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Fingles v. Continental Casualty Co.

April 28, 2010

IRA FINGLES
v.
CONTINENTAL CASUALTY COMPANY



The opinion of the court was delivered by: O'neill, J.

MEMORANDUM

On July 31, 2008, plaintiff Ira Fingles, the executor of the estate of Herbert Fingles, initiated this lawsuit in the Philadelphia County Court of Common Pleas. His five-count complaint alleged misconduct by defendant, Continental Casualty Company, with respect to its handling of an insurance agreement between Herbert Fingles and Continental.*fn1 On December 23, 2008, the case was removed to this Court.*fn2 On December 29, 2008, Continental moved to dismiss counts III and V of the complaint. Presently before me are Continental's motion to dismiss counts III and V of plaintiff's complaint, plaintiff's response and Continental's reply. For the following reasons, I will grant in part and deny in part the motion.

BACKGROUND

Herbert Fingles entered into a long-term care insurance policy with Continental Casualty Company on October 30, 1996. On September 10, 2003, Fingles underwent triple bypass surgery. During the surgery, he suffered anoxic encephalopathy--brain damage resulting from oxygen deprivation. Following the surgery, he received several weeks of treatment at Magee v. Rehabilitation Hospital. Upon discharge from Magee, Fingles was unable to care for himself so he hired Mabel Barclay, a certified nursing assistant, to provide in-home care. On May 22, 2004, he submitted claims to Continental requesting payment for Barclay's services. Continental denied the request because Barclay was not affiliated with a licensed home health care agency as defined in Fingles's policy.

Because his claim was denied, Fingles moved into an assisted living facility on July 15, 2004. On September 22, 2004, he submitted a claim to Continental requesting payment for the assisted living facility. Continental informed Fingles that his claim could not be processed because several of the necessary forms were missing. Fingles repeatedly requested that Continental specify which forms were missing and send such forms to him, but never received the requested clarification or the forms themselves. Fingles ultimately withdrew the September 22, 2004 claim.

In May 2005, Fingles submitted a third claim to Continental. Because of his prior frustration with the claims process, he requested that any missing forms be forwarded to him within one week. Continental again refused to pay the claim, questioning for the first time whether Fingles actually needed the care he received.

In September 2005, Continental sent a nurse to perform an in-home assessment of Fingles's need for the care that he had been receiving. After reviewing the nurse's report, Continental determined that Fingles was eligible for the care he had been receiving. In December 2005, however, Continental informed Fingles that his coverage had been terminated in February 2004 because he had missed a premium payment. Continental sent no notice of the missed premium payment to Fingles prior to terminating his coverage and, indeed, until December 2005, Fingles had received no notice of the termination of coverage.

Despite the missed premium payment, Continental twice informed Fingles that his coverage would be reinstated if he paid the past-due amount. Fingles died on January 7, 2006. Ten days later, plaintiff remitted $10,603.44 to Continental to reinstate the coverage. Continental then requested supplemental information, which plaintiff provided. On June 5, 2006, Continental issued a partial payment of $11,090.00 on the claim. It denied the remainder of Fingles's claim.

The documents plaintiff has attached to his complaint reveal a plethora of correspondence between Continental and Fingles or plaintiff. At least five times during this process, Fingles requested copies of all documents in Continental's possession that related to Fingles. He never received the requested documents. Additionally, on December 5, 2005, Fingles requested that Continental cease sending correspondence directly to him and instead forward all correspondence to his attorney. Continental never honored that request.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Typically, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations," though plaintiff's obligation to state the grounds of entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). The complaint must state "'enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Wilkerson v. New Media Tech. Charter School Inc., 522 F.3d 315, 321 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). The Court of Appeals has recently made clear that after Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1955, 173 L.Ed. 2d 868 (2009), "conclusory or 'bare-bones' allegations will no longer survive a motion to dismiss: 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.' To prevent dismissal, all civil complaints must now set out 'sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Iqbal, 129 S.Ct. at 1949). The Court also set forth a two part-analysis for reviewing motions to dismiss in light of Twombly and Iqbal: "First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 210-11 (quoting Iqbal, 129 S.Ct. at 1950). The Court explained, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Id. (citing Phillips v. County of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008)). "Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" Iqbal, 129 S.Ct. at 1949.

DISCUSSION

Continental moves to dismiss count III (common law insurance bad faith) and count V (UTPCPL violation) of the complaint. It argues that count III should be dismissed because Pennsylvania law does not recognize a common law remedy for bad faith conduct by an insurer independent of a breach of contract claim. It argues that count V should be dismissed because Continental's alleged failure to pay benefits constitutes nonfeasance, which is not actionable under the UTPCPL, and because plaintiff has not adequately alleged the elements of fraud. Each argument will be discussed in turn.

I. Count III Will Be Dismissed Because the Common Law Bad Faith Claim is Subsumed by the ...


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