Opinion
Case No. 22-cv-12218
2023-09-22
David MARSHALL, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant.
Robert B. June, Ann Arbor, MI, for Plaintiff. Samantha K.W. Van Sumeren, Bodman PLC, Detroit, MI, Michelle Thurber Czapski, Bodman PLC, Troy, MI, for Defendant.
Robert B. June, Ann Arbor, MI, for Plaintiff. Samantha K.W. Van Sumeren, Bodman PLC, Detroit, MI, Michelle Thurber Czapski, Bodman PLC, Troy, MI, for Defendant.
OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS (ECF NO. 5)
SHALINA D. KUMAR, United States District Judge
I. Introduction
Plaintiff David Marshall sues Defendant Metropolitan Life Insurance Company's ("MetLife") for breach of contract stemming from MetLife's denial of benefits under two employer-sponsored insurance plans. ECF No. 1-1. MetLife moves to dismiss. ECF No. 5. The parties fully briefed the motion, and the Court heard oral argument on June 21, 2023. ECF Nos. 5, 7, 8. This matter is now ripe for decision. For the reasons below, the Court denies MetLife's motion.
II. Factual Background
After a July 2017 car accident, Marshall suffered physical and cognitive impairments, and he could no longer perform his material job duties. ECF No. 1-2, PageID.19-20. On November 28, 2017, he stopped working due to his disability. Id. at PageID.19. Marshall received short-term disability benefits from MetLife from November 28, 2017 through May 19, 2018. Id. at PageID.20.
After May 19, 2018, Marshall applied for long term disability ("LTD") and continuation of life insurance ("LWOP") benefits under an LTD plan and an LWOP plan (the "Plans"), respectively. Id. at PageID.20. The Plans are sponsored by Marshall's employer. ECF Nos. 5-2, 5-4. The LTD plan required Marshall to submit proof of disability within 270 days of becoming "disabled." ECF No. 5-2, PageID.72, 75, 100. The LWOP plan required such proof within 12 months of becoming "totally disabled." ECF No. 5-4, PageID.199. Both Plans provide that any legal action on a benefit claim must be brought within three years after proof of disability is required. ECF No. 5-2, PageID.101; ECF No. 5-4, PageID.200.
After Marshall submitted his proofs of disability for LTD and LWOP benefits, MetLife informed Marshall through an October 9, 2018 letter that it denied his LTD benefit claim and through an October 17, 2018 letter that it denied his LWOP benefit claim. ECF No. 1-2, PageID.20; ECF No. 5-5, PageID.214; ECF No. 5-6, PageID.221. Marshall appealed MetLife's denials, and MetLife upheld them. ECF No. 1-2, PageID.20. MetLife informed Marshall of its final decisions through final denial letters, which state that Marshall has the right to bring an action on his LTD and LWOP benefit claims and that his "last date[s] to file" actions were July 6, 2022, for his LTD benefit claim, and July 10, 2022, for his LWOP benefit claim. ECF No. 5-5, PageID.219; ECF No. 5-6, PageID.227.
On July 11, 2022, Marshall filed suit for breach of contract to recover LTD and LWOP benefits under the Plans. ECF No. 1-2. MetLife removed the lawsuit to this Court and filed a motion to dismiss. ECF Nos. 1, 5.
III. Legal Standard
When deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must "construe the complaint in the light most favorable to plaintiff and accept all allegations as true." Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). "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." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (concluding that a plausible claim need not contain "detailed factual allegations," but it must contain more than "labels and conclusions" or "a formulaic recitation of the elements of a cause of action").
"[D]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claim." Weiner v. Klais & Co., 108 F.3d 86, 89 (6th Cir. 1997) (citation omitted). Courts may therefore consider the plan documents and the administrative record in an ERISA case under Rule 12(b)(6). See, e.g., Claerhout v. Nexteer Auto. Corp., No. 18-12556, 2019 WL 1779570, at *2 (E.D. Mich. Apr. 23, 2019) (considering plan documents on a motion to dismiss an ERISA claim); Brown v. Walgreens Income Prot. Plan for Store Managers, No. 10-14442, 2012 WL 1060093, at *2 (E.D. Mich. Mar. 29, 2012) (considering the administrative record on a motion to dismiss an ERISA claim). Accordingly, the Court considers the plan documents and administrative record showing the application of plan terms to Marshall's suit.
IV. Analysis
MetLife moves to dismiss Marshall's suit, arguing that under ERISA, the Plans' three-year limitations periods should be enforced to bar his action for LTD and LWOP benefits. MetLife explains that the Plans required Marshall to bring suit three years after he had to submit proofs of disability—August 25, 2021 for his LTD benefit claim and November 28, 2021 for his LWOP benefit claim—and because Marshall did not do so, the suit is time-barred. Marshall argues that Michigan's six-year limitations period for breach of contract actions applies, and that his suit is therefore timely. The Court agrees and denies MetLife's motion to dismiss.
A. The Michigan rule barring shortened limitations periods controls the applicable limitations periods.
The parties do not dispute that ERISA governs the Plans and Marshall's suit to recover benefits under the Plans. ERISA does not contain a statute of limitations for actions to recover benefits under a regulated plan. Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99, 102, 134 S.Ct. 604, 187 L.Ed.2d 529 (2013). "Absent a controlling statute to the contrary, a participant and a[n] [ERISA] plan may agree by contract to a particular limitations period." Id. at 105-06, 134 S.Ct. 604. When a plan contains a statute of limitations provision, a court must give effect to the provision as long as it is reasonable. Morrison v. Marsh & McLennan Co., 439 F.3d 295, 301-02 (6th Cir. 2006).
Marshall does not dispute the reasonableness of the Plans' limitations periods. He instead argues that Michigan Administrative Code Rule 500.2212 (the "Michigan Rule" or "Rule") renders the Plans' limitations periods unenforceable. Under the Michigan Rule, an insurer "shall not" issue or deliver to any person in Michigan an insurance contract that "contains a shortened limitation of action clause"—if an insurer does so, the shortened limitation of action clause in the insurance contract "is void and of no effect." Mich. Admin. Code R. 500.2212(2)-(3).
Absent a plan-provided limitations period, the Court must apply "the most analogous state statute of limitations, which is that for breach of contract." Santino v. Provident Life & Accident Ins. Co., 276 F.3d 772, 776 (6th Cir. 2001). For ERISA benefit claims, the most analogous Michigan statute of limitations is six years. Santino, 276 F.3d at 776 (citing MCL 600.5807(9)).
Here, the Plans' limitations periods for Marshall's LTD and LWOP benefit claims respectively expired on August 25 and November 28, 2021—three years after Marshall had to submit proofs of disability. But the statutory limitations periods for his benefit claims expire, at the earliest, on October 9, 2024 for the LTD claim and October 17, 2024 for the LWOP claim—six years after MetLife first denied Marshall's benefit claims, thereby putting Marshall on notice that the benefits he sought would be denied to him. See ECF No. 5-5, PageID.214; ECF No. 5-6, PageID.221; Patterson v. Chrysler Grp., LLC, 845 F.3d 756, 764 (6th Cir. 2017); see also infra Section IV.C (analyzing claim accrual for statute-of-limitations purposes).
Marshall alleges that he "stopped working on November 28, 2017, and he has been disabled since that time." ECF No. 1-2, PageID.19. Under the Plans, Marshall had to submit proof of disability for LTD benefits within 270 days—August 25, 2018; he had to do so for LWOP benefits within 12 months—November 28, 2018. See ECF No. 5-2, PageID.72, 75, 100; ECF No. 5-4, PageID.199. Accordingly, the Plans three-year limitations periods expired on August 25 and November 28, 2021. See ECF No. 5-2, PageID.101; ECF No. 5-4, PageID.200.
Because the Plans contractually shorten the limitations period by about three years, the Rule would render the Plans' limitations periods unenforceable. See Mich. Admin. Code R. 500.2212. Accordingly, the Michigan Rule would control and void the Plans' limitations periods, unless, as MetLife argues, ERISA preempts the Rule. See also Caldwell v. Standard Ins. Co., No. 2:14-CV-25242, 2015 WL 4727378, at *4 (S.D.W. Va. Aug. 10, 2015) (concluding the same under West Virginia statute voiding shortened limitations clauses in insurance contracts).
The parties do not otherwise dispute the Michigan Rule's applicability.
B. ERISA does not preempt the Michigan rule barring shortened limitations periods.
MetLife argues that ERISA completely preempts Michigan state law with respect to Marshall's suit because the only legal claim in his action is one to recover benefits under ERISA-governed plans. MetLife's argument implies that ERISA preempts the Michigan Rule and that the Rule is not saved by ERISA's savings clause, although MetLife neglects to address these issues. See ECF No. 8, PageID.293-94. Marshall argues that ERISA's savings clause exempts the Michigan Rule from preemption.
ERISA contains a broad preemption provision that states "[ERISA] supercede[s] any and all State laws . . . [that] relate to any employee benefit plan." 29 U.S.C. § 1144(a). However, ERISA also contains a savings clause which exempts from preemption "any law of any state which regulates insurance." Am. Council of Life Insurers v. Ross, 558 F.3d 600, 604 (6th Cir. 2009) (quoting 29 U.S.C. § 1144(b)(2)(A)).
A state law regulates insurance under the ERISA savings clause if (1) the state law is "specifically directed toward entities engaged in insurance" and (2) the state law "substantially affect[s] the risk-pooling arrangement between the insurer and the insured[s]." Ross, 558 F.3d at 605 (quoting Ky. Ass'n of Health Plans v. Miller, 538 U.S. 329, 341, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003)). A state law is "directed toward entities engaged in insurance" if it regulates insurers with respect to their insurance practices; and it substantially affects insurer-insured risk-pooling arrangements if it "alter[s] the scope of permissible bargains between insurers and insureds." Ross, 558 F.3d at 605-06 (citations omitted).
The Court concludes that ERISA does not preempt the Michigan Rule's application to Marshall's suit because the Rule regulates insurance. First, the Rule is specifically directed toward insurance-engaged entities because it specifically bars insurers from issuing or delivering contracts with shortened limitation of action clauses, which would be "void and of no effect" in such contracts. Mich. Admin. Code R. 500.2212; see Ross, 558 F.3d at 605 (holding similar Michigan rules barring discretionary clauses were directed toward entities engaged in insurance). Second, the Rule substantially affects insurer-insured risk-pooling arrangements because it directly controls the terms of insurance contracts by prohibiting their inclusion of shortened limitations clauses, and the enforcement of such clauses. See Ross, 558 F.3d at 605 (holding similar rules altered the scope of permissible insurer-insured bargains); see also Mich. Admin. Code R. 500.2212(1) ("A shortened limitation of action clause unreasonably reduces the risk purported to be assumed in the general coverage of the policy . . . ."). Third, ERISA does not otherwise impliedly preempt the Rule. Cf. Ross, 558 F.3d at 607-09 (holding the same with respect to similar Michigan rules).
MetLife argues that this case is nearly identical to Brown v. Walgreens Income Protection Plan, No. 10-CV-14442, 2013 WL 1040530 (E.D. Mich. Mar. 15, 2013), and so the Court should hold that Marshall's suit is time-barred just as the Brown court held. However, Brown is not binding. Moreover, although the Brown court held that a similar LTD plan's three-year limitations clause time-barred the plaintiff's suit, the Brown court did not face the preemption issues the Court faces here. No court has analyzed whether ERISA preempts the Rule here. But the Sixth Circuit has held ERISA does not preempt similar Michigan rules. See Ross, 558 F.3d at 607. With that authority in mind and for the reasons above, the Court holds that ERISA's savings clause exempts the Rule from preemption with respect to Marshall's suit. Under the Rule, the Plans' limitations periods are therefore unenforceable. See Mich. Admin. Code R. 500.2212.
Marshall also argues that MetLife's final denial letters did not trigger the Plan's limitations periods because under the Plans his deadlines to sue were in August and November 2021, whereas the letters provided July 2022 dates as his deadlines to sue. This argument has some merit. To substantially comply with 29 U.S.C. § 1133, MetLife's denial letters needed to afford a "fair opportunity for review" or else they would not trigger the Plans' time bars. Moyer v. Metro. Life Ins. Co., 762 F.3d 503, 507 (6th Cir. 2014). Accordingly, the letters must have provided the "time limits applicable to . . . [Marshall's] right to bring a civil action." Id. at 505 (citation omitted). Outright omission of such time limits would have made the letters "inconsistent with ensuring a fair opportunity for review," leaving the Plans' time bars untriggered. Id. at 507. Arguably then, MetLife's omission of correct time limits from the letters does the same: The letters' deadlines were at least 224 days and up to 315 days after the Plans' deadlines. Surely significantly inaccurate deadlines are more misleading than excluded deadlines, thus rendering MetLife's letters even less consistent with the requirement of a fair opportunity for review than those scrutinized in Moyer. See id. Because MetLife was in the best position to know what the Plans' deadlines were under the Plans it administered, Marshall had no reason to question the inaccurate deadlines. The Court thus believes that MetLife's final denial letters do not substantially comply with § 1133 and the Plans' time bars would be untriggered. However, the parties and the Court have found no on-point case, and moreover, the Court need not resolve this issue because it instead finds that the Plans' limitations periods are unenforceable.
C. Marshall timely brought suit within the applicable limitations period.
Having concluded that the Plans' limitations periods are unenforceable, the Court finds Marshall's suit is timely under Michigan's applicable statute of limitations. As noted above, in cases where the plaintiff brings a claim to recover benefits under an ERISA-governed plan but the plan does not provide a limitations period, the applicable limitations period is six years. Santino, 276 F.3d at 776. Clear and unequivocal repudiation of benefits, whether formal or informal, causes an ERISA benefit claim to accrue for statute-of-limitations purposes. Patterson, 845 F.3d at 764.
Based on the complaint and other documents the Court may properly consider at this stage, MetLife first notified Marshall that his claims were denied by letters dated October 9, 2018, for his LTD benefit claim, and October 17, 2018, for his LWOP benefit claim. See ECF No. 1-2, PageID.20; ECF No. 5-5, PageID.214; ECF No. 5-6, PageID.221. The earliest dates on which MetLife may have clearly and unequivocally repudiated benefits and for Marshall's benefit claims to accrue were therefore October 9 and 17, 2018. See Patterson, 845 F.3d at 764. The limitations periods for Marshall's LTD and LWOP benefit claims would thus expire six years later—in October 2024. See Santino, 276 F.3d at 776. Because Marshall filed suit in July 2022, his suit is timely.
V. Conclusion
For these reasons, MetLife's motion to dismiss (ECF No. 5) is DENIED.
In his response, Marshall requests 21 days to amend his complaint if the Court denies MetLife's motion. Because Marshall may not now amend as a matter of course, he must file a separate motion for leave to amend under Federal Rule of Civil Procedure 15(a)(2).