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KIRKHUFF v. LINCOLN TECHNICAL INSTITUTE INC.
September 6, 2002
DIANE KIRKHUFF, ET AL.
LINCOLN TECHNICAL INSTITUTE INC., ET AL. ROSS P. BARTIMUS V. LINCOLN TECHNICAL INSTITUTE, INC., ET AL. ROBERT C. RADLE V. LINCOLN TECHNICAL INSTITUTE, INC., ET AL.
The opinion of the court was delivered by: Bartle, District Judge.
These are actions alleging violations of the Employee
Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et
seq. Before the court are motions to amend each complaint to add
a claim for punitive damages under Pennsylvania's bad faith
statute, 42 Pa.Cons.Stat.Ann. § 8371.
Plaintiffs are employees of defendant Lincoln Technical
Institute, Inc. They are participants in an employee welfare
benefit plan providing insurance benefits through a group life
insurance policy issued by defendant The United States Life
Insurance Company in the City of New York. Plaintiffs contend
that certain benefits have been cancelled or deleted in
violation of ERISA.
Plaintiffs' motions to amend were triggered by a recent
decision by our colleague Judge Clarence C. Newcomer in
Rosenbaum v. Unum Life Ins. Co. of Am., Civil Action No.
01-6758 (E.D.Pa.), allowing a bad faith claim to proceed in an
ERISA action. Shortly thereafter, our colleague Judge Ronald L.
Buckwalter reached the opposite result in Sprecher v. Aetna
U.S. Healthcare, Inc., Civil Action No. 02-580 (E.D.Pa.). He
concluded that ERISA preempted such a cause of action.
Rule 15 of the Federal Rules of Civil Procedure provides that
"leave [to amend] shall be freely given when justice so
requires." However, leave should be denied when the amendment
would be futile, that is, when the amendment does not state a
claim for relief. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct.
227, 9 L.Ed.2d 222 (1962).
The Pennsylvania bad faith statute provides:
In an action arising under an insurance policy, if
the court finds that the insurer has acted in bad
faith toward the insured, the court may take all of
the following actions:
(1) Award interest on the amount of the claim
from the date the claim was made by the insured in
an amount equal to the prime rate of interest plus
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees
against the insurer.
42 Pa.Cons.Stat.Ann. § 8371.
ERISA, which expansively regulates employee benefit plans,
contains a broad preemption provision:
Except as provided in subsection (b) of this section,
the provisions of this subchapter and subchapter III
of this chapter shall supersede any and all State
laws insofar as they may now or ...
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