McFarlane v. First Unum Life Ins. Co.

• Citation: 274 F.Supp.3d 150
• Decision Date: 15 August 2017
• Docket Number: No. 16-CV-7806 (RA),16-CV-7806 (RA)
• Parties: Cherylle MCFARLANE, Plaintiff, v. FIRST UNUM LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

274 F.Supp.3d 150

Cherylle MCFARLANE, Plaintiff,

v.FIRST UNUM LIFE INSURANCE COMPANY, Defendant.

No. 16-CV-7806 (RA)

United States District Court, S.D. New York.

Signed August 15, 2017

Jeffrey Delott, Law Offices of Jeffrey Delott, NY, for Plaintiff.

Patrick Walter Begos, Robinson & Cole LLP, Stamford, CT, for Defendant.

OPINION AND ORDER

RONNIE ABRAMS, United States District Judge:

Plaintiff Cherylle McFarlane brings this action against Defendant First Unum Life Insurance Co. ("First Unum") to recover disability benefits under the Employment Retirement Income Security Act of 1974 ("ERISA"). First Unum moves to dismiss McFarlane’s complaint under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, First Unum’s motion is granted in part and denied in part.

BACKGROUND¹

Cherylle McFarlane is a former assistant nursing director at Independence Care Systems ("Independence Care").See Compl. Ex. 1 ("Appeal Letter") at 4 (Dkt. 1-1). First Unum issued a group disability policy to Independence Care, through which McFarlane received disability benefits. Compl. ¶ 3; Appeal Letter at 1. McFarlane alleges that First Unum is a "fiduciary under the Policy" and "exercised authority and control over the payment of benefits." Compl. ¶ 15.

On April 28, 2014, Dr. Farzin Sehati diagnosed McFarlane with fibromyalgia

, a disorder related to the central nervous system and characterized by widespread pain and fatigue. See Appeal Letter at 5. Dr. Sehati determined that, as a result of her fibromyalgia, McFarlane experienced pain in her neck, back, knees, and shoulders. See id. Dr. Sehati also noted that numerous treatments had failed to provide McFarlane relief. See id. Dr. Sehati advised McFarlane to stop working by May 5, 2014. See id. On May 2, 2014, McFarlane stopped working. See id. at 4.

On December 15, 2014, a First Unum representative approved McFarlane’s long-term disability benefits. See id. at 8. In a letter approving McFarlane’s benefits, First Unum stated: "We approved your benefits because you are unable to perform the material and substantial duties of your occupation as an Assistant Nursing Director of Care Management due to the symptoms related to your medical conditions of chronic fatigue syndrome and fibromyalgia

." Id. The letter added that "it is unclear if your condition will improve to allow for a transition back to work. We will need additional medical information to understand if your current treatment plan will result in any improvement." Id. According to McFarlane, no functional or medical information subsequently showed that her chronic fatigue syndrome or fibromyalgia had "changed, let alone improved." Id.

In a letter dated January 14, 2016, First Unum terminated McFarlane’s long-term disability benefits. Id. at 9. First Unum’s letter explained that McFarlane’s conditions were disabling for a period of eighteen months. See id. at 9, 11. Apparently because that period had passed, First Unum determined that McFarlane had become able to resume the material and substantial duties of her occupation. See id. at 9.

On July 7, 2016, McFarlane submitted an appeal to the Unum Benefits Center. See id. at 1. On August 22, 2016, McFarlane notified First Unum that it had not rendered a decision within 45 days, as required by 29 C.F.R. § 2560.503–1(i)(3)(i). See Compl. ¶ 17. Later that day, First Unum faxed a letter to McFarlane’s counsel, which stated that it needed "an extension of up to 45 days to complete [its] review" because it had "not received necessary information from Dr. Villanella that [it] previously requested." Decl. of Patrick W. Begos in Supp. of Mot. to Dismiss ("Begos Decl.") Ex. A at 1408 (Dkt. 12)² The letter further stated that "[t]his extension will begin when [First Unum] receive[s] the requested information." Id. First Unum never rendered a decision on McFarlane’s administrative appeal. See Compl. ¶ 21.

On October 6, 2016, McFarlane filed this action. McFarlane asserted claims for long-term disability benefits and for statutory penalties. See id. ¶¶ 23–35. On November 1, 2016, First Unum filed a motion to dismiss. See Def.'s Mot. to Dismiss (Dkt. 11). On December 15, 2016, McFarlane filed an opposition brief, see Pl.'s Opp'n Br. (Dkt. 18), to which First Unum replied on January 13, 2017, see Def.'s Reply Br. (Dkt. 26).

LEGAL STANDARD

To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ " Id. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ). On a Rule 12(b)(6) motion, the question is "not whether [the plaintiff] will ultimately prevail," but rather "whether his complaint [is] sufficient to cross the federal court’s threshold." Skinner v. Switzer , 562 U.S. 521, 529-30, 131 S.Ct. 1289, 179 L.Ed.2d 233 (2011) (internal quotation marks omitted). In answering this question, the Court must "accept[ ] plaintiffs' plausible allegations as true and draw[ ] all reasonable inferences in their favor." Fernandez v. Zoni Language Ctrs., Inc. , 858 F.3d 45, 48 (2d Cir. 2017).

"For the purpose of a motion to dismiss under Rule 12(b)(6), ‘the complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference.’ " Allco Fin. Ltd. v. Klee , 861 F.3d 82, 97 n.13 (2d Cir. 2017) (quoting Chambers v. Time Warner, Inc. , 282 F.3d 147, 152 (2d Cir. 2002) ). "Where a document is not incorporated by reference, the court may nevertheless consider it where the complaint ‘relies heavily upon its terms and effect,’ thereby rendering the document ‘integral’ to the complaint." Nicosia v. Amazon.com, Inc. , 834 F.3d 220, 230 (2d Cir. 2016) (quoting DiFolco v. MSNBC Cable LLC , 622 F.3d 104, 111 (2d Cir. 2010) ).

DISCUSSION

A. Long-Term Disability Benefits Claim

First Unum argues that McFarlane has not stated a claim for long-term disability benefits under ERISA because she has not exhausted her administrative remedies. See Def.'s Mem. in Supp. of Mot. to Dismiss ("Def.'s Mem.") at 7–10 (Dkt. 13). The Court disagrees.

"[A]n ERISA action may not be brought in federal court until administrative remedies are exhausted." Burke v. PriceWaterHouseCoopers LLP Long Term Disability Plan , 572 F.3d 76, 79 (2d Cir. 2009) (per curiam); see also Heimeshoff v. Hartford Life & Acc. Ins. Co. , 571 U.S. 99, 134 S.Ct. 604, 608, 187 L.Ed.2d 529 (2013) ("Courts have generally required participants to exhaust the plan’s administrative remedies before filing suit to recover benefits."); Chapman v. ChoiceCare Long Island Term Disability Plan , 288 F.3d 506, 511 (2d Cir. 2002) ("We require exhaustion of benefit claims brought under ERISA"). "ERISA itself does not contain an exhaustion requirement; the requirement is instead judge-made." Kirkendall v. Halliburton, Inc. , 707 F.3d 173, 179 (2d Cir. 2013). "Among other things, administrative exhaustion is a ‘safeguard that encourages employers and others to undertake the voluntary step of providing medical and retirement benefits to plan participants." Halo v. Yale Health Plan, Dir. of Benefits & Records Yale Univ. , 819 F.3d 42, 55 (2d Cir. 2016) (alterations omitted) (quoting LaRue v. DeWolff, Boberg & Assocs. , 552 U.S. 248, 259, 128 S.Ct. 1020, 169 L.Ed.2d 847 (2008) (Roberts, C.J., concurring)). Although the failure to exhaust administrative remedies is an affirmative defense, see Paese v. Hartford Life & Acc. Ins. Co. , 449 F.3d 435, 446 (2d Cir. 2006), "courts routinely dismiss ERISA claims brought under Section 502(a)(1)(B) on a 12(b)(6) motion to dismiss where the plaintiff fails to plausibly allege exhaustion of remedies," Abe v. New York Univ. , No. 14-CV-9323 (RJS), 2016 WL 1275661, at *5 (S.D.N.Y. Mar. 30, 2016). See, e.g. , Star Multi Care Servs., Inc. v. Empire Blue Cross Blue Shield , 6 F.Supp.3d 275, 292 (E.D.N.Y. 2014) ; Kesselman v. Rawlings Co., LLC , 668 F.Supp.2d 604, 608 (S.D.N.Y. 2009) ; Am. Medical Ass'n v. United Healthcare Corp. , 588 F.Supp.2d 432, 450 (S.D.N.Y. 2008) ; Egan v. Marsh & McLennan Cos., Inc. , 2008 WL 245511, at *10 (S.D.N.Y. Jan. 28, 2008).

Under the Department of Labor’s claims-procedure regulation, however, a claimant "shall be deemed to have exhausted" her administrative remedies if a plan fails to establish or follow claims procedures in compliance with ERISA. See 29 C.F.R. § 2560.503–1(l )(1). "The ‘deemed exhausted’ provision was plainly designed to give claimants faced with inadequate claims procedures a fast track into court." Eastman Kodak Co. v. STWB, Inc. , 452 F.3d 215, 222 (2d Cir. 2006). In applying this provision, the Second Circuit has "reject[ed] the idea that [a] small measure of conformity to the regulatory requirements ... can block or delay a plaintiff[’s] right to sue." Id. at 223 ; cf. Halo , 819 F.3d at 45 ("[W]hen denying a claim for benefits, a plan’s failure to comply with the Department of Labor’s claims-procedure regulation will result in that claim being reviewed de novo in federal court, unless the plan has otherwise established procedures in full conformity with the regulation and can show that its failure to comply with the regulation in the processing of a particular claim was inadvertent and harmless." (emphasis in original) (citation omitted)).

In this case, McFarlane argues that she is "deemed to have exhausted" her administrative remedies because First Unum did not decide her administrative appeal within the time periods...