Iwans v. Aetna Life Ins. Corp., Civ. No. 2:92CV00764 (AHN).

• Decision Date: 08 June 1994
• Docket Number: Civ. No. 2:92CV00764 (AHN).
• Citation: 855 F. Supp. 579
• Court: U.S. District Court — District of Connecticut
• Parties: Elaine IWANS v. AETNA LIFE INSURANCE CORP., CBIA Service Corp. and Contromatics, Inc.

855 F. Supp. 579

Elaine IWANS v. AETNA LIFE INSURANCE CORP., CBIA Service Corp. and Contromatics, Inc.

Civ. No. 2:92CV00764 (AHN).

United States District Court, D. Connecticut.

June 8, 1994.

David C. Shaw, Hartford, CT.

Kimberly Mango, Mark Ostrowski, Shipman & Goodwin, Hartford, CT, for defendants Aetna and CBIA.

Larry Lissitzyn, Reid & Reige, Hartford, CT, for Contromatics.

RULING ON MOTION TO DISMISS

NEVAS, District Judge.

The plaintiff, Elaine Iwans ("Iwans"), brings this action for wrongful denial of life insurance benefits against the defendants, CBIA Service Corp. ("CBIA"), Aetna Life Insurance Corp. ("Aetna") and Contromatics, Inc. ("Contromatics"), as executrix of her late husband's estate, as well as on behalf of past and former plan participants who may have been denied benefits because they were 60 or older at the time they became disabled.

Iwans's amended complaint alleges four causes of action. The first two counts allege claims under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., for the alleged breach of fiduciary duty regarding (1) the Plan's disability premium waiver provision and (2) Mr. Iwans's conversion rights under the Plan. The third count alleges a violation of Conn. Gen.Stat. §§ 38a-456 for failure to notify her husband that his group life insurance had been discontinued, or of his right to convert group life insurance coverage to an individual life insurance policy. In the fourth count, Iwans asserts that the defendants violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq. by writing and enforcing a discriminatory provision in the group life insurance policy.

Presently, CBIA and Aetna ("defendants" herein) move to dismiss the first three counts of the amended complaint as against them.¹ For the reasons that follow, this motion docs. # 13, # 35² is DENIED as to Counts I and II, and GRANTED as to Count III.

STANDARD OF REVIEW

When considering a Rule 12(b)(6) motion to dismiss, the court is required to accept as true all factual allegations in the complaint and draw inferences from these allegations in the light most favorable to the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Easton v. Sundram, 947 F.2d 1011, 1014-15 (2d Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1943, 118 L.Ed.2d 548 (1992). Dismissal is warranted only if, under any set of facts that the plaintiff can prove consistent with the allegations, it is clear that no relief can be granted. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); Frasier v. General Elec. Co., 930 F.2d 1004, 1007 (2d Cir.1991). "The issue on a motion to dismiss is not whether the plaintiff will prevail, but whether the plaintiff is entitled to offer evidence to support his or her claims." United States v. Yale New Haven Hosp., 727 F.Supp. 784, 786 (D.Conn.1990) (citing Scheuer, 416 U.S. at 232, 94 S.Ct. at 1684).

FACTS

With this standard in mind, the facts are as follows. From 1985 to 1991, Aetna issued group life insurance (the "Plan") to CBIA Service Corporation ("CBIA"). Contromatics, as an employer-member of CBIA, offered life insurance under the Plan to its employees. Aetna implemented the Plan and acted as Plan manager. As the Plan manager, Aetna construed and interpreted the Plan, resolved questions arising under the Plan, performed the necessary functions to provide benefits and furnished information concerning benefits to Plan participation.

As President and Chief Executive Officer of Contromatics, Iwans's husband, Robert C. Iwans ("Mr. Iwans"), was entitled to participate in any retirement and employee benefit plans offered, and was eligible for $150,000 in life insurance coverage. In 1988, Mr. Iwans was diagnosed with cancer, and in February, 1991, he suffered a disabling heart attack which seriously impeded his ability to perform his job. As a result, Contromatics reassigned some of Mr. Iwans's responsibilities as CEO from March 1, 1991 through July 8, 1991.

On or about July 1, 1991, Contromatics notified Aetna that Mr. Iwans was no longer eligible for coverage under the Plan. Thereafter, Contromatics discontinued paying premiums with respect to Mr. Iwans's group life insurance coverage under the Plan. By July 8, 1991, Mr. Iwans was totally disabled as a result of his cancer and heart attack, and his employment with Contromatics was terminated under written agreement.

However, neither Contromatics nor Aetna nor CBIA gave Mr. Iwans written notice that his group life insurance coverage was being terminated, or that he had a right to convert his coverage under the group policy to an individual life insurance policy within 31 days of his termination. Rather, upon inquiry Contromatics told Mr. Iwans that converting the Aetna group policy to an individual life insurance coverage was "not an option."

On October 15, 1991, Iwans notified Aetna of her husband's death and demanded payment by Aetna of group life insurance benefits under the Plan. On February 10, 1992, Aetna denied coverage, and informed Iwans that her husband's policy was cancelled on July 1, 1991 and no individual conversion had occurred during the 31-day eligibility period.

On May 27, 1992, Iwans demanded payment from Aetna on the grounds that Mr. Iwans was totally disabled on the date of his termination from Contromatics and was therefore eligible for group life coverage under the Plan, even though no premium payments were made on or after July 1, 1991. However, on August 14, 1992, Aetna informed Iwans that the premium waiver provision of the Plan did not apply to Mr. Iwans because he was over age 60 at the time he became disabled and unable to work. Under the terms of the payment premium waiver provision, if the employee is 60 or older when he or she becomes disabled and is unable to work, the person must continue to pay premiums in order to receive the Plan benefits. If the employee is younger than 60, coverage will continue without premium payments.

DISCUSSION

I. Breach of Fiduciary Duty

In Counts I and II, Iwans alleges actions based on the defendants' breach of their fiduciary duties. Although no claim for relief immediately follows these counts, in her prayer for relief, listed separately at the end of her complaint, she seeks individual recovery in the amount of $150,000, as well as punitive damages and liquidated damages for the alleged ADEA violations. In addition, Iwans asks that the defendants be ordered to do the following: 1) identify all Plan participants who became unable to work and were not provided written notification, and allow them an opportunity to convert to individual life insurance coverage; 2) provide life insurance to all Plan participants who became disabled but were denied continuation of coverage because of their age and to refund the premiums paid by these individuals while disabled; and 3) eliminate the requirement that a disabled participant be under age sixty to be entitled to the premium waiver provision of the Plan. (See Am.Compl. at 12.)

ERISA provides for a comprehensive, and somewhat overlapping, civil enforcement scheme. As ERISA's civil enforcement provision, section 502, 29 U.S.C. § 1132, provides:

(a) Persons empowered to bring a civil action

A civil action may be brought —

(1) by a participant or beneficiary —

....

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;

(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or terms of the plan.

29 U.S.C. § 1132(a).

Section 1109, referred to in subsection (2) of the provision, sets forth the liability for breach of fiduciary duty. Under this section, "any person who is a fiduciary with respect to a plan who breaches any of the ... duties imposed upon fiduciaries by this subchapter³ shall be personally liable to make good to such plan ..., and shall be subject to such other equitable or remedial relief as the court may deem appropriate...." 29 U.S.C. § 1109(a).

These fiduciary responsibility provisions "`codify and make applicable to ERISA fiduciaries certain principles developed in the evolution of the law of trusts.'" Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948, 954, 103 L.Ed.2d 80 (1989) (quoting H.R.Rep. No. 93-533, at 11 (1972), reprinted in, 1974 U.S.C.C.A.N. 4639, 4649). In light of this, the Supreme Court has directed courts to develop a "`federal common law of rights and obligations under ERISA-regulated plans.'" Id. (quoting Pilot Life v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 1558, 95 L.Ed.2d 39 (1987)).

Although Iwans does not identify the specific sections on which she relies, claims for breach of fiduciary duty must be brought under § 1132(a)(2) or § 1132(a)(3), and not § 1132(a)(1)(B) which provides for recovery of plan benefits. See Anweiler v. American Elec. Power Serv. Corp., 3 F.3d 986, 992 (7th Cir.1993).⁴ With this general framework in mind, the court now turns to the specific claims.⁵

A. Breach of Fiduciary Duty: Disability Premium Waiver

In Count I, Iwans alleges that the defendants breached their fiduciary duties by administering a plan that discriminates on the basis of age in violation of the ADEA. In their renewed motion to dismiss this first cause of action, defendants concede that Iwans has stated a claim for breach of fiduciary duty based on the narrow issue of whether the application of the plan violates federal law (ADEA), but argue that there is...