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Orlando v. United of Omaha Life Insurance Co.

September 28, 2007

JOHN M. ORLANDO, PLAINTIFF,
v.
UNITED OF OMAHA LIFE INSURANCE COMPANY, A NEBRASKA CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Honorable David H. Coar

MEMORANDUM OPINION AND ORDER

John M. Orlando ("Orlando"), an Illinois citizen, is suing United of Omaha Life Insurance Company ("United"), a Nebraska corporation, in this Court under diversity jurisdiction. On October 31, 2006, Orlando filed an amended complaint alleging two counts; the first count for breach of contract and the second count for taxable costs under Section 155 of the Illinois Insurance Code, codified at 215 Ill. Comp. Stat. 5/155 (West 1996). Before the Court now is United's Motion to Dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, United's motion is DENIED.

I. BACKGROUND

The following facts are taken from the Amended Complaint are assumed to be true. Orlando is an Illinois citizen. In 2002, he became employed by West Monroe Partners ("Partners"). Orlando was a highly paid employee who earned $16,666.67 per month. Orlando purchased insurance pursuant to a group disabilities benefits policy (the "Policy") with United.

From the certificate and booklet attached to the amended complaint, it is evident that United is the insurer and Partners is the policyholder under the Policy. As of January 1, 2003, Orlando participated in the plan and contributed a monthly premium under the terms of the Policy. As of June 23, 2003, Orlando became disabled under the terms of the Policy. Orlando calculated his monthly benefit under the terms of the Policy to be $7,500.00 per month. However, United has provided Orlando with a monthly benefit of only $2,606.65 per month. United has failed and refuses to provide Orlando with the correct amount of long-term disabilities benefits under the terms of the Policy. As a result of this failure, Orlando is suing United for damages for its breach of the Policy. He is also suing United for taxable costs for violations of the Illinois Insurance Code arising out of the same acts. United argues that Orlando's claims should be dismissed pursuant to Rule 12(b)(6) because they are completely preempted by section 502 of the Employee Retirement Income Security Act, codified at 29 U.S.C. §1132 ("ERISA").

II. STANDARD OF REVIEW

In reviewing a motion to dismiss for failure to state a claim upon which relief can be granted, the Court accepts all well-pleaded allegations in the plaintiff's complaint as true. Fed. R. Civ. P. 12(b)(6). The purpose of a 12(b)(6) motion is to decide the adequacy of the complaint, not to determine the merits of the case. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990) (citation omitted). A complaint should not be dismissed pursuant to Rule 12(b)(6) unless it fails it provide fair notice of what the claim is and the grounds upon which it rests or it is apparent from the face of the complaint that under no plausible facts may relief be granted. St. John's United Church of Christ v. City of Chicago, 2007 WL 2669403 at *7 (7th Cir. September 13, 2007) (citing Bell Atlantic Corporation v. Twombly, 127 S.Ct. 1955 (May 21, 2007). All reasonable inferences are to be drawn in favor of the plaintiff. Gastineau v. Fleet Mortg. Corp., 137 F.3d 490, 493 (7th Cir. 1998) (citation omitted).

III. DISCUSSION

Properly Viewing Documents not attached to the Complaint United claims Orlando cannot pursue his breach of contract claim or his claim for taxable costs under Section 155 of the Illinois Insurance Code because they are completely preempted by ERISA. In support of this contention, United attaches Group Policy No. GLTD-86F9, the Policy, to its memorandum in support of its motion to dismiss. Orlando attached a booklet entitled "Your Group Voluntary Long-Term Disability Benefits," which United refers to as the Certificate. For purposes of this motion, the Court will refer to this booklet as the "Booklet". The first issue is whether this Court may properly view the Policy in adjudicating the 12(b)(6) motion to dismiss, since it was not attached to the Amended Complaint, but instead provided by United.

Documents attached to the complaint as exhibits are considered to be a part of the pleadings, and generally, only those documents are reviewable by the Court on a 12(b)(6) motion to dismiss. Fed. R. Civ. P. 10(c); Moranski v. Gen. Motors Corp., 433 F.3d 537, 539 (7th Cir. 2005). However, documents attached to a motion to dismiss by the defendant may be considered when they are referred to in the plaintiff's complaint and are central to plaintiff's claim. McCready v. eBay, Inc., 453 F.3d 882, 891 (7th Cir. 2006). Here, Orlando specifically references the Policy several times in the Amended Complaint and it is central to his claims because it is the basis of his claims. Therefore, the Court will review the Policy without converting the motion to dismiss into a motion for summary judgment. See Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469, 478-79 (7th Cir. 2002).

Preemption

ERISA's preemption clause provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and are not exempt under section 1003(b) of this title." 29 U.S.C. § 1144(a). "Employee benefit plans" are defined to include "employee welfare benefits plans." 29 U.S.C. § 1002(3). The United States Supreme Court has repeatedly held that ERISA's preemption clause has a "broad scope" and an "expansive sweep." See e.g. California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 324 (1997) (citations omitted); see also DeBartolo v. Blue Cross Blue Shield, et al., 2001 WL 1403012, at *1 (N.D.Ill. 2001) (collecting cases). When Congress enacted ERISA, it expected that "a federal common law of rights and obligations under ERISA-regulated plans would develop" for those issues on which ERISA does not speak directly. Trustmark Life Ins. Co. v. Univ. of Chicago Hosp., 207 F.3d 876, 881 (7th Cir.2000) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987)). Thus, the Seventh Circuit has held that state common law can be used only in situations where "it is not inconsistent with congressional policy concerns." 207 F.3d at 881( quoting Thomason v. Aetna Life Ins. Co., 9 F.3d 645, 647 (7th Cir.1993)). Here, preemption depends on whether the plan created by the Policy is an "employee welfare benefit plan" (hereinafter referred to as an "ERISA plan") as defined by ERISA. If the Court can determine this by viewing the amended complaint, Booklet and Policy, only then should Orlando's state law claims be dismissed for failure to state a claim upon which relief can granted.

Title 29 U.S.C. § 1002(1) defines an "employee welfare benefit plan" as: any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions).

In Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., the Seventh Circuit explained that in simplified terms, the statute requires that for a particular plan to come under ERISA's purview, it must be "(1) a plan, fund, or program, (2) established or maintained, (3) by an employer or by an employee organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services or severance benefits, (5) to participants or ...


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