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Lash v. Reliance Standard Life Insurance Co.

United States District Court, E.D. Pennsylvania

April 4, 2017



          John R. Padova, J.

         Plaintiff Kimberly Lash brought this action against Temple University Health System (“Temple”), her former employer, Reliance Standard Life Insurance Company (“Reliance”), the insurer of Temple's Group Long-Term Disability Insurance Plan (the “Plan”), and Matrix Absence Management, Inc. (“Matrix”), the Third-Party Administrator (“TPA”) for the Plan. Matrix and Reliance now move to dismiss the First Amended Complaint. For the reasons that follow, the Motion to Dismiss is granted in part and denied in part.

         I. BACKGROUND

         The First Amended Complaint (“FAC”) and its attachments allege the following facts. Temple provides benefits to its employees under the Plan, which is governed by the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. (FAC ¶¶ 12-13, Ex. 2 at 13.) Reliance was appointed under the terms of the Plan “as the claims review fiduciary with respect to the insurance policy and the Plan.” (Id. ¶ 24.) However, “Reliance did not exercise its authority to determine claims and interpret policy provisions; instead, Reliance retained Matrix to act as a Plan Administrator.” (Id. ¶ 25.) Matrix performed claims administration duties “pursuant to an administrative services agreement with Reliance, ” which stated that Matrix had the authority to “grant and deny claims, authorize disbursement of benefits, and investigate and maintain claims files in accordance with industry standards.” (Id. ¶¶ 6-7.) Matrix was not required to “follow instructions or guidelines established by” Reliance. (Id. ¶ 8.) However, pursuant to the administrative services agreement between Matrix and Reliance (the “TPA Agreement”), Matrix was “responsible for fully adjudicating claims consistent with the terms and provisions of said policies and procedures of [Reliance] which may be modified from time to time.” (Pl.'s Supp. Mem. Ex. A.)[1] Although Matrix made initial decisions to grant or deny claims (FAC ¶ 89), it did not have final authority to decide disputed claims. Rather, the letter from Reliance denying Lash's appeal shows that such final authority was granted to Reliance. (Id. Ex. 5.)

         Lash worked as a payroll supervisor for Temple and was “insured for long-term disability benefits” under the Plan “at all material times.” (Id. ¶¶ 14, 18, 40.) An MRI performed in May, 2012 revealed that she had a tumor in her lower back. (Id. ¶ 35.) Lash had surgery to remove the tumor on May 24, 2012, which caused her to become totally paralyzed in her lower extremities. (Id. ¶¶ 35-36.) On December 11, 2012, Matrix initially approved Lash's claim for long-term disability benefits. (Id. ¶ 43.) At that time, Matrix informed her that “in order to be eligible for benefits beyond 24 months she had to be disabled from performing the material duties of any occupation beginning August 3, 2014.” (Id. ¶ 44.) To determine Lash's continued eligibility, Matrix collected documentation from her medical providers and had its Nurse Case Manager review her claim on April 10, 2014. (Id. ¶¶ 50-53, 55.)

         On August 24, 2014, Lash learned that the Social Security Disability Administration had found her to be totally disabled as of January 17, 2012, and awarded her benefits retroactive to August 2012. (Id. ¶ 70.) On October 21, 2014, Lash was informed that her long-term disability benefits under the Plan were being recalculated “to take into account her entitlement to Social Security Benefits” and was also asked to refund an amount Defendant believed she had been overpaid. (Id. ¶ 71.) Defendant further advised her that “the group policy requires that we withhold any future benefits payable to you until we receive the overpayment balance.” (Id. ¶ 72.) In December 2014, after receiving benefits from the Social Security Administration, Lash refunded the overpaid plan benefits to Reliance. (Id. ¶ 85.) On February 6, 2015, Matrix informed Lash that her claim for long-term disability benefits was denied, as Matrix determined that she could perform other occupations despite her disability. (Id. ¶¶ 89, 96, Ex. 4.) Lash appealed that decision on February 22, 2015, after which Reliance required her to submit to an Independent Medical Examination. (Id. ¶¶ 103, 110, 120.) On May 22, 2015, Reliance notified Lash that it had conducted an independent review and was upholding the decision to deny benefits. (Id. ¶ 117, Ex. 5.)

         Lash commenced the instant action by filing a Complaint in January of 2016 (the “original Complaint”). Thereafter, Matrix filed a Motion to Dismiss the claims against it, which we granted, but also gave Lash leave to file an amended complaint. Lash v. Reliance Standard Life Ins. Co., et al., Civ. A. No. 16-235, 2016 WL 3362060, at *4 (E.D. Pa. June 17, 2016).

         The First Amended Complaint contains four Counts. Counts I and II assert claims against Reliance and Matrix to recover benefits due to Lash pursuant to ERISA, 29 U.S.C. § 1132(a)(1)(B). (FAC ¶¶ 131-140.) Count III asserts a claim against Temple for breach of fiduciary duty. (Id. ¶¶ 141-47.) Count IV asserts an alternative ERISA claim pursuant to 29 U.S.C. § 1132(a)(3) against all Defendants for equitable relief in the form of remand to the administrative proceeding. (Id. ¶¶ 148-156.) Matrix and Reliance (“the moving Defendants”) have filed a Motion to Dismiss the First Amended Complaint for the following reasons: (1) Counts I and II fail to state a claim against Matrix, because the First Amended Complaint fails to allege that Matrix exercised authority or control over the administration of benefits under the Plan; (2) Count IV fails to state a claim against Matrix because the First Amended Complaint does not adequately allege that Matrix is a fiduciary of the Plan; (3) Count IV also fails to state a claim because it is redundant and unnecessary; and (4) the First Amended Complaint is unnecessarily lengthy. The moving Defendants also contend that Matrix is entitled to an award of attorneys' fees.


         When considering a motion to dismiss pursuant to Rule 12(b)(6), we “consider only the complaint, exhibits attached to the complaint, [and] matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)). We take the factual allegations of the complaint as true and “construe the complaint in the light most favorable to the plaintiff.” DelRio-Mocci v. Connolly Props., Inc., 672 F.3d 241, 245 (3d Cir. 2012) (citing Warren Gen. Hosp. v. Amgen, Inc., 643 F.3d 77, 84 (3d Cir. 2011)). Legal conclusions, however, receive no deference, as the court is “‘not bound to accept as true a legal conclusion couched as a factual allegation.'” Wood v. Moss, 134 S.Ct. 2056, 2065 n.5 (2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         A plaintiff's pleading obligation is to set forth “‘a short and plain statement of the claim, '” which gives the defendant “‘fair notice of what the . . . claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (quoting Fed.R.Civ.P. 8(a)(2) and Conley v. Gibson, 355 U.S. 41, 47 (1957)). The complaint must contain “‘sufficient factual matter to show that the claim is facially plausible, ' thus enabling ‘the court to draw the reasonable inference that the defendant is liable for [the] misconduct alleged.'” Warren Gen. Hosp., 643 F.3d at 84 (quoting Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)). “The plausibility standard is not akin to a ‘probability requirement'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556), but it “‘requires showing more than a sheer possibility that a defendant has acted unlawfully.'” Shahid v. Borough of Darby, 666 F. App'x 221, 222 n.1 (3d Cir. 2016) (quoting Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011)). In the end, we will grant a motion to dismiss brought pursuant to Rule 12(b)(6) if the factual allegations in the complaint are not sufficient “‘to raise a right to relief above the speculative level.'” W. Run Student Hous. Assocs., LLC v. Huntington Nat'l Bank, 712 F.3d 165, 169 (3d Cir. 2013) (quoting Twombly, 550 U.S. at 555).


         A. Whether Matrix is a Proper Defendant

         1.Claims Pursuant to 29 U.S.C. § 1132(a)(1)(B)

         The moving Defendants seek to dismiss Counts I and II as against Matrix, contending that Matrix is an improper Defendant in Lash's claims asserted under 29 U.S.C. § 1132(a)(1)(B). Under ERISA, an insurance plan participant may bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). A proper defendant in such an action is “the plan itself or a person who controls the administration of benefits under the plan.” Evans v. Emp. Benefit Plan, Camp Dresser & McKee, Inc., 311 F. App'x 556, 558 (3d Cir. 2009) (citing 29 U.S.C. § 1132(a)(1)(B)); see also Graden v. Conexant Sys. Inc., 496 F.3d 291, 301 (3d Cir. 2007) (same (citing Chapman v. ChoiceCare Long Island Term Disability Plan, 288 F.3d 506, 509-10 (2d Cir. 2002))). The United States Court of Appeals for the Third Circuit has explained that “[e]xercising control over the administration of benefits is the defining feature of the proper defendant under 29 U.S.C. § 1132(a)(1)(B).” Evans, 311 F. App'x at 558. Consequently, in order to allege a cognizable claim against Matrix with respect to Counts I and II, the First Amended Complaint must allege facts that, if true, would support a conclusion that Matrix had control over the administration of benefits under the Plan. See id.

         In the original Complaint, Lash asserted a § 1132(a)(1)(B) claim against Matrix that is very similar to the one included in the First Amended Complaint. Upon Matrix's Motion to Dismiss the § 1132(a)(1)(B) claim in the original Complaint, we dismissed the claim, in part because the original Complaint failed to allege that Matrix had final authority over disputed claims, an allegation that we concluded was required to sufficiently allege ...

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