United States District Court, W.D. Texas
REPORT AND RECOMMENDATION OF THE UNITED STATES
MAGISTRATE JUDGE
SUSAN
HIGHTOWER, UNITED STATES MAGISTRATE JUDGE
TO:
THE HONORABLE LEE YEAKEL, UNITED STATES DISTRICT
JUDGE
Before
this Court are Defendant Life Insurance Company of North
America's Rule 12(b)(6) Motion to Dismiss, filed on April
8, 2019 (Dkt. No. 12); Plaintiff's Response, filed on
April 17, 2019 (Dkt. No. 14); and Defendant's Reply,
filed on April 23, 2019 (Dkt. No. 15). On August 23, 2019,
the District Court referred the above motion to the
undersigned Magistrate Judge for Report and Recommendation
pursuant to 28 U.S.C. § 636(b)(1), Federal Rule of Civil
Procedure 72, and Rule 1 of Appendix C of the Local Rules of
the United States District Court for the Western District of
Texas (“Local Rules”).
I.
BACKGROUND
Plaintiff
Juan Pensado (“Plaintiff”) worked at the Four
Seasons hotel organization for nearly 30 years and was most
recently the Director of Banquets for the Four Seasons Hotel
in Austin, Texas. As the Director of Banquets, Plaintiff
“had a very physical job requiring him to constantly
walk, stand, climb stairs all day-nearly 10-12 hours on a
normal day and often for 18 hours a day.” Dkt. No. 1 at
¶ 8.
In
March 2014, Plaintiff stepped into a pothole and injured his
left foot. Plaintiff was eventually diagnosed with Charcot
foot, “a condition caused by nerve damage especially in
people with diabetes, like Pensado, and which can further
result in bone breakage, joint deterioration, foot ulcers and
infections.” Id. at ¶ 10. Plaintiff was
prescribed pain medication and his foot was placed in a cast.
After several months, Plaintiff attempted to return to work,
but his injury worsened, and he eventually had to undergo
several surgeries on his foot. Despite the surgeries and
continued treatment, Plaintiff's condition did not
improve. As a result of the surgeries and his restricted
mobility, Plaintiff missed several months of work at the Four
Seasons.
Through
his employment with the Four Seasons, Plaintiff was eligible
to apply for both short-term and long-term disability
benefits under a disability benefits plan entitled the
“Life Insurance of North America Group Policy”
(the “Policy”) issued by Life Insurance Company
of North America, also known as CIGNA Group Insurance Company
(“LINA”).[1] Plaintiff applied and was granted 24
months of short-term disability benefits under the Policy,
which provides for such benefits when a participant “is
unable to perform the material duties of his or her Regular
Occupation.” Id. at ¶ 19.
In late
2014, Plaintiff lost his job with the Four Seasons because
his disability prevented him from returning to work.
Accordingly, Plaintiff applied for long-term disability
benefits (“LTD”) under the Policy, which provides
that a participant is eligible for LTD benefits if he is
“unable to perform the material duties of any
occupation for which he or she is, or may reasonably become,
qualified based on education, training or experience.”
Id. at ¶ 22. Although LINA initially denied
Plaintiff's application in July 2015, it reversed its
denial after Plaintiff appealed the decision. However, on
June 15, 2017, LINA again denied, and continues to deny, LTD
benefits to Plaintiff based on the “any
occupation” language in the Policy, contending that
Plaintiff could perform an occupation. Plaintiff alleges that
LINA “unreasonably, arbitrarily and capriciously
ignored a mountain of medical evidence and expert medical
opinions from Pensado's treating doctors whose
conclusions showed him unable to perform any
occupation.” Id. at ¶ 24. On
December 12, 2018, Plaintiff received his final denial notice
and was informed that he had exhausted all administrative
appeals in his case.
While
Plaintiff's LTD benefits claim was pending before LINA,
Plaintiff also filed for Social Security benefits with the
Social Security Administration (“SSA”). Plaintiff
alleges that LINA referred him to Advantage 2000 Consultants
(“Advantage”), a consultant company that
represents individuals seeking Social Security disability
benefits. Plaintiff retained Advantage to represent him in
his claim for Social Security benefits and Advantage assigned
Plaintiff an attorney for the proceedings. In September 2017,
Plaintiff was awarded Social Security benefits.
Plaintiff
alleges that he was not aware that Advantage “had a
longstanding relationship with [LINA] in which . . .
Advantage 2000 receives a contingency fee from [LINA] from
the Social Security benefits . . . when it recovers such
benefits for a person who may also be covered by a private
plan for disability benefits.” Id. at ¶
49. Plaintiff alleges that this “[t]his contractual
sweetheart arrangement between [LINA] and Advantage 2000
creates not only a conflict of interest between Advantage
2000 and Pensado, but also a breach of fiduciary duty between
Pensado and the attorney who provides legal services to
Pensado.” Id. at ¶ 50. Plaintiff
complains that this arrangement interfered with and reduced
Advantage's objectivity in negotiating any subrogation by
LINA to the Social Security benefits obtained for Plaintiff.
“By receiving a contractual contingent fee for work
performed for [LINA] and ostensibly for Pensado's
benefit, the fee arrangement between [LINA] and Advantage
2000 and its attorney assigned to represent Pensado creates
an irreconcilable conflict of interest.” Id.
at ¶ 51. In addition, Plaintiff complains that Advantage
shared with LINA confidential information obtained from
representing Plaintiff in his Social Security proceedings.
Thus, Plaintiff alleges that LINA tortiously interfered with
“the contract that Advantage 2000 and its attorney have
with Pensado, as well as with the fiduciary duties owed
Pensado by Advantage 2000 and its attorney for the work they
perform to obtain and retain as much of his Social Security
benefits as possible.” Id. at ¶ 53.
On
February 19, 2019, Plaintiff filed this lawsuit against LINA
and “Life Insurance Company of North America Group
Policy, ” alleging (1) wrongful denial of benefits
under the Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. §§ 1001-1461
(“ERISA”), (2) failure to provide documents
allegedly required by ERISA, and (3) breach of fiduciary duty
under ERISA. Plaintiff also has asserted a tortious
interference with business relationship claim under Texas law
against LINA, alleging that LINA interfered with his business
relationship with the consulting company and his lawyer who
represented him before the Social Security Administration.
On
April 8, 2019, LINA filed this Motion to Dismiss under
Federal Rule of Civil Procedure 12(b)(6), arguing that Life
Insurance Company of North America Group Policy should be
dismissed from this lawsuit because it is not a proper
defendant under ERISA and is not a legal entity capable of
being sued. LINA also argues that Plaintiff's Texas
tortious interference claim is preempted by ERISA.
II.
LEGAL STANDARD
Federal
Rule of Civil Procedure 12(b)(6) allows a party to move to
dismiss an action for failure to state a claim upon which
relief can be granted. In deciding a Rule 12(b)(6) motion to
dismiss for failure to state a claim, the court
“accepts all well-pleaded facts as true, viewing them
in the light most favorable to the [nonmovant].” In
re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th
Cir. 2007) (internal quotation marks omitted). The Supreme
Court has explained that a complaint must contain sufficient
factual matter “to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the [nonmovant] pleads factual
content that allows the court to draw the reasonable
inference that the [movant] is liable for the misconduct
alleged.” Ashcroft, 556 U.S. at 678.
“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
entitle[ment] to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550
U.S. at 555 (internal quotations and citations omitted).
“Factual allegations must be enough to ...