Gross v. St. Agnes Health Care, Inc.

• Decision Date: 12 September 2013
• Docket Number: Civil Action No. ELH-12-2990
• Parties: JEANE GROSS, Plaintiff, v. ST. AGNES HEALTH CARE, INC., et al., Defendants.
• Court: U.S. District Court — District of Maryland

JEANE GROSS, Plaintiff, v. ST. AGNES HEALTH CARE, INC., et al., Defendants.

Civil Action No. ELH-12-2990

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

Date: September 12, 2013

MEMORANDUM OPINION

This case arises from the denial of life insurance benefits under an employee welfare benefit plan. Through her employer, plaintiff Jeane Gross continued to pay for a life insurance policy on her former husband, David Gross, from whom she was divorced. Following the death of Mr. Gross, plaintiff sought to recover the life insurance proceeds. Benefits were denied, however, because at the time of Mr. Gross's death, Ms. Gross was not married to Mr. Gross.

Plaintiff subsequently filed suit against her employer, St. Agnes Health Care, Inc. ("St. Agnes"), and Ascension Health, the "Plan Administrator," defendants, asserting that benefits were wrongfully denied and that defendants misrepresented plaintiff's eligibility for life insurance benefits, despite her divorce.¹ In particular, she lodged claims for breach of contract(Count I); fraudulent misrepresentation (Count II); negligent misrepresentation (Count III); promissory estoppel (Count IV); waiver (Count V); "Breach of Fiduciary Duties" under § 504 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1104 (Count VI); and "Interference with Protected Rights" under §§ 510 & 511 of ERISA, 29 U.S.C. §§ 1140 & 1141 (Count VII). In addition to recovery of the benefits allegedly due under the policy, plaintiff seeks punitive damages and attorney's fees.

Defendants have moved to dismiss for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6) ("Motion to Dismiss," ECF 22), and filed a supporting memorandum (ECF 22-1), along with numerous documents. See ECF 22-3; 22-4; 22-5; 22-6; 22-7. Plaintiff opposed the Motion ("Opposition," ECF 25), and defendants replied. ECF 27.

In addition, Ms. Gross has moved to file a Second Amended Complaint ("Motion to Amend," ECF 26), seeking to add ING Employee Benefits ReliaStar Life Insurance Company ("ING" or "ING ReliaStar"), the "Claims Administrator," as a defendant with respect to Counts I through VII, and to add two claims against defendants Ascension Health and ING ReliaStar: "Wrongful Denial of Benefit Rights Under ERISA 29 U.S.C. § 1104 for violation of 29 U.S.C. § 1132(a)(1)(B)" (Count VIII), and equitable estoppel (Count IX). See Second Amended Complaint ("S.A.C.," ECF 26-1). Defendants opposed the Motion to Amend, ECF 28, to which plaintiff replied. ECF 29.

The motions have been fully briefed, and no hearing is necessary to decide them. See Local Rule 105.6. For the reasons that follow, I will grant the Motion to Dismiss, in part, and deny it, in part. I will also grant the Motion to Amend, in part, and deny it, in part.

I. Factual Background

Plaintiff began her employment with St. Agnes in December 1999. Am. Compl. ¶ 8. On August 27, 2001, she enrolled in a "Supplemental Term Life Insurance Policy" (the "Policy") through St. Agnes for herself, her then-husband, David Gross, and their four children, for which she paid through payroll deductions. Id. ¶ 9.² Upon enrolling, plaintiff received a document titled "Supplemental Term Life Insurance Plan - Summary Plan Description" ("SPD"). According to plaintiff, it "was the only documentation ever provided . . . in regards to any explanation of benefits." Id. ¶ 10. In the Amended Complaint, plaintiff does not specify any of the terms of her Policy.

Defendants attached a copy of the SPD to their Motion to Dismiss. See Exhibit B, ECF 22-4.³ It provided: "Through your Employer and the Ascension Health Supplemental Term Life Insurance Plan (the Plan), you can purchase additional life insurance coverage for yourself or for your Eligible Dependents . . . ." SPD at 2. The SPD's definition of "Eligible Dependent" included, inter alia, "eligible spouse." Id. at 3.⁴ However, the SPD did not define "eligible spouse" and was "silent as to whether separation or divorce are grounds for termination ofbenefits." Am. Compl. ¶ 14.

In Section 2, titled "Plan Benefits," the SPD provided a cursory summary of the available coverage. See SPD at 9-11. As to "Dependent Coverage," Section 2 stated, in part: "Since you are the beneficiary for your dependents' coverage, the benefit amount for the death of a covered dependent is payable to you." Id. at 9. It also said: "[I]f your dependent dies while covered under the Plan, you will receive the elected benefit amount. Payment will be made after the carrier receives proof of death." Id. However, the SPD advised that dependent coverage ends when "[a] dependent ceases to be eligible as a dependent." Id. at 5.

Notably, the SPD cautioned: "The information in this Summary Plan Description (SPD) is intended to serve as a summary of the Ascension Health Supplemental Term Life Insurance Plan." Id. at 2. Further, it advised: "If there are any discrepancies between the information in this SPD and the official Plan documents or certificates of insurance, the terms of the Plan documents and insurance certificates will prevail." Id.

Defendants appended a copy of the Plan to their Motion to Dismiss. See Exhibit A, ECF 22-3.⁵ It stated that the Plan is an "employee welfare benefit plan subject to the Employee Retirement Income Security Act of 1974 ('ERISA')." Plan at 4. Section 5 of the SPD, titled "Your ERISA Rights," summarized the rights and protections available to Plan participants under ERISA. See SPD at 18-19. For example, it stated that Plan participants have the right to "[e]xamine" and "[o]btain, upon written request to the Plan administrator, copies of documentsgoverning the operation of the Plan" and the right to "appeal any denial" of a claim for benefits. Id. at 18. The SPD also outlined the obligations imposed on "fiduciaries" under ERISA to "operate [the] Plan . . . prudently and in the interest of . . . Plan participants and beneficiaries." Id. And, the SPD advised: "If you have any questions about your Plan, you should contact your Employer." Id. at 19.

In addition, defendants attached to their Motion to Dismiss a copy of the Policy. See Exhibit D, ECF 22-6. It defined "Dependent" as, inter alia, "your lawful spouse." Id. at 29.

In January 2004, plaintiff and her then husband, David Gross, contemplated a divorce. Am. Compl. ¶¶ 11-12. According to plaintiff, they were both concerned about the security of their four children, id. ¶ 12, and based their decision "primarily . . . on whether Plaintiff would be entitled to the life insurance benefits if Mr. Gross's health deteriorated completely." Id. To determine "what rights and benefits she would be entitled [to] if divorced," plaintiff "referred to the SPD." Id. ¶ 13. Because it did not define "eligible spouse," id. ¶ 14, plaintiff met with the Benefits Coordinator for St. Agnes, Donna Lippo, to "inquire[] into how the separation and/or divorce would affect her potential benefits." Id. ¶¶ 15-16. Ms. Lippo was "fully aware of Plaintiff's circumstances" and "assured" plaintiff that she could maintain the life insurance coverage on her husband even if they were divorced. Id. ¶ 17.

Plaintiff "relied" on Ms. Lippo's representations, and she and Mr. Gross were divorced in September 2006. Id. ¶ 18. In November 2006, plaintiff submitted a "St. Agnes Healthcare Change Form" to "disenroll" Mr. Gross from medical, dental, and vision insurance, expressly indicating her divorce as the reason for the change. Id. ¶ 19. However, she did not "disenroll" him from the Policy. Id. Moreover, for about six years, Ms. Gross continued to pay"contributions" for the life insurance coverage for her ex-husband, which were deducted from her paycheck on a bi-weekly basis. Id.

In August 2010, Mr. Gross was hospitalized due to an "ongoing illness." Id. ¶ 20. Fearing that Mr. Gross's death was "imminent," plaintiff met with Ms. Lippo, who provided plaintiff with information about how to file a claim for life insurance benefits. Id. ¶ 21. On or about September 3, 2010, Ms. Lippo informed plaintiff that, "following clarification from Defendant Ascension Health, Plaintiff would not be entitled to the life insurance benefits for her ex-husband." Id. ¶ 22. According to plaintiff, a "representative" of defendants "admitted that [Ms. Lippo] communicated the wrong information" to plaintiff regarding the supplemental life insurance policy. Id. ¶ 23.

As a result of Mr. Gross's death,⁶ plaintiff filed a claim for life insurance benefits in late 2010 or early 2011. In a letter dated February 2, 2011, Kelly Brown, Senior Life Claims Examiner for ING, notified plaintiff that her claim for benefits had been denied. Id. ¶ 24. Defendants attached to the Motion to Dismiss, the letter to which plaintiff referred in her Amended Complaint. See Exhibit E, ECF 22-7. It stated, inter alia, id.:

Dear Ms. Gross:

We have received notice of the death of Mr. Gross. Please accept our sympathy for your loss.

We have completed our review of the claim for the Dependent Spouse Life Insurance benefit under the above policy and have determined that no benefit is payable. In making our determination we reviewed the death claim form, the death certificate, enrollment form, and the group insurance policy.

Under the terms of this policy, you may choose Dependent Spouse Life Insurance for your spouse. The policy definition of a dependent includes "your lawful spouse." The policy also states that your dependent's insurance stops on the date your dependent is no longer a dependent as defined.

The death certificate we received with this claim states that Mr. Gross was divorced at the time of his death. Because it does not appear that Mr. Gross was your lawful spouse at the time of his death, he was not an eligible dependent as defined in this policy. Therefore, there is no benefit payable and your claim for the Dependent Spouse Life Insurance benefit is denied.

You should present your divorce decree to your Human Resources department to arrange for

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