Rich v. Life Ins. Co. of N. Am.
| Decision Date | 28 March 2013 |
| Docket Number | CIVIL ACTION NO. 3:12-CV-92 |
| Court | U.S. District Court — Northern District of West Virginia |
| Parties | BETH RICH, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, a foreign corporation, Defendant. |
(JUDGE GROH)
Pending before this Court is Defendant Life Insurance Company of North America's Motion to Dismiss [Doc. 26], filed on November 8, 2012. This motion has since been fully briefed and is now ripe for decision. Having reviewed the record and considered the arguments of the parties, this Court concludes that the Defendant's motion should be GRANTED IN PART, and DENIED IN PART.
In her Amended Complaint, the Plaintiff alleges that at all times relevant she was insured through a disability insurance policy issued by Defendant Life Insurance Company of North America to the Morgan County, West Virginia Board of Education. The Plaintiff alleges that in 2009 she became disabled and filed a claim for long term disability benefits under the disability policy issued by LINA. The Plaintiff began receiving a monthly benefitfrom the Defendant in the amount of $1,393.00, with an effective disability date of April 23, 2009.
The Plaintiff alleges that on or about January 10, 2011, the Defendant informed the Plaintiff that it was conducting a review to determine if she would remain eligible for benefits. The Plaintiff alleges that the Defendant initiated this review with the intent to deny the Plaintiff future benefits under her long term disability policy. According to the Plaintiff, the Defendant hired a company called MES Solutions which advertises itself as providing medical reports to assist disability insurers in the management of long term disability claims. MES Solutions, in turn, hired a separate corporation, Medical Advisory Services, Inc., in order to medically evaluate the Plaintiff.
The Plaintiff alleges that MES Solutions scheduled her for a medical evaluation on June 3, 2011, which was conducted by a staff physician employed by Medical Advisory Services, Inc. On June 10, 2011, the Plaintiff alleges the Defendant notified her that she was no longer disabled based on the June 3, 2011 medical evaluation. The Plaintiff alleges that she appealed this decision, but her appeal was denied by the Defendant on September 13, 2011.
The Plaintiff alleges that pursuant to its general business practice, the Defendant retained a company called Advantage 2000 Consultants to act as Plaintiff's Social Security disability advocate to obtain Social Security benefits which would then be used as an offset to the benefits paid by Defendant. The Plaintiff alleges that a Social Security ALJ ruled on November 4, 2011, that the Plaintiff had been disabled since April 23, 2009. Specifically, the Plaintiff alleges that the ALJ found: (1) the Plaintiff suffered from rheumatoid arthritis, fibromyalgia, degenerative disk disease of the lumbar spine, and gastroesophagitis; (2) thePlaintiff "could not sustain sufficient concentration, persistence or pace to do even simple routine tasks on a regular and continuing basis;" (3) the Plaintiff "could not sustain sedentary work because of the pain and swelling associated with her rheumatoid arthritis;" (4) the Plaintiff's "acquired job skills do not transfer to other occupations within the residual functional capacity as defined by law;" and (5) "there are no jobs that exist in significant numbers in the national economy that [the Plaintiff] can perform."
The Plaintiff alleges that the Defendant has a contract with Advantage 2000 Consultants whereby Advantage 2000 Consultants both provides Social Security representative services to people insured through the Defendant's long term disability insurance policies and provides what are termed "Vendor Coordinated Overpayment Reduction" ("COR") services to the Defendant. COR services allegedly consist of "arranging for the re-payment of any incurred overpayment for [the Defendant's] claimants who may be eligible for Social Security Disability Income ("SSDI") Benefits." The Plaintiff alleges that Advantage 2000 Consultants is paid a flat fee for its Social Security representation services, and an undisclosed contingency fee constituting a percentage of the actual amount of Social Security overpayments recovered as a result of Advantage 2000 Consultants' COR services to the Defendant. The Plaintiff further alleges that Advantage 2000 Consultants is paid additional commissions when the company hits specific weekly, quarterly, and annual benchmarks in recoveries. The Plaintiff alleges that the Defendant uses the findings of the Social Security Administration in favor of disability claimants to recoup and offset payments made to its policyholders.
The Plaintiff alleges that the Defendant, as a course of practice and conduct, began the process of terminating its disability payments to the Plaintiff by demanding proof ofdisability to perform the duties of any occupation after the Social Security Administration's September 30, 2010 request for hearing, but before the Social Security Administration's decision in the Plaintiff's case was issued on November 4, 2011. The Plaintiff alleges that nothing material changed with regard to her disabling condition between the time of the Defendant's June 10, 2011 denial of benefits and the ALJ's November 4, 2011 decision awarding Social Security benefits to the Plaintiff. The Plaintiff alleges that the Defendant intentionally disregarded the medical evidence which was obtained through Advantage 2000 Consultants in order to obtain the benefit of Social Security disability benefits for themselves while having already terminated the Plaintiff's benefits on June 10, 2011.
On August 20, 2012, the Plaintiff filed a Complaint in the Circuit Court of Berkeley County, West Virginia, against Defendants Cigna Corporation ("Cigna") and LINA. The Defendants removed the instant action to this Court on September 10, 2012. On September 27, 2012, the Defendants filed a Motion to Dismiss. On October 15, 2012, the Plaintiff filed an Amended Complaint, alleging causes of action for breach of contract (Count I), breach of first party fiduciary duty (Count II), common law bad faith (Count III), unfair trade practices pursuant to W. Va. Code §33-11-1, et seq. (Count IV), violation of statutory consumer protection (Count V), and seeking declaratory judgment as to the Plaintiff's rights under the applicable insurance policy (Count VI). As relief, the Plaintiff prayed for compensatory damages, punitive damages, attorney's fees, costs, and interest.
On November 8, 2012, the Defendants filed a Motion to Dismiss the Plaintiff's Amended Complaint, arguing: (1) that this Court lacked personal jurisdiction over Defendant Cigna; (2) that Count II of the Amended Complaint, alleging breach of first partyfiduciary duty, should be dismissed; (3) that Count IV of the Amended Complaint, alleging unfair trade practices pursuant to W. Va. Code §33-1-1, et seq., should be dismissed; (4) that Count V of the Amended Complaint, alleging violation of statutory consumer protection, should be dismissed; and (6) that the Plaintiff's prayer for punitive damages should be dismissed.
On November 27, 2012, the Plaintiff filed a Response to the Defendants' Motion to Dismiss. Also on November 27, 2012, the parties stipulated to the dismissal of Cigna as a party defendant to this action pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii). On November 28, 2012, the Plaintiff voluntarily dismissed Counts II and V of the Amended Complaint pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i). On December 7, 2012, Defendant LINA filed a Reply in support of its motion to dismiss.
Thus, the only remaining motions before the Court are Defendant LINA's motion to dismiss Count IV of the Plaintiff's Amended Complaint, and Defendant LINA's motion to dismiss the Plaintiff's prayer for punitive damages.
Pursuant to 28 U.S.C. §1332, district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs and is between citizens of different states.
The Plaintiff is a resident of the State of West Virginia. Defendant LINA is a Pennsylvania corporation with its primary place of business located in Philadelphia, Pennsylvania. With regard to the amount in controversy, the Defendant asserts that the value of the benefits at issue in and of themselves exceed $75,000.00, without evenconsidering the additional compensatory and punitive damages being sought by the Plaintiff. Accordingly, diversity jurisdiction exists.
In analyzing a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), a court must accept the factual allegations contained in the complaint as true. Advanced Health Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 143 (4th Cir.1990). Dismissal is appropriate pursuant to Rule 12(b)(6) only if "'it appears to be a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proven in support of its claim.'" Id. at 143-44 (quoting Johnson v. Mueller, 415 F.2d 354, 355 (4th Cir.1969)); see also Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir.1989).
Stated another way, it has often been said that the purpose of a motion under Rule 12(b)(6) is to test the formal sufficiency of the statement of the claim for relief; it is not a procedure for resolving a contest about the facts or the merits of the case. 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §1356, at 294 (2d ed.1990). The Rule 12(b)(6) motion also must be distinguished from a motion for summary judgment under Federal Rule of Civil Procedure 56, which goes to the merits of the claim and is...
To continue reading
Request your trial