Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-02805/USCOURTS-azd-2_06-cv-02805-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Bank of America Group Benefits Program

Fiduciary, The Bank of America Benefits

Appeals Committee; Bank of America,

N.A., 

Plaintiffs, 

vs.

Carol Riggs, 

Defendant. 

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No. CV06-02805-PHX-NVW

ORDER

Pending before the court are Defendant Riggs’ Motion to Dismiss for lack of subject

matter jurisdiction (Doc. # 7) and Plaintiff’s Motion to Reconsider (Doc. # 18). The motion

to dismiss was denied in an order dated March 29, 2007 (Doc. # 14), on the ground that while

federal subject matter jurisdiction is absent, the amount in controversy between the diverse

parties is sufficient under 28 U.S.C. § 1332(a). For the reasons stated below, the motion to

dismiss will now be granted, and the motion for reconsideration will be denied. 

I. Diversity Jurisdiction

After denying the motion to dismiss, the court ordered additional briefing pertaining

to the question of diversity jurisdiction in light of the rule that “future potential benefits may

not be taken into consideration in the computation of the amount in controversy in diversity

actions . . . involving disability insurance where the controversy concerns merely the extent

of the insurer’s obligation with respect to disability benefits and not the validity of the

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1

 There was some confusion concerning this issue on the part of the court at oral

argument. For the sake of clarification only, and without any judgment as to the merits of

the case, the court points out that the settlement agreement does state that Riggs’s coverage

“will be billed at the active employee rate.” Doc. # 8 at 4. It is therefore possible from the

settlement agreement alone, and without reference to course of performance, that Riggs is

entitled to health care coverage as if she were an active employee. 

2

 Plaintiff bases these figures on Data Book: Healthcare Spending and the Medicare

Program, Section 2, Medicare Beneficiary Demographics 21 (MedPAC June 2006). 

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policy.” Mass. Cas. Ins. Co. v. Harmon, 88 F.3d 415, 416-17 (6th Cir. 1996). Defendant

responds that the rule expressed in Harmon divests the court of diversity jurisdiction for lack

of a sufficient amount in controversy. Plaintiff contends that the jurisdictional amount has

been satisfied because the dispute about whether Defendant is entitled to health care

coverage available to “active employees” amounts to an attack on the validity of the policy

provision that limits Defendant’s eligibility exclusively to participation in medical plans with

coverage supplemental to Medicare, and future benefits may be considered in calculating the

amount in controversy under 28 U.S.C. § 1332(a) when the validity of a policy provision is

at issue. 

The underlying substantive question in this case is whether a settlement agreement

guarantees Riggs a higher level of health care coverage than that provided under her former

employer’s ERISA Plan.1

 Only the extent of Plaintiff’s liability for Riggs’s future health

care costs is at issue; there is no dispute over liability for costs already incurred. However,

the amount in controversy could still exceed $75,000 if one multiplies the average number

of years remaining in the life span of a person in Riggs’s position by the average annual

difference in value between primary coverage under the Plan and coverage that is merely

supplemental to Medicare. Depending on which party’s interpretation of the Plan and

Settlement Agreement is correct, and assuming that Riggs’s health care costs will follow

national averages, Plaintiff may or may not be required to pay an additional $12,000 in

annual medical expenses over the course of roughly 24 years, or a total of $288,000.2

Diversity jurisdiction thus hinges in part on whether the rule expressed in Harmon bars

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consideration of the $288,000 under 28 U.S.C. 1332(a) on the facts of this case. If the rule

does have that effect, it will appear to a “legal certainty” that the amount in controversy is

insufficient to sustain diversity jurisdiction because no other benefits are in dispute. 

Applied here, Harmon’s statement of the rule pertaining to future potential benefits

is analytically unsatisfying. A dispute over the validity of a policy does not logically call

into question future potential benefits any more than a mere dispute over the extent of

coverage under a valid policy. In either case, the direct effect of a decision on the merits is

to require or deny the future disbursement of those benefits that are implicated by the plan

or plan provision that was in dispute. The only difference is the extent of the future benefits

that are affected. 

As an illustration, it is hard to see how a dispute over the validity of an insurance

policy that entitles a beneficiary to $100,000 in future benefits calls such benefits into

question any more than a dispute about whether the same policy, admittedly valid, entitles

the beneficiary to $180,000 in future benefits instead of $100,000. Just as a decision in the

first scenario would directly decide entitlement to a future $100,000, a decision in the second

would directly determine whether the beneficiary is entitled to a future $80,000. The future

disbursement of the $80,000 is admittedly factually contingent, but it is questionable that it

is any more attenuated, contingent, or collateral than the future $100,000 that would be

counted in the first scenario under Harmon. For the same reason, it is also unsatisfying to

rule that future benefits may only factor into the amount in controversy when the validity of

an entire policy, as opposed to the validity of a mere provision in the policy, is at issue.

The court nevertheless feels compelled to follow the considered dictum of the Ninth

Circuit, which corresponds with the rule articulated in Harmon. In Budget Rent-a-Car, Inc.

v. Higashiguchi, 109 F.3d 1471, 1473 (9th Cir. 1997), it was explained that an insurer’s

maximum liability was “relevant to determine the amount in controversy only if the validity

of the entire insurance policy is at issue.” While Higashiguchi is factually distinguishable

from the present case, the cited language suggests that future benefits should not be

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considered in calculating the amount in controversy in this case because the validity of only

one provision in the Plan, rather than the Plan itself, is at issue. 

Moreover, the rule in Harmon typically applies in the context of disputes involving

installment contracts. See 14B Charles Allen Wright, Arthur R. Miller & Edward H. Cooper,

Federal Practice And Procedure § 3710 (3d ed. 1998). The contract presently at issue

simply provides coverage for the cost of health care. Payments are made neither in fixed

intervals nor at fixed levels. This difference is significant because without a fixed benefit

level and rate it is impossible to discern the precise value of Riggs’s future potential benefits.

Health care costs can fluctuate from year to year, and there is no necessary reason to believe

that Riggs’s costs would follow national averages. 

Hawkins v. Aid Assoc. for Lutherans, 338 F.3d 801, 805 (7th Cir. 2003), which

counted future benefits when the validity of an isolated arbitration clause in a policy was

disputed, does not warrant a different result. The majority of cases express that the validity

of the entire policy must be at issue for future potential benefits to count toward the amount

in controversy. Additionally, the approach in Hawkins would create uncertainty by resting

jurisdiction on the often slippery distinction between disputes over the scope of coverage and

disputes over the validity of an isolated provision of a plan that determines the scope of

coverage. See Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., 545 U.S. 308, 321

(2005) (Thomas, J., concurring) (“Jurisdictional rules should be clear.”). For these reasons,

jurisdiction may not be exercised under 28 U.S.C. § 1332(a). The amount in controversy is

insufficient. 

II. Subject Matter Jurisdiction

Plaintiff’s motion for reconsideration argues that subject matter jurisdiction exists

pursuant to 29 U.S.C. 1332(a)(3)(B)(ii). The statute provides, “A civil action may be

brought . . . by a participant, beneficiary, or fiduciary . . . to obtain . . . appropriate equitable

relief . . . to enforce any provisions of this subchapter or the terms of the [ERISA] plan.” In

part, the language of the statute has been satisfied. Plaintiff is an ERISA fiduciary.

Moreover, the request for a declaratory judgment can be seen as an action to “enforce” the

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terms of the ERISA Plan because it aims to establish the primacy of the language of the Plan

over the conflicting language of the Settlement Agreement. Transamerica Occidental Life

Ins. Co. v. DiGregorio, 811 F.2d 1249, 1252 (9th Cir. 1987) (“A declaratory judgment may

be said to ‘enforce’ ERISA or the terms of an ERISA plan where it seeks to establish the

primacy of an ERISA obligation over some independent, potentially conflicting federal or

state law duty.”). 

The remaining question concerning the applicability of section 1332(a)(3)(B)(ii) is

whether Plaintiff is seeking to enforce the terms of the Plan by means of “appropriate

equitable relief.” The court finds that it is not. Because declaratory relief is “neither strictly

equitable nor legal,” the classification of a particular request for such relief must hinge on

the “nature of the underlying controversy.” Id. at 1251. Here, the underlying controversy

concerns the extent to which Plaintiff is contractually obligated to cover Defendant’s future

health care costs. Transamerica makes clear that such a dispute is legal in nature. In that

case, an insurer responded to an insured’s threat of a lawsuit over the scope of coverage by

seeking a declaratory judgment that a particular clause in the policy did not apply. In part

because the insured’s contractual claim to benefits, which was the source of the Plaintiff’s

case, was “clearly a legal one,” it was held that the action did not fall within the ambit of

section 1332(a)(3)(B)(ii). Id. at 1252. The source of Riggs’s claim to benefits is similarly

contractual and legal in nature. FMC Medical Plan v. Owens, 122 F.3d 1258, 1261 (9th Cir.

1997), supports this view by suggesting that section 1132(a)(3) is limited exclusively to the

“traditional forms of equitable relief” such as “injunction, mandamus, and restitution.” See

also Sereboff v. Atlantic Med. Servs., Inc., 126 S. Ct. 1869, 1873 (2006) (explaining that

section 1132(a)(3)(B) authorizes “only those categories of relief that were typically available

in equity”). 

IT IS THEREFORE ORDERED that the Motion for Reconsideration (Doc. # 18) is

DENIED. 

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IT IS FURTHER ORDERED that the Motion to Dismiss (Doc. # 7) is GRANTED,

and the order entered March 29, 2007 (Doc. # 14) is amended to the extent it provides

otherwise. 

IT IS FURTHER ORDERED that the clerk enter judgment dismissing this action for

lack of subject matter jurisdiction. The Clerk shall terminate this case. 

DATED this 27th day of June 2007.

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