The opinion of the court was delivered by: Sue E. Myerscough United State District Judge
Wednesday, 24 October, 2012 09:18:35 AM
Clerk, U.S. District Court, ILCD
This matter is before the Court on the Motions to Dismiss filed by Defendants James Smith (d/e 12), Northwestern Mutual Life Insurance Company (Northwestern) (d/e 14), and Adam Springer (d/e 22). For the reasons that follow, both Smith's and Springer's Motions to Dismiss are GRANTED in their entirety. Northwestern's Motion is GRANTED IN PART and DENIED IN PART. Northwestern's Motion is GRANTED in all respects with the exception of Count II of the Complaint. Count II survives.
Plaintiff William Hankinson (Plaintiff) filed a Complaint (d/e 1-3) in the Circuit Court of the Seventh Judicial Circuit, Sangamon County, Illinois against Defendants Northwestern Mutual Life Insurance Company (Northwestern), R. Adam Springer, and James Smith. Northwestern, with Springer's and Smith's consent, filed a Notice of Removal (d/e 1) to this Court.
A. Events Occurring Prior to October 20, 2004 The Complaint alleges that in 2003, Plaintiff owned 50% of the Springfield Accident & Pain Center, Ltd. (Springfield Center), a chiropractic clinic. John D. Warrington, D.C., owned the other 50%. Between February 2004 and March 2005, Northwestern employed Springer and Smith as agents. Springer and Smith provided Plaintiff and Dr. Warrington with information about a group disability insurance policy. In March 2004, the agents solicited the purchase of a group disability insurance policy--Northwestern Group Policy L670599 (the Policy). The Parties do not dispute that the Policy is an ERISA qualified benefit plan.
In August 2004, Plaintiff and Dr. Warrington decided that Dr. Warrington would buy all of Plaintiff's interest in Springfield Center and Plaintiff would open his own chiropractic clinic. Plaintiff and Dr. Warrington met with Springer. Both expressed to Springer that they wanted to make sure that the disability coverage would continue for both Plaintiff and Dr. Warrington. Plaintiff and Dr. Warrington provided Springer all of the facts, terms, documents, and circumstances attendant to the proposed purchase/sale, including that Plaintiff intended to continue practicing as a chiropractor at his own clinic.
Springer reviewed the Northwestern insurance policies held by Springfield Center, including the Policy, in order to counsel and advise Plaintiff and Dr. Warrington about how to maintain or re-establish ongoing disability coverage. Springer also contacted Smith at Northwestern's home office during the review process. Springer described the proposed purchase/sale of Springfield Center to Smith.
Additionally, Springer told Smith that Plaintiff intended to open his own chiropractic clinic.
Smith responded with information on how to continue/re-establish the current Springfield Center Long Term Disability (LTD) Policy. He told Springer to advise Plaintiff and Dr. Warrington that Plaintiff need only submit a "change of address" form and continue paying premiums.
B. Events Occurring On and After October 20, 2004 On October 20, 2004, Plaintiff and Dr. Warrington consummated
the purchase/sale agreement. Plaintiff subsequently met with Springer at Plaintiff's new solely-operated chiropractic clinic. Springer again represented to Plaintiff that the Policy continued to cover Plaintiff for disability insurance.
Northwestern sent premium invoices to Springfield Center from 2004 to 2010 that listed Plaintiff as an insured under the Policy. Plaintiff and Dr. Warrington shared the costs of the premium payments made pursuant to those premium invoices. Northwestern made no inquiries and performed no reviews--beyond the guidance offered by Springer and Smith--of the Policy or of the post purchase/sale status of Plaintiff between 2004 and 2010.
Following the purchase/sale transaction between Plaintiff and Dr. Warrington, Plaintiff continued practicing as a chiropractor, working 30 or more hours per week at his new practice. Plaintiff and Dr. Warrington maintained an exclusive business relationship whereby they shared patients when necessary.
C. Policy Administration and Procedural History In December 2010, Plaintiff became permanently disabled and
unable to work. Plaintiff submitted a claim under the Policy to Northwestern. In January 2011, Northwestern denied Plaintiff's claim because Plaintiff was not a "Member" under the Policy, regularly working 30 or more hours a week for Springfield Center. In February and March 2011, Plaintiff's counsel requested that Northwestern review the denial. In May 2011, Northwestern again denied Plaintiff disability coverage.
In June 2011, Plaintiff filed a nine-count complaint in state court which has since been removed to this Court. Plaintiff brings Counts I (29 U.S.C. § 1132(a)(1)(B)), II (Estoppel), V (Fraud), VI (Negligent Misrepresentation), VII (Illinois Consumer Fraud and Deceptive Business Practices), VIII (Breach of Contract), and IX (215 ILCS 5/155) against Northwestern. Plaintiff brings Counts III and VI ( both Negligent Misrepresentation) against Springer. Finally, Plaintiff brings Count IV (Negligent Misrepresentation) against Smith.
D. Pertinent Policy Language
The Policy contains several provisions relevant to Plaintiff's claims.
First, the Policy defines a Member as a person who: (1) is an active sole proprietor, partner, or employee of the Employer; (2) a citizen or resident of the United States or Canada; and (3) is regularly working 30 or more hours per week for the Employer.
The Policy also contains a provision that states "[w]hen your insurance under the Summary of Insurance Benefits ends you may have the right to purchase group [Long-term Disability or LTD] conversion insurance." The Policy goes on to list several occurrences that automatically end the insurance. The first is "[t]he date your employment terminates." The second is "[t]he date you cease to be a Member."
The Policy then sets forth when conversion may occur under the Policy. The right to convert exists if: (1) the insurance ends because employment ends for any reason other than retirement, and (2) the Member: (a) has been insured under the Employer's LTD insurance program for at least one year on the date insurance ends, (b) is not disabled on the date insurance ends, (c) is a citizen of the United States or Canada, and (d) is not eligible for insurance under any employer's LTD insurance program. Further, the Member must complete Northwestern's application form in writing, pay the first premium to Northwestern's Group Insurance Administration Office within the first 31 days after insurance ends, and select an available benefit amount. The Policy states that "[t]he payment of each premium by the Policyowner as it becomes due will maintain the Policy in force until the next Premium Due Date."
Finally, the Policy states that no change in the Policy will be valid unless it is approved in writing by one of Northwestern's executives and given to the Policyowner to attach to the policy. Likewise, no change in the Summary of Insurance Benefits will be valid unless it is approved in writing by one of Northwestern's executives and given to the Employer. Lastly, no agent may change the Policy or Summary of Insurance Benefits, or waive any Policy provision.
All three Defendants filed Motions to Dismiss pursuant to Fed.R.Civ.P.12(b)(6). The Motions are fully briefed.
II. JURISDICTION AND VENUE
The federal questions alleged in Plaintiff's Count I, pursuant to § 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1132(a)(1)(B)), give this Court subject-matter jurisdiction. See 28 U.S.C. § 1331. Personal jurisdiction and venue requirements are satisfied because the relevant acts occurred in this judicial district. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (finding that personal jurisdiction exists where a defendant "purposefully avail[ed himself or herself] of the privilege of conducting activities" in the forum state); see 28 U.S.C. § 1391(b) (stating that venue in non-diversity cases is proper in a judicial district ...