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RIESER v. STANDARD LIFE INSURANCE CO.

May 25, 2004.

LORETTA RIESER, Plaintiff
v.
STANDARD LIFE INSURANCE CO., et al., Defendants



The opinion of the court was delivered by: BERLE M. SCHILLER, District Judge

MEMORANDUM AND ORDER

Plaintiff Loretta Rieser brings this action alleging violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001-1461, and the Pennsylvania bad faith statute, 42 PA. CONS. STAT. ANN. § 8371, against Defendants Standard Life Insurance Company ("Standard Life"), Canada Life Assurance Company ("Canada Life"), and Gross-Given Manufacturing Company ("Gross-Given"), and alleging fraud against Defendant Gross-Given. Presently before this Court are Defendant Standard Life's motion to dismiss Plaintiff's bad faith claim, Defendant Canada Life's motion to dismiss Plaintiff's bad faith and ERISA claims, and Defendant Gross-Given's motion to dismiss Plaintiff's bad faith, fraud and ERISA claims. Additionally before this Court is Defendants Standard Life and Canada Life's motions to strike Plaintiff's demand for a jury trial. For the reasons that follow, the Court grants Defendants Standard Life and Canada Life's motions to dismiss and grants in part and denies in part Defendant Gross-Given's motion to dismiss. Furthermore, the Court grants Defendant Standard Life and Canada Life's motions to strike Plaintiff's demand for a jury trial. I. BACKGROUND

Plaintiff is the widow of David R. Rieser, an employee of Gross-Given at its Warminster, Pennsylvania facility from February 19, 1952 until January 28, 1998. (Am. Compl. ¶ 12.) On January 28, 1998, Mr. Rieser ceased active employment at Gross-Given because he became disabled due to emphysema. (Id.) Gross-Given provided an employee benefit welfare plan including health, life, and disability insurance coverage through Standard Life for its employees. (Id. ¶ 14.) In November 1997, prior to going on disability, Mr. Rieser received a memorandum from David Riccio, a Gross-Given employee, concerning his disability and benefits under the employee benefit plan. (Id. ¶ 17.) The memorandum explained that when Mr. Rieser ceased active employment due to his disability, Gross-Given would continue to pay the premiums for his health and life insurance and that coverage would remain the same as long as he remained disabled. (Id. ¶ 18.) Furthermore, the memorandum explained that Mr. Rieser would also receive disability benefits as long as he remained disabled, but that such benefits would be reduced after he reached the age of sixty-five and would cease entirely when Mr. Rieser chose to access his retirement benefits. (Id. ¶¶ 17-19.) Accordingly, the Riesers refrained from accessing Mr. Rieser's retirement benefits in order to maintain his disability payments. (Id. ¶ 20.) At the time he received this memorandum and when he ceased active employment at Gross-Given, Mr. Rieser was sixty-one years old. (Id. ¶¶ 13, 17.)

  In October 1998, approximately nine months after Mr. Rieser ceased active employment, a disability benefits analyst from Standard Life sent a letter to Mr. Rieser informing him that because he was over the age of sixty when he became disabled, he was not eligible to have his life insurance coverage continue without the payment of premiums. (Id. ¶ 23.) The letter asked Mr. Rieser to contact Gross-Given regarding his "membership status and premium payments" and stated that his life insurance would remain in force until the termination of his status as a "member" or the cessation of premium payments, whichever occurred first. (Id. ¶ 24.) Plaintiff alleges that neither Gross-Given nor any other entity ever informed Mr. Rieser that he was no longer a member of the plan, that he was excluded from coverage, or that the plan had been amended in any way. (Id. ¶¶ 26-28.)

  On November 1, 2000, Gross-Given replaced the Standard Life policy with a group life insurance policy obtained from Canada Life, effective November 1, 2000. (Def. Canada Life's Mot. to Dismiss Ex. A (Policy) at 6.) Mr. Rieser died on November 13, 2002 at the age of sixty-six. (Am. Compl. ¶ 11.) After Mr. Rieser's death, Ms. Rieser submitted claims to Standard Life and Canada Life for $55, 000.00 in life insurance benefits, but both claims were denied. (Id. ¶ 30-31.) Plaintiff thereafter exhausted her administrative remedies by appealing these denials of coverage. (Id. ¶ 32.)

 II. STANDARD OF REVIEW

  In considering a motion to dismiss for failure to state a claim upon which relief may be granted, courts must accept as true all of the factual allegations pleaded in the complaint and draw all reasonable inferences in favor of the non-moving party. Bd. of Trs. of Bricklayers & Allied Craftsmen Local 6 of N.J. Welfare Fund v. Wettlin Assocs., Inc., 237 F.3d 270, 272 (3d Cir. 2001). A motion to dismiss will only be granted if it is clear that relief cannot be granted to the plaintiff under any set of facts that could be proven consistent with the complaint's allegations. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Although, in deciding a motion to dismiss, courts generally consider only the allegations in the complaint, exhibits attached to the complaint, and matters of public record, a court may also consider an undisputably authentic document attached to a defendant's motion where plaintiff's claims are based on the document. Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

 III. DISCUSSION

  A. Standard Life's Motion to Dismiss

  Standard Life moves to dismiss Plaintiff's claim pursuant to the Pennsylvania bad faith statute, 42 PA. CONS. STAT. ANN. § 8371, arguing that such claims are preempted by ERISA. Section 514 of ERISA provides that the act "shall supercede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1444(a) (2004). ERISA includes a savings provision, however, that excepts from preemption "any law of any state which regulates insurance, banking, or securities." 29 U.S.C. § 1444(b)(2)(A); see Ky. Assoc. of Health Plans, Inc. v. Miller, 538 U.S. 329, 342 (2003) (holding that savings clause applies only to state laws that "substantially affect the risk pooling arrangement between the insurer and the insured"). A state statute that falls within the savings clause, however, may nonetheless be preempted if it allows plan participants "to obtain remedies under state law that Congress rejected in ERISA." Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 378 (2002) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987)); see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 55 (1987) (finding that the civil enforcement provisions of ERISA § 502(a) are intended as exclusive remedies).

  As numerous courts in this district have recently considered whether § 8371 is preempted by ERISA, this Court will not engage in a lengthy exposition of its reasoning. Plaintiff's claims pursuant to Pennsylvania's bad faith statute are preempted by ERISA because § 8371 does not "regulate insurance" for purposes of ERISA's savings clause, and, even if § 8371 did fall within the savings clause, it would nonetheless be preempted because it provides plan participants with a remedy that Congress rejected in ERISA. See, e.g., Dolce v. Hercules Inc. Ins. Plan, No. Civ. A. 03-1747, 2003 WL 22992148, at *3-4, 2003 U.S. Dist. LEXIS 23890, at * 12-13 (E.D. Pa. Dec. 15, 2003) (holding that § 8371 does not fall within savings clause under Miller test and is nonetheless preempted because it enlarges ERISA's remedies); Nguyen v. Healthguard of Lancaster, Inc., 282 F. Supp.2d 296, 306 (E.D. Pa. 2003) (same); McGuigan v. Reliance Std. Life Ins. Co., 256 F. Supp.2d 345, 348, 350 (E.D. Pa. 2003) (same). Accordingly, Standard Life's motion to dismiss Plaintiff's bad faith claim is granted.

  B. Canada Life's Motion to Dismiss

  Plaintiff asserts two claims against Canada Life: violation of ERISA and a state law claim for bad faith. Canada Life moves to dismiss Plaintiff's claims against it because, according to the allegations in Plaintiff's complaint, Mr. Rieser was never covered by the Canada Life group life insurance policy.*fn1

  The clear and unambiguous terms of the Canada Life insurance policy state that when the policy went into effect on November 1, 2000, it applied only to those employees who were "actively at work" on the effective date or who later became full time employees "actively at work" after the effective date. (Def Canada Life's Mot. to Dismiss Ex. A. at 6, 8-9.) As defined in the Canada Life policy, "actively at work" means that: a person is either 1) actually performing the person's normal duties, if it is a scheduled work day; or 2) capable of performing the person's normal duties, if the person is not at work due to a ...


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