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MADDEN v. COUNTRY LIFE INS. CO.

October 18, 1993

JAMES G. MADDEN, Plaintiff,
v.
COUNTRY LIFE INSURANCE COMPANY, an Illinois corporation, Defendant.



The opinion of the court was delivered by: PHILIP G. REINHARD

 INTRODUCTION

 Plaintiff James G. Madden filed a two-count state law complaint in state court alleging defendant Country Life Insurance Company wrongfully rescinded coverage under a group health insurance policy. Defendant removed the case to this court under 28 U.S.C. § 1441, alleging the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., preempts plaintiff's state law claims, and now moves to dismiss the complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.

 BACKGROUND

 Plaintiff filed his complaint in the Circuit Court of Stephenson County on April 28, 1993. According to the allegations contained in the complaint, on April 1, 1990, plaintiff enrolled in a group health and hospitalization policy issued to Madden & Sissler, the law firm of which plaintiff is a partner. The policy covered both of the two partners in the firm and their single employee. In December of that year, plaintiff underwent medical treatment, for which he submitted a claim to defendant. After submitting the claim, however, plaintiff was notified that his participation under the plan had been rescinded dating back to April 1, 1990. In rescinding plaintiff's coverage, defendant claimed that at the time of his application for coverage under the plan plaintiff had misrepresented his medical condition. Plaintiff underwent further medical treatment totalling $ 4,000 during 1991, which he claims should also have been reimbursed under the plan.

 Count I of the complaint seeks reimbursement for plaintiff's medical expenses in December 1990 and in 1991, stating that defendant's rescission of plaintiff's coverage under the policy was unjustified. Count II invokes section 5/155 of the Illinois Insurance Code, 215 ILCS 5/155 (1993), *fn1" to seek attorney's fees and damages based on defendant's "vexatious and unreasonable" behavior. On May 20, 1993, defendant removed the case to this court on the basis that ERISA preempts plaintiff's state law claims, and now moves to dismiss the complaint. Plaintiff, in his brief in response to defendant's motion to dismiss, asserts that ERISA does not preempt his state law claims, and thus remand back to state court is the proper course of action for this court.

 CONTENTIONS

 Defendant contends that, according to the definitions found in ERISA, the policy it issued is an employee welfare benefit plan, plaintiff is an employee, and, therefore, plaintiff's claims are appropriate only under ERISA, if at all. Defendant further contends that plaintiff fails to allege facts sufficient to justify relief under ERISA and, therefore, plaintiff's complaint must be dismissed.

 Plaintiff contends that according to the definitions found in ERISA the policy issued by defendant does not qualify as an employee welfare benefit plan, Madden & Sissler does not fit the definition of an employer, plaintiff himself does not fit the definition of an employee, and, therefore, ERISA does not apply to preempt the state law claims. Plaintiff further contends that because ERISA does not preempt his state law claims, this court lacks jurisdiction and should, therefore, remand the case to state court. It is this last issue which initially must be addressed.

 DISCUSSION

 In deciding a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court must accept as true all facts alleged, together with all reasonable inferences which may be derived from those facts. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). Dismissal is proper only if it appears beyond a doubt that plaintiff can prove no set of facts that would entitle him to the relief requested. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Prince v. Rescorp Realty, 940 F.2d 1104, 1106 (7th Cir. 1991).

 Section 502(a) of ERISA, 29 U.S.C. § 1132(a), sets forth a comprehensive scheme for civil enforcement of ERISA's provisions. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52-56, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987). These civil enforcement mechanisms provide the exclusive remedy under which a party entitled to invoke them may recover benefits under an ERISA employee welfare benefit plan. Id. Thus, section 502(a) preempts all state law provisions that come within the scope of its pre-emption clause, *fn2" even those consistent with ERISA's substantive requirements. Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 739, 85 L. Ed. 2d 728, 105 S. Ct. 2380 (1985). In addition, while ordinarily preemption does not provide a basis for removal where the grounds for federal subject matter jurisdiction do not appear on the face of the complaint, the Supreme Court has created an exception to the well-pleaded complaint rule where Congress clearly expressed the intent to completely preempt an area of law and provide an exclusive remedy, as it has with ERISA. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62-67, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987). Thus, the threshold issue in determining whether ERISA preempts the state law remedy invoked by a state court plaintiff is whether the remedy sought in the complaint fits within the scope of the comprehensive scheme Congress intended to be the exclusive remedy provided by section 502(a). See Kelly v. Blue Cross & Blue Shield, 814 F. Supp. 220, 223 (D.R.I. 1993) (stating that to "decide whether ERISA preempts plaintiff's state law claims . . . the Court must first determine the scope of ERISA's application, if any, to this case."); cf. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. at 66 (stating the "touchstone of the federal court's removal jurisdiction is . . . the intent of Congress" and "Congress has clearly manifested an intent to make causes of action within the scope of the civil enforcement provisions of § 502 removable to federal court." (emphasis added)).

 The identity of the party seeking to avail himself of the remedies cannot, however, be ignored. Only if a party fits within the definitions of the parties enumerated for particular remedies under ERISA is the party entitled to invoke these remedies. Giardono v. Jones, 867 F.2d 409, 411-14 (7th Cir. 1989). "ERISA carefully enumerates the parties entitled to relief under § 502." Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983). "The phrasing of § 502 is instructive. Section 502(a) specifies which persons--participants, beneficiaries, fiduciaries, or the Secretary of Labor--may bring actions for particular kinds of relief." Id. at 25. Section 502(a) authorizes an ERISA employee benefit plan participant or beneficiary to bring a cause of action "to recover benefits due under the plan, to enforce the participant's rights under the plan, or to clarify rights to future benefits." Pilot Life, 481 U.S. at 53. Under section 502(a), a "participant or beneficiary may also ...


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