Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00925/USCOURTS-almd-2_07-cv-00925-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

---

IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

DAVID ALLEN TEBBETTS, et al., )

)

Plaintiffs, )

)

v. ) CASE NO. 2:07-cv-925-MEF

)

BLUE CROSS BLUE SHIELD OF ) (WO- Do Not Publish)

ALABAMA, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

As of the date of this decision, this case is a case brought pursuant to the Employee

Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a) (“ERISA”) by plan

participants for alleged breach of fiduciary duty and equitable estoppel. This cause is before

the Court on two motions to dismiss: Defendant Blue Cross and Blue Shield of Alabama’s

Motion to Dismiss (Doc. # 54) filed on October 24, 2008 and Defendant Carecore National,

LLC’s Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. # 55) filed on October 24,

2008. Plaintiffs oppose the motions. For the reasons set forth below, the Court finds that the

motions are due to be GRANTED.

FACTS AND PROCEDURAL HISTORY

Plaintiff Cynthia Ingram Tebbetts (“Mrs. Tebbetts”) is an employee of Montgomery

Imaging, LLC. Mrs. Tebbetts purchased a Blue Cross Blue Shield family health insurance

plan entitled “Medical Association of the State of Alabama Group Health Care Plan”

(“MASA”). This plan provided coverage to Mrs. Tebbetts and her husband, Plaintiff David

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 1 of 10
Tebbetts (“Mr. Tebbetts”). The MASA policy was issued by Defendant Blue Cross Blue

Shield (“Blue Cross”) and administered in part by Defendant CareCore National, LLC

(“CareCore”).

Montgomery Imaging chose MASA as the sole health insurance plan offered to its

employees. Montgomery Imaging established eligibility requirements its employees must

meet in order to qualify to purchase the plan, including working at least thirty-two hours per

week and having worked for Montgomery Imaging for at least sixty days. In addition,

Montgomery Imaging pays 100% of the employee’s individual premium. If an employee

elects family coverage, the employee pays the incremental premium for that additional

coverage through payroll deduction. Montgomery Imaging also distributes enrollment forms

and plan descriptions, which are provided by Blue Cross, to its employees. Blue Cross

invoices Montgomery Imaging for all of its employees’ premiums each month, and

Montgomery Imaging remits a check to Blue Cross each month to pay the premiums.

On September 13, 2006, Mr. Tebbetts consulted with a doctor because he was

experiencing pain in his abdomen, and the doctor ordered a CT scan of Mr. Tebbetts’

abdomen. The doctor sought pre-approval from Defendants of the CT scan, but Defendants

declined coverage. Several days later, Mr. Tebbetts was taken to the hospital where a CT

scan and ultrasound revealed that Mr. Tebbetts had a cyst on his pancreas that had caused his

spleen to rupture. Mr. Tebbetts’ spleen was surgically removed.

On September 10, 2007, Plaintiffs filed the Complaint in the Circuit Court for

2

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 2 of 10
Montgomery County, Alabama, for damages arising out of Defendants’ failure to approve

the original request for a CT scan. Plaintiffs alleged that the claims they were bringing were

outside the preemptive scope of ERISA. Consequently, Plaintiffs sought damages for breach

of contract, bad faith, negligence and wantonness, loss of consortium, fraudulent

misrepresentation, fraudulent suppression, and conspiracy under Alabama law. Blue Cross

filed its Notice of Removal in this Court on October 15, 2007. Plaintiffs unsuccessfully

sought remand arguing that the MASA group health insurance policy is not an “employee

benefit plan” within the meaning of ERISA, and that Defendants’ removal was procedurally

defective. On September 2, 2008, this Court denied the motion to remand.

On September 15, 2008, Defendants filed a dispositive motion in which they argued

that ERISA provides the exclusive remedy available to Plaintiffs with regard to

administration of the plan. Defendants argued that because all of Plaintiffs’ claims, as then

articulated, arose under Alabama law they were preempted. After Plaintiffs filed the

Amended Complaint, which is discussed in greater detail below, this initial dispositive

motion was denied as moot.

Plaintiffs filed the Amended Complaint (Doc. # 51) on October 6, 2008. The factual

predicate set forth in the Amended Complaint is largely unchanged. Plaintiffs allege that

Defendants caused them harm by denying coverage under the Plan for a CT scan in

September of 2006. Plaintiffs now alleged that the denial of the requested CT scan resulted

from a scheme and conspiracy to change the manner in which benefits for CT scans, MIRS

3

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 3 of 10
and other diagnostic procedures are pre-approved in order to increase Defendants’ profits.

The Amended Complaint sets forth only two counts: breach of fiduciary duty under 29

U.S.C. § 1132(a) and judicial estoppel. The Amended Complaint changed the type of relief

1

sought by this suit from damages to declaratory and injunctive relief. Specifically, Plaintiffs

now seek the following: (1) the removal of Defendants from their fiduciary roles in the

administration of the Plan involved and the appoint of a special master, neutral committee,

or other independent neutral body to substitute for those removed fiduciaries in the making

of all determinations as to the entitlement of Plan benefits; (2) an injunction against

Defendants prohibiting them from further breaches of fiduciary duties and directing them to

exercise reasonable care, skill, prudence and diligence in the administration of the Plan; (3)

an order finding Defendants jointly and severally liable for breach of fiduciary duty as

described in the Amended Complaint; (4) an order requiring the reopening of each claim

administered by CareCore and to re-administer such claims according to the terms of the Plan

and to accurately determine whether the claimants are entitled to benefits according to the

terms of the Plan; (5) an order establishing an administrative committee to audit and review

Defendants’ compliance with any injunctive or equitable relief and to further oversee and

ensure that Plaintiffs and the class members receive a full, fair, and equitable review as

It is worth noting that the Amended Complaint fails to specify which subsection or

1

subsections of 29 U.S.C. § 1132(a) are invoked. Nonetheless, Plaintiffs’ arguments in

opposition to the motions to dismiss have made it plain that the only claim pursuant to 29

U.S.C. § 1132(a) which they are making is one pursuant to 29 U.S.C. § 1132(a)(3).

4

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 4 of 10
required by any ruling of this Court; (6) an order requiring each fiduciary to disgorge all

profit made as a result of the violations of 29 U.S.C. §§ 1104, 1105 and the terms of the Plan;

(7) an award of reasonable attorneys’ fees and costs and expert fees; (8) any other equitable

remedies allowed under the statute; and (9) any other such relief as may be deemed just and

proper. The Amended Complaint also purports to seek relief on behalf of Plaintiffs and a

proposed class of similarly situated individuals including all plan participants and

beneficiaries of the MASA group health insurance policy.

After the Plaintiffs filed the Amended Complaint, Defendants filed their motions to

dismiss. Those motions are now fully briefed and ready for ruling.

JURISDICTION AND VENUE

This Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. §§

1331, 1332(a), and 29 U.S.C. § 1132(e). Venue is proper in the Middle District of Alabama

in that a substantial part of the events or omissions giving rise to the claims occurred within

this district. See 29 U.S.C. § 1132(e)(2).

LEGAL STANDARDS

A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Prior to the

Supreme Court’s decision in Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007), a motion

to dismiss could only be granted if a plaintiff could prove “no set of facts . . . which would

entitle him to relief.” See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Hishon v.

King & Spalding, 467 U.S. 69, 73 (1984); Wright v. Newsome, 795 F.2d 964, 967 (11th Cir.

5

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 5 of 10
1986). Now, in order to survive a motion to dismiss for failure to state a claim, the plaintiff

must allege “enough facts to state a claim to relief that is plausible on its face.” Twombly,

127 S. Ct. at 1974. While the factual allegations of a complaint need not be detailed, a

plaintiff must nevertheless “provide the ‘grounds’ of his ‘entitlement to relief’ and a

formulaic recitation of the elements of a cause of action will not do.” Id. at 1965. A

plaintiff’s “[f]actual allegations must be enough to raise a right to relief above a speculative

level on the assumption that the allegations in the complaint are true.” Id. It is not sufficient

that the pleadings merely “le[ave] open the possibility that the plaintiff might later establish

some set of undisclosed facts to support recovery.” Id. at 1968 (internal quotation and

alteration omitted). In considering a defendant’s motion to dismiss, a district court will

accept as true all well-pleaded factual allegations and view them in a light most favorable

to the plaintiff. See Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1057 (11th Cir.

2007). Accord, Nelson v. Campbell, 541 U.S. 637, 640 (2004) (where a court is considering

dismissal of a complaint at the pleading stage, it must assume the allegations of the

complaint are true).

DISCUSSION

A. Count One - 

Defendants contend that Count One of the Amended Complaint must be dismissed

because Plaintiffs are not entitled to relief under 29 U.S.C. § 1132(a)(3) because 29 U.S.C.

2

This provision is also known as § 502(a)(3) of ERISA.

2

6

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 6 of 10
§ 1132(a)(1)(B) afforded Plaintiffs an adequate remedy. Plaintiffs dispute this contention

3

and insist that they are entitled to elect to proceed only with a claim pursuant to 29 U.S.C.

§ 1132(a)(3). For the reasons that follow, the Court finds that Defendants’ contention is

correct in the circumstances of this case.

ERISA is a comprehensive legislative scheme with integrated systems of procedures

for enforcement which provides a uniform regulatory regime over employee benefit plans.

See Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004). As part of that scheme, §

1132(a)(3), the provision which Plaintiffs invoke, provides:

A civil action may be brought by a participant, beneficiary, or fiduciary (A) to

enjoin any act or practice which violates any provision of this title or the terms

of the plan, or (B) to obtain other appropriate equitable relief (i) to redress

such violations or (ii) to enforce any provisions of this title or the terms of this

plan.

29 U.S.C. § 1132(a)(3). Congress intended this provision to be a “catchall” that would act

“as a safety net, offering appropriate equitable relief for injuries caused by violations that §

502 does not elsewhere adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512

(1996). This provision authorizes some individualized claims for breach of fiduciary duty,

but under precedents handed down by the Eleventh Circuit Court of Appeals, not where

plaintiffs had a cause of action based on the same allegations under § 1132(a)(1)(B) or

ERISA’s other more specific remedial provisions. See, e.g., Jones v. Am. Gen. Life &

Accident Ins. Co., 370 F.3d 1065, 1073-74 (11th Cir.), reh’g denied, 116 Fed. Appx. 24 (11th

This provision is also known as § 502(a)(1)(B) of ERISA.

3

7

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 7 of 10
Cir. 2004); Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284, 1286-88 (11th Cir.

2003); Katz v. Comprehensive Plan of Group Ins., ALLTEL, 197 F.3d 1084, 1088-89 (11th

Cir. 1999) reh’g denied 209 F.3d 726 (11th Cir. 2000). Accord, Nolte v. BellSouth Corp.,

No. 1:06-cv-762-WSD, 2007 WL 120842, *3-*7 (N.D. Ga. Jan. 11, 2007). In light of these

4

cases, it is clear that this Court must determine whether the allegations supporting the §

1132(a)(3) claim were also sufficient to state a cause of action under § 1132(a)(1)(B),

regardless of the relief sought. 370 F.3d at 1073. Thus, the fact that Plaintiffs have recast

the relief they seek from claims for damages into claims for equitable relief, the Court must

focus on whether the factual predicate for their claim could have supported a cause of action

under § 1132(a)(1)(B). That section provides:

A civil action may be brought - (1) by a participant or beneficiary-... (B) 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). The Supreme Court has explained that

[t]his provision is relatively straightforward. If a participant or beneficiary

believes that benefits promised to him under the terms of the plan are not

provided, he can bring suit seeking provision of those benefits. A participant

or beneficiary can also bring suit generically to “enforce his rights” under the

plan, or to clarify any of his rights to future benefits.

While not decided under the Eleventh Circuit Court of Appeals’ application of the

4

relevant precedents, it is also noteworthy that other courts have reached a similar result. See,

e.g., Estate of Spinner v. Anthem Health Plans of VA, 589 F. Supp. 2d 738, 746-49 (W.D. Va.

2008); Gallagher v. CIGNA Healthcare of ME, Inc., 538 F. Supp. 2d 286, 296-97 (D. Me.

2008);

8

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 8 of 10
Davila, 542 U.S. at 210. Moreover, immediately upon the denial of benefits under an

ERISA-governed health care plan, a participant or beneficiary can pay for the treatment

themselves and seek reimbursement through a § 1132(a)(1)(B) action or can seek a

preliminary injunction in a suit filed pursuant to that provision. Id. at 211.

In the case at hand, it is plain that all of Plaintiffs’ complaints against Defendants arise

out of a denial of coverage for a CT scan. Upon that denial, Plaintiffs could have paid for

the test themselves and then sought reimbursement through a § 1132(a)(1)(B) action or file

such an action seeking a preliminary injunction. They could have filed suit pursuant to §

1132(a)(1)(B) seeking clarification of their rights to future benefits under the terms of the

plan. Plaintiffs elected not to pursue their remedies under § 1132(a)(1)(B), but the remedies

were available to them. Because Plaintiffs had an adequate remedy under § 1132(a)(1)(B),

they cannot assert a § 1132(a)(3) claim even if their § 1132(a)(1)(B) has been lost. See

Ogden, 348 F.3d at 1287; Katz, 197 F.3d at 1089. Thus, Plaintiffs’ claim pursuant to §

1132(a)(3) is due to be DISMISSED.

B. Count Two - Equitable Estoppel

Defendants contend that Count Two of the Amended Complaint must be dismissed

because Plaintiffs have failed to sufficiently plead the necessary facts to support a claim for

equitable estoppel. Plaintiffs make no response in opposition to this contention. “This

circuit has created a very narrow common law doctrine under ERISA for equitable estoppel.”

Katz, 197 F.3d at 1090 (citing Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347

9

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 9 of 10
(11th Cir. 1994) and Kane v. Aetna Life Ins., 893 F.2d 1283, 1285-86 (11th Cir.), cert.

denied, 498 U.S. 890 (1990)). Such a claim for equitable estoppel under ERISA is “only

available when (1) the provisions of the plan at issue are ambiguous, and (2) representations

are made which constitute an oral interpretation of the ambiguity.” Id. Having reviewed

the Amended Complaint, the Court cannot find that Plaintiffs have alleged enough facts to

state a claim of equitable estoppel under ERISA to show that relief that is plausible on this

claim and they have certainly not presented a complaint which on its face provides the

grounds of their entitlement to relief on this claim. Accordingly, the motions to dismiss are

due to be GRANTED as to Count Two of the Complaint. 

CONCLUSION

For the reasons set for above, it is hereby ORDERED that

(1) Defendant Blue Cross and Blue Shield of Alabama’s Motion to Dismiss (Doc. #

54) is DENIED.

(2) Defendant Carecore National, LLC’s Motion to Dismiss Plaintiffs’ Amended

Complaint (Doc. # 55) is DENIED.

DONE this the 26 day of June, 2009.

th

/s/ Mark E. Fuller

CHIEF UNITED STATES DISTRICT JUDGE

10

Case 2:07-cv-00925-MEF-WC Document 81 Filed 06/26/09 Page 10 of 10