Fisk v. Cigna Group Insurance et al
Filing
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MEMORANDUM OPINION & ORDER; 1)Def, LINA'a 16 MOTION to Dismiss is GRANTED; 2)Pla's long term disability benefits claim is DISMISSED WITHOUT PREJUDICE for failure to exhaust administrative remedies; 3)W/in 10 days from date of this Order, parties to file joint or individual status reports w/respect to how the Court should adjudicate the remaining claims.. Signed by Judge David L. Bunning on 10/3/11.(LST)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
AT COVINGTON
CIVIL ACTION NO. 10-273-DLB-CJS
THEODORE LEE FISK
vs.
PLAINTIFF
MEMORANDUM OPINION AND ORDER
CIGNA GROUP INSURANCE, ET AL.
DEFENDANTS
***************
Plaintiff Theodore Lee Fisk (“Fisk”) commenced this civil action against Defendants
Cigna Insurance Group (“LINA”),1 Employee Benefit Plans Committee Toyota Motor
Engineering and Manufacturing North America (“Employee Benefit Plans Committee”), and
Toyota Motor Manufacturing North America, Inc. (“Toyota”)2 alleging that he was wrongfully
denied short term disability (“STD”) and long term disability (“LTD”) benefits in violation of
the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §1132(a)(1)(B).
Against Toyota, Plaintiff also asserts a negligence and/or bad faith claim alleging that
Toyota failed to provide an accurate job description of Plaintiff’s true duties and
responsibilities for his disability determination. The Court’s jurisdiction is premised on
1
In its Motion to Dismiss, Defendant LINA indicates that Plaintiff has sued the incorrect
party, as Cigna Group Insurance is not a corporate entity or an insurance company but merely a
registered service mark. Defendant contends that Life Insurance Company of North America
(LINA) is the correct party. At oral argument, Plaintiff did not contest Defendant’s assertion.
2
In its Answer (Doc. # 13), Defendant Toyota states that it was improperly sued in the name
of Toyota Motor Manufacturing North America, Inc. The proper party is Toyota Motor Engineering
& Manufacturing North America, Inc.
1
federal question jurisdiction.
This matter is currently before the Court on Defendant LINA’s Motion to Dismiss3
(Doc. # 16) Plaintiff’s LTD benefits claim because he failed to exhaust his administrative
remedies. A telephonic Oral Argument was held on September 28, 2011. Plaintiff was
represented by Scott Best and Louis Schneider, Defendant LINA was represented by
Cameron Hill, and Defendants Employee Benefit Plans Committee and Toyota were
represented by Craig Siegenthaler. The matter is now ripe for review.
For the reasons set forth below, because Plaintiff has failed to show by clear and
positive indication that his pursuit of administrative remedies would be futile, see Fallick v.
Nationwide Mut. Ins. Co., 162 F.3d 410, 419 (6th Cir. 1998), Defendant LINA’s Motion to
Dismiss (Doc. # 16) is GRANTED.
I.
FACTUAL AND PROCEDURAL BACKGROUND
At all times relevant to the Complaint, Fisk was a full-time employee of Defendant
Toyota with exempt employment status. As a full-time employee of Toyota, Fisk qualified
for and participated in Toyota’s STD and LTD Disability Plans. Defendant LINA acts as the
claims administrator of both plans.
Under Toyota’s STD Plan, “disability” is defined as “a physical or mental condition
that renders you incapable of performing any of your usual duties with Toyota.” (Doc. # 211, at 4). The STD Plan provides benefits for up to fifty-two weeks of disability. As a fulltime exempt employee, Fisk was eligible to receive 100% of his base salary for weeks one
through twenty-six and 65% for weeks twenty-six through fifty-two.
3
LINA alternatively requests that this motion be treated as a motion for summary judgment
under Federal Rule of Civil Procedure 56. (Doc. # 17, at 3).
2
Under Toyota’s LTD Plan, an employee is considered “disabled” if he or she is
“unable to perform the material duties of his or her Regular Occupation; and unable to earn
80% or more of his or her Indexed Earnings from working in his or her Regular
Occupation.” (Doc. # 21-1, at 11). “Regular Occupation” is defined as: “The occupation
the [employee] routinely performs at the time the Disability begins. In evaluating the
Disability, the Insurance Company will consider the duties of the occupation as it is
normally performed in the general labor market in the national economy. It is not work
tasks that are performed for a specific employer or at a specific location.” Id. at 30. The
LTD Plan requires an elimination period of fifty-two weeks before the employee becomes
eligible.
Plaintiff filed his Complaint on December 1, 2010 alleging that he was wrongfully
denied benefits under the STD and LTD Plans. Plaintiff contends that he meets the
definition of “disability” as provided in both plans and has met such definition since January
19, 2010.
II.
A.
ANALYSIS
Standard of Review
Although Defendant LINA has styled its motion as a “Motion to Dismiss,” it
alternatively requests that the motion be treated as one for summary judgment pursuant
to Federal Rule of Civil Procedure 56. In support of its motion, LINA has submitted and
relied upon materials extrinsic to the pleadings.4 At oral argument, Plaintiff’s counsel
objected to the Court’s consideration of the motion as one for summary judgment unless
4
Excerpts from the Administrative Record (Doc. # 17-1); Declaration of Lisa Mekkelsen
(Doc. # 17-2); and Declaration of Richard Lodi (Doc. # 21-1)
3
Plaintiff be allowed to depose LINA’s Senior Operations Representative Richard Lodi, who
submitted a sworn declaration (Doc. # 21-1) in support of LINA’s motion.
Rule 12(b) permits a party to assert certain defenses, such as lack of personal
jurisdiction or insufficient process, by motion. Although not specifically mentioned in Rule
12(b), other grounds for dismissal, such as failure to exhaust administrative remedies and
statute of limitations, are commonly decided on motions to dismiss, a practice upheld by
the Supreme Court and Sixth Circuit. See Jones v. Bock, 549 U.S. 199, 215 (2007); Scott
v. Ambani, 577 F.3d 642, 647 (6th Cir. 2009). However, if “matters outside the pleadings
are presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56.” Fed. R. Civ. P. 12(d).
Despite LINA’s submission and reliance on documents outside the pleadings, the
Court finds that the consideration of those documents, with one exception noted below, is
not necessary to adjudicate the motion to dismiss for failure to exhaust administrative
remedies. Therefore, the Court will exclude the extrinsic exhibits submitted by LINA and
treat the motion as a motion to dismiss pursuant to Rule 12(b). For purposes of a motion
to dismiss, "all allegations in the complaint must be taken as true and construed in a light
most favorable to the nonmovant." Ang v. Procter & Gamble Co., 932 F.2d 540, 544 (6th
Cir. 1991). While Plaintiff's factual allegations must be accepted as true, legal conclusions
or unwarranted factual inferences need not be accepted by the reviewing court. Lewis v.
ACB Bus. Servs., Inc., 135 F.3d 389, 405 (6th Cir. 1998).
In considering a defendant’s motion to dismiss, it is also appropriate for this Court
to take account of any relevant plan documents incorporated into the complaint by
4
reference. Weiner v. Klais & Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997). Courts may
consider ERISA plan documents not attached to a complaint where a plaintiff’s claims are
“based on rights under plans which are controlled by the plans’ provisions as described in
the plan documents” and where the documents are “incorporated through reference to the
plaintiff’s rights under the plans, and they are central to plaintiff’s claims.” Id. at 89; see
also City of Monroe Employees Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 659 n.6 (6th
Cir. 2005). Furthermore, “[d]ocuments that a defendant attaches to a motion to dismiss
are considered part of the pleadings if they are referred to in the plaintiff’s complaint and
are central to [his] claim.” Weiner, 108 F.3d at 89 (quoting Venture Assocs. Corp. v. Zenith
Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). Accordingly, because Plaintiff has
specifically referenced Toyota’s STD and LTD Plans in his Complaint (Doc. # 1) and his
claims are based on rights under the plans, the plan documents LINA attached to the
Declaration of Richard Lodi (Doc. #21-1) will also be considered as part of the pleadings
in ruling on Defendant’s motion to dismiss. At oral argument, Plaintiff indicated that he did
not object to the Court’s consideration of these plan documents.
B.
Exhaustion of Administrative Remedies
Defendant LINA argues that Plaintiff did not exhaust his administrative remedies as
required by ERISA because Plaintiff never submitted a claim for LTD benefits.
Acknowledging the fact that he did not apply for LTD benefits, Plaintiff argues that he was
not required to do so because such an attempt would be futile.
The Sixth Circuit has repeatedly held that, although ERISA does not explicitly
require exhaustion of administrative remedies, “[t]he administrative scheme of ERISA
5
requires a participant to exhaust his or her administrative remedies prior to commencing
suit in federal court.” Costantino v. TRW, Inc., 13 F.3d 969, 974 (6th Cir. 1994) (quoting
Miller v. Metro. Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991)). This implicit requirement
is not only consistent with ERISA’s legislative history but with the statute itself, which
mandates that every employee benefit plan “afford a reasonable opportunity to any
participant whose claim for benefits has been denied for a full and fair review by the
appropriate named fiduciary of the decision denying the claim.” Id. (citing 29 U.S.C. §
1133(2)).
The purposes of administrative exhaustion are to minimize the number of frivolous
ERISA lawsuits; promote the consistent treatment of benefit claims; provide a
nonadversarial dispute resolution process; and decrease the cost and time of claims
settlement. Id. at 975 (citing Makar v. Health Care Corp. of the Mid-Atlantic (CareFirst),
872 F.2d 80, 83 (4th Cir. 1989)). The exhaustion requirement, therefore, enables plan
fiduciaries to efficiently manage their funds, correct their errors, interpret plan provisions,
and assemble a factual record that will assist a court in reviewing any decisions. Id. The
application of the administrative exhaustion requirement is committed to the sound
discretion of the district court and, thus, cannot be disturbed on appeal unless there has
been an abuse of discretion. Id. at 974; see also Baxter , 941 F.2d at 453-54 (6th Cir.
1991).
The Court has recognized an exception to the administrative exhaustion
requirement when it can be shown “by clear and positive indication” that a plaintiff’s pursuit
of administrative remedies would be futile. Fallick v. Nationwide Mut. Ins. Co. , 162 F.3d
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410, 419 (6th Cir. 1998). To meet this standard, a plaintiff must show that “it is certain that
his claim will be denied on appeal, not merely that he doubts that an appeal will result in
a different decision.” Id. (internal quotations and citation omitted). Generally, the Sixth
Circuit applies the administrative futility doctrine in two scenarios.
First, when the
“[p]laintiff’s suit [is] directed to the legality of [the plan], not to a mere interpretation of it,”
Costantino, 13 F.3d at 975 (emphasis in the original), and also when the defendant “lacks
the authority to institute the [decision] sought by [the plaintiff].” Hill v. Blue Cross & Blue
Shield of Mich., 409 F.3d 710, 719 (6th Cir. 2005). This case does not fall within either
scenario.
Plaintiff maintains that it would have been an act of futility to apply for LTD benefits
because LINA, the same claims administrator who had denied his STD benefits, would
also be deciding his LTD benefits claim under a more restrictive disability standard than
the STD benefits claim. Under the STD Plan, “disability” is defined as “a physical or mental
condition that renders you incapable of performing any of your usual duties with Toyota.”
(Doc. # 21-1, at 4). On the other hand, pursuant to the LTD Plan, an employee is
considered “disabled” if he or she is “unable to perform the material duties of his or her
Regular Occupation; and unable to earn 80% or more of his or her Indexed Earnings from
working in his or her Regular Occupation.” (Doc. # 21-1, at 11). “Regular Occupation” is
defined as: “The occupation the [employee] routinely performs at the time the Disability
begins. In evaluating the Disability, the Insurance Company will consider the duties of the
occupation as it is normally performed in the general labor market in the national economy.
It is not work tasks that are performed for a specific employer or at a specific location.” Id.
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at 30. Plaintiff contends that the standard for qualifying for disability benefits under the
STD Plan is less restrictive than qualifying for benefits under the LTD Plan. Thus, it would
be futile to apply for LTD benefits with the same administrator that denied Plaintiff’s STD
benefits under the lesser standard.
To support his position, Plaintiff claims the facts of this case are analogous to those
in the Sixth Circuit’s decision in Dozier v. Sun Life Assur. Co. of Canada, 466 F.3d 532 (6th
Cir. 2006).
In Dozier, the plaintiff participated in LTD and life insurance policies
underwritten by Sun Life Assurance Company of Canada (“Sun Life”). Dozier, 466 F.3d
at 533.
The LTD Plan applied to employees “unable to perform the Material and
Substantial Duties of his Own Occupation.” Id. (emphasis in the original). The life
insurance policy offered a waiver-of-premium benefit for disabled employees, defined as
those who are “unable to perform the material and substantial duties of any occupation for
which he is or becomes reasonably qualified for by education, training or experience.” Id.
(emphasis in the original). The plaintiff applied for benefits under each policy through a
single application form provided by Sun Life. Id. Sun Life’s policy required that if an
employee filed for LTD benefits, he did not need to additionally file for the waiver-ofpremium benefit. Id.at 535. Subsequently, both the LTD benefits and waiver-of-premium
claims were denied by Sun Life. Id. at 534. The plaintiff appealed the LTD benefits denial,
but Sun Life upheld the initial decision. Id. However, the plaintiff did not appeal the
waiver-of-premium denial. Id. Ultimately, the Court found that the plaintiff was not required
to exhaust his administrative remedies and seek administrative review of his waiver-ofpremium denial because he had “every reason to believe that administrative review of the
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waiver-of-premium claim would be pointless,” and could fairly assume that the same
company would apply the tests for both plans consistently, “meaning that denial of one
claim would foreclose eligibility for relief on the other.” Id. at 535. Relying on Dozier,
Plaintiff argues that because both his STD and LTD Plans were administered by one
company, as in Dozier, for him to apply for LTD benefits after being denied STD benefits
would be futile.
Defendant attempts to distinguish Dozier by asserting that unlike Dozier, which
involved an “own occupation” and “any occupation” standard where denial under one
excluded recovery from the other, the standards used in the present case are simply two
different “own occupation” standards–one is not necessarily more restrictive than the other.
Therefore, Defendant argues that had Plaintiff applied for LTD benefits after the 52-week
elimination period5, he might have been approved.
Upon consideration of the parties’ arguments, the Court finds that Dozier is clearly
distinguishable from the present case.
In Dozier, the court found exhaustion of
administrative remedies excused under the futility doctrine not only because the claims
were handled by the same company, but because of that company’s particular practices
in handling the claims. Dozier, 466 at 535. Pursuant to Sun Life’s policy, LTD benefits and
waiver-of-premium claims were treated concurrently–an application for LTD benefits was
automatically viewed as an application for a waiver-of-premium. Id. at 535-536. However,
LINA does not treat STD and LTD benefits claims as one in the same, and Plaintiff has
5
According to Plaintiff’s Complaint, he has been disabled since January 19, 2010.
Therefore, Plaintiff was not eligible for LTD benefits until January 2011. Plaintiff filed this action
on December 1, 2010.
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failed to file an application for LTD benefits resulting in no administrative record for the
Court to review. See Norberry v. Life Ins. Co. of N. Am., No. 3:07-1268, 2008 WL 5170404
(M.D. Tenn. Dec. 10, 2008) (Court found that because the plaintiff did not file a LTD
benefits claim and thus there was no administrative record to review, her LTD benefits
claim must be dismissed for failure to exhaust administrative remedies). At the time
Plaintiff filed the Complaint in this Court, he was not even eligible to receive LTD benefits.
Moreover, unlike Dozier, the disability definitions in this case do not fall under the
“own” and “any” occupation standard, where one necessarily includes the other; rather,
they are simply two different “own” occupation standards. Arguably, an employee’s
position at Toyota may exclude a material duty of his or her “regular occupation” as it is
normally performed in the general labor market in the national economy. Thus, if it was
that material duty that the employee could not perform due to his sickness or injury, he
would be not be eligible for STD benefits but would be eligible for LTD benefits.
Consequently, Plaintiff cannot prove that it is certain that his LTD benefits claim would
have been denied and has failed to establish by a clear and positive indication that filing
a LTD benefits claim would have been futile.
One final matter deserves brief comment. Plaintiff additionally requests that should
the Court determine Plaintiff’s claim is not ripe for review because he failed to exhaust his
administrative remedies, he now be allowed to file a LTD benefits claim. Plaintiff bases
this request on Welsh v. Wachovia Corp., 191 F. App’x 345, 359 (6th Cir. 2006) (Plaintiff
afforded the opportunity to go back and file a claim for LTD benefits and therefore
assemble a factual record, after the court found that he was unreasonably denied the full
twenty-six weeks of STD benefits).
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Plaintiff’s argument can be addressed in short order. Simply put, in Welsh, pursuant
to the terms of the LTD plan, the plaintiff had to exhaust the full twenty-six weeks of STD
benefits before becoming eligible for LTD benefits. Given the court’s conclusion that
Welsh qualified for the full twenty-six weeks of STD benefits, his “failure” to apply for LTD
benefits was excused and he was allowed to file a LTD benefits claim in order to assemble
a factual record. Unlike Welsh, Fisk was not precluded by the terms of the Plan from
applying for and receiving LTD benefits simply because he did not exhaust the full fifty-two
weeks of STD benefits. Plaintiff’s ability to now file a LTD benefits claim will depend upon
the terms of the LTD Plan.
III.
CONCLUSION
Accordingly, for the reasons set forth herein, because Plaintiff cannot show by clear
and positive indication that his pursuit of administrative remedies would be futile,
IT IS ORDERED as follows:
(1)
Defendant LINA’s Motion to Dismiss (Doc. # 16) is hereby GRANTED;
(2)
Plaintiff’s long term disability benefits claim is hereby DISMISSED WITHOUT
PREJUDICE for failure to exhaust administrative remedies; and
(3)
within ten (10) days from the date of this Order, the parties shall file joint or
individual status reports with respect to how the Court should adjudicate the
remaining claims.
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This 3rd day of October, 2011.
G:\DATA\Opinions\Covington\2010\2-10-273 MOO Granting MTD.wpd
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