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Zalesiak v. Unumprovident Corp.

April 30, 2007

DEBORAH ZALESIAK, AS SPECIAL ADMINISTRATOR OF THE ESTATE OF BARBARA ABRAHAMSON, DECEASED, PLAINTIFF,
v.
UNUMPROVIDENT CORPORATION, AND THE PAUL REVERE LIFE INSURANCE COMPANY, DEFENDANT .



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Deborah Zalesiak ("Zalesiak"), as Special Administrator of the Estate of Barbara Abrahamson ("Abrahamson"), filed an eight-count Complaint against Defendants UnumProvident Corporation ("UPC") and The Paul Revere Life Insurance Company ("PRL," together with UPC, "Defendants") in the Circuit Court of Cook County, Illinois, setting forth, as counts 1 - 7 of the complaint, causes of action for bad faith, fraudulent misrepresentation, negligent misrepresentation, negligence, intentional infliction of emotional distress, negligent infliction of emotional distress, wrongful death, and, as count 8 of the complaint, a cause of action for violation of the Racketeer Influenced and Corrupt Organizations ("RICO") statute, 18 U.S.C. § 1961, et. seq. Defendants removed the action to this Court on the grounds that Zalesiak's state law claims were completely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et. seq. Thereafter, Defendants moved to dismiss counts 1 - 7 of the Complaint as completely preempted by ERISA and also moved to dismiss the RICO count for failure to properly allege a violation of the RICO statute.

Zalesiak responded to Defendants' Motion to Dismiss with an amended complaint, setting forth only two causes action: the first under RICO and the second under ERISA. Now before the Court is Defendants' motion to dismiss the amended complaint.*fn1 Defendants argue: (1) that Zalesiak's RICO claim is preempted by ERISA; (2) that Zalesiak has otherwise failed to state a RICO claim; and (3) that Zalesiak's ERISA claim must be dismissed for its failure to name the benefit plan as a defendant. For the reasons stated below, Defendants' motion to dismiss is granted.

Statement of Facts*fn2

Zalesiak alleges that at all times relevant to this litigation, UPC offered disability insurance policies to employers in the state of Illinois including Harris Hospital Supply, Inc. ("Harris"), where Abrahamson was employed at all times relevant to this litigation. PRL was, at all times relevant to this litigation, a wholly-owned subsidiary of UPC and the plan administrator for the disability insurance policies sold by UPC. In its capacity as plan administrator, PRL served as an agent of UPC.

Zalesiak alleges that, in order to control the costs of the disability policies issued by UPC, PRL and UPC engaged in a scheme whereby PRL, acting as plan administrator with exclusive decisionmaking authority with respect to such policies, intentionally denied benefits requested by certificate holders without reviewing their claims. The goal of the scheme was to frustrate legitimate attempts to claim benefits under the policies with the intent that potential beneficiaries would either abandon those claims or die, either of which events would provide a financial benefit for Defendants.

Harris purchased a group disability policy (the "Policy") from UPC. Under the terms of the Policy, if an employee of Harris were to become disabled, that employee would be paid, on a monthly basis, a specific sum of money for the duration of the employee's disability. At some point prior to March 4, 1997, Abrahamson -- a Harris employee and certificate holder under the Policy -- began to experience severe pain and other physical problems such that she became disabled as defined by the terms of the Policy.

On or about March 4, 1997, Abrahamson submitted a disability claim, including medical records containing physician opinions as to the nature and extent of her disability as required by the terms of the Policy. On July 29, 1997, PRL mailed Abrahamson a letter indicating that it had reviewed the materials she had provided and that it had determined that she was not qualified to receive disability benefits under the terms of the Policy. Accordingly, PRL denied Abrahamson's claim for benefits. Zalesiak alleges that when PRL sent this letter to Abrahamson, it knew that it either had not conducted any review of the materials Abrahamson had provided or that such review indicated that Abrahamson was indeed qualified to receive disability benefits.

On August 21, 1997, in accordance with the terms of the Policy, Abrahamson submitted a written appeal of the denial of her claim for disability benefits. On November 1, 1997, PRL mailed Abrahamson a letter advising her that its earlier decision denying her claim for benefits had been reconsidered and reversed.

On October 29, 1998, PRL mailed Abrahamson a letter advising her that her disability benefits were no longer payable and requiring that Abrahamson submit additional information to justify her claim. Zalesiak alleges that when PRL sent its October 29 letter to Abrahamson, it knew that Abrahamson was, in fact, still entitled to receive benefits. Abrahamson submitted the additional information PRL required. At some point in June 1999, PRL mailed Abrahamson a letter advising her that her claim for disability benefits had been reviewed and that her benefits would be reinstated.

Abrahamson's benefits were cut off again the following summer. On July 22, 2000, PRL sent her another letter advising her that her benefits were no longer payable and requiring additional information to justify her claim. Zalesiak alleges that when PRL sent its July 22 letter to Abrahamson, it knew that Abrahamson was, in fact, still entitled to receive disability benefits. On September 26, 2000, Abrahamson field an appeal of the July 22, 2000 decision denying her benefits. Abrahamson submitted the additional information PRL required on or about March 4, 2001.

Knowing that she was still entitled to receive disability benefits, PRL affirmed the denial of Abrahamson's benefits by letter mailed April 25, 2001. However, on February 21, 2002, PRL sent Abrahamson a letter indicating that her claim for disability benefits had been reviewed and her benefits reinstated.

Almost a year later, on February 2, 2003, PRL sent Abrahamson yet another letter indicating that her disability benefits were no longer payable and requiring Abrahamson to submit additional information to justify her claim. As before, Zalesiak alleges that PRL sent the February 2, 2003 letter knowing that Abrahamson was, in fact, entitled to receive disability benefits. Abrahamson appealed PRL's February 2, 2003 determination on May 27, 2003. PRL acknowledged receipt of Abrahamson's appeal and, via a form letter sent on July 11, 2003, PRL requested additional time to review the records Abrahamson submitted in connection with her appeal of PRL's February 2, 2003 determination that Abrahamson's disability benefits were no longer payable. Zalesiak alleges that PRL requested additional time to review Abrahamson's records knowing that additional time was not necessary to review those records and that Abrahamson was still entitled to receive disability benefits.

On July 17, 2003, PRL sent Abrahamson a letter affirming its February 2, 2003 decision denying Abrahamson's claim for disability benefits. PRL indicated that Abrahamson was no longer qualified to receive such benefits even though PRL knew that Abrahamson was still qualified to receive disability benefits. Abrahamson submitted additional records to PRL on November 5, 2003. Over the following months, PRL sent Abrahamson four letters (on November 13, 2003; December 15, 2003; February 4, 2004; and March 3, 2004) requesting additional time to review medical records submitted by Abrahamson in support of her claim for disability benefits. PRL sent each of those four letters knowing that Abrahamson was entitled to benefits and, as such, that it did not need any additional time to review her records. Then, on March ...


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