Love v. Fortis Benefits Ins. Co.

• Decision Date: 07 November 2000
• Docket Number: No. CIV.A. 00-A-1265-N.,CIV.A. 00-A-1265-N.
• Citation: 120 F.Supp.2d 997
• Parties: Ernestine LOVE, Plaintiff, v. FORTIS BENEFITS INS. CO., Defendant.
• Court: U.S. District Court — Middle District of Alabama

120 F.Supp.2d 997

Ernestine LOVE, Plaintiff, v. FORTIS BENEFITS INS. CO., Defendant.

No. CIV.A. 00-A-1265-N.

United States District Court, M.D. Alabama, Northern Division.

November 7, 2000.

COPYRIGHT MATERIAL OMITTED

Robert S. Thompson, Tuskegee, AL, for plaintiff.

J. Beth Moscarelli, Montgomery, AL, Steven Casey, Birmingham, AL, for defendant.

MEMORANDUM OPINION

ALBRITTON, Chief Judge.

I. INTRODUCTION

This cause is before the court on a Motion to Remand, filed by the Plaintiff, Ernestine Love ("Love"), on October 11, 2000 (Doc. # 7); a Motion to Dismiss or in the Alternative a Motion for Summary Judgment (Doc. # 3) filed by the Defendant, Fortis Benefits Insurance Company ("Fortis"), on September 22, 2000; and a Motion to Strike (Doc. # 4) filed by Fortis on September 22, 2000.

Love originally filed her Complaint in this case in the Circuit Court of Bullock County, Alabama, Love has brought state law claims against the Defendant arising from the denial of long term disability insurance benefits. These claims are for breach of contract (Count I), bad faith (Count II), suppression (Count III), fraudulent misrepresentation (Count IV), and negligence (Count V).

On September 15, 2000, Fortis filed a Notice of Removal, contending that Love's claims are completely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), so that this court has subject matter jurisdiction over the case. The grounds for Fortis' Motion to Strike and Motion to Dismiss or for Summary Judgment are also that Love's state law claims are completely preempted by ERISA.

Love's subsequent Motion to Remand and her response to the Motions to Strike and to Dismiss contest that her claims are completely preempted by ERISA.

For reasons to be discussed, the Motion to Remand is due to be DENIED and the Motion to Dismiss is due to be GRANTED without prejudice to Love filing her claims under ERISA.

II. APPLICABLE STANDARDS

A. MOTION TO REMAND STANDARD

Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (1994); Wymbs v. Republican State Executive Committee, 719 F.2d 1072, 1076 (11th Cir.1983), cert. denied, 465 U.S. 1103, 104 S.Ct. 1600, 80 L.Ed.2d 131 (1984). As such, federal courts only have the power to hear cases that they have been authorized to hear by the Constitution or the Congress of the United States. See Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673. Because federal court jurisdiction is limited, the Eleventh Circuit favors remand of removed cases where federal jurisdiction is not absolutely clear. See Burns, 31 F.3d at 1095.

B. MOTION TO DISMISS STANDARD

A court may dismiss a complaint for failure to state a claim only if it is clear that no relief could be granted under any set of facts that could be proven consistent with the allegations in the complaint. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); see also Wright v. Newsome, 795 F.2d 964, 967 (11th Cir.1986) ("[W]e may not ... [dismiss] unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims in the complaint that would entitle him or her to relief.") (citation omitted). The court will accept as true all well-pleaded factual allegations and will view them in a light most favorable to the nonmoving party. Hishon, 467 U.S. at 73, 104 S.Ct. 2229. Furthermore, the threshold is "exceedingly low" for a complaint to survive a motion to dismiss for failure to state a claim. Ancata v. Prison Health Services, Inc., 769 F.2d 700, 703 (11th Cir.1985).

III. FACTS

Love alleges that while she was employed with Columbus Mills d/b/a Beaulieu of America ("Columbus Mills"), she purchased a long term disability insurance policy from Fortis. According to Love, when she made a claim on that policy in December of 1988, her claim was denied on the basis of a pre-existing condition. Love states that the insurance policy was not endorsed by her employer.

Fortis has provided a copy of the application for insurance and a Declaration of one of its sales representatives who states that the Vice-President of Columbus Mills selected the particular Fortis policy, including deductibles used to fund the plan. See Declaration of David Gilbert pages 1-2. According to this Declaration, Columbus Mills contractually agreed to offer the Fortis policy to its employees over a variety of other insurance products. Id. at page 2. Columbus Mills also determined the employees who would be allowed to participate. Id.; see also Application for Insurance. Fortis did not administer the plan. Columbus Mills paid a third party administrator to administer the plan. Declaration at page 2. Columbus Mills also participated in administering the plan by being responsible for submitting enrollment forms to the third party administrator and for providing termination notices to the third party administrator. Id. The Declaration also states that Columbus Mills attempted to renegotiate the terms of the preexisting condition provision of the contract. Id. According to Fortis' brief, when Fortis decided not to change the provision, Columbus Mills canceled the policy. Finally, according to the Declaration, when Fortis determined that Columbus Mills had made an overpayment, Fortis issued a check to Columbus Mills, not to the individual employees. Id.

IV. DISCUSSION

Removal of a case to federal court is only proper if the case originally could have been brought in federal court. See 28 U.S.C. § 1441(a). In this case, Fortis argues that removal was proper because the court has federal question jurisdiction. Federal question jurisdiction requires that the action arise under the Constitution, laws, or treaties of the United States. See 28 U.S.C. § 1331. In deciding whether a federal question exists, the court must apply the well-pleaded complaint rule whereby the court looks to the face of the complaint, rather than to any defenses asserted by the defendant. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Consequently, the general rule is that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption. See Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425.

There is, however, an exception to the well-pleaded complaint rule which the Defendants claim applies in the present case to give this court federal question jurisdiction. This exception is known as the "complete preemption" doctrine. Id. The doctrine of complete preemption is distinguished from a simple defense of preemption in that simple preemption is a question of whether a defense is available under federal law, while complete preemption is a jurisdictional question which focuses on Congress' intent to make the cause of action a federal cause of action and removable despite the fact that the plaintiff's complaint identifies only state claims. Whitman v. Raley's Inc., 886 F.2d 1177, 1181 (9th Cir.1989). Therefore, where the removal petition demonstrates that the plaintiff's claims, although couched in the language of state law claims, are federal claims in substance, the preemptive force of federal law provides the basis for removal jurisdiction. See Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968).

The Supreme Court has determined that the uniform regulatory scheme established by ERISA is one area in which Congress intended to provide for complete preemption. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Congress' intent is evidenced in the statutory provision of ERISA which provides that ERISA shall supersede state laws insofar as they may relate to any employee benefit plan. 29 U.S.C. § 1144(a). Therefore, if state law claims "relate to" an ERISA plan within the meaning of ERISA's preemption provision under 29 U.S.C. § 1144(a), the claims are converted to federal claims for the purposes of removal jurisdiction. Taylor, 481 U.S. at 60, 107 S.Ct. 1542.

In this case, Fortis contends that complete preemption under ERISA gives this court subject matter jurisdiction. In conducting complete preemption analysis in this case, the court is guided by the Eleventh Circuit's framework of analysis in Butero v. Royal Maccabees Life Insurance Company, 174 F.3d 1207 (11th Cir.1999). In Butero, the court explained that the requirements of complete preemption are that there must be a relevant ERISA plan, the plaintiff must have standing to sue under the plan, the defendant must be an ERISA entity, and the complaint must seek compensatory relief akin to that available under 29 U.S.C. § 1132(a). Id. at 1213. Here, the required element at issue is the existence of an ERISA plan. Accordingly, the court begins its analysis with ERISA's statutory scheme.

In relevant part, ERISA defines the terms "employee welfare benefit plan" and "welfare plan" as:

any plan, fund, or program which ... is ... established or maintained by an employer ... to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants ... through the purchase of insurance or otherwise benefits in the event of sickness, accident, disability, [etc.] ....

29 U.S.C. § 1002(1).

The Eleventh Circuit has stated that an ERISA employee welfare plan requires: (1) a plan, fund, or program (2) established or maintained (3) by an employer (4) for the purpose of providing disability benefits (5) to participants or their beneficiaries. Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir.1982).

Love's argument is that there is no ERISA plan because the regulatory safe harbor which exempts certain group insurance from the definition of employee benefit welfare plan applies in this case.

The Department of Labor's "safe harbor" regulation which exempts...