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Rita Westerheide v. Hartford Life Insurance Co.

September 20, 2011


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


Before the Court is Defendants' Motion to Dismiss and Motion to Strike (Doc. 16) and memorandum in support (Doc. 17), to which Plaintiff has filed a memorandum in opposition (Doc. 18).

Plaintiff Rita Westerheide brings suit pursuant to the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., and 29 U.S.C. § 1132(a)(1)(B), against her former employer, Cannon Design, Inc. ("Cannon"), the Group Short Term Disability, Long Term Disability, Basic Term Life, Supplemental Dependent Life, Supplemental Term Life, Basic Accidental Death and Dismemberment Plan for Employees of Cannon Design, Inc. ("the plan"), and Hartford Life Insurance Company ("Hartford"), the administrator of the plan. In August 2008, Plaintiff Westerheide applied for and received long term disability benefits under the long term disability plan, but in May 2009, the defendants advised Westerheide was advised that her benefits were terminated, based on new information obtained from one of Westerheide's treating physicians. Westerheide's administrative appeal was unsuccessful.

The First Amended Complaint (Doc. 11) asserts three claims, each against all three of the defendants: (I) seeking payment of long term disability benefits past due and for a declaration of his right to future benefits under the terms of the plan, pursuant to 29 U.S.C. § 1132(a)(1)(B); (II) alleging a violation of the plan's claims procedures by way of a violation of the privacy protections of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), warranting equitable relief pursuant to 29 U.S.C. § 1132(a)(3)(B), including application of the de novo standard of review; and (III) seeking attorneys' fees pursuant to 29 U.S.C. § 1132(g)(1).

Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants move to: (1) dismiss all claims against Cannon; (2) dismiss Count II as to Hartford and the plan; and (3) strike portions of the Amended Complaint: (a) seeking an award of future benefits (¶¶ 10, 11, 14(c), 15, 20 and the prayer for relief in Count I); and (b) allegations of "bad faith" (¶ 22). Each issue will be addressed in turn.

I. Analysis

A. Federal Rule of Civil Procedure 12(b)(6)

Dismissal is warranted under Federal Rule of Civil Procedure12(b)(6) if the complaint fails to set forth "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); EEOC v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007). In making this assessment, the Court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor. Tricontinental Industries, Inc., Ltd. v. Price Waterhouse Coopers, LLP, 475 F.3d 824, 833 (7th Cir. 2007); Marshall v. Knight, 445 F.3d 965, 969 (7th Cir. 2006).

Federal Rule of Civil Procedure 8 only requires a "short and plain statement of the claim showing that the pleader is entitled to relief," which is sufficient to provide the defendant with "fair notice" of the claim and its basis. Nevertheless, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp., 550 U.S. at 555-556 (citations and parenthetical information omitted). A plausible theory of liability must be pleaded. Sheridan v. Marathon Petroleum Co., LLC, 530 F.3d 590, 596 (7th Cir. 2008); see also Limestone Development Corp. v. Village of Lemont, Ill., 520 F.3d 797, 803-804 (7th Cir. 2008).

1. Defendant Cannon Design, Inc.

"The proper defendant in a suit for benefits under an ERISA plan is . . . normally the plan itself, see ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); Blickenstaff v. R.R. Donnelley & Sons Co. Short Term Disability Plan, 378 F.3d 669, 674 (7th Cir. 2004), rather than the plan administrator, because the plan is the obligor." Feinberg v. RM Acquisition, LLC, 629 F.3d 671, 673 (7th Cir. 2011). The same can be said for a claim for equitable relief under ERISA Section 502(a)(3). Peabody v. Davis, 636 F.3d 368, 379-380 (7th Cir. 2011)*fn1 . "But when the lines between the plan, the plan administrator, and the plan sponsor are indistinct or contested, the plaintiff's designation of the "wrong" defendant can be forgiven provided the 'right' defendant is not misled." Feinberg, 629 F.3d at 673 (internal citations omitted). Defendants argue that the exception to the general rule that the plan is the proper defendant is inapplicable with respect to Cannon, Plaintiff Westerheide's former employer and the sponsor of the plan. Westerheide counters that Defendants have not met their burden of establishing that the exception is inapplicable.

Keeping in mind that Bell Atlantic Corp. v. Twombly and Rule 12(b)(6) require that the complaint set forth a plausible claim, not mere speculation, the Court finds that the Amended Complaint does not state a viable claim against Cannon. More specifically, there is nothing to suggest that the exception to the rule that the plan is the proper defendant could even be applicable to Cannon. For example, the Amended Complaint explains that Hartford is the administrator of the plan, while Cannon is only described as Westerheide's employer and, obviously, the sponsor of the benefits plan (see Doc. 11 ¶¶ 3-5). Reference to "all defendants" informing Plaintiff that her long term disability benefits had been denied (Doc. 11 ¶ 7), and to "the defendants" denying Westerheide's appeal by letter" are insufficient to raise more than a faint inference that Cannon is intertwined with plan administration. In such a situation, dismissal of Cannon as a defendant is warranted, so Defendants' motion to dismiss is granted in that respect. See Riverview Health Institute LLC v. Medical Mutual of Ohio, 601 F.3d 505, 523 (6th Cir. 2010) (plaintiff failed to sufficiently plead insurance company as ERISA fiduciary; no allegation that insurance company was administrator of the plan).

2. Count II

Count II is premised upon 29 U.S.C. ยง 1132(a)(3)(B) and is captioned "Violation of Claims Procedure." Defendants interpret Count II as alleging a HIPAA violation, based on allegations that Defendants used information improperly and beyond the scope of their authorization. Defendants argue that, although some HIPAA provisions were incorporated into ERISA, the privacy provisions were not; therefore, there is no private right of action under ERISA for such a violation. Plaintiff Westerheide ...

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