Struve v. Electrolux Home Prods., Inc.
| Decision Date | 25 February 2019 |
| Docket Number | Case No. 17-cv-8158 |
| Parties | GERALD A. STRUVE, Plaintiff, v. ELECTROLUX HOME PRODUCTS, INC. LIFE INSURANCE PLAN, et. al., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Before the Court are the motion to dismiss filed by Defendants Electrolux Home Products, Inc. Life Insurance Plan and Electrolux Home Products, Inc. [30], and Plaintiff's motion to strike certain affirmative defenses asserted by Defendant Prudential Insurance Company of America [36]. For the reasons set forth below, the motion to dismiss [30] is granted, and the motion to strike [36] is granted. Further status hearing set for March 19, 2019 at 9:30 a.m.
At all relevant times, Decedent Jeffrey Struve ("Decedent")—an employee of Electrolux Home Products, Inc. ("Electrolux")—was a participant in the Electrolux Home Products, Inc. Life Insurance Plan (the "Plan"), an employee welfare benefit plan. [Id. at ¶ 21.] Electrolux was the Plan sponsor, administrator, and a fiduciary of the Plan. [Id. at ¶ 22.] The Plan retained Defendant the Prudential Insurance Company of America ("Prudential") to provide life insurance for the Plan's participants and their beneficiaries under a Group Insurance Contract. [Id. at ¶ 23.] The Plan is fully insured by Prudential, so Prudential pays benefits from its own assets. [Id. at ¶ 25.] All claims determinations are made by Prudential as the claims administrator. [Id.] Prudential "has the sole discretion to interpret the terms of the Group Contract, to make factual findings, and to determine eligibility for benefits." [1-4, at 3.]
As an employee of Electrolux, Decedent was provided Group Term Life Insurance (also called Basic Life Insurance) by Prudential for $240,000 effective March 1, 2011. [1 at ¶ 28.] On or about March 9, 2013, Decedent requested and was provided $160,000.00 in "Employee Supplemental Life Insurance" (also called "Optional Life Insurance") with Prudential. [Id. at ¶ 29.] On or about February 28, 2013, Decedent requested an increase in "Employee Supplement Life Insurance" coverage to two times his salary ($320,000). [Id. at ¶ 29.]1 Under the terms of the Plan, Decedent was entitled to the requested increase in coverage without proof of insurability. [Id. at ¶ 31.] However, even though Decedent enrolled and agreed to pay the required contributions, Defendants refused to provide the requested increase in coverage without proof of insurability. [Id. at ¶ 32.] Specifically, Defendants required Decedent to complete a Short Form Health Statement Questionnaire, which he did. [Id.] The requested increase in coverage to two times Decedent's salary went into effect on January 1, 2014. [Id. at ¶ 33.]
Decedent passed away on August 13, 2014 from metastatic soft tissue sarcoma myxofibrosarcoma. [Id. at ¶ 34; 1-1, at 2.] He paid all contributions up to the month during which he passed away. [1, at ¶ 34.] Decedent properly designated his son Gerald Struve (the "Beneficiary" or "Plaintiff") as the beneficiary of any death benefits. [Id. at ¶ 36.] The Beneficiary made a claim to the Plan and Prudential for payment of the Basic Life Insurance and the Optional Life Insurance benefits. [Id. at ¶ 37.] The Basic Life Insurance benefits were paid. [Id. at ¶ 38.] However, Prudential denied the Beneficiary's claim for Optional Life Insurance benefits because the Decedent purportedly made misrepresentations regarding his medical history on the Short Form Health Statement Questionnaire. [1-1.] Specifically, Prudential contended that the Decedent should have answered "yes" to the last question on the form, which asked:
Within the last five years, have you been diagnosed with, or treated by a member of the medical profession for, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-Related Complex (ARC), or have you been treated for or had any trouble with any of the following: heart, chest pain, high blood pressure, cancer or tumors, diabetes, lungs, kidneys, liver?
[1, at ¶¶ 3-5.] Prudential contended that the Decedent's response was misleading "because he was diagnosed with Diabetes" within the relevant time frame. [Id. at ¶ 4.]
Plaintiff brings this lawsuit against the Plan, Electrolux, and Prudential to recover benefits he contends are due under the Plan and related life insurance policies under Sections 502(a)(1)(B) and 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan and Electrolux (hereinafter, the "Defendants")2 moved to dismiss Plaintiff's claims against them. Prudential answered the complaint and asserted numerous affirmative defenses. Plaintiff moved to strike certain of those of affirmative defenses. Before the Court are the motion to dismiss filed by Defendants and the motion to strike filed by Plaintiff.
To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level." E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "A pleading that offers 'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Dismissal for failure to state a claim under Rule 12(b)(6) is proper "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Twombly, 550 U.S. at 558. In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiff's well-pleaded factual allegations and draws all reasonable inferences in Plaintiff's favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007).
1. Section 502(a)(1)(B) Claims
Defendants Elextrolux and the Plan argue that they are not the proper Defendants to this ERISA benefits action because they had no role in the benefits decision at the heart of this case. To the extent that Plaintiff seeks to bring claims to recover benefits due under Section 502(a)(1)(B), the Court agrees that Defendants are not proper Defendants. Under Section 502(a)(1)(B), "[a] civil action may be brought by a participant or beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Employers generally are not the proper defendants for claims under Section 502(a)(1)(B). Blickenstaff v. R.R. Donnelley & Sons Co. Short Term Disability Plan, 378 F.3d 669, 674 (7th Cir. 2004). "The proper defendant in a suit for benefits under an ERISA plan is * * * normally the plan itself * * * because the plan is the obligor." Feinberg v. RM Acquisition, LLC, 629 F.3d 671, 673 (7th Cir. 2011) (internal citations omitted); see also Larson v. United Healthcare Ins. Co., 723 F.3d 905, 913 (7th Cir. 2013) . "Typically the plan owes the benefits and is the right defendant." Larson, 723 F.3d at 913 (citing Leister v. Dovetail, Inc., 546 F.3d 875, 879 (7th Cir. 2008)). However, "[w]hen an employee-benefits plan is implemented by insurance and the insurance company decides contractual eligibility and benefits questions and pays the claims, an action against the insurer for benefits due 'is precisely the civil action authorized by § 502(a)(1)(B).'" Id. (quoting Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202, 1207 (9th Cir. 2011) (en banc)).
Here, the Plan fully is insured by Prudential, which pays the benefits from its own assets. [1, at ¶ 25.] Furthermore, all claims determinations (including any necessary factual findings and eligibility determinations) are made by Prudential as the claims administrator under the Plan. [Id.] Thus, under Seventh Circuit precedent, Prudential—not the Plan or Electrolux—is the obligor and is the proper Defendant for Plaintiff's claims to recover benefits due. Although Plaintiff argues that Defendants breached their fiduciary duties by failing to (1) provide the decedent the correct documents, (2) ensure compliance with the plan, and (3) to monitor the activities of anyone to whom it delegated obligations, Plaintiff does not explain how such purported breaches entitle him "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Plaintiff does not contest that Prudential is the obligor. Nor does Plaintiff challenge the cases cited by Defendants—and discussed above—holding that the obligor is the proper Defendant in an action brought under Section 502(a)(1)(B). Plaintiff does note that Defendants do not cite to any cases in which the Court held that if the insurer is subject to suit the employer/plan is not.3 Nonetheless, the cases cited by Defendants do make clear that it is the obligor who is subject to liability under Section 502(a)(1)(B). Because neither the Plan nor Electrolux are obligors, the Court grants Defendants' motion to dismiss Plaintiff's Section 502(a)(1)(B) claims against the Plan and Electrolux.
ii. Section 502(a)(3) Claims
Defendants also argue that Plaintiff's Section 502(a)(3) claims should be dismissed as duplicative of Plaintiff's Section...
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