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Smith v. Liberty Life Assurance Co. of Boston

United States District Court, D. Colorado

September 27, 2018




         This matter is before the Court on Defendant's Motion for Partial Dismissal and to Strike [Docket No. 10]. The Court has jurisdiction pursuant to 28 U.S.C. § 1331.

         I. BACKGROUND[1]

         This case arises out of defendant's denial of plaintiff's claim for long-term disability benefits. Plaintiff worked for Valley View Hospital as a Professional Billing Director from 1989 to 2001 and from 2007 to 2016. Docket No. 1 at 2, ¶¶ 8-9. On April 13, 2016, she left her employment with the hospital when she was no longer able to perform the duties of her position. Id., ¶ 9.

         During her employment, plaintiff was a participant in the Valley View Hospital Group Disability Plan (the “Plan”). Id., ¶¶ 11-12. The Plan included a Group Disability Income Policy, which provided long term disability benefits to eligible employees of Valley View Hospital. Id., ¶ 13. Defendant was the claim administrator of the Plan as well as the insurer and underwriter of the long term disability policy. Id. at 3, ¶¶ 17-18. Under the terms of the policy, defendant was required to pay plaintiff 60% of her basic monthly earnings in the event that she became disabled while the Plan was in effect. Id. at 2, ¶ 14.

         In August 2015, plaintiff underwent surgery for a tear in her right rotator cuff and for carpal tunnel in her right hand. Id. at 3, ¶ 20. Although plaintiff initially returned to work on a limited basis, it became clear by December 2015 that her right hand was not healing properly. Id. at 3-4, ¶¶ 21-22. Despite follow-up surgery, the effects of the two surgeries and the nerve damage in plaintiff's hand became so severe that she could no longer perform her job. Id., ¶ 26. Plaintiff's treating physicians certified that she had permanent restrictions preventing her from performing full-time work. Id., ¶ 27. After leaving her job on April 13, 2016, plaintiff applied for long term disability benefits under defendant's long term disability policy. Id., ¶¶ 27-28. Plaintiff informed defendant that she was unable to perform her own occupation because she could not use her right hand without pain and had little sensation in two of her fingers and her thumb. Id., ¶ 28. On August 31, 2016, defendant informed plaintiff that she did not qualify as being disabled under the policy and was therefore ineligible for long term disability benefits. Id., ¶ 29. In reaching that determination, defendant failed to consider the nerve damage underlying plaintiff's disability claim. Id., ¶ 30. In addition, defendant's August 31, 2016 letter “misled [plaintiff] regarding the information she needed to submit with her internal appeal and failed to explain what [plaintiff] needed to do to ‘perfect' her appeal.” Id. at 5, ¶ 33.

         Plaintiff submitted an internal appeal of her disability claim on September 7, 2016. Id., ¶ 35. In response to the appeal, defendant hired an orthopedic surgeon to review plaintiff's medical records. Id., ¶ 36. The surgeon concluded, based on plaintiff's records, that there was “clear documentation of median nerve deficits” and that certain restrictions were appropriate. Id., ¶ 37. On August 5, 2016, defendant upheld the denial of plaintiff's disability claim. Id. at 6, ¶ 39.

         Plaintiff filed this lawsuit on July 25, 2017, asserting two claims under the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.: (1) a claim under section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), for benefits owed under the terms of defendant's long term disability policy; and (2) a claim under section 502(a)(3), 29 U.S.C. § 1132(a)(3), for breach of fiduciary duties. Id.[2] On September 5, 2017, defendant filed a motion to dismiss plaintiff's breach of fiduciary duty claim under Fed.R.Civ.P. 12(b)(6). Docket No. 10.[3] Plaintiff filed a response to the motion on September 27, 2017, Docket No. 22, to which defendant replied on October 10, 2017. Docket No. 24. Since the parties completed briefing on the motion to dismiss, they have filed several notices of supplemental authority. See Docket Nos. 43, 45, 47, 48, 57. The Court will consider these supplemental filings along with the parties' briefs in resolving defendant's motion to dismiss.


         To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint must allege enough factual matter that, taken as true, makes the plaintiff's “claim to relief . . . plausible on its face.” Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation marks and alteration marks omitted); see also Khalik, 671 F.3d at 1190 (“A plaintiff must nudge [his] claims across the line from conceivable to plausible in order to survive a motion to dismiss.” (quoting Twombly, 550 U.S. at 570)). If a complaint's allegations are “so general that they encompass a wide swath of conduct, much of it innocent, ” then plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191 (quotations omitted). Thus, even though modern rules of pleading are somewhat forgiving, “a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (alteration marks omitted).

         III. ANALYSIS

         Defendant moves to dismiss plaintiff's breach of fiduciary duty claim on the ground that plaintiff's first claim for relief, which is brought under 29 U.S.C. § 1132(a)(1)(B), provides the exclusive remedy for the improper denial of her disability benefits. Docket No. 10 at 2.

         Section 1132 of Title 29 prescribes ERISA's civil enforcement scheme. Two provisions of that scheme are relevant here. Section 1132(a)(1)(B) authorizes a participant or beneficiary of an insurance plan governed by ERISA to bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). Section 1132(a)(3) permits a participant, beneficiary, or fiduciary of an ERISA benefits plan to bring a civil action “(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter.” Id., § 1132(a)(3).[4] In Varity Corp. v. Howe, 516 U.S. 489 (1996), the Supreme Court explained that § 1132(a)(1)(B) “focus[es] upon [a] specific area[], ” providing a “remedy for breaches of fiduciary duty with respect to the interpretation of plan documents and the payment of claims, ” while § 1132(a)(3) is a “catchall” provision that affords “‘appropriate equitable relief' for ‘any' statutory violation.” Id. at 512. In other words, § 1132(a)(3) “act[s] as a safety net . . . for injuries caused by violations that [§ 1132] does not elsewhere adequately remedy.” Id. The Supreme Court further cautioned, however, that “where Congress elsewhere provided adequate relief for a beneficiary's injury, ” additional equitable relief under § 1132(a)(3) “normally would not be ‘appropriate.'” Id. at 515.

         The Tenth Circuit has interpreted Varity as authorizing dismissal of a § 1132(a)(3) claim when a denial-of-benefits claim under § 1132(a)(1)(B) affords adequate relief. In Lefler v. United Healthcare of Utah, Inc., 72 Fed.Appx. 818 (10th Cir. 2003) (unpublished), the Tenth Circuit affirmed the district court's grant of summary judgment in favor of the defendant on the plaintiffs' § 1132(a)(3) claim, stating that “consideration of a claim under [that provision] is improper when [a plaintiff] states a cognizable claim under [§ 1132(a)(1)(B)].” Id. at 826. Although Lefler does not mandate the dismissal of parallel § 1132(a)(3) claims at the pleadings stage, district courts in this Circuit have relied on Varity and Lefler to dismiss § 1132(a)(3) claims that are duplicative of denial-of-benefits claims under § 1132(a)(1)(B). See, e.g., Sliwinski v. Aetna Life Ins. Co., No. 17-cv-01528-RM-MEH, 2017 WL 4616599, at *7 (D. Colo. Oct. 16, 2017) (report and recommendation adopted) (dismissing breach of fiduciary claim where wrongful denial of benefits claim afforded adequate relief); Holbrooks v. Sun Life Assurance Co. of Canada, 2012 WL 2449850, at *2 (D. Kan. June 26, 2012) (finding that relief under § 1132(a)(3) was not authorized because plaintiff had asserted a colorable claim under § 1132(a)(1)(B)); see also Moore v. Berg Enter., Inc., 201 F.3d 448, 1999 WL 1063823, *2 n.2 (10th Cir. 1999) (unpublished table decision) (relying on Varity to hold that, “under the undisputed circumstances of th[e] case, [the plaintiff was] not entitled to repackage his denial of benefits ...

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