Weaver v. the Prudential Ins. Co. of Am.

• Citation: 763 F.Supp.2d 930
• Decision Date: 07 December 2010
• Docket Number: Civil Action No. 3:10–cv–00438.
• Parties: Barbara WEAVER, Plaintiff,v.The PRUDENTIAL INSURANCE COMPANY OF AMERICA, and Hendersonville Hospital Corp., d/b/a Hendersonville Medical Center, Defendants.
• Court: U.S. District Court — Middle District of Tennessee

763 F.Supp.2d 930

Barbara WEAVER, Plaintiff,

v.The PRUDENTIAL INSURANCE COMPANY OF AMERICA, and Hendersonville Hospital Corp., d/b/a Hendersonville Medical Center, Defendants.

Civil Action No. 3:10–cv–00438.

United States District Court, M.D. Tennessee, Nashville Division.

Dec. 7, 2010.

John B. Holt, Holt & Kroeger, Springfield, TN, Peter T. Skeie, Nashville, TN, for Plaintiff.Kathryn Hays Sasser, Walker, Tipps & Malone, Nashville, TN, Jahnisa P. Tate, Alston & Bird LLP, Atlanta, GA, for The Prudential Insurance Company of America.Robert J. Mendes, Mglaw, PLLC, Nashville, TN, for The Prudential Insurance Company of America, and Hendersonville Hospital Corp.Randall A. Constantine, Mazursky Constantine LLC, Atlanta, GA, for Hendersonville Hospital Corp.

MEMORANDUM OPINION

THOMAS A. WISEMAN, JR., Senior District Judge.

Plaintiff Barbara Weaver originally filed this action in the Circuit Court for Sumner County, Tennessee on March 22, 2010, asserting claims under state law for promissory estoppel, negligence, and breach of fiduciary duty, and seeking as damages the value of an insurance policy insuring Plaintiff's ex-husband Johnny Weaver, deceased. Defendants removed the matter to this Court on May 4, 2010, on the grounds that the policy at issue is governed by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. (“ERISA”), and that Plaintiff's state-law claims relating to the policy are completely preempted by ERISA.

Now before the Court are three motions: (1) a Motion to Remand filed by Plaintiff (Doc. No. 22); (2) a Motion for Judgment on the Pleadings filed by Defendant Prudential Insurance Company of America (“Prudential”) (Doc. No. 32); and (3) a Motion to Dismiss for failure to state a claim filed by Defendant Hendersonville Medical Center (the “Hospital”) (Doc. No. 7). The motions have been fully briefed and are ripe for resolution. For the reasons set forth herein, Plaintiff's motion to remand will be denied; Prudential's motion for judgment will be granted, and the Hospital's motion will be granted in part and denied in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

The facts set forth herein are drawn from the Plaintiff's Complaint and the ERISA plan documents attached to the pleadings.

The Hospital provides group life insurance as a benefit to its employees. Prudential issued the Hospital's group policy to HCA Management Services (“HCA”), the Hospital's parent corporation, which provided life insurance benefits under a welfare benefit plan sponsored by the Hospital, through its parent HCA, and insured by Prudential (the “Group Plan”). The formal name of the Group Plan is the “Life, Accidental Death & Dismemberment Plan.” (Doc. 23, App. A at 6, § 2.11.) The Hospital's stated intention in creating and sponsoring the Group Plan was to create an employee welfare benefit plan subject to and within the meaning of ERISA. ( Id. at 4, § 1.03.) The HCA Plan Administration Committee is the Plan Administrator, a committee appointed and maintained by the Hospital. (Doc. 23, App. C at 1, § 2.12.) The Group Plan provides various types of life insurance benefits to eligible participants and beneficiaries, and such benefits are paid for by the Hospital and provided at no cost to employees. Employees are required to pay for supplemental and dependent coverage. Benefit claims are governed by ERISA's claim regulations. (Doc. 23, App. A at 16, § 8.01.)

The Group Plan states that the “persons for whom you may obtain Dependents insurance [are][y]our legal spouse, excluding a legally separate spouse or divorced spouse.” (Doc. 23–9, at 17 (emphasis added).) Thus, employees have the right to purchase group life insurance coverage on spouses, but spousal coverage ceases if the employee divorces her spouse. In the event of divorce and the subsequent end to spousal coverage, the Group Plan allows the divorcing employee to convert the Group Plan into an Individual Life Insurance Contract. In order to obtain conversion coverage, however, “[t]he individual contract must be applied for.” (Doc. 23–9, at 27.) The policy also states: “But in no event may you convert the insurance to an individual contract if you do not apply for the contract and pay the first premium prior to the one hundred and sixth day after you cease to be insured for all or part of the Dependents Term Life Coverage with respect to the dependent.” (Doc. 23–9, at 24.) The Summary Plan Description further provides that an employee who seeks to convert a group life insurance policy to an individual insurance policy “must request a Conversion Application from Prudential” and “must apply and pay the policy premium within 45 days of [the employee's] dependent's loss of eligibility to participate in coverage.” (Doc. 23–6, at 8.) Individual contracts are issued and administered independently of the Group Plan.

Plaintiff began her employment at the Hospital, located in Sumner County, Tennessee, in October 2000. In 2002, Plaintiff enrolled in the Group Plan, Group Policy No. 44028. As part of her participation in the Group Plan, she enrolled in and elected to purchase $25,000 of dependent term life insurance coverage (the “Group Policy”) for her then-husband, Johnny Weaver. The Group Policy provided that, in the event of Mr. Weaver's death, Plaintiff would be the beneficiary of $25,000. As indicated above, however, the Group Plan also expressly provided that ex-spouses are not qualified dependents.

Plaintiff and Mr. Weaver divorced on January 5, 2007. Prior to the divorce, Plaintiff spoke with Craig Arnold, the Hospital's Human Resources Director, and told Mr. Arnold that she was planning to get divorced but wanted to continue to have life insurance coverage on Mr. Weaver after the divorce. Plaintiff alleges that Mr. Arnold told her that she would not need to make any changes to her benefits package to retain life insurance coverage on Mr. Weaver after the divorce. Following the divorce, Plaintiff did not obtain a Conversion Application from Prudential, nor did she submit an Application to convert the Group Policy to an individual contract, and no individual contract was ever issued. Plaintiff nonetheless continued to allow a premium for dependent term life insurance coverage on Mr. Weaver, in the amount of $4.95 per pay period, to be deducted from her paycheck. The Hospital remitted the premiums to Prudential, and Prudential accepted the premiums. Prudential was unaware that Plaintiff was divorced.

Mr. Weaver died on November 28, 2008. On January 30, 2009, Plaintiff filed a claim with Prudential to collect $25,000 in dependent life insurance benefits. Prudential denied the claim because Mr. Weaver, as Plaintiff's former spouse, was not a qualified dependent under the Group Plan. Plaintiff appealed this decision and exhausted her administrative remedies under the Group Plan.

Plaintiff filed suit to recover the benefit in Sumner County Circuit Court stating claims under state law for promissory estoppel against Prudential, and negligence and breach of fiduciary duty against the Hospital. As previously indicated, Defendants removed the matter to this Court on the grounds of ERISA preemption.

II. ANALYSIS AND DISCUSSIONA. Plaintiffs' Motion to Remand

A state court action may be removed to federal court if the district court would have had “original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States.” 28 U.S.C. § 1441; Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Under the “well-pleaded complaint rule,” removal is generally proper only if a federal question is presented on the face of the plaintiff's complaint. Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9–12, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); Warner v. Ford Motor Co., 46 F.3d 531, 533–34 (6th Cir.1995) (noting that while federal preemption is ordinarily a federal defense to a plaintiff's suit, “as a defense, it does not appear on the face of a well-pleaded complaint, and therefore does not authorize removal to federal court” (internal citations omitted)).

However, the complete-preemption doctrine provides “a narrow exception to the well-pleaded complaint rule.” AmSouth Bank v. Dale, 386 F.3d 763, 776 (6th Cir.2004). Complete preemption applies in situations when “a federal statute wholly displaces the state-law cause of action,” in which case “a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law. This claim is then removable under 28 U.S.C. § 1441(b), which authorizes any claim that ‘arises under’ federal law to be removed to federal court.” Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003); AmSouth Bank, 386 F.3d at 776.

ERISA contains an integrated enforcement mechanism in § 502(a), 29 U.S.C. § 1132(a), that is “essential to accomplish Congress' purpose of creating a comprehensive statute for the regulation of employee benefit plans.” Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). Accordingly, “[a]ctions that could have been brought under § 1132, ‘where there is no other independent legal duty that is implicated by a defendant's actions,’ are completely preempted by § 1132.” Thurman v. Pfizer, Inc., 484 F.3d 855, 860 (6th Cir.2007) (quoting Davila, 542 U.S. at 210, 124 S.Ct. 2488). To come within the complete preemption exception “a court must conclude that the common law or statutory claim under state law should be characterized as a superseding ERISA action ‘to recover benefits due to [the plaintiff] 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,’ as provided in § 1132(a)(1)(B).” Peters v. Lincoln Elec. Co., 285 F.3d 456, 468 n. 11 (6th Cir.2002) (quoting Warner, 46 F.3d 531,...