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Wallace v. Beaumont Healthcare Employee Welfare Benefit Plan

United States District Court, E.D. Michigan, Southern Division

January 18, 2017

CHERYL L. WALLACE, Plaintiff,
v.
BEAUMONT HEALTHCARE EMPLOYEE WELFARE BENEFIT PLAN f/k/a OAKWOOD HEALTHCARE, INC. EMPLOYEE WELFARE BENEFIT PLAN, HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, and RELIANCE STANDARD LIFE INSURANCE CO., Defendants.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT RELIANCE STANDARD LIFE INSURANCE COMPANY'S MOTION TO DISMISS PLAINTIFF'S AMENDED COMPLAINT

          LINDA V. PARKER, U.S. DISTRICT JUDGE.

         In this action brought pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), Plaintiff Cheryl L. Wallace claims she was wrongfully denied long term disability benefits and that one or more defendants engaged in procedural due process violations and breached its fiduciary duties while handling her long term disability claim. Defendants are the Beaumont Healthcare Employee Welfare Benefit Plan (f/k/a the Oakwood Healthcare, Inc. Employee Welfare Benefit Plan) (“Plan”), Hartford Life Insurance Company (“Hartford”), and Reliance Standard Life Insurance Company (“Reliance”). Presently before the Court is Reliance's motion to dismiss Plaintiff's Amended Complaint. The parties have fully briefed the motion. Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court is dispensing with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f). For the reasons that follow, the Court is granting Defendants' summary judgment motion. For the reasons that follow, the Court is granting in part and denying in part Reliance's motion.

         I. Standard for Motion to Dismiss

A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a motion to dismiss, a complaint need not contain “detailed factual allegations, ” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action . . ..” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not “suffice if it tenders ‘naked assertions' devoid of ‘further factual enhancement.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).

         As the Supreme Court provided in Iqbal and Twombly, “[t]o 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.' ” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The plausibility standard “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 of illegal [conduct].” Twombly, 550 U.S. at 556.

         In deciding whether the plaintiff has set forth a “plausible” claim, the court must accept the factual allegations in the complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). This presumption is not applicable to legal conclusions, however. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

         Ordinarily, the court may not consider matters outside the pleadings when deciding a Rule 12(b)(6) motion to dismiss. Weiner v. Klais & Co., Inc., 108 F.3d 86, 88 (6th Cir. 1997) (citing Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989)). A court that considers such matters must first convert the motion to dismiss to one for summary judgment. See Fed. R. Civ. P 12(d). However, “[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the [c]omplaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to [the] defendant's motion to dismiss, so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).

         II. Factual and Procedural Background

         Plaintiff worked at Oakwood Healthcare, Inc. Health System (“Oakwood”) as a registered nurse. (Am. Compl. ¶ 11, ECF No. 16.) Incident to her employment, Plaintiff was a participant in the Oakwood Healthcare, Inc. Employee Welfare Benefit Plan, which afforded long term disability benefits to its eligible employees.[1] (Id. ¶¶ 4, 5.) Hartford served as the plan's insurer until Oakwood cancelled its contract with Hartford, effective January 1, 2013. (Id. ¶ 25.) On that date, Reliance became the plan's insurer. (Id. ¶ 34.)

         In the interim, on October 8, 2012, Plaintiff stopped working at Oakwood due to a serious and worsening health condition. (Id. ¶ 11.) Plaintiff remained off work from October 8, 2012 through April 7, 2013. (Id. ¶ 27.) Plaintiff returned to work on April 7, 2013, but found it necessary to take a medical leave of absence again starting May 12, 2013. (Id. ¶¶ 28, 29.) Plaintiff was not able to return to work thereafter. (Id. ¶ 30.) Plaintiff therefore filed a claim for long term disability benefits with Hartford and Reliance. (Id. ¶ 31.)

         Hartford denied Plaintiff's claim on the basis that she failed to satisfy the eligibility requirements in Hartford's insurance policy-- specifically the 180-day Elimination Period. (Id. ¶ 32.) In making this determination, Hartford maintained that Plaintiff's first date of actual disability was October 12, 2012, rather than October 8, 2012. (Id.)

         Reliance denied Plaintiff's claim based on the pre-existing condition exclusion in its contract. (Id. ¶ 36.) Reliance maintained that, pursuant to the terms of its insurance contract, Plaintiff did not become insured under its group insurance policy until April 7, 2013, when she returned to active work from her medical leave and then left her employment again on May 21, 2013. (Pl.'s Resp., Ex. 5, ECF No. 25-6.) In its denial letter, Reliance informed Plaintiff that she “may request a review” of its determination by submitting a written request. (Id., Ex. 6, ECF No. 25-7.) The letter further advised in pertinent part:

The written request for review must be sent within 180 days of your receipt of this letter. Your request should state any reasons why you feel this determination is incorrect, and should include any written comments, documents, records, or other information relating to your claim for benefits. Only one review will be allowed, and your request must be submitted within 180 days of your receipt of this letter to be considered.
In the event that your claim is subject to the Employee Retirement Income Security Act of 1974 (“the Act”), you have the right to bring a civil action under section 502(a) of the Act following an adverse benefit determination on a review. Your failure to request a review within 180 days of your receipt of this letter may constitute a failure to exhaust administrative remedies ...

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