Opinion
CIVIL ACTION NO. 03-4350
April 12, 2004
MEMORANDUM
Presently before the Court is Defendant MAMSI Life and Health Insurance Company's ("Defendant") Motion to Dismiss the Complaint of Plaintiff's William and Sally McConnell ("Plaintiff's"). For the reasons that follow, Defendant's motion will be granted and Plaintiff's' Complaint will be dismissed without prejudice and with leave to file an amended complaint.
I. Background
Plaintiff's in this case are a husband and wife who secured health insurance from Defendant through Plaintiff William McConnell's employment at Country Butcher. Plaintiff's allege the following facts. As part of Plaintiff William McConnell's compensation, Plaintiff's were eligible for health insurance coverage from Defendant. When Plaintiff's were considering enrolling in this health insurance plan, an account representative of Defendant's came to Plaintiff's place of employment to take their application and Plaintiff's were assured, both orally and in a booklet provided by the account representative, that Plaintiff sally McConnell would be covered for medical costs related to the fact that she was pregnant at that time. In reliance on those representations, Plaintiff obtained medical services related to her pregnancy costing $3,555.00. After obtaining these services, Plaintiff's were informed that Plaintiff's pregnancy-related services would not be covered by Defendant.
Plaintiff's subsequently filed this suit in Pennsylvania District Court in Chester County, Pennsylvania on July 1, 2003 alleging that Defendant was indebted to them for $3,555.00. Defendant removed this suit, premised on federal question jurisdiction under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. (2003). Defendant filed a Motion to Dismiss on February 2, 2004. Briefing was completed on March 12, 2004.
II. Legal Standard
When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox. Rothschild. O'Brien Frankel, 20 F.3d 1251, 1261 (3d Cir. 1994). The court must accept as true all well pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985). A Rule 12(b)(6) motion will be granted only when it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).
Jurisdiction is premised upon federal question jurisdiction, pursuant to 28 U.S.C. § 1441(a)-(b). Venue is proper as a substantial portion of the acts giving rise to the claims occurred in this judicial district.
III. Discussion
Defendant argues that Plaintiff's' claims are state law claims that are preempted by ERISA. In addition, Defendant argues that Plaintiff's' claims are based on the allegation that an oral modification to the Plan existed and that, because ERISA requires all modifications to be in writing, Plaintiffs' claims, even if properly pled under ERISA, must be dismissed. Plaintiff's appear to concede that their claims are properly brought under ERISA, but dispute that their claims rest on an allegation of oral modification.
Plaintiff's' Answer to Motion to Dismiss at pp. 4, 8.
A. ERISA Preemption
The issue presented is whether Plaintiff's state law claims filed in this Court are preempted by ERISA. There is no dispute that Plaintiffs health insurance plan is an employee benefit plan governed by ERISA. See 29U.S.C. § 1002(2) (2003). As detailed above, Plaintiff's claims are to recover benefits due under this ERISA plan.
ERISA provides:
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . .
§ 514(a), 29 U.S.C. § 1144(a) (2003). In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 1, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), the Court interpreted the preemption provision broadly.
The phrase "relate to" [is] given its broadest common-sense meaning, such that a state law "relate[s] to" a benefit plan "in the normal sense of the phrase, if it has a connection with or reference to such a plan."Pilot Life. 481 U.S. at 47 quoting Shaw v. Delta Air Lines. 463 U.S. 85, 97 (1983). The Court found that defendant's tort and breach of contract claims "each based on alleged improper processing of a claim for benefits under an employee benefit plan, undoubtedly meet the criteria for preemption under § 514(a)." Pilot Life, 481 U.S. at 48. The Third Circuit in Pryzbowski v. U.S. Healthcare, clarified the holding in Pilot Life, ruling that a decision regarding benefits "falls within the scope of the administrative responsibilities of the HMO or insurance company, and therefore `relates to' the employee benefit plan."Pryzbowski v. U.S. Healthcare, 245 F.3d 266, 278 (2001). This Court has also repeatedly found that ERISA preempts state law claims regarding improper processing of benefits. See, e.g., Bell v. UNUM Provident Corp., 222 F. Supp.2d 692, 696-97 (2002) (Baylson, J.) (discussing cases in this district addressing ERISA preemption).
Plaintiffs' claims in this case are state law claims based on the allegations that Defendant represented to them that their health insurance coverage would include coverage for Mrs. McConnell's prenatal and pregnancy-related services and that, in reliance on this representation, Mrs. McConnell secured such services. This dispute over whether Defendant represented to Plaintiff's that the Plan included prenatal coverage and whether Plaintiff's were wrongly denied pregnancy-related services clearly "relates to" the Plan. In order for this Court to adjudicate such a claim, it would have to consult the terms of the Plan and any other coverage documents provided to Plaintiff's. See DePace v. Matsushita Electric Corp., 257 F. Supp.2d 543, 569 (E.D.N.Y. 2003) (finding that state law claims regarding misrepresentation by employer of benefit plan to induce employee's retirement are preempted by ERISA).
As Plaintiffs' claims "relate to" the Plan, their state law claims are preempted by ERISA and will be dismissed, and Plaintiff's will be given leave to amend the complaint to present claims under ERISA.
The Court recognizes the burden placed on Plaintiff to pursue in this Court, within the strictures of the Federal Rules of Civil Procedure, their "small claim" for $3,555.00. However, if Plaintiff's are successful, the Court can award the Plaintiff's fees, which could easily exceed $3,555.00.
B. Oral Modification
Defendant argues that Plaintiffs' claims rest on an alleged oral modification to the health insurance policy and thus, under the ERISA requirement that all modifications be in writing, must be dismissed. It is premature for the Court to grant Defendant's motion with prejudice at this time for two reasons. First, Plaintiff's' claims, on their face, do not rest solely on an oral modification. Plaintiffs' Complaint includes allegations that Plaintiff's were presented with written materials showing the health insurance benefits provided by Defendant, and that these materials listed pregnancy-related services as covered. Plaintiff's also attached these written materials to their Complaint. Second, as Plaintiff's will be given leave to amend their Complaint, it would be premature for this Court to grant Defendant's motion regarding an oral modification before Plaintiff's can present their claims under ERISA. It may be, as the Complaint suggests, that Plaintiff's raise a claim under § 502(a)(1)(B) of ERISA and can prove that the written plan covered pregnancy related services. It is also possible, however, that Plaintiff's will choose to raise a claim under § 502(a)(3) based on the representations made to them by the account executive for Defendant. Without knowing the claims to be presented in an Amended Complaint, it is premature for this Court to consider Defendant's argument regarding oral modification and, thus, it will be denied.
§ 502(a)(3) of ERISA provides:
A civil action may be brought — . . .
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title 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 title or the terms of the plan . . .
§ 502(a), 29 U.S.C. § 1132(a) (2004). Prior cases have accepted this section of ERISA as the basis for equitable estoppel claims where a plaintiff alleges that an insurance company has fraudulently induced participation in a benefit plan. See, e.g. Smith v. Hartford Ins. Group, 6 F.3d 131, 137 (3d Cir. 1993) (discussing burden of proof for a plaintiff raising an equitable estoppel claim based on misrepresentations regarding health insurance coverage).
IV. Conclusion
As Plaintiff's' state law claims are preempted by ERISA, and Defendant's argument regarding an oral modification is premature, Defendant's Motion to Dismiss will be granted without prejudice and Plaintiff's will be given leave to amend their complaint.
An appropriate order follows.
ORDER
AND NOW, this day of April, 2004, it is hereby ORDERED that the Defendant's Motion to Dismiss is GRANTED without prejudice, with leave granted to Plaintiff's to file an Amended Complaint raising a claim under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. (2003), within twenty days of the date of this Order.Defendants shall file a responsive pleading to any Amended Complaint within ten days after service of the Amended Complaint.