McDonald v. Household Intern., Inc.

• Decision Date: 29 September 2005
• Docket Number: No. 04-3259.,04-3259.
• Citation: 425 F.3d 424
• Parties: James McDONALD and Karen McDonald, Plaintiffs-Appellants, v. HOUSEHOLD INTERNATIONAL, INC., d/b/a Household Finance Corp., and United HealthCare Corp., d/b/a United Healthcare Insurance Co., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

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425 F.3d 424 James McDONALD and Karen McDonald, Plaintiffs-Appellants,
v.
HOUSEHOLD INTERNATIONAL, INC., d/b/a Household Finance Corp., and United HealthCare Corp., d/b/a United Healthcare Insurance Co., Defendants-Appellees. No. 04-3259. United States Court of Appeals, Seventh Circuit. Argued February 16, 2005. Decided September 29, 2005.

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D. Bruce Kehoe (argued), Wilson Kehoe & Winingham, Indianapolis, IN, for Plaintiffs-Appellants.

William J. Wortel (argued), Bryan Cave, Chicago, IL, Thomas W. Blessing (argued), Stewart & Irwin, Indianapolis, IN, for Defendants-Appellees.

Before EASTERBROOK, WOOD, and SYKES, Circuit Judges.

WOOD, Circuit Judge.

At the time he began working for Household International, Inc. (Household), James McDonald expected that he would receive health insurance that included prescription drug coverage under the group insurance policy that the company maintained with United HealthCare Corporation (United). McDonald needed prescription drugs to control his blood pressure. For reasons that are unclear, his insurance was not activated promptly. Two months after he started work, he suffered a catastrophic intercerebral hemorrhagic stroke. In this lawsuit, McDonald and his wife, Karen McDonald, have raised a variety of state-law claims that turn on the fact that McDonald did not receive the promised insurance coverage in time. The district court found that the federal Employee Retirement Income Security Act, commonly called ERISA, preempted the state law theories and on that basis dismissed the complaint. We conclude that although the district court was correct about ERISA preemption, the dismissal was premature. Parties do not need to plead legal theories in their complaints in federal court, and thus the McDonalds are entitled to go forward and litigate their claim under ERISA.

I

Our account of the facts accepts all well-pleaded allegations in the complaint as true and draws all reasonable inferences in favor of the McDonalds, as this case comes to us from a dismissal under Rule 12(b)(6). See, e.g., Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir.2000). James McDonald began working for Household on November 19, 2001. A few days before that, on November 16, he received an employment confirmation letter from Household stating "[y]our health and life insurance will be effective 30 days from your start date." That meant that as of December 19, 2001, his insurance should have been in place. Unfortunately, it was not. After December 19, McDonald repeatedly tried to get his prescription for Vasotec blood pressure medication filled, but he was told each time that the paperwork had not come through and he did not yet have any benefits. Unable to pay for the drugs himself, McDonald simply went without his medication from December 19 until January 15, 2002. During that time, he made numerous requests to Household and United pleading with them to activate his insurance benefit coverage. Nothing happened. Instead, on January 15, he had a catastrophic stroke.

McDonald and his wife filed this lawsuit on November 13, 2003, invoking the diversity jurisdiction of the district court. The amount in controversy exceeds $75,000, and the McDonalds properly alleged that they were both citizens of Indiana. Their allegations about the corporate defendants were less complete than they should have been, but they correctly asserted that

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Household International, Inc., and Household Finance Corporation (which, contrary to the implication of the complaint, are two separate entities) are both incorporated in Delaware and both have their principal places of business in Illinois. United HealthCare Corporation actually merged with United Health Group, which is a Minnesota corporation with its principal place of business in Minnesota. The complaint referred to United HealthCare "d/b/a United Health Insurance Company," but the latter is also a separate corporation that is a wholly owned subsidiary of United Health Group. United Health Insurance is a Connecticut corporation, according to public records, and its offices are in Connecticut. If this case depended entirely on diversity jurisdiction, we would probably be inclined to remand for the limited purpose of clarifying the fact that these facts accurately represent United Health Insurance's citizenship. Given our conclusion about ERISA preemption, however, the case is securely within the federal question jurisdiction, and we have no need to take this step. For convenience, in the remainder of this opinion, we refer to the Household entities as "Household," and to the United HealthCare entities as "United."

The complaint was divided into six counts, five of which raised different theories supporting McDonald's claim, and the sixth of which was for loss of spousal services and consortium for Mrs. McDonald. Briefly, Count I asserted that Household had been negligent in failing to procure insurance for McDonald; Count II claimed that United negligently failed to process McDonald's insurance application and to secure insurance for him, in particular pharmaceutical coverage; Count III raised a breach of contract claim against Household, which had promised in the November 16 letter to give McDonald health insurance under its policy, which included prescription drug benefits; Count IV was a similar breach of contract claim against United, alleging that United had received premiums from McDonald in exchange for the health policy; and Count V asserted that both Household and United had committed acts of gross negligence, willful or wanton misconduct, or intentional wrongs that led to McDonald's lack of health coverage and ultimately to the stroke.

Both Household and United filed a motion to dismiss under FED. R. CIV. P. 12(b)(6), claiming that the McDonalds had failed to state any claims upon which relief could be granted because, any way one looked at the case, it was really one for benefits under an ERISA plan and thus the state-law theories were preempted by ERISA. The district court found this argument persuasive and entered an order dismissing the complaint. In that order, the court said that the plaintiffs could "refile their complaint requesting appropriate relief pursuant to ERISA within 30 days" of the date of the order, August 3, 2004. The McDonalds did not accept that invitation. Instead, on August 30, 2004, three days before the time to amend expired, they filed their notice of appeal.

II

Concerned that the district court's order of dismissal did not qualify as a final judgment, we ordered the parties to file jurisdictional memoranda addressing the subject of appellate jurisdiction. Relying principally on Tifft v. Commonwealth Edison Co., 366 F.3d 513 (7th Cir.2004), all parties argue that this case became final as a practical matter no later than September 2, 2004, which was the last day when plaintiffs could have filed an amended complaint. See id. at 516 n. 3. A notice of appeal that is filed too early is treated as if it was filed on the date when judgment

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was entered. See FED. R. APP. P. 4(a)(2). As in Tifft, this case is finished as far as the district court is concerned, and the dismissal for all practical purposes is now one with...