Morgart v. Allscripts Healthcare Solutions, Inc. et alMemorandum in Support regarding 23 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIME.D.N.C.March 8, 2019IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION John Patrick Morgart, Plaintiff, vs. Allscripts Healthcare Solutions, Inc. and Allscripts Healthcare, LLC, Defendants. Civil Action No. 5:18-cv-524 MEMORANDUM IN SUPPORT OF RULE 12 MOTION TO DISMISS Pursuant to Rule 12(b)(6) and Rule 12(c) of the Federal Rules of Civil Procedure, Defendants Allscripts Healthcare Solutions, Inc. and Allscripts Healthcare, LLC file this Motion to Dismiss because Plaintiff John Patrick Morgart failed to exhaust his administrative remedies. In support of this Motion, Defendants Allscripts Healthcare Solutions, Inc. and Allscripts Healthcare, LLC shows the Court as follows: I. CASE BACKGROUND AND SUMMARY OF FACTS Plaintiff John Patrick Morgart (“Plaintiff”) initially commenced the above-captioned lawsuit by filing a Complaint in state court on September 14, 2017. While not clear on its face, the Complaint appeared to state a common-law breach of contract claim or a claim under the North Carolina Wage and Hour Act in which Plaintiff alleged he was entitled to 13 weeks of severance pay. (See DE 1-3, ¶ 5.) The Complaint only broadly referenced an unspecified “agreement” for severance pay and Defendants Allscripts Healthcare Solutions, Inc. and Allscripts Healthcare, LLC (collectively hereinafter “Allscripts”) did not know that an ERISA plan was in play until Plaintiff’s deposition on October 4, 2018, when he testified that his only claim was for seven weeks of severance pay allegedly owed pursuant to the Allscripts Healthcare Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 1 of 8 2 Solutions, Inc. Severance Plan (the “Plan”), which is an ERISA-covered benefits plan. Accordingly, Allscripts subsequently timely filed their Notice of Removal on November 1, 2018. On December 3, 2018, Plaintiff filed a Motion to Remand, arguing that his state-law claim was not preempted by ERISA. The Court denied Plaintiff’s motion on January 24, 2019. (See DE 20.) In its Order, this Court acknowledged jurisdiction pursuant to ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a), and noted that Plaintiff’s claim “depends upon the interpretation of the ERISA-backed severance plan and whether [P]laintiff was wrongfully deprived of benefits under the plan.” (See DE 20.) Plaintiff cannot proceed on his ERISA claim because he failed to exhaust the mandatory administrative prerequisites required under the Severance Plan. The Severance Plan under which Plaintiff seeks benefits under expressly sets forth the required administrative review process, and states, in pertinent part: 5. CLAIMS PROCEDURE If you are a participant under the Plan, you will automatically receive the benefits to which you are entitled under the Plan subject to the release requirement described above. If you feel you have not been provided with all the benefits to which you are entitled under the Plan, you may file a written claim with the Plan Administrator with respect to your rights to receive benefits to which you are entitled under the Plan as described below. You or your representative must make a written claim for benefits. The Plan Administrator will review all claims and may require you to provide any information that it decides is necessary to make a decision about your claim. Within 90 days after the Plan Administrator receives your claim, it will notify you of its decision . . . . . . . You must utilize and exhaust the Plan’s review procedures before you bring any civil action against the Company . . . . Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 2 of 8 3 Ex. 1 to Pl. [’s] Oct. 4, 2018 Dep. at 20-21, attached hereto as Exhibit A (emphases added). Preliminarily, the Complaint fails to reference or otherwise mention the exhaustion of Plaintiff’s administrative remedies under the Severance Plan, and in fact, as of the date of this Motion, Plaintiff has not pursued any administrative remedies under the Plan.1 Thus, although Plaintiff claims that Allscripts have failed to pay him severance benefits allegedly owed to him, there has been no initial denial of his claim for benefits, much less any final administrative denial. Plaintiff has wholly failed to follow the Plan’s mandatory administrative review process, and instead proceeded directly to court. Accordingly, Allscripts file this Motion to Dismiss due to Plaintiff’s failure to exhaust administrative remedies as required by the Plan. II. STANDARD OF REVIEW A. Rule 12(b)(6) Federal Rule of Civil Procedure 12(b)(6) requires dismissal of a Complaint if it “fail[s] to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (holding to survive a Rule 12(b)(6) Motion to Dismiss, a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.”). In reviewing a motion to dismiss under Rule 12(b)(6), the court accepts the well-pled allegations in the Complaint as true and construes them in the light most favorable to the plaintiff. See, e.g., Nemet Chevrolet, Ltd. V. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009); Randall v. United States, 30 F.3d 518, 522 (4th Cir. 1994), cert. denied, 514 U.S. 1107 (1995) (“In 1 Notably, in his deposition, Plaintiff admitted that he never made a written claim to the Severance Plan Administrator prior to filing his lawsuit despite allegedly receiving and reviewing documentation regarding eligibility, participation, and administration guidelines. (See Pl. [’s] Oct. 4, 2018 Dep. Tr. at 93-98, 126:22-127:5 and Ex. 1 to Pl. [’s] Oct. 4, 2018 Dep. at 16-37, attached hereto as Exhibit A.) Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 3 of 8 4 reviewing the legal sufficiency of the complaint, [the] court must accept as true all well-pleaded allegations in the light most favorable to the plaintiff.”) Dismissal is appropriate where “it appears beyond doubt that the plaintiff[ ] can prove no set of facts in support of [his] claim that would entitle [him] to relief.” Jackson v. Blue Dolphin Commc’n of N.C., LLC, 226 F. Supp. 2d 785, 788–89 (W.D.N.C. 2002) (quoting Flood v. New Hanover Cty., 125 F.3d 249, 251 (4th Cir. 1997). B. Rule 12(c) In ruling on a 12(c) motion for judgment on the pleadings, the court applies the same standard as for a 12(b)(6) motion and must accept the non-movant’s allegations as true, viewing the facts in the light most favorable to the non-moving party. See Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999); see also EEOC v. Bojangles Restaurants, Inc., 284 F. Supp. 2d 320, 325 (M.D.N.C. 2003) (same standard utilized for judging claims under Rules 12(b)(6) and 12(c)). A motion for judgment on the pleadings, like a motion to dismiss, should be granted if the movant is entitled to judgment as a matter of law. See id.; see also Bradley v. Ramsey, 329 F. Supp. 2d 617, 622 (W.D.N.C. 2004) (citing Moore’s Federal Practice, Sec. 12.38 (3d ed.)). The purpose of such a motion is to test the sufficiency of the complaint and should be granted if, after accepting all well-pleaded factual allegations as true, it appears certain that the plaintiff can prove no set of facts entitling him to relief. See Edwards, 178 F.3d at 243-44. This process helps streamline litigation by dispensing with needless discovery and fact-finding regarding unviable claims. See Pruett v. Town of Spindale, 162 F. Supp. 2d 442, 445 (W.D.N.C. 2001). Furthermore, the “requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege any facts which set forth a claim.” Efird v. Riley, Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 4 of 8 5 342 F. Supp. 2d 413, 419 (M.D.N.C. 2004). In addition, courts do not have to accept as true the legal conclusions in a plaintiff’s complaint. See Edwards, 178 F. 3d at 244; see also Frank Economides v. Gay, 155 F. Supp. 2d 485, 488 (D. Md. 2001) (on a motion to dismiss, court will assume all factual allegations to be true, but does not have to accept as true the legal conclusions in the complaint); Wright & Miller, Fed. Practice & Procedure, Sec. 1368 (for purposes of a Rule 12(c) motion, the movant concedes the accuracy of the factual allegations in the complaint but does not admit conclusions of law, legally impossible facts, or other matters inadmissible at trial). III. ARGUMENT “ERISA and its regulations require benefit plans to provide certain pre-suit procedures for reviewing claims after participants submit proof of loss (internal review).” Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99, 105 (2013) (citing 29 U.S.C. § 1133; 29 C.F.R. § 2560.503–1 (2012)); Makar v. Health Care Corp. of Mid-Atl. (CareFirst), 872 F.2d 80, 82 (4th Cir. 1989) (“[A]n ERISA claimant generally is required to exhaust the remedies provided by the employee benefit plan in which he participates as a prerequisite to an ERISA action for denial of benefits under 29 U.S.C. § 1132.”) “Exhaustion of administrative remedies for such claims gives force to ERISA’s explicit requirement that benefit plans covered by ERISA provide internal dispute resolution procedures for participants whose claims for benefits have been denied.” Smith v. Sydnor, 184 F.3d 356, 361 (4th Cir. 1999). To that end, it is a uniform requirement that participants exhaust internal review procedures prior to seeking judicial review under § 502(a)(1)(B). See Heimeshoff, 571 U.S. at 105 (citing LaRue v. DeWolff, Boberg & Associates, Inc., 552 U.S. 248, 258–259 (2008) (ROBERTS, C.J., concurring in part and concurring in judgment)); Gayle v. United Parcel Serv., Inc., 401 F.3d 222, 226 (4th Cir. 2005) Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 5 of 8 6 (“An ERISA welfare benefit plan participant must both pursue and exhaust plan remedies before gaining access to the federal courts.”). Thus, a cause of action under ERISA does not accrue until the plan issues a final denial. See Heimeshoff, 571 U.S. at 105; Langley v. Teamster Local Union No. 61, 1:01CV260-C, 2001 U.S. Dist. LEXIS 21111, at *8-9 (W.D.N.C. Dec. 12, 2001) (“As a matter of law, failure to exhaust administrative remedies under ERISA is fatal to a claim in this court. . . .”) (internal citations omitted)). Here, the Complaint fails to reference the exhaustion of administrative remedies under the Plan. See generally, DE 1-3. The Complaint does not allege that Plaintiff made any written claim for benefits. It also does not allege that the Plan Administrator reviewed Plaintiff’s claim and determined whether or not it was meritorious. In fact, the Complaint could not plead exhaustion because Plaintiff never pursued any administrative remedies and/or acted pursuant to the claims procedure outlined under the Severance Plan. See supra FN 1. As stated in this Court’s January 24, 2019 Order, Plaintiff’s claim “depends upon the interpretation of the ERISA-backed severance plan and whether [P]laintiff was wrongfully deprived of benefits under the plan.” (See DE 20.) Accordingly, the Court’s review of Plaintiff’s claim for benefits under ERISA would be solely based on the administrative record – namely a denial decision by a plan fiduciary. However, in this case, no such administrative record exists because Plaintiff never filed a written claim with the Plan Administrator. Without such a record, the Court has nothing upon which to base any decision, and thus, Plaintiff’s case is entirely premature and judicial intervention is improper. See Williams v. Ironworkers Local 16 Pension Fund, 178 F. App'x 235, 236 (4th Cir. 2006) (“An ERISA cause of action does not accrue until a claim of benefits has been made and formally denied.”) (quoting Rodriguez v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir. 1989)). Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 6 of 8 7 Pursuant to Plaintiff’s failure to demonstrate his exhaustion of remedies provided under the Plan and his failure to plead same, Plaintiff’s Complaint fails to state a claim upon which relief can be granted, and therefore, the above-captioned action must be dismissed, with prejudice. IV. CONCLUSION Because Plaintiff has neither received any initial denial of benefits, nor has he exhausted his administrative remedies under the Allscripts Healthcare Solutions, Inc. Severance Plan, this case is not ripe for adjudication and/or properly positioned for judicial intervention. For these reasons, Defendants Allscripts Healthcare Solutions, Inc. and Allscripts Healthcare, LLC respectfully request that this Court grant their motion and dismiss this action, with prejudice. Respectfully submitted this the 8th day of March, 2019. /s/ Elizabeth H. Pratt__________________ Elizabeth H. Pratt, NC Bar No. 46132 epratt@littler.com Molly M. Shah mmshah@littler.com Littler Mendelson, P.C. Bank of America Corporate Center 100 North Tryon Street, Suite 4150 Charlotte, NC 28202 Telephone: 704.972.7000 Facsimile: 704.333.4005 Attorneys for Defendants Allscripts Healthcare Solutions, Inc. and Allscripts Healthcare, LLC Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 7 of 8 8 CERTIFICATE OF SERVICE I hereby certify that on March 8, 2019, I electronically filed the foregoing MEMORANDUM IN SUPPORT OF RULE 12 MOTION TO DISMISS with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the following: Terry F. Rose PO Box 2847 Smithfield, North Carolina 27577 Telephone: 919-938-1616 tfroselaw@aim.com Attorney for Plaintiff /s/ Elizabeth H. Pratt Elizabeth H. Pratt epratt@littler.com Case 5:18-cv-00524-BO Document 24 Filed 03/08/19 Page 8 of 8