Heyman v. Lincoln National Life Insurance Co., 071819 FED6, 18-5622

Docket Nº:18-5622
Party Name:JAMES HEYMAN, Plaintiff-Appellant, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, Defendant-Appellee.
Judge Panel:BEFORE: DAUGHTREY, COOK, and GRIFFIN, Circuit Judges. GRIFFIN, Circuit Judge, dissenting.
Case Date:July 18, 2019
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

JAMES HEYMAN, Plaintiff-Appellant,



No. 18-5622

United States Court of Appeals, Sixth Circuit

July 18, 2019





Plaintiff James Heyman appeals two orders of the district court, one that denied his motion to remand this matter to the Kentucky state court from which it was removed and a second that granted judgment on the pleadings to the defendant, Lincoln National Life Insurance Company. Heyman argues that the district court erred in concluding that the amount in controversy in the case exceeded $75, 000. He thus insists that the district court did not have subject matter jurisdiction over this lawsuit. He also contends that, even if the district court properly exercised diversity jurisdiction in this matter, that court erroneously applied a first-to-file rule to justify granting judgment on the pleadings to Lincoln National.

We conclude that the district court appropriately determined both that it had jurisdiction over this matter and that application of the first-to-file rule was proper. However, the district court abused its discretion, in dismissing Heyman's lawsuit-even though that dismissal was without prejudice-rather than holding the matter in abeyance pending resolution of an earlier-filed federal lawsuit with overlapping parties and issues. We thus affirm the judgment of the district court in part, reverse the order of dismissal, and remand the matter for such further actions as are appropriate.


James Heyman formerly was employed by the Louisville-Jefferson County Metropolitan Government and thus was insured under a group long-term-disability-insurance policy issued by Lincoln National Life Insurance Company. When Heyman became disabled and unable to work, Lincoln National began paying benefits to him, beginning on November 9, 2011, in the amount of $1, 222.87 per month. Effective January 1, 2012, the Social Security Administration, having found Heyman to be disabled according to Social Security standards, also awarded him monthly Social Security Disability Insurance (SSDI) benefits of $1, 977.00.

In August 2013, Lincoln National learned that Heyman had been receiving SSDI benefits- as well as benefits from the insurance company-for, at that point, 20 months. Pursuant to the "Other Income Benefits" provisions of Lincoln National's policy, such Social Security disability benefits were required to "be offset, in determining the amount of the Insured Employee's Monthly Benefit" if "th[o]se amounts . . . result[ed] from the same Disability for which a Monthly Benefit is payable under [the Lincoln National] Policy." Because the amount of the monthly SSDI benefits exceeded the amount of the long-term-disability benefits provided under the Lincoln National policy, the insurance company asserted that Heyman should not have been receiving the monthly $1, 222.87 payments, but rather only "the minimum benefit amount under the Policy in the amount of $122.29" for those 20 months. According to a Lincoln National official, "[t]his resulted in a benefit overpayment made to Mr. Heyman by Lincoln National in the amount of $12, 979.38."

Upon discovering the overpayments, Lincoln National requested that Heyman reimburse the insurance company in the amount of those overpayments. When Heyman failed to do so, Lincoln National, in accordance with expressed policy provisions, began withholding even the minimum monthly payments of $122.29-beginning in September 2015-in an attempt to recoup its alleged losses.

In response, Heyman filed suit on December 22, 2015, in Jefferson County (Kentucky) Circuit Court. In his complaint, he claimed that Lincoln National's actions in reducing and then withholding disability benefits constituted: a breach of the company's contract with Heyman; a breach of the company's "duty to act in good faith and fair dealing"; a violation of Kentucky Revised Statutes § 304.12-230 (Kentucky's Unfair Claims Settlement Practices Act (UCSPA)); a violation of Kentucky Revised Statutes § 304.14-375, which "prohibits an insurer from seeking reimbursement of health insurance overpayments 'more than two (2) years after the claim was filed'"; a violation of Kentucky Revised Statutes § 304.12-235, which prohibits delays in payment of insurance claims; and a violation of Kentucky Revised Statutes § 304.12-010, which prohibits unfair or deceptive acts or practices by insurance companies. In his prayer for relief, Heyman sought "all available damages including an amount of money sufficient to satisfy his claims (not to exceed $75, 000) inclusive of pre- and post-judgment interest, attorneys' fees and costs, including the cost of any experts, and any other and further relief as the Court deems appropriate."

Upon receipt of Heyman's complaint, Lincoln National filed a timely notice of removal to federal district court. In that filing, Lincoln National noted that Heyman is a citizen and resident of Kentucky and that the insurance company was organized pursuant to the laws of Indiana and had its principal place of business in Pennsylvania. Lincoln National further alleged that, despite Heyman's efforts to limit his damages to $75, 000, the amount in controversy actually far exceeded the amount necessary to invoke the district court's diversity jurisdiction. See 28 U.S.C. § 1332(a). Specifically, Lincoln National claimed that Heyman's compensatory damages amounted to $31, 305.40, that damages tied to declaratory and injunctive relief totaled another $303, 271.76, and that Heyman could be entitled to additional punitive damages, attorneys' fees, and interest.

Disputing the insurer's calculation of possible damages, Heyman filed a motion to remand the matter to the Jefferson County court. Lincoln National countered by filing a motion for judgment on the pleadings, leading Heyman to reemphasize his belief that the district court lacked jurisdiction over the matter by filing the following stipulation: I assert in the above cause of action, and any subsequent state court action(s), that I will not seek or accept damages in excess of $75, 00.00, inclusive of statutory pre-and post-judgment interest, attorneys' fees and costs (including the cost of any experts), punitive damages, the fair value of any injunctive relief, and any other and further relief the Court deems appropriate. This stipulation does not limit my ability to seek costs and interest on a judgment as defined in 28 U.S.C. § 1332(a).

In light of that stipulation, the district court ordered Lincoln National either to indicate its acquiescence to the remand request or to file "a surreply addressing the stipulation."

Lincoln National chose to file a surreply in opposition to Heyman's motion for remand. In that surreply, the insurer argued that Heyman's stipulation could not divest the district court of jurisdiction because that post-removal stipulation was not the plaintiff's "first expression of damages" and thus was ineffective in limiting the amount in controversy in the suit. Furthermore, Lincoln National asserted that Heyman's complaint also seeks injunctive relief and "the value of injunctive relief cannot be limited through a stipulation."

The district court agreed with Lincoln National's argument and ruled that Heyman's stipulation was "not the 'first expression' of the damages he seeks" and "thus cannot be considered 'a clarification rather than a reduction of the amount in controversy.'" Heyman v. Lincoln Nat'l Life Ins. Co., No. 3:16-cv-37-DJH-DW, 2017 WL 3274452, at *2 (W.D. Ky. Apr. 27, 2017) (citation omitted). The district court thus concluded that the amount-in-controversy provision of 28 U.S.C. § 1332(a) had been met and denied Heyman's motion to remand. Id. at *3-4.

Satisfied that it could exercise jurisdiction over the dispute, the district court turned its attention to Lincoln National's motion for judgment on the pleadings. The district court noted that Heyman's suit mirrored that filed on behalf of another plaintiff in a class action in Indiana federal court. Because the Indiana federal court suit predated Heyman's Kentucky federal court action, and because the parties and issues in the two cases were similar, the district court invoked a first-to-file rule, granted the insurance company's motion, and dismissed Heyman's case, albeit without prejudice. From those district court rulings, Heyman now appeals.


Amount in Controversy

District courts may exercise diversity jurisdiction over "civil actions where the matter in controversy exceeds the sum or value of...

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