Egbers et al v. Senior Lifestyle Corporation
ORDER denying 6 Motion to Dismiss for Failure to State a Claim and finding as moot 3 Motion to Dismiss for Failure to State a Claim. Signed by Judge Michael R. Barrett on 9/6/17. (ba)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
KARI EGBERS AND STEPHANIE WILLIAMS,
On behalf of Themselves and All Others
Case No. 1:16cv732
Judge Michael R. Barrett
SENIOR LIFESTYLE CORPORATION,
OPINION AND ORDER
This matter is before the Court on Defendant’s Motion to Dismiss Plaintiffs’ Amended
Complaint (Doc. 6). Plaintiffs have filed a response (Doc. 19) and Defendant has filed a reply
For purposes of this Motion, the facts alleged in Plaintiffs’ Amended Complaint are
accepted as true. Defendant operates over 100 independent, assisted and memory communities
across the United States. (Doc. 5, ¶ 8). In 2002, in order to provide health insurance coverage to
its employees, Defendant established the Senior Lifestyle Corporation Employees Benefit Plan
(the “Plan”). (Id. at ¶ 13). The Plan is self-funded by Defendant. (Id. at ¶ 2). To fund the Plan,
Defendant collected payroll deductions from their employees, including Plaintiffs. (Id. at ¶ 14).
While Defendant serves as the plan’s sponsor and administrator, Key Benefits Administrators,
Inc. (“KBA”) is the third-party administrator of the Plan. (Id. at ¶¶ 2-3). The Employee
Contributions deducted from payroll were retained in Defendant’s corporate bank account until
they were remitted to KBA.
(Id. at ¶ 14).
In 2015, Defendant failed to remit Employee
Contributions to fund the Plan. (Id. at ¶¶ 15-16). According to Plaintiffs, Defendant also failed
to remit Employer Contributions to KBA. (Id. at ¶ 3).
Plaintiffs were both pregnant during the relevant time period. (Id. at ¶¶ 18-19). Because
Defendant failed to provide adequate funds to pay Plaintiffs’ related medical claims, KBA did
not pay the claims. (Id. at ¶ 17). As a result, Plaintiffs allege that during the relevant time
period, the Plan’s coverage lapsed and thus, Plaintiffs paid for health insurance coverage that
was not provided and incurred medical expenses that should have been covered by the Plan.
Plaintiffs allege Egbers specifically incurred approximately $2,500 in medical expenses. (Id. at
¶ 18). Plaintiffs allege Williams incurred approximately $400,000 in medical expenses. (Id. at
Plaintiffs further allege they were told for months by Defendant that they were working
to fix the “2015 KBA claims issue” and that the 2015 claims would eventually be paid. (Id. at
¶ 24). The claims remain unpaid by Defendant. According to Plaintiffs, they are being pursued
by professional debt collectors for the unpaid medical bills. (Id. at ¶ 26).
As result, Plaintiffs filed the instant action on behalf of themselves and all others
similarly situated, alleging violations under the Employment Retirement Income Security Act of
1974 (“ERISA”). Defendant filed a motion to dismiss Plaintiffs’ complaint. (Doc. 2). In
response, Plaintiffs filed an Amended Complaint. (Doc. 5). Defendant now moves for dismissal
of the Amended Complaint. (Doc. 6).
When reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim, this Court
must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as
true, and draw all reasonable inferences in favor of the plaintiff.” Bassett v. Nat’l Collegiate
Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (internal quotations omitted). To properly state
a claim, a complaint must contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[T]o survive a motion to dismiss, a
complaint must contain (1) ‘enough facts to state a claim to relief that is plausible,’ (2) more than
‘a formulaic recitation of a cause of action’s elements,’ and (3) allegations that suggest a ‘right to
relief above a speculative level.’” Tackett v. M&G Polymers, USA, LLC, 561 F.3d 478, 488 (6th
Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009).
Defendant makes two primary arguments in favor of dismissal. First, Defendant argues
Plaintiffs’ claims are “nothing more than a repackaged claim for benefits” and thus, Plaintiffs
cannot obtain relief for their claims for breach of fiduciary duty under § 502(a)(3). Second,
Defendant argues that the Amended Complaint must be dismissed because Plaintiffs fail to state
a claim for denial benefits under § 502(a)(1)(B).
The Sixth Circuit has explained that § 502(a)(3) is a “catchall provision” identical to 29
U.S.C. §1132(a)(3), which allows for relief for breach of fiduciary duty and other violations
where § 1132 does not provide an adequate remedy elsewhere. Wilkins v. Baptist Healthcare
System, Inc., 150 F.3d 609, 615 (6th Cir. 1998) (citing Varity Corp. v. Howe, 516 U.S. 489, 512,
116 S.Ct. 1065 (1996).
Relevant to this case, 29 U.S.C. § 1132 provides as follows:
Persons empowered to bring a civil action
A civil action may be brought—
(1) by a participant or beneficiary
(B) to recover benefits due to him 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
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms of the
plan, or (B) to obtain other appropriate equitable relief (I) to redress such
violations or (ii) to enforce any provision of this subchapter or the terms of
29 U.S.C. § 1132. § 502(a)(1)(B), on the other hand, is properly brought when a plaintiff seeks a
remedy for a denial of benefits. Following the guidance set forth in Varity, the Sixth Circuit has
held that to prevail on a breach of fiduciary duty claim, Plaintiffs’ injury must be separate and
distinct from the failure to pay benefits under § 502(a)(1)(B). Rochow v. Life Ins. Co. of N. Am.,
780 F.3d 364, 372 (6th Cir. 2015). In Rochow, the Court dismissed the plaintiff’s fiduciary duty
claims because he had already “recovered all the benefits he had been wrongfully denied under
§ 502(a)(1)(B)” and thus, allowing him to recover under §502(a)(3) would result in
impermissible duplicative recovery. Id. at 371. Defendant argues the facts in this case compel
the same result. The Court disagrees.
In Rochow, the issue was a denial of long term disability benefits. The plaintiff filed a
claim for long term disability benefits. Long term benefits were initially denied, finding that the
plaintiff continued to work and was therefore not disabled until after his employment had ended.
The district court disagreed, finding that plaintiff was improperly denied benefits, and granted
him long term disability benefits under § 502(a)(1)(B). In Wilkins, the plaintiff likewise filed for
long term disability benefits, claiming he was disabled because of a tear in his rotator cuff.
Wilkins, 150 F.3d at 614. While the Court reached a different conclusion as to whether the
plaintiff was entitled to long term disability benefits in that case, the Court found that plaintiff’s
claim was properly brought under § 502(a)(1)(B), and not § 502(a)(3), because it was one for
denial of benefits. See id. at 615.
Here, Plaintiffs are not simply arguing they were denied benefits they were entitled to
recover. Rather, the Amended Complaint alleges their claims were timely and valid, but because
Defendant failed to remit Employee and Employer Contributions to KBA, there were not
sufficient funds to cover their claims. (Doc. 5, ¶ 3). They allege as a result of Defendant’s
actions, Plaintiffs effectively lost their health insurance coverage. (Id. at ¶ 17). In other words,
Plaintiffs allege Defendant breached its fiduciary duty to remit Employee and Employer
Contributions to KBA as required under the terms of the Plan. (Id. at ¶ 15). As a result, they
seek injunctive relief, as well as benefits due. (Id. at ¶ 44-50).
Plaintiffs argue that the circumstances herein are akin those present in Hill v. Blue Cross
and Blue Shield of Mich., 409 F.3d 710 (6th Cir. 2005). In Hill, the Sixth Circuit found a breach
of fiduciary duty claim under § 502(a)(3) in a class action lawsuit stated a claim for relief
because the plaintiffs’ central claim was that the third-party administrator had violated the health
insurance program’s emergency-medical-treatment provisions. Id. at 714. They alleged the
defendant’s actions were contrary to the terms of the program. Id. at 716. The Court surmised
that “an award of benefits to a particular [plaintiff] based on an improperly denied claim for
emergency-medical-treatment expenses will not change the fact that [the defendant] is using an
allegedly improper methodology for handling all of the Program's emergency-medical-treatment
claims” Id. at 718.
Here, if Plaintiffs ultimately succeed, they would conceivably be entitled to recover the
amount alleged owed in unpaid benefits. However, like in Hill, an award of benefits will not
change the fact that Defendant is allegedly failing to remit Employee and Employer
Contributions in violation of the terms of the Plan. If Defendant’s alleged failure to remit
continues, Plaintiffs will continue to effectively be without health insurance, as the Plan will not
have sufficient funds to pay future claims. This is not simply a one-time claim for denial of
individual benefits as Defendant argues. Although Plaintiffs, of course, want to be reimbursed
for their alleged timely and valid medical claims, they seek class-wide injunctive relief to enjoin
Defendant from continuing to violate the terms of the Plan.
Accordingly, when accepting Plaintiffs’ allegations as true, and drawing all reasonable
inferences in favor of Plaintiffs, Plaintiffs have stated a claim under § 502(a)(3). Having reached
this conclusion, the Court need not address whether Plaintiffs have stated a claim under
Consistent with the foregoing, Defendant’s Motion to Dismiss Plaintiffs’ Amended
Complaint (Doc. 6) is DENIED. Defendant’s Motion to Dismiss (Doc. 3) is DENIED AS
IT IS SO ORDERED.
s/Michael R. Barrett
Michael R. Barrett, Judge
United States District Court
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?