Opinion
Civil Action No. 7:21-CV-00123
2021-09-27
Jose M. MARTINEZ, Plaintiff, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, et al., Defendants.
Mark Anthony Di Carlo, Attorney at Law, Corpus Christi, TX, for Plaintiff. Robert L. Galligan, Alexandro Benavides, Jones, Galligan, Key & Lozano, L.L.P., Weslaco, TX, for Defendants.
Mark Anthony Di Carlo, Attorney at Law, Corpus Christi, TX, for Plaintiff.
Robert L. Galligan, Alexandro Benavides, Jones, Galligan, Key & Lozano, L.L.P., Weslaco, TX, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S COMPLAINT AND DENYING PLAINTIFF'S MOTION FOR JUDGMENT AND SANCTIONS
Randy Crane, United States District Judge
Now before the Court is "Defendants' Motion to Dismiss Plaintiff's Complaint" ("Defendants' Motion") (Dkt. No. 7) filed by Prudential A/K/A D/B/A The Prudential Company of America Disability Management Service A/K/A D/B/A Prudential Services Company of America ("Prudential") and American Electric Power Service Corporation ("AEPSC") (collectively "Defendants") and "Plaintiff's Amended Motion for Default Judgment Plaintiff's Amended Motion for Judgment on the Pleadings and/or Response and Objections to Defendant's Response and Objections to Defendants' Motion to Dismiss Plaintiff's Complaint" ("Plaintiff's Motion") (Dkt. No. 15) filed by Plaintiff Jose M. Martinez. After considering the two motions and their responsive briefings (Dkt. Nos. 10, 11, 18), the Court is of the opinion that Defendants' Motion (Dkt. No. 7) should be GRANTED IN PART AND DENIED IN PART and Plaintiff's Motion (Dkt. No. 15) should be DENIED for the following reasons.
I. Factual and Procedural Background
Plaintiff filed suit on April 2, 2021, alleging Defendants wrongfully denied him long term disability. (Dkt. No. 1). Plaintiff alleges that he is the beneficiary of an "American Electric System Long Term Disability Plan" (the "Plan") with Prudential. Id. at p. 2 ¶ 1. The Plan is a welfare benefit plan providing long-term disability benefits. (Dkt. No. 22 at p. 185). Plaintiff was employed by American Electric Power ("AEP") from January 1981 to April 2019. (Dkt. No. 1 at p. 8 ¶ 19). Plaintiff believes he paid into "disability" throughout his employment. Id. at p. 9 ¶ 20.
Plaintiff attached sealed exhibits to his complaint (Dkt. No. 2). The sealed exhibits did not include all documents referenced in the Complaint and Defendants' Motion. Thus, the Court notified the parties of the discrepancy and instructed the parties to submit the referenced pages that were missing from the sealed exhibits (Dkt. No. 19). Defendants submitted the missing pages it referenced in Defendants' Motion and their reply brief (Dkt. No. 11) to the Court. (Dkt. No. 21). Plaintiff submitted all missing pages to the Court. (Dkt. No. 22).
Plaintiff states that the sealed exhibits were meant to include pages 000001-000538, and Defendants received all pages. Id. The sealed exhibits included documents that were numbered 000001-000068. (Dkt. No. 2). Plaintiff states that the sealed exhibits only included pages 000001-000067, so Plaintiff's submission begins with page 0068, which doesn't match the page 000068 in Dkt. No. 2. (Dkt. Nos. 2, 22). The Court considers page 0068 in Plaintiff's submission (Dkt. No. 22) to be the true page 68.
The Court will cite to Plaintiff's submission of the missing sealed exhibit pages.
Defendants state that AEP is not a party in this lawsuit. (Dkt. No. 7 at p. 11 ¶ 25). The Court, therefore, notes, that AEPSC is not the same as AEP.
A. The Plan
AEPSC is the plan sponsor and administrator. (Dkt. No. 1 at p. 2 ¶ 2); (Dkt. No. 22 at p. 184). AEPSC "has the authority to control, administer and manage the operation of the plan." (Dkt. No. 1 at p. 23 ¶ 66); (Dkt. No. 22 at p. 184). AEPSC and its subsidiaries and affiliates adopted the Plan with the purpose to benefit its employees. (Dkt. No. 1 at p. 23 ¶ 66); (Dkt. No. 22 at p. 184). The Plan is governed by the laws of the State of Ohio, except to the extent it is preempted by federal law. (Dkt. No. 1 at p. 22 ¶ 65); (Dkt. No. 22 at p. 184).
Under the Plan, a full-time employee who is disabled for 1,040 hours or longer can receive up to 60% of his or her base pay through the Plan. (Dkt. No. 22 at p. 169). Eligible employees are automatically enrolled for this "Employer-provided 60% of pay base benefits" under the Plan. Id. at p. 170. AEPSC pays the full cost of the base Plan coverage that provides up to 60% of the base pay coverage. Id. Employees, as of January 1, 2014, have the option to supplement the employer-provided base plan by purchasing an additional benefit equal to 10% of their base pay. Id. at p. 169.
AEPSC has the authority, responsibility, and discretion to determine eligibility to participate in the Plan. Id. at 180. AEPSC appointed the "AEP Recovery Center to make initial determinations of eligibility and an internal LTD Appeals Committee to consider appeals of adverse eligibility determinations made by the AEP Recovery Center." Id. Prudential is the Plan's claims administrator. Id.
After a claimant files a claim for benefits, the claimant will be advised of the determination within forty-five days after receipt of the claim either "by AEP Recovery Center (with regard to eligibility determinations) or Prudential (with regard to other benefit determinations)." (Dkt. No. 1 at p. 27 ¶ 70); (Dkt. No. 22 at p. 180). The period can be extended by thirty days if the reviewer determines that it is necessary and notifies the claimant. (Dkt. No. 1 at p. 7 ¶ 17, p. 27 ¶¶ 70-70.1); (Dkt. No. 22 at p. 180). If a decision cannot be made within the thirty-day extension, the reviewer can extend the period for an additional thirty days provided he or she notifies the claimant. (Dkt. No. 1 at p. 7 ¶ 17); (Dkt. No. 22 at p. 180).
If a claimant disagrees with a determination as to his or her eligibility, the claimant can submit a request in writing to the AEP LTD Plan Appeal Committee and formally request an appeal. (Dkt. No. 22 at p. 181). "The AEP Plan Appeal committee has full discretion and authority to determine eligibility under the plan[.]" (Dkt. No. 1 at p. 8 ¶ 18). If a claimant disagrees with any other type of benefit determination, he or she can submit a written request to Prudential and formally request an appeal. (Dkt. No. 22 at p. 181). "Prudential has full discretion and authority to determine eligibility for benefits and for continued benefits and both have full discretion and authority to construe and interpret all terms and provisions of the plan." (Dkt. No. 1 at p. 8 ¶ 18). Both the AEP LTD Plan Appeal Committee and Prudential "have full discretion and authority to construe and interpret all terms and provisions of the plan." Id.
A claimant has 180 days from receiving a notice of an adverse benefit determination to file an appeal. (Dkt. No. 1 at p. 64 ¶ 160); (Dkt. No. 22 at p. 182). If a claimant is not satisfied with Prudential's decision regarding an appeal on an issue that doesn't involve eligibility under the Plan, then the claimant can submit an additional review, or a "voluntary second level appeal," within sixty days after he or she receives notice of determination of the first level appeal. (Dkt. No. 22 at p. 183).
B. Denial of Plaintiff's Claim
Plaintiff applied for long term disability on April 16, 2019. (Dkt. No. 1 at p. 27 ¶ 70.1). Prudential acknowledged that it received Plaintiff's claim for benefits on May 2, 2019. (Dkt. No. 22 at p. 158). In a May 14, 2019 letter, Prudential's claim reviewer requested additional information from Plaintiff. (Dkt. No. 1 at p. 27 ¶ 70.1); (Dkt. No. 22 at p. 216-17). Prudential sent a letter on May 30, 2019, stating that it needed additional information to determine benefits under the Plan. (Dkt. No. 1 at p. 34 ¶ 93); (Dkt. No. 22 at p. 254-55). Prudential "requested" an extension of time on June 18, 2019. (Dkt. No. 1 at p. 8 ¶ 17.1, p. 57 ¶ 146) (Dkt. No. 22 at p. 438-39).
Plaintiff alleges that the letter states that Prudential needs additional time to make a determination (Dkt. No. 1 at p. 29 ¶ 73). The letter, however, does not state that additional time is needed to make a determination. (Dkt. No. 22 at p. 216-17).
Plaintiff alleges that Prudential "requested" an extension (Dkt. No. 1 at p. 8 ¶ 17.1, p. 57 ¶ 146), but the letter appears to notify Plaintiff of an extension (Dkt. No. 22 at p. 438-39).
On June 14, 2019, Jennifer Sullivan of Prudential sent a letter to Mr. Juan Briones, PA. Id. at p. 53-56 ¶ 138-143; (Dkt. No. 22 at p. 428-29, 433-34). The letter stated that Sullivan is a registered nurse but did not indicate that she is a claims manager. (Dkt. No. 1 at p. 53 ¶ 139, p. 55 ¶ 142.1); (Dkt. No. 22 at p. 428-29, 433-34).
Plaintiff was denied long term disability on July 17, 2019. (Dkt. No. 1 at p. 63-64 ¶ 160); (Dkt. No. 22 at p. 465). The denial letter mentioned that Prudential did not receive a response from Briones to the letter Sullivan sent on June 14, 2019. (Dkt. No. 1 at p. 64 ¶ 160); (Dkt. No. 22 at p. 466). Plaintiff was informed that he had a right to appeal within 180 days of July 17, 2019. (Dkt. No. 1 at p. 64 ¶ 160); (Dkt. No. 22 at p. 467). The letter stated the appeal must be made in writing. (Dkt. No. 22 at p. 467). Prudential called Plaintiff to advise him of the denial and appeal rights. Id. at p. 470. Plaintiff filed a first level appeal, which was denied on July 17, 2019. (Dkt. No. 1 at p. 2 ¶ 3).
Plaintiff's counsel requested claim documents on August 30, 2019, and October 10, 2019. Id. at p. 65 ¶ 163; (Dkt. No. 22 at p. 480-81, 486-87). Prudential spoke to Plaintiff's counsel and informed counsel that it requires Plaintiff's signed authorization to release information on August 30, 2019. (Dkt. No. 22 at p. 483). Plaintiff's counsel sent Prudential signed authorization on August 30, 2019. Id. at p. 484. Prudential sent the information to Plaintiff's counsel on October 10, 2019. Id. at 488-91. Plaintiff received "a long term disability plan and summary plan on November 4, 2019." Id. at p. 5 ¶ 13.1. This plan did not include a list of acronyms. Id. at p. 21 ¶ 61.1.
The October letter has a date of October 8, 2020. (Dkt. No. 22 at p. 486-87). Plaintiff later alleges requests were made "on August 28, 2109 [sic] and on October 14, 2019." (Dkt. No. 1 at p. 65 ¶ 165); (Dkt. No. 22 at p. 496-500).
Plaintiff filed a second level of appeal on February 12, 2020. Id. at p. 2 ¶ 4; (Dkt. No. 22 at p. 496). A letter dated February 12, 2020, from Plaintiff's counsel to Prudential states that he received the claim file on November 4, 2019, and that the claim file was incomplete and inadequate. (Dkt. No. 1 at p. 65-69 ¶ 165); (Dkt. No. 22 at p. 496-500). The letter states, "I cannot appeal this decision until I receive a copy of all the documents. Therefore, although I do not consider it necessary, we are requesting an extension of time to file an appeal until we receive the entire claim file." (Dkt. No. 22 at p. 496).
Prudential sent a letter to Plaintiff's counsel on February 20, 2020, notifying Plaintiff that the appeal was untimely since the deadline to file an appeal was January 27, 2020. (Dkt. No. 1 at p. 70 ¶ 169); (Dkt. No. 22 at p. 524-25). The letter acknowledges that Plaintiff requested the claim file before the appeal deadline but stated that the request for the claim file is not a request for an appeal. (Dkt. No. 22 at p. 525).
Plaintiff's counsel sent a letter to Prudential on February 27, 2020, acknowledging receipt of the denial letter and again requesting all documents in the claim file. (Dkt. No. 1. at p. 71 ¶ 170); (Dkt. No. 22 at p. 536). Plaintiff's counsel, again, requested further documentation regarding Plaintiff's Prudential claim file on July 31, 2020. (Dkt. No. 2 at p. 1). Plaintiff received the list of acronyms on August 5, 2020. (Dkt. No. 1 at p. 21 ¶ 61.1, p. 75 ¶ 173.12).
Plaintiff takes issue with multiple actions or omissions by the Defendants. Id. at p. 72-87 ¶¶ 173-173.49. Ultimately, Plaintiff asserts claims under the Texas Deceptive Trade Practices Act ("DTPA") (id. at p. 3 ¶ 9.1, p. 86 ¶¶ 173.43-45, p. 88 ¶ 6), the Texas Insurance Code ("TIC") (id. at p. 4 ¶ 9.1, p. 83-84 ¶¶ 173.28-.29, p. 84 ¶ 173.31, p. 85 ¶ 173.38), the Employee Retirement Income Security Act ("ERISA") (id. at p. 19 ¶ 57.2, p. 53 ¶ 139, p. 55-56 ¶ 142.1, p. 77-78 ¶ 173.21, p. 79 ¶ 173.26-.27, p. 81 ¶ 173.30), the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") (id. at p. 72 ¶ 173, p. 80 ¶ 173.28), 20 C.F.R. § 702.127(b) (id. at p. 80 ¶ 173.28), common law negligence (id. at p. 19-20 ¶ 57.3, p. 74 ¶ 173.11, p. 82 ¶ 173.31), implied contract to procure insurance (id. ), fraud (id. at p. 55 ¶ 142.1, p. 80 ¶ 173.28, p. 84 ¶ 173.30), and breach of duty of good faith and fair dealing (id. at p. 84-85 ¶ 173.33-.34, 173.39). Plaintiff also asserts that he is entitled to declaratory relief pursuant to the Texas Civil Practices and Remedies Code. Id. at p. 83 ¶ 173.27.
The complaint cited to 20 C.F.R. § 701.217(b). (Dkt. No. 1 at p. 80 ¶ 173.28). Plaintiff acknowledged in his response brief that the complaint had a typo; the correct reference is to 20 C.F.R. § 702.217(b). (Dkt. No. 10 at p. 28 ¶ 4.39.1).
II. Defendant's Motion to Dismiss
Defendants' Motion seeks to dismiss all of Plaintiff's claims for relief. (Dkt. No. 7). After considering Defendants' Motion, Plaintiff's responsive brief (Dkt. No. 10), Defendants' reply brief (Dkt. No. 11), and the relevant law, the Court finds that Defendants' Motion (Dkt. No. 7) should be granted in part and denied in part for the following reasons.
Plaintiff requested thirty days from September 10, 2021, to review Defendants' initial disclosures and file an amended response to Defendants' Motion. (Dkt. No. 22 at p. 2 ¶ 5). The Court is unable to discern how Plaintiff's review of initial disclosures would change the Court's analysis.
A. Legal Standard
"Rule 12(b)(6) authorizes the filing of motions to dismiss asserting, as a defense, a plaintiff's ‘failure to state a claim upon which relief can be granted,’ " and is read in conjunction with the federal pleading standard. Inclusive Communities Project, Inc. v. Lincoln Prop. Co. , 920 F.3d 890, 899 (5th Cir. 2019) (quoting FED. R. CIV. P. 12(b)(6) ). "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief[.]" FED. R. CIV. P. 8(a)(2). Relief must be plausible, "not merely conceivable," based on the allegations made in the Plaintiff's complaint. Inclusive Communities Project , 920 F.3d at 899 (quoting United States ex rel. Grubbs v. Kanneganti , 565 F.3d 180, 186 (5th Cir. 2009) ). The "plausibility" standard does not require detailed factual allegations, but a party's "obligation to provide the ‘grounds’ of his ‘entitle[ment]’ to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]" Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted); accord Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To "show" that the pleader is entitled to relief, the well-pleaded facts of the complaint and any other matters properly considered must allow the court, drawing on its "judicial experience and common sense," to infer "more than the mere possibility of misconduct." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.
"Generally, a court ruling on a 12(b)(6) motion may rely on the complaint, its proper attachments, ‘documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.’ " Randall D. Wolcott, M.D., P.A. v. Sebelius , 635 F.3d 757, 763 (5th Cir. 2011) (quoting Dorsey v. Portfolio Equities, Inc. , 540 F.3d 333, 338 (5th Cir. 2008) ); see also Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC , 594 F.3d 383, 387 (5th Cir. 2010) (court's review on 12(b)(6) motion "is limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint").
Under Rule 12(b)(6), claims may be dismissed due to a "a dispositive issue of law" or "if the complaint does not contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Inclusive Communities Project , 920 F.3d at 899 (quoting Neitzke v. Williams , 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) ; Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ).
Legal conclusions in the Complaint do not need to be accepted as true. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.
B. Analysis
i. ERISA Coverage
Defendants argue that the state-law claims are preempted by ERISA, that the ERISA breach of fiduciary duty claim fails due to the ERISA benefits claim, and the ERISA benefits claim fails due to failure to exhaust administrative remedies. (Dkt. No. 7 at §§ II.A-.C). Plaintiff argues that the plan is not a "self-funded" plan. (Dkt. No. 10 at p. 5 ¶ 4.21). Therefore, the Court must determine whether the Plan is covered under ERISA based on the Complaint. (Dkt. No. 10 at p. 5 ¶ 4.21).
a. Employee Welfare Benefit Plan
First, the Court must determine whether the Plan is an employee welfare benefit plan under ERISA. An "employee welfare benefit plan" is
any plan, fund, or program which was ... established or maintained by an employer ... to the extent that such plan, fund, or program was established or is maintained for the purpose of providing its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital
care or benefits, or benefits in the event of sickness, accident, disability ....
ERISA § 3(1)(a) ( 29 U.S.C. § 1002(1)(A) ). To determine whether a plan qualifies as an employee welfare benefit plan, the Court asks "whether the plan: (1) exists; (2) falls within the safe-harbor provision established by the Department of Labor; and (3) satisfies the primary elements of an ERISA ‘employee benefit plan’—establishment or maintenance by an employer intending to benefit employees." Cantrell v. Briggs & Veselka Co. , 728 F.3d 444, 448-49 (5th Cir. 2013) (quoting Meredith v. Time Ins. Co. , 980 F.2d 352, 355 (5th Cir. 1993) ). The Plan itself states it is a welfare benefit plan providing long-term disability benefits. (Dkt. No. 22 at p. 185). There is no dispute that the Plan exists. (Dkt. No. 1 at p. 2, ¶ 1).
The second prong of the three-part tests asks whether the Plan falls within the Department of Labor's safe-harbor provision. The safe-harbor provision states that an "employee welfare benefit plan" does not include
a group or group-type insurance program offered by an insurer to employees or members of an employee organization, under which
(1) No contributions are made by an employer or employee organization;
(2) participation the program is completely voluntary for employees or members;
(3) The sole functions of the employer or employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer; and
(4) The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoffs.
29 C.F.R. § 2510.3-1(j). "The plan must meet all four criteria to be exempt." McNeil v. Time Ins. Co. , 205 F.3d 179, 190 (5th Cir. 2000).
AEPSC is the plan sponsor and administrator and "has the authority to control, administer and manage the operation of the plan." (Dkt. No. 1 at p. 2 ¶ 2, p. 23 ¶ 66); (Dkt. No. 22 at p. 184). Additionally, AEPSC pays the full cost of the base Plan coverage that provides up to 60% of the base pay coverage and has the authority, responsibility, and discretion to determining eligibility to participate in the Plan. (Dkt. No. 22 at p. 170, 180). Thus, the first and third criteria of the safe-harbor provision are not met.
Finally, for the third prong, the Court asks whether the Plan "meets the ERISA requirement of establishment or maintenance by an employer for the purpose of benefitting the plan participants." McNeil , 205 F.3d at 189 (citing Meredith , 980 F.2d at 355 ). This prong contains two elements: (1) the plan must be established or maintained by the employer, and (2) the employer's purpose must be to provide benefits to its employees. Hansen v. Continental Ins. Co. , 940 F.2d 971, 977 (5th Cir. 1991), abrogated on other grounds by Cigna Corp v. Amara , 563 U.S. 421, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011). For the first element, the court focuses on the employer and its "involvement with the administration of the plan." Gahn v. Allstate Life Ins. Co. , 926 F.2d 1449, 1452 (5th Cir. 1991). "[I]f an employer does no more than purchase insurance for her employees, and has no further involvement with the collection of premiums, administration of the policy, or submission of claims, she has not established an ERISA plan." Hansen , 940 F.2d at 978.
As mentioned above, AEPSC is the plan sponsor and administrator and "has the authority to control, administer and manage the operation of the plan." (Dkt. No. 1 at p. 2 ¶ 2, p. 23 ¶ 66); (Dkt. No. 22 at p. 184). Further, AEPSC "adopted the plan for the benefit of their employees." (Dkt. No. 1 at p. 23 ¶ 66); (Dkt. No. 22 at p. 184). The Plan is at least maintained by the employer, and the purpose is to benefit the AEP's employees. Therefore, the Plan is considered an "employee welfare benefits plan" under ERISA.
b. Participant
Next, the question is whether Plaintiff is a "participant" under ERISA. Plaintiff is a "participant" since he was an employee of AEPSC "who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees" of AEP. See 29 U.S.C. § 1002(7).
c. Coverage
The relevant provisions of ERISA in this action "apply to any employee benefit plan if it is established or maintained ... by any employer engaged in commerce or in any industry or activity affecting commerce[.]" ERISA § 4(a)(1) ( 29 U.S.C. § 1003(a) ). "Commerce" is defined as "trade, traffic, commerce, transportation, or communication between any State and any place outside thereof." 29 U.S.C. § 1002(11). "Industry or activity affecting commerce" is defined as "any activity, business, or industry in commerce or in which a labor dispute would hinder or obstruct commerce or the free flow of commerce, and includes any activity or industry ‘affecting commerce’ within the meaning of the Labor Management Relations Act, 1947, or the Railway Labor Act." Id. at § 1002(12).
None of the parties directly argue whether the employer engaged in commerce or in any industry or activity affecting commerce. The documents attached to Plaintiff's complaint, however, shed some light. Plaintiff's job duties include responding to customer requests by going to a job site to serve the customers. (Dkt. No. 22 at p. 219, 244, 246). When Plaintiff returns to the office, he orders materials and bills customers. Id. These job duties indicate that the employer is at least engaged in activity affecting interstate commerce. Therefore, the Plan is covered under ERISA.
ii. State-law Claims
Defendants primarily argue that ERISA preempts the state-law claims either through complete preemption under ERISA § 502(a) ( 29 U.S.C. § 1132(a) ) or conflict preemption under ERISA § 514(a) ( 29 U.S.C. § 1144(a) ). (Dkt. No. 7 at p. 5 ¶ 10).
A claim that comes within the scope of a state-law cause of action is actually based on a federal statute if the federal statute completely preempts the state-law cause of action. Aetna Health Inc. v. Davila , 542 U.S. 200, 207-08, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). Section 502(a) "completely preempts any state cause of action seeking the same relief, regardless of how artfully pleaded as a state action." McGowin v. ManPower Intern., Inc. , 363 F.3d 556, 559 (5th Cir. 2004). Under § 502(a)(1)(B), a participant can file 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). To determine whether ERISA completely preempts a state-law claim, the primary question is whether the state-law claim "falls within the scope" of § 502(a)(1)(B). Aetna Health Inc. , 542 U.S. at 210-11, 124 S.Ct. 2488 ; Arana v. Ochsner Health Plan , 338 F.3d 433, 437 (5th Cir. 2003). "In other words, if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant's actions, then the individual's cause of action is completely pre-empted by ERISA § 502(a)(1)(B)." Aetna Health Inc. , 542 U.S. at 210, 124 S.Ct. 2488. Because complete preemption is a jurisdictional doctrine (it confers exclusive federal jurisdiction), a state-law claim that is in fact an ERISA claim cannot be dismissed as completely preempted. Solomon v. Lincoln Nat'l Corp. , 4:15-cv-02340, 2015 WL 12778801, *6 (S.D. Tex. Nov. 12, 2015), report and recommendation adopted sub nom. Solomon v. Lincoln Nat'l Life Ins. Co. , 4:15-cv-02340, 2015 WL 12778802 (S.D. Tex. Dec. 8, 2015).
Conflict preemption refers to preemption under ERISA § 514(a). Section 514(a) preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in [ 29 U.S.C. § 1003(a) ]." 29 U.S.C. § 1144(a). "State law ‘relates to’ an ERISA plan ‘if it has a connection with or reference to such a plan.’ " Transitional Hosps. Corp. v. Blue Cross and Blue Shield of Texas, Inc. , 164 F.3d 952, 954 (5th Cir. 1999) (quoting Shaw v. Delta Air Lines, Inc. , 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) ); King v. Bluecross Blueshield of Alabama , 439 F. App'x 386, 389 (5th Cir. 2011). Conflict preemption occurs "if a two-prong test is satisfied: (1) The state law claim addresses an area of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and (2) the claim directly affects the relationships among traditional ERISA entities—the employer, the plan and its fiduciaries, and the participants and beneficiaries. Mayeaux v. Louisiana Health Serv. and Indem. Co. , 376 F.3d 420, 432 (5th Cir. 2004). "If the facts underlying a state law claim bear some relationship to an employee benefit plan, [the court] evaluate[s] the nexus between ERISA and state law in the framework of ERISA's statutory objectives." Id. "Relevant statutory objectives include ... ‘establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans.’ " Id. (quoting 29 U.S.C. § 1001(b) ). Section 514(a) does not preempt a state law "if the state law has only a tenuous, remote, or peripheral connection with covered plans, as is the case with many laws of general applicability." Id. (quoting New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. , 514 U.S. 645, 661, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) ).
a. DTPA Claims
Plaintiff claims that Defendants violated the Texas DTPA, specifically §§ 17.46(b)(5), (b)(12), and (b)(24) of the Texas Business and Commerce Code ("TBCC"). Section 17.50(a)(1)(A) of the Texas Business and Commerce Code allows a consumer to bring a private action for "the use or employment by any person of a false, misleading, or deceptive act or practice that is" enumerated in § 17.46.
Plaintiff claims Defendants violated § 17.46(b)(5) of the TBCC "by representing that services had characteristics, uses and benefits that they did not have[.]" (Dkt. No. 1 at p. 86 ¶ 173.43). Plaintiff further claims Defendants violated § 17.46(b)(24) of the TBCC "by failing to disclose information concerning services which was known at the time of the transaction where the failure to disclose such information was intended to include [sic] Plaintiff into a transaction intp [sic] which Plaintiff would not have entered had the information been [sic][.]" (Dkt. No. 1 at p. 86 ¶ 173.45). Plaintiff's factual bases for the §§ 17.46(b)(5) and 17.46(b)(24) claims are that
Defendants sold and accepted premium payments for a long term disability policy and failed to disclose that services had benefits when they did not have benefits; failed to disclose information such that they would act as an advocate against the Plaintiff; would not use state laws in interpreting and granting benefits.
(Dkt. No. 1 at p. 3-4 ¶ 9.1). Plaintiff also claims Defendants violated § 17.46(b)(12) of the TBCC "by representing that an agreement conferred or involved rights, remedies or obligations which it did not have or involve[.]" (Dkt. No. 1 at p. 86 ¶ 173.44).
The §§ 17.46(b)(5), (b)(24) claims address an area of exclusive federal concern, namely "establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans." See 29 U.S.C. § 1001(b). Additionally, the § 17.46(b)(12) claim addresses the rights to receive benefits under the terms of an ERISA plan. See Mayeaux , 376 F.3d at 432. All three claims affect the relationship among traditional ERISA entities. Therefore, the DTPA claims are conflict preempted. See Hogan v. Kraft Foods , 969 F.2d 142, 144 (5th Cir. 1992) (noting that DTPA claims have been found to be preempted by ERISA in previous Fifth Circuit decisions).
b. Texas Insurance Code Claims
Plaintiff asserts several claims under the Texas Insurance Code. (Dkt. No. 1 at p. 4 ¶ 9.1, p. 83-84 ¶¶ 173.28-.29, p. 84 ¶ 173.31, p. 85 ¶ 173.38). Plaintiff alleges violations of §§ 541.051, 541.052, 541.060, and 541.061 of the Texas Insurance Code ("TIC"):
The Defendants violated Texas Insurance Code § 541.051 by misrepresenting the terms and benefits of the long term disability policy. The Defendants violated Texas Insurance Code § 541.052 by placing before the public materials containing untrue, deceptive or misleading assertion, representations or statements regarding the Policy The Defendants violated Texas Insurance Code § 541.060 by engaging in unfair settlement Practices by misrepresenting material facts or policy provision relating to the coverage; failing in good faith to effectuate a prompt, fair and [sic] equitable settlements of the long term disability claim when the Defendants liability has become reasonably clear; failing to promptly provide to the plaintiff a reasonable explanation of the bases in the [sic] policy in relation to fact or applicable law for defendant's denial of Plaintiffs' [sic] claim; and refusing to pay a claim without conducting a reasonable investigation with respect to the long term disability claim. The Defendants violated Texas Insurance Code § 541.061 by misrepresenting the disability Policy by making untrue statements of material facts, failing to state material facts necessary to make other statements made not misleading considering the circumstances under which the statements were made; making statements regarding the protection of the plaintiff if he purchased the insurance which would reasonably lead a prudent person to a false conclusion of material fact; making material misstatements of law; and, failing to disclose the matters required by law to be disclosed such as the legal standards they would attempt to use to interpret the policy.
(Dkt. No. 1 at p. 4 ¶ 9.1). Plaintiff alleges a violation of § 542.056(a) of the TIC for failure to notify Plaintiff of acceptance or rejection of his claim in a timely manner. Id. at p. 83-84 ¶ 173.28. Plaintiff alleges a violation of § 542.058(a) of the TIC for delayed payment of Plaintiff's claim. Id. at p. 84 ¶ 173.29. Plaintiff alleges a violation of § 542.055(a)(2)-(3) of the TIC for failure to timely request from Plaintiff additional items that Defendants reasonably believed to be required from Plaintiff. Id. at p. 84 ¶ 173.31. Lastly, Plaintiff alleges a violation of § 541.002(1) of the TIC. Id. at p. 85 ¶ 173.38.
Section 541.002(1) of TIC is a definition for the term "knowingly."
Defendants argue that the TIC claims fail since the Plan is "a self-funded plan that is governed by ERISA" and Defendants are not acting as insurers. (Dkt. No. 7 at p. 9 ¶¶ 18, 20). Plaintiff argues that the assertion that Defendants are not acting as insurers is not supported by the record. (Dkt. No. 10 at p. 14-15 ¶ 4.171). As mentioned above, the Plan is an employee welfare benefit plan governed by ERISA.
Chapter 541 of the TIC applies to "an individual, a corporation, association, [or] partnership ... engaged in the business of insurance." Tex. Ins. Code. Ann. § 541.002 ; Stanissis v. Dyncorp Intern. LLC , 2015 WL 1931417, *8 (N.D. Tex. April 29, 2015). Chapter 542 of the TIC applies to "any insurer authorized to engage in the business as an insurance company or to provide insurance in [Texas]." Tex. Ins. Code Ann. § 542.052 ; Stanissis , 2015 WL 1931417, at *8. An employee benefit plan is not "deemed to be an insurance company or other insurer, bank, trust company, or investment company or to be engaged in the business of insurance or banking for purposes of any law of any State purporting to regulate insurance companies." 29 U.S.C. § 1144(b)(2)(B) ; see Texas Dept. of Ins. v. American Nat. Ins. Co. , 410 S.W.3d 843, 848-49 (Tex. 2012) ("Simply put, states cannot regulate private self-funded insurance plans.").
Chapters 541 and 542 of the TIC do not apply to AEPSC since it is not engaged in the business of insurance. Although Prudential is an insurance company (Dkt. No. 7 at p. 9 ¶ 20), it is merely acting as the Plan's claims administrator (Dkt. No. 22 at p. 180). Plaintiff has failed to allege sufficient facts to indicate Prudential is engaged in the business of insurance separate from administering the Plan's claims. Therefore, the TIC claims fail.
c. Negligence and Implied Contract to Procure Insurance
Plaintiff asserts claims "following common law theories of negligence and implied contract to procure insurance." (Dkt. No. 1 at p. 19-20 ¶ 57.3, p. 74 ¶ 173.11, p. 82 ¶ 173.31). Plaintiff states that "[t]he agent's legal responsibilities to the insurer arise out of common law theories of negligence, and the written contract that ties the agency to the insurer." Id. at p. 19-20 ¶ 57.3, p. 74 ¶ 173.11 (emphasis added).
Defendants argue that Plaintiff fails to state a claim upon which relief can be granted since the claim fails to provide Defendants with fair notice of Plaintiff's claim, in violation of Federal Rule of Civil Procedure 8(a)(2). (Dkt. No. 7 at p. 10-11 ¶ 25). Defendants note that Plaintiff fails to allege who he claims is the "agent" in these claims. Id. However, in the preceding paragraph of his complaint, Plaintiff states that AEP is "[t]he agent who sells the policy." Id. ; (Dkt. No. 1 at p. 81 ¶ 173.30). If AEP is the "agent," then Defendants argue AEP is not a party to this suit (Dkt. No. 7 at p. 11 ¶ 25). Plaintiff argues that Defendants have not stated whether AEP is an interested party and whether AEP is a separate entity from AEPSC. (Dkt. No. 10 at p. 16 ¶ 4.22). Further, Plaintiff states there were numerous agents, including Prudential. Id.
Defendants also argue that the claim should be dismissed either because Defendants are not insurance companies or because ERISA preempts the claims. (Dkt. No. 7 at p. 10-11 ¶¶ 24, 26).
Regardless of who is or are the referenced agent(s), Plaintiff fails to allege how Defendants are negligent or how an implied contract was formed. Instead of a "short and plain statement of the claim showing that [he] is entitled to relief," as required by Federal Rule of Civil Procedure 8(a)(2), Plaintiff leaves it to the Court and Defendants to decipher the ninety-page complaint and the hundreds of pages of sealed exhibits to find the bases for these claims. There are no factual allegations indicating an implied contract, and Plaintiff fails to tie any allegations to a negligence claim. Plaintiff fails its obligation to recite the grounds of his entitlement to relief. See Twombly , 550 U.S. at 555, 127 S.Ct. 1955. The Court finds that Plaintiff fails to plead plausible claims of negligence and implied contract to procure insurance.
d. Breach of Duty of Good Faith and Fair Dealing
Plaintiff asserts that Defendants breached their duty of good faith and fair dealing. (Dkt. No. 1 at p. 84-85 ¶¶ 173.33-34, 173.39). Plaintiff states that the Defendants assumed a duty of good faith and fair dealing toward Plaintiff by selling "the insurance policy to Plaintiff and by collecting substantial premiums." Id. at p. 85 ¶ 173.39. Defendants argue this claim is preempted by ERISA. (Dkt. No. 7 at p. 11 ¶ 28). Plaintiff does not directly respond to this argument.
Under Texas law, "[a] cause of action for breach of the duty of good faith and fair dealing is stated when it is alleged that there is no reasonable basis for denial of a claim or delay in payment or a failure on the part of the insurer to determine whether there is any reasonable basis for the denial or delay." Ellis v. Liberty Life Assur. Co. of Boston , 394 F.3d 262, 275 (5th Cir. 2004) (quoting Arnold v. Nat'l County Mut. Fire Ins. Co. , 725 S.W.2d 165, 167 (Tex. 1987) ). ERISA conflict preempts a common law claim for breach of the duties of good faith and fair dealing. Id. at 276.
e. Fraud
Plaintiff asserts a claim for fraud because Jennifer Sullivan's letter to Dr. Briones does not state that she is a "claims manager." (Dkt. No. 1 at p. 55 ¶ 142.1, p. 80 ¶ 173.28). Additionally, "The Plaintiff asserts the Defendants acted fraudulently as to each representation made to Plaintiff concerning material facts for the reason it would not have acted and which Defendant[s] knew were false or made recklessly without any knowledge of their truth." Id. at p. 84 ¶ 173.30. Defendants argue that it is unclear whether Plaintiff is asserting a common-law cause of action, but if so, the claim is preempted. (Dkt. No. 7 at p. 12 ¶ 31). Plaintiff does not directly respond to this argument.
In McGowin v. ManPower International, Inc. , the Fifth Circuit agreed with the district court's determination that ERISA § 502(a)(1)(B) completely preempted the plaintiff's fraud claim. 363 F.3d at 559. There, the Fifth Circuit noted that the plaintiff sought relief found in ERISA § 502(a)(1)(B) as the complaint stated that the plaintiff suffered damages due to the loss of benefits. Id.
Here, Plaintiff generally prays for various forms of damages without mentioning the denial of benefits under the Plan. (Dkt. No. 1 at p. 87-90 ¶¶ 1-19). The Plaintiff only mentions ERISA § 502(g)(1) when praying for attorney's fees and ERISA § 502(a)(3) when praying for equitable relief. Id. at p. 88 ¶¶ 7, 14. Despite this artful pleading, Plaintiff's claims arise out of the denial of benefits under an ERISA plan. With respect to this fraud claim, the only factual allegation Plaintiff specifically identifies is the alleged failure of Jennifer Sullivan to state that she is a "claims manager." Id. at p. 55 ¶ 142.1, p. 80 ¶ 173.28. Although Plaintiff does not explicitly state the relief he seeks, the Court understands that the lawsuit is "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). In fact, Plaintiff acknowledges that his allegations are to show he is entitled to long term disability under federal and state law claims. (Dkt. No. 10 at p. 8 ¶ 4.71). Therefore, this claim is completely preempted by ERISA.
Even if the claim is not completely preempted, Plaintiff fails to plausibly state a fraud claim. The elements of common-law fraud are
(1) the defendant made a material representation that was false; (2) the defendant knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth; (3) the defendant intended to induce the plaintiff to act upon the representation; and (4) the plaintiff actually and justifiably relied upon the representation and suffered injury as a result.
CBE Group, Inc. v. Lexington Law Firm , 993 F.3d 346, 350 (5th Cir. 2021) (citing JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C. , 546 S.W.3d 648, 653 (Tex. 2018) ). Even if Jennifer Sullivan failed to state that she is a "claims manager," the allegations do not indicate how the failure intended to induce Plaintiff to act, how Plaintiff relied on that failure, or how the failure resulted in an injury besides the denial of Plaintiff's disability claim. Plaintiff fails to state a plausible claim for relief.
f. Declaratory Judgment
Plaintiff asserts that he is entitled to declaratory relief pursuant to Section 37 of the Texas Civil Practices and Remedies Code due to Defendants' breach of its contractual obligations under the Plan. (Dkt. No. 1. at p. 83 ¶ 173.27). "Although declaratory relief may be permitted in an ERISA action via the federal [Declaratory Judgment Act], ERISA preempts the additional remedies unique to the [Texas Uniform Declaratory Judgment Act], a state law." Shanker v. United of Omaha Life Ins. Co. , 2017 WL 25907, *2 (S.D. Tex. January 3, 2017). This claim is completely preempted because it seeks "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," as provided in ERISA § 502(a)(1)(B). See Id. (finding ERISA preempts a Texas declaratory judgment claim); Arana , 338 F.3d at 438-39 (finding a claim for declaratory judgment under Louisiana state law is completely preempted by ERISA).
iii. ERISA Claims
Plaintiff asserts a breach of fiduciary duty claim and a benefits claim under ERISA. Plaintiff asserts that Defendants violated their fiduciary obligations with respect to the definition of disability because "lying is inconsistent with the duty owed by all fiduciaries" under ERISA § 404(a)(1) ( 29 U.S.C. § 1104(a)(1) ). (Dkt. No. 1 at p. 18-19 ¶ 57-57.2, p. 81-82 ¶ 173.30). Plaintiff specifically alleges the Defendants violated their fiduciary duty under ERISA § 404(a)(1)(B) ( 29 U.S.C. § 1104(a)(1)(B) ). (Dkt. No. 1 at p. 79 ¶¶ 173.26-.27). Plaintiff also has a claim under ERISA § 502(a)(1)(B) since at least one state law claim is completely preempted by ERISA § 502(a)(1)(B). See Caterpillar Inc. v. Williams , 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) ("Once an area of state law has been completely pre-empted, any claim purportedly based on the pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law."). Lastly, Plaintiff also claims that Jennifer Sullivan's identification of herself as a "Clinical Consultant" and a "registered nurse" instead of a "claims consultant" is an ERISA violation. (Dkt. No. 1 at p. 53 ¶ 139, p. 55 ¶ 142.1, p. 77-78 ¶ 173.21).
Defendants argue the ERISA breach of fiduciary duty claim fails due to the existence of a claim for ERISA benefits. (Dkt. No. 7 at § II.B). Further, Defendants argue the ERISA benefits claim fails due to Plaintiff's failure to exhaust administrative remedies. Id. at § II.C.
a. ERISA Breach of Fiduciary Duty Claim
Plaintiff's ERISA breach of fiduciary duty claims are based on violations of ERISA § 404(a)(1)(B). ERISA § 502(a)(2) permits a participant to bring a civil action for relief under ERISA § 409. 29 U.S.C. § 1132(a)(2). ERISA § 409 establishes that a fiduciary is liable for breach of fiduciary duty. 29 U.S.C. § 1109(a). A fiduciary must discharge its duty "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims[.]" ERISA § 404(a)(1)(B) ( 29 U.S.C. § 1104(a)(1)(B) ).
Defendants argue that Plaintiff cannot concurrently bring a claim for breach of fiduciary duty and benefits. (Dkt. No. 7 at § II.B). "[A]n ERISA plaintiff may bring a private action for breach of fiduciary duty only when no other remedy is available under 29 U.S.C. § 1132." Rhorer v. Raytheon Eng'rs and Constructors, Inc. , 181 F.3d 634, 639 (5th Cir. 1999), abrogated on other grounds by Cigna Corp v. Amara , 563 U.S. 421, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011). In Rhorer , the Fifth Circuit affirmed the district court's dismissal of an ERISA breach of fiduciary duty claim since 29 U.S.C. § 1132(a)(1)(B) provided the plaintiff an avenue for legal redress. Id. Since Plaintiff has an avenue for legal redress through his benefits claim, the ERISA breach of fiduciary duty claim fails.
b. ERISA Benefits Claim
Although Plaintiff does not specifically plead an ERISA benefits claim under § 502(a)(1)(B), the Court finds that such a claim exists due to the complete preemption of at least one state-law claim (the declaratory judgment claim). Defendants argue that this claim fails for failure to exhaust administrative remedies. (Dkt. No. 7 at § II.C).
The Fifth Circuit requires claimants seeking benefits under an ERISA plan to first exhaust the administrative remedies available under the plan before bringing suit. Gonzalez v. Aztex Advantage , 547 F. App'x 424, 427-28 (5th Cir. 2013) (quoting Bourgeois v. Pension Plan for Emp. Of Santa Fe Int'l Corps. , 215 F.3d 475, 479 (5th Cir. 2000) ). In Gonzalez , the plaintiff failed to appeal within 180 days of receiving notice denying his benefits. Id. at 428. The Fifth Circuit rejected the plaintiff's argument that his failure to appeal "would be futile in light of the ‘hostile and bitter’ treatment he received from the plan administrator" since the plaintiff provided no evidence on how the administrator was hostile or bitter. Id. Additionally, the Fifth Circuit rejected the plaintiff's argument that he was not provided a summary plan description since the plaintiff already had notice of where he should address his appeal. Id.
Here, the main issue among the parties is whether Plaintiff timely appealed. Plaintiff was denied his benefits via letter dated July 17, 2019. (Dkt. No. 1 at p. 63-64 ¶ 160); (Dkt. No. 22 at p. 465). Prudential also advised Plaintiff of the denial via phone call. (Dkt. No. 22 at p. 467). The Plan requires Plaintiff to appeal within 180 days. (Dkt. No. 1 at p. 64 ¶ 160); (Dkt. No. 22 at p. 182). Defendants argue that Plaintiff failed to file an appeal within 180 days from receipt of his denial letter. (Dkt. No. 7 at p. 14 ¶ 39). Plaintiff, however, alleges that he filed an appeal on that same day, which was ultimately denied. (Dkt. No. 1 at p. 2 ¶ 3). Plaintiff filed a second level of appeal on February 12, 2020. (Dkt. No. 1 at p. 2 ¶ 4); (Dkt. No. 22 at p. 496). Defendants believe this "second level of appeal" was actually the first and only request for an appeal. (Dkt. No. 7 at p. 15 ¶¶ 41-42).
Because the Court accepts the factual allegations as true, the Court cannot conclude at this stage that Plaintiff failed to exhaust his administrative remedies. Additionally, this case is distinguishable from Gonzalez because Plaintiff's allegations indicate that he tried to get his complete claim file before the appeal deadline and didn't receive the complete file until after the appeal deadline. Therefore, this Court cannot dismiss Plaintiff's ERISA benefits claim.
iv. HIPAA Claim
Plaintiff alleges a violation of 42 U.S.C. § 1320d-5, which is a part of HIPAA. (Dkt No. 1 at p. 80 ¶ 173.28). Defendants argue that HIPAA does not create a private cause of action. (Dkt. No. 7 at p. 17 ¶ 46). Plaintiff responded that the allegations relating to HIPAA "are involved with the allegations of breach of fiduciary duty of the Plaintiff, and a violation of ERISA provisions." (Dkt. No. 10 at p. 28 ¶ 4.381). HIPAA does not create a private cause of action. Acara v. Banks , 470 F.3d 569, 570-72 (5th Cir. 2006). Therefore, this claim must be dismissed.
v. Claim under 20 C.F.R. § 702.217(b).
Plaintiff alleges a violation of 20 C.F.R. § 702.217(b). (Dkt No. 1 at p. 80 ¶ 173.28); (Dkt. No. 10 at p. 28 ¶ 4.39.1). This regulation is part of "the general administrative regulations governing claims filed under the [Longshore and Harbor Workers' Compensation Act]." 20 C.F.R. § 701.102. The complaint does not allege any facts regarding a claim filed under the Longshore and Harbor Workers' Compensation Act. Since the complaint does not contain sufficient factual matter, accepted as true, to state a claim for relief under 20 C.F.R. § 702.217(b) that is plausible on its face, this claim must be dismissed.
The complaint cited to 20 C.F.R. § 701.217(b). (Dkt. No. 1 at p. 80 ¶ 173.28). Plaintiff acknowledged in his response brief that the complaint had a typo; the correct reference is to 20 C.F.R. § 702.217(b). (Dkt. No. 10 at p. 28 ¶ 4.39.1).
III. Plaintiff's Motion for Judgment and Sanctions
Plaintiff's Motion (Dkt. No. 15) asserts two bases for judgment in his favor: (1) default judgment under Federal Rule of Civil Procedure 55 and (2) judgment on the pleadings under Federal Rule of Civil Procedure 12(c). (Dkt. No. 15 at ¶ 2). Plaintiff's Motion also requests that Plaintiff be granted sanctions. Id. at ¶ 8. After considering Plaintiff's Motion, Defendants' responsive brief (Dkt. No. 18), and the relevant law, the Court finds that Plaintiff's Motion should be denied for the following reasons. A. Default Judgment under Rule 55
Plaintiff asserts that he is entitled to default judgment because Defendants have not filed an answer and because, Plaintiff argues, Defendants' Motion is actually a motion for judgment on the pleadings. (Dkt. No. 15 at ¶ 2). "When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend , and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." FED. R. CIV. P. 55(a) (emphasis added). A defendant is not in default if he or she timely files and serves a motion to dismiss. See Walker v. Skalka , 847 F. App'x 230, 231 (5th Cir. 2021) (per curium) (finding that the defendants did not default when they timely filed and served their motion to dismiss on the plaintiff); Saldana-Fountain v. United States , 693 F. App'x 295, 297 (5th Cir. 2017) (per curium) ("[T]he United States and Chavez Defendants defended against [the plaintiff's] complaint by filing motions to dismiss; consequently, the district court did not err when it found that entering default judgment was inappropriate.").
Generally, a defendant must answer a complaint "within 21 days after being served with the summons and complaint." FED. R. CIV. P. 12(a)(1)(A)(i). If a defendant timely waives service, then the defendant "need not serve an answer to the complaint until 60 days after the request was sent[.]" Id. R. 4(d)(3). If a defendant files a motion to dismiss for failure to state a claim, then the defendant must do so before serving an answer. Id. R. 12(b). Per Defendants' waivers of service of summons, Defendants had to file an answer or motion to dismiss within 60 days of June 9, 2021. (Dkt. Nos. 5-6). Defendants filed their Defendants' Motion on August 4, 2021. (Dkt. No. 7). Therefore, Defendants defended themselves against Plaintiff's complaint by filing a timely motion to dismiss.
Plaintiff argues that Defendants' Motion is actually a motion for judgment on the pleadings. (Dkt. No. 10, 15). Federal Rule of Civil Procedure 12(c) authorizes judgment on the pleadings after the pleadings are closed but early enough not to delay trial. FED. R. CIV. P. 12(c). The pleadings are not closed as Defendants still have 14 days to file an answer after notice of this Court's order. See id. R. 12(a)(4)(A). Therefore, Defendants' Motion is not a motion for judgment on the pleadings, and Plaintiff is not entitled to default judgment.
Even if Defendants' Motion is a motion for judgment on the pleadings, then it would still be an attempt to defend against Plaintiff's complaint, defeating default.
B. Judgment on the Pleadings under Rule 12(c)
Plaintiff argues that he is entitled to judgment on the pleadings "for the Defendants' failing to state a legal defense to a claim." (Dkt. No. 15 at ¶ 2). As mentioned above, Federal Rule of Civil Procedure 12(c) authorizes judgment on the pleadings after the pleadings are closed. FED. R. CIV. P. 12(c). Since the pleadings are not closed, Plaintiff is not entitled to judgment on the pleadings.
C. Sanctions
Plaintiff argues that it is entitled to sanctions because Defendants' "claims that the cases represent failure to exhaust administrative remedies were misleading to the court[.]" (Dkt. No. 15 at ¶ 8). The Court does not find that Plaintiff is entitled to sanctions.
IV. Conclusion
For the foregoing reasons, the Court hereby ORDERS that Defendants' Motion (Dkt. No. 7) is DENIED as to Plaintiff's ERISA claim under § 502(a)(1)(B) and GRANTED as to all of Plaintiff's other claims. All claims except for Plaintiff's ERISA claim under § 502(a)(1)(B) are DISMISSED . The Court further ORDERS that Plaintiff's Motion (Dkt. No. 15) is DENIED .
SO ORDERED September 27, 2021, at McAllen, Texas.