Termini v. Life Ins. Co. of North America

• Decision Date: 08 December 2006
• Docket Number: No. 2:06 CV 591.,2:06 CV 591.
• Parties: Toni TERMINI, individually, and as Executor of the Estate of Salvatore Termini, deceased, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, and Cigna Group Insurance Companies, a subsidiary of Cigna Corporation, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

464 F.Supp.2d 508

Toni TERMINI, individually, and as Executor of the Estate of Salvatore Termini, deceased, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, and Cigna Group Insurance Companies, a subsidiary of Cigna Corporation, Defendants.

No. 2:06 CV 591.

United States District Court, E.D. Virginia, Norfolk Division.

December 8, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Daniel M. Schieble, Esq., Philip J. Infantino, III, Esq., Richard H. Matthews, Esq., Pender & Coward PC, Virginia Beach, VA, for Plaintiff.

Eric W. Schwartz, Esq., John C. Lynch, Esq., John S. Hubbard, Esq., Troutman Sanders LLP, Virginia Beach, VA, for Defendant Life Insurance Company of North America.

MEMORANDUM OPINION

REBECCA BEACH SMITH, District Judge.

This matter is before the court on plaintiffs motion to remand the case to state court, defendant Life Insurance Company of North America's ("LINA") motion to dismiss for failure to state a claim, and plaintiffs motion for leave to amend. For the reasons stated below, plaintiffs motion to remand is DENIED, LINA's motion to dismiss is GRANTED-IN-PART and DENIED-IN-PART, and plaintiffs motion for leave to amend is GRANTED.

I. Factual and Procedural History

Plaintiff, as beneficiary of a decedent formerly employed by Electric Power Research Institute ("EPRI"), brought the present action seeking accidental death and dismemberment benefits under an employee benefits plan that LINA issued to EPRI and administered.¹

For a number of years leading up to the date of his death on May 11, 2005, plaintiffs husband Salvatore Termini ("the decedent") was an employee of EPRI and participated in the company's group accidental death and dismemberment plan. Under the terms of the plan, LINA is obligated to pay benefits to eligible persons for the death or loss from bodily injuries "Naused by an accident which happens while an insured is covered by this policy." On January 1, 2004, LINA issued a renewal accidental death and dismemberment policy to the decedent, which provided $500,000.00 in coverage. The decedent listed plaintiff as the beneficiary of this policy.

On April 30, 2005, while the policy was in full force and effect, the decedent sustained injuries as a result of a fall while jogging. Because of the fall, the decedent suffered a basilar skull fracture and subarachnoid hemorrhage. After this incident, the decedent became unconscious and had a hypoxic event, which led to cardiac arrhythmia and eventually his death on May 11, 2005.

Following the decedent's death, EPRI, on behalf of plaintiff, applied for the proceeds of the policy on or about June 27, 2005. On July 13, 2005, LINA denied the benefits. On August 2, 2005,.plaintiff furnished LINA with the identity and location of an eyewitness to the decedent's fall. On November 15, 2005, LINA denied the benefits without interviewing the eyewitness or contacting the decedent's physicians. On December 3, 2005, plaintiff appealed this decision, but on April 7, 2006, LINA upheld its denial of the claim.

On August 28, 2006, plaintiff filed a five-count complaint against defendants LINA and CIGNA Group Insurance Companies in the Circuit Court for the City of Chesapeake. Plaintiffs complaint asserts four causes of action against LINA: (1) breach of contract; (2) promissory estoppel; (3) equitable estoppel; and (4) bad faith. Plaintiffs complaint also asserts one cause of action, tortious interference with contractual relations and prospective economic advantage, against CIGNA Group Insurance Companies. Plaintiff seeks $500,000.00 in compensatory damages against LINA and CIGNA Group Insurance Companies, jointly and severally. Plaintiff seeks $750,000.00 in compensatory damages and 3350,000.00 in punitive damages against CIGNA Group Insurance Companies. In addition, plaintiff seeks costs, expenses, and reasonable attorneys' fees.

On October 23, 2006, LINA removed this action to the United States District Court for the Eastern District of Virginia, asserting that this court has federal question jurisdiction pursuant to 28 U.S.C. § 1441(a) as plaintiffs claims are governed by the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq.² In addition, on October 30, 2006, LINA filed a motion to dismiss and memorandum in support of this motion. On November 8, 2006, plaintiff filed a motion to remand, brief in support of remand, brief in opposition to LINA's motion to dismiss, motion for leave to amend, and brief in support of motion for leave to amend. On November 15, 2006, LINA filed a reply to plaintiff's brief in opposition to LINA's motion to dismiss. On November 16, 2006, LINA filed its brief in opposition to plaintiffs motion to remand and brief in opposition to plaintiffs motion for leave to amend. Accordingly, the three motions are now ripe for review.

II. Analysis

A. Motion to Remand

Because the court must first determine whether it has proper subject matter jurisdiction over this case, the court will first address plaintiff's motion to remand. A court must remand a case to state court "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction ...." 28 U.S.C. § 1447(c). The party who is seeking removal bears the burden of establishing federal jurisdiction. See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936).

The district court will have subject matter jurisdiction over a civil action if a federal question exists. See 28 U.S.C. § 1331. A district court has federal question jurisdiction if the civil action arises "under the Constitution, laws, or treaties of the United States." Id. It is well-settled that "a cause of action arises under federal law only when the plaintiffs well-pleaded complaint raises issues of federal law." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). A federal defense, such as preemption, may generally not form the basis for removal. See Smith v. Logan, 363 F.Supp.2d 804, 808 (E.D.Va.2004) (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392-93, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)). "However, if a state law cause of action has been completely preempted by federal law, any claim based on the completely preempted state law is considered a federal claim arising under federal law." Id. (citing Caterpillar Inc., 482 U.S. at 393, 107 S.Ct. 2425). The Fourth Circuit has confirmed that this complete preemption exception to the well-pleaded complaint rule applies to removal in the ERISA context. See Makar v. Health Care Corp., 872 F.2d 80, 82 (4th Cir.1989).

Plaintiff urges the court to remand the instant action to state court, because her complaint only expressly seeks damages under state law.³ Pl.'s Br. in Supp. of Mot. for Remand at 1-2. Defendant counters that its removal of this action is proper, arguing that ERISA governs the group insurance policy at issue and completely preempts plaintiffs state law claims. Def.'s Br. in Opp'n to Pl.'s Mot. for Remand at 3-7. In order to properly resolve these issues, the court must determine whether ERISA governs EPRI's group insurance policy, and if so, whether ERISA completely preempts plaintiffs state law

1. Whether ERISA Governs EPRI's Group Insurance Policy

Plaintiff contends that ERISA does not preempt her state law claims because EPRI's group insurance policy does not constitute an "employee welfare benefit plan" as defined by ERISA. Pl.'s Br. in Supp. of Mot. for Remand at 2. "With few exceptions not relevant here, ERISA applies to all employee benefit plans that are established or maintained by an employer `engaged in commerce or in any industry or activity affecting commerce.'" Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 417 (4th Cir.1993) (quoting 29 U.S.C. § 1003(a)). In particular, ERISA defines an "employee welfare benefit plan" as

any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer ..., to the extent that such a plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, ... benefits in the event of sickness, accident, disability, death or unemployment....

29 U.S.C. § 1002(1). Under this definition, the employer must pay or manifest an intention to provide benefits to employees or their beneficiaries. See Custer, 12 F.3d at 417. "The existence of a plan may be determined from the surrounding circumstances to the extent that a `reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits.'" Id. (quoting Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir.1982) (en banc)). Thus, to determine whether ERISA applies, the Fourth Circuit has broken the statutory definition down into five elements: (1) a plan, fund, or program; (2) established or maintained; (3) by an employer; (4) for the purpose of providing benefits in the event of sickness, accident, disability, or death; (5) to participants or their beneficiaries. See Madonia v. Blue Cross & Blue Shield, 11 F.3d 444, 446 (4th Cir.1993).

Plaintiff fails to present an argument that any of the aforementioned elements are lacking in this case. Instead, plaintiff summarily argues that the accidental death and dismemberment plan is not governed by ERISA. Pl.'s Br. in Supp. of Mot. for Remand at 2. The court finds, however, that the record clearly demonstrates that ERISA governs EPRI's group insurance policy. EPRI, as an employer, purchased and obtained the policy for the benefit of its full-time employees who work at least twenty hours per week. The policy itself provided procedures for making claims and obtaining benefits. Notably, EPRI filed the claim at issue on behalf of plaintiff in this case. In addition, the accidental death and dismemberment policy benefits were of the type described in 29...