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JACOBSON v. HUMANA INSURANCE COMPANY

June 6, 2005.

REID JACOBSON, Plaintiff,
v.
HUMANA INSURANCE COMPANY, Defendant.



The opinion of the court was delivered by: MARK FILIP, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Reid Jacobson ("Plaintiff" or "Jacobson") initiated a state court case against Defendant Humana Insurance Company ("Defendant" or "Humana"), alleging breach of contract, bad faith, and vexatious delay. On Defendant's motion, the case was removed to this Court on the ground that the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq., preempted these state law allegations.*fn1 Thereafter, Plaintiff filed his First Amended Complaint at Law (the "Complaint"), which asserts a common law breach of contract claim ("Count I") and an ERISA claim ("Count II"). (D.E. 13.)*fn2 This matter comes before the Court on Defendant's Motion to Dismiss Count I of the Complaint (the "Motion to Dismiss"). (D.E. 18.) For the reasons explained below, Defendant's Motion to Dismiss is granted. Accordingly, Count I (but not Count II, the ERISA claim) is dismissed.

I. Factual Background*fn3

  According to the Complaint, Humana provided medical insurance to Jacobson and his family, including his minor son, Joel Jacobson, pursuant to a group insurance policy (the "Insurance Policy"). (D.E. 13, Count I ¶¶ 2-3.) The Insurance Policy is governed by ERISA (Id., Count II ¶ 3.)

  Joel is confined to a wheelchair, with a diagnosis of spastic quadraparesis, and he requires assistance with bathing, dressing, and therapy. (Id., Count I ¶ 4.) As part of the treatment for his condition, Joel requires daily hydrotherapy and gait training at the Jacobsons' home. (Id., Count I ¶ 5.) The Complaint alleges that a certain track-type lifting system is medically necessary for safe caretaking of Joel, for access to his bath and therapy pool, and for use in gait training and other therapy. (Id., Count I ¶¶ 6-7.)

  Under the Insurance Policy, Humana is required to pay for all equipment and services medically necessary to treat Joel. (Id., Count I ¶¶ 8-9.) Jacobson allegedly purchased a track type lifting system for $17,589.00 and submitted the invoice to Humana for reimbursement. (Id., Count I ¶¶ 10-11.) According to the Complaint, Humana has not reimbursed Jacobson for the cost of the lift. (Id., Count I ¶ 12.)

  Jacobson appealed Humana's denial of the claim. (Id., Count II ¶ 14.) As part of the appeal, Jacobson requested guidelines, criteria and the clinical rationale employed by Humana in denying the claim, but Humana never provided Jacobson the requested materials. (Id., Count II ¶ 15.) Humana ultimately denied Jacobson's appeal. (Id., Count II ¶ 16.)

  Count I of the Complaint asserts that Humana's refusal to reimburse Jacobson's claim for the cost of the lifting system constitutes a breach of contract and was vexatious and done in bad faith. (Id., Count I ¶ 13.) Humana moved to dismiss Count I on the ground that Count I's state law claims are preempted by ERISA. Thus, according to Defendant, Count I fails to assert a claim upon which relief can be granted. (D.E. 18.)

  II. Standard of Review

  "A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of a complaint for failure to state a claim upon which relief may be granted." Johnson v. Rivera, 272 F.3d 519, 520-21 (7th Cir. 2001). In deciding a motion to dismiss, the court must assume all facts alleged in the complaint to be true, construe the allegations generously and view the allegations in the light most favorable to plaintiffs. See, e.g., Singer v. Pierce & Assoc., P.C., 383 F.3d 596, 597 (7th Cir. 2004); Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). Dismissal for failure to state a claim is appropriate where "the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Lee v. City of Chicago, 330 F.3d 456, 459 (7th Cir. 2003) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

  III. Discussion

  Supreme Court precedent teaches that Congress envisioned that ERISA would "reserv[e] to Federal authority the sole power to regulate the field of employee benefit plans." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46 (1987) ("Pilot Life"). In order to effectuate that policy, ERISA contains preemption provisions which are "deliberately expansive" and designed to "establish pension plan regulation as exclusively a federal concern." Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 423 (1981). Specifically, Section 1144(a) of ERISA provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. . . ." 29 U.S.C. § 1144(a). Congress included a savings provision, however, which excepts from preemption any state law regulating, inter alia, insurance. See 29 U.S.C. § 1144(b)(2)(A). For the reasons discussed below, the Court finds Count I is completely preempted by ERISA.

  A. Preemption Analysis

  The determination of whether a state law is preempted under Section 1144(a) requires a two-step analysis: (i) there must be an employee welfare benefit plan, and (ii) the state law must "relate to" the employee benefit plan. See Pilot Life, 481 U.S. at 45. In the case sub judice, the parties do not dispute that the Insurance Policy is an "employee welfare benefit plan." In fact, the Complaint indicates that the Insurance Policy is governed by ERISA. (D.E. 13, Count II ¶ 3.) ...


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