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John N. West and Peter Shlosky, Individually, and On Behalf of A Class of Similarly Situated Individuals v. Cuna Mutual Insurance Society

February 16, 2012

JOHN N. WEST AND PETER SHLOSKY, INDIVIDUALLY, AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED INDIVIDUALS, PLAINTIFFS,
v.
CUNA MUTUAL INSURANCE SOCIETY, DEFENDANT.



The opinion of the court was delivered by: Judge Cathy Bissoon

MEMORANDUM AND ORDER

I.MEMORANDUM

Pending before the Court is Defendant CUNA Mutual Insurance Society's Motion to Dismiss or, in the alternative, Motion to Strike (Doc. 9). For the reasons stated herein, the Court will grant Defendant's Motion to Dismiss Plaintiffs' putative class action claims, deny Defendant's Motion to Dismiss Plaintiffs' individual claims, and deny Defendant's alternative Motion to Strike as moot.

BACKGROUND

A.Factual Background

Plaintiffs John N. West and Peter Shlosky brought this action, individually and on behalf of a class of similarly situated individuals, alleging wrongful denial and/or termination of credit disability benefits under insurance policies issued by Defendant CUNA Mutual Insurance Society. See Compl. (Doc. 1). Plaintiffs also allege that Defendant acted in bad faith in denying claims, refusing to reevaluate claims, and refusing to negotiate in good faith. See id.

At issue are insurance policies containing the following definition of "disability":

During the first 12 consecutive months of disability means that a member is not able to perform substantially all of the duties of his occupation on the date his disability commenced because of a medically determined sickness or accidental bodily injury. After the first 12 consecutive months of disability, the definition changes and requires the member to be unable to perform any of the duties of his occupation or any occupation for which he is reasonably qualified by education, training or experience.

Compl. ¶ 8 (Doc. 1).

The same insurance policies were at issue in a prior class action, Meyer v. CUNA Mutual Group, No. 2:03-cv-602 (W.D. Pa.) (Conti, J.). On a motion for summary judgment, the district court in Meyer construed the meaning of "or" in the final clause of the "disability" definition. See Meyer, 2007 WL 2907276, at *7-10 (W.D. Pa. Sept. 28, 2007). The court found that "or" signified the presence of two alternatives, either of which may independently serve as a basis for disability. "[T]hus any claimant who meets the 'own occupation' standard or the 'any occupation' standard will be totally disabled within the meaning of the policy." Id. at *10.

The district court denied summary judgment "as to the remaining issues under the breach of contract claim, namely (1) which of the potential members is actually a member of the class, and (2) what are the damages for each class member." Id. at *11. The court subsequently decertified the class "because the remaining issues to be adjudicated do not satisfy the requirements of Federal Rules of Civil Procedure 23(a) and 23(b)(3) for class certification." Meyer, No. 2:03-cv-602, Order, Sept. 21, 2009 (Doc. 203) (Conti, J.).

On appeal, the Third Circuit affirmed the district court's interpretation of "or." Meyer v. CUNA Mutual Ins. Soc'y, 648 F.3d 154, 168 (3d Cir. 2011) ("Meyer II"). The Third Circuit vacated the district court's entry of injunctive relief, which is not relevant to the currently pending motion to dismiss in this case. Id. at 169-71. The plaintiff did not appeal the district court's decertification of the class. Id. at 171 n.18.

Plaintiffs in this case assert claims for breach of contract (Count I) and bad faith (Count II). In support of Plaintiffs' breach of contract claim, Plaintiffs allege that Defendant continues to deny benefits to insureds "[i]n clear defiance of the District Court's Order." Id. at

ΒΆ 21. Specifically, Plaintiffs allege that the district court in Meyer already determined that "under the aforementioned policy language Class Members remain eligible for disability benefits so long as they are unable to return to their pre-injury occupation," and that "Defendant's refusal to pay ...


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