KATHERINE P. NELSON, Magistrate Judge.
This matter is before the Court on the Motion to Dismiss and to Strike (Doc. 2), and separate supporting brief (Doc. 3), filed by the Defendant, Symetra Life Insurance Company ("Symetra"). The assigned District Judge referred the motion to the undersigned Magistrate Judge for appropriate action under 28 U.S.C. § 636(a)-(b), Federal Rule of Civil Procedure 72, and S.D. Ala. GenLR 72(a). See S.D. Ala. GenLR 72(b); (4/8/2019 electronic reference). The Plaintiff, Cassandra Shears, has filed a response (Docs. 12, 13) to the motion, and Symetra has filed a reply (Doc. 14) to the response. The motion is under submission. (See Doc. 6). Upon consideration, the undersigned
In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief can be granted," the Court construes the complaint in the light most favorable to the plaintiff, "accepting all well-pleaded facts that are alleged therein to be true." Miyahira v. Vitacost.com, Inc., 715 F.3d 1257, 1265 (11th Cir. 2013) (citing Bickley v. Caremark RX, Inc., 461 F.3d 1325, 1328 (11th Cir. 2006)). "[G]enerally, the existence of an affirmative defense will not support a rule 12(b)(6) motion to dismiss for failure to state a claim. A district court, however, may dismiss a complaint on a rule 12(b)(6) motion when its own allegations indicate the existence of an affirmative defense, so long as the defense clearly appears on the face of the complaint." Fortner v. Thomas, 983 F.2d 1024, 1028 (11th Cir. 1993) (quotation omitted)). Accord Murphy v. DCI Biologicals Orlando, LLC, 797 F.3d 1302, 1305 (11th Cir. 2015) ("A district court may dismiss a complaint for failure to state a claim if an affirmative defense appears on the face of the complaint.").
Under Federal Rule of Civil Procedure 12(f) a court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. The court may act on its own or on a motion made by a party either before responding to the pleading . . ."
Shears commenced this case in the Circuit Court of Mobile County, Alabama, on February 28, 2019. (See Doc. 1-1 at 2-7). On March 6, 2019, Shears filed an amended complaint, the operative pleading in this case, substituting Symetra as the named Defendant. (Doc. 1-3 at 6-11). Her causes of action arise from Symetra's denial of benefits under a $50,000 spouse supplemental life insurance policy taken out by her now-deceased husband and naming her as a beneficiary. Counts One and Two of the amended complaint respectively allege claims for breach of contract, and misrepresentation and concealment. Count Three requests relief under the Employee Retirement Income Security Act of 1974, 88 Stat. 891, as amended, 29 U.S.C. § 1132(a) et seq. ("ERISA"), but only "if th[e] policy is deemed to be controlled by ERISA," which Shears disputes. On April 2, 2019, Symetra removed the case to this Court under 28 U.S.C. §1441 (see Doc. 1) and filed the present motion to dismiss and strike.
Symetra argues that Shears's state law claims in Counts One and Two of her operative complaint are due to be dismissed because they are preempted by ERISA. The undersigned agrees.
"Congress enacted ERISA to `protect . . . the interests of participants in employee benefit plans and their beneficiaries' by setting out substantive regulatory requirements for employee benefit plans and to `provid [e] for appropriate remedies, sanctions, and ready access to the Federal courts.' 29 U.S.C. § 1001(b). The purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans." Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004).
Connecticut State Dental Ass'n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1344 (11th Cir. 2009) (quotations and some citations omitted). "Although related, complete and defensive preemption are not coextensive: `Complete preemption is [ ] narrower than "defensive" ERISA preemption, which broadly "supersede[s] any and all State laws insofar as they . . . relate to any [ERISA] plan." ERISA § 514(a), 29 U.S.C. § 1144(a) (emphasis added). Therefore, a state-law claim may be defensively preempted under § 514(a) but not completely preempted under § 502(a).'" Id. (quoting Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1281 (11th Cir. 2005)).
"The [defensive] preemption provision of ERISA provides that it `shall supersede any and all state laws insofar as they may now or hereafter relate to any employment plan' covered by ERISA." Variety Children's Hosp., Inc. v. Century Med. Health Plan, Inc., 57 F.3d 1040, 1042 (11th Cir. 1995) (quoting 29 U.S.C. § 1144(a)). "A state law `relates to' a covered employee benefit plan `if it has a connection with or reference to such a plan.'" Id. (quoting District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 129 (1992)). Defensive preemption requires dismissal of state-law claims. Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir. 1999). As defensive preemption is an affirmative defense, it is Symetra's burden to demonstrate its applicability. See id ("Defensive preemption provides only an affirmative defense to certain state-law claims."); In re Rawson Food Serv., Inc., 846 F.2d 1343, 1349 (11th Cir. 1988) ("[I]t is well established that the party asserting an affirmative defense usually has the burden of proving it." (quotation omitted)). Moreover, to dismiss a claim under Rule 12(b)(6), the "affirmative defense" of defensive preemption must "clearly appear[] on the face of the complaint." Fortner, 983 F.2d at 1028.
Shears disputes that the subject life insurance policy was issued as part of an ERISA-covered plan, pleading the ERISA claim in Count Three only as an alternative to her state law claims "if th[e] policy is deemed to be controlled by ERISA . . ." (Doc. 1-3 at 36).
Shears invokes 29 C.F.R. § 2510.3-1(j), "a `safe harbor' provision that excludes some programs for group insurance from the `employee welfare benefit plans' governed by ERISA." Smith v. Jefferson Pilot Life Ins. Co., 14 F.3d 562, 568 (11th Cir. 1994).
However, the subject group insurance program does not satisfy the "safe harbor" provision's first requirement, as the policy's terms indicate that the employer made contributions towards some of the coverage offered under the plan. (See Doc. 3-1 at 4, 8-9, 11 (providing for both "contributory coverage" — "coverage for which [the insured] was required to contribute toward the cost" — and "non-contributory coverage — "coverage for which [the insured is] not required to contribute toward the cost"), and stating that the "Employer will automatically enroll" the insured in non-contributory coverage)). Thus, even if, as Shears claims, she and her husband paid all premiums for the Supplemental Life Insurance coverage themselves, the fact that the employer contributed towards the premiums for other plan coverage defeats application of the "safe harbor" provision. See Jefferson Pilot, 14 F.3d at 568 ("The regulation applies only to programs where no contributions are made by an employer; yet under the Plan the defendant contributed all of the premium except for the dependent coverage contribution. The employer must not subsidize the purchase of insurance for this safe harbor provision to apply." (citing Randol, 987 F.2d at 1550)).
Accordingly, the undersigned finds that the subject insurance policy is governed by ERISA, and that Shears's claims for breach of contract, misrepresentation, and concealment in Counts 1 and 2 of the operative complaint are therefore due to be dismissed with prejudice as preempted by ERISA. See Butero, 174 F.3d at 1215 (state-law bad faith, breach of contract, and fraud claims are all preempted under § 1144(a) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987)); Williams v. Wright, 927 F.2d 1540, 1549-50 (11th Cir. 1991) ("With regard to state law breach of contract claims specifically, this court and others have unanimously held that such claims are preempted by ERISA."); Variety Children's Hosp., 57 F.3d at 1042 ("[W]here state law claims of fraud and misrepresentation are based upon the failure of a covered plan to pay benefits, the state law claims have a nexus with the ERISA plan and its benefits system.").
Symetra asserts that the ERISA claim in Count 3 is due to be dismissed for failure to exhaust administrative remedies, because Shears failed to request administrative review of the December 28, 2018 initial determination denying benefits within 60 days of receiving it. Shears does not contest this, but argues that her failure to exhaust should be excused or, alternatively, that her case should be remanded to the claims administrator for further proceedings.
"The law is clear in this circuit that plaintiffs in ERISA actions must exhaust available administrative remedies before suing in federal court." Counts v. Am. Gen. Life & Acc. Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997). The Eleventh Circuit "appl[ies] the exhaustion requirement strictly and recognize[s] narrow exceptions only based on exceptional circumstances." Perrino v. S. Bell Tel. & Tel. Co., 209 F.3d 1309, 1318 (11th Cir. 2000). "[A] district court has the sound discretion to excuse the exhaustion requirement when resort to administrative remedies would be futile or the remedy inadequate, or where a claimant is denied meaningful access to the administrative review scheme in place . . ." Id. at 1315 (citation and quotations omitted). However, "the exhaustion requirement for ERISA claims should not be excused for technical violations of ERISA regulations that do not deny plaintiffs meaningful access to an administrative remedy procedure through which they may receive an adequate remedy." Id. Certain technical violations may, however, justify remand to the plan administrator for an out-of-time appeal. See Counts v. Am. Gen. Life & Acc. Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997) ("The consequence of an inadequate benefits termination letter is that the normal time limits for administrative appeal may not be enforced against the claimant. Thus, the usual remedy is not excusal from the exhaustion requirement, but remand to the plan administrator for an out-of-time administrative appeal." (citations omitted)).
Shears alleges in her operative complaint that she received the initial adverse determination notice "on or about January 3, 2019." (Doc. 1-3). As stated in that notice, a request for review of the adverse determination was required to be submitted "within 60 days of receipt of" the determination (Doc. 1-3 at 15), which was Monday, March 4, 2019.
Shears, then acting pro se, sent a letter dated January 7, 2019, to a Symetra representative acknowledging receipt of the adverse determination and stating, in relevant part:
(Doc. 1-3 at 17).
By letter dated January 10, 2019, Symetra acknowledged receipt of Shears's letter and sent her copies of "the medical records used in the review of the Life Insurance claim for Kenneth Eirby." (Id. at 19). On February 11, 2019, current counsel for Shears sent Symetra a letter requesting additional material and asking that the 60-day time period for Shears to appeal the adverse determination be suspended until that material had been provided. (Id. at 20-23). That letter requested a response from Symetra by February 28, 2019.
Shears claims that the adverse determination letter was defective for several reasons, none of which the undersigned finds convincing. First, she complains that "the letter only offers the Plaintiff a chance to have the denial reviewed" and that "[t]he term appeal is not mentioned until the very end of the letter." (Doc. 13 at 8). However, Shears cites no rule requiring such precision, and the ERISA statutes and regulations do not indicate there is a meaningful distinction between "appeal" and "review." See, e.g., 29 U.S.C. § 1133(2) ("In accordance with regulations of the Secretary, every employee benefit plan shall afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair
Similarly, Shears complains that the adverse determination letter "itself is vague as to whether or not ERISA or State law controls this matter" (Doc. 13 at 9), since it provides alternative instructions for how obtain review of the decision "
Next, Shears complains that the adverse determination letter states that Symetra "will conduct only one review this determination" (Doc. 12-1 at 4), claiming this "[t]his is clearly contrary to ERISA rules and regulations" (Doc. 13 at 8). Shears does not cite which ERISA rule or regulation that this provision is "clearly contrary" to, and nothing in either the statute or regulation governing ERISA claims procedures requires more than one round of review of an adverse determination. See generally 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1. If anything, the ERISA regulations appear to discourage multiple administrative reviews of adverse determinations, requiring that "claims procedures do not contain any provision, and are not administered in a way, that requires a claimant to file more than two appeals of an adverse benefit determination prior to bringing a civil action under section 502(a) of" ERISA. 29 C.F.R. § 2560.503-1(c)(2).
Finally, Shears complains that Symetra "reserve[d] the right to consider and assert other reasons for limitation or denial of [her] claim, even if [Symetra] ha[d] not previously raised such reasons." (Doc. 12-1 at 4). She asserts that "[a]llowing itself additional `bites at the apple' while limiting Shears to only one review of the benefit determination is clearly contrary to 29 USC § 1133(2)" (Doc. 13 at 8), which provides that every ERISA plan shall "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." However, as the authority Shears cites in support makes clear, a plan administrator may deny benefits for reasons not relied on in an initial adverse determination so long as the claimant is "afford[ed] the opportunity to respond to the second, determinative reason for the termination." Wenner v. Sun Life Assur. Co. of Canada, 482 F.3d 878, 882 (6th Cir. 2007). The initial adverse determination was careful to state that Symetra would "conduct only one review of
Shears also asserts that Symetra failed to produce all of the information requested in her January 7 and February 11 letters, and that this deprived her of the chance to meaningfully appeal the initial adverse determination. She claims that "[w]ithout that information [her] appeal would have been nothing more than `I disagree with the decision and ask that you reconsider[,]' [a]n empty appeal that would have most likely resulted in the continued denial of benefits and then placed [Shears] in the exact same position she occupies today." (Doc. 13 at 4). However, this assertion assumes that Shears would have been barred from presenting any new evidence or argument in support of her appeal after the 60-day period to request review had run. Shears cites nothing to support such assumption, and nothing in the adverse determination letter suggests that Shears would have been so limited—indeed, the ERISA regulations and the adverse determination letter both contemplate that evidence could still be received after a request for review is made. See 29 C.F.R. § 2560.503-1(i)(4) ("For purposes of paragraph (i) of this section, the period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is filed in accordance with the reasonable procedures of a plan, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing." (emphasis added)); (Doc. 1-3 at 15 ("The 60 day time period will start when we receive your request for review, even if we have not received all of the information necessary to make our final determination." (emphasis added)).
Shears has also cited nothing to support her assumption that Symetra was required to respond to her requests for documents prior to the deadline to request review. The ERISA regulations require only that a claimant "be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits." 29 C.F.R. § 2560.503-1(h)(2)(iii). They do not impose any specific time limits for responding to such requests, and it would appear that plan administrators would be in substantial compliance so long as the information was produced in time to allow a claimant to meaningfully make use of it on administrative appeal.
Nevertheless, the Court need not engage in speculation on whether Symetra would have timely produced all of Shears's requested information, because Symetra argues that it "produced all relevant documents" — i.e., the medical records produced with its January 7 letter — and that "[a]ny additional documents were not required to be produced." (Doc. 3 at 8). Symetra is correct that only information "relevant to the claimant's claim for benefits" must be produced upon request, 29 C.F.R. § 2560.503-1(h)(2)(iii), with "relevant" meaning that the information "(i) [w]as relied upon in making the benefit determination; (ii) [w]as submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; [or] (iii) [d]emonstrates compliance with the administrative processes and safeguards required pursuant to paragraph (b)(5) of [29 C.F.R. § 2560.503-1] in making the benefit determination . . ." 29 C.F.R. § 2560.503-1(m)(8)(i)-(iii).
The adverse determination letter stated that Symetra was denying benefits and rescinding the subject policy based on purported misrepresentations made by Shears's husband in the Evidence of Insurability Application for Group Coverage (EOI) he submitted prior to approval, which were discovered by reviewing the medical records that Symetra subsequently produced to Shears. Symetra claimed that these misrepresentations were material, in that "had the applications been correctly completed, the application would have been declined." (Doc. 1-3 at 14). Shears's pro se January 7 letter noted that the adverse determination "said that [she] had a right to all of the records and documents related to [the] denial[,]" questioned how she could "appeal the decision without seeing the records and documents [Symetra] relied on[,]" and stated that she "need[ed] copies of all [Symetra's] records and documents . . ." (Doc. 1-3 at 17). Thus, the January 7 letter could reasonably be read as a request for all "relevant" information related to Shears's claim. Moreover, in her counseled February 11 letter, Shears again requested, inter alia, "[t]he complete plan document[, a]ll relevant claim documents and material as existed in the claim file on December 28, 2018, including a signed copy of the actual application in issue[, and t]he actual and specific underwriting guidelines [Symetra] claim[ed] were materially compromised by the alleged non-disclosure of medical information . . ." (Doc. 1-3 at 23). It does not appear that Symetra ever produced those documents in response to either letter, and Symetra here argues that it did not have to produce them. However, "ERISA requires a plan administrator to furnish the following upon written request from a plan participant: `the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.'" Byars v. Coca-Cola Co., 517 F.3d 1256, 1270 (11th Cir. 2008) (quoting 29 U.S.C. § 1024(b)(4)). Additionally, purported misrepresentations in the original EOI, and a Symetra underwriter's assurance that accurate answers would have resulted in denial of policy, were the only reason given for Symetra's decision to deny benefits. Thus, the original EOI, and the underwriting policies under which the EOI would have been reviewed, were plainly relevant because they were "relied upon in making the benefit determination." 29 C.F.R. § 2560.503-1(m)(8)(i).
One purpose given by the Department of Labor for adopting § 2560.503-1(m)(8) was to provide "`claimants with adequate access to the information necessary to determine whether to pursue further appeal.'" Metzger v. UNUM Life Ins. Co. of Am., 476 F.3d 1161, 1167 (10th Cir. 2007) (quoting 65 Fed. Reg. 70,246, 70,252 (Nov. 21, 2000)) (emphasis omitted). At this early stage, and drawing all reasonable inferences in favor of Shears, as the Court must on a Rule 12(b)(6) motion to dismiss, the undersigned cannot definitively say that Symetra's insistence it did not have to produce the plan document, the original EOI, and the underwriting guidelines for reviewing the EOI would not have "denied meaningful access to the administrative review scheme in place" so that Shears's failure to exhaust should be excused.
Shears's operative complaint "requests a trial by jury for Counts One and Two set forth above and any and all disputed factual assertions related to this matter." (Doc. 1-3 at 36). Symetra requests that this jury demand be stricken. This request is due to be
In accordance with the foregoing analysis, and pursuant to 28 U.S.C. § 636(b)(1)(B)-(C), Federal Rule of Civil Procedure 72(b)(1), and S.D. Ala. GenLR 72(a)(2)(S), it is
A copy of this report and recommendation shall be served on all parties in the manner provided by law. Any party who objects to this recommendation or anything in it must, within fourteen (14) days of the date of service of this document, file specific written objections with the Clerk of this Court. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); S.D. Ala. GenLR 72(c). The parties should note that under Eleventh Circuit Rule 3-1, "[a] party failing to object to a magistrate judge's findings or recommendations contained in a report and recommendation in accordance with the provisions of 28 U.S.C. § 636(b)(1) waives the right to challenge on appeal the district court's order based on unobjected-to factual and legal conclusions if the party was informed of the time period for objecting and the consequences on appeal for failing to object. In the absence of a proper objection, however, the court may review on appeal for plain error if necessary in the interests of justice." 11th Cir. R. 3-1. In order to be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the Magistrate Judge's report and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the Magistrate Judge is not specific.
