Dombroski v. Wellpoint, Inc.

• Decision Date: 20 September 2007
• Docket Number: No. 06 BE 60.,06 BE 60.
• Citation: 173 Ohio App.3d 508,879 N.E.2d 225,2007 Ohio 5054
• Parties: DOMBROSKI, Appellant, v. WELLPOINT, INC. et al., Appellees.
• Court: Ohio Court of Appeals

879 N.E.2d 225

173 Ohio App.3d 508

2007-Ohio-5054

DOMBROSKI, Appellant, v. WELLPOINT, INC. et al., Appellees.

No. 06 BE 60.

Court of Appeals of Ohio, Seventh District, Belmont County.

Decided September 20, 2007.

Robert Palmer and John Tucker, for appellant.

Charles Bean, Robert Webner, and Suzanne Richards, Columbus, for appellees.

VUKOVICH, Judge.

{¶ 1} Plaintiff-appellant, Kimberly Dombroski, appeals from the decision of the Belmont County Common Pleas Court dismissing her complaint for failure to state a claim against defendants-appellees, WellPoint, Inc., and Anthem Insurance Companies Inc. The issue in this appeal is whether the trial court erred in dismissing the complaint pursuant to Civ.R. 12(B)(6) for failure to state a claim upon which relief can be granted. For the reasons stated below, the complaint stated sufficient facts to overcome a Civ.R. 12(B)(6) motion to dismiss. Thus, the trial court's decision is hereby reversed, and this cause is remanded for further proceedings.

STATEMENT OF CASE

{¶ 2} In 2000, Dombroski successfully had a cochlear implant implanted in her left ear. In 2005, her doctor determined that she needed a cochlear implant placed in her right ear. At the time of her doctor's 2005 determination, Dombroski was insured by Community Insurance Company ("CIC"), which underwrote the policy. CIC, through Anthem UM Services, Inc. ("AUMSI"), denied coverage for the implantation of the right cochlear implant on the grounds that a bilateral implant was investigational.

{¶ 3} On May 22, 2006, Dombroski filed an amended complaint against CIC and AUMSI. She also sued WellPoint, Inc., and Anthem Insurance Companies, Inc. ("AICI"). (The insurance companies as a group will be referred to as "Anthem.") She set forth claims for breach of the insurance contract, promissory estoppel, and the tort of bad faith. Amended Complaint ¶ 1.¹

{¶ 4} The complaint alleges that CIC, AUMSI, and AICI are subsidiaries of WellPoint, which controls those subsidiaries so that they have no separate mind, will, or existence of their own. The complaint states that this control over the subsidiaries was exercised in such a manner as to violate the duty of good faith and fair dealings to its Ohio insureds, specifically Dombroski. Amended Complaint ¶ 10.

{¶ 5} Attached to the complaint was the insurance policy, stating that covered services must be medically necessary and not investigational. (Health Certificate M-15 and M-35). The policy defines the terms "medically necessary" and "investigational." (Health Certificate M-16-17 and M-18-19). The complaint asserts that the insurance benefits are administered pursuant to the "medical policies and claims administration policies" that are adopted by Anthem appellees.

{¶ 6} The corporate medical policy declares that a bilateral cochlear implant is investigational. Thus, the complaint contends that "WellPoint through AICI establishes certain `corporate medical policies,' which it directs its subsidiaries to utilize in the administering, handling and processing of claims under its insurance products throughout the United States." Amended Complaint ¶ 9. AICI's corporate medical policy was the basis for the denial of the right ear cochlear implant. Amended Complaint ¶ 9.

{¶ 7} In response to the complaint, WellPoint and AICI filed very similar Civ.R. 12(B)(6) motions to dismiss, claiming that the complaint failed to state a claim upon which relief could be granted. Specifically, they argued that Dombroski could not prevail on the claim of breach of duty to act in good faith under the insurance contract. They reasoned that without privity of contract between WellPoint, AICI, and Dombroski, Dombroski could not prevail on the breach of the duty to act in good faith under the insurance contract. Second, WellPoint and AICI contended that Dombroski failed to allege a basis for piercing the corporate veil.

{¶ 8} Dombroski countered, alleging that she had pleaded sufficient facts for a breach of duty to act in good faith and to pierce the corporate veil. However, the trial court determined that Dombroski had failed to state a claim upon which relief could be granted. The court dismissed the complaint against WellPoint and AICI. Notably, both CIC and AUMSI are still parties. Dombroski timely appeals.

ASSIGNMENT OF ERROR

{¶ 9} "Lower court erred in granting appellees WellPoint's and AICI's respective motions to dismiss pursuant to Civil Rule 12(B)(6)."

{¶ 10} To dismiss a complaint for failure to state a claim upon which relief may be granted pursuant to Civ.R. 12, it must be shown beyond doubt that the plaintiff can prove no set of facts in support of her claim that would entitle her to relief. York v. Ohio State Hwy. Patrol (1991), 60 Ohio St.3d 143, 144, 573 N.E.2d 1063. Factual allegations in the complaint will be presumed as true, and inferences will be made in favor of the non-moving party. Mitchell v. Lawson Milk Co. (1988), 40 Ohio St.3d 190, 192, 532 N.E.2d 753. The trial court is not permitted to resort to evidence outside the complaint to support dismissal under Civ.R. 12(B)(6). Attachments to the complaint are not considered to be outside the complaint. Adlaka v. Giannini, 7th Dist. No. 05MA105, 2006-Ohio-4611, 2006 WL 2575053, ¶ 34. See Civ.R. 10(C) and (D).

{¶ 11} Appellate review of a trial court's decision to dismiss a complaint on the basis of Civ.R. 12(B)(6) is de novo. Woods v. Oak Hill Community Med. Ctr. (1999), 134 Ohio App.3d 261, 267, 730 N.E.2d 1037. A de novo review requires the appellate court to conduct an independent review of the evidence before the trial court without deference to the trial court's decision. Brown v. Scioto Cty. Commrs. (1993), 87 Ohio App.3d 704, 711, 622 N.E.2d 1153. Thus, this court must review the complaint and determine whether Dombroski has stated any claim for which relief could be granted.

{¶ 12} As stated above, the two issues that were raised to the trial court in the motions to dismiss and oppositional memorandum were (1) whether CIC's corporate veil could be pierced to get to WellPoint and AICI and (2) whether the complaint asserted an actionable-bad-faith claim against WellPoint and AICI (which is hereinafter deciphered as a management-theory argument). We will address those two arguments, taking each in turn.

Piercing the Corporate Veil

{¶ 13} As stated above, Dombroski's amended complaint indicates that her insurance contract was underwritten by CIC. The contract states that it is solely between CIC and Dombroski. Dombroski admits that neither WellPoint nor AICI is a party to the insurance contract. She claims that while WellPoint and AICI are not formal parties to the contract, they can be liable for the denial of coverage for the right cochlear implant, if she can pierce CIC's corporate veil.

{¶ 14} "Generally, a parent corporation is not liable for the actions of its subsidiary, even if the subsidiary is wholly owned by the parent corporation." Wallace v. Shelly & Sands, Inc., 7th Dist. No. 04BE11, 2005-Ohio-1345, 2005 WL 678526, quoting Starner v. Guardian Industries (2001), 143 Ohio App.3d 461, 468, 758 N.E.2d 270. The reason for this is stated as follows:

{¶ 15} "`That a corporation is a legal entity, apart from the natural persons who compose it, is a mere fiction, introduced for convenience in the transaction of its business, and of those who do business with it; but like every other fiction of the law, when urged to an intent and purpose not within its reason and policy, may be disregarded.'" Belvedere Condominium Unit Owners' Assn. v. R.E. Roark Cos., Inc. (1993), 67 Ohio St.3d 274, 287, 617 N.E.2d 1075, quoting State ex rel. Atty. Gen. v. Standard Oil Co. (1892), 49 Ohio St. 137, 30 N.E. 279, paragraph one of the syllabus.

{¶ 16} Thus, the corporate entity may be disregarded, and a parent corporation and its subsidiary may be treated as a single entity when the three-prong test set forth in Belvedere is established. Wallace, 2005-Ohio-1345, 2005 WL 678526, ¶ 37. The tripartite test is as follows:

{¶ 17} "(1) control over the corporation by those to be held liable was so complete that the corporation has no separate mind, will, or existence of its own, (2) control over the corporation by those to be held liable was exercised in such a manner as to commit fraud or an illegal act against the person seeking to disregard the corporate entity, and (3) injury or unjust loss resulted to the plaintiff from such control and wrong." Belvedere, 67 Ohio St.3d 274, 617 N.E.2d 1075, at paragraph 3 of the syllabus.

{¶ 18} Therefore, the Belvedere test is equally applicable to piercing a corporation to reach an individual shareholder or owner and to piercing a corporation to reach another corporation. Id. at 287-288, 617 N.E.2d 1075, citing North v. Higbee Co. (1936), 131 Ohio St. 507, 6 O.O. 166, 3 N.E.2d 391 (a parent/subsidiary case that the Belvedere court cited for two of the Belvedere prongs).

{¶ 19} The trial court held, and WellPoint and AICI maintain, that Dombroski did not set forth facts in her complaint that would entitle her to pierce CIC's corporate veil. Civ.R. 8(A) is the relevant rule for pleading requirements, and it merely requires "a short and plain statement of the claim showing that the party is entitled to relief."

{¶ 20} "`[T]he complaint, and other relief-claiming pleadings need not state with precision all elements that give rise to a legal basis for recovery as long as fair notice of the nature of the action is provided. However, the complaint must contain either direct allegations on every material point necessary to sustain a recovery on any legal theory, even though it may not be the theory suggested or intended by the pleader, or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial.' 5 Wright & Miller, Federal Practice & Procedure: Civil (12969), at 120-123, Section 1216." Fancher v. Fancher (1982)...