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Hayes v. American International Group

November 30, 2009


The opinion of the court was delivered by: McLaughlin, J.


Plaintiff Joseph T. Hayes, M.D., is a physician specializing in occupational medicine. On November 6, 2001, he alleges that he was struck by a hospital door and suffered disabling cervical and lumbar injuries. In February 2002, Dr. Hayes made a claim against his disability policy. As part of the initial claim evaluation, Dr. Hayes alleges that he disclosed that he continued to work five hours a week after his accident performing acupuncture. He also alleges that he disclosed in 2003 that he anticipated being able to perform medical file reviews. Despite these alleged disclosures, the defendants found Dr. Hayes to be totally disabled and began paying him disability benefits under his policy.

Dr. Hayes received disability payments from March 2002 through May 2006. In May 2006, his benefits were terminated on the ground that he had been observed through surveillance performing activities inconsistent with his claimed disability, including engaging in the practice of medicine. In November 2006, Dr. Hayes's insurance company referred his file to the New Jersey Office of the Insurance Fraud Prosecutor.

Based on the termination of his disability benefits, Dr. Hayes filed this suit, bringing claims for breach of contract, intentional misrepresentation, breach of fiduciary duty, statutory bad faith under 42 Pa. C.S. § 8371, and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Act ("PaUTPCPL"), 73 P.S. § 201-1 et seq. All claims are asserted against three defendants: American International Group ("AIG"), The United States Life Insurance Company in the City of New York ("U.S. Life"), and Disability Management Services, Inc. ("Disability Management"). Jurisdiction over this case is based in diversity.*fn1

Defendants AIG and U.S. Life (collectively "the moving defendants") have filed a motion to transfer this case to the District of New Jersey or, in the alternative, to dismiss all the plaintiff's claims except that for breach of contract. Defendant Disability Management has answered the complaint, but also filed a joinder to the moving defendants' motion. The Court will deny the motion to transfer and grant, in part, the motion to dismiss.

I. The Motion to Transfer

The moving defendants argue that this case should be transferred to the United States District Court for the District of New Jersey under 28 U.S.C. § 1404(a). Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."

In weighing a transfer under § 1404(a), courts are not limited to looking only at the convenience of parties and witnesses, but may consider any relevant factors that may bear on whether a transfer would be in the interests of justice. The moving party bears the burden of establishing the need for a transfer and, in ruling on such a motion, the plaintiff's choice of forum "should not be lightly disturbed." Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).

Some of the private interests that may be considered include the plaintiff's choice of forum; the defendant's choice of forum; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of witnesses, although only to the extent that the witnesses may actually be unavailable for trial in a particular forum; and the location of books and records to the extent they could not be produced in a particular forum. Jumara, 55 F.3d at 879. Some of the public factors to be considered include the enforceability of the judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the local interest in deciding local controversies at home; the public policies of the fora; and, in diversity cases, the familiarity of the trial judge with the applicable state law. Id.

In arguing for transfer, the moving defendants do not contend that a transfer to New Jersey is necessary for the convenience of the parties or witnesses. The moving defendants state only that the District of New Jersey is "at least as convenient as, if not more convenient" than the Eastern District of Pennsylvania. Def. Br. at 13. Instead, the principal argument for transfer is that the operative facts underlying Dr. Hayes's claims took place in New Jersey and that New Jersey has a public policy interest in seeing them tried in that forum. These arguments are not sufficient to warrant transfer.

The moving defendants argue that these claims arose in New Jersey. They contend that Dr. Hayes' disability policy was issued while he was a New Jersey resident and delivered to him in New Jersey.*fn2 Payments under the policy were sent to an address in New Jersey, as was the letter terminating his benefits. Because the "vast majority" of operative facts took place in New Jersey, the moving defendants argue that the plaintiff's choice of forum should be given little if any weight.

The moving defendants also contend that New Jersey has a strong public policy interest in having all instances of insurance fraud occurring within its borders tried in its courts and in having its law apply to the interpretation of insurance contracts issued to its residents. They argue that New Jersey law will apply to many, if not all, of the claims here, and that the case should be transferred because a New Jersey court will be more familiar with New Jersey law.

Weighing these arguments, the Court finds that they are not sufficient to meet the moving defendants' burden of showing that a transfer is warranted. Contrary to the moving defendants' assertions, a significant number of the events at issue in this lawsuit occurred in Pennsylvania. The complaint states, and the moving defendants have not disputed, that Dr. Hayes' practiced medicine in Pennsylvania at the time he became disabled and that his disability was caused by an accident at a Pennsylvania hospital. According to the moving defendants' brief, one of the reasons for the termination of Dr. Hayes' benefits was that he was observed at medical buildings in Norristown and Northhampton, Pennsylvania, acting in a manner that indicated that he was practicing medicine at these locations. Def. Br. at 6.

New Jersey's asserted public policy interests in this case are also insufficient to warrant a transfer. The defendants have not explained how New Jersey's ability to investigate allegations of insurance fraud concerning Dr. Hayes will be affected by whether this case proceeds in Pennsylvania or New Jersey. The Court can see no reason why the forum in which this case proceeds would affect any New Jersey investigation. The Court also finds that, to the extent that New Jersey law applies to this ...

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