Baldwin v. Univ. of Pittsburgh Med. Ctr. (upmc)

Decision Date29 March 2011
Docket NumberNo. 10–1673.,10–1673.
Citation636 F.3d 69
PartiesDeborah L. BALDWIN, as guardian of C.L.D., a minor, K.K.D., a minor, and C.M.D., a minor, Appellantv.UNIVERSITY OF PITTSBURGH MEDICAL CENTER (UPMC); Life Insurance Company of North America.
CourtU.S. Court of Appeals — Third Circuit

OPINION TEXT STARTS HERE

Patrick W. Murray, Esq., (Argued), Stewart, Murray & Associates, Pittsburgh, PA, for Appellant.John G. Ferreira, Esq., Stephanie R. Reiss, Esq., (Argued), Morgan Lewis & Bockius, LLP, Pittsburgh, PA, for Appellee Life Insurance Company of North America.John J. Myers, Esq., Andrew T. Quesnelle, Esq., (Argued), Eckert, Seamans, Cherin & Mellott LLC, Pittsburgh, PA, for Appellee University of Pittsburgh Medical Center (UPMC).Before: JORDAN, GREENAWAY, JR., and GARTH, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge.

This appeal by the plaintiff-appellant Deborah L. Baldwin as the adoptive mother of three Trent children requires us to decide Baldwin's standing to claim the insurance proceeds of policies subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001–1461, which were purchased by the children's biologic mother. The District Court denied relief to Baldwin, holding that she, as the adoptive mother to Trent's three children, has no standing to receive the insurance proceeds on behalf of the children under ERISA. We hold that Baldwin is entitled to offer evidence as to Trent's intent, i.e., understanding of the terms of her insurance policies, in order to establish the facts she alleges in her complaint. As a consequence, we will reverse the District Court's judgment and remand to the District Court for further proceedings as directed in this opinion.

I.

In 2001, Victoria Trent, biologic mother of three minor children, C.L.D., K.K.D., and C.M.D., began working for appellee University of Pittsburgh Medical Center (UPMC). On June 6, 2003, at Trent's urging, Trent's lifelong family friend, Deborah Baldwin, adopted the children and became their legal guardian. New birth certificates were issued for the children. Notwithstanding the adoption, Trent maintained a parental relationship with the children, who still referred to her as “Mom”: she lived with Baldwin and the children for three years after they were adopted by Baldwin, and Trent spent all holidays and festivals with Baldwin and the children.

Trent was employed at UPMC from 2001 to 2008. Trent enrolled in four insurance plans offered by UPMC for the year 2008. The premiums for these were deducted from her salary each pay period: 1) a $25,000 basic life insurance policy; 2) a $25,000 basic accidental death and dismemberment (AD & D) insurance policy; 3) a $100,000 supplemental group life insurance policy; and 4) a $200,000 supplemental AD & D insurance policy. Trent designated a beneficiary—Baldwin—for the $25,000 basic life policy, but did not designate a beneficiary for the three remaining policies.

Each of the life policies, as distinct from the ERISA statute, contains the following language:

If there is no named beneficiary or surviving beneficiary, Death Benefits will be paid to the first surviving class of the following living relatives: spouse; child or children; mother or father; brothers or sisters; or to the executors or administrators of the Insured's estate.

To similar effect, the AD & D policies provide:

If there is no named beneficiary or surviving beneficiary, or if the Employee dies while benefits are payable to him, We may make direct payment to the first surviving class of the following classes of persons:

1) spouse;

2) child or children;

3) mother or father;

4) sisters or brothers;

5) Estate of the Covered Person.

On December 23, 2008, Trent died in an accident at the age of thirty-four. Following Trent's death, Baldwin timely sought payment under each of Trent's insurance policies in accordance with the applicable claims procedure. The insurer, Life Insurance Company of North America (LINA), paid $25,000 due to Baldwin as the designated beneficiary of Trent's basic life policy. However, LINA rejected Baldwin's claims on behalf of the children for the proceeds from the other three policies. LINA explained that as a result of the adoption, the children were no longer considered Trent's “children” for the purposes of the policies' default-beneficiary provisions.

Baldwin appealed LINA's determination. In a May 15, 2009, letter, LINA, using Cigna Group Insurance (CIGNA) as signatory, detailed the reasons why, after further review, it had again concluded that the insurance proceeds were “not payable” to the children:

While Mrs. Trent may have maintained a relationship with her biological children, this would not supersede the fact that Ms. Trent waived all legal ties with the children. As a result of the adoption [C.L.D., K.K.D., and C.M.D.] became the legal children of Ms. Baldwin and would no longer be eligible for benefits under these policies as the children of Ms. Trent.

At the time of her death, there was no beneficiary named by Ms. Trent for the [$100,000 supplemental group life policy and accidental death policies]. Therefore, the benefits of these policies would be payable under the facility of payment wording contained in this policy. The facility of payment does not contain provisions that allow for payment of benefits to step-children or any other child which may be in a close familial relationship with the insured. Since [C.L.D., K.K.D., and C.M.D.] were not the children of Victoria Trent at the time of her death, no benefits were payable to them....

....

This policy is a binding contract between Victoria Trent and the insuring company. Therefore, in an effort to provide equitable claims administration to our insureds we must honor all policy provisions. Since Ms. Trent did not designate [C.L.D., K.K.D., and C.M.D.] to receive any proceeds from this policy, we cannot honor payment to them or any other person not designated as beneficiary of record with the employer prior to Ms. Trent's death or the first class of surviving relatives.

Having exhausted all avenues of administrative review of her claim, Baldwin, as guardian of the children, filed a complaint in the District Court for the District of Western Pennsylvania against UPMC and LINA.1 In the two-count complaint, Count One alleged that UPMC and LINA had breached their fiduciary duty to Trent and the children, in violation of ERISA, 29 U.S.C. § 1104(a)(1)(A) and (B), by failing to act for the exclusive purpose of providing benefits and inadequately managing the enrollment process; and Count Two alleged that the two defendants had arbitrarily and capriciously denied the children benefits, which is a basis for recovery under ERISA, 29 U.S.C. § 1132(a)(1)(B).

II.

The two defendants moved to dismiss the complaint for lack of both subject-matter jurisdiction and statutory standing. The District Court dismissed Baldwin's complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). A dismissal for lack of statutory standing is effectively the same as a dismissal for failure to state a claim. See Vaughn v. Bay Envtl. Mgmt., Inc., 567 F.3d 1021, 1024 (9th Cir.2009) (citing Lanfear v. Home Depot, Inc., 536 F.3d 1217, 1221–22 (11th Cir.2008), and Harzewski v. Guidant Corp., 489 F.3d 799, 803–04 (7th Cir.2007)). The standard for reviewing dismissals under Rules 12(b)(1) (for lack of subject matter jurisdiction) and 12(b)(6) (for failure to state a claim) “is the same: we accept as true plaintiffs' material allegations, and construe the complaint in the light most favorable to them.” Alston v. Countrywide Fin. Corp., 585 F.3d 753, 758 (3d Cir.2009) (citation omitted).

In a March 16, 2010, opinion and order, the District Court granted defendants' motion to dismiss with prejudice, holding that Baldwin had neither statutory nor prudential standing to bring her claim under ERISA. ERISA does not specify who is a “beneficiary” beyond “one who is[,] or may become entitled to[,] a benefit,” 29 U.S.C. § 1002(8)—a remarkably broad category. The District Court held that the category of default beneficiaries provided in the insurance policies determined who was to obtain the benefits under the policies. The second category of default beneficiaries specified by the insurance plans is “child or children.” The definition of “child or children” 2 is relevant to this appeal because that phrase appears in the insurance plans at issue.

To define the term “children” as used in the insurance plans, the District Court rejected Baldwin's request that it consult Pennsylvania contract law. Instead, the District Court sought elucidation from federal common law and the Pennsylvania Intestate Succession Law, 20 Pa. Cons.Stat. Ann. §§ 2103, 2108, which the District Court concluded mandate that adoption severs the legal link between birth parent and child. Under this interpretation, the child becomes the child of the adoptive parent only.

Importing that definition of “children” into the insurance plans' language, the District Court held that the adopted children were not entitled to benefits by default as Trent's “children.” Thus, inasmuch as the children could not make out a colorable claim of their entitlement to benefits, neither they, nor Baldwin, their guardian, had standing to bring suit under ERISA, and the District Court was therefore without subject-matter jurisdiction.

This appeal followed.

III.

This Court has plenary review over an order dismissing an ERISA claim for lack of standing. See Leuthner v. Blue Cross & Blue Shield of Ne. Pa., 454 F.3d 120, 124 (3d Cir.2006); Miller v. Rite Aid Corp., 334 F.3d 335, 340 (3d Cir.2003). We must ‘accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.’ Pittsburgh Mack...

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