Patchell v. Cigna Health & Life Ins. Co., & Life Ins. Co. of Am.

ANTHONY PATCHELL,on his own behalf and on behalf of all others similarly situated,and AMANDA PATCHELL, his wife, Plaintiffs, v. CIGNA HEALTH AND LIFE INSURANCE COMPANY,and LIFE INSURANCE COMPANY OF AMERICA, Defendants.

Case No. 3:17-cv-161

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

March 28, 2018

JUDGE KIM R. GIBSON

MEMORANDUM OPINION

I. Introduction

Pending before the Court is Defendants' Motion to Dismiss Plaintiffs' Amended "Class Action and ERISA Complaint." (ECF No. 27.) Although Plaintiffs have not responded to Defendants' Motion to Dismiss (ECF No. 27) or Memorandum of Law in Support thereof (ECF No. 28), the deadline for Plaintiffs' response—March 2, 2018—has passed and, thus, Defendants' Motion to Dismiss is ripe for disposition.¹

For the reasons that follow, this Court will GRANT Defendants' Motion.

II. Jurisdiction and Venue

The Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331 because Plaintiffs' claims are brought under the Employee Retirement Income Security Act ("ERISA"). Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(2) because a substantial portion of the events or omissions giving rise to Plaintiffs' claims occurred in the Western District of Pennsylvania.

III. Background

A. Procedural History

Plaintiffs commenced this action on September 7, 2017 by filing a Complaint before this Court. (ECF No. 1.) Defendants filed their first Motion to Dismiss on November 13, 2017. (ECF No. 12.) However, prior to a decision on this first Motion to Dismiss, this Court granted Plaintiffs' request to file an Amended Complaint. (ECF No. 22.)

Plaintiffs filed their Amended Complaint on January 24, 2018. (ECF No. 26.) Plaintiffs' Amended Complaint is organized into six counts: (1) a claim under ERISA to recover overpayment for breach of fiduciary duty, by Mr. Patchell and Ms. Patchell; (2) a claim for loss of consortium by Ms. Patchell; (3) a claim for ERISA violations by the purported class of Plaintiffs; (4) a claim incorporating by reference Count I on behalf of the entire class of Plaintiffs; (5) a motion for a preliminary injunction on behalf of Mr. Patchell; and (6) a claim seeking disgorgement of profits by Mr. Patchell and the purported class of Plaintiffs. (Id. at 9-19.)

On February 9, 2018, Defendants filed the pending Motion to Dismiss Plaintiffs' Amended "Class Action and ERISA Complaint" and an accompanying Memorandum of Law in support thereof. (ECF Nos. 27, 28.) To date Plaintiffs' have neither responded to nor moved for anextension of the deadline to respond to Defendants' Motion to Dismiss Plaintiffs' Amended "Class Action and ERISA Complaint."

B. Plaintiffs' Allegations²

Mr. Patchell obtained a Life Insurance Policy Company of North America ("LINA") Disability Policy (the "Policy") through his employer. (ECF No. 26 at ¶ 6.) In February 2010, a judge determined that Mr. Patchell is permanently disabled. (Id. at ¶ 12.) Thereafter, Mr. Patchell began receiving short-term disability ("STD") benefits from LINA pursuant to his Policy. (Id. at ¶¶ 12-16.) At some unspecified point, Mr. Patchell began receiving long-term disability ("LTD") benefits under his Policy. (Id. at ¶ 35.)

Mr. Patchell's LTD benefit totaled $4,513.00 per month, which resulted in Mr. Patchell receiving a monthly check for $2,868.00.³ (Id. at ¶ 17.) Of this monthly payment, $1721.40 went to Mr. Patchell and $1,147.60 went to Mr. Patchell's counsel as an attorney's fee. (Id. at ¶ 18.)

On January 7, 2016, LINA suspended all payments to Mr. Patchell after it determined that it had overpaid him because Mr. Patchell's monthly benefit did not take into account offsets due to Social Security benefits received by his children. (Id. at ¶ 23.) LINA "clawed back" these overpayments by withholding Mr. Patchell's future LTD payments under his Policy. (Id. at ¶¶ 19, 23, 24, 41.)

Mr. Patchell had previously disclosed his children's Social Security benefits to LINA on a questionnaire he completed prior to receiving STD benefits. (Id. at ¶ 24.)

C. The Policy

Plaintiffs did not attach Mr. Patchell's Policy to their Amended Complaint. However, the Defendants attached the Policy to their motion to dismiss. (See ECF No. 28-1.)

1. The Court May Consider the Policy at the Motion to Dismiss Stage

"To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record." Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)); see also Borough of Moosic v. Darwin Nat. Assur. Co., 556 Fed. Appx. 92, 95 (3d Cir. 2014) ("Generally, a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings.") (internal citations omitted).

"However, an exception to the general rule is that a 'document integral to or explicitly relied upon in the complaint' may be considered 'without converting the motion to dismiss into one for summary judgment.'"⁴ Schmidt, 770 F.3d at 249 (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)) (emphasis in original); see also Schuchardt v. President of the United States, 839 F.3d 336, 353 (3d Cir. 2016) (stating that a court deciding a 12(b)(6) motion may consider "document[s] integral to or explicitly relied upon in the complaint") (emphasis in original) (internal citations omitted).

"Documents are integral when the plaintiff's claims are based on the document." Hearbest, Inc. v. Adecco USA, No. 13CV1026, 2013 WL 4786232, at *3 (W.D. Pa. Sept. 6, 2013) (quoting In reDonald J. Trump Casino Sec. Litig., 7 F.3d 357, 368 n. 9 (3d Cir. 1993)); Ayco Co., L.P. v. Lipton, No. 12CV0712, 2012 WL 3746193, at *3 (W.D. Pa. Aug. 29, 2012); Langweiler v. Borough of Newtown, No. CIV..A 10-3210, 2011 WL 1809264, at *5 (E.D. Pa. May 12, 2011); Apple Am. Grp., LLC v. GBC Design, Inc., No. CV 3:15-325, 2018 WL 948772, at *10 (W.D. Pa. Feb. 15, 2018) (Gibson, J.)

The Court finds that the Policy is integral to Plaintiffs' Amended Complaint. All of Plaintiffs' claims are based on their central allegation that LINA improperly suspended Mr. Patchell's LTD benefits owed to him under the Policy. (See, generally, ECF No. 26.) Moreover, the Amended Complaint references Mr. Patchell's Policy on numerous occasions. (See, e.g., id. at ¶¶ 6, 10, 11, 19, 20, 21, 22.) Thus, the Policy is "integral to" Plaintiffs' Amended Complaint. Therefore, the Court may consider the Policy at the 12(b)(6) stage without converting Defendants' motion to dismiss into a motion for summary judgment. Schmidt, 770 F.3d at 249.

2. Policy Terms

Patchell's Policy provides for "Disability Benefits if an Employee becomes Disabled while covered under this Policy." (ECF No. 28-1 at 7.) Under the Policy, LINA "may reduce the Disability Benefits by the amount of . . . Other Income Benefits" that the beneficiary receives. (Id. at 8.) The Policy defines "Other Income Benefits" as:

any amounts received (or assumed to be received) by the Employee or his or her dependents under: . . . any Social Security disability or retirement benefits the Employee or any third party receives (or is assumed to receive*) on his or her own behalf or for his or her dependents; or which his or her dependents receive (or are assumed to receive*) because of his or her entitlement to such benefits.

(Id.) The Policy defines "Dependents" to "include any person who receives (or is assumed to receive*) benefits under any applicable law because of an Employee's entitlement to benefits." (Id.)

The Policy's "Assumed Receipt of Benefits" provision explains that LINA "will assume the Employee (or his or her dependents, if applicable) are receiving benefits for which they are eligible from Other Income Benefits." (Id. at 9.) The Policy provides that LINA "will reduce the Employee's Disability Benefits by the amount from Other Income Benefits it estimates are payable to the Employee and his or her dependents." (Id.)

The "Recovery of Overpayment" provision gives LINA "the right to recover any benefits it has overpaid" by using "any or all" of the following methods: (1) "request[ing] a lump sum payment of the overpaid amount;" (2) "reduc[ing] any amounts payable" under the Policy; and (3) "tak[ing] any appropriate collection activity" otherwise available. (Id.)

IV. Standard of Review

A complaint may be dismissed under Federal Rule of Civil Rule 12(b)(6) for "failure to state a claim upon which relief can be granted." Connelly v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016). But detailed pleading is not generally required. Id. The Rules demand only "a short and plain statement of the claim showing that the pleader is entitled to relief" to give the defendant fair notice of what the claim is and the grounds upon which it rests. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2)).

Under the pleading regime established by Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009), a court reviewing the sufficiency of a complaint must take three steps.⁵ First, the court must "tak[e] note of the elements [the] plaintiff must plead to state a claim." Iqbal, 556 U.S. at 675.Second, the court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679; see also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) ("Mere restatements of the elements of a claim are not entitled to the assumption of truth.") (citation omitted). Finally, "[w]hen there are well-pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679. "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...