Lewis v. Aetna U.S. Healthcare, Inc., 99-CV-104-H(M).
Decision Date | 20 October 1999 |
Docket Number | No. 99-CV-104-H(M).,99-CV-104-H(M). |
Citation | 78 F.Supp.2d 1202 |
Parties | Stephanie LEWIS, Plaintiff, v. AETNA U.S. HEALTHCARE, INC., Defendant. |
Court | U.S. District Court — Northern District of Oklahoma |
Joseph F. Clark, Jr., Richard Edward Warzynski, Layon Cronin & Kaiser, Tulsa, OK, for plaintiff.
Richard Casey Cooper, Sheila Marie Powers, Boesche McDermott & Eskridge, Tulsa, OK, for defendant.
This matter comes before the Court on Defendant's notice of removal (Docket # 1) and Defendant's motion to dismiss(Docket # 8).This case was originally filed on December 21, 1998, in the District Court for Tulsa County, Oklahoma.Defendant undertook to remove the case to federal court by filing a notice of removal on February 5, 1999.Defendant filed its motion to dismiss on February 26, 1999.A hearing was held in this matter on July 8, 1999.
To prevail on a motion to dismiss, a defendant must establish that there is no set of circumstances under which the plaintiff would be entitled to relief.SeeJenkins v. McKeithen,395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404(1969);Ash Creek Mining Co. v. Lujan,969 F.2d 868, 870(10th Cir.1992).Accordingly, for purposes of resolving the issues here, the Court accepts as true the allegations in Plaintiff's original Petition.SeeAsh Creek Mining,969 F.2d at 870.
Plaintiff's Petition states two causes of action arising from Defendant's prolonged refusal to pay life insurance benefits due Plaintiff upon the death of her common law spouse.The first cause of action asserts that Defendant's failure to perform its obligations to Plaintiff under the policy constituted a breach of contract.The second cause of action, for bad faith, alleges that "Defendant's unreasonable delay in paying life insurance benefits constitutes a breach of the covenant of good faith and fair dealing," and seeks punitive as well as compensatory damages.
For purposes of the instant motion, the Court also accepts as admitted each of the eight requests for admissions that were served on Defendant contemporaneously with Plaintiff's Petition and never answered.SeeOkla. Stat. Ann. tit. 12, § 3236(West 1996).These requests for admission establish that, at the time of his death, Plaintiff's common law spouse was covered by a policy issued by Defendant, that Defendant denied coverage erroneously and eventually paid Plaintiff the benefits due her under the policy.
In its notice of removal, Defendant asserts that because Plaintiff states in her Petition that the dependent life insurance policy at issue in this action was part of an employee benefit package, Plaintiff's claims of breach of contract and bad faith refusal to pay benefits under the policy are governed by the Employment Retirement Insurance Security Act("ERISA"), 29 U.S.C. § 1001, et seq.Based on this assertion, Defendant argues that Plaintiff's action raises a question of federal law and is therefore removable to federal court under 28 U.S.C. § 1441(a).Furthermore, in its motion to dismiss, Defendant reiterates its assertion that ERISA applies to the insurance policy at issue and confirms that it did in fact eventually pay Plaintiff the benefits due her under the policy.
Plaintiff claims that Defendant is liable to Plaintiff for its failure to pay Plaintiff promptly the death benefits due her under the subject life insurance policy.As noted above, Plaintiff asserts one cause of action for breach of contract and a second cause of action in tort for breach of the implied-in-law covenant of good faith and fair dealing under Christian v. American Home Assurance Co.,577 P.2d 899(Okla.1977).In her response to Defendant's motion to dismiss, Plaintiff asserts first that this plan is not covered by ERISA and second, even if covered by ERISA, her claims avoid preemption under the statute's saving clause, 29 U.S.C. § 1144(b)(2)(A).
State laws that "relate to any employee welfare benefit plan" are generally preempted by ERISA.29 U.S.C. § 1144.ERISA's "relate to" preemption is conspicuous for its breadth.SeeFMC Corp. v. Holliday,498 U.S. 52, 58, 111 S.Ct. 403, 112 L.Ed.2d 356(1990);Straub v. W. Union Tel. Co.,851 F.2d 1262, 1263(10th Cir.1988).Both of Plaintiff's causes of action relate to the alleged bad faith delay in paying a claim under her employer's group insurance coverage.The record is uncontroverted that Columbia Doctor's Hospital presented the dependent life insurance coverage at issue here as part of its benefits package for its employees.Thus, the policy qualifies as an "employee welfare benefit plan."See29 U.S.C. § 1002(1)(1994).Plaintiff's claims against Aetna clearly relate to the plan.SeePeckham v. Gem State Mut. of Utah,964 F.2d 1043(10th Cir.1992).Therefore, Plaintiff's claim that this plan is not subject to ERISA at all is without merit.Since Plaintiff does not assert that her contract cause of action is nevertheless exempt under the saving clause, her claim for breach of contract clearly must fail, because ERISA limits relief to benefits due under the policy, which have been paid in this case.1Accordingly, the only remaining issue is whether, as Plaintiff argues, her tort claim under Christian avoids preemption by falling within ERISA's statutory saving clause.That clause states, in applicable part: "Except as provided in subparagraph (B), nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities."229 U.S.C. § 1144(b)(2)(A)(1994).Plaintiff argues that a Christian tort action constitutes enforcement of a state rule that "regulates insurance" under the test for construing the saving clause recently announced by the United States Supreme Court in UNUM Life Ins. Co. of America v. Ward,526 U.S. 358, 119 S.Ct. 1380, 143 L.Ed.2d 462(1999).
The question presented is whether ERISA preempts a Christian cause of action, or whether, in light of UNUM, such a cause of action "regulates insurance" and therefore avoids preemption pursuant to ERISA's saving clause, 29 U.S.C. § 1144(b)(2)(A).Under the allegations accepted as true here, the issue is whether an insurance company may refuse to pay a rightful claim in bad faith, thereby forcing the claimant to hire an attorney and incur unnecessary costs, but ultimately pay the benefits due under the policy, and finally invoke ERISA preemption and its statutory limitations on recovery to the benefits payable under the policy, thus avoiding all accountability both to the insured and to the State of Oklahoma for its conduct.The Court finds that the history, express terms, and consistent application of the Christian cause of action compel the conclusion that the purpose and effect of this State rule is to "regulate insurance" as that phrase has been defined by the United States Supreme Court in UNUM.As a result, Plaintiff's tort cause of action is not preempted by ERISA and may proceed under Oklahoma law.
To fully understand Christian, it is necessary first to understand its legal context by reviewing the relevant statutory provisions regulating insurance in Oklahoma.The Oklahoma statutes evidence a specific legislative policy against the bad faith failure to pay rightful claims.In particular, the Insurance Code,Okla. Stat. tit. 36 § 101 et seq., contains several regulatory restrictions that are relevant to the issue of bad faith: Article 12 of the Insurance Code, entitled Unfair Practices and Frauds, regulates certain practices pertaining to the payment of claims generally,3 as well as the failure to pay claims in violation of the Uniform Claims Settlement Practices Act;4Okla. Stat. tit. 36 § 1219 creates a private right of action if an insurer does not pay a valid claim within 60 days;Okla. Stat. tit. 36 § 3629 obligates an insurer to settle or reject a claim within 90 days of receiving a proof of loss; and Okla. Stat. tit. 36 § 4405(A)(8) requires a standard clause in each accident and health insurance policy pursuant to which insurers must pay claims promptly.5
It is settled law that Oklahoma does not recognize a private right of action for a violation of the Unfair Settlement Practices Act, Okla. Stat. tit. 36 § 1250.1 et seq.SeeGianfillippo v. Northland Casualty Co.,861 P.2d 308, 310(Okla.1993);Walker v. Chouteau,849 P.2d 1085(Okla.1993).However, the Insurance Code in general, and the Act in particular, reflect a clear State policy of regulating insurance in part by prohibiting the bad faith failure by insurers to pay promptly the rightful claims of insureds.
As discussed more fully below, the Christian court expressly referenced this legislative policy in holding that Oklahoma recognized the tort of breach of implied duty of good faith and fair dealing in an accident insurance policy.This tort has since been recognized with respect to all insurance policies.SeeMcCorkle v. Great Atl. Ins. Co.,637 P.2d 583, 588(Okla.1981).
The facts in Christian were relatively straightforward.The plaintiff purchased disability insurance and became permanently and totally disabled in an accident covered by the policy.The insurer refused to pay benefits and further refused to tell the insured why benefits were denied.The insured sued the insurer for breach of contract and sought maximum disability benefits plus interest."Although [the insurer] refused to pay the claim and fully litigated the action, it became apparent during the trial that [the insurer] did not have, and had never had, a valid defense to [the insured's] claim."Christian,577 P.2d at 900.The trial court held for the plaintiff.Seeid.
Thereafter, Mr. Christian filed a second action in tort for breach of the duty of good faith, seeking compensatory damages, damages for mental suffering and distress, punitive damages, as well as all attorney fees and litigation costs for the prior action.
In reversing the trial court's summary judgment in favor of insurer, the Oklahoma...
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