Amich v. Sedgwick Claims Management Services Inc et al

Filing 42

ORDER signed by Judge J P Stadtmueller on 11/29/10 denying 38 plaintiff's Motion for Leave to File Amended Complaint. See Order. (cc: all counsel) (nm)

A m i c h v. Sedgwick Claims Management Services Inc et al

D o c . 42

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN
LAW RENCE AMICH, Plaintiff, v. SEDGW ICK CLAIMS MANAGEMENT SERVICES, INC., and WALGREEN INCOME PROTECTION PLAN FOR PHARMACISTS AND REGISTERED NURSES, Defendants. Case No. 10-CV-105

ORDER
O n July 7, 2010, plaintiff Lawrence Amich ("Amich") filed a Motion for Leave to File Amended Complaint (Docket #38) seeking to file a second amended c o m p la in t. This motion follows from a complaint (Docket #1) and first amended c o m p la in t (Docket #12-1) filed by Amich on February 8, 2010, and March 30, 2010 r e s p e c t iv e l y . A m ic h 's present motion and proposed amended complaint would add a third d e f e n d a n t, Director of Risk Management and Benefits Accounting ("Plan A d m in is tr a to r " ) . The Plan Administrator is allegedly the plan administrator for

d e fe n d a n t Walgreen Income Protection Plan for Pharmacists and Registered Nurses ("th e Plan"). Defendant Sedgwick Claims Management Services, Inc. ("Sedgwick") is the claims administrator for the Plan. Both current defendants oppose the motion o n the grounds that Amich has not shown good cause to amend the scheduling

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o rd e r, nor has he satisfied the general standard for securing leave to amend. D e fe n d a n ts are correct on both points and the court will deny the motion. B AC K G R O U N D Amich's complaints, including the most recent proposed amendment, allege tw o violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. The first claims a violation of § 502(a)(1)(B), 29 U.S.C.

§ 1132(a)(1)(B), through refusal to provide Amich disability benefits. The second c la im alleges a violation of § 502(c)(1)(B), 29 U.S.C. § 1132(c)(1)(B), through im p ro p e r refusal to provide documents relevant to denial of Amich's claim for d isa b ility benefits. Amich's original complaint named Sedgwick and W a lg re e n Co., A m ich 's employer, as defendants. After Amich filed his original complaint,

d e fe n d a n ts filed a Joint Answer (Docket #7) on March 23, 2010, coupled with a M o tio n to Dismiss (Docket #8). Defendants' answer asserted as a defense that A m ic h had "failed to name and join one or more necessary and/or indispensable p a r t i e s . " (Defs.' Joint Answer at 31, ¶ 2). In their motion to dismiss, defendants a s s e rte d that the only proper defendant to Amich's first claim was the Plan, not S e d g w ic k or W a lg re e n Co. In response, the parties stipulated to the filing of Amich's firs t amended complaint which dropped W a lg re e n Co. and replaced it with the Plan a s the second defendant. The alleged violations remained the same. O n April 2, 2010, Amich moved for summary judgment (Docket #17). Later, o n May 4, 2010, the parties filed with the court their Joint Report (Docket #23)

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p u rs u a n t to Federal Rule of Civil Procedure 26(f), and the court subsequently issued a Scheduling Order (Docket #24) on May 11, 2010. That order, based upon the a g r e e m e n t of the parties in the Joint Report, set May 14, 2010, as the deadline to a m e n d pleadings and add parties. After the deadline, on May 17, 2010, defendants file d their Brief in Opposition (Docket #25) to Amich's motion for summary judgment. In that brief, defendants for the first time argue that only a plan administrator may be lia b le for Amich's second claim, under § 1132(c)(1)(B), and that neither defendant is in fact a plan administrator within the meaning of ERISA. It is in response to this a rg u m e n t that Amich now seeks to amend his complaint by the addition of the Plan A d m in istra to r as a defendant. A fte r defendants had filed their brief in opposition, Amich filed a Reply Brief (D o c k e t #30) on June 2, 2010,1 in which he did not address the issue of proper d e fen d a n t s . On June 4, 2010, defendants filed a competing motion for summary ju d g m e n t (Docket #33) accompanied by a supporting brief (Docket #34) in which it a s s e rte d essentially the same point as in its opposing brief, that only a plan a d m in is tra to r could be liable under § 1132(c)(1)(B), and neither defendant was a p la n administrator. On July 6, 2010, Amich filed a response brief (Docket #36) a d d re s s in g defendants' claims that the Plan Administrator was the proper defendant, a n d on July 7, 2010, Amich filed the motion to amend now before the court.

The court notes that, despite defendants' assertion that Amich's Reply Brief was late, it was in fact timely according to Federal Rules of Civil Procedure 6(d) and 5(b)(2)(E).

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L E G AL STANDARD U n d e r Federal Rule of Civil Procedure 15, a party may amend its pleading u p o n receiving leave of the court, to be freely given when justice requires. Fed. R. C iv. P. 15(a)(2). However, "[t]o amend a pleading after the expiration of the trial c o u rt's Scheduling Order deadline to amend pleadings, the moving party must show 'g o o d cause.'" Trustmark Ins. Co. v. Gen. & Cologne Life Re of Am., 424 F.3d 542, 5 5 3 (7th Cir. 2005) (citing Fed. R. Civ. P. 16(b)). That standard "primarily considers the diligence of the party seeking amendment." Id. (internal quotation omitted). F a ilu re to timely amend a complaint, despite awareness of the underlying facts, may s h o w a lack of diligence. See id. Even under the Rule 16 standard, leave to amend r e m a in s discretionary with the district court. d i s c r e t io n ) . AN AL Y S IS D e fe n d a n ts primarily argue that Amich has failed to show good cause to a m e n d his complaint under Rule 16, arguing that case law and the plan documents m a d e explicit the correct party to sue. Additionally, defendants assert that, their first a rg u m e n t aside, Amich fails to establish good cause by failing to otherwise explain h is delay in filing to amend or inability to meet the amendment deadline set by the c o u rt. Further, defendants assert that, regardless of Amich's ability to meet the Rule 1 6 standard, his motion should be denied under the Rule 15 standard. Amich d is p u te s each of these points, and also asserts that W is c o n s in law providing for See id. (reviewing for abuse of

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c o rre c tio n of misnomers and misdescriptions permits the amendment. Per the fo llo w in g discussion, the court finds Amich was not diligent in seeking to amend his c o m p la in t after he was explicitly alerted to the issue by defendants' brief and, that in any event, his proposed complaint would fail to state a claim and amendment w o u ld thus be futile under Rule 15. Amich's appeal to W is c o n s in law has no a p p lic a tio n here and, as such, the court is obliged to deny the motion. I. R U L E SIXTEEN In seeking leave to amend, Amich urges that, though the summary plan d o c u m e n t labels the plan administrator as Director of Risk Management and B e n e fits Accounting, that document is unclear as to which defendant might be liable u n d e r § 1132(c) because the document also describes Sedgwick as sharing similar d is c re tio n a ry authority with the Plan Administrator. Defendants, on the other hand, a s s e rt that Amich's claim to a lack of clarity in the summary plan document is in s u ffic ie n t to establish good cause. Defendants further argue that Amich has not o th e rw is e shown good cause, giving no explanation for delay and making no s h o w in g that he was unable, despite his diligence, to comply with the Scheduling O rd e r's timetable. A m ic h 's argument that the summary plan document is unclear as to who might b e liable is not insufficient to show good cause. As both parties note, the plan la n g u a g e states:

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T h e Claim Administrator and the Plan Administrator will apply th e ir judgment to claims and appeals in a manner that they deem to be c o n s is te n t with the Plan and any rules, regulations or prior in te rp re ta tio n s of the Plan. The Claim Administrator and the Plan A d m in is tra to r will make their decisions in a manner that they believe will a p p ly the Plan consistently to similarly situated participants. T h e authority granted to the Claim Administrator and the Plan A d m in is tra to r to construe and interpret the Plan and make benefit d e te rm in a tio n s , including claims and appeals determinations, shall be e xe rc is e d by them (or persons acting under their supervision) as they d e e m appropriate in their sole discretion. Benefits under this plan will b e paid or provided to you only if the Claim Administrator or the Plan A d m in is tra to r, as the case may be, decides in its discretion that you are e n title d to them. (A ff. of Alan Olson Ex. 1 at 21) (Docket #19-1). Defendants point to Seventh Circuit p re c e d e n t holding that "liability under section 1132(c)(1) is confined to the plan a d m in is tra to r and [we] have rejected the contention that other parties, including c la im s administrators, can be held liable for the failure to supply participants with the p la n documents they seek." Mondry v. Am. Family Mut. Ins. Co., 557 F.3d 781, 794 (7 th Cir. 2009). They then argue that, as a result, shared discretionary authority c a n n o t support a claim of confusion over which party was the plan administrator. H o w e v e r, § 1132(c)(1) creates a penalty for "[a]ny administrator . . . (B) who fa ils or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary." 29 U.S.C. § 1132(c)(1). Section 1024(b)(4) provides that "[t]he administrator shall, upon written re q u e s t . . . furnish a copy of the latest updated summary, plan description, and the la te s t annual report, any terminal report, the bargaining agreement, trust agreement,

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c o n tra c t, or other instruments under which the plan is established or operated." 29 U .S .C . § 1024(b)(4). The Mondry court pointed out that "administrator" is defined a s "the person specifically so designated by the terms of the instrument under which th e plan is operated." 29 U.S.C. § 1002(16)(A)(I). Mondry dealt specifically with the is s u e of whether a claims administrator could be held liable for failing to provide plan d o c u m e n ts pursuant to 29 U.S.C. § 1024(b)(4). 557 F.3d at 794. As such, the S e v e n th Circuit's conclusion fits together logically in that a plan administrator, who is responsible for and controls plan documents, is the administrator in question with re g a rd to providing plan documents. Thus, a refusal or failure to provide plan d o c u m e n ts triggers liability only as to a plan administrator. But here, Amich alleges th a t an administrator failed to provide documents relevant to claim denial. By re g u la tio n , claims procedures must "[p]rovide that a claimant shall be provided, upon re q u e s t . . . reasonable access to, and copies of, all documents, records, and other in fo rm a tio n relevant to the claimant's claim for benefits." 29 C.F.R. § 2560.5031 (h )(2 )(iii). This regulation has been enacted to carry out the purposes of the s u b c h a p te r.2 At the same time, § 1132(c)(1) creates penalties for an administrator ­ defined as the "person so specifically designated" under the plan; thus, it is c o n c e iva b le that a claim administrator might be liable for failure to furnish documents re le va n t only to an aspect of the plan which it actively controls and administers. As

2

See 29 U.S.C. § 1135.

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s u c h , the court does not find Mondry sufficient to negate Amich's claim that the plan is unclear as to which party may be liable for the particular violation he alleges. A s to defendants' assertions that Amich failed to explain his delay in filing for a m e n d m e n t or inability to meet the Scheduling Order's timetable, the court first notes tha t, though Amich did not file within the time frame set by the Scheduling Order, d e fe n d a n ts did not draw Amich's attention to the issue in the clear and obvious m a n n e r that their briefing asserts. Defendants made only a passing reference to A m ic h 's failure to join a necessary or indispensable party and then asserted in their m o tio n to dismiss that the Plan was the only proper defendant as to Amich's first c la im . It would appear that any issue as to including the proper party was then s e ttle d , it being possible that defendants, let alone Amich, did not even realize the is s u e at hand was present at that time. Defendants' next reference to a missing p a rty did not occur until the Scheduling Order's deadline to amend had passed, th e re b y foreclosing defendants' argument that Amich was alerted to the issue by d e fe n d a n ts , yet failed to make an amendment prior to the deadline. H o w e v e r, there still remains an issue as to Amich's diligence, both pred e a d lin e , in the sense of independently ensuring that the correct parties were joined, a s well as post-deadline, after defendants' brief in opposition to his summary ju d g m e n t motion made the issue clear. Given the court's previous discussion

a c c e p tin g the possibility of real confusion as to the proper administrator to sue, the

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c o u rt is not inclined to find that Amich failed to be diligent prior to defendants' actual ra is in g of the issue after the deadline to amend had passed. B u t regardless of Amich's pre-deadline conduct, the court does not find Amich w a s diligent in amending after learning that he may have sued the wrong party. This c o u rt has previously found a delay of six months beyond the scheduling order d e a d lin e to be lacking in diligence where the plaintiff made no attempt to amend until a fte r the defendants filed motions to dismiss. Alioto v. Town of Lisbon, 2009 W L 3 7 5 7 0 0 5 , at *2 (E.D. W is . 2009). The Seventh Circuit has found a delay of nine m o n th s to be non-diligent. Trustmark Ins. Co., 424 F.3d at 553. In another case, the N o rth e r n District of Illinois found non-diligent a fifty-six-day delay in filing for a m e n d m e n t, in light of admitting to knowledge of the claim sought to be added since "th e beginning of the case." Mintel Int'l Grp., Ltd. v. Neergheen, 636 F. Supp. 2d 6 7 7 , 689-90 (N.D. Ill. 2009). Here, Amich became aware of the underlying facts on M a y 17, 2010, when defendants filed their brief in opposition to Amich's motion for s u m m a r y judgment. He then filed his motion to amend the complaint on July 7, 2 0 1 0 . That is a fifty-one-day delay. Under other circumstances, such a delay might s till fall within the realm of diligence, but, upon inspection, Amich's proposed a m e n d e d complaint is essentially identical other than the addition of the Plan A d m in is tra to r as a party, one insertion of the Plan Administrator's name in paragraph 9 3 , and changing "Sedgwick" to "Defendants" in the final eight paragraphs prior to the claims for relief. (Pl.'s Mot. for Leave to File Am. Compl. Ex. 1) (Docket #38-1).

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T h is is not the type of amendment that requires fifty-one days to draft, particularly in light of a lack of any other sufficient explanation.3 As such, the court finds Amich w a s not sufficiently diligent to support a showing of good cause necessary for this c o u rt to grant his motion. II. R U L E FIFTEEN E v e n were the court to find that Amich established good cause for a m e n d m e n t, his motion would nevertheless fail on account of futility. Under Rule 15, d is tric t courts have "broad discretion to deny leave to amend where there is undue d e la y, bad faith, dilatory motive, repeated failure to cure deficiencies, undue p re ju d ic e to the defendants, or where the amendment would be futile." Arreola v. G o d in e z, 546 F.3d 788, 796 (7th Cir. 2008). Specifically, amendment is futile where th e proposed complaint would fail to state a claim upon which relief could be g ra n te d . Gen. Electric Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1 0 8 5 (7th Cir. 1997). A m ic h 's second claim, consistent between amended complaints, is for refusal to provide documents. (Am. Compl. ¶ 92) (Docket #12-1); (Pl.'s Mot. for Leave to F ile Am. Compl. Ex. 1). That claim invokes § 502(c)(1)(B) of ERISA, which provides fo r the imposition of statutory penalties where "[a]ny administrator . . . fails or refuses to comply with a request for any information which such administrator is required by

Amich does argue that his delay was only thirty-nine business days and that counsel also researched, drafted, and filed his brief in opposition to defendants' motion for summary judgment during that time. While the court appreciates the need to ensure other briefing was timely, that explanation is not sufficient in light of the simple nature of the proffered amendment.

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this subchapter to furnish to a participant or beneficiary." 29 U.S.C. § 1132(c)(1)(B). Y e t Amich's proposed amended complaint contains no new factual allegations w h a ts o e ve r to support such a claim against the Plan Administrator. As noted above, A m ich merely added a description of the Plan Administrator as a party, inserted its n a m e in the claim for relief in paragraph 93, and changed "Sedgwick" to "D e fe n d a n ts " in the final eight paragraphs preceding his claims. As regards

p a ra g ra p h 93, the insertion merely results in an assertion that "allegations of this A m e n d e d Complaint raise violations of ERISA §502(c)(1)(B) . . . regarding the im p ro p e r refusal of . . . the [Plan Administrator] to provide Mr. Amich all of the d o c u m e n ts relevant to its denial of his claim for disability benefits under the Plan." (P l.'s Mot. for Leave to File Am. Compl. Ex. 1, at ¶ 93). This is a legal conclusion a n d does not itself allege facts sufficient to state a claim. See Ashcroft v. Iqbal, 129 S . Ct. 1937, 1950 (2009) (legal conclusions not entitled to presumption of truth); Bell A tla n tic Corp. v. Twombly, 550 U.S. 544, 555 (2007) ("labels and conclusions" and "a formulaic recitation of the elements" insufficient to state a claim for relief). The s a m e is true of the final eight paragraphs prior to the claims. By changing

"S e d g w ic k " to "Defendants," Amich has, at best, alleged that the Plan Administrator: "fa ile d to provide a detailed explanation" as to rejecting specific evidence; "failed to p ro vid e a description" of additional or necessary information for perfecting his claim; "fa ile d to provide an explanation" as to the necessity of any additional information; w a s "unable to describe" certain duties of Amich's position at W a lg re e n s ; "ignored

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c le a r medical evidence" in denying the claim; acted arbitrarily and capriciously; c a u s e d Amich to suffer the loss of benefits and incur expenses; and that its actions s h o u ld be reviewed de novo. (Pl.'s Mot. for Leave to File Am. Compl. Ex. 1, at ¶ ¶ 84-91). Some of these allegations are merely legal conclusions or unrelated to th e claimed violation. Others, specifically the alleged failures, do not actually allege th a t Amich ever made a request for documents from the Plan Administrator and fu rth e r do not allege that the Plan Administrator ever failed or refused to comply with s u c h requests. Thus, the proposed amended complaint would fail to state a claim fo r relief against the Plan Administrator, making the requested amendment futile. A s such, the court may also deny the motion on the basis of Rule 15(a). I II . W IS C O N S IN LAW F in a lly, Amich also argues that his motion finds support in the W is c o n s in rule th a t misnomer or misdescription may be corrected by amendment at any time. The ru le to which Amich cites holds that "if the misnomer or misdescription does not le a ve in doubt the identity of the party intended to be sued, or even where there is ro o m for doubt as to identity, if service of process is made on the party intended to b e sued, the misnomer or misdescription may be corrected by amendment at any s tag e of the suit." Hoesley v. La Crosse VFW Chapter, 175 N.W .2 d 214, 215 (W is . 1 9 7 0 ). To the extent that rule would even have application here, it is not satisfied, a s the naming of the claims administrator as opposed to the plan administrator falls far outside the purpose and meaning of the rule. That rule is typically used to ensure

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s m a ll technicalities do not subvert the proper application of justice. In fact, as the W isc o n s in Supreme Court noted in affirming denial of the appellant's motion to d is m is s for improper service of process, the amendment in that case would not have h a d the effect of bringing in additional parties. Id. at 215-16. Here, we have no s i m p l e misspelling or other form of accident or oversight, but rather a deliberate n a m in g of one party, and the objective absence of another party. In summary, this c o u rt finds that Amich has not shown sufficient diligence to satisfy the Rule 16 good c a u s e standard, and, in any event, the amendment would be futile and thus well w ith in the court's discretion to deny under Rule 15. Therefore, the court will deny the m o tio n to amend the complaint. A c c o r d in g ly , IT IS ORDERED that the plaintiff's Motion for Leave to File Amended C o m p la in t (Docket #38) be and the same is hereby DENIED. D a te d at Milwaukee, W is c o n s in , this 29th day of November, 2010. BY THE COURT:

J .P . Stadtmueller U .S . District Judge

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