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Hoh v. Standard Insurance Co.

United States District Court, S.D. West Virginia, Charleston Division

June 6, 2017




         Plaintiff William Gerard Hoh brings this case against Defendant Standard Insurance Company (“Standard”) alleging two causes of action that arise out of Standard's denial of Plaintiff's claims under both a Group Short Term Disability Insurance Policy (“STD Policy”) and Group Long Term Disability Insurance Policy (“LTD Policy”). Standard issued these policies to the West Virginia Public Employees' Insurance Agency (“PEIA”) to cover certain state public employees like Plaintiff. Before the Court is Standard's Motion to Dismiss. (ECF No. 5.) For the reasons discussed below, the Court GRANTS IN PART and DENIES IN PART the motion.

         I. BACKGROUND

         This action arises out of a complaint brought by Plaintiff in the Circuit Court of Kanawha County, West Virginia.[1] (ECF No. 1-1 at 4-10.) According to the complaint, Plaintiff served as Medical Director of PEIA, where he “performed administrative reviews and issued benefit decisions.” (Id. at 5 ¶¶ 5-6.) Plaintiff participated in a group disability plan sponsored by PEIA for its employees, and Standard “was delegated authority to decide eligibility for benefits and pay claims for this disability policy.” (Id. at 5-6 ¶¶ 14-15, 17.) The group disability plan consists of both the STD Policy and LTD Policy, which are attached to the complaint as Exhibits C and D, respectively. (Id. at 28-95.) The complaint asserts that under the group disability plan, “a claimant should be found to be disabled if, as a result of physical disease, injury, or mental disorder, he is unable to perform, with reasonable continuity, the material duties of his own occupation.” (Id. at 6 ¶ 16.)

         Plaintiff allegedly began experiencing pain in his arms and legs in 2012 “due to re-tethering of his spinal cord.”[2] (Id. at 5 ¶ 7.) The complaint states that Plaintiff “ceased work on May 17, 2013[, ] due to his back pain, neck pain, headaches, and neuropathy in his upper and lower extremities.” (Id. ¶ 10.) Plaintiff sought evaluation from numerous doctors and specialists who ultimately diagnosed him with adult-onset tethered cord syndrome and determined that he was unable to continue working. (Id. ¶¶ 8-9, 11-13.) He alleges to have filed claim number 00DT9666 with Standard under the STD Policy for short-term disability benefits before becoming eligible for long-term benefits and filing claim number 00VU0256 under the LTD Policy. (Id. at 6 ¶¶ 18, 20.) The complaint provides that Standard denied Plaintiff both short-term and long-term benefits on May 1, 2014. (Id. at 7 ¶ 28.) Plaintiff filed an administrative appeal with Standard in December 2014, and Standard upheld its previous decision on April 10, 2015. (Id. ¶¶ 29-30.)

         Plaintiff contends that Standard wrongfully denied him short-term and long-term disability benefits that he is still owed and repeatedly erred throughout the claim review process. (See Id. at 7-8 ¶¶ 31-38.) He claims that Standard's actions and wrongful denial of his claims generate the following two causes of action: 1) common law breach of contract, (id. at 8 ¶¶ 39-43), and 2) violation of the West Virginia Unfair Trade Practices Act (“UTPA”), (id. at 9 ¶¶ 44-47). Plaintiff seeks several remedies: recovery of past, ongoing, and future disability benefits, punitive damages, attorney's fees and costs, pre- and post-judgment interest, and any other relief deemed appropriate. (Id. ¶¶ 1-9.)

         After Plaintiff filed his complaint in the Circuit Court of Kanawha County, Standard removed the case to this Court on March 2, 2017, pursuant to 28 U.S.C. § 1332. (ECF No. 1 at 1-2.) Standard filed the pending Motion to Dismiss on March 9, 2017, arguing that both of Plaintiff's claims should be dismissed as time-barred by the applicable statute of limitations. (ECF No. 5.) Plaintiff responded to the motion on March 23, 2017, (ECF No. 8), and Standard filed its reply memorandum in support of its motion on March 30, 2017, (ECF No. 10). The Motion to Dismiss is fully briefed and ripe for adjudication.


         A motion to dismiss for failure to state a claim upon which relief may be granted tests the legal sufficiency of a civil complaint. Fed.R.Civ.P. 12(b)(6). A plaintiff must allege sufficient facts, which, if proven, would entitle him to relief under a cognizable legal claim. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-55 (2007). A case should be dismissed if, viewing the well-pleaded factual allegations in the complaint as true and in the light most favorable to the plaintiff, the complaint does not contain “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. In applying this standard, a court must utilize a two-pronged approach. First, it must separate the legal conclusions in the complaint from the factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Second, assuming the truth of only the factual allegations, the court must determine whether the plaintiff's complaint permits a reasonable inference that “the defendant is liable for the misconduct alleged.” Id. Well-pleaded factual allegations are required; labels, conclusions, and a “formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555; see also King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016) (“Bare legal conclusions ‘are not entitled to the assumption of truth' and are insufficient to state a claim.” (quoting Iqbal, 556 U.S. at 679)). A plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” thereby “nudg[ing] [the] claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 555, 570.


         Plaintiff's complaint alleges two claims for relief. Standard attacks both counts in its Motion to Dismiss and argues that the statute of limitations bars them. In deciding a motion to dismiss based on the statute of limitations, the Court should only grant the motion if it clearly appears on the face of the complaint that the plaintiff's claims are time-barred. Goodman v. PraxAir, Inc., 494 F.3d 458, 464 (4th Cir. 2007); Dean v. Pilgrim's Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005).

         Courts analyzing a West Virginia statute of limitations should conduct a five-step analysis in determining whether a cause of action is barred by the statute of limitations. See Robinson v. Quicken Loans Inc., 988 F.Supp.2d 615, 625 (S.D. W.Va. 2013) (citing Dunn v. Rockwell, 689 S.E.2d 255 (W.Va. 2009)). The Court initially must “identify the applicable statute of limitation for each cause of action.” Dunn, 689 S.E.2d at 265. Second, the Court “should identify when the requisite elements of the cause of action occurred.” Id. Further, the Court must decide if the discovery rule should apply, which tolls the statute of limitations “until a claimant knows or by reasonable diligence should know of his claim.” Gaither v. City Hosp., Inc., 487 S.E.2d 901, 906 (W.Va. 1997) (syllabus point four). Fourth, if the plaintiff does not benefit from the discovery rule, then the Court must look at “whether the defendant fraudulently concealed facts that prevented the plaintiff from discovering or pursuing the cause of action.” See Dunn, 689 S.E.2d at 265. Lastly, the Court must inquire whether “some other tolling doctrine” affects the statute of limitations period. See id.

         A. Count One: Breach of Contract

         Standard argues in its motion that Plaintiff's breach of contract claim is barred by the three-year contractual limitation on legal actions contained in both the STD Policy and LTD Policy. (See ECF No. 6 at 7-8.) The policies limit the commencement of legal actions to three years from “the earlier of the date Proof of Loss was received by Standard or the date Proof of Loss was required to be given.” (Id. at 8 (citing ECF Nos. 7-1, 7-2).) Because Plaintiff's proof of loss claim form was submitted to Standard on November 17, 2013, Standard asserts, the period within which he could bring any legal action expired three years later on November 17, 2016. (Id.) Thus, Standard argues that Count One is time-barred and should be dismissed with prejudice. (Id.)

         Plaintiff responds that the contractual limitation within the STD Policy and LTD Policy is unenforceable under W.Va. Code § 33-15-4. (See ECF No. 8 at 11 (citing Caldwell v. Standard Ins. Co., No. 2:14-cv-25242, 2015 WL 4727378, at *1 (S.D. W.Va. Aug. 10, 2015).) While Plaintiff discusses two West Virginia statutes from Caldwell, he states that only the second is “controlling.” (See Id. at 9-11 (citing W.Va. Code §§ 33-6-14, 33-15-4).) The latter statute specifies that insurance contracts may not include language “less favorable in any respect to the insured” than language provided by the statute, including the statutory provision that states, “[n]o action at law . . . shall be brought to recover on this policy . . . after the expiration of three years after the time written proof of loss is required to be furnished.” (Id. at 11 (emphasis removed) (quoting W.Va. Code § 33-15-4, 4(k)).) Plaintiff argues that the group disability plan policies at issue allow for an action to accrue on “the earlier of the date Standard received Proof of Loss and the time within which Proof of Loss is required to be given, ” which is less favorable to Plaintiff when applied to the facts of his case. (See Id. (emphasis in original).) Accordingly, Plaintiff argues that the contractual limitation is unenforceable and that West Virginia's ten-year statute of limitations for breach of contract applies to this case. (See Id. at 12.)

         Standard's reply asserts that § 33-15-4(k) does not invalidate the contractual limitation in the group disability plan policies because “the Group Policies' three-year time frame is exactly the three[-]year time frame” in the statute. (See ECF No. 10 at 14.) Therefore, Standard argues, the policy language is “no less favorable” to Plaintiff than the statutory requirement. (See id.) Standard goes on to argue that Plaintiff's breach of contract claim under the STD Policy, specifically, is time-barred because proof of loss was required “within 90 days after the end of the [thirty-day] Benefit Waiting Period.” (Id.) Based on Plaintiff's allegation that he ceased work on May 17, 2013, Standard argues that the Benefit Waiting Period under the STD Policy ended thirty days later on June 16, 2013, and that proof of loss was required within ninety days thereafter, or by September 14, 2013. (Id. at 15.) Applying the three-year contractual limitation to that accrual date, Standard concludes that Plaintiff's breach of contract claim under the STD policy must have been filed by September 14, 2016. (See id.)

         The crux of the parties' dispute involves the first step of the Dunn analysis-namely, what statute of limitations applies. In Standard's motion, it argues that the contractual limitations provided in both the STD Policy and LTD Policy and attached to the complaint govern this situation to bar Plaintiff's breach of contract claim. (See ECF No. 6 at 7-9; see also ECF No. 1-1 at 45, 89.) Plaintiff, on the other hand, argues that those contractual limitations are unenforceable under West Virginia law and that, therefore, the State's statutory limitation controlling general breach of contract actions applies. (See ECF No. 8 at 9-12.) For the reasons that follow, the Court agrees with Plaintiff that the contractual limitations in the STD Policy and LTD Policy conflict with West Virginia law and cannot apply to Plaintiff's claim but not insofar as Plaintiff argues that West Virginia's general ten-year statute of limitations applies.

         A contractual provision “may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations” if the shorter period is reasonable. Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S.Ct. 604, 611 (2013) (quoting Order of United Commercial Travelers of Am. v. Wolfe, 331 U.S. 586, 608 (1947)). However, if the contractual limitation provision is unenforceable because it conflicts with state law, then the Court “turns to the law of West Virginia for the applicable limitations period.” See Gillespie v. CUNA Mut. Grp. Long Term Disability Ins. Policy, No. 2:09-120, 2010 WL 1050286, at *2-4 (S.D. W.Va. Mar. 28, 2010).

         West Virginia insurance law specifically enumerates policy provisions required to be included in all accident and sickness insurance policies but provides that “the insurer may, at its option, substitute for one or more of such provisions corresponding provisions of different wording approved by the commissioner which are in each instance not less favorable in any respect to the insured or the ...

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