Osborn v. Principal Life Insurance Company et al
OPINION AND ORDER granting 14 Motion to Dismiss for Failure to State a Claim. Signed by Judge James L. Graham on 10/10/2017. (ds)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
Edward Osborn, Sr.,
Case No. 2:17-cv-329
Principal Life Insurance
OPINION AND ORDER
This is an action filed pursuant to the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. §1001, et
plaintiff, Edward Osborn, Sr., against Principal Life Insurance
Company (“Principal”), the administrator of the Romanoff Electric
Inc., Project Coordinators Group Long Term Disability Insurance
Plan (“the Plan”).
Plaintiff was awarded disability benefits for
a two-year period, but continued long-term benefits were disallowed
when Principal concluded that plaintiff had failed to demonstrate
that he was unable to perform the substantial and material duties
of any occupation.
In the first count of the complaint, plaintiff
1132(a)(1)(B), alleging that the defendants wrongfully denied him
continued long-term disability benefits payable under the Plan. In
the second count, plaintiff seeks equitable relief for breach of
fiduciary duty under 29 U.S.C. §1132(a)(3).
In the third count,
plaintiff reiterates his contention that benefits were wrongfully
denied and seeks a declaratory judgment concerning his rights under
the Plan, as well as an injunction against the termination of
benefits in the future.
I. Motion to Dismiss - Standards
This matter is before the court on Principal’s motion for
partial dismissal under Fed. R. Civ. P. 12(b)(6) for failure to
state a claim for relief for which relief may be granted.
ruling on a motion to dismiss under Rule 12(b)(6), the court must
construe the complaint in a light most favorable to the plaintiff,
accept all well-pleaded allegations in the complaint as true, and
determine whether plaintiff undoubtedly can prove no set of facts
in support of those allegations that would entitle him to relief.
Erickson v. Pardus, 551 U.S. 89, 94 (2007); Bishop v. Lucent
Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008); Harbin-Bey
v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005).
To survive a motion
inferential allegations with respect to all material elements
necessary to sustain a recovery under some viable legal theory.”
Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005).
allegations, the “[f]actual allegations must be enough to raise the
claimed right to relief above the speculative level,” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007), and must create a
reasonable expectation that discovery will reveal evidence to
support the claim. Campbell v. PMI Food Equipment Group, Inc., 509
F.3d 776, 780 (6th Cir. 2007).
A complaint must contain facts
sufficient to “state a claim to relief that is plausible on its
Twombly, 550 U.S. at 570.
Plaintiff must provide “more
than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.”
Id., 550 U.S. at 555;
see also Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)(“Threadbare
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”).
II. Principal’s Motion
A. Dismissal of Count Two
Principal seeks dismissal of plaintiff’s breach of fiduciary
duty claim advanced in Count Two. In that count, plaintiff alleges
that Principal “still wrongfully denies Plaintiff benefits” and
that Principal “breached its duty to administer the Plan with due
reinstating his long-term disability benefits or remanding the case
to the claims administrator for a full and fair review. Complaint,
Paras. 67, 72.
Pursuant to §1132(a)(3), plaintiff also requests
the issuance of an injunction prohibiting the defendants from
denying his benefit claims and ordering defendants to properly
review his benefit claims, and other equitable relief to redress
defendants’ violation of ERISA or the Plan.
Complaint, Paras. 65,
Plaintiff also alleges that the defendants violated ERISA
and/or the Plan’s claims procedures, citing 29 U.S.C. §1133.
Complaint, Para. 71.
§1132(a)(3) because plaintiff’s breach of fiduciary duty claim is
asserted in Count One.
In Varity Corp. v. Howe, 516 U.S. 489, 515
(1996), the Supreme Court held that “where Congress elsewhere
provided adequate relief for a beneficiary’s injury, there will
likely be no need for further equitable relief, in which case such
relief would normally not be appropriate.” The Supreme Court noted
fiduciary duty with respect to interpretation of plan documents and
§1132(a)(1)(B), and that the remedy for “other breaches of other
sorts of fiduciary obligation” may be sought under the “catchall”
provision in §1132(a)(3).
Id. at 512.
The Sixth Circuit in Wilkins v. Baptist Healthcare Sys. Inc.,
150 F.3d 609, 615 (6th Cir. 1998), interpreted Varity Corp. as
limiting “the applicability of §1132(a)(3) to beneficiaries who may
not avail themselves of §1132's other remedies.”
See also Donati
v. Ford Motor Co., General Retirement Plan, Retirement Committee,
821 F.3d 667, 673-74 (6th Cir. 2016)(plaintiff could not pursue a
claim under §1132(a)(3) because she sought the same relief in her
benefits claim); Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478,
491 (6th Cir. 2009)(relief under §1132(a)(3) not appropriate where
plaintiff merely “repackages” a §1132(a)(1)(B) benefits claim);
Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 454 (6th Cir.
2003)(affirming dismissal of plaintiff’s §1132(a)(3) claim for
breach of fiduciary duty because §1132(a)(1)(B) provided him with
a remedy for the alleged injury of denial of benefits and permitted
him to bring a lawsuit to challenge the denial of benefits).
The Sixth Circuit recently addressed this question in Rochow
v. Life Ins. Co. of North America, 780 F.3d 364 (6th Cir. 2015)(en
The court held that a claimant cannot pursue a breach of
fiduciary duty claim under §1132(a)(3) based solely on an arbitrary
and capricious denial of benefits where the §1132(a)(1)(B) remedy
is adequate to make the claimant whole.
Id. at 371.
can pursue a breach of fiduciary duty claim, irrespective of the
degree of success obtained on a claim for recovery of benefits
under §1132(a)(1)(B), only where the breach of fiduciary duty claim
is based on an injury separate and distinct from the denial of
§1132(a)(1)(B) is otherwise shown to be inadequate.
Id. at 372.
defendant’s profits resulting from defendant’s ability to invest
the funds which were not paid in benefits. Plaintiff suggests that
a similar remedy may be appropriate in this case.
Circuit concluded that the ongoing withholding of benefits was a
continuing effect of the denial of benefits, and that together they
comprised a single injury.
Id. at 373-74.
The court noted that if
an arbitrary and capricious denial of benefits implicated a breach
addition to the recovery of benefits, then equitable relief would
be potentially available whenever a benefits denial is held to be
arbitrary or capricious, a result “plainly beyond and inconsistent
with ERISA’s purpose to make claimants whole.”
Id. at 372.
In Count Two, plaintiff alleges that Principal wrongfully
discontinued long-term disability benefits to which he was entitled
and failed to comply with the procedural requirements of ERISA.
Complaint, Paras. 64-65, 67.
The injury referred to in Count Two,
that being the actions of Principal resulting in the denial of
long-term disability benefits, is the same injury involved in his
§1132(a)(1)(B) claim for benefits in Count One.
requests unspecified equitable relief and an injunction ordering
Principal not to deny his benefit claims, citing §1132(a)(3).
plaintiff in Count Two can be obtained if he prevails on his
A benefits claim under §1132(a)(1)(B) asserted in
Count One is an action “to recover benefits due [plaintiff] under
the terms of his plan, [and] to enforce his rights under the terms
of the plan[.]”
If plaintiff prevails on his
Count One claim for benefits, an order for the payment of benefits
would result in the recovery of the benefits he seeks, and would
have the same effect as an injunction to pay benefits.
In considering plaintiff’s §1132(a)(1)(B) benefits claim, this
court can also consider whether Principal breached its fiduciary
duties in processing plaintiff’s claim or in denying benefits. See
Bagsby v. Central States, Southeast & Southwest Areas Pension Fund,
162 F.3d 424, 430 (6th Cir. 1998)(noting that an alleged breach of
fiduciary duty may be relevant to a §1132(a)(1)(B) claim asserting
that plan administrators acted arbitrarily and capriciously in
In reviewing the record under either the de
novo or the arbitrary and capricious standard, this court can
consider whether Principal failed to follow the mandates of ERISA
or the Plan’s administrative claims procedures.
The court further notes that in Count Three, which repeats the
benefits claim asserted in Count One, plaintiff reiterates his
allegation that the termination of benefits was unreasonable and
illegal. Complaint, Para. 77. He then requests relief in the form
of a declaratory judgment regarding his right to benefits under the
Complaint, Para. 79.
This is not a form of relief which is
only available under §1132(a)(3).
A judgment declaring that
Principal wrongfully denied plaintiff’s claim for benefits can be
awarded as a form of relief for the Count One benefits claim,
because under §1132(a)(1)(B), a participant or beneficiary can
bring a civil action “to clarify his rights under the terms of the
Because the relief sought by plaintiff under §1132(a)(3) is
for the same injury (denial of benefits) as his §1132(a)(1)(B)
claim, and because plaintiff may obtain the relief he seeks under
§1132(a)(1)(B), he cannot pursue a separate §1132(a)(3) claim in
Principal also notes the allegation in Count Two that the
defendants violated ERISA and/or the Plan’s administrative claims
procedures, citing 29 U.S.C. §1133.
Complaint, Para. 71.
section requires employee benefit plans to provide adequate written
notice of the reasons for denying a claim.
29 U.S.C. §1133(1).
also requires employee benefit plans to afford participants whose
claims have been denied a reasonable opportunity for an appeal with
full and fair review of the denial.
29 U.S.C. §1133(2).
It is not
clear from the complaint whether plaintiff, by referencing §1133,
intends to assert a separate substantive claim for damages based on
If it is so construed, Principal argues that §1133
Machinists Pension Fund, 949 F.2d 310, 316 (10th Cir. 1991)(citing
Massachusetts Mutual Life Ins. Co. v.
Russell, 473 U.S. 134, 135
(1985)(noting the general principle “that an employer’s or plan’s
failure to comply with ERISA’s procedural requirements does not
The complaint states that the
sold in Ohio and subject to Ohio
However, any rights that plaintiff
governed by ERISA and federal law.
Plan is a policy of insurance
Complaint, Para. 78.
may have under the Plan are
See 29 U.S.C. §1144(a).
entitle a claimant to a substantive remedy.”)).
The court need not decide this issue because, insofar as
plaintiff’s complaint can be read as asserting a separate claim
under §1133, that section, by its terms, imposes obligations on an
Principal. See Stuhlreyer v. Armco, Inc., 12 F.3d 75, 79 (6th Cir.
Therefore, Principal’s motion to dismiss this allegation,
insofar as it may assert a separate claim for liability under §1133
against Principal, is well taken. However, this court can consider
determining whether the denial of benefits was contrary to ERISA.
Further, if this court determines that the terms of the Plan did
not provide for a full and fair review as required under §1133,
this court may remand this matter to the administrator for further
See Moyer v. Metropolitan Life Ins. Co., 762 F.3d
505, 507 (6th Cir. 2014).
B. Dismissal of Claim for Future Benefits
In Count Three, plaintiff seeks to “enjoin the Defendants from
termination of benefits until future order from this court.”
Complaint, Para. 80.
Principal moves to strike this language,
permitted under ERISA. See Ford v. Uniroyal Pension Plan, 154 F.3d
613, 620 (6th Cir. 1998)(awarding interest on the present value of
future benefits would overcompensate the plaintiffs and penalize
defendant in violation of ERISA’s purely compensatory remedial
scheme); Wade v. Life Ins. Co. of North America, 245 F. Supp.2d
182, 188 (D. Me. 2003)(award of future benefits not yet accrued
violates ERISA’s purely compensatory remedial scheme).
The statement “until further order from this court” suggests
jurisdiction over Principal’s payment of benefits. This court does
not have the authority to assume the administrator’s role of
determining whether plaintiff continues to satisfy the requirements
for long-term disability benefits under the terms of the Plan, nor
does this court have that kind of expertise.
As the court in Wade
noted, “no ERISA provision permits the Court to predict the future
in order to fashion appropriate relief under the statute.”
245 F. Supp.2d at 188.
The requested order would also improperly
restrict Principal’s functions as Plan administrator.
the circumstances affecting a claimant’s eligibility for benefits
authority to evaluate continuing eligibility.” Id.; see also Welsh
v. Burlington Northern, Inc., Employee Benefits Plan, 54 F.3d 1331,
1340 (8th Cir. 1995)(affirming the district court’s declaration
that plaintiff “is entitled to disability benefits in the future
for as long as he is disabled,” but noting that “nothing prevents
the health insurance plan from evaluating whether [plaintiff]
continues to be disabled in the future”).
To the extent that
plaintiff seeks an award of benefits “until future order from this
court,” the motion to strike is granted.
In the event that
plaintiff prevails in this action, this court will enter an
appropriate order awarding benefits.
In accordance with the foregoing, Principal’s motion (Doc.
14)to dismiss plaintiff’s §1132(a)(3) claim in Count Two and his
request for benefits “until future order from this court” is
Date: October 10, 2017
w/James L. Graham
James L. Graham
United States District Judge
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