Jewel v. Unumprovident Corp.

• Decision Date: 06 January 2005
• Docket Number: No. CIV.A.04-40262-FDS.,CIV.A.04-40262-FDS.
• Parties: Carol JEWEL, Shirley Hoiland, and Mary L. Patrick, individually and on behalf of all others similarly situated, Plaintiffs, v. UNUMPROVIDENT CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

352 F.Supp.2d 122

Carol JEWEL, Shirley Hoiland, and Mary L. Patrick, individually and on behalf of all others similarly situated, Plaintiffs, v. UNUMPROVIDENT CORPORATION, et al., Defendants.

No. CIV.A.04-40262-FDS.

United States District Court, D. Massachusetts.

January 6, 2005.

David Pastor, Gilman and Pastor, LLP, Douglas M. Brooks, Martland & Brooks LLP, Saugus, MA, Richard J. Quadrino, Quadrino & Schwartz, PC, Garden City, NY, for Plaintiffs.

Joseph M. Hamilton, Kristina H. Allaire, Mirick, O'Connell, Demallie & Lougee, Worcester, MA, for Defendants.

MEMORANDUM REGARDING PLAINTIFFS' MOTION TO REMAND

SAYLOR, District Judge.

This is an action against a related group of insurance companies alleging misconduct in the handling of long-term disability claims. The complaint was originally filed in the Worcester Superior Court, and as pleaded was not removable to federal court under 28 U.S.C. § 1441. Approximately one year later, plaintiffs filed an emergency motion seeking certain immediate relief. Based on the allegations in that motion, and the relief sought, defendants removed the matter to federal court pursuant to 28 U.S.C. § 1446(b), on the grounds that the matter had "become removable." Plaintiffs have moved to remand, contending that federal subject-matter jurisdiction is lacking even in light of the relief sought in the emergency motion. For the reasons set forth below, the motion to remand has been granted.

Background¹

Defendants UnumProvident Corporation, Unum Life Insurance Company of America, First Unum Life Insurance Company, Provident Life and Casualty Insurance Company, Provident Life and Accident Insurance Company, and the Paul Revere Life Insurance Company are related entities that issue long-term disability insurance policies. They are alleged to have engaged in unfair and deceptive practices in the handling of disability claims, essentially by denying benefits in order to boost financial results rather than on the basis of unbiased medical evidence. Plaintiffs Carol Jewel, Shirley Hoiland, and Mary Patrick are the beneficiaries of disability policies issued by defendants. Plaintiffs contend that they were wrongfully denied benefits, and have sued individually and on behalf of a putative class, seeking damages for breach of contract and violation of the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A.

Plaintiffs filed their complaint in Worcester Superior Court on December 11, 2003. The action, as initially pleaded, was not removable to this Court. Complete diversity is lacking, as plaintiffs and defendant Paul Revere Life Insurance Company are citizens of Massachusetts. Plaintiffs did not assert any claims under federal law; in particular, plaintiffs did not assert a claim under the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., nor did they assert any state-law claims that are preempted by ERISA. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Indeed, the class was defined to exclude any individual to whom ERISA might apply:

All individual long-term disability policyholders and all participants in group, long-term disability plans which are not covered by the Employee Retirement Income Security Act of 1974 ("non-ERISA group plan participants") who (a) had coverage issued by an insuring subsidiary of UNUMProvident named herein as a Defendant, and (b) whose claims for long-term disability benefits were denied, or whose payments of long-term disability benefits were terminated or suspended, on or after July 1, 1999 by any Defendant after being subjected to any one or more of the abusive claims practices alleged in this Complaint.

Complaint ¶ 11.

On September 29, 2004, plaintiffs moved for class certification as to the Chapter 93A claim. The Superior Court scheduled a hearing on plaintiffs' motion for November 15, 2004. At defendants' request, that hearing was postponed and rescheduled for December 22, 2004.

On November 18, 2004, defendants announced that they had entered into a Regulatory Settlement Agreement ("RSA") with state insurance regulatory authorities and the United States Department of Labor concerning their handling of disability claims. The RSA is the product of at least two investigations of defendants' practices, one conducted by state insurance regulators and another conducted by the Department of Labor.²

The RSA requires, among other things, that defendants afford certain beneficiaries an opportunity to reopen previously denied claims for long-term disability insurance benefits. The RSA further requires defendants to send a specific form of notice to those beneficiaries (the "RSA notice") that advises them, among other things, of their right to reopen their disability claims.

The RSA covers both policies that are subject to ERISA (essentially, those provided as an employment benefit) and policies that are not. Because the regulation of insurance is generally left to the states, the interest of the Department of Labor is limited to the ERISA aspects of the settlement. The RSA notice does not distinguish between individuals whose claims arise under ERISA and those whose claims do not. According to plaintiffs, there are approximately 215,000 policies subject to the RSA, of which approximately 39,000 are not covered by ERISA. According to defendants, presumably either because they do not capture the relevant information from policyholders or cannot readily retrieve it, "[t]here is no practicable and timely method whereby either [they] or anyone else can determine which of the persons to whom the RSA requires notice to be sent have claims covered by ERISA and which do not."

On December 17, 2004, plaintiffs filed in the Superior Court an Emergency Motion to (1) Supplement the Record on Plaintiffs' Motion for Class Certification, and (2) Provide Expedited Notice to Class Members of Pendency of Proposed Class Action and Statement of Reasons (the "Emergency Motion").³ The Emergency Motion essentially challenges the sufficiency of the RSA notice. It seeks to require defendants to mail a "Notice of Pendency" of the proposed class action to all class members. Plaintiffs specifically suggest the following:

The form of the Notice of Pendency of the proposed class actions may take one of two forms; (a) insertion of language into the letter that defendants intend to distribute as part of the RSA that includes: (1) a description of the pending class actions; (2) the nature of the relief sought in the class actions; (3) the potential advantages and disadvantages of the RSA process; and (4) the fact that the claimant may be excluded from participation in the class actions should he/she elect review under RSA and receive even one dollar more in additional benefits; or (b) the enclosure of a separate notice with the mailing to be made by Defendants.

Under either approach, the most immediate and cost-effective, and the least confusing, way to provide notice to the class members will be to insert the necessary additional information into the mailing to denied claimants contemplated under the RSA. If Defendants do not make these disclosures, then Defendants and the class members run the serious risk that the RSA notice and the waivers or releases executed pursuant to the RSA will later be judged invalid and all parties will face additional time, expense, confusion, and the risk that the results of the RSA claims process will be meaningless. Plaintiffs contend that claimants would best be informed of their option by inclusion of language directly into the letter proposed by defendants.... Again, as an alternative, a separate form of notice can be distributed in the same mailing....

Emergency Motion at 17-18. Plaintiffs claim that defendants should be required to send a "Notice of Pendency" to prospective class members to avoid the "prejudice and confusion which will be caused when the Defendants notify putative class members about the RSA."⁴

On December 22, 2004, defendants filed a notice of removal in this Court, contending that the relief sought in the Emergency Motion triggered a right of removal that did not previously exist. Specifically, defendants state that, because plaintiffs sought in the Superior Court to alter the language of the RSA notice, and because the RSA notice is required by an agreement to which the Department of Labor is a party, removal is now proper for two reasons: first, under 28 U.S.C. § 1442(a), "because [they] are defendants in a suit against a person acting under an officer of the United States sued for an act performed under the color of office"; and second, under 28 U.S.C. § 1441, "because the requested relief ... seeks to change and alter a remedial scheme entered into by the [Department of Labor] under ERISA."

On December 30, plaintiffs filed a motion to remand for lack of subject-matter jurisdiction. Plaintiffs state that none of the plaintiffs in the putative class asserts claims governed by ERISA, and, therefore, the relief they seek in their Emergency Motion does not, factually or legally, seek to change or alter a remedial scheme entered into by the Department of Labor under ERISA. Plaintiffs further state that defendants do not satisfy the elements of the federal officer removal statute, 28 U.S.C. § 1442(a).

Because of the urgency of the matter, the Court held a telephonic hearing on the remand motion on January 3, 2005. On January 4, it issued an order remanding the action to the Superior Court and stating that a memorandum setting forth the Court's opinion would follow.

Analysis

As noted above, defendants claim that removal is proper under two statutes, 28 U.S.C. §§ 1441 and 1442(a). The Court will consider each in turn.

I. Removal Under Section 1442(a)

The relevant portion of § 1442 is as follows:

(a) A civil action or criminal prosecution commenced in a State court against any of the following may be removed by them to the...