Shackelton v. Connecticut General Life Ins. Co.

• Decision Date: 01 April 1993
• Docket Number: No. 92-CV-1250.,92-CV-1250.
• Citation: 817 F. Supp. 277
• Parties: Harold J. SHACKELTON, Plaintiff, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and Cigna Companies, Defendants.
• Court: U.S. District Court — Northern District of New York

817 F. Supp. 277

Harold J. SHACKELTON, Plaintiff, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and Cigna Companies, Defendants.

No. 92-CV-1250.

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

April 1, 1993.

Kernan & Kernan (John E. Short, of counsel), Utica, NY, for plaintiff.

Michael R. Vaccaro, Law Offices (Matthew J. Roe, of counsel), Syracuse, NY, for defendants.

MEMORANDUM-DECISION AND ORDER

McCURN, Chief Judge.

Plaintiff commenced this action in New York State Supreme Court, Oneida County, on August 24, 1992, alleging (1) breach of contract, (2) unfair insurance claim settlement practices in violation of N.Y.Ins.L. § 2601 (McKinney 1985), and (3) deceptive business conduct in violation of N.Y.Gen. Bus.L. § 349 (McKinney 1988). Plaintiff essentially contends that defendants, his former employer and its parent company, failed to provide him with insurance coverage for home health care as required by his employee benefits plan. Defendant removed the case to this court pursuant to 28 U.S.C. § 1441 (West Supp.1992), claiming that the causes of action set forth in plaintiff's complaint are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461 (1988 & West Supp.1992), and thus presents an action arising under federal law. Defendants now move to dismiss plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiff cross-moves pursuant to 28 U.S.C. § 1447 (1988) to remand the case to state court.

I. BACKGROUND

In considering a motion to dismiss pursuant to Rule 12(b)(6), the court is obligated to accept as true the facts alleged in plaintiff's complaint. E.g. Kramer v. Time Warner, Inc., 937 F.2d 767, 773 (2d Cir.1991); Cosmas v. Hassett, 886 F.2d 8, 13 (2d Cir.1989); accord, e.g., Carino v. Deerfield, 750 F.Supp. 1156, 1160 (N.D.N.Y.1990), aff'd mem., 940 F.2d 649 (2d Cir.1991). Even assuming that defendants have a completely different version of the facts giving rise to this suit, the court cannot consider that version at this early stage of the litigation. See, e.g., Festa v. Local 3 Int'l Bhd. of Elec. Workers, 905 F.2d 35, 37 (2d Cir.1990); Capital Imaging Assocs., P.C. v. Mohawk Valley Medical Assocs., 725 F.Supp. 669, 676 (N.D.N.Y.1989). At any rate, defendants have not yet answered plaintiffs' complaint, opting instead to file the instant motion to dismiss. Accordingly, the court will review the issues presented in this case based upon the facts as set forth in plaintiff's complaint.

From plaintiff's perspective, the facts of this case are relatively straightforward. He was employed by co-defendant Connecticut General Life Insurance Company for forty years before retiring in 1967. Complaint ¶ 4. Connecticut General is a subsidiary of co-defendant CIGNA Companies. Id. ¶ 3. Through his employment, plaintiff received an employee benefits package which entitled him to various insurance benefits, including health and medical insurance, even after his retirement. Id. ¶¶ 5-7. According to plaintiff, the health and medical insurance plan (hereinafter the "plan") is supposed to provide him with coverage for, inter alia, home health care in the event that such care is deemed necessary. Id. ¶¶ 7, 9.

In November, 1990, plaintiff's medical condition deteriorated to the point where he needed home health care. Pursuant to the plan, defendants provided plaintiff with coverage for his home health care. Complaint ¶¶ 8-10. In January, 1991, however, defendants discontinued his coverage, thereby leaving plaintiff completely uninsured (at least with respect to his home health care). Id. ¶¶ 11, 14. Defendants terminated plaintiffs coverage even though plaintiff had, in his view, fully satisfied all of his obligations under the plan. Id. ¶ 12. Plaintiff has demanded that defendants comply with the plan by resuming his coverage for home health care, but to no avail.

II. DISCUSSION

While the facts of this case may be relatively simple, the governing law is anything but simple. These motions implicate intricate questions concerning the scope of ERISA, the preemption doctrine, and New York insurance law.¹ At least one fact seems certain, however; the parties seemingly agree, as they should, that the benefit plan under which plaintiff seeks coverage is an "employee welfare benefit plan" as defined in ERISA § 3(1), 29 U.S.C. § 1002(1) (West Supp.1992), and used throughout that statute. See Howard v. Gleason Corp., 901 F.2d 1154, 1156 (2d Cir.1990); see also Brundage-Peterson v. Compcare Health Servs. Ins. Corp., 877 F.2d 509, 510-11 (7th Cir.1989); Donovan v. Dillingham, 688 F.2d 1367, 1372 (11th Cir.1982) (en banc). Accordingly, the ensuing analysis is founded upon the premise that plaintiff's plan constitutes an employee welfare benefit plan falls within the meaning of ERISA.

A. Motion to Dismiss

Plaintiff essentially contends that defendants' termination of his home health care constituted a breach of contract and violated two New York statutes: N.Y.Ins.L. § 2601 and N.Y.Gen.Bus.L. § 349. Section 2601 of the Insurance Law prohibits insurance providers from engaging in "unfair settlement practices" in resolving claim disputes, and General Business Law section 349 generally proscribes "deceptive acts or practices in the conduct of business." Plaintiff contends that defendant violated these statutes and breached his employment contract by discontinuing his coverage for home health care when such coverage was clearly required by the terms of the plan.

1. ERISA preemption

Defendants move to dismiss the complaint on grounds that ERISA preempts the state causes of action asserted by plaintiff and provides the exclusive remedy for any claims that plaintiff might have. ERISA carries an express preemption provision which states, in pertinent part, that the statute "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee health benefit plan." ERISA § 514(a), 29 U.S.C. § 1144(a) (emphasis added). The operative words in that provision are "relate to": only those laws that relate to an employee health benefit plan are preempted. The Supreme Court has construed the "relate to" clause as being "deliberately expansive," Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987), to reflect Congressional intent to prevent states from confusing, diluting, or undermining ERISA's comprehensive scheme. See, e.g., id. at 46-47 & 50, 107 S.Ct. at 1552-1553 & 1554; Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981). Indeed, the legislative history shows that Congress included such a vast preemption clause "to displace all state laws that fall within ERISA's sphere, even including state laws that are consistent with ERISA's substantive requirements."² Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985) (citation omitted).

In keeping with that intent, the Court has broadly interpreted ERISA's preemption of state laws that "relate to" benefit plans as proscribing any state action that bears on private pensions, even those that relate only indirectly. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139-140, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990); Alessi, 451 U.S. at 525, 101 S.Ct. at 1907. "The phrase `relate to' was given its broad common-sense meaning, such that a state law `relates to' a benefit plan `in the normal sense of the phrase, if it has a connection with or reference to such a plan.'" Metropolitan Life Ins. Co., 471 U.S. at 739, 105 S.Ct. at 2389 (quoting Shaw, 463 U.S. at 97, 103 S.Ct. at 2900); accord, Dumac Forestry Servs., Inc. v. International Bhd. of Elec. Workers, 637 F.Supp. 529, 535 (N.D.N.Y.1986) (McCurn, J.), aff'd in part, rev'd in part on other grounds, 814 F.2d 79 (2d Cir.1987). Significantly, the "state laws" that may be preempted by ERISA include "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." ERISA § 514(c)(1); 29 U.S.C. § 1144(c)(1); see Ingersoll-Rand Co., 498 U.S. at 139-140, 111 S.Ct. at 483; Pilot Life Ins., 481 U.S. at 48 n. 1, 107 S.Ct. at 1553 n. 1.

Considering the broad sweep of ERISA's preemption provision, it would appear on the surface that plaintiff cannot maintain this suit under state law. After all, in drafting ERISA Congress created enforcement remedies so comprehensive that alternative state remedies would be unnecessary—and improper. Pilot Life Ins. Co., 481 U.S. at 54, 107 S.Ct. at 1556; see Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 3092, 87 L.Ed.2d 96 (1985). In fact, numerous courts have expressly ruled that breach of contract claims that are based upon welfare benefit plans "relate to" the plans within the meaning of ERISA, and are thus preempted. See, e.g., Reichelt v. Emhart Corp., 921 F.2d 425, 431-32 (2d Cir. 1990), cert. denied, ___ U.S. ___, 111 S.Ct. 2854, 115 L.Ed.2d 1022 (1991); Gilbert v. Burlington Indus., Inc., 765 F.2d 320, 328 (2d Cir.1985) (citing cases), aff'd, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986).³ Several other courts have ruled that insurance protection statutes which, regardless of their purpose, have the effect of regulating benefit plan administration are likewise preempted by ERISA. See Howard, 901 F.2d at 1157 (New York insurance notification statute); Gilbert, 765 F.2d at 327 (New York wage collection statute); see also cases cited infra p. 283. But see Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 147 (2d Cir.) (Connecticut escheat law "is too tenuous, remote, and peripheral to require preemption under § 514(a)), cert. denied, 493 U.S. 811, 110 S.Ct. 57, 107 L.Ed.2d 25 (1989); Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters, Inc., 793 F.2d...