Hulcher v. United Behavioral Systems, Inc., Civil No. 3:95CV46.

• Decision Date: 21 February 1995
• Docket Number: Civil No. 3:95CV46.
• Citation: 919 F. Supp. 879
• Parties: Bradford HULCHER, Plaintiff, v. UNITED BEHAVIORAL SYSTEMS, INC. and Blue Cross and Blue Shield of Virginia, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

919 F. Supp. 879

Bradford HULCHER, Plaintiff, v. UNITED BEHAVIORAL SYSTEMS, INC. and Blue Cross and Blue Shield of Virginia, Defendants.

Civil No. 3:95CV46.

United States District Court, E.D. Virginia, Richmond Division.

February 21, 1995.

COPYRIGHT MATERIAL OMITTED

Mark Edward Rubin, Sarah Jane Chittom, Shuford, Rubin & Gibney, Richmond, VA, for plaintiff.

Barbara Pope Flannagan, Laura Graham Fox, Wright, Robinson, McCammon, Osthimer & Tatum, Richmond, VA, for United Behavioral Systems, Inc.

Jeanette Dian Rogers, Amy Tredway Holt, Blue Cross and Blue Shield of Virginia, Legal Department, Richmond, VA, for Blue Cross Blue Shield of Virginia.

Jennings Grey Ritter, II, John Edward Holleran, Hunton & Williams, Richmond, VA, for Crestar Bank.

MEMORANDUM

MERHIGE, District Judge.

This matter is before the Court on Defendants' motion to strike Plaintiff's request for a jury trial. For the reasons which follow, the Court will deny the motion.

I.

Plaintiff, an alleged beneficiary of a health insurance plan funded by her husband's employer, sought treatment for depression at an institution which was considered a "non-network provider." Plaintiff avers that the subject plan was obligated to provide benefits up to 50% of the cost of care provided by non-network providers. According to Plaintiff, Defendants "breached their contract of insurance by refusing to pay any part of the costs incurred by the plaintiff." Motion for Judgment ¶ 8. Consequently, Plaintiff filed suit against Defendants in the Circuit Court for the County of Henrico on December 20, 1994, seeking $11,000.00 plus attorneys fees and costs.

On January 17, 1995, Defendants filed separate notices of removal with the Clerk of this Court on the basis that the motion for judgment stated a claim under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.¹ Plaintiff subsequently filed a Demand for Jury Trial on January 27, 1995, and Defendants moved to strike the jury demand. To date, Plaintiff has yet to amend the complaint to state a cause of action under ERISA. While the Court could merely take the instant matter under advisement pending the submission of an amended complaint, the Court, in the interest of judicial economy, will address Defendant's motion to strike on the assumption that Plaintiff, within ten days of the date of this Memorandum and accompanying Order, will file an amended complaint stating a cause of action under ERISA.²

II.

Plaintiff demands a trial by jury. In so doing, he argues that the suit involves a legal claim in that the complaint sets forth a breach of contract action seeking monetary damages. On this basis, Plaintiff contends that the action should properly be tried before a jury.

A. General principles

ERISA does not expressly provide for a right to a jury trial. Indeed, the majority view is that jury trials are not permitted under ERISA on the general premise that any determinations related thereto are inherently equitable. See e.g., Turner v. CF & I Steel Corp., 770 F.2d 43 (3d Cir.), cert. denied, 474 U.S. 1058, 106 S.Ct. 800, 88 L.Ed.2d 776 (1986); Spinelli v. Gaughan, 12 F.3d 853, 857-58 (9th Cir.1993); Borst v. Chevron Corp., 36 F.3d 1308 (5th Cir.1994). Notwithstanding this general principle, there has been a developing trend in cases brought under ERISA § 1132(a)(1)(B) to permit a trial by jury. See e.g., Vaughn v. Owen Steel Co., Inc., 871 F.Supp. 247, 1994 WL 711838 (D.S.C.1994); Dawes v. First Unum Life Ins. Co., 851 F.Supp. 118 (S.D.N.Y.1994); Sullivan v. LTV Aerospace & Defense Co., 850 F.Supp. 202 (W.D.N.Y.1994); Int'l Union, United Auto., Aerospace, & Agric. Implement Workers of America v. Midland Steel Prod. Co., 771 F.Supp. 860, 863-65 (N.D.Ohio 1991); Rhodes v. Piggly Wiggly Alabama Dist. Co., Inc., 741 F.Supp. 1542 (N.D.Ala. 1990); Steeples v. Time Insurance Co., 139 F.R.D. 688 (N.D.Olka.1991); McDonald v. Artcraft Electric Supply Co., 774 F.Supp. 29 (D.D.C.1991); Vicinanzo v. Brunschwig & Fils, Inc., 739 F.Supp. 882, 885 (S.D.N.Y. 1990); Gangitano v. NN Investors Life Ins. Co., 733 F.Supp. 342 (S.D.Fla.1990). But see Blake v. Unionmutual Stock Life Ins. Co. of America, 906 F.2d 1525 (11th Cir.1990) (no jury trial); Bair v. General Motors Corp., 895 F.2d 1094 (6th Cir.1990) (same); In re Vorpahl, 695 F.2d 318 (8th Cir.1982) (same); Quesinberry v. Individual Banking Group Accident Ins. Plan, 737 F.Supp. 38 (W.D.Va. 1990), aff'd, 987 F.2d 1017 (4th Cir.1993) (no jury trial).³ The rationale underlying the cases which have permitted a jury trial is that suits by individual beneficiaries to recover benefits under an ERISA plan sound in contract and are, thus, legal in nature, rather than equitable.

Defendants rely on Berry v. Ciba-Geigy Corp., 761 F.2d 1003 (4th Cir.1985), for the general proposition that jury trials are never permitted when a claim raises issues regarding rights under an ERISA plan.⁴ In Berry, an individual beneficiary brought suit to challenge the plan trustee's decision to terminate long-term disability benefits. The Fourth Circuit concluded that the district court erred in permitting trial by jury. The court based this holding on the principle that the "arbitrary and capricious" standard of review must be applied to a denial of benefits, and that the application of this standard is "a matter for the court" because the "significance of the standard, while second-nature to a judge, is not readily communicated to jurors." Id. at 1006-07. The court, in support of its holding, noted in summation that ERISA actions are generally held to be equitable in nature and, thus, appropriately tried to the court. Id. at 1007 (citing, inter alia, Restatement (Second) of Trusts §§ 197, 98).

Despite a contrary holding, the Court does not feel confined by Berry. Accord Vaughn, 871 F.Supp. at 248-49, 1994 WL 711838 at *3-4. Contra Quesinberry, 737 F.Supp. at 38 (adhering to Berry). To begin, Berry was decided prior to Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In Firestone, the Supreme Court held that a § 1132(a)(1)(B) challenge to a denial of benefits must, absent discretion in the trustee or fiduciary to determine benefits eligibility, be reviewed de novo. Id. at 115, 109 S.Ct. at 956. In short, the Supreme Court determined that "actions challenging an employer's denial of benefits before the enactment of ERISA were governed by principles of contract law" and, consequently, that de novo review was generally more appropriate because the arbitrary and capricious standard "afforded less protection to employees and their beneficiaries than they enjoyed before ERISA was enacted." Id. at 113-14, 109 S.Ct. at 955-56.⁵ Thus, the continued validity of Berry has been called into question by the Supreme Court in Firestone. Moreover, the Court notes that Berry is also limited because the court, for whatever reason, did not conduct a Seventh Amendment analysis to determine whether or not there is a constitutional right to a jury trial in § 1132(a)(1)(B) actions. Given the Supreme Court's recent emphasis on such analysis, see Chauffeurs, Teamsters and Helpers Local No. 391 v. Terry, 494 U.S. 558, 565, 110 S.Ct. 1339, 1344, 108 L.Ed.2d 519 (1990), the Court concludes that it is bound to determine the constitutional requirements of an action under § 1132(a)(1)(B). Consequently, the Court does not consider Berry to be controlling in the instant matter. Accord Vaughn, 871 F.Supp. at 248-49, 1994 WL 711838 at *3-4.

B. Constitutional analysis

The Seventh Amendment provides that "in Suits at Common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." U.S. Const. amend. VII. The right to jury trial exists, and will be "carefully preserved," where legal rights are at issue. Terry, 494 U.S. at 565, 110 S.Ct. at 1344 (citations omitted). In determining whether or not a particular action will involve a determination of legal rights, a court must "examine both the nature of the issues involved and the remedy sought," with the second inquiry being the more important. Id. (citations omitted). Furthermore, the right to trial by jury is not generally dependent upon whether or not "the issues are typical grist for the jury's judgment." Id. at 565 n. 4, 110 S.Ct. at 1345 n. 4.

1. Nature of the issue to be tried

It is true that trust law principles pervade ERISA and that ERISA challenges, especially those involving breach of fiduciary duties, are often equitable in nature. See Terry, 494 U.S. at 567, 110 S.Ct. at 1345; Firestone, 489 U.S. 101, 110, 109 S.Ct. 948, 954. Actions by individual beneficiaries to recover benefits, however, stand on a different footing.

"The right to a jury trial includes more than the common-law forms of action recognized in 1791; the phrase `Suits at common law' refers to `suits in which legal rights are to be ascertained and determined.'" Terry, 494 U.S. at 564, 110 S.Ct. at 1344 (citations omitted). Where legal rights are involved, the Supreme Court has "carefully preserved the right to a trial by jury." Id. at 565, 110 S.Ct. at 1345. Unlike actions for breach of fiduciary duty, a suit to recover what is due and owing under a benefits plan is, in reality, an action at law to recover a purported legal entitlement. See Firestone, 489 U.S. at 113, 109 S.Ct. at 955 (pre-ERISA suits to recover benefits under a health plan were contractual in nature). Furthermore, there is little doubt that the "closest eighteenth century analogue to a such a claim would be a claim for breach of contract." Sullivan, 850 F.Supp. at 214 (citations omitted); cf. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989) (statutory fraudulent transfer action by bankruptcy trustee seeking monetary damages was analogous to 18th-century common law fraudulent conveyance actions; thus, parties entitled to jury trial).

In the instant matter, Plaintiff avers that...