Campbell v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA

Decision Date16 September 2015
Docket NumberCivil Action No.: 14–0892(RC)
Citation130 F.Supp.3d 236
Parties Rita Campbell, Plaintiff, v. National Union Fire Insurance Company of Pittsburgh, PA, et al., Defendants.
CourtU.S. District Court — District of Columbia

Tracy Diana Rezvani, Robert Olin Wilson, Rezvani Volin & Rotbert P.C., Washington, DC, for Plaintiff.

Raphaelle E. Monty, Danielle J. Carter, Sidley Austin LLP, Scott McIntosh, Quarles & Brady LLP, Daly D.E. Temchine, Epstein, Becker and Green, P.C., Washington, DC, David G. Jorgensen, Thomas M. Buchanan, Winston & Strawn LLP, Chicago, IL, Patrick J. Murphy, Quarles & Brady LLP, Milwaukee, WI, Eric Damian Welsh, Sarah F. Hutchins, Parker Poe Adams & Bernstein, LLP, Charlotte, NC, Harvey Kurzweil, Kelly A. Librera, Winston & Strawn LLP, New York, NY, Neal R. Marder, Winston & Strawn LLP, Los Angeles, CA, for Defendants.

HealthExtras, LLC, pro se.

MEMORANDUM OPINION

GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS

RUDOLPH CONTRERAS, United States District Judge

I. INTRODUCTION

From 2000 through 2014, Plaintiff Rita Campbell was enrolled in the HealthExtras benefit program, which purported to provide her with group disability insurance coverage. Ms. Campbell now believes that the policy she paid for was illegal and worthless, and she has brought this putative class action on behalf of herself and similarly situated residents of the District of Columbia against seven companies that she believes contributed to and profited from the sale of illusory insurance policies. Ms. Campbell never submitted a claim for coverage and is no longer enrolled in the program, but she seeks to recover her premium payments and damages, alleging that Defendants sold her insurance coverage that they never intended to honor, charged her premiums in excess of her contractual obligation, and failed to provide truthful information about the program. In her five-count complaint, Ms. Campbell asserts numerous violations of the D.C. Consumer Protection Procedures Act ("CPPA"), and she alleges that Defendants either breached their contractual obligations or, alternatively, that Defendants are liable for unjust enrichment, conversion, and money had and received. In their motions to dismiss, Defendants argue that Ms. Campbell lacks standing because her insurance policy was enforceable under D.C. law and she suffered no injury, that her claims are barred by the applicable statutes of limitations, and that in any event, she has failed to plead fraud with particularity and failed to state a claim for relief. Upon consideration of the motions to dismiss, and the memoranda in support thereof and opposition thereto, the Court will grant in part and deny in part the Defendants' motions to dismiss.

II. FACTUAL ALLEGATIONS

This case marks one of at least eleven closely related actions filed across the country seeking to recover premium payments and damages in relation to the HealthExtras benefit program ("the program"), which plaintiffs in each case allege was marketed and sold to them in violation of state law.1 This particular action focuses on allegations that Defendants advertised and purported to sell disability insurance coverage through the HealthExtras benefit program to D.C. residents while violating D.C. insurance laws and without any intent to provide the paid-for coverage.

In 1999 or 2000, Ms. Campbell received marketing materials about the HealthExtras benefit program from Defendant HealthExtras, Inc., now known as Catamaran Health Solutions, LLC ("Catamaran").2 See 1st Am. Compl. ¶ 53, ECF No. 29. Catamaran had paid the actor Christopher Reeve to serve as the face of its marketing campaign, and it reached potential customers by entering into agreements with credit card companies that allowed Catamaran to access cardholders' financial information and to send marketing flyers to selected cardholders along with their credit card statements. Id. ¶¶ 41, 47. Ms. Campbell expressed interest in the program, which included disability insurance packaged together with an out of area emergency accident and sickness medical expense benefit. Id. ¶¶ 56, 66. As a result, Catamaran mailed her a program description along with a letter advertising coverage in the form of a "$1,000,000 cash payment if you are permanently disabled due to an accident," and "$2,500 a year in reimbursements for coinsurance and deductibles for healthcare expenses when you are travelling." Id. ¶ 56.

Ms. Campbell then enrolled in the program and agreed to pay premiums on a monthly or annual basis, with her premiums being charged to her credit card. Id. ¶¶ 60, 63. Catamaran's Member Services subsequently sent Ms. Campbell an enrollment letter commending her for "hav[ing] armed [her]self with one of the most exciting and affordable disability plans found anywhere in America today." Id. ¶ 61. The enrollment confirmation letter also bore Christopher Reeve's picture and attributed to him the statement that "[b]ecause lives can change in an instant, as mine did, you should have the additional security for yourself and your family that HealthExtras can provide." Id.

Defendant Virginia Surety Company, Inc. ("Virginia Surety") served as the underwriter for Ms. Campbell's $2,500 medical expense benefit during the entire period of her enrollment. Id. ¶ 68. Defendant National Union Fire Insurance Company of Pittsburgh, PA ("National Union") replaced non-party Federal Insurance Company as the underwriter of her disability insurance policy effective January 1, 2005. Id. ¶¶ 47(i), 67. Ms. Campbell also alleges that Catamaran effectively acted as an underwriter for her disability insurance policy as of July 2000, when it agreed with "at least one insurer" that Catamaran would "pay disability benefits to any person who does not qualify as permanently disabled, but who is nonetheless unable to perform the material and substantial duties of such person's regular occupation." Id. ¶ 125.

Because Catamaran was not a licensed insurance broker in the District of Columbia, the company paid "real licensed broker[s]," like Defendant Alliant Services Houston, Inc. ("Alliant Services"), to use their names on correspondence and program documents. Id. ¶ 58. The Program Summary that Ms. Campbell received from Catamaran identified Alliant Services' corporate predecessor as the "Program Administrator," and her payment notices listed Alliant Services as the "Broker of Record."3 Id. ¶ 9.

In 2004, Ms. Campbell received a "Description of Coverage" and "Accident Protection Plan Program Summary" for her disability policy series C11695DBG. Id. ¶ 70. The description of her policy contained "extremely restrictive, conflicting and confusing terms and exclusions which renders any disability insurance ‘coverage’ virtually worthless to consumers and is in sharp contrast to ... representations made in the marketing material" she had previously received. Id. ¶¶ 70–75, 103–05. Specifically, Ms. Campbell asserts that the policy exclusions contradicted Defendants' marketing materials that had advertised "valuable protection," "a $1,000,000 tax-free cash payment if you are permanently disabled due to an accident," and a $1,000,000 payment "[a]fter 12 months of continuing and permanent disability caused by an accident—including the inability to work." Id. ¶¶ 103–05.

The materials that Ms. Campbell received in 2004 also stated that "if any conflict should arise between the contents of this Description of Coverage and the Master Policy SRG 9540519 or if any point is not covered herein, the terms and conditions of the Master Policy will govern in all cases." Id. ¶ 70. But Ms. Campbell claims that "she has never been provided a copy of Master Policy SRG 9540519," and she suspects that "[w]hat little coverage escapes C11695DBG may be further trumped and negated by Master Policy SRG 9540519." Id. ¶¶ 71, 76. Ms. Campbell notes that "[a]lthough the coverage description disclosed some limitations on the policy ... [no] Defendant[s] disclosed ... [that] there was no intention to pay disability benefits that fell within the terms of coverage." Id. ¶¶ 81–82.

In fact, Ms. Campbell claims, Catamaran, National Union, and Defendant American International Group, Inc. ("AIG") developed the policies in question "with no intent to pay ever [sic] disability claims and the specific intent to deny any disability claims made by victims of the HealthExtras Scheme." Id. ¶ 107. Public records show that an individual in California who was rendered a quadriplegic had his claim denied by National Union, and that another individual in South Carolina had his claim denied by National Union after he was rendered a paraplegic. Id. ¶ 111. "Upon information and belief," Ms. Campbell further asserts that "there are thousands of these unfair and unconscionable denials which are not in the public record." Id. ¶ 114.

Although Ms. Campbell alleges that she was never provided with a copy of the governing Master Policy, on an unspecified date, she did receive the "Master Application for Blanket Accident Insurance Policy" for Master Policy 9540519.4 Master Application, Pl.'s Ex. B at 2–3, ECF No. 29–2. The Master Application is printed on letterhead naming National Union and Defendant AIG, doing business as AIG Group Insurance Trust, ("AIG" or "the Trust"). 1st Am. Compl. ¶ 77. The document describes a policy with an effective date of September 2004, names the Trust as the policyholder, and includes policy riders and endorsements that list the policyholder as "HealthExtras." Id. ¶ 77. From these facts, Ms. Campbell concludes that the Trust was created by National Union, AIG, and Catamaran. Id. "[U]pon information and belief," Ms. Campbell further alleges that the corporate defendants issued a Master Policy to themselves that they did not disclose to group members, and that they "are in fact the alter-ego of" the Trust. Id. at ¶¶ 73–74, 77.

She asserts that the Trust is a "sham organization[ ]," that it does not constitute a "group that was or is...

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