins. Co., 112 F.3d 460, 464
(10th Cir. 1997)) (alterations added). Elements three, four, and five are not at issue in this case:
Greatwide is the employer, the disability insurance plan clearly provides disability benefits, and
plaintiff is the beneficiary. Only the first and second elements are at issue.
Under the first element, “‘[a] plan, fund, or program exists if from the surrounding
circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the
source of financing, and the procedures for receiving benefits.’” Sipma, 256 F.3d at 1012 (quoting
Gaylor, 112 F.3d at 464) (internal quotations omitted). At this stage, enough facts show this element
is met. Plaintiff is the intended beneficiary. Plaintiff was also the source of financing. And, the
procedures for receiving the disability benefits are reasonably established in the plan. Thus, a “plan,
fund, or program” exists for purposes of ERISA.
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The second element is the main point of contention. Plaintiff argues no facts suggest
Greatwide “established or maintained” the employee benefit plan, taking it out of ERISA’s scope.
The Tenth Circuit has provided:
[T]he “established or maintained” requirement is designed to ensure that the plan is
part of an employment relationship. . . . [W]e determine whether the plan is part of
an employment relationship by looking at the degree of participation by the employer
in the establishment or maintenance of the plan. An employer’s mere purchase of
insurance for its employees does not, without more, constitute an ERISA plan. An
important factor in determining whether a plan has been established is whether the
employer’s purchase of the policy is an expressed intention by the employer to
provide benefits on a regular and long-term basis.
Sipma, 256 F.3d at 1012 (quoting Gaylor, 112 F.3d at 464). Whether the employer pays the
premiums on the policy is often an important factor. Id. (citing Madonia v. Blue Cross & Blue Shield
of Vir., 11 F.3d 444, 447 (4th Cir. 1993) (“Under this statutory definition, employers may easily
establish ERISA plans by purchasing insurance for their employees.”)).
At this stage, it does not appear Greatwide’s degree of participation in the establishment or
maintenance of the plan is great or substantial. In fact, plaintiff has alleged he, and not Greatwide,
paid all of the individual premiums for the policy. Assuming, as we must, that plaintiff paid the
premiums, it is likely Greatwide did not “establish or maintain” the “plan, fund, or program.” It
appears that Greatwide did nothing more than provide the ability for plaintiff to obtain disability
insurance, but did not “establish or maintain” it. Defendant contends “it is both clear and undisputed
that the OneBeacon Policy is an employee benefit plan covered by ERISA”; yet it fails to show any
facts supporting that conclusion. See Dkt. No. 11, pg. 3. As such, the court finds plaintiff has
asserted enough facts to show his state law claims are not preempted by ERISA, at least not on the
present facts. Thus, the court will not dismiss plaintiff’s Complaint.
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Even if plaintiff’s claims did fall within ERISA, the proper action is for the court to
recharacterize the claims as arising under ERISA, rather than dismissing them as defendant seeks.
See Rutherford v. Reliance Standard Life Ins. Co., No. 10-2456, 2010 WL 4942128, at *3 (D. Kan.
Nov. 30, 2010) (citing Metropolitan Life Ins. Co., 481 U.S. at 63-67; Carling v. Metropolitan Life
Ins. Co., 935 F.2d 1114, 1119 (10th Cir. 1991)). However, because the facts suggest plaintiff’s
claims are not preempted by ERISA, such a recharacterization is unnecessary at this stage.
IT IS ACCORDINGLY ORDERED this 25th day of May 2011, that Defendant’s Motion to
Dismiss (Dkt. No. 10) is denied.
s/ J. Thomas Marten
J. THOMAS MARTEN, JUDGE
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