Murphy v. First Unum Life Ins. Co.

MARTA I. MURPHY a/k/a MARTA L. MURPHY, Plaintiff, v. FIRST UNUM LIFE INSURANCE COMPANY, Defendant.

15-CV-820 (SJF)(SIL)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

February 9, 2016

ORDER

FEUERSTEIN, J.

Defendant, First Unum Life Insurance Company ("First Unum" or "Defendant"), moves to dismiss Counts I through IV of the Complaint, in which Marta I. Murphy, a/k/a Marta L. Murphy ("Murphy" or "Plaintiff") seeks to recover long term disability benefits pursuant to a group insurance policy issued by First Unum. Defendant also moves to strike Plaintiff's jury demand; for a declaration that the arbitrary and capricious standard of review applies to the administrator's benefits decision; and for a declaration that Plaintiff is not entitled to discovery beyond the administrative record.

Defendant's motion is granted insofar as it seeks: dismissal of Courts I, III and IV; to strike Plaintiff's jury demand and a declaration that the arbitrary and capricious standard of review applies to the administrator's benefits decision. Insofar as Defendant seeks dismissal of Count II, the motion is granted in part and denied in part. The motion for a declaration that Plaintiff is not entitled to discovery beyond the administrative record is denied.

I. BACKGROUND

On June 1, 1998, First Unum issued a group long term disability ("LTD") insurance policy (the "Plan") to Huntington Hospital, Plaintiff's employer. (Compl. at ¶ 6). The Plan isgoverned by the Employee Retirement Income Security Act of 1974 ("ERISA"). Id. at ¶ 7. Plaintiff paid her LTD premiums to First Unum, pursuant to the Plan, until October 2010. Id. at ¶¶ 10, 12. In or about October 2010, Plaintiff became disabled, and on March 18, 2011, First Unum began paying LTD benefits to Plaintiff. Id. at ¶¶ 13-14. In May 2011, Murphy was "involved" in a car accident that "exacerbated her symptoms of pain" and medical condition. Id. at ¶ 16.

On April 9, 2013, First Unum re-evaluated Murphy's medical condition "under a different definition of disability," terminated her LTD benefits, and refused to waive her premiums starting on May 24, 2013. Id. at ¶¶ 17-18. Plaintiff "continues to be totally disabled in that her injuries and medical conditions restrict her ability to perform the material and substantial duties of her regular occupation as a Lead Medical Assistant [at Huntington Hospital] and prevent her from engaging in that occupation, and further prevent her from performing any occupation for which she is reasonably qualified by way of training, education and experience." Id. at ¶ 21.

On February 17, 2015, Murphy filed this action, alleging that First Unum breached the terms of the Plan by terminating Murphy's LTD benefits and refusing to waive her premiums. Id. In her Complaint Murphy claims:

• Count I: breach of contract;

• Count II: declaratory judgment;

• Count III: bad faith and punitive damages;

• Count IV: negligence and punitive damages; and

• Count V: recovery of benefits pursuant to ERISA.

Id. On August 14, 2015, First Unum moved, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss Counts I-IV of the Complaint. (Mot. to Dismiss). First Unum further seeks to strike Plaintiff's jury demand, to have the Court review the Plan administrator's decisionpursuant to an arbitrary and capricious standard of review, and to restrict Plaintiff's discovery to the administrative record. Id.

II. DISCUSSION

A. Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure states that a defendant may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To determine whether dismissal is appropriate, "a court must accept as true all [factual] allegations contained in a complaint," but need not accept "legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to insulate a claim against dismissal. Id. "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.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1937, 1955, 167 L. Ed. 2d 929 (2007)). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint . . . has not shown . . . that the pleader is entitled to relief." Id. at 679 (internal citations and quotation marks omitted).

B. Preemption by ERISA

ERISA "broadly preempts 'any and all State laws insofar as they may now or hereafter relate to any employee benefit plan' as defined under the statute." Silverman v. Unum Grp., No. 14-cv-6439, 2015 WL 4603345, at *4 (E.D.N.Y. July 30, 2015) (quoting 29 U.S.C. § 1144(a)). "Given this broad scope, ERISA will preempt even general state laws that are not directed toward benefit plans in cases where those laws would have 'a connection with or reference to' an ERISA plan." Id. (internal quotation marks and citation omitted) (quoting Pilot Life Ins. Co. v.Dedeaux, 481 U.S. 41, 47-48, 107 S. Ct. 1549, 1553, 95 L. Ed. 2d 39 (1987)). "'Thus, a state law of general application, with only an indirect effect on an [ERISA] plan, may nevertheless be considered to "relate to" that plan for preemption purposes.'" Id. (quoting Smith v. Dunham-Bush, Inc., 959 F.2d 6, 9 (2d Cir. 1992)).

The Second Circuit has "consistently held that causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing are preempted by ERISA," which also preempts other state law claims. Id. (citations omitted); see, e.g., Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101 (2d Cir. 2008) (holding claim of breach of covenant of good faith was state law claim preempted by ERISA); Rubin-Schneiderman v. Merit Behavioral Care Corp., 121 F. App'x 414, 415 (2d Cir. 2005) (holding ERISA preempts negligence claim); Smith v. Dunham-Bush, Inc., 959 F.2d 6, 8 (2d Cir. 1992) (holding ERISA preempts contract and tort claims). Money damages are not cognizable pursuant to ERISA. See 29 U.S.C. § 1132(a)(3); Guerrero v. FJC Sec. Serv. Inc., 423 F. App'x 14, 17 (2d Cir. 2011) (quotation marks and citation omitted) ("Claims for money damages are . . . not cognizable under [ERISA] section 502(a)(3)."). "ERISA's civil enforcement remedies were intended to be exclusive." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S. Ct. 1549, 1556, 95 L. Ed. 2d 39 (1987).

Plaintiff, citing several cases, argues that her state law claims in Counts I through IV of the Complaint are not preempted by ERISA. (Pl.'s Affirmation in Opp'n to Def.'s Mot. to Dismiss ("Pl.'s Opp'n"), at 2-5 (citing cases)). The cases are inapposite.

New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S. Ct. 1671, 131 L. Ed. 2d 695 (1995) ("Travelers"), held that a state statute imposing healthcare surcharges on patients was not preempted by ERISA. Id. The United States Supreme Court (the "Supreme Court") explained that a decision in favor of ERISA preemption would be"simply incompatible" with an existing federal statute providing comprehensive aid to state healthcare rate regulation. Id. at 667; see id. at 655. However, Plaintiff has failed to identify a federal statute that would conflict with a conclusion that ERISA preempts her state law claims. In addition, Travelers found that the state statute in question did not have a "connection with," or "relate to," an employee benefit plan within the meaning of ERISA, because the healthcare surcharges made no "reference to" ERISA plans and exerted only an "indirect economic influence" on the plan's costs. Id. at 656, 660, 662. By contrast, Plaintiff's breach of contract, bad faith, and negligence claims all "relate to" the Plan, its termination, and the denial of Plan benefits to Plaintiff, and are therefore preempted by ERISA. See Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008); cf. California Div. of Labor Standards Enforcement v. Dillingham Const., N.A., Inc., 519 U.S. 316, 330, 117 S. Ct. 832, 840, 136 L. Ed. 2d 791 (1997) (holding California wage statute not preempted by ERISA, because it is "indistinguishable from New York's surcharge" statute in Travelers, 514 U.S. 645); Gerosa v. Savasta & Co., 329 F.3d 317, 323 (2d Cir. 2003) (holding ERISA "does not preempt 'run-of-the-mill' state-law professional negligence claims against non-fiduciaries"); VFS Financing, Inc. v. Elias-Savion-Fox, LLC, No. 12-cv-2853, 2014 WL 6765827, at *12 (S.D.N.Y. Dec. 1, 2014) (holding ERISA does not preempt state anti-garnishment statute sheltering retirement IRA accounts from judgment creditors, because state statute does not "interfere with the duties of ERISA plan administrators," "create disunity within federal law as to retirement benefits," or "affect the relationship between plan administrators and beneficiaries").

In addition, Plaintiff's state law claims "premised on" the termination of the Plan "would require reference to the Plan in the calculation of any recovery." Paneccasio v. UnisourceWorldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008). Therefore, Counts I, III and IV are preempted by ERISA and dismissed. See id.

Declaratory judgments that "'compel the defendant to pay a sum of money to the plaintiff are suits for "money damages," as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty.'" Cent. States, Se. & Sw. Areas Health and Welfare Fund v. Gerber Life Ins. Co., 771 F.3d 150, 154 (2d Cir. 2014) (quoting Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210, 122 S. Ct. 708, 713, 151 L. Ed. 2d 635 (2002)). ERISA does not permit money damages. See 29 U.S.C. § 1132(a)(3); Guerrero v. FJC Sec. Serv. Inc., 423 F. App'x 14, 17 (2d Cir. 2011...