Rogers v. Unitedhealth Grp., Inc.

• Decision Date: 26 October 2015
• Docket Number: No. 2:15–cv–01736–DCN,2:15–cv–01736–DCN
• Citation: 144 F.Supp.3d 792
• Court: U.S. District Court — District of South Carolina
• Parties: Thomas D. Rogers and Victoria A. Rogers, Plaintiffs, v. Unitedhealth Group, Inc.; United Healthcare Services, Inc.; and United Healthcare, Inc., Defendants.

144 F.Supp.3d 792

Thomas D. Rogers and Victoria A. Rogers, Plaintiffs,

v.Unitedhealth Group, Inc.; United Healthcare Services, Inc.; and United Healthcare, Inc., Defendants.

No. 2:15–cv–01736–DCN

United States District Court, D. South Carolina, Charleston Division.

Signed October 26, 2015

H. Blair Hahn, Richardson Patrick Westbrook and Brickman, Mt. Pleasant, SC, for Plaintiffs.

Jennifer E. Johnsen, Gallivan White and Boyd, Greenville, SC, for Defendants.

ORDER

DAVID C. NORTON, UNITED STATES DISTRICT JUDGE

This matter comes before the court on defendants UnitedHealth Group, Inc., United Healthcare Services, Inc., and United Healthcare, Inc.'s (collectively “United”) motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the court grants in part and denies in part United's motion.

I. BACKGROUND

Plaintiff Thomas D. Rogers (“Tom”) entered into a contract for health care coverage (“Group Plan”) with United¹ as part of his employment with Richardson, Patrick, Westbrook, and Brickman LLC. Compl. ¶ 8; Id. Ex. A. Tom has suffered from kidney disease for much of his adult life. Id. ¶ 10. In early 2014, Tom's doctor recommended a new drug therapy to treat his nephritis. Id. ¶ 11. Tom experienced complications from the new treatment and developed an infection. Id. ¶ 12. On May 23, 2014, Tom was admitted to the hospital where he was diagnosed with septicemia on May 28, 2014. Id. After spending two weeks in the hospital, Tom's physicians “encouraged [him] to move to a rehabilitation facility to continue his treatment, given the critical nature of his condition and the ongoing need for multiple dialysis treatments each week.” Id. ¶ 14.

In accordance with the terms of the Group Plan, Tom sought pre-approval from United for coverage of his rehabilitative care. Id. ¶ 15. United denied Tom's request for coverage, believing he could receive in-home treatment. Id. ¶ 16. At the time, Tom “could not negotiate stairs, needed mobility assistance, [ ] was still receiving constant medication ... and [ ] was recovering from severe septicemia with an already-compromised immune system.” Id. Tom again sought pre-approval for coverage at an alternate rehabilitation facility called Vibra. Id. ¶ 18. United rejected Tom's second request. Id. ¶ 19.

Tom's physicians “agreed that an acute inpatient care facility was the best option to prevent possible fatal complications.” Id. ¶ 18. Tom decided to receive rehabilitative treatment at Vibra for approximately one week from June 10, 2014 until June 17, 2014. Id. ¶ 20.

On June 10, 2014, the first day of Tom's stay at Vibra, United notified Tom by letter of the results of its peer-to-peer review of Tom's physician's decision to refer him to Vibra. Id. ¶ 21; Compl. Ex. B. United's reviewing physician determined that it was not medically necessary for Tom to be admitted to Vibra and therefore refused to pay any claims from that provider. Id. ¶ 21. The original bill for the care Tom received from Vibra was $24,164.65, but Tom negotiated a lower rate three months after his discharge. Id. ¶ 22. Tom paid Vibra a total of $11,795.00. Id.

In its letter notifying Tom of the results of the peer-to-peer review, United gave Tom the opportunity to request the information United reviewed in making its decision regarding coverage, including “copies of all documents, records, health benefit plan provisions, internal rules, guidelines and protocols and any other relevant information” relied upon in making its decision. Id. ¶ 23; Ex. B, at 2. Tom sent both a written request for all information and documents relied upon and the requisite signed release to United on July 22, 2014. Compl. Ex. C. Tom claims that United failed to respond to his request. Compl. ¶ 25. Tom's attorney sent a second written request for the documents on September 25, 2014. Compl. Ex. D. Tom claims that the only response he received from United was a “cryptic fax” sent on September 29, 2014 “stating that a fax received by United did not include an ORS/Secondary barcode sheet, a detail neither explained in the cryptic fax nor requested pursuant to the June 10, 2014, letter setting forth the necessary steps for requesting details of the denial of coverage.” Compl. ¶ 26.

Tom and plaintiff Victoria A. Rogers (“Ms.Rogers”) (collectively “the Rogers”) filed the present action on April 21, 2015. The Rogers bring the following claims: (1) Employee Retirement Income Security Act (“ERISA”) violation pursuant to 29 U.S.C. § 1132(a)(1)(B) ; (2) injunctive relief under ERISA pursuant to 29 U.S.C. § 1132(a)(3) ; (3) breach of fiduciary duty pursuant to 29 U.S.C. § 1109 ; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; and (6) negligence. United filed a motion to dismiss on June 5, 2015. The Rogers filed a response in opposition to United's motion on June 22, 2015. United filed a reply on July 2, 2015. The motion to dismiss has been fully briefed and is now ripe for the court's review.

II. STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss for “failure to state a claim upon which relief can be granted.” When considering a Rule 12(b)(6) motion to dismiss, the court must accept the plaintiff's factual allegations as true and draw all reasonable inferences in the plaintiff's favor. See E.I. du Pont de Nemours & Co. v. Kolon Indus., 637 F.3d 435, 440 (4th Cir.2011). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

On a motion to dismiss, the court's task is limited to determining whether the complaint states a “plausible claim for relief.” Id. at 679, 129 S.Ct. 1937. A complaint must contain sufficient factual allegations in addition to legal conclusions. Although Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief,” “a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). “Facts pled that are ‘merely consistent with’ liability are not sufficient.” A Soc'y Without a Name v. Virginia, 655 F.3d 342, 346 (4th Cir.2011) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ).

III. DISCUSSION

United requests that the court dismiss all six claims, making the following four arguments in its motion: (1) the Rogers' state law claims must be dismissed because they are preempted by ERISA; (2) the Rogers failed to state a claim for breach of fiduciary duty under 29 U.S.C. § 1109 ; (3) Tom failed to exhaust his administrative remedies; and (4) Ms. Rogers must be dismissed as a party because she does not have constitutional standing to bring ERISA claims. The court will address each argument in turn.

A. Preemption

United first argues that the Rogers' fourth, fifth, and sixth state law causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and negligence, respectively, must be dismissed because they are preempted by ERISA. United argues that because ERISA provides the exclusive remedy for claims related to employee benefit plans and preempts state law claims to the extent they duplicate, supplant, or supplement the relief afforded by ERISA, the Rogers' state law claims must be dismissed. Defs.' Mot. 3. In response, the Rogers, citing recent Supreme Court and Fourth Circuit precedent, argue that “[a]lthough the presumption is that state law claims are preempted by ERISA, ... in cases such as this where [United has] outright refused to comply with the federal guidelines set forth by ERISA, equity must not reward [United's] illicit behavior with an automatic, across-the-board protection from state law causes of action.” Pls.' Resp. 10.

The Fourth Circuit has stated that “[p]reemption is fundamentally a question of congressional intent” and that “[c]ourts must ‘never’ assume[ ] lightly that Congress has derogated state regulation.' ” Wilmington Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 341 (4th Cir.2007) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) ; N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) ). The relevant provision regarding preemption under ERISA states that “the provisions of [ERISA] shall supersede any and all State laws insofar as they now or hereafter relate to any employee benefit plan.” Id. (quoting 29 U.S.C. § 1144(a) ) (emphasis added). The scope of ERISA's preemption provision is “deliberately expansive, and designed to establish pension plan regulation as exclusively a federal concern.” Id. (quoting Pilot Life, 481 U.S. at 46, 107 S.Ct. 1549 ). “A law relates to an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.” Id. (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96–97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) ). The Supreme Court has repeatedly emphasized that ERISA's preemption provision is not limited “to state laws specifically designed to affect employee benefit plans.” Id. (quoting Pilot Life, 481 U.S. at 47–48, 107 S.Ct. 1549 ). “Nor may parties avoid ERISA's preemptive reach by recasting otherwise preempted claims as state-law contract and tort claims.” Id. “Furthermore, ERISA's preemptive scope is not diminished simply because a finding of preemption will leave a gap in the relief available to a plaintiff.” Id.

The scope of ERISA's “relate to” preemption provision is not without bounds, however. The Supreme Court has stated that “[i]f ...