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TURNOY v. LIBERTY LIFE ASSURANCE CO.

January 29, 2003

BERNARD TURNOY, PLAINTIFF V, LIBERTY LIFE ASSURANCE CO., OF BOSTON, DEFENDANTS.


The opinion of the court was delivered by: Robert W. Gettleman, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Bernard Turnoy filed a three-count complaint for monetary and declaratory relief against defendant Liberty Life Assurance Company of Boston ("Liberty") after Liberty denied his claim for disability benefits. In Count I, plaintiff seeks retroactive benefits allegedly owed to him under his long- and short-term disability insurance policies with Liberty, as well as a declaratory judgment with respect to the amount of benefits to which he is entitled in the future. Count II seeks damages for emotional distress arising out of Liberty's allegedly improper denial of benefits to plaintiff. In Count III, plaintiff asks the court to assess "the maximum penalty allowed" against defendant under 215 Ill. Comp. Stat. § 5/155, for Liberty's allegedly vexatious and unreasonable conduct.

Liberty has filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), arguing that Counts I, II, and III are state law claims that are pre-empted by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001 et seq. Further, Liberty argues that, to the extent plaintiff's complaint may be construed as stating a claim for denial of benefits under ERISA, plaintiff's claims for compensatory and punitive damages, as well as a jury trial, should be stricken. For the reasons discussed herein, Liberty's motion to dismiss is granted with respect to all counts.

BACKGROUND

The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to rule on its merits. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). When considering the motion, the court accepts the allegations of the complaint as true and views the facts in the light most favorable to plaintiff. Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1428 (7th Cir. 1996).

The consideration of a Rule 12(b)(6) motion is generally restricted to the pleadings, which include the complaint, any exhibits attached thereto, and supporting briefs. Thompson v. Illinois Dept. of Professional Regulation, 300 F.3d 750, 753 (7th Cir. 2002). Accordingly, "where a plaintiff attaches documents [to his complaint] and relies upon the documents to form the basis for a claim or part of a claim, dismissal is appropriate if the document negates the claim." Id. at 754. With these standards in mind, the court turns to the facts of the instant dispute.

From November 1980 through March 2001, plaintiff worked as an agent/insurance producer on behalf of the Massachusetts Mutual Life Insurance Company ("Mass Mutual"). Plaintiff alleges that he was self-employed and worked as an independent contractor for Mass. Mutual.

Plaintiff received group short- and long-term disability coverage through a Liberty group policy, No. GD3-810-253705/GF3-810-253705-01 (the "policy"), which was attached to plaintiff's complaint. According to the policy, eligible classes for insurance benefits include "agents, general agents, and general managers meeting the production requirements published annually by the Sponsor." According to the definitions section of the policy, ""Sponsor' means [Mass Mutual] to whom the policy is issued." In addition, the policy provides that, (1) a covered person's application for insurance must be "made with Liberty through [Mass Mutual]," (2) all premiums are payable by Mass. Mutual, and (3) before increasing premiums, Liberty must notify Mass. Mutual, rather than individual covered persons, at least 31 days in advance.

The policy further defines eligibility for short- and long-term benefits. "All Agents who have a valid career agent contract, General Agents who have a valid general agent contract and General Managers who have a valid employment agreement" are eligible for short-term disability benefits. With respect to long-term disability benefits, the policy delineates two classes of eligible participants: Class 1 includes "[a]ll Agents who have a valid career agent contract, General Agents who have a valid general agent contract and General Managers who have a valid employment agreement participating in the Base Plan"; Class 2 includes "[a]ll Agents who have a valid career agent contract, General Agents who have a valid general agent contract and General Managers who have a valid employment agreement electing the Buy-Up Plan."

In late December 2000, plaintiff's health began to decline. On March 17, 2001, plaintiff alleges that he became unable to work due to cervical sponylosis, fatigue, cardiac disease and anxiety. On December 28, 2001, plaintiff sought disability benefits from Liberty, and his application was denied on February 5, 2002. In his appeal of that denial on March 1, 2002, plaintiff allegedly included reports from treating doctors that indicated that he could not perform his job of agent/insurance producer or any occupation providing comparable earnings.

Plaintiff alleges that Liberty failed to respond meaningfully to his March 1, 2002, appeal, and that he is owed benefits in the amount of $4255.90 per month since March 17, 2001, plus interest. Plaintiff also seeks tort damages for emotional distress stemming from Liberty's denial of benefits, as well as punitive damages under Illinois law for Liberty's allegedly "vexatious and unreasonable" conduct.

In its motion to dismiss, Liberty contends that plaintiff's insurance policy falls within ERISA's definition of an "employee welfare benefit plan," as interpreted by the Seventh Circuit, and that his state-law claims are therefore preempted. Moreover, according to Liberty, even if plaintiff could colorably state a claim under § 1132(a)(1)(B) of ERISA, his claims for compensatory and punitive damages, as well as a jury trial, must be stricken,

Plaintiff responds that, (I) more discovery is needed to ascertain whether the policy falls within ERISA's safe harbor provision, 29 C.F.R. ยง 2510.3-1, (2) plaintiff is not a participant or beneficiary who is covered by ERISA, and (3) even if ERISA is applicable to the instant ...


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