Hecht v. Summerlin Life and Health Ins. Co.

• Decision Date: 17 March 2008
• Docket Number: No. 2:07-CV-01200-PMP-LRL.,2:07-CV-01200-PMP-LRL.
• Citation: 536 F.Supp.2d 1236
• Parties: Amy HECHT, Plaintiff, v. SUMMERLIN LIFE AND HEALTH INSURANCE COMPANY, a Nevada corporation; The Sapphire Club Group Health & Dental Plan, Defendants. And all Related Actions.
• Court: U.S. District Court — District of Nevada

536 F.Supp.2d 1236

Amy HECHT, Plaintiff, v. SUMMERLIN LIFE AND HEALTH INSURANCE COMPANY, a Nevada corporation; The Sapphire Club Group Health & Dental Plan, Defendants And all Related Actions.

No. 2:07-CV-01200-PMP-LRL.

United States District Court, D. Nevada.

March 17, 2008.

COPYRIGHT MATERIAL OMITTED

Steven J. Parsons, Steven J. Parsons, Law Office of, Las Vegas, NV, for Plaintiff.

James J. Pisanelli, Brownstein Hyatt Farber Schreck, Mark E. Ferrario, Lisa J Zastrow, Kummer Kaempger Bonner Renshaw & Ferrario, Las Vegas, NV, for Defendants.

ORDER

PHILIP M. PRO, District Judge.

Presently before the Court is Third Party Defendant CHSI of Nevada's Motion to Dismiss Third Party Complaint (Doc. # 13), filed on October 18, 2007. Third Party Plaintiff Summerlin Life and Health Insurance Company filed an Opposition (Doc. # 16) on November 19, 2007. Third Party Defendant CHSI of Nevada filed a Reply (Doc. # 20) on December 19, 2007.

I. BACKGROUND

In September 2004, Plaintiff Amy Hecht ("Hecht") was involved in a car accident in which she suffered disabling injuries. (Am. Compl. [Doc. # 22] at 2.) At the time of the accident, Hecht was employed by Defendant, SHAC LLC, doing business as Sapphire Gentlemen's Club ("Sapphire Club"), and was insured under her employer's employee benefit plan, the Sapphire Gentlemen's Club Group Medical Plan ("the Plan"). (Id.) Defendant Summerlin Life and Health Insurance Company ("Summerlin Life") is the Plan's underwriter. (Id. at 1.) The Sapphire Club subsequently terminated Hecht's employment when she was unable to return to work due to her injuries. (Id. at 3.) According to the Amended Complaint, both Sapphire Club and Summerlin Life legally Were required to advise Hecht of her right to continue her health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act ("COBRA') and Nevada Revised Statute § 689B.200. (Id.)

Hecht alleges she heard nothing from Summerlin Life, but the Sapphire Club provided her COBRA enrollment material. (Id.) On November 10, 2004, Hecht sent the Sapphire Club the appropriate enrollment forms and paid individual premiums to continue her insurance coverage. (Id.) Hecht alleges that Defendant Summerlin Life thereafter failed to pay Hecht's medical bills and did not assist Hecht when she called to inquire about the failure to pay her medical bills. (Id.) On April 26, 2005, the Sapphire Club mailed to Plaintiffs father a premium refund check. (Id.)

Hecht filed suit in Nevada state court on August 9, 2007 against Summerlin Life and the Sapphire Club. Group Health & Dental Plan, asserting claims for declaratory relief, breach of an employee benefit plan under the Employee Retirement Income Security Act ("ERISA"), breach of contract, breach of the duty of good faith and fair dealing, breach of Nevada statutory duties, and requesting injunctive relief. Defendant Summerlin Life removed the action to this Court on September 5, 2007. (Notice of Removal.) Hecht since has filed an Amended Complaint substituting the originally named defendant the Sapphire Club Group Health & Dental Plan for Defendant SHAC, LLC. (Am.Compl.)

On September 12, 2007, Defendant Summerlin Life cross-claimed against the Sapphire Club and brought a third party complaint against Third Party Defendant CHSI of Nevada ("CHSI"). (Answer, Cross-Claim & Third Party Compl. [Doc. # 6].) According to Summerlin Life, the Sapphire Club and its agent, CHSI, did not timely inform Summerlin Life of Hecht's election to continue coverage. (Id. at 8.) Summerlin Life contends CHSI informed Summerlin Life to terminate Hecht's benefits as of October 1, 2004 due to the termination of her employment. (Id.) On April 1, 2005, CHSI provided Summerlin Life with Hecht's COBRA election form. (Id.) Summerlin Life contends that because the Sapphire Club, through its agent CHSI, informed Summerlin Life to terminate Hecht's benefits, and did not timely provide Summerlin Life with Hecht's election form, Summerlin Life denied Hecht's COBRA election as untimely. (Id.) Summerlin Life seeks indemnification and contribution from both the Sapphire Club and CHSI to the extent Summerlin Life is liable to Hecht. (Id. at 8-9, 11.)

Third Party Defendant CHSI moves to dismiss the Third Party Complaint, arguing it did not owe a duty under ERISA to notify Summerlin Life of Hecht's election to continue coverage because only employees, employers, beneficiaries, group health plans, administrators, and sponsors have notification responsibilities, and CHSI falls within none of these categories. Additionally, CHSI argues Summerlin Life lacks standing to bring a claim under ERISA because Summerlin Life is not a participant, beneficiary, or fiduciary entitled to bring suit under 29 U.S.C. § 1132(a)(3). Finally, CHSI argues the Third Party Complaint is not ripe because unless and until Summerlin Life is found liable to Hecht, its contribution and indemnity claims are based only on a possibility of future liability.

Summerlin Life responds that CHSI identified itself as the Sapphire Club's Health and. Benefits Manager, and signed and completed the employer portion of Hecht's COBRA form electing to continue benefits. Summerlin Life therefore argues its allegations that CHSI was the Sapphire Club's Health and Benefits Manager and agent, which the Court must accept as true, demonstrates CHSI had a duty as either the employer's agent or the administrator to notify Summerlin Life of Hecht's election to continue benefits. Alternatively, Summerlin Life argues the Sapphire Club may have delegated its fiduciary duties to CHSI, a matter which discovery will clarify. Summerlin Life also argues it has standing to bring a claim under ERISA because it is a fiduciary that exercised actual authority in denying Hecht's claim. Finally, Summerlin Life argues its claims are ripe because Federal Rule of Civil Procedure 14(a) specifically contemplates the joinder of third party defendants for the purpose of determining contribution and indemnity claims related to the underlying complaint.

II. MOTION TO DISMISS

In considering a motion to dismiss, "all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party." Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir.1998) (citation omitted). However, the Court does not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations in the plaintiffs complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir.1994). There is a strong presumption against dismissing an action for failure to state a claim. See Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997) (citation omitted). The issue is not whether the plaintiff ultimately will prevail, but whether she may offer evidence in support of her claims. See id. (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). A plaintiff must make sufficient factual allegations to establish a plausible entitlement to relief. Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007). Such allegations must amount to "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action." Id. 127 S.Ct. at 1964-65.

A. Ripeness

"[R]ipeness is `peculiarly a question of timing' ... designed to `prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements.'" Thomas v. Anchorage Equal Rights Comm'n, 220 F.3d 1134, 1138 (9th Cir.2000) (en banc) (quoting Regional Rail Reorg. Act Cases, 419 U.S. 102, 140, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974) & Abbott Labs. 4). Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). The ripeness doctrine contains both a constitutional component derived from Article III limitations on judicial power and a prudential component. Id. The constitutional component of ripeness is similar to the first element of the standing inquiry, and requires a showing of a "concrete impact upon the parties arising from the dispute." Buono v. Kempthorne, 502 F.3d 1069, 1077 (9th Cir. 2007).

Even if a claim is ripe under the constitutional component of the ripeness doctrine, courts may refuse to exercise jurisdiction for prudential reasons. Id. at 1079. Under the jurisprudential ripeness inquiry, the Court considers "(a) the hardship that the party seeking relief will suffer from withholding judicial action, and (b) the fitness of the issues in the record for judicial review." Id.

Generally, a matter is not ripe "if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all." Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 662 (9th Cir.2002) (quotations omitted). Consequently, courts often find claims for indemnification or contribution are not ripe because the claims are contingent on a finding of liability on the underlying claim. See, e.g., Lincoln House, Inc. v. Dupre, 903 F.2d 845, 847 (1st Cir.1990); McRory v. Hobart Bros. Co., Inc., 732 F.2d 1533, 1535 (11th Cir.1984); RLI Ins. Co. v. John. H. Hampshire, Inc., 461 F.Supp.2d 364, 369 (D.Md.2006); Urological Surgery Prof'l Ass'n v. Fecteau Benefits Group, Inc., 359 F.Supp.2d 24, 25-26 (D.N.H. 2005). These cases, however, dealt with situations where the action to determine liability on the underlying claim and the indemnification or contribution claim were brought in separate actions. See Lincoln House, Inc., 903 F.2d at 847 (liability action in state court, indemnity action in federal court); McRory, 732 F.2d at 1535 (same); RLI Ins. Co., 461 F.Supp.2d at 369 (liability action not yet initiated in any court); Urological Surgery Prof'l Ass'n, 359 F.Supp.2d at 25-26 (liability action in separate suit in same court).

Federal Rule of Civil Procedure 14(a) permits a defendant to file a third party complaint against a nonparty "who is...