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Baldwin v. University of Pittsburgh Medical Center and Life Insurance Company of North America

March 16, 2010

DEBORAH L. BALDWIN, AS GUARDIAN OF C.L.D., A MINOR, K.K.D., A MINOR, AND C.M.D., A MINOR PLAINTIFFS,
v.
UNIVERSITY OF PITTSBURGH MEDICAL CENTER (UPMC) AND LIFE INSURANCE COMPANY OF NORTH AMERICA (LINA), DEFENDANTS.



The opinion of the court was delivered by: Conti, District Judge

MEMORANDUM OPINION

Pending before the court are two motions to dismiss filed separately by defendant University of Pittsburgh Medical Center ("UPMC") (Docket No. 10) and defendant Life Insurance Company of North America ("LINA," together with UPMC "defendants") (Docket No. 12). Defendants assert that the complaint (Docket No. 2) filed by Deborah L. Baldwin ("plaintiff" or "Baldwin") on behalf of her adopted children C.L.D, K.K.D, and C.M.D. (collectively the "minors") should be dismissed in its entirety due to plaintiff's lack of standing. Plaintiff is seeking declaratory relief, recovery of benefits denied, an award of prejudgment interest, reasonable counsel fees, and an award of penalties pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. Plaintiff contends on behalf of the minors that she is entitled to $325,000 in benefits under the supplemental life and accidental death and dismemberment policies of Victoria G. Trent ("decedent" or "Trent"), the minors' biological mother. Defendants argue that due to plaintiff's lack of standing this court does not have subject-matter jurisdiction over this case and their motions should be granted pursuant to Federal Rule of Civil Procedure 12(b)(1).

The court considered the parties' submissions and oral arguments on February 8, 2010. For the reasons set forth below and on the record, the court will grant the motions filed by defendants. The court concludes that plaintiff on behalf of the minors does not have standing to bring claims against defendants under ERISA because the minors do not qualify as children of the decedent. As a result, this court lacks subject-matter jurisdiction to hear plaintiff's claims and the case will be dismissed with prejudice.

Background*fn1

On June 6, 2003, Baldwin legally adopted the minors from Trent. (Compl. Ex. A at 3) (Docket No. 2-1.) New birth certificates were issued for the minors which removed Trent as the mother from those certificates. (Id.) On December 23, 2008, Trent, who was an employee of UPMC, died of an accidental death at the age of thirty-four. (Compl. ¶¶ 4, 21.) (Docket No. 2.) At the time of her death, Trent held four insurance policies administered by defendants: (1) a basic life insurance policy ("Basic Life") in the amount of $25,000.00; (2) a basic accidental death and dismemberment insurance policy ("Basic AD&D") in the amount of $25,000.00; (3) a supplemental life insurance policy ("Supp. Life") in the amount of $100,000.00; and (4) a supplemental accidental death and dismemberment insurance policy ("Supp. AD&D") in the amount of $200,000.00. (Id. ¶¶ 23-28.) Prior to her death, Trent designated Baldwin as the sole beneficiary of her Basic Life policy. (Id. ¶ 23.) No beneficiary was designated by Trent for the other policies. (Id. ¶ 44.)

After Trent's death, Baldwin sought payment on behalf of herself as the named beneficiary on the Basic Life policy and sought payment on behalf of the minors on the other policies for which no beneficiary was named. (Id. ¶ 36.) Defendants paid plaintiff $25,000 pursuant to decedent's Basic Life policy and denied plaintiff's claim to benefits under decedent's Basic AD&D, Supp. Life, and Supp. AD&D policies. (Id. ¶¶ 23, 37.) After the initial denial of payment, the matter was referred under the terms of the policies at issue to LINA's appeal unit for further review. (Id. Compl. ¶ 38.) By letter dated May 15, 2009, the decision to deny plaintiff payment on decedent's Basic AD&D, Supp. Life, and Supp. AD&D policies was upheld on the basis that plaintiff and the minors were not named beneficiaries of the insurance policies at issue and the minors were not the "children" of Trent due to their legal adoption by Baldwin prior to decedent's death. (Id. ¶ 39.) Under those circumstances, defendants denied payment because the minors were ineligible to receive benefits under the relevant provisions of the policies which dictate the disbursement of benefits in the event that a policy participant dies without designating a beneficiary. (Id. ¶¶ 37, 39.)

On September 8, 2009, plaintiff filed a two-count complaint against UPMC, Cigna Group Insurance ("CIGNA"), and LINA. (Id. ¶¶ 1-62.) At count I, plaintiff alleges that UPMC, CIGNA, and LINA breached their fiduciary duties under ERISA, 29 U.S.C. § 1104(a)(1)(A), by failing to act for the exclusive purpose of providing benefits to participants when they denied the benefits of Trent's insurance policies to plaintiff on behalf of the minors. (Id. ¶¶ 55-59.) In addition, plaintiff contends that UPMC, CIGNA, and LINA violated ERISA, U.S.C. § 1104(a)(1)(B), by failing to act with the care, skill and diligence required of them due to their mismanagement and poor insurance policy enrollment process. (Id. ¶¶ 57.) At count II, plaintiff alleges that defendants improperly denied plaintiff payment by arbitrarily and capriciously refusing to disburse decedent's plan benefits pursuant to ERISA, 29 U.S.C. § 1132(a)(1)(B), and its supporting regulations. (Id. ¶¶ 60-62.) Plaintiff argues that decedent's insurance policies are contracts and, under Pennsylvania law, a decedent's intent should govern when determining policy beneficiaries. (Id. ¶ 40.) In a stipulation agreed upon by plaintiff and LINA, CIGNA was removed from the complaint and the case caption on November 13, 2009. (Docket No. 6).

Standard of Review

The burden of establishing jurisdiction in the district court lies with the party seeking to invoke the court's jurisdiction. KVOS, Inc. v. Associated Press, 299 U.S. 269, 278 (1936); see Carpet Group Intern. v. Oriental Rug Importers Ass'n, Inc., 227 F.3d 62, 69 (3d Cir. 2000); see also Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988). If a Rule 12(b)(1) motion challenges the court's subject-matter jurisdiction based on the sufficiency of the pleading's allegations, i.e., the movant presents a "facial" attack on the pleading, then those allegations are taken as true and construed in a light most favorable to the complainant. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (case dismissed upon facial attack on complaint, without consideration of extrinsic evidence); Cedars-Sinai Med. Center v. Watkins, 11 F.3d 1573, 1583 (Fed. Cir. 1993); 2A JAMES W. MOORE ET AL., MOORE'S FEDERAL PRACTICE ¶ 12.07[2.-1], at 12-51 to 52 (1993).

If the Rule 12(b)(1) motion denies or controverts the pleader's allegations of jurisdiction, however, the movant is deemed to be challenging the factual basis for the court's subject-matter jurisdiction. See Watkins, 11 F.3d at 1583-84 (citing Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1558-59 (9th cir. 1987)); 5A CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1363, at 456-57 (1990). In such a case, the allegations in the complaint are not controlling, KVOS, 299 U.S. at 277-79; Trentacosta, 813 F.2d at 1559; Thornhill Publishing Co. v. General Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979); 5A WRIGHT & MILLER, supra, § 1363, at 457-58, and only uncontroverted factual allegations are accepted as true for purposes of the motion. See Gibbs v. Buck, 307 U.S. 66, 72 (1939); Watkins, 11 F.3d at 1583-84; 5A WRIGHT & MILLER, supra, §§ 1350, 1363, at 219-20, 457.

All facts underlying the controverted jurisdictional allegations are in dispute and are subject to fact finding by the district court. Watkins, 11 F.3d at 1583-84; 2A MOORE ET AL., supra, ¶ 12.07 [2.- 1], at 12-52; see generally Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990) (drawing distinction between facial and factual challenges to the court's subject-matter jurisdiction); Mortensen v. First Fed. Savs. &Loan Ass'n, 549 F.2d 884, 891-92 (3d Cir. 1977). In establishing the predicate jurisdictional facts, a court is not restricted to the face of the pleadings, but may review evidence extrinsic to the pleadings, including affidavits and deposition testimony. Land v. Dollar, 330 U.S. 731, 735 n.4 (1947); Watkins, 11 F.3d at 1584; St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989) (court properly considered materials outside pleadings to determine whether plaintiff's claim was ripe), cert. denied, 493 U.S. 993 (1989); Reynolds, 846 F.2d at 747; Indium Corp. of Am. v. Semi-Alloys, Inc., 781 F.2d 879, 883-84, cert. denied, 479 U.S. 820 (1986).

Defendants' motions at issue challenge the court's subject-matter jurisdiction based upon the sufficiency of the complaint's allegations and the exhibits attached to the complaint, presenting a "facial" attack on the complaint. The allegations of the complaint are taken as true and construed in a light most favorable to plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (case dismissed upon facial attack on complaint, without consideration of extrinsic evidence).

Analysis

Defendants move to dismiss plaintiff's ERISA claims for lack of standing under Federal Rule of Civil Procedure 12(b)(1). Whether plaintiff on behalf of the minors has standing to pursue her claims under 29 U.S.C. § 1132 is a threshold jurisdictional question that must be dealt with before the merits of the case are considered. Miller v. Rite Aid Corp., 334 F.3d 335, 341 n.2 (3d Cir. 2003). The parties concede that this case does not present an issue of traditional Article III standing, U.S. CONST. art. III, ยง 2 ("Case" and "Controversies"); rather, the court's ...


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