Friedland v. Unum Grp. & Unum Life Ins. Co. of Am.

50 F.Supp.3d 598

Karen Friedland, Plaintiff

v.Unum Group and Unum Life Insurance Company of America, Defendants.

Civ. No. 13–1417–SLR

United States District Court, D. Delaware.

Signed June 19, 2014

John S. Spadaro, Esquire of John Sheehan Spadaro, LLC, Hockessin, Delaware, Counsel for Plaintiff.

John D. Demmy, Esquire of Stevens & Lee, P.C, Wilmington, Delaware and E. Thomas Henefer of Stevens & Lee, P.C, Reading, Pennsylvania, Counsel for Defendants.

MEMORANDUM OPINION

ROBINSON, District Judge

I. INTRODUCTION

On August 14, 2013, plaintiff Karen Friedland (“plaintiff”) filed a complaint against Unum Group (“Unum”) and its wholly owned subsidiary, Unum Life Insurance Company of America (“Unum Life”) (collectively “defendants”), to challenge Unum Life's denial of her claim for ongoing disability benefits under a long-term disability plan that is regulated by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 –1461 (“ERISA”). (D.I. 1) Plaintiff asserts three causes of action: (1) claim for benefits under ERISA § 502(a)(1)(B); (2) common law fraud; and (3) violation of the Federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et. seq., particularly §§ 1962(c) and (d). (D.I. 1 at ¶¶ 42–43, 45–47, 48–51) Plaintiff seeks payment of benefits past due and of future benefits to age 65 discounted to present value, economic losses caused by her loss of her position at Gettysburg College, treble damages under RICO, and attorney fees and costs. (Id. at 28, ¶¶ a-h)

Currently before the court is defendants' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) alleging that: (1) plaintiff's ERISA claim is time barred by the Delaware statute of limitations or, in the alternative, plaintiff cannot recover future benefits under § 1132(a)(1)(B); (2) plaintiff's common law fraud claim is preempted by ERISA; and (3) plaintiff's RICO claim fails to state a claim for relief. (D.I. 7) This court has jurisdiction pursuant to 18 U.S.C. §§ 1331, 1332, and 1367(a).

II. BACKGROUND

Plaintiff is a Pennsylvania resident and former employee of The Johns Hopkins University, where she was insured against disability pursuant to an employee benefit plan issued by defendants and governed by ERISA. (D.I. 1 at ¶¶ 1–3) In 1994, plaintiff left her job at Johns Hopkins after she was hospitalized as a result of falling down a flight of steps. (Id. at ¶ 10) Defendants agreed that plaintiff was totally disabled, and paid her full disability benefits for about two years until 1996, when plaintiff notified defendants that she would attempt to work part-time as an instructor in the theater department at Carroll Community College. (Id. ) Early into her part-time work, defendants examined and tested plaintiff's capacity to work. (Id. at ¶ 12) On May 18, 1999, defendants concluded that plaintiff's restrictions and limitations were permanent, as confirmed by an independent medical examination and functional capacity evaluation. (Id. ) Defendants concluded that plaintiff suffered from permanent partial disability. (Id. )

In the spring of 2007, plaintiff notified defendants of her employment contract with Gettysburg College for the 2007–2008 school year, whereby she would receive 7.5 hours per week of class time and $50,000 in salary for the school year. (Id. at ¶ 13) After acknowledging receipt of plaintiff's employment contract, defendants determined that plaintiff was still eligible for benefits under her disability plan. (Id. at ¶ 14) On January 15, 2010, defendants notified plaintiff that her condition had improved to the point that she was able to work full time, and subsequently discontinued her benefits. (Id. )

Plaintiff claims that the discontinuance of her benefits did not result from new medical evidence, but instead from an illegal policy and scheme to reduce expensive payouts, whereby defendants conducted their evaluation of plaintiff's entitlement to benefits through unethical and fraudulent insurance claim-processing standards. (Id. at ¶ 19) In exchange for substantial insurance premiums, plaintiff claims that she and others similarly situated relied to their detriment upon the promises and contractual obligations of honest claims handling set forth in the disability policies sold by defendants. (Id. at ¶ 20)

III. STANDARD OF REVIEW

A motion filed under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint's factual allegations. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 545, 127 S.Ct. 1955 (internal quotation marks omitted) (interpreting Fed.R.Civ.P. 8(a) ). Consistent with the Supreme Court's rulings in Twombly and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Third Circuit requires a two-part analysis when reviewing a Rule 12(b)(6) motion. Edwards v. A.H. Cornell & Son, Inc., 610 F.3d 217, 219 (3d Cir.2010) ; Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). First, a court should separate the factual and legal elements of a claim, accepting the facts and disregarding the legal conclusions. Fowler, 578 F.3d at 210–11. Second, a court should determine whether the remaining well-pled facts sufficiently show that the plaintiff “has a ‘plausible claim for relief.’ ” Id. at 211 (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 ). As part of the analysis, a court must accept all well-pleaded factual allegations in the complaint as true, and view them in the light most favorable to the plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) ; Christopher v. Harbury, 536 U.S. 403, 406, 122 S.Ct. 2179, 153 L.Ed.2d 413 (2002) ; Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir.2008). In this regard, a court may consider the pleadings, public record, orders, exhibits attached to the complaint, and documents incorporated into the complaint by reference. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007) ; Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384–85 n. 2 (3d Cir.1994).

The court's determination is not whether the non-moving party “will ultimately prevail” but whether that party is “entitled to offer evidence to support the claims.” United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 302 (3d Cir.2011). This “does not impose a probability requirement at the pleading stage,” but instead “simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of [the necessary element].” Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). The court's analysis is a context-specific task requiring the court “to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 663–64, 129 S.Ct. 1937.

IV. DISCUSSION

A. Statute of Limitations for ERISA Claims

Because ERISA does not contain a statute of limitations for recovery of benefits, the court looks to the statute of limitations for the state law claim that is most analogous to the claim for benefits under ERISA. See DelCostello v. Int'l Broth. of Teamsters, 462 U.S. 151, 158–160, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983). Specifically, the court “borrows” the most analogous statute of limitations from the forum state. Romero v. The Allstate Corp., 404 F.3d 212, 220 (3d Cir.2005) ; Syed v. Hercules, Inc., 214 F.3d 155, 159 (3d Cir.2000). The Third Circuit has held that the one-year statute of limitations found at 10 Del. C. § 8111 is applicable to claims for recovery of benefits under an ERISA plan.¹ Syed, 214 F.3d at 159 ; see also Gregorovich v. E.I. du Pont de Nemours, 602 F.Supp.2d 511, 517 (D.Del.2009) (identifying 10 Del. C. § 8111 as the applicable statute of limitations on claims for ERISA benefits filed in Delaware).

A non-fiduciary claim such as the one plaintiff filed under § 1132(a)(1)(B) accrues when a claim for benefits has been denied. Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 520 (3d Cir.2007) (citations omitted); see 10 Del. C. § 8111. Plaintiff's complaint was filed on August 14, 2013, more than one year from the decision to terminate her disability benefits (January 15, 2010), and more than one year from the letter confirming the decision to terminate her disability benefits (September 17, 2010).² (See D.I. 1 at ¶ 14; D.I. 10, ex. A at 2) Plaintiff's ERISA claim, therefore, is time-barred by the limitations statute.³

B. Preemption of Fraud Claim by ERISA

The Supreme Court has explained, “[t]he purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans.” Aetna Health, Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). Congress's intent in enacting ERISA was to promote the interests of employees and their beneficiaries in employee benefit plans by “eliminating the threat of conflicting or inconsistent State and local regulation of employee benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 99, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) (quoting 120 Cong. Rec. 29933 (1974)). Section 514 of ERISA, the “express preemption” provision, reads in pertinent part:

Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.

29 U.S.C. § 1144(a) (emphasis added). The Supreme Court has emphasized that the express preemption provisions of ERISA are “deliberately expansive,” noting Congress's emphasis on the “breadth and importance of the...