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Yost v. Anthem Life Insurance Co.

United States District Court, M.D. Pennsylvania

October 27, 2017

ERIC YOST, individually and on behalf of a class of similarly situated individuals, Plaintiff,



         I. Introduction and Procedural History

         Plaintiff Eric Yost, individually and on behalf of a class of similarly situated individuals, filed a putative class action complaint on December 11, 2015 in the Court of Common Pleas of Pike County. Doc. 2-1. The case was removed to this Court on January 14, 2016. Doc. 1. On August 2, 2016, this Court granted in part and denied in part a motion to dismiss the original complaint. Yost v. Anthem Life Ins. Co., 2016 WL 4151214 (M.D. Pa. Aug. 2, 2016). Count I of the original complaint, a claim for declaratory judgment that Pennsylvania's Motor Vehicle Financial Responsibility Law ("MVFRL"), 75 Pa.C.S.A. § 1720, is not preempted by ERISA, survived. Plaintiff then filed an Amended Complaint on August 18, 2016, re-alleging the claim for declaratory relief (Count II); and adding a claim for breach of the ERISA plan's terms under the same preemption argument (Count III); a claim for breach of fiduciary duty by misrepresentation (Count IV); and a claim for breach of the fiduciary duty of loyalty (Count V). Doc. 26. Defendant Anthem Life Insurance Company ("Anthem") moved to dismiss Counts II through V of the Amended Complaint.[1] Doc. 30. For reasons stated below, this Court will grant Defendant's motion in part and deny the motion in part.

         II. Factual Allegations

         The factual allegations are substantively similar to those of the original complaint, which the Court has detailed in its August 2, 2016 opinion. The plaintiff, Eric Yost, was insured for disability benefits under a Group Plan issued by Anthem through his former employer. Doc. 26 ¶ 6. On February 2, 2013, Mr. Yost was injured as a result of a motor vehicle accident, rendering him temporarily disabled. Id. ¶ 7. Mr. Yost submitted a claim for short term disability benefits to Anthem, and Anthem paid Mr. Yost $5, 654.40 from February 2013 to April 2013. /d.¶¶8, 9.

         Separately, Mr. Yost sought damages against the alleged tortfeasor from the motor vehicle accident. Id. ¶ 10. The tortfeasor's insurer settled the action and compensated Mr. Yost for his personal injuries. Id. ¶ 11. Upon learning of the settlement, Anthem asserted a claim for reimbursement of the short term disability benefits it previously paid to Mr. Yost in the amount of $6, 997.25. Id. ¶¶12, 14. Mr. Yost's lawyer and an Anthem representative then attempted to negotiate a settlement as to Anthem's assertion for reimbursement. Id. ¶¶ 14-20.

         However, after settlement discussions were underway, Mr. Yost's brought the MVFRL to the attention of the Anthem representative, arguing that Anthem has no right of recovery because in a motor vehicle action, Pennsylvania law prohibited reimbursement of "benefits...payable by a program, group contract or other arrangement" from a claimant's tort recovery. Doc. 2-1 at 92. Anthem's representative disagreed and responded that "after consulting with [Anthem's] in-house legal consultants we have determined that the Pennsylvanian Code...does not apply to this matter given it appears that the Code is applicable when an automobile insurance carrier asserts reimbursement, " and Anthem was not an auto insurance carrier. Id. at 99. Thus, Anthem continued to assert a claim for reimbursement of the disability benefits it paid to Mr. Yost. Doc. 26 ¶ 24. As a result, Mr. Yost's lawyer "has been forced to refuse to distribute to Mr. Yost the money in dispute" due to his ethical obligations, leaving Mr. Yost "subject to suit and loss of benefits based on the dispute over the [] funds." Id. ¶ 26.

         III. Standard of Review

         A complaint must be dismissed under Federal Rule of Civil Procedure 12(b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

         "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do." Twombly, 550 U.S. at 555 (internal citations and alterations omitted). "[T]he presumption of truth attaches only to those allegations for which there is sufficient 'factual matter" to render them 'plausible on [their] face'...Conclusory assertions of fact and legal conclusions are not entitled to the same presumption." Schuchardt v. President of the United States, 839 F.3d 336, 347 (3d Cir. 2016) (citing Iqbal, 556 U.S. at 679, 129 S.Ct. 1937).

         "Although the plausibility standard 'does not impose a probability requirement, ' it does require a pleading to show 'more than a sheer possibility that a defendant has acted unlawfully.'" Connelly v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 and Iqbal, 556 U.S. at 678, 129 S.Ct. 1937). "The plausibility determination is 'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Id. at 786-87 (citing Iqbal, 556 U.S. 679, 129 S.Ct. 1937).

         IV. Analysis

         A. Counts

         II and III: ERISA Preemption

         The ERISA preemption issue has been fully litigated and resolved in the previous motion to dismiss in Mr. Yost's favor. Yost, 2016 WL 4151214, at *4. For the sake of brevity, the Court offers a simple summary of its previous opinion. Anthem argued-and continues to argue-that ERISA preempts § 1720 of the MVFRL because "it 'relates to' employer-benefit plans and is not saved from preemption by ERISA's 'saving clause.'" Doc. 31 at 1. The parties do not dispute that the Plan is subject to the provisions of ERISA because it was a "welfare benefit plan." Nor do they dispute that ERISA may "preempt" any state laws that "relate to" ERISA plans. However, a state law may be "saved" from preemption if it is "specifically directed toward the insurance industry." Yost, 2016 WL 4151214, at*3 (citing Kentucky Ass'n of Health Plans, Inc.v. Miller, 538 U.S. 329, 334, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003)). And it is on the issue of the savings clause that the parties continue to disagree.

         As stated in the Court's first opinion, the Supreme Court has already instructed that "[t]here is no dispute that the [Section 1720] falls within ERISA's insurance savings clause...Section 1720 directly controls the terms of insurance contracts by invalidating any subrogation provision that they contain. It does not merely have an impact on the insurance industry; it is aimed at it" FMC Corp. v. Holliday, 498 U.S. 52, 60-61, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990) (emphasis added) (internal citations omitted). Relying on the language in FMC Corp., the Court denied Anthem's motion to dismiss the claim for declaratory judgment.

         Despite having had the opportunity to fully litigate this issue, Anthem devotes over half of its new motion to dismiss brief arguing that the Court's opinion is incorrectly decided, as well as three footnotes alluding to a motion for certification of an interlocutory appeal. Doc. 31, at 6-17, n. 1, 2, 5. Anthem also attached a draft brief it planned on filing for certification for appeal. Doc. 31-3. Both the new motion to dismiss brief and the attached draft brief contain substantively the same arguments that this Court has already considered in its previous opinion. The court appreciates the fact that Anthem sincerely believes that the first opinion was wrongly decided, but notes that a brief summary of the arguments would have been sufficient to preserve the issue, especially since Anthem has not cited any new legal developments since the Court issued its first opinion.

         For the sake of completeness, the Court will expound upon its reasoning in holding that § 1720 of the MVFRL is not saved from ERISA preemption. There are "[t]hree provisions of ERISA [which] speak expressly to the question of preemption, " the preemption clause, the saving clause, and the deemer clause. FMC Corp., 498 U.S. at 58. The first preempts state laws that "relate to any employee benefit plan." 29 U.S.C. § 1144(a). The second "saves" such laws from preemption if they "regulate insurance, banking, or securities." 29 U.S.C. § 1144(b)(2)(A). And the third "exempt[s] self-funded ERISA plans from state laws that 'regulat[e] insurance' within the meaning of the saving clause." FMC Corp., 498 U.S. at 61, 111 S.Ct. at 409 (interpreting 29 U.S.C. § 1144(b)(2)(B)).

         The key question in FMC Corp. revolved around the third clause, or the so-called "deemer clause." Id. What is at issue in this case, by contrast, is the second clause, or the "savings clause, " i.e. the parties here dispute whether MVFRL is "saved" from preemption. However, it is not as if FMC Corp. left the Court with no elucidation, because the Supreme Court stated explicitly that "[t]here is no dispute that the Pennsylvania law falls within ERISA's insurance saving clause." Anthem argues that this language is "dicta." Doc. 31 at 20. It also argues that the Third Circuit's description of FMC Corp. is "dicta" when it noted that the Supreme Court "'already resolved' the saving clause question with respect to §1720." Id. at 15 n. 12 (citing Wlrth v. Aetna U.S. Healthcare, 469 F.3d 305, 309 n.6 (3d Cir. 2006)). Anthem would have this Court rely on Levine v. United Healthcare Corp., 402 F.3d 156 (3d Cir. 2005) instead, which is a Third Circuit case that analyzed whether a New Jersey statute is saved under the ERISA savings clause. Anthem claims that Levine should control because it applied the most recent framework for determining whether the savings clause applies, as set forth by the Supreme Court in Miller. The Miller framework asks whether the state law is "specifically ...

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