Logan v. Healthcare International et al

Filing 62

OPINION AND ORDER by Magistrate Judge Kimberly E. West denying 19 Defendants Healthcare International Global Networks, Ltd. and Healthcare International Global Networks, Inc.'s Motion to Dismiss Amended Complaint filed 5/28/13. (neh, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
SAMUEL HOWARD LOGAN, JR.,
Plaintiff,
v.
HEALTHCARE INTERNATIONAL
GLOBAL NETWORKS, LTD.;
HEALTHCARE INTERNATIONAL
GLOBAL NETWORKS, INC.; and
NATIONAL LIFE INSURANCE
COMPANY,
Defendants.

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Case No. CIV-13-144-KEW

OPINION AND ORDER
This matter comes before the Court on Defendants Healthcare
International Global Networks, Ltd. and Healthcare International
Global Networks, Inc.’s Motion to Dismiss Amended Complaint filed
May 28, 2013 (Docket Entry No. 19). Plaintiff initiated this action
on February 20, 2013 in the District Court in and for Pittsburg
County, Oklahoma.

The case was removed by Defendants to this Court

on April 2, 2013.

An Amended Complaint was subsequently filed on

May 13, 2013.
As alleged in the Amended Complaint, Plaintiff states he is a
resident

of

McAlester,

Oklahoma.

While

working

in

Nigeria,

Plaintiff contends he sought health insurance coverage through an
Internet search and discovered the website of Defendant HealthCare
International (both moving Defendants collectively referred to
herein as “HealthCare”) with a posted address in London, England.
Plaintiff asserts that on April 6, 2011, he completed an online
application for health insurance and purchased a comprehensive

medical and hospitalization coverage for he and his family from
HealthCare with an effective date of June 1, 2011.

Plaintiff

further alleges that on April 26, 2012, he became ill while on
assignment in Nigeria and sought medical care.

When he was unable

to obtain medical care and a diagnosis of his condition in Nigeria,
Plaintiff alleges he requested that Healthcare authorize his travel
to Houston, Texas so that he could receive adequate medical care and
treatment. Plaintiff contends Healthcare failed to timely authorize
his travel to Houston.
himself

and

traveled

He ultimately paid for the airline tickets
to

Houston

to

receive

medical

care

and

treatment.
After

arriving

in

Houston,

Plaintiff

was

attended

by

a

physician who immediately admitted him to Methodist West Hospital
(the “Hospital”). Plaintiff obtained authorization from Healthcare
for admission to the Hospital.
endocarditis

which

Plaintiff

Plaintiff was diagnosed with

alleges

was

contracted

infection after the insurance policy was issued.

from

an

Plaintiff alleges

his physicians determined that the infection had begun to destroy
the mitral valve of his heart and that he would have to undergo
surgery to save his life.
Plaintiff contends he and the Hospital sought authorization
from Healthcare for the surgery.

In response, on May 16, 2012,

Olympus Managed Health Care, Inc. (“Olympus”) informed the Hospital
and

Plaintiff’s

physician

on

behalf

of

Defendants,

that

the

“diagnosis [of endocarditis] can either be attributed to either

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[sic] congenital or a history of heart defects; this condition and
the claims relating to this condition are not eligible for cover.”
Plaintiff alleges the determination was unsupported by any evidence
and was contrary to the medical opinions and evidence provided to
Healthcare by Plaintiff’s physicians which indicated the condition
was not congenital.

Plaintiff

states

that

he

was informed of

HealthCare’s decision of no coverage while he was in the Intensive
Care Unit of the Hospital awaiting surgery, which caused him
“significant physical and emotional distress and harm.”
On May 17, 2012, Plaintiff alleges Olympus informed HealthCare
that Plaintiff intended to appeal the decision finding no coverage.
Additionally, Olympus allegedly continued to provide information
concerning Plaintiff’s medical condition and history from the
Hospital

and

Plaintiff’s

treating

physicians.

The

Hospital

allegedly requested that HealthCare provide information as to the
physician who diagnosed and treated Plaintiff’s prior condition but
HealthCare declined the request.
Plaintiff ultimately received the surgery which replaced his
destroyed mitral valve.

Plaintiff asserts he suffers from the

effects of the delay in the surgery and the denial of coverage.
Plaintiff filed this action alleging (1) unspecified Defendants
breached the insurance contract in failing to provide coverage for
his endocarditis; (2) Defendants breached the covenant of good faith
and fair dealing under Oklahoma law in the manner in which they
handled the insurance claim, made the coverage decision, failed to

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conduct an adequate investigation, and adequately or properly
considered the evidence; (3) HealthCare owed Plaintiff a duty of
care to act reasonably and prudently in determining coverage and
negligently failed to fulfill its duty in finding no coverage; and
(4) Defendants’ conduct warrants the imposition of punitive damages.
Through the pending motion to dismiss, HealthCare contends it
is not Plaintiff’s insurer and is not a party to the insurance
contract.

Further, HealthCare invokes the choice of law provision

of the insurance contract which states that the law of Puerto Rico
applies to any dispute over the contract.

HealthCare asserts that,

under Puerto Rican law, only the insurer can be held liable for
insurance bad faith. HealthCare contends it is merely a third party
administrator to the insurance policy issued by National Life
Insurance Company and, as such, Plaintiff cannot pursue a claim
against it for bad faith.

HealthCare also contends that Puerto

Rican law does not recognize a claim for punitive damages.
HealthCare brings this Motion under the auspices of Fed. R.
Civ. P. 12(b)(6).

Typically, to survive a Rule 12(b)(6) challenge,

a complaint must meet the plausibility standard enunciated in United
States Supreme Court cases of Bell Atlantic Corp. v. Twombly, 550
U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Clearly, Bell Atlantic changed the legal analysis applicable to
dismissal motions filed under Fed. R. Civ. P. 12(b)(6), creating a
“refined standard” on such motions.

Khalik v. United Airlines, 671

F.3d 1188, 1191 (10th Cir. 2012)(citation omitted).

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Bell Atlantic

stands for the summarized proposition that “[t]o survive a motion
to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim for relief that is plausible on
its face.’”

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) quoting

Bell Atlantic, 550 U.S. at 570.

The Supreme Court did not parse

words when it stated in relation to the previous standard that “a
complaint should not be dismissed for failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to relief”
is “best forgotten as an incomplete, negative gloss on an accepted
pleading standard.”

Bell Atlantic,

550 U.S. at 546.

The Tenth Circuit has interpreted the plausibility standard as
referring “to the scope of the allegations in the complaint:

if

they are so general that they encompass a wide swath of conduct,
much of it innocent, then the plaintiffs ‘have not nudged their
claims across the line from conceivable to plausible.’”
Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008).

Robbins v.

The Bell Atlantic

case, however, did not intend the end of the more lenient pleading
requirements of Fed. R. Civ. P. 8(a)(2).

Khalik, 671 F.3d at 1191.

Rather, in Khalik, the Tenth Circuit recognized the United States
Supreme Court’s continued endorsement of Rule 8's “short and plain
statement” requirement in the case of Erickson v. Pardus, 551 U.S.
89 (2007) wherein the Supreme Court found “[s]pecific facts are not
necessary; the statement need only ‘give the defendant fair notice
of what the . . . claim is and the grounds upon which it rests.’”

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Id. at 93.
Certainly, Plaintiff has stated sufficient factual allegations
to plead plausible causes of action against HealthCare.

Nothing in

the adoption of the plausibility standard, however, suggests that
a complaint cannot be dismissed “because it asserts a legal theory
not cognizable as a matter of law . . . .”
F.Supp.2d

1215,

1217

(D.

Colo.

2004).

Golan v. Ashcroft, 310
The

foundation

of

HealthCare’s Motion begins and ends with the proposition that the
laws of Puerto Rico apply to this dispute since the insurance
contract specified such in a choice of law provision. The insurance
contract, which is appended to the Amended Complaint and, therefore,
can be considered in connection with the subject Motion, provides
under

the

section

entitled

“LAW

TO

BE

APPLIED”

that

insurance shall be subject to the laws of Puerto Rico.”

“[t]his

While the

parties both cite to the Restatement (Second) of Conflict of Laws,
§ 187 (1971) (the “Restatement”) to support their positions, they
differ in their interpretation of the relevant provisions.
The Restatement states at § 187 as follows:
§ 187 Law of the State Chosen by the Parties
(1) The law of the state chosen by the parties to govern
their contractual rights and duties will be applied if
the particular issue is one which the parties could have
resolved by an explicit provision in their agreement
directed to that issue.
(2) The law of the state chosen by the parties to govern
their contractual rights and duties will be applied, even
if the particular issue is one which the parties could
not have resolved by an explicit provision in their
agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to

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the parties or the transaction and there is no other
reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be
contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state in the
determination of the particular issue and which, under
the rule of § 188, would be the state of the applicable
law in the absence of an effective choice of law by the
parties.
(3) In the absence of a contrary indication of intention,
the reference is to the local law of the state of the
chosen law.
REST 2d CONFL § 187
HealthCare contends that subsection (1) ends the analysis since
the parties contracted for the laws of Puerto Rico to govern their
agreement. However, Comment (b) of the Restatement explains certain
limitations upon an express provision establishing the choice of law
in stating:
b. Impropriety or mistake. A choice-of-law provision,
like any other contractual provision, will not be given
effect if the consent of one of the parties to its
inclusion in the contract was obtained by improper means,
such as by misrepresentation, duress, or undue influence,
or by mistake. Whether such consent was in fact obtained
by improper means or by mistake will be determined by the
forum in accordance with its own legal principles. A
factor which the forum may consider is whether the
choice-of-law provision is contained in an “adhesion”
contract, namely one that is drafted unilaterally by the
dominant party and then presented on a “take-it-or-leaveit” basis to the weaker party who has no real opportunity
to bargain about its terms. Such contracts are usually
prepared in printed form, and frequently at least some of
their provisions are in extremely small print. Common
examples are tickets of various kinds and insurance
policies. Choice-of-law provisions contained in such
contracts are usually respected. Nevertheless, the forum
will scrutinize such contracts with care and will refuse
to apply any choice-of-law provision they may contain if
to do so would result in substantial injustice to the
adherent.

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REST 2d CONFL § 187, Comment (b).
The circumstances surrounding the offering of the insurance
contract, the negotiation of the provisions, the relative bargaining
power of the parties, and any resulting injustice to one party or
the other have not been presented to enable this Court to make the
determination of whether the choice of law provision should be
enforced.
policy

Regardless whether Plaintiff expressly alleged that the

and

included

choice

of

law

provision

was

procured

by

“misrepresentation, duress, or undue influence, or by mistake”

in

the Amended Complaint, a determination of the enforceability of the
provision and the appropriate law to be applied is required for the
adjudication of Plaintiff’s claims in this or any other forum.
Clearly, if the law of Oklahoma as the forum state is applied to
this transaction, an express statement is provided under Oklahoma
law which could result in a finding that the choice of law provision
is void.

See, Okla. stat. tit. 36 § 3617.

Until such time as the

parties have developed the factual record sufficiently for this
Court to determine the validity of the choice of law provision, no
finding will be made as to the law applicable to Plaintiff’s claims.
Although HealthCare makes the conclusory statement that England (as
National Life’s corporate home), Nigeria (where Plaintiff was
working and living when he obtained the policy), and Texas (where
Plaintiff

received

medical

care

and

treatment)

“have

more

significant contacts than Oklahoma,” little factual evidence has
been presented to establish the validity of these statements.

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HealthCare was at least aware of Plaintiff’s post office box in
McAlester, Oklahoma as a “correspondence address” as that fact is
set forth on the policy.

Plaintiff’s actual relationship to

McAlester as a place of residency is, again, subject to factual
development.

The policy itself distinguishes between an insured’s

“Country of Residence” and “Home Country,” but references the
Application Form to make the distinction.

Plaintiff’s Application

Form is not a part of the record accompanying the Amended Complaint.
Presuming that the laws of Puerto Rico do apply to this
dispute, HealthCare next contends that it is not a proper defendant
because Puerto Rico does not recognize bad faith liability against
third party claim administrators citing In re San Juan Dupont Plaza
Hotel Fire Litigation, 802 F.Supp. 624 (D. Puerto Rico 1992).

This

Court would note that this case does not stand for the proposition
put forth by HealthCare but rather only states that “[t]he insurance
contract is essentially a contract between the insurer and the
insured(s) and the terms shall be defined in accordance with the
general

principles

of

contract

law.”

Id.

at

637.

This

pronouncement falls far short of HealthCare’s urged position that
Puerto Rico “does not extend liability arising on the policy beyond
the insurer.”

Puerto Rico does recognize a claim for bad faith in

connection with insurance claims.

See Event Producers, Inc. v.

Tyser & Co., 854 F.Supp. 35, 39 (D. P.R. 1993). HealthCare contends
the First Circuit has precluded a claim for bad faith based in tort
law citing Noble v. Corporacion Insular de Seguros, 738 F.2d 51 (1st

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Cir. 1984).

The First Circuit determined that the cause of action

under the particular circumstances present in that case was based
in contract rather than tort but did not expressly find that bad
faith tort liability did not exist in Puerto Rico.

Id. at 52-54.

Plaintiff has asserted liability against HealthCare and while
the concept might not have yet been addressed by a court in Puerto
Rico, it is not inconceivable that the theory would be adopted by
a

court

in

that

jurisdiction

given

that

several

others

have

recognized the cause of action against third party administrators.
See e.g. Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 797-98
(10th Cir. 1995); Robertson Stephens, Inc. v. Chubb Corp., 473
F.Supp.2d 265, 271 (D. R.I. 2007); Cary v. United of Omaha Life Ins.
Co., 68 P.2d 462, 468 (Colo. 2003). Moreover, this Court is mindful
of the admonition of the Tenth Circuit that a “‘court should be
especially reluctant to dismiss on the basis of the pleadings when
the asserted theory of liability is novel or extreme, since it is
important that new legal theories be explored and assayed in the
light of actual facts rather than a pleader's suppositions.’ 5A
Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 1357, at 341-43 (2d ed.1990).”

Sheldon v. Vermonty,

2000 WL 1774038, 3-4 (10th Cir.)(unpublished opinion).

At this

stage of the proceedings, this Court will not dismiss a bad faith
claim against HealthCare even if the laws of Puerto Rico apply in
this action until the parties have developed further evidence of the
relationship between HealthCare and Plaintiff.

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As a final matter, HealthCare contends Puerto Rican law does
not recognize the availability of punitive damages.

This appears

to be the current state of the law. See Noble v. Corporacin Insular
De Seguros, supra at 54.

Should it be determined that the laws of

Puerto Rico govern this action, punitive damages will not be
available for recovery by Plaintiff.
IT

IS

THEREFORE

ORDERED

that

Defendants

Healthcare

International Global Networks, Ltd. and Healthcare International
Global Networks, Inc.’s Motion to Dismiss Amended Complaint filed
May 28, 2013 (Docket Entry No. 19) is hereby DENIED.
IT IS SO ORDERED this 26th

day of November, 2013.

______________________________
KIMBERLY E. WEST
UNITED STATES MAGISTRATE JUDGE

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