Delancey et al v. MedAmerica Insurance Company
ORDER granting 9 Motion to Dismiss. Signed by District Judge Carlton W. Reeves on 3/31/2017. (NM)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WILBURN F. DELANCEY AND
THE ESTATE OF VELM B. DELANCEY
CAUSE NO. 3:16-CV-00231-CWR-FKB
MEDAMERICA INSURANCE CO.
MEMORANDUM OPINION AND ORDER
Before the Court is the defendant’s motion to dismiss. Docket No. 9. The motion has
been fully briefed and the Court is ready to rule.
Factual and Procedural History
The below allegations are drawn from the complaint and taken as true for purposes of this
Velma Delancey purchased a long-term-care insurance policy from MedAmerica in 1998.
Beginning in 2007, “MedAmerica approved of and paid for Mrs. Delancey’s use of privatelyhired caregivers under the Alternative Care Benefit (ACB) provision of the policy for
approximately five years.” Docket No. 1-1, at 5.
That changed in April 2012, when MedAmerica notified Mrs. Delancey in writing that it
would no longer reimburse her for private care services unless the services were first approved
by a third-party verification company. Id. In March 2013, MedAmerica denied Mrs. Delancey’s
insurance claims due to her failure to satisfy the verification requirement. Id. These denials
continued until her death in December 2013. Id. at 7.
Wilburn Delancey and Mrs. Delancey’s estate (“the Estate”) filed this lawsuit in Hinds
County Circuit Court on February 29, 2016, asserting claims for breach of contract, tortious
breach of contract, breach of the covenant of good faith and fair dealing, bad faith denial of
insurance benefits, negligence, intentional infliction of emotional distress, and negligent
infliction of emotional distress. Id. at 3. They allege that the policy gave MedAmerica no
authority to condition Mrs. Delancey’s benefits on the verification requirement. “By imposing a
requirement of third-party verification,” they say, “MedAmerica attempted to unilaterally change
the terms of its Policy to Mrs. Delancey’s detriment.” Docket No. 13, at 3.
The action was removed to this Court on March 30, 2016 pursuant to diversity
jurisdiction, Docket No. 1, and now MedAmerica seeks dismissal of every claim. Docket No. 9.
When considering a motion to dismiss for failure to state a claim, the Court accepts the
plaintiff’s factual allegations as true and makes all reasonable inferences in the plaintiff’s favor.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To proceed, the complaint “must contain a short
and plain statement of the claim showing that the pleader is entitled to relief.” Id. at 677-78
(quotation marks and citation omitted). This requires “more than an unadorned, the defendantunlawfully-harmed-me accusation,” but the complaint need not have “detailed factual
allegations.” Id. at 678 (quotation marks and citation omitted). The plaintiff’s claims must also
be plausible on their face, which means there is “factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citation
“Because this case is proceeding in diversity, the applicable substantive law is that of the
forum state, Mississippi. State law is determined by looking to the decisions of the state’s
highest court.” Burrell v. Allstate Prop. & Cas. Ins. Co., No. 3:13-CV-493-CWR-FKB, 2014
WL 4851273, at *1 (S.D. Miss. Sept. 29, 2014) (citations omitted).
MedAmerica argues that the claims asserted by Mr. Delancey in his individual capacity
fail for lack of standing. Mr. Delancey has conceded the issue by failing to address it in his
response. See Rutter v. Conseco Life Ins. Co., No. 3:09-CV-680-DPJ-JCS, 2011 WL 2532467, at
*5 (S.D. Miss. June 24, 2011). Accordingly, the individual-capacity claims are dismissed.
The claims of the Estate all stem from MedAmerica’s refusal to reimburse Mrs. Delancey
for private care services not first approved by a third-party verification company. MedAmerica
asserts that the causes of actions accrued in April 2012 when it notified Mrs. Delancey that
future reimbursements would be contingent upon her satisfying the verification requirement. It
contends that the claims are, therefore, time-barred under the applicable statutes of limitations.
See Miss. Code Ann. §§ 15-1-35, 15-1-49. The Estate responds that the causes of action did not
arise until MedAmerica first denied the insurance claim in March 2013.
The intentional infliction of emotional distress claim is untimely under either accrual date
since this action was filed on February 29, 2016. See Jones v. Fluor Daniel Servs. Corp., 32 So.
3d 417, 423 (Miss. 2010) (holding that IIED claims have a one-year statute of limitations). But
the remaining claims, which are governed by the three-year statute of limitations, may still be
“The Mississippi Supreme Court has held that in the case of a breach of contract, the
cause of action accrues at the time of the breach, regardless of the time when the damages from
the breach occurred.” Wallace v. Greenville Public Sch. Dist., 142 So. 3d 1104, 1107 (Miss. Ct.
App. 2014) (brackets and quotation marks omitted) (citing Johnson v. Crisler, 125 So. 724, 72425 (Miss. 1930) and Young v. S. Farm Bureau Life Ins. Co., 592 So. 2d 103, 107 (Miss. 1991));
see also McDonnell v. Miller, 655 F. App’x 229, 232 (5th Cir. 2016). In Black v. Ansah, for
example, the court held that the breach occurred when the employee was notified that her
contract would not be renewed in the future, not on the actual date of the contract’s expiration.
876 So. 2d 395, 400 (Miss. Ct. App. 2003). The Black court stated that there is “no reason to
conclude that a person with known and measurable harm that awaits solely the passage of time to
inflict itself, may not sue because of that futurity until the time has passed.” Id. at 399.
Here, at the heart of the complaint is the allegation that MedAmerica’s imposition of the
verification condition was wrongful. Therefore, the breach of contract claims accrued in April
2012 when MedAmerica notified Mrs. Delancey that it would no longer pay for private care
services that were not verified. The Estate had until April 2015 to sue, but did not. Accordingly,
these claims (breach of contract and tortious breach of contract) are time-barred. See Miss. Code
Ann. § 15-1-49.
The bad faith denial of insurance claim, in contrast, survives the statute of limitations
defense. It did not accrue until MedAmerica first refused payment in March 2013. See Young,
592 So. 2d at 107. But the claim fails to meet the plausibility standard that governs Rule
12(b)(6) motions. See Iqbal, 556 U.S. at 678.
The policy explicitly stated that “services . . . must be provided by Approved Providers in
order to be reimbursed.” Docket No. 1-1, at 21. Privately-hired caregivers, like those employed
by Mrs. Delancey, were not among the policy’s Approved Providers. Id. at 21-22. The
Alternative Care Benefit provision granted MedAmerica the discretion to pay for such services,
that were not otherwise covered by the policy, if agreed to by both parties. See id. at 23 (“We
may pay for alternative care benefits under this provision.”) (emphasis added). MedAmerica was
never under an obligation to pay for private care services. Since payment was purely
discretionary, the Court cannot reasonably infer that MedAmerica is liable for denying Mrs.
Delancey’s insurance claims.
Consequently, the bad faith denial of insurance claim fails as a matter of law. The
negligence and breach of the covenant of good faith and fair dealing claims, which are predicated
upon the bad faith denial of insurance, also fail. See, e.g., Roland v. Transamerica Life Ins. Co.,
570 F. Supp. 2d 871, 879 (N.D. Tex. 2008).
The defendant’s motion to dismiss is granted.1 A separate Final Judgment will issue.
SO ORDERED, this the 31st day of March, 2017.
s/ Carlton W. Reeves
UNITED STATES DISTRICT JUDGE
Counsel for the MedAmerica took the liberty, without seeking permission from the Court, to submit memoranda
which exceeded the page limit allowed by the rules. See L.U.Civ.R. 7(b)(5). Those pages were made even longer
with the significant number of footnotes with reduced font. The local rules have been adopted for a number of
reasons. One of which is for counsel to follow them. Counsel is warned.
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