Soileau & Assocs. v. La. Health Serv. & Indem. Co.

• Decision Date: 19 September 2019
• Docket Number: CIVIL ACTION NO. 18-710-WBV-JCW SECTION: D (2),c/w 18-7613 SECTION: D (2)
• Parties: SOILEAU & ASSOCIATES, LLC, ET AL. v. LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY
• Court: U.S. District Court — Eastern District of Louisiana

SOILEAU & ASSOCIATES, LLC, ET AL.
v.
LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY

CIVIL ACTION NO. 18-710-WBV-JCW SECTION: D (2)
c/w 18-7613 SECTION: D (2)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

September 19, 2019

ORDER AND REASONS

Before the Court is a Rule 12(B)(6) Motion to Dismiss, filed by defendant, Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana.¹ The Motion is opposed,² movant has filed a Reply,³ and Plaintiffs have filed a Sur-Reply.⁴ After careful consideration of the parties' memoranda and the applicable law, the Motion is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND⁵

This case arises under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). On or about December 22, 2017, Soileau & Associates, LLC, Isaac H. Soileau, Jr. and Karen S. Kovach, individually and on behalf of K.S., a minor child (hereafter, "Plaintiffs"), filed a Petition for Damages in

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the Civil District Court for the Parish of Orleans, State of Louisiana, against Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana (hereafter, "Blue Cross") ("Soileau I").⁶ Plaintiffs alleged that Soileau & Associates, LLC had a policy of medical and hospitalization coverage insured through Blue Cross that provided coverage for K.S., their minor child, who was previously diagnosed with "traumatic brain injury, fetal alcohol syndrome, autism, pervasive developmental delays, ADHD-severe, PTSD, anxiety, and several other neurological conditions."⁷ Plaintiffs asserted that Blue Cross arbitrarily, capriciously and unreasonably denied authorization for K.S.'s continued inpatient treatment, and alleged claims for breach of contract, bad faith adjusting and failure to timely pay claims in violation of La. R.S. 22:1281(A) and (D). Plaintiffs specifically asserted that the insurance policy at issue is not an ERISA-qualified policy and, therefore, the state law claims are not preempted by ERISA.⁸

Defendants removed the case to this Court on January 23, 2018 on the basis of federal question jurisdiction, 28 U.S.C. § 1331, asserting that the insurance policy at issue is governed by ERISA, Plaintiffs' claim for benefits arises under 29 U.S.C. § 1132(a)(1)(B) (hereafter, "§ 502(a)(1)(B)") and, therefore, is completely preempted by ERISA.⁹ On August 15, 2018, this Court denied Plaintiffs' Motion to Remand, concluding that the Court has federal question jurisdiction because the policy at issue

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is an employee welfare benefit plan under ERISA and that Plaintiffs' claim for benefits falls within the scope of Section 502(a)(1)(B).¹⁰

Prior to remand, on or about July 17, 2018, Plaintiffs filed a second state court action against Blue Cross and New Directions Behavioral Health, LLC ("New Directions"), asserting the same state law claims and challenging the same benefit determination made by Blue Cross and its alleged agent, New Directions ("Soileau II").¹¹ On August 10, 2018, Blue Cross removed the case to this Court on the same grounds as in Soileau I, which Plaintiffs did not challenge.¹²

On September 27, 2018, after the denial of the Motion to Remand in Soileau I, Plaintiffs filed their First Amending & Supplemental Complaint against Blue Cross in Soileau I, asserting eight causes of action, including: (1) a claim for benefits under § 502(a)(1)(B); (2) a claim for equitable relief under 29 U.S.C. § 1132(a)(3) ("§ 502(a)(3)"); (3) a claim for breach of fiduciary duty under 29 U.S.C. § 1132(a)(2) ("§ 502(a)(2)"); (4) a claim for failure to timely provide ERISA plan documents under 29 U.S.C. § 1132(c)(1) ("§ 502(c)(1)"); (5) a claim for equitable estoppel under § 502(a)(3); (6) a claim based on the alleged failure to provide a full and fair review of their claims under 29 U.S.C. § 1133 ("§ 503"); (7) state law claims for negligence, breach of fiduciary duty, unjust enrichment, bad faith claims handling, civil conspiracy and

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tortious interference with contract; and (8) a claim that ERISA is unconstitutional as applied because it violates Plaintiffs' Seventh Amendment right to a jury trial.¹³

A month later, on October 26, 2018, Soileau I and Soileau II were consolidated for all purposes.¹⁴ Thereafter, Blue Cross filed a Motion for Partial Summary Judgment in Consolidated Actions, seeking dismissal of all of Plaintiffs' claims in the First Amended Complaint except the ERISA § 502(a)(1)(B) claim.¹⁵ In response, Plaintiffs filed a Second Amending & Supplemental Complaint, adding New Directions and Health Integrated, Inc., purported agents of Blue Cross, as defendants.¹⁶ Plaintiffs assert the same eight causes of action as in their First Amending & Supplemental Complaint.

On March 21, 2019, Blue Cross filed a Rule 12(b)(6) Motion to Dismiss, seeking dismissal of all of Plaintiffs' claims in the Second Amended Complaint except the § 502(a)(1)(B) claim.¹⁷ In response, on April 10, 2019, Plaintiffs filed a Third Amending & Supplemental Complaint against Blue Cross, as well as New Directions and Health Integrated, Inc. as alleged third-party administrators for Blue Cross.¹⁸ The Third Amended Complaint asserts the same eight causes of action as the two prior amended pleadings, and adds a claim that Blue Cross' benefit determination violated the

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Americans with Disabilities Act or, alternatively, violated the Patient Protection and Affordable Care Act.¹⁹

On April 24, 2019, Blue Cross filed the instant Rule 12(B)(6) Motion to Dismiss, seeking dismissal of all of Plaintiffs' claims in the Third Amended Complaint except the § 502(a)(1)(B) claim, Plaintiffs' first cause of action.²⁰ Thereafter, on May 21, 2019, the Court issued an Order denying as moot Blue Cross' Motion for Partial Summary Judgment and Blue Cross' Rule 12(b)(6) Motion to Dismiss as to the Second Amended Complaint.²¹

II. LEGAL STANDARD

A. Fed. R. Civ. P. 12(b) Motion to Dismiss

Under Federal Rule of Civil Procedure 12(b)(6), a defendant can seek dismissal of a complaint, or any part of it, for failure to state a claim upon which relief may be granted.²² To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'"²³ "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."²⁴ "The plausibility standard is not akin to a

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probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully."²⁵

A court must accept all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.²⁶ The Court, however, is not bound to accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.²⁷ "Dismissal is appropriate when the complaint on its face shows a bar to relief."²⁸ In deciding a Rule 12(b)(6) motion to dismiss, a court is generally prohibited from considering information outside the pleadings, but may consider documents outside of the complaint when they are: (1) attached to the motion; (2) referenced in the complaint; and (3) central to the plaintiff's claims.²⁹

III. ANALYSIS

A. Plaintiffs' § 502(a)(2) and § 502(a)(3) claims for equitable relief (Cause of Action Nos. 2, 3 and 5).

In their second and fifth causes of action, Plaintiffs seek equitable relief under ERISA § 502(a)(3), asserting that they are entitled to an injunction and declaratory relief for future benefits, as well as an order estopping Blue Cross from denying Plaintiffs' claims for reimbursement.³⁰ Plaintiffs' third cause of action is a claim for breach of fiduciary duty against Blue Cross under § 502(a)(2), through which Plaintiffs seek to "recover benefits due the Plan or to correct an unlawful gain that

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has inured to the fiduciary."³¹ Blue Cross argues that these claims are barred because the United States Supreme Court has held that plaintiffs cannot seek equitable relief under §§ 502(a)(3) and 502(a)(2) when suing to recover benefits under § 502(a)(1)(B).³² Blue Cross asserts that because Plaintiffs have a remedy under § 502(a)(1)(B), they cannot also assert claims for equitable relief under § 502(a)(3) or for breach of fiduciary duty under § 502(a)(2), and that such claims are only appropriate if Plaintiffs had no other available remedy.³³ Blue Cross further argues that the "equitable relief" sought by Plaintiffs through their §§ 502(a)(2) and 502(a)(3) claims is the reversal of the benefit determination at issue and the payment of benefits under the ERISA Plan.³⁴ Re-urging the arguments raised in their opposition briefs filed in response to Blue Cross' Motion for Partial Summary Judgment and Blue Cross's first Rule 12(b)(6) Motion to Dismiss, Plaintiffs argue that § 502(a)(1)(B) is not their exclusive remedy in this case.³⁵ In their prior briefs, Plaintiffs cite a federal district court case from Mississippi to support their position that because this case is at the pleading stage, Plaintiffs are not precluded from simultaneously bringing claims under several subsections of § 502(a).³⁶

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Although Plaintiffs urge the Court to take a more expansive approach to ERISA claims, Fifth Circuit precedent makes clear that Plaintiffs' § 502(a)(3) and § 502(a)(2) claims are barred. Section 502(a)(2) provides a remedy for breaches of fiduciary duty that generally pertain to the misuse or improper management of plan assets, while § 502(a)(3) provides a remedy for all other violations of ERISA or the terms of the plan, including breaches of fiduciary duty, not encompassed by § 502(a)(2).³⁷ In Varity Corp. v. Howe, the Supreme Court recognized that § 502(a)(3) is a "catchall provision" that, "act[s] as a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy."³⁸ The Fifth Circuit...