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Sizemore v. Northwestern Mutual Life Insurance Co.

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

August 16, 2017



          THOMAS E. JOHNSTON, United States District Judge

         Pending before the Court is Defendant Northwestern Mutual Life Insurance Company's (“Northwestern”) Motion to Dismiss (ECF No. 7). For the following reasons, the Motion is GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         On January 23, 2017, Plaintiff Vaughn T. Sizemore (“Plaintiff”) filed this lawsuit against Northwestern and ten John Doe defendants. The eight-count Complaint alleges a claim under the Employee Retirement Income Security Act (“ERISA”) (Count I), common law bad faith (Count II), breach of reasonable expectations (Count III), estoppel (Count IV), waiver (Count V), two claims under the West Virginia Unfair Trade Practices Act (“WVUTPA”) (Counts VI and VII), and a claim under the West Virginia Consumer Credit and Protection Act (“WVCCPA”).

         Plaintiff was employed as an attorney with the law firm of Bailey and Wyant, PLLC, until January 2015, where he participated in an employee welfare benefit plan (the “Plan”). (ECF No. 1 ¶¶ 1, 273.) Northwestern is the insurer and claims administrator for the Plan. (ECF No. 1 ¶¶ 2, 8.) According to the Complaint, on February 2, 2004, Plaintiff was diagnosed with Wegener's Granulomatosis, which is now known as Granulomatosis with polyangiitis (“GPA”). (ECF No. 1 ¶ 10.) Plaintiff has suffered a variety of symptoms from this condition, including loss of circulation to his fingers, peripheral neuropathy, and kidney failure. (ECF No. 1 ¶ 13.) Since his diagnosis, Plaintiff has undergone seventy surgeries, including two kidney transplants. (ECF No. 1 ¶ 14.) Due to limitations from these conditions and the various related surgeries, Plaintiff's ability to work has fluctuated greatly since his diagnosis, and he has applied for and been awarded disability benefits for several intervals during that time. (ECF No. 1 ¶¶ 15-37.)

         After a period without receiving benefits, Plaintiff again applied for benefits on or about January 18, 2012. (ECF No. 1 ¶ 29.) Northwestern approved this claim on April 23, 2012, on the grounds that Plaintiff qualified for benefits under the Plan's “Own Occupation” definition of disability, though the approval also acknowledged that Plaintiff could qualify for the Plan's “Partial Disability” definition of disability. (ECF No. 1 ¶¶ 32-34.) On June 22, 2015, Northwestern sent Plaintiff a letter informing him that he would no longer receive benefits as he no longer met the policy's definition of disability. (ECF No. 1 ¶ 37.) Following receipt of that notice, on July 1, 2015, Plaintiff requested an internal appeal of that decision. (ECF No. 1 ¶ 279.) On December 15, 2015, Northwestern sent Plaintiff a letter affirming its initial decision that Plaintiff was no longer disabled, under either the Own Occupation or the Partial Disability definition of disability. (ECF No. 1 ¶¶ 281-82.) In its decision on this review, Northwestern did not consider the statement of Plaintiff's treating Nephrologist, Dr. Rahman. (ECF No. 1 ¶ 296.) On the grounds that this decision was the first time Northwestern had addressed his alleged disability under the Partial Disability definition, on January 21, 2016, Plaintiff requested a review of the determination that his condition did not meet that definition. (ECF No. 1 ¶¶ 281-85.) Northwestern informed Plaintiff on February 12, 2016, that it would not review this determination because Plaintiff had already exhausted his appeals process. (ECF No. 1 ¶¶ 241-43.)


         Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Allegations “must be simple, concise, and direct” and “[n]o technical form is required.” Fed.R.Civ.P. 8(d)(1). A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of a civil complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). “[I]t does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court decides whether this standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer that “the defendant is liable for the misconduct alleged.” Id. A motion to dismiss will be granted if, “after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards, 178 F.3d at 244.


         ERISA § 514 “supersede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. . . .” 29 U.S.C. § 1144(a). This provision broadly preempts state laws that conflict with ERISA. Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 186- 87 (4th Cir. 2002) (“Under ordinary conflict preemption, state laws that conflict with federal laws are preempted, and preemption is asserted as a ‘federal defense to the plaintiff's suit.'” (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987))). ERISA also implicates complete preemption, where “Congress ‘so completely preempts a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'” Id. at 187 (quoting Taylor, 481 U.S. at 63-64). ERISA completely preempts state law claims that “fall within the scope of an ERISA provision that [a plaintiff] can enforce via § 502(a).” Sonoco Products Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 372 (4th Cir. 2003) (citing Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1487 (7th Cir. 1996)). In such circumstances, the plaintiff's state law claims are converted into federal claims arising under ERISA. See Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004) (“[T]he ERISA civil enforcement mechanism is one of those provisions with such “extraordinary pre-emptive power” that it converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” (internal quotation marks and citation omitted)). However, preempted state law claims seeking remedies outside the scope of ERISA's civil enforcement provision should be dismissed. Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278, 290 (4th Cir. 2003) (“[T]he district court must consider only remedies authorized by § 502(a) and must reject all others.”). Additionally, this Court has found that it is unnecessary to convert preempted state law claims to ERISA claims where the complaint already raises an analogous ERISA claim. See Goff v. Frontier Commc'ns of Am., Inc., No. 2:16-CV-05689, 2017 WL 440731, at *5 (S.D. W.Va. Feb. 1, 2017).

         “A state claim is an alternative enforcement mechanism for ERISA rights if the state claim could be brought as an enforcement action under § 502.” Darcangelo, 292 F.3d at 191. Section 502 permits ERISA plan participants to “enforce [their] rights under the terms of the [ERISA] plan.” 29 U.S.C. § 1132(a)(1)(B). This civil enforcement provision affords a plan participant or beneficiary the right (1) to recover benefits due under the terms of the plan, (2) to enforce rights under the terms of the plan, and (3) to clarify rights to future benefits. 29 U.S.C. § 1132(a)(1)(B).

         Plaintiff raises a claim for under ERISA § 502 in Count I of the Complaint.[1] Plaintiff alleges that he was denied benefits due him under the terms of the Plan. Though Plaintiff incorporates by reference 285 paragraphs in addition to the allegations specifically directed at this claim, the relevant allegations can be summarized as follows: Plaintiff's benefits were cut off without consideration of his qualification for benefits under the Plan's Partial Disability definition; on review of this denial of benefits, Northwestern determined for the first time that Plaintiff did not qualify under the Partial Disability definition; Northwestern refused to consider the report of a treating nephrologist that the Plan required it to consider in its review; and Northwestern refused to review the determination that Plaintiff did not meet the Partial Disability definition.

         The crux of this claim is that Northwestern failed to abide by ERISA's procedural requirements. In denying an ERISA claim, a plan must give “specific reasons” for denial of the claim. 29 U.S.C. § 1133(1). The plan participant must then be given an opportunity for “full and fair review” of the denial. 29 U.S.C. § 1133(2). The Fourth Circuit has held that a claimant is deprived of a full and fair review when a plan administrator upholds a denial of a claim on a basis not provided as a specific reason in the initial notice of denial. See Gagliano v. Reliance Standard Life Ins. Co., 547 F.3d 230, 236 (4th Cir. 2008). The Fourth Circuit also explained that the review process requires the administrator to allow beneficiaries to submit documents in support of their claims, and that those documents must be considered in the appeal. Id. at 235 (citing 29 C.F.R. § 2560.503-1(h)(1-2) (2008)). Though Plaintiff seeks various forms of relief on this claim, [2] the typical remedy for a procedural violation is remand to the plan administrator for a full and fair review. See Weaver v. Phoenix Home Life Mut. Ins. Co., 990 F.2d 154, 159 (4th Cir. 1993) (“Normally, where the plan administrator has failed to comply with ERISA's procedural guidelines and the plaintiff/participant has preserved his objection to the plan administrator's noncompliance, the proper course of action for the court is remand to the plan administrator.”)

         Northwestern seeks dismissal of Counts II-VIII, arguing both that these counts are preempted by ERISA and each of them fails to state a claim.[3] Northwestern also seeks dismissal of the entire Complaint on the grounds that its length violates Rule 8 of the Federal Rules of Civil Procedure's requirement that statements of a claim be “short and plain.” Fed.R.Civ.P. 8(a)(2). As an initial matter, Plaintiff does not seem to contest that Counts II-VII are preempted, acknowledging in his Response that those claims are pled “alternatively to the violation of ERISA.” (ECF No. 9 at 1.) While this may be sufficient to find that Counts II-VII are preempted, the Court deems it appropriate to examine the claims individually.

         A. Common Law Bad Faith

          Count II raises a claim of common law first party bad faith. “A first-party bad faith action is one wherein the insured sues his/her own insurer for failing to use good faith in settling a claim filed by the insured.” Syl. Pt. 2, Loudin v. Nat'l Liab. & Fire Ins. Co., 716 S.E.2d 696, 697 ( W.Va. 2011). West Virginia law recognizes both a common law and a statutory cause of action for first party bad faith. See Id. at 700 (citations omitted). This Court has recognized that ERISA preempts common law bad faith claim where those claims relate to a covered benefit plan. See Int'l Union v. Mystic, LLC, No. 5:16-CV-02030, 2016 WL 4596353, at *8 (S.D. W.Va. Sept. 2, 2016) (citing Griggs v. E.I. DuPont de Nemours & Co., 237 F.3d 371, 378 (4th Cir. 2001)); Summer v. Carelink Health Plans, Inc., 461 F.Supp.2d 482, 486 (S.D. W.Va. ...

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