Paul Revere Life Insurance Co. v. Payne, CA 942575
| Decision Date | 15 March 2000 |
| Docket Number | CA 942575 |
| Parties | The Paul Revere Life Insurance Co. v. Brooks E. Payne |
| Court | Massachusetts Superior Court |
Venue Worcester
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Fecteau
The Paul Revere Life Insurance Company ("Paul Revere") filed this declaratory judgment action seeking, inter alia, a declaration that it is entitled to either rescind or reform a disability insurance policy (the "Policy") issued to the defendant, Brooks E. Payne ("Payne"). Paul Revere argues that Payne made material misrepresentations on his disability insurance application that increased its risk of loss as a matter of law, pursuant to G.L.c. 175, 186. Payne denies that he misrepresented his health history, and has filed a counterclaim to recover benefits under the Policy. Payne contends that Paul Revere's failure to pay him in accordance with the terms of the disability insurance policy constitutes a breach of contract and violates both G.L.c 176D and G.L.c. 93A.1
After a methodical and comprehensive review of the pleadings and supporting legal memoranda and arguments of counsel, this court, sua sponte, questioned whether it had subject matter jurisdiction to adjudicate Paul Revere's claims pursuant to 29 U.S.C. 1132(a)(1)(B), (a)(7) and Jefferson-Pilot Life Insurance Co. v. Krafka, 57 Cal.Rptr.2d 723 (Cal.App. 2 Dist. 1996) (). See Iglesias v. Mutual Life Ins. Co. of New York, 156 F.3d 237, 241 (1st Cir. 1998) (), citing Clark v. Paul Gray, Inc., 306 U.S. 583, 588 (1939); Bonfatti v. Zoning Bd. of Appeals of Holliston, 48 Mass.App.Ct. 46, 49 (1999); see also Kennedy v. Consolidated Motor Lines, 312 Mass. 84, 89 (1942) ().
This court then ordered the parties to submit supplemental legal memoranda on the issue of subject matter jurisdiction. On February 28, 2000, the parties filed a joint supplemental memorandum acknowledging that this court lacked subject matter jurisdiction to hear Paul Revere's claims. The parties, however, have urged this court to exercise its concurrent jurisdiction, pursuant to 29 U.S.C. 1132(a)(1)(B) and adjudicate Payne's counterclaims.
Based on the foregoing, this court finds that it lacks subject matter jurisdiction over, and thus dismisses, Paul Revere's claims. See Mass.R.Civ.P. 12(h)(3) ("Whenever it appears by suggestion of a party or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action"). Accordingly, to the extent that Paul Revere's motion seeks summary judgment in its favor on its complaint, that request is DENIED. For reasons stated more fully below, to the extent that Paul Revere moves for entry of summary judgment in its favor onPayne's counterclaims that request is ALLOWED.2
The facts, viewed in the light most favorable to the nonmoving party, are set forth below. See Beal v. Board of Selectmen of Hingham, 419 Mass. 535, 539 (1995).
In 1992, Payne was employed by Columbia MetroWest Medical Center ("MetroWest") in Framingham, Massachusetts as its Vice-President for Human Resources. MetroWest established and maintained an employee benefit plan, entitled the EXECU-FLEX Benefit Plan (the "Plan"), for the purpose of providing certain employees, including Payne, with supplemental fringe benefits. MetroWest, as Payne's employer, was the Plan administrator and sponsor.3
Under the terms of the Plan, MetroWest made available to Payne an amount equal to 39% of his salary to purchase benefits. This amount was available for the purchase of benefits over and above Payne's salary. Charges for basic benefits provided to all MetroWest employees, were subtracted from the allowance, with the remainder the Flex Allowance available for allocation among tax-sheltered FLEX level benefit choices.
Payne's benefit choices included individual long-term disability benefits that were in addition to the group long-term disability benefits that had been provided to all employees of MetroWest. In 1992, Payne elected to allocate $2,958 of his annual $11,556 FLEX Allowance towards the purchase by MetroWest of an individual disability insurance policy issued by Paul Revere.
On May 20, 1992, Payne executed and submitted an application for disability insurance to Paul Revere (the "Application") for its approval.4 This application represented the entire contract between the parties. Based on the information provided by Payne in the Application, Paul Revere issued him a policy (the "Policy") for $6,000 per month in disability benefits at standard rates with no exclusions. The first $1,500 was "guaranteed issue" disability coverage, that is, it was issued regardless of Payne's health history. The next $1,500 per month was "modified guaranteed issue," that is, subject to "rate and rider," and the underwriter would be allowed to exclude certain medical conditions and/or charge a higher premium. The remaining $3,000 per month was subject to normal underwriting guidelines.
MetroWest paid the Policy premiums from Payne's FLEX Allowance, with Payne paying nothing. See Affidavit of Barbara D. Plante.
In June 1993, Payne went on sick leave from MetroWest. Under the terms of a Separation Agreement and General Release, Payne remained on sick leave until September 27, 1993, at which time MetroWest agreed to maintain him on its payroll for an additional nine months while Payne sought other employment. In return, Payne agreed to release MetroWest from all claims, including those arising under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq.
In April 1994, while still on MetroWest's payroll, Payne applied for full disability benefits. In the course of investigating Payne's claim, Paul Revere learned for the first time of Payne's complete medical and psychiatric history. On September 19, 1994, Paul Revere informed Payne that it was rescinding the Policy based on alleged material omissions of his health history on his insurance application.5
On September 30, 1994, Payne made a written demand upon Paul Revere, pursuant to G.L.c. 176D and G.L.c. 93A, for full disability benefits. Paul Revere rejected his demand, but allowed Payne's claim to the extent of a $1,500 monthly benefit. On November 17, 1994, Paul Revere initiated this declaratory judgment action to rescind or reform the Policy based on Payne's alleged failure to disclose his complete mental health history.6 Payne has counterclaimed for breaches of contract and for violations of G.L.c. 176D and G.L.c. 93A.7 The matter is now before the court on Paul Revere's motion for summary judgment on all counts of Payne's counterclaim.
This court grants summary judgment where there are no genuine issues of material fact and the moving party is entitled to a judgment as a matter of law. See Cassesso v. Comm'r of Correction, 390 Mass. 419, 422 (1983); Community Nat'l Bank v. Dawes, 369 Mass. 550, 553 (1976); Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). The moving party bears the burden of affirmatively demonstrating the absence of a triable issue and that the summary judgment record entitles the moving party to judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). This may be done by submitting affirmative evidence that negates an essential element of the nonmoving party's case or by showing that the nonmoving party has no reasonable expectation, of proving of its case at trial. Kourovacilis v. General Motors Corp., 410 Mass. 706, 716 (1991). See also Commonwealth v. Two Parcels of Land, No. 97-P-1790 (App.Ct. March 2, 2000), slip. op. at 3. (internal quotation and citation marks omitted); Giacalone v. I.E.S., Inc., Civil Action No. 97-4666, 10 Mass. L. Rptr. 209, 1999 WL 513898 (Mass. Super. May 17, 1999).
Here, Paul Revere argues that it is entitled to summary judgment because Payne's claims for breach of contract and violations of G.L.c. 176D and G.L.c. 93A are preempted by ERISA. Since questions of preemption raise important issues of subject matter jurisdiction that can never be waived, this court first examines the basis for the exercise of concurrent jurisdiction under 29 U.S.C. 1132(e). See Jamgochian v. Dierker, 425 Mass. 565, 567 (1997) (), Second Bank-State St. Trust Co. v. Linsley, 341 Mass. 113, 116 (1960). See also Central Transport, Inc. v. Package Printing Co., Inc., 429 Mass. 189, 191 (1999) ().
While Congress may have intended to comprehensively and exclusively regulate the administration of employee benefit plans, such as the EXECU-FLEX plan at issue here, see Best v. AGFA Compugraphic, Civil Action No. 91-13406, 1992 WL 390713 at *2 (U.S. Dist. Ct. December 9, 1992), citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44 (1987), it did legislatively permit state courts such as this court, to exercise concurrent jurisdiction over "civil action[s]... brought by a participant or beneficiary [of an employee benefit plan]... to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to...
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