Meyer v. UNUM Life Insurance Company of America et al

Filing 30

MEMORANDUM AND ORDER sustaining in part and overruling in part 22 Motion to Dismiss. The motion is OVERRULED as to Counts I and II and SUSTAINED as to Count III, andthe alternative motion to strike is OVERRULED. Signed by Chief Judge Kathryn H. Vratil on 4/8/2013. (mm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
JOHN V. MEYER,

)
)
Plaintiff,
)
)
v.
)
)
UNUM LIFE INSURANCE
)
COMPANY OF AMERICA, et al.,
)
)
Defendants.
)
____________________________________)

CIVIL ACTION
No. 12-1134-KHV

MEMORANDUM AND ORDER
John V. Meyer brings suit against UNUM Life Insurance Company of America and UNUM
Group (collectively “UNUM”), Niska Gas Storage, LLC Plan (“the Plan”) and Niska Gas Storage,
LLC (“Niska”) for relief under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§ 1001 et seq. Plaintiff seeks to (1) recover disability benefits from the Plan and UNUM pursuant
to 29 U.S.C. § 1132(a)(1)(B) (Count I); (2) impose a statutory penalty on Niska for failure to provide
documentation pursuant to 29 U.S.C. § 1132(c)(1) (Count II); and (3) obtain injunctive relief against
Niska pursuant to 29 U.S.C. § 1132(a)(3) (Count III). This matter is before the Court on Niska
Defendants’ Motion To Dismiss The First Amended Complaint With Brief In Support (Doc. #22)
filed July 2, 2012. In their joint motion, the Plan and Niska move to dismiss plaintiff’s amended
complaint because (1) the Plan is not a proper defendant in Count I, plaintiff’s denial of benefits
claim, because it did not make the decision to deny plaintiff benefits; (2) Count II does not state a
plausible claim for relief; and (3) Count III for injunctive relief is not appropriate because legal relief
is available to plaintiff in his benefits claim against UNUM.1 Alternatively, the Plan and Niska
argue that the amended complaint should be dismissed or stricken and plaintiff should be required

1

UNUM is not a party to this motion.

to re-plead to comply with Rule 8, Fed. R. Civ. P. For the following reasons the Court sustains in
part and overrules in part the Plan and Niska’s motion to dismiss and overrules their motion to
strike.
Legal Standards
In ruling on a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., the Court assumes as
true all well-pleaded factual allegations and determines whether they plausibly give rise to an
entitlement of relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To survive a motion to dismiss,
a complaint must contain sufficient factual matter to state a claim which is plausible – and not
merely conceivable – on its face. Id. at 679-80; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). In determining whether a complaint states a plausible claim for relief, the Court draws on
its judicial experience and common sense. Iqbal, 556 U.S. at 679.
The Court need not accept as true those allegations which state only legal conclusions. See
id.; Hall v. Bellmon, 935 F.3d 1106, 1110 (10th Cir. 1991). Plaintiff bears the burden of framing
his complaint with enough factual matter to suggest that he is entitled to relief; it is not enough to
make threadbare recitals of a cause of action accompanied by conclusory statements. Twombly, 550
U.S. at 556. Plaintiff makes a facially plausible claim when he pleads factual content from which
the Court can reasonably infer that defendants are liable for the misconduct alleged. Iqbal, 556 U.S.
at 678. Plaintiff must show more than a sheer possibility that defendants have acted unlawfully –
it is not enough to plead facts that are “merely consistent with” defendants’ liability. Id. (quoting
Twombly, 550 U.S. at 557). A pleading which offers labels and conclusions, a formulaic recitation
of the elements of a cause of action, or naked assertions devoid of further factual enhancement will
not stand. Iqbal, 556 U.S. at 678. Similarly, where the well-pleaded facts do not permit the Court
to infer more than the mere possibility of misconduct, the complaint has alleged – but has not
“shown” – that the pleader is entitled to relief. Id. at 1950. The degree of specificity necessary to
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establish plausibility and fair notice depends on context, because what constitutes fair notice under
Rule 8(a)(2), Fed. R. Civ. P., depends on the type of case. Robbins v. Okla., 519 F.3d 1242, 1248
(10th Cir. 2008) (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232-33 (3d Cir. 2008)).
Rule 12(f) motions are a generally disfavored, drastic remedy. See Nwakpuda v. Falley’s,
Inc., 14 F. Supp. 2d 1213, 1215 (D. Kan. 1998); Sierra Club v. Tri-State Generation & Transmission
Ass’n, Inc., 173 F.R.D. 275, 285 (D. Colo. 1997). A motion to strike will usually be denied unless
the allegations have no possible relation to the controversy and may prejudice one of the parties. See
Nwakpuda, 14 F. Supp. 2d at 1215; Fed. Deposit Ins. Corp. v. Niver, 685 F. Supp. 766, 768 (D. Kan.
1987). If the record reveals any doubt as to the importance of the allegations to be stricken, the
Court should deny the motion. Rajala v. McGuire Woods, LLP, No. 08-02638, 2011 WL 91948,
at *2 (D. Kan. Jan. 11, 2011).
Factual Background
The amended complaint alleges the following facts.
Plaintiff began working in the natural gas industry in 1987, and from 1999 to 2006 he
worked for Manchester Gas Storage in Oklahoma. Through mergers and acquisitions, that
company’s operations became Niska’s operations. In 2008, Niska recruited plaintiff to work at its
Salt Plains Storage facility. Plaintiff began working there as an Operator on October 15, 2008. The
Operator position requires constant physical activity including maintenance work, housekeeping,
monitoring and repairing large machines to ensure the safe, reliable and efficient operation of gas
storage facilities and fields.
The Plan, in which plaintiff is a participant, is an employee welfare benefit plan as defined
by ERISA, 29 U.S.C. § 1002(1). The Plan includes long-term disability (“LTD”) benefits. Niska
is the plan administrator but it has delegated to UNUM the fiduciary responsibility of making benefit
determinations.
3

Plaintiff has been disabled under the terms of the Plan since March 4, 2010, when he suffered
a cerebral artery ischemic stroke. He awakened in the middle of the night and felt like he could not
walk and was disoriented. When he woke up the next morning, he could not talk and his right side
was immobilized. His girlfriend found him lying on the kitchen floor and called EMS. Plaintiff first
went to the emergency room at Anthony Medical Center and later that day transferred to Via Christi
St. Francis Hospital in Wichita for treatment of an acute stroke. On March 8, 2010, plaintiff had
extracranial-intracranial bypass surgery. Six days later he was discharged to a rehabilitation facility
for aggressive rehabilitation. The discharge summary from his hospital stay contains the following
statements:
1.

“2-D echocardiogram was done to rule out embolic source of stroke. . . .”

2.

“On 3/10/10, transesophageal echocardiogram [TEE] was done in order to
rule out any potential embolic source of stroke and no intracardiac mass or
clot was seen as well as no vegetation.”

3.

“A TEE was performed to further ensure there was no embolic source of the
initial stroke, and after the TEE he was extubated without any further issues.”

Amended Complaint (Doc. #20) at 8, ¶ 36. During the summer following his stroke, plaintiff
received treatment for atrial fibrillation, which included drugs and electrical shock treatment and
minimally invasive heart surgery. Despite his sustained rehabilitation efforts, the right side of
plaintiff’s body remains weak; he continues to struggle with speech; he has a hard time remembering
things; he has lost coordination; and he is barely able to walk.
Plaintiff became covered under the Plan 30 days after he began his employment with Niska,
on or about November 14, 2008. Plaintiff received a packet of information about benefits when he
began working for Niska. One of the documents, which described plaintiff’s LTD coverage, stated
that he would be automatically enrolled for both short- and long-term disability, and that the latter
was insured by UNUM. This 2007 “Benefits Overview” described those benefits to include 66.67%

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of an employee’s salary, with benefits beginning after a 180-day waiting period;2 a maximum benefit
of $10,000 per month; and cost of living adjustments. Plaintiff is entitled to receive monthly LTD
benefits until his 65th birthday, which is May 15, 2021.
Plaintiff had not received a summary plan description (“SPD”) before he suffered his stroke.
In June of 2010, he spoke several times with Niska employee Jennifer Johnson in an effort to obtain
LTD plan documents and get assistance in making a claim for benefits. Plaintiff also asked for a
copy of the policy itself. From that time until November of 2011, however, plaintiff only received
a UNUM document entitled “Long Term Disability Income Protection Insurance Plan Highlights”
for Niska Gas Storage, LLC Policy No. 125243. Plaintiff later received documents from UNUM
which indicated that as of November 1, 2009, this policy was no longer effective.
On July 28, 2010, Niska faxed plaintiff a UNUM application for LTD benefits. The
following month, plaintiff completed the application and submitted it to UNUM, along with a
questionnaire that his primary care physician answered. On September 2, 2010, in connection with
plaintiff’s LTD application, Niska faxed to UNUM an Employer’s Statement of plaintiff’s earnings.
One week later, UNUM told Johnson that it planned to review plaintiff’s file for preexisting
conditions, a process which generally takes 30 to 45 days.3 In a letter dated December 6, 2010,
UNUM denied plaintiff’s claim for LTD benefits on the ground that he had a preexisting condition
which either “caused, contributed to, or resulted in” his stroke. Plaintiff appealed the decision, and

2

With a disability date of March 4, 2010, plaintiff’s benefits became payable on
August 4, 2010.
3

The UNUM plan does not cover disabilities which are caused by, contributed to by
or result from a participant’s preexisting condition. The Plan defines a preexisting condition as one
for which the participant received medical treatment, consultation, care or services including
diagnostic measures, or took prescribed drugs or medicines in the six months before the effective
date of coverage, and the disability begins in the first 24 months after the effective date of coverage
unless the participant has been treatment-free from the condition for 12 consecutive months after
the effective date. See Doc. 1-2 at 5.
5

on July 15, 2011, UNUM denied the appeal.
On October 19, 2011, plaintiff’s counsel made a written request of Niska for copies of three
documents: the Employee Benefit Plan, the insurance policy and a copy of the SPD. Niska received
the request on October 24, 2011 and replied one month later by sending plaintiff a copy of the 2010
version of “Benefits Overview” for Salt Plains Storage, LLC. It also suggested that plaintiff contact
UNUM for the documents he had requested. Plaintiff did so, and UNUM sent him a copy of the
insurance policy. The description of LTD coverage in the 2007 and 2010 “Benefits Overviews” are
identical except that the latter refers to a 24-month exclusion for preexisting conditions which did
not appear in the former. The exclusion in the 2010 “Benefits Overview” is also inconsistent with
the language of the Plan, as the Plan has an exclusion that is broader than 24 months.
Other inconsistencies exist. The title page of the insurance plan which plaintiff received
from UNUM bears a copyright date of 1993, an effective date of March 23, 2007 and an amendment
stamp of November 1, 2009. Niska did not notify plaintiff of any amendments to the LTD plan, but
information that UNUM provided indicates that an amendment became effective while plaintiff was
a participant, before his stroke. The overview which Johnson faxed to plaintiff in June of 2010
seemingly described the pre-amendment policy. On April 3, 2012, plaintiff’s counsel contacted
Niska once again to inquire further about changes to Niska’s “Benefits Overview” summaries since
2008, when plaintiff began his employment. Niska’s counsel responded that there had been no
benefit changes to any UNUM policies since their implementation on March 23, 2007, and therefore
the documents which Niska had provided were complete.
In his amended complaint, plaintiff alleges that the Plan and UNUM wrongfully denied him

LTD benefits, that Niska is liable for statutory penalties for failure to provide plaintiff an SPD and
that Niska is subject to injunctive relief.
Analysis
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I.

Motion To Dismiss
Although the Plan and Niska filed a joint motion, they are not jointly named in plaintiff’s

claim; Count I sues the Plan and Counts II and III sue Niska. As to each count, however, defendants
argue that plaintiff has failed to state a claim upon which relief can be granted.
A. Count I
Count I asserts a traditional claim for benefits under 29 U.S.C. § 1132 and names the Plan
and UNUM as defendants. See 29 U.S.C. § 1132(d)(1) (“An employee benefit plan may sue or be
sued under this subchapter as an entity.”). While the Plan concedes that it is an entity that can sue
and be sued under ERISA, it argues that it cannot be liable to plaintiff because UNUM is the party
that decided and paid benefit claims, and that UNUM is the only proper defendant. Plaintiff
maintains that, according to the plain language of the statute and under applicable case law, the Plan
is a proper defendant.
Defendants’ position finds no support in case law in the Tenth Circuit or in this Court.
Although these courts have not addressed the issue in a factually similar case, dicta suggests that
plaintiff may indeed maintain his claim against the Plan. See Geddes v. United Staffing Alliance
Employee Med. Plan, 469 F.3d 919, 931 (10th Cir. 2006) (because ERISA allows claims only
against plan and plan administrator, court lacks authority to enter money judgment against separate
claims administrator); Randles v. Galichia Med. Group, P.A. ERISA Benefit Plan, No. 05-1374,
2006 WL 3760251, at *15 (D. Kan. Dec. 18, 2006) (plan is proper defendant, not employer, in suit
seeking LTD benefits where insurer made denial of benefits decision); Miller v. Pension Plan for
Employees of Coastal Corp., 780 F. Supp. 768, 773 (D. Kan. 1991) (employer not proper party in
pension benefits claim because ERISA only permits suit against plan).
The Second Circuit Court of Appeals considered this issue in Chapman v. Choicecare Long

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Island Term Disability Plan, 288 F.3d 506 (2002). There, a participant brought an action for LTD
benefits against her employer-sponsored plan. UNUM administered the plan, accepting or rejecting
claims and paying benefits. UNUM had denied plaintiff’s claim upon its filing and its appeal. In
response to plaintiff’s complaint, the plan moved for summary judgment on grounds which included
the argument that it was not a proper party defendant. 288 F.3d at 508-09. The plan made
essentially the same argument that the Plan makes here: under the terms of its policy with UNUM,
the insurance company promised to pay LTD benefits to qualified claimants, so the plan should not
be a defendant. The district court entered summary judgment for the plan.
The Second Circuit vacated the judgment and rejected the plan’s argument that it was not
a proper party defendant. The Second Circuit cited the language of Section 1132 which permits a
benefits claim against a plan, and noted that the statute clearly allows a plan to be held liable in its
own name for a money judgment. The Court continued with the following:
We see no reason why such a liability should not arise upon a beneficiary’s claim of
entitlement to receive benefits from the Plan. The Plan’s argument to the effect that
it may not be sued because it has contracted with First UNUM to make payments to
Plan beneficiaries is wholly unsupported by the language of the statute.
Id. at 509. Of course, the Second Circuit holding does not preclude the plan administrator from also
being a proper party defendant,4 a fact noted in a district court case which followed Chapman and
likewise rejected a plan’s effort to be dismissed as a defendant on the ground that the insurer had
the sole authority to make claim determinations under the LTD plan. Spears v. Liberty Life
Assurance Co. of Boston, 885 F. Supp. 2d 546 (D. Conn. 2012). As the district court further noted,
its decision did not prejudice the plan because plaintiff cannot recover twice, both from the plan and
from the insurer. Id. at 556.
4

See 288 F. 3d at 509 (in recovery of benefits claim, only plan, administrator and plan
trustees may be held liable) (quoting Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir.
1989)).
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Based on the foregoing, the Court concludes that the Plan is a proper party defendant.
Defendants’ motion to dismiss is overruled with respect to Count I.
B.

Count II

Count II seeks a statutory penalty under 29 U.S.C. § 1132 for Niska’s failure to provide
plaintiff a copy of the SPD within 90 days of his becoming a participant. Niska moves for dismissal
because plaintiff has not shown that the failure prejudiced him and because the amended complaint
fails to plead sufficient facts to support an award of such penalty.
ERISA requires a plan administrator to furnish a copy of the SPD to each participant within
90 days of the individual becoming a participant. 29 U.S.C. § 1024(b)(1)(A). If the administrator
fails to comply and the participant later requests a copy of the SPD but does not receive it within 30
days, the administrator is subject to statutory penalties under the following section:
Any administrator . . . (B) who fails or refuses to comply with a request for any
information which such administrator is required by this subchapter to furnish to a
participant or beneficiary (unless such failure or refusal results from matters
reasonably beyond the control of the administrator) by mailing the material requested
to the last known address of the requesting participant or beneficiary within 30 days
after such request may in the court's discretion be personally liable to such
participant or beneficiary in the amount of up to $100 a day from the date of such
failure or refusal, and the court may in its discretion order such other relief as it
deems proper.
29 U.S.C. § 1132(c). Plaintiff alleges that Niska was required but failed to furnish a copy to him on
or about February 13, 2009. He further alleges that he made several requests of Niska for LTD plan
documents in June of 2010, but he did not receive a copy of the SPD until November of 2011 when
Niska provided it in response to his attorney’s request.
Niska’s arguments are premature on a motion to dismiss. The amended complaint alleges
that Niska did not provide plaintiff a copy of the SPD within 90 days of his becoming a participant
in the plan. Neither did Niska comply within 30 days to what the Court assumes was an oral request.
Niska’s arguments with respect to prejudice and willfulness are more appropriately directed at
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whether and in what amount it will be subject to a statutory penalty.5 The amended complaint
alleges facts sufficient to state a claim against Niska under the statutory penalty provision, Section
1132(c). See Crotty v. Cook, 121 F.3d 541, 547 (9th Cir. 1997) (plan administrator’s failure to
furnish SPD within 90 days of participation and after oral request violates plain terms of Section
1132(c)); Davis v. Liberty Mut. Ins. Co., 871 F.2d 1134, 1138-39 (D.D.C. 1989) (Section 1024(b)(1)
imposes no requirement that SPD request be written). Defendants’ motion to dismiss is overruled
with respect to Count II.
C.

Count III

In his third and final count, plaintiff seeks injunctive and other equitable relief against Niska
for breach of fiduciary duty. Plaintiff alleges that Niska (1) failed to make disclosures about
circumstances which might have caused plaintiff to be denied benefits; (2) failed to disclose
information which participants needed for their own protection; (3) made false or misleading
statements about the Plan and benefits; and (4) delegated non-delegable obligations of disclosure
and production. Plaintiff invokes 29 U.S.C. § 1132(a)(3), the catchall provision, and asks the Court
to order Niska to comply with various ERISA duties and enjoin it from violating other ERISA
obligations. Niska argues that injunctive relief is not appropriate because plaintiff’s claim for
benefits provides an adequate remedy.
Plaintiff seeks relief under two enforcement sections of ERISA, Section 1132(a)(1)(B) and
Section 1132(a)(3). Niska correctly states that a plaintiff’s exclusive recovery for injury due to nonpayment of employee benefits is under the former section, and that an additional or alternative claim
for equitable relief under the latter is unavailable. See Varity Corp. v. Howe, 516 U.S. 489, 512, 515
(1996). Plaintiff argues that Count III stands on its own and seeks only prospective injunctive relief.
5

An award of penalty under Section 1132(c) is discretionary. 29 U.S.C. § 1132(c);
Moothart v. Bell, 21 F.3d 1499, 1503-06 (10th Cir. 1994).
10

However, this case is indisputably a claim for LTD benefits, and Count III is based on the same
conduct that underlies Count I. As the Supreme Court made clear in Varity, Section 1132(a)(3) is
a catchall provision that acts as a safety net by offering appropriate equitable relief for injuries which
have no other adequate remedy. 516 U.S. at 512.
The additional, appropriate relief that Section 1132(a)(3) offers is not authorized if plaintiff
possesses a colorable claim under Section 1132(a)(1)(B). Lefler v. United Healthcare, 72 F. App’x
818, 826 (10th Cir. 2003). Niska concedes that plaintiff has a claim for benefits under Section
1132(a)(1)(B). See Niska Defendants’ Motion To Dismiss The First Amended Complaint With
Brief In Support (Doc. #22) at 11. The contentions in Count III address the same conduct as those
in Count I, and plaintiff could be made whole by the relief he seeks in Count I. Accordingly, the
claims set forth in Count III are foreclosed. Defendants’ motion to dismiss is sustained with respect
to Count III.
II.

Motion To Strike
Defendant asserts an alternative motion to strike plaintiff’s amended complaint on the ground

that it does not comply with the requirement of Fed. R. Civ. P. 8(a) that a claim for relief must
contain a “short and plain statement of the claim showing the pleader is entitled to relief.”
Defendants presumably are referring to factual allegations that concern UNUM’s handling of
plaintiff’s claim.
Federal Rule of Civil Procedure 12(f) provides that a court “may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The function
of the rule is to avoid the expense of time and money that arises from litigating spurious issues by
dispensing with those issues before trial. Rajala v. McGuire Woods, LLP, No. 08-02638, 2011 WL
91948, at *2 (D. Kan. Jan. 11, 2011) (quoting Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880,
885 (9th Cir. 1983)). Motions to strike are generally disfavored, however, and are usually not
11

granted absent a showing of prejudice to the moving party. Semsroth v. City of Wichita, No. 062376, 2008 WL 45521, at *2 (D. Kan. Jan. 2, 2008). The amended complaint contains detailed
allegations as to UNUM’s handling of plaintiff’s claim for benefits, but it raises no spurious issues.
Moreover, defendants have not shown prejudice. The Court declines to strike the amended
complaint and overrules defendants’ alternative motion to strike.
For the foregoing reasons, the Court sustains in part and overrules in part Niska Defendants’
Motion To Dismiss The First Amended Complaint With Brief In Support (Doc. #22) filed July 2,
2012. The motion is OVERRULED as to Counts I and II and SUSTAINED as to Count III, and
the alternative motion to strike is OVERRULED.
IT IS SO ORDERED.
Dated this 8th day of April, 2013 at Kansas City, Kansas.
s/ Kathryn H. Vratil
KATHRYN H. VRATIL
United States District Judge

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