Fortelney v. Liberty Life Assurance Co. of Boston

• Decision Date: 16 May 2011
• Docket Number: Case No. CIV–09–1205–F.
• Citation: 790 F.Supp.2d 1322
• Parties: Larry FORTELNEY, Brandon Stoup, David Carter, Chelsea Carter, Individually, and on behalf of all others similarly situated, Plaintiffs,v.LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, The Bassett Law Firm, LLC, Greta Bassett, John R. Nelson, and Integrated Benefits, Inc., Defendants.
• Court: U.S. District Court — Western District of Oklahoma

790 F.Supp.2d 1322

Larry FORTELNEY, Brandon Stoup, David Carter, Chelsea Carter, Individually, and on behalf of all others similarly situated, Plaintiffs,

v.LIBERTY LIFE ASSURANCE COMPANY OF BOSTON, The Bassett Law Firm, LLC, Greta Bassett, John R. Nelson, and Integrated Benefits, Inc., Defendants.

Case No. CIV–09–1205–F.

United States District Court, W.D. Oklahoma.

May 16, 2011.

Jennifer S. Montagna, William B. Federman, Federman & Sherwood, R. Robyn Assaf, Oklahoma City, OK, for Plaintiffs.Brian E. Robison, Russell Yager, Vinson & Elkins, Dallas, TX, Kristin M. Simpsen, Reid E. Robison, McAfee & Taft, Sarah K. Oberndorfer, Susanna M. Gattoni, Hall Estill, Oklahoma City, OK, Miriam M. Burke, Vinson & Elkins, Austin, TX, Carolyn J. Fairless, Michael D. Alper, Michael L. O'Donnell, Wheeler Trigg & O'Donnell, Denver, CO, John H. Tucker, Theresa Noble Hill, Rhodes Hieronymus Jones Tucker & Gable, Tulsa, OK, for Defendants.

ORDER

STEPHEN P. FRIOT, District Judge.

Before the court are Defendant Liberty Life Assurance Company of Boston's Motion to Dismiss Plaintiffs' First Amended Class Action Complaint (doc. no. 54), Defendants Bassett Law Firm LLC, Greta Bassett, and John R. Nelson's Motion to Dismiss Plaintiffs' First Amended Complaint (doc. no. 56) and Defendant Integrated Benefits, Inc.'s Motion to Dismiss Plaintiffs' First Amended Class Action Complaint (doc. no. 74). Upon review of all of the parties' submissions in support of and in opposition to the motions, the court makes its determination.

Introduction

Plaintiffs, Larry Fortelney, Brandon Stoup, David Carter and Chelsea Carter, bring this action individually and on behalf of similarly situated individuals who received long term disability benefits from defendant, Liberty Life Assurance Company of Boston, and were required to pay defendant, Liberty Life Assurance Company of Boston, for alleged “overpayments” after receipt of social security and/or workers' compensation benefits. In their First Amended Class Action Complaint (“Amended Complaint”), plaintiffs allege both statutory and common law claims against defendant, Liberty Life Assurance Company of Boston (“Liberty”), defendants, The Bassett Law Firm, LLC, Greta Bassett and John R. Nelson (collectively “the Bassett defendants”) and defendant, Integrated Benefits, Inc. (“IBI”).¹ Plaintiffs seek actual and punitive damages and injunctive relief against defendants. Defendants, in their motions, seek dismissal of the Amended Complaint pursuant to Rule 12(b)(6) and Rule 9(b), Fed.R.Civ.P.

Standard of Review

The inquiry under Rule 12(b)(6), Fed.R.Civ.P., is whether the Amended Complaint “ ‘contains enough facts to state a claim for relief that is plausible on its face.’ ” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). To survive a motion to dismiss, plaintiffs must nudge their claims across the line from conceivable to plausible. Id. The mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the Amended Complaint must give the court reason to believe that these plaintiffs have a reasonable likelihood of mustering factual support for these claims. Ridge at Red Hawk, 493 F.3d at 1177. The court assumes the truth of plaintiffs' well-pleaded factual allegations and views them in the light most favorable to plaintiffs. Id. Pleadings that are no more than legal conclusions are not entitled to the assumption of truth; while legal conclusions can provide the framework of the Amended Complaint, they must be supported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. Rule 9(b), Fed.R.Civ.P., governs the pleading of certain special matters. Rule 9(b) provides in pertinent part: “In alleging fraud ... a party must state with particularity the circumstances constituting fraud.... Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” The requirements of Rule 9(b) are to be read in conjunction with the general pleading principles of Rule 8, Fed.R.Civ.P., calling for the pleadings to be “simple, concise, and direct, ... [and] be construed so as to do justice.” Rule 8(d) and (e), Fed.R.Civ.P.; Schwartz v. Celestial Seasonings, Inc., 124 F.3d 1246, 1252 (10th Cir.1997). As with Rule 8, Rule 9(b)'s purpose is to afford the defendant fair notice of plaintiffs' claim and the factual ground upon which it is based. Id. In order to plead fraud with particularity, plaintiffs' Amended Complaint must “set forth the time, place, and contents of the false representation, the identity of the party making the false statements and the consequences thereof.” Koch v. Koch Indus., 203 F.3d 1202, 1236 (10th Cir.2000) (quotations omitted). This means “ ‘the who, what, when, where, and how: the first paragraph of any newspaper story.’ ” Caprin v. Simon Transportation Services, Inc., 99 Fed.Appx. 150, 158 (10th Cir.2004) (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990)).

Allegations of Plaintiffs' First Amended Class Action Complaint

Plaintiffs make the following factual allegations in the Amended Complaint, which, as previously stated, the court assumes for present purposes to be true, viewing them in a light most favorable to plaintiffs. Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d at 1177.

Liberty, an insurance company, issues group disability income policies through numerous employers throughout the United States. These policies provide long term disability benefits (“LTD benefits”) to covered employees if they are unable to perform the material and substantial duties of their occupation due to injury or sickness.

One such policy (“LTD policy”) is issued through OGE Energy Corp. (“OG & E”) for its employees. See, Amended Complaint, ¶¶ 15, 21, and 22.

A. Plaintiff Larry Fortelney

Plaintiff, Larry Fortelney (“Fortelney”), worked for OG & E. Fortelney contributed to the LTD policy issued by Liberty. In March or April of 2005, Fortelney was injured at work. He thereafter applied for LTD benefits under the LTD policy. See, Amended Complaint, ¶ 23.

By letter dated November 16, 2005, Liberty informed Fortelney that he qualified for LTD benefits. Liberty stated that Fortelney's date of disability was June 21, 2005, making him eligible for LTD benefits beginning on December 18, 2005, pursuant to the 180 day elimination period standard in the LTD policy. Liberty stated that the LTD policy required Fortelney to apply for social security benefits should his disability be expected to extend for twelve months. Liberty requested Fortelney to complete an enclosed Social Security/Reimbursement Agreement (“SSRA”) and referred to an enclosed fact sheet about the advantages of applying for social security benefits. Id., ¶ 24.

The fact sheet enclosed in the November 16th letter encouraged the filing of a claim for social security benefits and stated that recipients “typically receive a large retroactive payment from Social Security shortly after their claim is approved.” It advised that “[m]uch of this money is essentially money that Liberty [has] advanced to you while you were awaiting Social Security's decision, and you must pay it back to Liberty immediately.” The fact sheet, however, advised that the social security cost of living increases are “yours to keep” and that it could amount to over $238,000 in additional benefits over 26 years. See, Amended Complaint, ¶ 24.

The fact sheet additionally stated that it was not necessary to hire a lawyer to assist with the social security process. It advised that if a Liberty case manager believed legal assistance was necessary, Liberty would provide it and would pay for it. It further stated that Liberty had identified legal representatives throughout the United States with a strong track record in securing social security benefits for their clients and if necessary, Liberty would put that expertise to work for the policyholder. See, Amended Complaint, ¶ 25.

On November 25, 2005, Fortelney signed the SSRA which provided in part:

If disability benefits are approved I request that Liberty Life Assurance Company of Boston (Liberty Life) pay me my benefits with no reduction for estimated Social Security Disability benefits until Social Security makes a decision. I understand that this may result in an overpayment of disability benefits paid to me if Social Security subsequently awards benefits to me, and I understand that I must repay this overpayment to Liberty Life. In consideration of Liberty Life paying me a disability benefit with no reduction for estimated Social Security benefits until Social Security makes a decision, I agree to the following:

* * *

I agree to apply for Social Security benefits within 45 days of Liberty Life's written request and provide proof of such application.

* * *

If Social Security awards benefits to me, I agree that Liberty Life has a first lien on all such benefits to the extent of any overpayment or debt, and I agree to hold such Social Security benefits in a trust for the benefit of Liberty Life until the amount of Liberty Life's overpayment has been repaid in full.

I agree to repay Liberty Life in full within the time period specified in my policy/plan provision.

* * *

If I do not repay any overpayment due to Liberty Life in full, I understand Liberty Life will discontinue payment of benefits to me, including payments for insurance premiums and other deductions paid on my behalf, and Liberty Life may withhold future disability benefits until the overpayment is recovered in full. In addition, Liberty Life may also pursue other means permitted by law to collect the overpayment...