Autonation, Inc. v. United Healthcare Ins. Co.

• Decision Date: 21 March 2006
• Docket Number: No. 05-61277-CIV-MOORE.,05-61277-CIV-MOORE.
• Citation: 423 F.Supp.2d 1265
• Parties: AUTONATION, INC., a Delaware corporation and Autonation Benefits Company, Inc., a Florida corporation, Plaintiffs, v. UNITED HEALTHCARE INSURANCE COMPANY, a Minnesota corporation, Defendant.
• Court: U.S. District Court — Southern District of Florida

423 F.Supp.2d 1265

AUTONATION, INC., a Delaware corporation and Autonation Benefits Company, Inc., a Florida corporation, Plaintiffs, v. UNITED HEALTHCARE INSURANCE COMPANY, a Minnesota corporation, Defendant.

No. 05-61277-CIV-MOORE.

United States District Court, S.D. Florida.

March 21, 2006.

COPYRIGHT MATERIAL OMITTED

Philip A. Sechler, Patrick H. Kim, Williams & Connolly LLP, Washington, D.C., Edward J. Pozzuoli, Stephanie Alexander, Alexis M. Yarbrough, Tripp Scott, Fort Lauderdale, FL, for Plaintiff.

Steven M. Ziegler, David A. Armstrong, Steven M. Ziegler, P.A., Hollywood, FL, for Defendant.

ORDER

K. MICHAEL MOORE, District Judge.

THIS CAUSE came before the Court upon Defendant, United Healthcare Insurance Company's Motion to Dismiss Plaintiffs' Amended Complaint (DE # 21).

UPON CONSIDERATION of the motion and being otherwise fully advised in the premises, the Court enters the following Order.

I. Facts

The instant case arises out of Plaintiff AutoNation, and its subsidiary AutoNation Benefits Company, Inc. (collectively, "Plaintiffs") claim for breach of fiduciary duty in violation of the Employee Retirement Income Security Act of 1974 ("ERISA") (Count I), and state law claims for breach of contract (Count II) and professional negligence (Count III) against United Healthcare Insurance Company ("United" or "Defendant").

AutoNation is the nation's largest retailer of new and used vehicles, and employs approximately 27,000 people. Amended Compl. ¶ 7. Together with its subsidiary, ABC, AutoNation provides healthcare and prescription drug benefits for its employees through a self-funded healthcare program known as the AutoNation Medical Benefits Plan (the "Plan"). Id. ¶ 8. On April 1, 2002, AutoNation and ABC executed an administrative services agreement ("ASA") with United under which United agreed to administer the Plan for thirty-six months. Id ¶ 11. This contract was later extended for nine additional months. Id. United had a number of obligations under the ASA, including the duty to "discharge its duties ... in the interest of Participants and with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person would . .," "periodically review its claims processing services for the Program for the purpose of detecting Overpayments," assume liability for unrecovered overpayments when the Overpayment was caused by "gross negligence" or an "intentional disregard of [United's] obligations under" the ASA, and to determine which services are "covered" under the ASA, among other obligations. See Amended Compl. ¶¶ 13-26.

After the Plan experienced a substantial increase in costs, AutoNation hired Hewitt Associates ("Hewitt") to conduct an investigation, which led Hewitt to recommend a full-scale audit of United's administration of the Plan. Id. ¶¶ 27-28. AutoNation subsequently hired Hewitt and Mercer Human Resource Consulting, Inc. to assess United's performance under the Plan. Id. ¶ 29. The audits found that United "did not deliver the value, level of review, or services contemplated and paid-for." Id. ¶ 33. The Complaint further alleges that even after United was made aware of the flaws in its administration of the Plan, it continued to disregard its obligations. Id. ¶ 35. Plaintiffs claim they were harmed by Defendant's alleged negligence and breaches of its contractual and fiduciary duties, which included Defendant's failure to detect excessive overpayments and Defendant's payment of benefits to terminated employees. Id. ¶¶ 35-37.

II. Standard of Review

A motion to dismiss for failure to state a claim merely tests the sufficiency of the complaint; it does not decide the merits of the case. Milburn v. United States, 734 F.2d 762, 765 (11th Cir.1984). On a motion to dismiss, the Court must construe the complaint in the light most favorable to the plaintiff and accept the factual allegations as true. SEC v. ESM Group, Inc., 835 F.2d 270, 272 (11th Cir. 1988). Further, the Court should not grant a motion to dismiss "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." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (citations omitted); South Fla. Water Mgmt. Dist. v. Montalvo, 84 F.3d 402, 406 (11th Cir.1996). Specifically, "[i]t is a well-settled principle of law that a complaint should not be dismissed merely because a plaintiff's allegations do not support the particular legal theory he advances, for the court is under a duty to examine the complaint to determine if the allegations provide for relief on any possible theory." Bowers v. Hardwick, 478 U.S. 186, 201-02, 106 S.Ct. 2841, 92 L.Ed.2d 140 (1986) (Blackmun, J., dissenting) (quotations omitted); see Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir.1997). Nonetheless, to withstand a motion to dismiss, it is axiomatic that the complaint must allege facts sufficiently setting forth the essential elements of a cause of action.

III. Discussion

Defendant first argues that Counts II and III of Plaintiffs' Amended Complaint, which are state law claims, are preempted by ERISA and should therefore be dismissed.¹

A. ERISA Preemption

There are two types of ERISA preemption. The first is "complete" preemption, or "super preemption." Butero v. Royal Maccabees Life Insurance Co., 174 F.3d 1207, 1211 (11th Cir.1999). Because Congress has created a "comprehensive remedial scheme" for the loss or denial of employee benefits, "federal jurisdiction exists, even if the face of the complaint does not plead federal claims." Whitt v. Sherman Int'l Corp., 147 F.3d 1325, 1329 (11th Cir.1998). "When Congress comprehensively occupies a field of law, `any civil complaint raising this select group of claims is necessarily federal in character' and thus furnishes subject-matter jurisdiction under 28 U.S.C. § 1331 .... Therefore, federal courts have subject-matter jurisdiction over state-law claims that have been superpreempted, and defendants may remove to federal court those actions that contain such claims." Butero, 174 F.3d at 1211-12 (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). Thus, the doctrine of super preemption is a jurisdictional one—super preemption "converts states law claims into federal claims for purposes of the well-pleaded complaint rule, allowing a defendant to remove the case to federal court." Whitt, 147 F.3d at 1329. In this case however, there is no dispute that the case is properly before this Court, as the Plaintiff has asserted both diversity jurisdiction and federal question jurisdiction. Nonetheless, the Defendant wishes to establish complete preemption because "complete preemption under § 502(a) automatically establishes conflict preemption under § 514." Defendant's Motion to Dismiss, at 3-4. See also Cotton v. Mass. Mutual Life Insurance Co., 402 F.3d 1267, 1281 (11th Cir.2005) ("claims that are completely preempted are also defensively preempted"). The Court, however, should not reach resolution of Defendant's argument that the claims are completely preempted, as the motion before us today does not contend that this Court lacks subject matter jurisdiction over Plaintiffs' claims.

"Defensive" or "conflict" preemption provides an affirmative defense to certain state-law allegations and calls for their dismissal where the state law claims "relate to" an ERISA plan. See Butero, 174 F.3d at 1212. Unlike complete preemption, conflict preemption does not raise jurisdictional concerns. Rather, it originates from ERISA's express preemption provision, 29 U.S.C. § 1144(a).² Id. While the term "relates to" is necessarily broad, the Supreme Court has stated that "we must go beyond the unhelpful text [of the ERISA] statute and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive." New York Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 1677, 131 L.Ed.2d 695 (1995). State laws should not be preempted "when the law has too tenuous a connection with the ERISA plan." Morstein v. National Ins. Services, Inc., 93 F.3d 715, 722 (11th Cir.1996).

The Defendant argues that Plaintiffs' state law claims should be conflict preempted because they "relate to" an ERISA Plan within the meaning of the statute. The Defendant cites to a number of cases that stand for the proposition that state law breach of contract or breach of duty claims can be preempted under ERISA. See e.g., Aetna Health Inc. v. Da vila, 542 U.S. 200, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (Supreme Court holding that plaintiffs' state law claims are completely preempted because defendant's potential state law liability "derives entirely from the particular rights and obligations established by the benefit plans"); Butero, 174 F.3d at 1215 (holding that state law breach of contract claim is preempted). The Plaintiffs disagree, and cite to cases where a plaintiff sues the administrator of a health plan for an alleged breach of a services agreement between the plaintiff and the administrator, and those state law claims (including breach of contract) are not conflict preempted. See Children's Hosp. Corp. v. Kindercare Learning Centers, Inc., 360 F.Supp.2d 202, 206 (D.Mass.2005) (the state law breach of contract claim "does not involve an ERISA plan, but an independent contract between the two entities"); Baylor University Medical Center v. Epoch Group, L.C., 340 F.Supp.2d 749, 759-60 (N.D.Tex.2004) ("enforcing a contract to provide medical services is hardly an exclusive area of federal concern ... . [The parties' relationship] flows from and is governed by the ... contracts ... . Because [plaintiff] seeks to enforce a contract with [defendant, plaintiff] is suing on its own...