MCGARRIGLE v. LIBERTY LIFE ASSURANCE COMPANY OF BOSTON et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE JOHN R. PADOVA ON 5/22/2013. 5/23/2013 ENTERED AND COPIES MAILED TO UNREP, AND E-MAILED.(uh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
OF BOSTON, ET AL.
May 22, 2013
Plaintiff Wendy McGarrigle has brought this action against Liberty Life Assurance
Company of Boston (“Liberty”) and Factory Mutual Insurance Company (“Factory”), seeking
payment of short term and long term disability benefits pursuant to Factory’s short and long term
disability plans. Before the Court is Liberty’s Motion to Dismiss, which seeks dismissal of
McGarrigle’s claims against Liberty, on the grounds that (1) it is not a proper defendant as to
McGarrigle’s claim for short term disability benefits, and (2) McGarrigle failed to exhaust her
administrative remedies as to her claim for long term disability benefits. For the following
reasons, the Motion is granted in part and denied in part.
Factory provides to its employees both a Short Term Disability Plan (the “STD Plan”)
and a Long Term Group Disability Policy (the “LTD Policy”), which are employee welfare
benefit plans governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §
1001, et seq. (“ERISA”).1 (Compl. ¶ 5, Liberty Ex. A; Liberty Ex. B, Annex A.) McGarrigle
We have taken the facts from the Complaint, Liberty’s Exhibit A (the LTD Policy), and
Annex A to Liberty’s Exhibit B (a compilation of the provisions of Liberty’s STD Plan (the
“STD Plan Summary”)). Extrinsic exhibits may be considered on a motion to dismiss if the
exhibits are “referred to in the plaintiff’s complaint and are central to the claim,” Pryor v. Nat’l
was employed by Factory and was covered under the STD Plan and the LTD Policy. (Compl. ¶
8.) In March 2012, she suffered post-surgical complications that kept her from being able to
work and will keep her from being able to work for the indefinite future. (Id. ¶ 12.) McGarrigle
applied for disability benefits in March 2012, alleging that she became disabled as of March
2012. (Id. ¶ 16.) Benefits were initially granted and were paid from April 2012 until the middle
of July 2012. (Id.) Liberty sent McGarrigle a letter dated August 16, 2012, denying her claim
for disability benefits.
(Id. ¶ 17.)
She requested an administrative appeal and supplied
documentation of her continued disability. (Id. ¶ 18.) On November 8, 2012, Liberty denied
McGarrigle’s administrative appeal. (Id.)
The Complaint asserts one claim against both Defendants to recover benefits under the
terms of the STD Plan and the LTD Policy pursuant to 29 U.S.C. § 1132(a)(1)(B).
Complaint also asserts an alternative claim against both Defendants for breach of an insurance
Liberty has moved to dismiss McGarrigle’s claims against it for failure to state a claim
upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). When
Collegiate Athletic Ass’n, 288 F.3d 548, 560 (3d Cir. 2002) (quotation omitted), that is, if the
exhibits are “integral to or explicitly relied upon in the complaint.” DiFronzo v. Chiovero, 406
F. App’x 605, 607 (3d Cir. 2011) (citation omitted).
The Complaint seeks payment of benefits to McGarrigle pursuant to the terms of
Factory’s short term and long term disability plans. Consequently, we find that the terms of the
STD Plan and the LTD Policy are central to McGarrigle’s claim and we may, therefore, consider
the LTD Policy and STD Plan Summary in connection with this Motion to Dismiss. The
remainder of Liberty’s Exhibit B is the Administrative Services Only Agreement between
Liberty and Factory, which governs Liberty’s provision of administrative services in connection
with the STD Plan. The Complaint does not mention the Administrative Services Only
Agreement and that Agreement does not appear to be central to Plaintiff’s claims for disability
benefits. Consequently, we have not considered the remainder of Liberty’s Exhibit B in
connection with the Motion to Dismiss.
considering a motion to dismiss pursuant to Rule 12(b)(6), we “consider only the complaint,
exhibits attached to the complaint, [and] matters of public record, as well as undisputedly
authentic documents if the complainant’s claims are based upon these documents.” Mayer v.
Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)). We take the factual allegations of the
complaint as true and draw all reasonable inferences in favor of the plaintiff. DelRio-Mocci v.
Connolly Props., Inc., 672 F.3d 241, 245 (3d Cir. 2012) (citing Warren Gen. Hosp. v. Amgen
Inc., 643 F.3d 77, 84 (3d Cir. 2011). Legal conclusions, however, receive no deference, and the
court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986) (cited with approval in Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)).
A plaintiff’s pleading obligation is to set forth “a short and plain statement of the claim,”
Fed. R. Civ. P. 8(a)(2), which gives the defendant “‘fair notice of what the . . . claim is and the
grounds upon which it rests.’” Twombly, 550 U.S. at 555 (alteration in original) (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)). The complaint must contain “‘sufficient factual
matter to show that the claim is facially plausible,’ thus enabling ‘the court to draw the
reasonable inference that the defendant is liable for [the] misconduct alleged.’” Warren Gen
Hosp., 643 F.3d at 84 (quoting Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)).
“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a
sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Twombly, 550 U.S. at 556). In the end, we will dismiss a complaint if the factual
allegations in the complaint are not sufficient “‘to raise a right to relief above the speculative
level.’” West Run Student Housing Assocs., LLC v. Huntington Nat’l Bank, 712 F.3d 165, 169
(3d Cir. 2013) (quoting Twombly, 550 U.S. at 555).
ERISA provides that a plan participant may bring a civil action “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.” 29 U.S.C. § 1132(a)(1)(B). McGarrigle
has brought this action to recover the short term and long term disability benefits she claims she
is owed pursuant to the STD Plan and the LTD Policy, and to enforce her rights under both the
STD Plan and the LTD Policy. (Comp. ¶ 28.)
The Proper Defendant
Liberty argues that McGarrigle’s claim for short term disability benefits should be
dismissed against it because it is not responsible for paying benefits pursuant to Factory’s STD
Plan and thus is not a proper defendant in connection with this claim. However, “[i]n a claim for
wrongful denial of benefits under ERISA, the proper defendant is the plan itself or a person who
controls the administration of benefits under the plan.” Evans v. Emp. Benefit Plan, 311 F.
App’x 556, 558 (3d Cir. 2009) (citing 29 U.S.C. § 1132(a)(1)(B)); see also Hahnemann Univ.
Hosp. v. All Shore, Inc., 514 F.3d 300, 308 (3d Cir. 2008) (stating that the proper defendants in a
suit brought pursuant to § 1132(a)(1)(B) are the plan itself and the plan administrators in their
official capacities (quoting Graden v. Conexant Sys., Inc., 496 F.3d 291, 301 (3d Cir. 2007))).
“[I]f entitlement to benefits is established, the court can direct the plan administrator to pay them
from the assets of the plan . . . .” Hahnemann Univ. Hosp., 514 F.3d at 308 (citation omitted).
The United States Court of Appeals for the Third Circuit has explained that “[e]xercising control
over the administration of benefits is the defining feature of the proper defendant under 29
U.S.C. § 1132(a)(1)(B).” Evans, 311 F. App’x at 558.
The Complaint alleges that Liberty was engaged by Factory to manage and administer
Factory’s short and long term disability plan. (Compl. ¶¶ 6, 10.) The Complaint further alleges
that Liberty requested medical information from McGarrigle, denied her claim for benefits on
August 16, 2012, and denied her administrative appeal on November 8, 2012. (Id. ¶¶ 14, 17-18.)
According to the STD Plan Summary, the STD Plan is self-funded by Factory, and Liberty
provides claim processing services to the Plan. (Liberty Ex. B at LL-050.) The STD Plan
Summary provides that Covered Persons who have become disabled due to injury or sickness
and seek benefits pursuant to the STD Plan must provide notice of their claim and proof of loss
to Liberty, which has the responsibility to determine: (1) if the proof is satisfactory, (2) whether
benefits will be paid pursuant to the STD Plan, and (3) the amount of benefits that will be paid
pursuant to the STD Plan. (Id. at LL-062-065, 072.) We conclude that the allegations of the
Complaint, together with these provisions of the STD Plan, state sufficient facts, which if true,
would establish that Liberty “[e]xercise[d] control over the administration of benefits” under the
STD Plan and is thus a proper defendant under 29 U.S.C. § 1132(a)(1)(B). Evans, 311 F. App’x
at 558. The Motion to Dismiss is, therefore, denied as to McGarrigle’s claim for short term
Exhaustion of Administrative Remedies
Liberty argues that McGarrigle’s claim for long term disability benefits should be
dismissed because she did not apply for long term disability benefits and thus has not exhausted
her administrative remedies with respect to that claim. “‘Except in limited circumstances . . . a
federal court will not entertain an ERISA claim unless the plaintiff has exhausted the remedies
available under the plan.’” Harrow v. Prudential Ins. Co., 279 F.3d 244, 249 (3d Cir. 2002)
(alteration in original) (quoting Weldon v. Kraft, Inc., 896 F.2d 793, 800 (3d Cir. 1990)).
Although the Complaint alleges that McGarrigle applied for both short and long term disability
benefits in March 2012, she has conceded that she did not actually apply for long term disability
benefits pursuant to the LTD Policy. (McGarrigle Mem. at 7-9.) She suggests that we excuse
her failure to exhaust her administrative remedies with respect to her claim for long term
disability benefits because it would be futile for her to apply for long term disability benefits
since Liberty has already denied her claim for short term disability benefits.
“A plaintiff is excused from exhausting administrative procedures under ERISA if it
would be futile to do so.” Harrow, 279 F.3d at 249 (citing Berger v. Edgewater Steel Co., 911
F.2d 911, 916 (3d Cir. 1990)). “Plaintiffs merit waiver of the exhaustion requirement when they
provide a ‘clear and positive showing of futility.’” Id. (quoting Brown v. Cont’l Baking Co., 891
F. Supp. 238, 241 (E.D. Pa. 1995); and citing Davenport v. Harry N. Abrams, Inc., 249 F.3d 130,
133 (2d Cir. 2001)). We consider the following factors in determining whether exhaustion
should be excused based on futility:
(1) whether plaintiff diligently pursued administrative relief; (2) whether plaintiff
acted reasonably in seeking immediate judicial review under the circumstances;
(3) existence of a fixed policy denying benefits; (4) failure of the insurance
company to comply with its own internal administrative procedures; and (5)
testimony of plan administrators that any administrative appeal was futile.
Id. (citing Berger, 911 F.2d at 916-17; and Metz v. United Counties Bancorp., 61 F. Supp. 2d
364, 383-84 (D.N.J. 1999)).
McGarrigle admits that she did not apply for long term disability benefits pursuant to the
LTD Policy. It appears, therefore, that she did not diligently pursue administrative relief as to
that claim. The Complaint does not allege that McGarrigle acted reasonably in failing to apply
for long term disability benefits; that Liberty employed a fixed policy of denying benefits; that
Liberty failed to comply with its own internal administrative procedures; or that any employee of
Liberty conceded that it would be futile for McGarrigle to apply for benefits pursuant to the LTD
Policy. Under these circumstances, we conclude that the Complaint does not allege sufficient
facts to establish that the futility exception applies to McGarrigle’s claim for long term disability
benefits and, accordingly, we reject McGarrigle’s request that we excuse her failure to exhaust
her administrative remedies.
The Motion to Dismiss is, therefore, granted without prejudice as to McGarrigle’s claim
for long term disability benefits.
McGarrigle’s claim for long term disability benefits is
dismissed without prejudice to her reasserting that claim after she has exhausted her
administrative remedies pursuant to Factory’s LTD Policy.2
For the reasons stated above, Liberty’s Motion to Dismiss is denied as to McGarrigle’s
claim against Liberty for short term disability benefits and granted, without prejudice, as to
McGarrigle’s claim for long term disability benefits. McGarrigle’s claim for long term disability
benefit is dismissed without prejudice and may be reasserted after she exhausts her
administrative remedies with respect to that claim.
An appropriate order follows.
BY THE COURT:
/s/ John R. Padova
John R. Padova, J.
Liberty asks, in its Reply, that we stay McGarrigle’s claim for long term disability
benefits under the LTD Policy until her claim for short term disability benefits has been resolved.
Since we have dismissed McGarrigle’s claim for long term disability benefits, we need not
address this request.
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