Little v. Unumprovident Corp., No. C-2-01-1269.

• Citation: 196 F.Supp.2d 659
• Decision Date: 01 May 2002
• Docket Number: No. C-2-01-1269.
• Parties: Joyce LITTLE, Plaintiff, v. UNUMPROVIDENT CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

196 F.Supp.2d 659

Joyce LITTLE, Plaintiff, v. UNUMPROVIDENT CORPORATION, et al., Defendants.

No. C-2-01-1269.

United States District Court, S.D. Ohio, Eastern Division.

May 1, 2002.

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Scott S. Blass, Bordas, Bordas & Jividen, Wheeling, WV, for plaintiff.

Brett K. Bacon, Michael J. Holleran, Frantz, Ward, LLP, Cleveland, OH, for defendants.

OPINION AND ORDER

GRAHAM, District Judge.

This is an action filed by plaintiff Joyce Little against defendants UNUMProvident Corporation and UNUM Life Insurance Company of America. This matter is now before the court on defendants' motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) and to strike plaintiff's jury demand.

A complaint may be dismissed for failure to state a claim only where it appears beyond doubt that the plaintiff can prove no set of facts in support of her claim which would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The court must construe the complaint in a light most favorable to the plaintiff and accept all well-pleaded allegations in the complaint as true. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A motion to dismiss under Rule 12(b)(6) will be granted if the complaint is without merit due to an absence of law to support a claim of the type made or of facts sufficient to make a valid claim, or where the face of the complaint reveals that there is an insurmountable bar to relief. Rauch v. Day & Night Mfg. Corp., 576 F.2d 697 (6th Cir.1978). The court is not required to accept as true unwarranted legal conclusions or factual inferences. Morgan v. Church's Fried Chicken, 829 F.2d 10 (6th Cir.1987).

I. History of the Case

This action was originally filed in the Court of Common Pleas of Belmont County, Ohio on November 19, 2001. In her complaint, plaintiff alleged that she was a covered insured under a long term disability policy and a group life and accidental death and dismemberment benefit policy issued to the Twin City Hospital Corporation in Dennison, Ohio. Plaintiff further alleged that in the summer of 1994, she developed cardiomyopathy and congestive heart failure which rendered her totally disabled and unable to perform the material duties of her regular occupation or any occupation for which she was reasonably fitted by training, education or experience. It is further alleged that defendants paid total disability benefits from 1994 to 2000. However, by letters dated January 25, 2001, and January 26, 2001, defendants advised plaintiff that her disability benefits would be discontinued, and that as a result, her life insurance coverage would also be terminated. Plaintiff contended that the decision to discontinue her benefits was without reasonable justification, and alleged that defendants misled plaintiff's physician in an effort to place his reports about plaintiff's condition in a false light.

In Count I of her complaint, plaintiff asserted a claim for benefits due under the policies. In Count II, she asserted a claim for intentional infliction of emotional distress resulting from the handling of her claims and the discontinuance of her disability benefits and coverage under the life insurance policies. In Counts III and IV, plaintiff asserted claims for breach of the actual and implied covenants of good faith and fair dealing inherent in insurance contracts due to the termination of her disability benefits and life insurance coverage, misrepresentations allegedly made to plaintiff's physician, and the arbitrary, capricious or malicious refusal to continue her benefits. She also alleged that defendants put their own interests ahead of plaintiff's interests.

On December 20, 2001, defendants filed a notice of removal of the action to this court. The removal was based on the existence of diversity jurisdiction, and on federal question jurisdiction resulting from the alleged complete pre-emption of plaintiff's state law claims by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. In support of the latter ground for removal, defendants asserted that the insurance policies in question were issued to plaintiff's employer, Twin City Hospital Corporation, and were employee benefit plans as defined in ERISA, 29 U.S.C. § 1002(1), and further, that plaintiff was a "participant" of these ERISA plans as defined in 29 U.S.C. § 1002(7).¹

II. ERISA Pre-emption

A. Standards

Defendants argue that plaintiff's state law claims of bad faith, intentional infliction of emotional distress, and fraud are pre-empted by ERISA. Defendants also contend that plaintiff's prayer for punitive damages is pre-empted.

ERISA is a comprehensive act designed to regulate employee welfare and pension benefits plans. New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 650-51, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). ERISA was enacted to replace a patch-work scheme of state regulation of employee benefit plans with a uniform set of federal regulations. See FMC Corp. v. Holliday, 498 U.S. 52, 56-60, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990).

Pursuant to 29 U.S.C. § 1144(a), ERISA pre-empts all state laws that "relate to" employee benefit plans, whether or not the state laws are designed to affect employee benefit plans. Id. at 58, 111 S.Ct. 403. The label placed on the state law claim does not determine whether it is pre-empted; rather, pre-emption occurs where the essence of the claim is for the recovery of an ERISA plan benefit. Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1276 (6th Cir.1991).

In discussing this pre-emption provision, the Supreme Court has noted its extreme breadth, terming it "clearly expansive," "broad [in] scope," "broadly worded," "deliberately expansive," and "conspicuous for its breadth." California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 324, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997)(internal citations omitted). The Supreme Court has found that in enacting § 1144(a), it was Congress' intent:

to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government ..., [and to prevent] the potential for conflict in substantive law, ... requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.

Travelers, 514 U.S. at 656-57, 115 S.Ct. 1671 (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)). However, the pre-emption provision is not without limits. Pre-emption does not occur if the state law has only a tenuous, remote, or peripheral connection with covered plans, such as many laws of general applicability. District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 130 n. 1, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992).

A plan "relates to" an ERISA plan for purposes of § 1144(a) if it has (1) a connection with, or (2) a reference to, such plan. Dillingham, 519 U.S. at 324, 117 S.Ct. 832.² In discussing whether a state law has a "connection with" an ERISA plan, the Supreme Court has indicated that ERISA's "relates to" language was not intended to modify "the starting presumption that Congress does not intend to supplant state law." Travelers, 514 U.S. at 654, 115 S.Ct. 1671. See also De Buono v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806, 813, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997). In analyzing whether there is connection to an ERISA plan, a court must look "to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive," Travelers, 514 U.S. at 656, 115 S.Ct. 1671, as well as to the nature of the effect of the state law on ERISA plans. Dillingham, 519 U.S. at 325, 117 S.Ct. 832. The Supreme Court has also stated that the purpose of § 1144(a) was "to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans," and noted that, under past decisions, ERISA pre-empts state laws that mandate employee benefit structures or their administration. Id. at 657-58, 115 S.Ct. 1671.

By way of example, the Supreme Court held in Travelers that a statute which required hospitals to exact surcharges from patients whose hospital bills were paid by non-Blue Cross/Blue Shield providers was not pre-empted because the indirect economic influence of the surcharge did not bind plan administrators to any particular choice so as to regulate the ERISA plan itself, nor did it preclude uniform administrative practice or furnishing a uniform interstate benefit package. Travelers, 514 U.S. at 659-60, 115 S.Ct. 1671. In Dillingham, the Court found that California's prevailing wage statute, which required contractors to pay journeyman wages to apprentices not hired from an approved apprenticeship program, was not pre-empted because it did not require ERISA plans to do anything, but merely provided economic incentive to comport with the state's requirements by using apprentices from approved programs. Dillingham, 519 U.S. at 332, 334, 117 S.Ct. 832. In De Buono, the Court held that ERISA did not pre-empt a state tax on hospitals, even though the law had some impact on the cost of providing benefits to covered employees. De Buono, 520 U.S. at 816, 117 S.Ct. 1747.

In contrast, pre-emption has been found where state laws mandated employee benefit structures or their administration, or where state laws provided alternative enforcement mechanisms which related to ERISA plans. See Travelers, 514 U.S. at 657-58, 115 S.Ct. 1671 (discussing cases). The Supreme Court recently applied the Travelers analysis in Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001)....