Terry v. Northrop Grumman Health Plan

• Citation: 989 F.Supp.2d 401
• Decision Date: 09 January 2013
• Docket Number: Civil Action No. 1:12–CV–263.
• Parties: Anna Mae TERRY v. NORTHROP GRUMMAN HEALTH PLAN.
• Court: U.S. District Court — Middle District of Pennsylvania

989 F.Supp.2d 401

Anna Mae TERRY

v.NORTHROP GRUMMAN HEALTH PLAN.

Civil Action No. 1:12–CV–263.

United States District Court,

M.D. Pennsylvania.

Filed Jan. 9, 2013.

Recognized as Preempted

N.J.S.A. 17B:27–73

Limited on Preemption Grounds

40 P.S. § 532.7

Kirk L. Wolgemuth, Devine Law Offices, LLC, Lancaster, PA, for Anna Mae Terry.

Emily H. Bensinger, Saul Ewing LLP, Harrisburg, PA, James A. Keller, Saul Ewing LLP, Philadelphia, PA, for Northrop Grumman Health Plan.

ORDER

CHRISTOPHER C. CONNER, District Judge.

AND NOW, this 9th day of January, 2013, upon consideration of the Report and Recommendation of United States Magistrate Judge Mildred E. Methvin (Doc. 29), recommending (1) that defendant's motion to dismiss (Doc. 7) be granted on Count IV and denied on Count II, and (2) that plaintiff's motion for leave to file an amended complaint be denied, and, following an independent review of the record, it appearing that neither party has objected to the magistrate judge's report and recommendation, and that there is no clear error on the face of the record,¹see Nara v. Frank, 488 F.3d 187, 194 (3d Cir.2007) (explaining that “failing to timely object to [a report and recommendation] in a civil proceeding may result in forfeiture of de novo review at the district court level”), it is hereby ORDERED that:

1. The Report and Recommendation of Magistrate Judge Methvin (Doc. 29) are ADOPTED.

2. Defendant's motion to dismiss is GRANTED as to Count IV and DENIED as to Count II.

3. Plaintiff's motion for leave to file an amended complaint (Doc. 12) is DENIED as moot.

4. A pretrial/trial schedule shall issue by separate order.

REPORT AND RECOMMENDATION ON MOTION TO DISMISS AND MOTION FOR LEAVE TO FILE AMENDED COMPLAINT (Docs. 7, 12)

MILDRED E. METHVIN, United States Magistrate Judge.

Anna Mae Terry filed this ERISA action on February 10, 2012. (Doc. 1). She brings claims for life insurance benefits (Count I), breach of fiduciary duty (Count II), statutory penalties (Count III), and a state claim for life insurance benefits (Count IV). Named as defendant is Northrop Grumman Health Plan, a health and welfare benefit plan as defined by ERISA. This court has jurisdiction pursuant to 29 U.S.C. § 1132 and 28 U.S.C. § 1367.

Before the court are two motions: 1) Northrop's motion to dismiss Counts II and IV; ¹ and 2) Terry's motion for leave to file an amended complaint.² Both motions are opposed. They have been referred to the undersigned for a report and recommendation and are now ripe for disposition.

FINDINGS AND RECOMMENDATIONS

I. Background

For purposes of the motion to dismiss, Terry's factual averments will be accepted as true. Terry makes the following allegations in her complaint:

Terry's husband, David Terry, was employed by Northrop, which sponsored the Northrop Grumman Health Plan as an employee benefit. Through the life insurance portion of the plan, David obtained both basic life insurance coverage of $50,000 and optional coverage of $60,000. (Doc. 1 ¶¶ 5–10). Plaintiff is the beneficiary of the policies. ( Id. ¶ 16). The insurance plan also provides continuation of coverage through conversion or portability. ³ ( Id. ¶ 11). The terms of the insurance plan provide that conversion or portability must be applied for within 31 days of the date coverage ends. ( Id. ¶ 14).

On September 1, 2010, David was informed that his basic life insurance would be effective from that date until June 30, 2011 and that the cost for the optional insurance was $424.80. ( Id. ¶ 17). On October 18, 2010, David was informed he would be laid off from work, effective October 29, 2010. ( Id. ¶ 18). Prior to his layoff and extending 31 days after coverage ended, David did not receive notice of his rights to convert or port his insurance. ( Id. ¶ 19). David died on January 2, 2011 as the result of a heart attack. ( Id. ¶ 21).

After Terry inquired about the life insurance benefits, Northrop sent the required notice of conversion/portability rights on February 23, 2011. ( Id. ¶ 22). Northrop denied Terry's claim for life insurance benefits on February 22, 2011. Terry appealed on June 23, 2011. ( Id. ¶¶ 23, 24). Northrop upheld the denial of benefits on September 12, 2011, asserting that David had never completed the necessary forms to convert or port his life insurance benefits. ( Id. ¶ 25).

Terry requested copies of all relevant documents regarding her claim for life insurance on October 12, 2011, and she claims she had still not received the actual plan documents as of February, 2012. ( Id. ¶¶ 26, 27). The present action followed.

II. Issues Presented

Northrop asserts the following grounds for dismissal:

A. Count II of the complaint should be dismissed because a claim for breach of fiduciary duty under 29 U.S.C. 1132(a)(3) only affords injunctive relief or “other appropriate relief,” and is not a ground for recovery of disputed benefits.

B. Count IV of the complaint, which seeks recovery of benefits under state law, should be dismissed because the cited statute provides no private right of action and is preempted by ERISA.

With respect to her motion for leave to file an amended complaint, Terry raises the following ground for relief:

C. In the absence of any undue delay, bad faith or dilatory motive, and mindful that leave to amend is to be freely given, Terry should be permitted leave to amend Count II to request equitable relief and thus establishthat it is not merely a claim for recovery of benefits.

III. Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for dismissal of claims that fail to assert a basis upon which relief can be granted. When considering a motion to dismiss, the court must “accept all [of plaintiff's] factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.2008) (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n. 7 (3d Cir.2002)). See also Matrixx Initiatives, Inc. v. Siracusano, ––– U.S. ––––, 131 S.Ct. 1309, 1322–23, 179 L.Ed.2d 398 (2011).

The complaint must set forth sufficient facts to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The question is not whether the plaintiff will ultimately prevail, but whether the “complaint [is] sufficient to cross the federal court's threshold.” Skinner v. Switzer, ––– U.S. ––––, 131 S.Ct. 1289, 1296, 179 L.Ed.2d 233 (2011) (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)).

Although Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief,” a plaintiff must do more than present “bald assertions” and “legal conclusions.” In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1429–30 (3d Cir.1997).

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the “grounds” of his “entitle[ment] to relief” requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do. Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true.

Twombly, 550 U.S. at 545, 127 S.Ct. 1955 (citations omitted). Plaintiffs must nudge their claims “across the line from conceivable to plausible.” Id. at 570, 127 S.Ct. 1955.See also Phillips, 515 F.3d at 232.

A plaintiff “armed with nothing more than conclusions” is not entitled to discovery. Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). Consequently, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief,’ ” and the complaint should be dismissed. Id. (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original).

The “plausible grounds” requirement “does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence” supporting the plaintiff's claim for relief. Twombly, 550 U.S. at 556, 127 S.Ct. 1955. Determining plausibility is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950 ( citing Twombly, 550 U.S. at 557–58, 127 S.Ct. 1955).

The Third Circuit has outlined a two-part analysis that courts should utilize when deciding a motion to dismiss for failure to state a claim. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). First, the factual and legal elements of a claim should be separated. In other words, while courts must accept all of the complaint's well-pleaded facts as true, they may disregard any legal conclusions. Second, courts then decide whether the facts alleged in the complaint are sufficient to demonstrate that the plaintiff has a “ ‘plausible claim for relief.’ ” Id. at 210 (quoting Iqbal, 129 S.Ct. at 1950). That is, a complaint must do more than allege the entitlement to relief; its facts must show such an entitlement. Id. at 211.

IV. Discussion(A) Is Count II (Breach of fiduciary duty) precluded?

Northrop contends that Count II of the complaint seeks the same relief as Count I—recovery of life insurance proceeds, plus costs, interest, and attorneys fees—and that Count II therefore should be dismissed.⁴

Northrop also argues that the statutory provision cited in support of Count II, 29 U.S.C. § 1132(a)(3), authorizes only equitable relief, not recovery of benefits. Under this provision, a plan beneficiary may bring suit in federal court “to enjoin any act or practice which violates ... the terms of the...