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Diehl v. Electronic Data Systems Corp.

July 10, 2008

DAVID P. DIEHL, PLAINTIFF
v.
ELECTRONIC DATA SYSTEMS CORPORATION AND LIFE INSURANCE COMPANY OF NORTH AMERICA, DEFENDANTS



The opinion of the court was delivered by: Judge Conner

MEMORANDUM

Plaintiff David P. Diehl ("Diehl") brings this action pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. Presently before the court is the motion for judgment on the pleadings (Doc. 18),*fn1 filed by defendant Electronic Data Systems Corporation ("EDS"), with respect to Diehl's state law claims. For the reasons that follow, the motion will be granted.

I. Factual Background*fn2

From 2000 to 2006, Diehl was a full-time employee of EDS. (Doc. 15 ¶¶ 13, 15- 17.) At all times relevant hereto, EDS offered a short-term disability benefit plan*fn3 to its qualified full-time employees.*fn4 (Id. ¶ 19.) The plan, which is administered by defendant Life Insurance Company of North America ("LINA"), provides up to twenty-six weeks of fully paid leave for "medically approved absences." (Id. ¶¶ 20, 25; see also Doc. 19, Ex. 1.)*fn5 The purpose of the plan is to protect an employee's income in the event that he or she is "unable to work due to an illness, injury or pregnancy for which [he or she] is receiving appropriate care and treatment." (Doc. 19, Ex. 1.) The plan's benefits are available to any employee considered to be "disabled." An individual is considered disabled for purposes of the plan if he or she, "solely because of injury or sickness," is: (1) "receiving appropriate care and treatment from a medical provider on a continuing basis," (2) "unable to perform all the material duties of his or her regular occupation," and (3) "unable to earn more than 80% of [his or her] covered earnings from working in [his or her] regular occupation." (Id. at 3; see also Doc. 15 ¶ 21.)

When Diehl's health began to deteriorate in May of 2005, he was permitted to work from his residence.*fn6 (See Doc. 27 at 1.) On May 12, 2006, Diehl was granted short-term disability benefits "due to lumbar degenerative disc disease and lumbar radiculitis." (Doc. 15 ¶¶ 22-23.) On August 2, 2006, Diehl was informed that defendants were "unable to continue paying benefits beyond July 7, 2006." (Id. ¶ 28; id., Ex. B at 1.) As a result, Diehl received approximately thirteen weeks of coverage. (Id. ¶ 29.) Diehl appealed the benefits denial on September 22, 2006. (Id. ¶ 30; id., Ex. C.) On October 10, 2006, Diehl's appeal was denied because LINA claimed that it had "not received sufficient clinical medical documentation to substantiate any limitations and restrictions" on Diehl's ability to perform his job after July 7, 2006. (Id. ¶¶ 31-32; id., Ex. D.) Diehl alleges that his physical condition was "continuously deteriorating" and that he remained eligible for benefits after July 7, 2006. (Id. ¶ 33.)

EDS also offered a long-term disability plan to employees who had received the entire twenty-six weeks of coverage pursuant to the short-term plan. (Id. ¶ 35.) Diehl alleges that the long-term plan is funded through LINA and qualifies as an ERISA plan. (Id. ¶¶ 36, 68.) Diehl alleges that he was an "eligible employee who participated in the [long-term] plan" and that he had purchased supplemental long-term coverage that would have entitled him to $4,300.00 per month in benefits. (Id. ¶¶ 36-37, 69-71, 73, 75.) Despite Diehl's alleged eligibility for long-term coverage, he was denied benefits because he had not received the entire twenty-six weeks of coverage allotted by the short-term plan. (Id. ¶¶ 38, 72, 77.) Diehl further alleges that LINA "has an egregious conflict of interest in making disability determinations" because it both determines an employee's right to short-term benefits and bears responsibility for the long-term plan once the short-term coverage has expired. (Id. ¶ 80.)

Diehl commenced working full-time from his residence on October 23, 2006. On November 17, 2006, he reapplied for short-term benefits. In December of 2006 and January of 2007, Diehl received eight additional weeks of short-term coverage. His benefits "unilaterally stopped" after January of 2007. (Id. ¶¶ 45-47.) In total, Diehl had received twenty-one of the twenty-six available weeks of short-term coverage when his benefits ceased for the second time. (Id. ¶ 48.) Diehl was terminated from his position on June 15, 2007. (Id. ¶ 49.)

On May 25, 2007, Diehl filed this action in the Cumberland County Court of Common Pleas. (See Doc. 1, Ex. 3.) On July 3, 2007, Diehl's action was removed to this court. (See Doc. 1.) Diehl's amended complaint, which he filed on August 28, 2007, alleges that: (1) EDS and LINA have acted in "bad faith" and refused to extend him benefits "without support in law or contract," (2) EDS violated the Pennsylvania Wage Payment and Collection Law ("Wage Law"), 43 P.S. §§ 260.1 -260.45, and (3) EDS and LINA violated ERISA when they refused to provide Diehl with the full twenty-six weeks of short-term coverage, making him ineligible for long-term benefits pursuant to an ERISA plan. (See Doc. 15; see also id. ¶¶ 50, 52.) EDS filed the instant motion for judgment on the pleadings with respect to Diehl's non-ERISA claims. (See Doc. 18.) The motion has been fully briefed and is ripe for disposition.

II. Standard of Review

A motion for judgment on the pleadings is a procedural hybrid of a motion to dismiss and a motion for summary judgment. Rule 12(c) of the Federal Rules of Civil Procedure provides: "After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." FED. R. CIV. P. 12(c). To succeed on a motion under Rule 12(c), "the movant [must] clearly establish . . . that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Hayes v. Cmty. Gen. Osteopathic Hosp., 940 F.2d 54, 56 (3d Cir. 1991); see also 5A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 1368, at 519 (2d ed. 1990). When deciding a motion for judgment on the pleadings, the court is directed to view "the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Hayes, 940 F.2d at 56.

III. Discussion

Diehl asserts breach of contract and breach of the duty of good faith and fair dealing claims against EDS.*fn7 The court will consider these two claims in tandem because a claim that a defendant violated the duty of good faith and fair dealing "is, in actuality, a claim for breach of contract." See McPeek v. Travelers Cas. & Sur. Co. of Am., No. 06-114, 2007 WL 1875801, at *2 (W.D. Pa. June 27, 2007); see also Northview Motors Corp. v. Chrysler Motor Co., 227 F.3d 78, 91-92 (3d Cir. 2000) (treating a breach of the duty of good faith and fair dealing claim "as any other breach of contract claim, requiring a plaintiff to demonstrate only the existence of a contract, breach and resulting damages"); Se. Pa. Transp. Auth. v. Holmes, 835 A.2d 851, 859 (Pa. Commw. Ct. 2003) ("In the absence of a contractual relationship between [the parties], there is no basis for asserting the breach of good faith and fair dealing doctrine."). Diehl also asserts that EDS's denial of his disability benefits violated the Wage Law. The court will discuss Diehl's breach of contract claim before turning to an analysis of the Wage Law.

A. Breach of Contract

To state a claim for breach of contract in Pennsylvania, a plaintiff must allege: "1) the existence of a contract, including its essential terms; 2) a breach of a duty imposed by the contract; and 3) resultant damage." See Church v. Tentarelli, No. 2728-EDA-2007, ___ A.2d ___, 2008 WL 2579676, at *4 (Pa. Super. Ct. June 30, 2008)(quoting Pittsburgh Constr. Co. v. Griffith, 934 A.2d 572, 580 (Pa. Super. Ct. 2003)). In the instant case, Diehl concedes that he was an at-will employee, meaning that his employment with EDS is insufficient to establish the existence of a contract. (Doc. 27 at ...


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