Vaught v. Hartford

Filing 13

ORDER granting in part and denying in part 8 Motion to Dismiss and Motion to Strike. Signed by Judge Herman J. Weber on 8/31/11. (do1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
SHEILA VAUGHT,
Plaintiff,
vs.

Case No. 1:11-cv-227-HJW

THE HARTFORD LIFE & ACCIDENT
INSURANCE COMPANY,
Defendant.
ORDER
This matter is before the Court upon the defendant’s “Motion to Dismiss
Plaintiff's State-Law Claims and Strike Plaintiff's Jury Demand and Claim for
Damages” (doc. no. 8), which plaintiff opposes. Having carefully considered the
pleadings and briefs, including the plan document attached to defendant’s motion
to dismiss, the Court will grant the motion to dismiss plaintiff’s state-law claims,
except as to the invasion of privacy claim, and deny without prejudice the motion to
strike the jury demand and claim for damages, for the following reasons:
I. Issues Presented
The questions before the Court are (1) whether the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., pre-empts plaintiff’s
state law claims of breach of contract, bad faith, misrepresentation, and violation of
privacy, and (2) whether the Court should strike plaintiff’s demand for a jury trial and
her request for compensatory and punitive damages because if all state law claims
are dismissed, plaintiff is not entitled to such damages or a jury trial under ERISA.

II. Background & Factual Allegations
Sheila Vaught (“plaintiff”) was a participant in an employee benefit plan issued
by Hartford Life & Accident Insurance Company (“Hartford”) to policyholder DaVita
Inc. Plaintiff asserts claims under ERISA and Ohio law. Pursuant to ERISA, plaintiff
alleges that defendant breached its fiduciary duty and improperly denied her
benefits. Plaintiff also asserts state claims for: (1) breach of contract, (2) bad faith,
(3) violation of privacy, and (4) misrepresentation. Plaintiff demands a jury trial and
seeks compensatory and punitive damages.
According to the Complaint, Hartford administers claims submitted under the
DaVita, Inc. Long Term Disability - Core Plan (“the Plan”) (doc. no. 5, ¶ 6). Defendant
attached a copy of the Plan to its Motion to Dismiss. The Plan provides that “this
employee welfare benefit plan...is subject to certain requirements of...ERISA” (doc.
no. 8-1 at 32). The Plan describes the relationships relevant to this lawsuit as
follows:
The benefits described ... are provided under a group
insurance policy. . . issued by the Hartford Life and
Accident Insurance Company . . . and are subject to the
Policy’s terms and conditions. The policy is incorporated
into, and forms a part of, the Plan. The Plan has
designated and named the Insurance Company as the
claims fiduciary for benefits provided under the Policy.
The Plan has granted the Insurance Company full
discretion and authority to determine eligibility for benefits
and to construe and interpret all terms and provisions of
the Policy.
(doc. no. 8-1 at 32). The Plan defines “Disability or Disabled” to mean:
1. during the Elimination Period, you are prevented from
performing one or more of the Essential Duties of Your
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Occupation; 2. for the 24 months following the Elimination
Period, you are prevented from performing one or more of
the Essential Duties of Your Occupation, and as a result
your Current Monthly Earnings are less than 80% of your
Indexed Pre-disability Earnings; 3. after that, you are
prevented from performing one or more of the Essential
Duties of Any Occupation.
If at the end of the Elimination Period, you are prevented
from performing one or more of the Essential Duties of
Your Occupation, but your Current Monthly Earnings are
greater than 80% of your Pre-disability Earnings, your
Elimination Period will be extended for a total period of 12
months from the original Date of Disability, or until such
time as your Current Monthly Earnings are less than 80%
of your Pre-disability Earnings, whichever occurs first.
Your Disability must be the result of: 1. accidental bodily
injury; 2. sickness; 3. Mental Illness; 4. Substance Abuse;
or 5. pregnancy.
Your failure to pass a physical
examination required to maintain a license to perform the
duties of Your Occupation, alone, does not mean that you
are Disabled.
(doc. no. 8-1 at 19).
In her Complaint, plaintiff alleges that she has been totally disabled “as
defined by the policy” since September 12, 2006 (doc. no. 5, ¶ 20). Plaintiff alleges
that she filed for disability insurance benefits, and on March 12, 2007, was found to
be eligible for these benefits (doc. no. 5, ¶ 9). On or about January 29, 2010, plaintiff
was awarded Social Security Disability Insurance benefits but was “forced to turn
over eighty percent of it

to Hartford” (¶ 11).

Plaintiff alleges that Hartford

subsequently terminated her disability insurance benefits on the basis that plaintiff
was “no longer disabled under the terms of the policy” (¶ 12). Plaintiff contends that
Hartford terminated her benefits “without any medical basis” (¶ 13).

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Plaintiff claims that “at various times since March 2007, Hartford, through its
agents, have (sic), without permission to do so, violated and invaded plaintiff’s
privacy by videotaping her while she was on her own property” (¶ 34). She also
alleges that on several occasions in 2009, defendant’s agents secretly videotaped
and followed her, including by vehicle (¶¶ 14-15). Plaintiff claims that she has
suffered shame, humiliation, embarrassment and apprehension, and seeks damages,
costs and attorney’s fees.
Plaintiff alleges that, despite “overwhelming medical evidence, Hartford has
arbitrarily and wrongfully denied disability benefits to plaintiff since July 2010 and
has refused to pay any benefits” to her since then (¶ 23).

Plaintiff indicates she

appealed the termination of her benefits but that defendant delayed its ruling and
constructively denied her appeal (¶¶ 16-18).
III. Standard of Review
“A party may, by motion, defend against a claim for relief if the claimant fails
to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Although
courts will not ordinarily consider matters outside the pleadings when ruling on a
motion to dismiss, documents attached to the motion are considered part of the
pleadings if they are referred to in the complaint and are central to the claims.
Weiner v. Klais and Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997). The present plaintiff
repeatedly refers to the “employee benefit plan” in her complaint and the Plan’s
provisions are central to her claims. Thus, the Court may consider the Plan without
converting the motion to dismiss into a motion for summary judgment.

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In order to survive a Rule 12(b)(6) motion to dismiss, “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, 129 S.Ct. 1937, 1949 (quoting Twombly, 550
U.S. 544, 570 (2007)). However, courts are not required to accept legal conclusions
couched as factual allegations.

Twombly, 550 U.S. 544, 555-56 (2007) (citing

Swierkiewicz v. Sorema N. A., 534 U.S. 506, 508, n. 1 (2002)).

The “[f]actual

allegations must be enough to raise a right to relief above the speculative level.” Id.
at 555. A plaintiff must provide more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action is not sufficient to avoid dismissal. Id.
IV. Analysis
A. Preemption of plaintiff’s breach of contract and bad faith claims
ERISA’s pre-emption clause provides that ERISA “shall supersede any and all
State laws insofar as they may now or hereafter relate to any employee benefit plan.”
29 U.S.C. § 1144(a) (emphasis added). The United States Supreme Court has held
that the “express pre-emption provisions of ERISA are deliberately expansive and
designed to establish pension plan regulation as exclusively a federal concern.”
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 43-44 (1987) (quoting Alessi v. RaybestosManhattan, Inc, 451 U.S. 504, 523 (1981)). The Court held that when a common-law
claim, specifically one for breach of contract or bad faith, relates to an employee
benefit plan, the claim is pre-empted under ERISA’s pre-emption clause unless the
cause of action falls under an exception. Id. at 47-48. The Court emphasized that the
phrase relate to should be given a broad common-sense meaning and found that

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where a common law cause of action is based on an improper denial of benefits
under an employee benefit plan, the connection or reference to the plan triggers the
express pre-emption clause. Id.
Following Pilot Life, the United States Court of Appeals for the Sixth Circuit
has emphasized that it “has repeatedly recognized that virtually all state law claims
relating to an employee benefit plan are preempted by ERISA,” and that “only those
state laws and state law claims whose effect on employee benefit plans is merely
tenuous, remote or peripheral are not preempted.” Cromwell v. Equicor-Equitable
HCA Corp., 944 F.2d 1272, 1276 (6th Cir. 1991), cert. dismissed, 505 U.S. 1233 (1992).
Here, plaintiff essentially contends that she was improperly denied ERISA
benefits and that such denial amounted to a breach of contract and bad faith (doc.
no. 5 at 19-32). For example, plaintiff alleges that Hartford breached the ERISA plan
because Hartford allegedly “arbitrarily and wrongfully denied disability benefits to
plaintiff since July , 2010 and has refused to pay any benefits to plaintiff since July,
2010" (doc. no. 5, ¶ 23). Plaintiff further alleges that “Hartford had a duty to act in
good faith in the handling and payment of plaintiff’s claim” and that “Hartford has
conducted itself in bad faith throughout the multi-year administration of plaintiff’s
disability claim including the wrongful refusal to continue to pay plaintiff’s benefits”
(¶¶ 26, 28). Of course, “it is not the label placed on a state law claim that determines
whether it is preempted, but whether in essence such a claim is for the recovery of
an ERISA plan benefit.” Cromwell, 944 F.2d at 1276. Plaintiff’s state law claims for
breach of contract and bad faith are pre-empted by ERISA because they plainly relate

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to the administration of the Plan and the denial of benefits. Pilot Life, 481 U.S. at 4748; see also, Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir. 1988), cert. denied, 488
U.S. 826 (1988) (pre-empting breach of contract claim); Caffey v. Unum Life Ins. Co.,
302 F.3d 576, 582 (6th Cir. 2002) (pre-empting bad faith claim).
B. Pre-emption of plaintiff’s misrepresentation claim
Aside from a fact-specific exception, which does not apply in this instance,1
misrepresentation claims that relate to an employee benefit plan are also pre-empted
by ERISA. Cromwell, 94 F.2d at 1276 (holding that allegation of misrepresentation
as grounds for recovery of benefits from plan is at the very heart of issues within the
scope of ERISA’s exclusive regulation and is pre-empted); Ramsey v. Formica
Corp., 389 F.3d 421, 424-25 (6th Cir. 2005) (holding that state law claim of
misrepresentation stemming from employer’s reduction of the plaintiff’s monthly
benefits was pre-empted by ERISA).
Here, plaintiff alleges that, “Hartford intentionally misrepresented what it
intended to do regarding its policy and made representations in the adjustment of
plaintiff’s claim, which were relied upon by the plaintiff, to her detriment” (doc. no.
5, ¶ 40).

As the alleged representations were made in connection with the

adjustment of plaintiff’s claim for disability benefits, the misrepresentation claim
relates to the employee benefit plan and is pre-empted by ERISA. Pilot Life, 48 U.S.
at 47-48; Cromwell, 944 F.2d at 1283-84. Additionally, the plaintiff’s allegation lacks

1

See Bloemker v. Laborers’ Local 265 Pension Fund, 605 F.3d 436, 440-43
(6th Cir. 2010) (holding that a misrepresentation claim may be construed as
equitable estoppel and survive ERISA pre-emption under certain circumstances).
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specificity and amounts to a formulaic recitation of elements, which is not sufficient
to avoid dismissal.

Twombly, 550 U.S. at 555.

Thus, the claim may also be

dismissed for failure to plead sufficient facts to state a claim. Id. at 545.
C. Pre-emption of plaintiff’s invasion of privacy claim
As discussed, a state law claim is pre-empted by ERISA when the claim relates
to an employee benefit plan. Pilot Life, 481 U.S. at 47-48. Only “state law claims
whose effect on employee benefit plans is merely tenuous, remote or peripheral are
not preempted.” Cromwell, 944 F.2d at1276.
Defendant contends that plaintiff’s invasion of privacy claim is pre-empted by
ERISA and cites In re General Motors Corp., 3 F.3d 980, 985 (6th Cir. 1993) in
support. However, the facts of that case are quite different from the facts in the
present case. In General Motors, a plaintiff’s confidential medical records of drug
treatment through an employee benefit plan were provided to plaintiff’s employer
during discharge proceedings. The Court of Appeals for the Sixth Circuit decided
that plaintiff’s invasion of privacy claim was (1) pre-empted by the Labor
Management Relations Act (“LMRA”) because the claim concerned confidentiality
language in a document subject to the LMRA, and (2) was also pre-empted by ERISA
because the claim related to the employee benefit plan. Id. at 984-86.
In the present case, plaintiff claims that “[a]t various times since March, 2007,
Hartford, through its agents, have, without permission to do so, violated and invaded
plaintiff’s privacy by videotaping her while she was on her own property (doc. no.
5, ¶ 34). She also alleges that on several occasions, Hartford agents secretly

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videotaped and followed her, including by vehicle (¶¶ 14-15). She alleges has
suffered “shame, humiliation, embarrassment, and oppression” as a result (¶ 35).
Although plaintiff’s claim is stated in rather conclusory terms, the claim may be
construed as alleging that the defendant’s conduct went beyond the bounds of a
reasonable investigation.
Courts have expressed concerns regarding the bounds of ERISA administrator
conduct and found that some objectionable conduct does not relate to employee
benefit plans for purposes of pre-emption. See Dishman v. UNUM Life Ins. Co. of
Am., 269 F.3d 974, 984 (9th Cir. 2001) (“We are certain that the objective of Congress
in crafting Section 1144(a) was not to provide ERISA administrators with blanket
immunity from garden variety torts which only peripherally impact daily plan
administration.”);

Darcangelo v. Verizon Communications, Inc., 292 F.3d 181,

192(4th Cir. 2002) (“the simple fact that a defendant is an ERISA plan administrator
does not automatically insulate it from state law liability for alleged wrongdoing
against a plan participant or beneficiary”).
Under Ohio law, an actionable invasion of privacy is generally defined as “the
wrongful intrusion into one’s private activities in such a manner as to outrage or to
cause mental suffering, shame or humiliation to a person of ordinary sensibilities.”
Housh v. Peth, 165 Ohio St. 35, 39 (1956). “Intrusion upon seclusion” is recognized
as a type of invasion of privacy in Ohio and occurs when a defendant invades the
“private seclusion that the plaintiff has thrown about his person or affairs.” York v.
Gen. Elec. Co., 144 Ohio App.3d 191, 194 (2001) (quoting RESTATEMENT OF TORTS §

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652B, CMT. c (1977)). Ohio does not impose liability merely for viewing affairs that
are in the public view. Id. at 194. The Ohio Jury Instructions provide that:
In order to establish a claim for invasion of privacy by
wrongfully intruding into the plaintiff’s private activities,
the plaintiff must prove by the greater weight of the
evidence that (A) the defendant intentionally intruded,
physically or otherwise, into the private activities, solitude,
or seclusion of the plaintiff; and (B) the intrusion by the
defendant would be highly offensive to a reasonable
person.
1 CV Ohio Jury Instructions (2010), Section 433.07.
Although the Plan indicates that Hartford may “detect, investigate, deter and
prosecute those who commit Insurance Fraud,” (doc. no. 8-1 at 18), Ohio law
provides that such investigations may not be tortious. See York, 144 Ohio App.3d
at 195 (“[I]t is not unreasonable for an employer to conduct an investigation into a
person’s injury while the person is receiving worker’s compensation benefits, as
long as the investigation does not amount to an invasion of privacy.”). Although it
is a close issue as to whether plaintiff’s invasion of privacy claim is so connected
to her claim of denial of ERISA benefits as to be pre-empted, plaintiff’s allegations,
taken as true, allege conduct that may be beyond the bounds of a reasonable
investigation. Tortious conduct that amounts to an invasion of privacy would not
“relate to” the administration of the plan for purposes of pre-emption. See, e.g.,
Dishman, 269 F.3d at 984 (rejecting the idea that "a plan administrator could
‘investigate' a claim in all manner of tortious ways with impunity"). The nature of the
investigation is necessarily a fact-specific inquiry not appropriately reviewed under
Rule 12(b)(6). Taking plaintiff’s allegations as true, her claim for invasion of privacy
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survives dismissal on the basis of pre-emption at this stage of the proceedings.
D. Request for damages and jury trial
Defendant correctly argues that plaintiff is not entitled to a jury trial on her
claim that she was denied ERISA benefits. Sprague v. General Motors Corp., 133
F.3d 388, 406 (6th Cir. 1998)(holding that no jury trial is permitted under ERISA for
a denial of benefits claim); Bair v. General Motors Corp., 895 F.2d 1094, 1096 (6th
Cir.1990) (holding that an ERISA claim is equitable in nature and thus not eligible for
jury trial). To the extent plaintiff alleges breach of fiduciary duty merely as part of
that denial of benefits, she is also not entitled to a jury trial on that claim. Wilkins
v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 613 (6th Cir. 1998) (holding that where
plaintiff’s claim amounted to a routine challenge to a denial of ERISA benefits, the
breach of fiduciary duty claim was subsumed in the denial of benefits claim).
With respect to damages, plan beneficiaries may not recover punitive
damages for the denial of ERISA benefits. Punitive damages are based on state law
and thus are preempted by ERISA. Davis v. Kentucky Finance Cos. Retirement Plan,
887 F.2d 689, 697 (6th Cir. 1989)), cert. denied, 495 U.S. 905 (1990); Varhola v. Doe,
820 F.2d 809, 817 (6th Cir. 1987). “The relevant text of ERISA, the structure of the
entire statute, and its legislative history all support the conclusion that in § 409(a)
Congress did not provide, and did not intend the judiciary to imply, a cause of action
for extra-contractual damages caused by improper or untimely processing of benefit
claims.” Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148 (1985).
In short, plaintiff is not entitled to a jury trial regarding the denial of ERISA

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benefits, nor may she seek punitive or other extra-contractual damages for the
alleged wrongful denial of benefits. Plaintiff’s state law claims are pre-empted and
subject to dismissal, and thus, she would also not be entitled to a jury trial or
damages on those claims. However, to the extent that the invasion of privacy claim
survives dismissal at this state of the proceedings, it would be premature to strike
plaintiff’s demand for a jury trial and damages as to that particular claim.
Accordingly, defendant’s “Motion to Dismiss Plaintiff's State-Law Claims and
Strike Plaintiff's Jury Demand and Claim for Damages” (doc. no. 8) is GRANTED in
part and DENIED in part, as follows:
1.

Plaintiff’s state law claims are dismissed as pre-empted,
except for the invasion of privacy claim in Count III;

2.

Defendant’s motion to strike the plaintiff’s demand for a
jury trial, punitive damages, and compensatory damages
is denied without prejudice; and

3.

By separate order, an ERISA scheduling order will be
issued.

IT IS SO ORDERED.
s/Herman J. Weber
Herman J. Weber, Senior Judge
United States District Court

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