Opinion
Cause No. IP 99-1022 C-M/S
July 6, 2000
ORDER ON MOTION TO DISMISS
This matter comes before the Court on the motion of defendants, Daughters of Charity National Health System, Inc. Voluntary Personal Accident Insurance Plan, St. Vincent Hospital and Health Care Center, Inc., Daughters of Charity National Health System, and AIG Life Insurance Company, Inc. (collectively "Defendants"), seeking dismissal of all of the claims presented in the complaint filed by Katherine Liggans ("Liggans") on January 20, 2000 for failure to state a claim upon which relief may be granted. Liggans brought this action under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq, after she was denied payment of life insurance benefits from the accidental death of her husband. Second Am. Compl. ¶¶ 13, 14. The Court has fully considered the parties' arguments and, for the reasons discussed below, GRANTS the Defendants' motion to dismiss Liggans' complaint.
I. FACTUAL PROCEDURAL BACKGROUND
Liggans is a materials handler at St. Vincent Hospital ("St. Vincent") in Indianapolis, Indiana where she has worked for twenty-four years. Id. ¶ 6. Beginning around 1984 or 1985, Liggans enrolled for term life insurance through her employer under the Daughters of Charity National Health System, Inc. Voluntary Personal Accident Insurance Plan ("Plan"). Id. ¶ 7. Part of the coverage chosen by Liggans under the Plan included accidental death and dismemberment benefits. Id. The Plan was administered by the Daughters of Charity National Health System ("Daughters of Charity") and underwritten by AIG Life Insurance Company, Inc. ("AIG").
In 1998, Liggans purchased accidental death and dismemberment and life insurance coverage for her husband, Johnny Liggans Jr. On May 15, 1998, Liggans' husband was killed in an automobile accident. Id. ¶ 11. Following her husband's death, Liggans submitted a claim for accidental death and dismemberment benefits. Id. ¶ 12. Her claim was denied by the Plan based on exclusion for intoxicants. Id. ¶ 13. The exclusion read: "Payment will not be made for any loss caused in whole or in part by, or resulting in whole or in part from, . . . the insured person being under the influence of drugs or intoxicants, unless taken under the advise of a physician." Id. ¶ 14.
Liggans contends that the exclusion upon which AIG relief in denying benefits was never disclosed to her prior to her husband's death. Id. ¶ 15. On June 14, 1999, Liggans filed this action in Marion Superior Court. The Defendants filed a notice of removal to the United States District Court for the Southern District of Indiana on July 2, 1999. Liggans filed an amended complaint on September 16, 1999, and a second amended complaint on January 20, 2000.
At present, this case is before the Court on the motion to dismiss filed by the Defendants on January 31, 2000. The Defendants have moved to dismiss Liggans' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Having reviewed the factual and procedural background, the Court now turns to a brief overview of the standards governing its decision.
II. STANDARDS
In assessing the propriety of a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), the Court accepts as true all well-pleaded factual allegations in the complaint and the inferences reasonably drawn from them. Baxter by Baxter v. Vigo County Sch. Corp., 26 F.3d 728, 730 (7th Cir. 1994). Dismissal is appropriate only if it appears beyond doubt that the plaintiffs can prove no set of facts consistent with the allegations in the complaint that would entitle them to relief. Hi-Lite Prods. Co. v. American Home Prods. Corp., 11 F.3d 1402, 1405 (7th Cir. 1993). However, the Court need not ignore facts set out in the complaint that undermine the plaintiffs' claims, Homeyer v. Stanley Tulchin Assoc., 91 F.3d 959, 961 (7th Cir. 1996) (citing American Nurses' Ass'n v. State of Illinois, 783 F.2d 716, 724 (7th Cir. 1986)), nor is the Court required to accept the plaintiffs' legal conclusions. Reed v. City of Chicago, 77 F.3d 1049, 1051 (7th Cir. 1996); Gray v. Dane County, 854 F.2d 179, 182 (7th Cir. 1988).
This standard essentially means that if any set of facts, even hypothesized facts, could be proven consistent with the complaint, then the complaint must not be dismissed. Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1995), cert. denied, 116 S. Ct. 1044 (1996). After the Federal Rules of Civil Procedure were passed in 1938, parties no longer had to plead facts that, if true, would establish each element of a cause of action. Id. Instead, plaintiffs "receive the benefit of imagination, so long as the hypotheses are consistent with the complaint." Id. (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
III. DISCUSSION
Liggans presents two claims under ERISA, 29 U.S.C. § 1132. First, Liggans seeks to recover benefits owed to her under the Plan. Second, Liggans asserts a claim for breach of fiduciary duty. The Court will address each of her claims in turn.
A. RECOVERY OF BENEFITS
Liggans brings a claim under § 1132(a)(1)(B), arguing that each of the Defendants are jointly and severally liable for unpaid benefits under the Plan. Defendants respond that Liggans has not stated a claim against St. Vincent, Daughters of Charity or AIG because ERISA requires that a recovery-of-benefits action be brought against the benefits plan itself and not the employer or the plan's administrator. The Court must agree.
Section 1132(a)(1)(B) provides that "[a] civil action may be brought by a participant or beneficiary 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."
Under ERISA, an employee benefit plan is an entity that may sue or be sued in its own capacity. 29 U.S.C. § 1132(d)(1). Yet, the circuits disagree on what other parties may be subject to suit for benefits. On one hand, some jurisdictions have held that the proper defendant in a recovery-of-benefits suit is either the plan itself or the plan's administrator or trustee exercising management over and control of the plan. See Terry v. Bayer Corp. 145 F.3d 28 (1st Cir. 1998) (proper party defendant in § 1132(a)(1)(B) action for benefits is party that controls administration of plan); Mitchell v. Eastman Kodak Co., 113 F.3d 433 (3d Cir. 1997) (permitting recovery-of-benefits action against plan administrator with discretionary authority over claims). On the other hand, the Seventh Circuit has adopted the position that only the plan itself may be sued on such a claim. Riordan v. Commonwealth Edison Co., 128 F.3d 549, 551 (7th Cir. 1991); Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1491 (7th Cir. 1996). As the Northern District of Illinois noted in Witowski v. Tetra Tech, Inc., 38 F. Supp.2d 640, 645 (N.D. Ill. 1998), the Seventh Circuit has yet to discuss this position at any length. However, in Jass, the Court quoted the Ninth Circuit's decision in Gelardi v. Pertec Computer Corp., 761 F.2d 1323 (9th Cir. 1985) for the proposition that the plain language of ERISA permits only two types of actions: actions against the plan as an entity for recovery of benefits under § 1132(a)(1)(B), and actions for breach of fiduciary duty under § 1109(a) and § 1105(a).
Applying Jass to the matter presented, the Court grants the Defendants' motion to dismiss the recovery-of-benefits claim with respect to each of the Defendants, except the Plan itself. Here, Liggans has sued not only the Plan, but also her employer as well as the plan administrator. While the circuits appear to be split on the issue of who is a proper defendant, the Seventh Circuit's position on this matter is clear: only the plan as an entity may be sued.
B. BREACH OF FIDUCIARY DUTY
Liggans also asserts a claim under § 1132(a)(3)(B) in which she seeks to recover damages for the Defendants' breach of fiduciary duty by not informing her of the policy exclusion for accidents involving intoxication. Section 1132(a)(3)(B) provides that a civil action may be brought by "a participant, beneficiary or fiduciary. . . to obtain other appropriate equitable relief." In response to Liggans' claim, the Defendants counter that Liggans' allegations do not establish a claim for breach of fiduciary duty. Alternatively, the Defendants argue that Liggans has failed to state a claim for relief because she has failed to seek any form of equitable remedy.
As an initial matter, the Court concludes that Liggans has stated an actionable claim for breach of fiduciary duty. Sections 1021, 1024 and 1054 of the ERISA statute create a duty to notify and adequately disseminate information to plan participants and beneficiaries. In this case, Liggans stated in her complaint that: "The Plan Administrator, Daughters and St. Vincent breached their fiduciary duty to Ms. Liggans by failing to fully inform her of the exclusions and terms of the contract she was entered under the Plan for accidental death and dismemberment coverage." Indeed, it is reasonable to conclude that the facts underlying Liggans' allegation might reveal that the information provided by the Defendants failed to include a forthright discussion of the intoxicant exclusion at issue. Similarly, Liggans could establish that the Defendants mislead Liggans in conversation regarding the extent of the coverage provided.
Notwithstanding Liggans' claim, however, dismissal is still warranted in this matter because Liggans has made no request for equitable relief as required under the text of §§ 1132(a)(3)(B). In Mertens v. Hewitt Assocs., 508 U.S. 248 (1993), the Supreme Court held that § 1132(a)(3)(B) does not provide a right of recovery where the plaintiff seeks monetary reimbursement for a breach of fiduciary duty. Id. at 256-59. There, the plaintiffs sought monetary relief for the acts and omissions of the actuary of their retirement plan. Id. at 255. In arguing that their claim fell within the statutory language of § 1132(a)(3)(B) which authorizes the court to award "appropriate equitable relief," the plaintiffs asserted that their request was one for equitable relief because at common law the courts of equity had exclusive jurisdiction over all actions by beneficiaries for breach of trust and in those courts money damages were available against the trustee. Id. at 255-56. The Court rejected this argument, however, noting that the plaintiffs were not seeking a remedy traditionally viewed as "equitable," such as an injunction or restitution. Id. at 255. Rather, what in fact the plaintiffs were seeking was nothing other than compensatory damages for the losses they sustained as a result of the alleged breach of fiduciary duties. Id. Because the plain language of the statute did not include legal remedies such as compensatory damages or other forms of monetary relief, the Court concluded that dismissal of the plaintiffs' claim was proper. Id. at 263.
The Seventh Circuit applied Mertens to reach a similar result in Buckley Dement v. Travelers Plan Administration of Illinois, 39 F.3d 784 (7th Cir. 1994). There, Buckley Dement, the sponsor, administrator and fiduciary of an ERISA-based group health program, brought a complaint against the third-party claims administrator of its employee health care plan which alleged that the claims administrator had failed to submit claims for an excess health insurance coverage policy before the policy expired. Id. at 786. In its complaint, Buckley Dement asserted that the claims administrator was a fiduciary and that its failure to process the claims at issue in a timely fashion constituted a violation of its fiduciary duties. Id. It then sought monetary reimbursement under § 1132(a)(3)(B) for the claims that it was required to pay. Id. Citing Mertens, the Seventh Circuit affirmed summary judgment for the claims administrator on the basis that the entire focus of Buckley Dement's complaint was the payment of money damages and § 1132(a)(3)(B) does not sanction the recovery of such relief. Id. at 786-87.
Under this precedent, the Court concludes that the same logic is applicable to Liggans' claim. Here, Liggans makes no claim for equitable relief. She does not seek an injunction, restitution or specific performance. Rather, the substance of the remedy Liggans seeks is in fact compensatory damages-monetary relief for all losses she sustained as a result of the Defendants' failure to fully inform her of the intoxicant exclusion to her accident death and dismemberment coverage. Both the Supreme Court and the Seventh Circuit have clearly stated that this type of remedy is not available under § 1132(a)(3)(B). Accordingly, Liggans' claim for breach of fiduciary duty is hereby dismissed.
While her precise argument is somewhat difficult to discern, Liggans contends that she has made a claim for equitable relief in the form of equitable estoppel. The Seventh Circuit has stated on several occasions that equitable estoppel is available in ERISA cases. See Coker v. Trans World Airlines, Inc., 165 F.3d 579, 585 (7th Cir. 1999) (citations omitted). But in this instance, Liggans' application of the doctrine is misplaced. In Coker, the Seventh Circuit described equitable estoppel as a cause of action with four elements: (1) a knowing misrepresentation, (2) made in writing, (3) with reasonable reliance on that misrepresentation by the plaintiff, and (4) to her detriment. Id. Even if Liggans can establish these elements, it is unclear, without further explanation, how establishing a prima facie case of equitable estoppel would satisfy the "equitable relief" requirement of § 1132(a)(3)(B).
IV. CONCLUSION
Having reviewed the complaint and the arguments presented by the parties, the Defendants' motion to dismiss is hereby GRANTED.