Jevelekides et al v. Lincoln National Corporation et al

Filing 12

MEMORANDUM-DECISION and ORDERED, that Defendants Motion (Dkt. No. 9) to dismiss is GRANTED; and it is further ORDERED, that Plaintiffs Complaint (Dkt. No. 1) is DISMISSED with prejudice. Signed by Senior Judge Lawrence E. Kahn on June 22, 2015. (sas)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
DESPINA JEVELEKIDES and JAMES N.
GRAY, III,
Plaintiffs,
-against-

3:14-cv-1517 (LEK/DEP)

LINCOLN NATIONAL CORPORATION,
et al.,
Defendants.

MEMORANDUM-DECISION and ORDER
I.

INTRODUCTION
Plaintiffs Despina Jevelekides (“Jevelekides”) and James N. Gray III (“Gray”) (collectively,

“Plaintiffs”) commenced the instant action on October 7, 2014, in New York Supreme Court,
County of Broome, asserting various causes of action regarding the payment of benefits on a longterm disability insurance policy. Dkt. No. 1-1 (“Complaint”). Defendants Lincoln National Life
Insurance Company (“Lincoln Life”), Lincoln National Corporation (“Lincoln National”), and
Lincoln Financial (collectively, “Defendants”) removed the action pursuant to 28 U.S.C. § 1441 on
December 16, 2014, on the ground that Plaintiffs’ claims arise, in whole or in part, under the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. Dkt. No.
1. Presently before the Court is Defendants’ Motion to dismiss Plaintiffs’ Complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Dkt. Nos. 9 (“Motion”); 9-9
(“Memorandum”). For the following reasons, Defendants’ Motion is granted.

II.

BACKGROUND1
The present action concerns a group long-term disability insurance policy (the “Policy”)

issued to Jevelekides’ former employer, Boscov’s, Inc. (“Boscov’s”), effective January 1, 2002.2
Compl. ¶ 4; Dkt. No. 9-2 (“Policy”).3 The Policy provides long-term disability benefits to eligible
Boscov’s employees. Compl. ¶ 4; Policy.
Jevelekides was diagnosed with Stage IV cervical cancer in February 2007. Compl. ¶ 5.
She was eligible for long-term disability benefits under the Policy and properly submitted a claim to
Jefferson Pilot. Id. ¶ 6. Her claimed disability began on February 8, 2007. Dkt. No. 9-3.4 The
Policy requires a 180-day “Elimination Period,” from the first date of disability, before benefit
payments can begin. Policy at Schedule of Benefits, 4. The employee must submit written proof of

1

Because this matter is before the Court on a motion to dismiss for failure to state a claim,
the allegations of the Complaint are accepted as true and form the basis of this section. See Boyd v.
Nationwide Mut. Ins. Co., 208 F.3d 406, 408 (2d Cir. 2000); see also Matson v. Bd. of Educ., 631
F.3d 57, 72 (2d Cir. 2011) (noting that, in addressing a motion to dismiss, a court must view a
plaintiff’s factual allegations “in a light most favorable to the plaintiff and draw[ ] all reasonable
inferences in her favor”).
2

The Policy was issued by Jefferson Pilot Financial Insurance Company. Compl. ¶ 4. On
July 2, 2007, Jefferson Pilot merged with Lincoln Life, and Lincoln Life assumed all assets and
obligations of Jefferson Pilot, including obligations on the Policy. Id. ¶ 7.
3

A “court may permissibly consider documents other than the complaint in ruling on a
motion under Rule 12(b)(6).” Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). A “complaint is
deemed to include any written instrument attached to it as an exhibit or any statements or documents
incorporated in it by reference.” Int’l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69,
72 (2d Cir. 1995) (quoting Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991)).
Moreover, a court may consider a document “upon which [the complaint] solely relies and which is
integral to the complaint.” Cortec Indus., 949 F.2d at 48. Defendants’ obligations under the Policy
are the basis of each of Plaintiffs’ causes of action. The Policy is therefore integral to the Complaint
and properly considered by the Court on Defendants’ Rule 12(b)(6) Motion.
4

The attending physician’s statement, Dkt. No. 9-3, is incorporated by reference into the
Complaint. See Compl. ¶ 6.
2

claim within ninety days of the end of the Elimination Period. Id. at 21. Because Jevelekides’
claimed disability began February 8, 2007, her written proof of claim was therefore due by
November 5, 2007.
On July 11, 2007, Lincoln Life approved Jevelekides’ claim, and on August 6, 2007, Lincoln
Life began sending Jevelekides monthly benefit payments of $1,113.00. Compl. ¶ 8; Dkt. No. 9-4
(“July 11, 2007 Letter”).5 Lincoln Life also notified Jevelekides that she had an obligation to apply
for Social Security Disability Income (“SSDI”), and that her benefit payments would be reduced by
the amount of SSDI she received. See Compl. ¶ 9.6 While Jevelekides’ application for SSDI was
pending, Lincoln Life offered Jevelekides two options to avoid overpayment: (1) Lincoln Life could
estimate the amount of SSDI she would receive and reduce her monthly payments accordingly; or
(2) she could continue receiving full payments and repay any overpayment upon being awarded
SSDI. Id.; July 11, 2007 Letter. Jevelekides elected to continue receiving full monthly benefits
subject to a repayment obligation. See July 11, 2007 Letter.
Jevelekides did not believe she was entitled to SSDI for her cancer because she was already
receiving SSDI for another condition. See Compl. ¶ 10. On or about December 27, 2001,
Jevelekides had applied for SSDI due to osteoarthritis in both her hips. Id. ¶ 3. Her application was
approved on September 12, 2003, and she began receiving benefits retroactively from October 1,

5

The July 11, 2007 Letter is incorporated by reference into Plaintiffs’ Complaint. See
Compl. ¶ 8.
6

The Complaint states that this correspondence occurred on July 11, 2008. Compl. ¶ 9.
However, Jevelekides completed a form in reference to her obligation to apply for SSDI dated July
17, 2007. See July 11, 2007 Letter. When a plaintiff’s allegations are inconsistent with documents
incorporated by reference, the documents shall control. Matusovsky v. Merrill Lynch, 186 F. Supp.
2d 397, 400 (S.D.N.Y. 2002).
3

2001. See id. Jevelekides informed Lincoln Life that she already was receiving SSDI for her
osteoarthritis, but was advised that she could also receive benefits for her cancer. Id. ¶ 10. The
Social Security Administration had previously advised Jevelekides to the contrary. Id.
In a letter dated October 1, 2008, Lincoln Life informed Jevelekides that she had been
overpaid $12,637.81 because she and her dependent, Gray, had been awarded $1,386 in SSDI
benefits monthly, beginning on March 1, 2008. Id. ¶ 11; Dkt. No. 9-5 (“October 1, 2008 Letter”).7
The letter also notified Jevelekides that her benefits would be reduced to $111.30 per month.
Compl. ¶ 12; October 1, 2008 Letter.
Plaintiffs’ Complaint contains four causes of action related to the reduction in benefits: (1)
breach of contract; (2) unjust enrichment; (3) misrepresentation; and (4) breach of duty of good faith
and fair dealing. Compl. ¶¶ 14, 18, 20, 22. Plaintiffs seek to recover the difference between the
monthly benefits originally awarded under the Policy and the benefits as reduced by the SSDI
Jevelekides allegedly was receiving. See id. ¶¶ 15, 18.
III.

LEGAL STANDARD
To survive a motion to dismiss pursuant to Rule 12(b)(6), a “complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)); see also FED. R. CIV. P. 12(b)(6). A court must accept as true the factual allegations
contained in a complaint and draw all inferences in a plaintiff’s favor. See Allaire Corp. v.
Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006). A complaint may be dismissed pursuant to Rule

7

The October 1, 2008 Letter is incorporated by reference in the Complaint. See Compl.

¶ 11.
4

12(b)(6) only where it appears that there are not “enough facts to state a claim to relief that is
plausible on its face.” Twombly, 550 U.S. at 570. Plausibility requires “enough fact [s] to raise a
reasonable expectation that discovery will reveal evidence of [the alleged misconduct].” Id. at 556.
The plausibility standard “asks for more than a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “[T]he pleading standard
Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (citing Twombly, 550 U.S. at
555). Where a court is unable to infer more than the mere possibility of the alleged misconduct
based on the pleaded facts, the pleader has not demonstrated that she is entitled to relief and the
action is subject to dismissal. See id. at 678-79.
IV.

DISCUSSION
Defendants argue that the Complaint should be dismissed because all of Plaintiffs’ causes of

action are preempted by ERISA. Mem. at 5-9. Defendants further argue that allowing Plaintiffs to
amend the Complaint to assert an ERISA cause of action would be futile because any claim
Plaintiffs could assert pursuant to ERISA would be barred by the Policy’s limitations period. Id. at
9-11. Defendants additionally argue that Gray has no standing under ERISA and that Plaintiffs have
not asserted any allegations against Lincoln National or Lincoln Financial. Id. at 12-14.
A. Preemption
The Policy is an “employee welfare benefit plan,” as defined by ERISA. 29 U.S.C.
§ 1002(1)(A) (defining “employee welfare benefit plan” as “any plan, fund, or program . . .
established or maintained by an employer . . . for the purpose of providing . . . benefits in the event
of . . . disability”). Plaintiffs’ causes of action are therefore subject to ERISA’s broad preemption
5

provision, which states that ERISA “shall supercede any and all State laws insofar as they may now
or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a).
“A law ‘relates to’ an employee benefit plan, in the normal sense of the phrase, if it has a
connection with or reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97
(1983). ERISA preemption is “not limited to ‘state laws specifically designed to affect employee
benefit plans.’” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987) (quoting Shaw, 463 U.S.
at 98). The Second Circuit has found ERISA preemption applicable to “state laws that would tend
to control or supersede central ERISA functions—such as state laws affecting the determination of
eligibility for benefits, amounts of benefits, or means of securing unpaid benefits.” Gerosa v.
Savasta & Co., Inc., 329 F.3d 317, 324 (2d Cir. 2003). “As to state common law claims, ERISA
preempts those that seek ‘to rectify a wrongful denial of benefits promised under ERISA-regulated
plans, and do not attempt to remedy any violation of a legal duty independent of ERISA.’”
Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008) (quoting Aetna Health
Inc. v. Davila, 542 U.S. 200, 214 (2004)).
Each of Plaintiffs’ causes of action are premised on eligibility for benefits and the amount of
benefits due under the Policy, and do not assert legal duties independent of the Policy. See Compl.
¶¶ 15-16, 18, 20-22. Plaintiffs have not argued to the contrary. See Dkt. No. 10 (“Response”).
Accordingly, Plaintiffs’ causes of actions relate to the Policy and are within the scope of ERISA’s
preemption provision. 29 U.S.C. § 1144(a).
Finding that Plaintiffs’ causes of action are preempted, however, does not end the matter.
“Where a district court determines that a state law claim is preempted by ERISA, it may properly
treat the claim as one brought under ERISA and decide it on the merits.” Wilkins v. Time Warner
6

Cable, Inc., 10 F. Supp. 3d 299, 318 (N.D.N.Y. 2014) (Kahn, J.). ERISA § 502(a)(1)(B) establishes
a cause of action “to recover benefits due [a participant or beneficiary] 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.” 29 U.S.C. § 1132(a)(1)(B). Plaintiffs have also requested leave to amend the
Complaint to assert a cause of action under ERISA § 502(a)(1)(B). Resp. at 6-7. Defendants argue
that the Policy’s limitations period bars Plaintiffs from asserting any cause of action under ERISA
§ 502(a)(1)(B). Mem. at 9. The Court will therefore consider whether Plaintiffs would be barred
under the limitations period from asserting a cause of action under ERISA § 502(a)(1)(B).
B. Limitations Period
ERISA does not prescribe a limitations period for § 502(a)(1)(B) actions. Burke v.
PriceWaterHouseCoopers LLP Long Term Disability Plan, 572 F.3d 76, 78 (2d Cir. 2009). The
Supreme Court recently held in Heimeshoff v. Hartford Life & Acc. Ins. Co., that “in the absence of
a controlling statute to the contrary, a provision in a contract may validly limit, between the parties,
the time for bringing an action on such contract to a period less than that prescribed in the general
statute of limitations, provided that the shorter period itself shall be a reasonable period.” 134 S. Ct.
604, 611 (2013).8 Similarly, parties can contract as to when a limitations period commences. Id.
“The principle that contractual limitations provisions ordinarily should be enforced as written is
especially appropriate when enforcing an ERISA plan,” because “‘[t]he plan, in short, is at the
center of ERISA.’” Id. at 611-12 (quoting US Airways, Inc. v. McCutchen, 133 S. Ct. 1537, 1548
(2013)).

8

New York law permits parties to a contract to agree upon a limitations period shorter than
that prescribed by statute. N.Y. C.P.L.R. § 201.
7

The Policy states that “[n]o legal action to recover any benefits may be brought until sixty
days after the required written proof of claim has been given. No legal action may be brought more
than three years after the date written proof of claim is required.” Policy at 23. As stated supra,
Plaintiffs’ written proof of claim was due by November 5, 2007. Therefore, the limitations period
required Plaintiffs to file suit by November 5, 2010. Plaintiffs, however, did not commence suit
until July 11, 2014.9
Plaintiffs’ action is therefore untimely, provided that the Policy’s three-year limitations
period is reasonable. In Heimeshoff, the Supreme Court upheld a similar three-year limitations
provision—running from when proof of loss was due—as reasonable. 134 S. Ct. at 612-13. The
Heimeshoff Court reasoned that a three-year limitations period was not “unreasonably short on its
face” because, under ERISA regulations, the internal review process is ordinarily resolved in one
year. Id. at 612. District courts in the Second Circuit have also enforced similar limitations
provisions. See Rotondi v. Hartford Life & Accident Grp., No. 09 Civ. 6287, 2010 WL 3720830, at
*8 n.6 (S.D.N.Y. Sept. 22, 2010) (citing Second Circuit cases enforcing three-year limitations
period running from when proof of loss was due). Plaintiffs have not argued that the limitations
provision is unreasonable, see generally Resp., and no reason appears to the Court for finding it so.
Plaintiffs instead argue that the language of the limitations provision indicates that it is
inapplicable to Plaintiffs’ action. Resp. at 1-3. Plaintiffs first argue that the provision only relates
9

Under New York law, an action may be commenced by filing a summons and complaint or
a summons with notice. N.Y. C.P.L.R. § 304. Although Plaintiffs did not file their Complaint until
October 7, 2014, they filed a summons with notice on July 11, 2014. See Dkt. No. 1-1
(“Summons”). Defendants argue that Plaintiffs failed to serve the Summons with notice and that
this action is therefore subject to dismissal. Dkt. No. 11 (“Reply”). Because the Court finds that
Plaintiffs’ action is barred under the limitations period, it need not address Defendants’ service
argument.
8

to the procedures for pursuing a claim under the Policy, and does not apply to legal actions brought
on the Policy. Id. at 1-2. In support, Plaintiffs note that the sub-section of the Policy in which the
provision appears is entitled, “Claim Procedures.” Id. However, the text of the provision clearly
applies to “legal actions.” Policy at 23. Second, Plaintiffs argue the provision does not apply
because Jevelekides’ claim was not denied and Plaintiffs are only contesting the amount of benefits
awarded. Resp. at 3. This argument is also misdirected. The provision bars any “legal action to
recover any benefits” outside of the limitations period. Policy at 23. The language does not
distinguish between an action based on the denial of benefits and an action challenging the amount
of benefits, and the Court will not make such a distinction. See Webb v. Gardner, Carton &
Douglas LLP Long Term Disability Plan, 899 F. Supp. 2d 788, 793-94 (N.D. Ill. 2012). Finally,
Plaintiffs argue that the Court should apply the principle of contra proferentem, and should interpret
ambiguity in the provision against Defendants, who drafted it. Resp. at 2-3 (quoting Restatement
(Second) of Contracts § 206 (1981) (“In choosing among the reasonable meanings of a promise or
agreement or a term thereof, that meaning is generally preferred which operates against the party
who supplies the words or from whom a writing otherwise proceeds.”)). However, contra
proferentem does not apply here, where the language of the provision is unambiguous. See United
Nat’l Ins. Co. v. Waterfront N.Y. Realty Corp., 994 F.2d 105, 109 (2d Cir. 1993).
Thus, even if Plaintiffs had brought their claims under § 502(a)(1)(B), the claims would have
been untimely. Plaintiffs’ Complaint is therefore dismissed with prejudice.10

10

Because the Complaint raises wholly pre-empted causes of action and Plaintiffs are timebarred from asserting a cause of action under ERISA § 502(a)(1)(B), the Court need not address
Defendants’ arguments with respect to Gray’s standing, or the lack of allegations against Lincoln
National and Lincoln Financial.
9

V.

CONCLUSION
Accordingly, it is hereby:
ORDERED, that Defendants’ Motion (Dkt. No. 9) to dismiss is GRANTED; and it is

further
ORDERED, that Plaintiffs’ Complaint (Dkt. No. 1) is DISMISSED with prejudice; and it
is further
ORDERED, that the Clerk of the Court serve a copy of this Memorandum-Decision and
Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.

DATED:

June 22, 2015
Albany, NY

10