UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JOHN SEGERBERG and CINDY )

SEGERBERG, as parents and next friend )

of MATTHEW SEGERBERG, )

)

Plaintiffs, ) No. 12 C 01544

)

v. )

) Judge Edmond E. Chang

PIPE FITTERS’ WELFARE FUND, )

LOCAL 597, successor in interest to )

Pipe Fitters’ Welfare Fund, Local 422, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

Plaintiffs John and Cindy Segerberg allege that Defendant Pipe Fitters’ Welfare

Fund, Local 597, violated the Employee Retirement Income Security Act of 1974

(ERISA), 29 U.S.C. § 1001 et seq., when it stopped providing medical benefits to the

Segerbergs.1

 The Segerbergs also allege two Illinois state-law claims stemming from

this failure to provide benefits, as well as from Local 597’s attempt to get

reimbursement of medical payments already made. Local 597 moves to dismiss [R. 18]

Counts Two (promissory estoppel) and Three (tortious interference)—the two state-law

claims in the Segerbergs’ Amended Complaint for Declaratory Judgment [R.

14]—pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons below, Local

597’s motion is granted as to both claims.

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The court has subject matter jurisdiction under 28 U.S.C. § 1331 over the ERISA claim,

and supplemental jurisdiction over the state-law claims, § 1367.
I.

In evaluating a motion to dismiss, the Court must accept as true the complaint’s

factual allegations and draw reasonable inferences in the plaintiff’s favor. Ashcroft v.

al-Kidd, ––– U.S. –––, 131 S. Ct. 2074, 2079 (2011). In 2005, the Segerbergs’ son,

Matthew,2 was seriously brain injured during birth. R. 14, Am. Compl. ¶ 7. At the time

of Matthew’s birth, his father was a participant in Pipe Fitters’ Welfare Fund, Local

422, which was an entity providing medical benefits to its working and retired

members and their families. Id. ¶¶ 6, 8. As a plan beneficiary, Matthew received

medical benefits from Local 422. Id. ¶ 9. 

During the time when Matthew was receiving benefits from Local 422, his

mother settled a lawsuit for damages relating to Matthew’s birth injuries. Id. ¶¶ 11-12.

Local 422 never requested that the Segerbergs sign a subrogation agreement for the

settlement amount, even though Local 422 could demand subrogation under the terms

of the Summary Description and Plan Document. Id. ¶¶ 14-15. Additionally, Local 422

placed a medical lien on the settlement amount, settled that lien for an amount less

than the full amount of benefits it had paid, and continued to provide Matthew with

medical benefits. Id. ¶ 17-19. 

In 2011, Local 422 merged with Local 597 and Local 422 ceased to exist. Id. ¶

20. In March of that year, Local 597 advised John Segerberg that, pursuant to Local

422’s plan terms, it was denying future benefits to Matthew and seeking an offset of

2

Plaintiffs’ response did not redact Matthew’s name down to his initials, see Fed. R. Civ.

P. 5.2(a)(3), so the redaction protection was waived, Fed. R. Civ. P. 5.2(h).

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medical benefits paid after the settlement of the lawsuit. Id. ¶ 22. Local 597 then

contacted Matthew’s medical providers directly to seek the offset. Id. ¶ 23. 

The Segerbergs make three claims in their Amended Complaint, the last two of

which are at issue here. In Count Two, the Segerbergs assert a promissory estoppel

claim. They allege that Local 422 made an implied promise that it would continue to

pay Matthew’s medical benefits by not requesting the Segerbergs sign a subrogation

agreement and by settling the medical lien for less than the amount of benefits paid

out. Id. ¶ 34. The Segerbergs detrimentally relied on this promise when they restricted

their medical providers and services to those covered by Local 422, which may have

been more expensive or less preferable than those outside Local 422’s plan. Id. ¶ 35.

They would also have chosen out-of-plan medical providers had they known that Local

597 would seek reimbursement of the payments made to Matthew. Id. ¶ 38. (The

allegations do not, however, state how the Segerbergs could have actually suffered

damages by choosing those providers and services where the plan had been paying for

them.)

In Count Three, the Segerbergs allege that Local 597 tortiously interfered with

the business relationships between the Segerbergs and their medical providers by

seeking reimbursement of Matthew’s medical benefits directly from the providers. Id.

¶ 44. They allege that this caused several providers to refuse to continue providing

Matthew with care. Id. ¶ 45. 

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II.

Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only

include “a short and plain statement of the claim showing that the pleader is entitled

to relief.” Fed. R. Civ. P. 8(a)(2). This short and plain statement must “give the

defendant fair notice of what the claim is and the grounds upon which it rests.” Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation and citation omitted).

The Seventh Circuit has explained that this rule “reflects a liberal notice pleading

regime, which is intended to ‘focus litigation on the merits of a claim’ rather than on

technicalities that might keep plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580

(7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)). 

“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state

a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police Chi.

Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[A] complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). These

allegations “must be enough to raise a right to relief above the speculative level.”

Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth

are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at

678-79. In considering a motion to dismiss, a court may review exhibits attached to the

complaint without converting the motion to one for summary judgment. Tierney v.

Vahle, 304 F.3d 734, 738 (7th Cir. 2002).

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III.

Local 597 moves to dismiss Counts Two and Three, arguing that ERISA

completely preempts state-law claims that relate to ERISA-regulated benefit plans and

that are brought by plan participants or beneficiaries.3

 As detailed below, Count Two

(the promissory estoppel claim) is preempted because it seeks to compel continued

payment of benefits; there might be conceivable reliance damages theories, but

Plaintiffs do not advance them in their brief. Count Three (the tortious interference

claim) is preempted because it could have been made under ERISA’s civil enforcement

provision, § 502(a)(1)(B), and is not an independent legal claim. Because the tortious

interference claim is preempted by ERISA, it must be dismissed because itfails to state

a claim upon which relief can be granted under ERISA.

A.

1.

Subject to certain exceptions, ERISA preempts “any and all State laws insofar

as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a).

ERISA instead creates a federal right of action for a plan participant or beneficiary “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). This civil enforcement scheme has extraordinary preemptive

power. Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004). This preemptive power

3

 The parties do not dispute that the Segerbergs are plan participants, or that Local 597

is an ERISA-regulated benefit plan. 

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is expressed in the breadth of the two-part test to evaluate preemption: “[1] if an

individual, at some point in time, could have brought his claim under ERISA

§ 502(a)(1)(B), and [2] where there is no other independent legal duty that is implicated

by a defendant’s actions, then the individual’s cause of action is completely

pre-empted.” Id. at 210. If both prongs are met, then the state-law claim is preempted.

Under the first prong of Davila’s two-part test—whether an individual could

have brought a claim under ERISA—the Seventh Circuit has held that plan

participants may not bring state-law claims against their plans to recover plan

benefits. See McDonald v. Household Int’l, Inc., 425 F.3d 424, 429 (7th Cir. 2005).

Indeed, ERISA preempts attempts by plan participants to allege promissory estoppel

as a means to compel plans to pay benefits. Pohl v. National Benefits Consultants, Inc.,

956 F.2d 126, 127 (7th Cir. 1992). Otherwise, a participant could use state law to

obtain benefits to which the written terms of their plan do not entitle them. Id. at 128. 

Under the second prong—whether a defendant’s actions implicate an

independent legal duty—a court must determine whether interpretation of the terms

of the benefit plan forms an essential part of the plaintiff’s state law claim (if it does,

then the duty is not independent of the plan and preemption still applies). Davila, 542

U.S. at 213. In Davila, the Supreme Court held that ERISA preempted state-law

claims brought by plan participants against their HMOs for failing to exercise ordinary

care in handling their coverage decisions. Id. at 214. In so holding, the Court reasoned

that the proximate cause of any injury was the failure of the plaintiffs’ plans to cover

the requested treatment, not the HMOs’ decision-making. Id. at 213; accord McDonald,

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425 F.3d at 429. As a result, the state-law claims necessarily required interpretation

of the terms of the benefit plan, and the claims were preempted. Davila, 542 U.S. at

213.

2. 

There are two plausible readings of the Segerbergs’s promissory estoppel claim

(Count Two), but one of them is not defended in the response to the dismissal motion.

The first is that Local 422 made an implied promise that Matthew’s medical benefits

would continue after they did not request the Segerbergs sign a subrogation agreement

and settled their medical lien for less than the amount of benefits paid out. Am. Compl.

¶ 34. The Segerbergs then relied on this promise by retaining medical providers within

Local 422’s plan instead of outside the plan—a fact Local 422 was aware of. Id. ¶ 36.

This reliance was to the Segerbergs’ detriment when Local 597 sought reimbursement

of medical payments and refused to pay further benefits. Id. ¶ 38. The Amended

Complaint’s prayer for relief then asks this Court for a declaratory judgment that

Matthew is entitled to continued medical benefits. Id. at 9. Taken together, this

reading of Count Two alleges that Local 597 is estopped from denying the Segerbergs

medical benefits, an argument that the Segerbergs appear to make in their Response

to Defendant’s Motion to Dismiss. See R. 26 at 10 (describing the issue as whether

“whether Local 422’s conduct . . . estops Local’s [sic] 597 from taking a position

inconsistent with Local 422’s conduct.”). 

This reading of Count Two is preempted by ERISA. Under this version of the

promissory estoppel claim, the Segerbergs are participants in Local 597’s plan and

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assert the estoppel claim to compel Local 597 to continue paying benefits. The

Segerbergs could therefore have brought this claim under ERISA directly—as, indeed,

they actually did in Count One—which fails Davila’s first prong. See Davila, 542 U.S.

at 210; Pohl, 956 F.2d at 127. Although the Segerbergs rely on Franciscan Skemp

Healthcare, Inc. v. Central States Joint Board Health and Welfare Trust Fund—where

a healthcare provider’s estoppel claim against an employee benefit plan was not

preempted—that decision turned on the fact that the healthcare provider was not

bringing its claim as a plan beneficiary. See 538 F.3d 594, 601 (7th. Cir. 2008). That is

not this case, where plan beneficiaries are bringing an action that falls squarely within

ERISA. Moreover, the complaint itself alleges that Local 597’s decision to seek

reimbursement of Matthew’s medical benefits was purportedly premised upon Local

422’s plan document. See Am. Compl. ¶ 22. Like in Davila, the proximate cause of the

injury suffered by the Segerbergs—revocation of plan benefits—was thus the alleged

failure of the plan to provide the benefits. See Davila, 542 U.S. at 213; McDonald, 425

F.3d at 429. So this reading of Count Two also fails Davila’s second prong, and is

preempted by ERISA.

It might be possible to read Count Two in a way that seeks more limited relief,

but the Segerbergs do not develop any argument in their response brief in support of

a narrower theory. A more limited reading of the promissory estoppel claim might be

based on the allegation that the Segerbergs chose medical providers and medical

services within Local 422’s plan based on Local 422’s implied promise to continue

providing medical benefits. Am. Compl. ¶ 35. The Segerbergs allege that these

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providers and services may have been more expensive than or less preferable to

providers and services outside of their plan. Id. The Segerbergs could also have chosen

out-of-plan providers had they been aware that Local 597 would seek a reimbursement

of medical payments made. Id. ¶ 38. Based on those allegations, if Local 597 were

really seeking reimbursement from the Segerbergs for the past payments, then

perhaps the Segerbergs could seek (if they were to be found liable for reimbursement)

an offset against the reimbursement equal to the amount of the difference between the

cost of retaining in-plan providers and services and the cost of retaining cheaper or

more preferable out-of-plan providers and services. The basis for the offset would be

that the Segerbergs relied on the plan’s implied promise to pay in picking the more

expensive options, and thus the plan should be estopped from recovering the difference

between the more and less expensive options.4

 But, to repeat, the Segerbergs do not

assert this form of reliance damages (really, an offset) in their response to the

dismissal motion. If the Segerbergs wish to propose an amended complaint that alleges

this theory, they must move for leave to amend, explain the claim’s legal basis, and

allege a plausible factual basis for the claim. The motion must be filed within 21 days

of the entry of this opinion.

4

This narrower reading of the promissory estoppel claim might survive ERISA

preemption because such a claim (assuming it is worth bringing) would not seek medical

benefits from Local 597 at all, but rather would seek only reliance damages arising from an

implied promise made by Local 422 to continue providing medical benefits (assuming, without

deciding, that such a promise was made).

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B.

In Count Three, the Segerbergs allege that Local 597 tortiously interfered with

their business relationships with Matthew’s medical providers when Local 597 sought

reimbursement of benefit payments from the providers directly. Am. Compl. ¶ 44. They

further allege that this caused some of the providers to refuse to continue providing

Matthew with care. Id. ¶ 45.

Under Davila’s two-part framework, the tortious interference claim is preempted

by ERISA. ERISA plan participants who bring tortious interference claims premised

upon state law could have brought those claims under ERISA’s civil enforcement

provision. See, e.g., Maciosek v. Blue Cross & Blue Shield United of Wis., 930 F.2d 536,

540 (7th Cir. 1991). In response, the Segerbergs characterize Count Three as a claim

about Local 597’s conduct, not about the plan’s denial of benefits. See R. 26, Pls.’ Resp.

at 11-12. This argument does not withstand Davila’s second prong. Under Illinois law,

tortious interference with business relations requires that the plaintiff prove, among

other elements, “the defendant’s intentional and unjustified inducement of a breach of

the contract.” E.g., HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d

672, 676 (Ill. 1989) (citation omitted). Whether or not Local 597 was justified in seeking

reimbursement from the Segerbergs’ medical providers directly depends on whether

the Segerbergs properly owed them an offset of medical benefits. This in turn directly

depends on Local 422’s plan terms. Indeed, Local 597 purported to rely on provisions

of Local 422’s Plan Document when it advised John Segerberg in its March 14, 2011

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letter that it sought an offset of medical benefits provided. See Am. Compl. ¶ 22.

Because this state-law claim of tortious interference necessarily requires the Court

interpret Local 422’s plan terms, Count Three is preempted by ERISA.

ERISA preemption of the state-law tortious interference claim does not end the

inquiry. Under Rule 8(a), a complaint need not plead both law and fact. Bartholet v.

Reishauer A.G. (Zurich), 953 F.2d 1073, 1077-78 (7th Cir. 1992). Accordingly, a Rule

12(b)(6) motion requires that the Court determine “whether relief [is] possible based

on any legal theory—ERISA included.” McDonald, 425 F.3d at 428. Therefore, even

though ERISA preempts the state-law version of tortious interference, the Court must

determine whether ERISA itself permits the Segerbergs to bring an ERISA-based

tortious interference claim. See id. at 428-30; see also Darcangelo v. Verizon Commc’ns,

Inc., 292 F.3d 181, 195 (4th Cir. 2002).

Although courts may use state common law as a basis to develop ERISA-based

causes of action, Trustmark Life Ins. Co. v. Univ. of Chi. Hosps., 207 F.3d 876, 881 (7th

Cir. 2000), the Court will not do so here. Recognizing a cause of action for tortious

interference of contract is unnecessary for the enforcement of ERISA: if the Segerbergs

were improperly denied benefits, they can directly allege an ERISA violation through

its civil enforcement provision—as they did in Count One. See Health Cost Controls v.

Manetas, 1995 WL 66383, at *6 (N.D. Ill. Feb. 13, 1995) (Castillo, J.). On the other

hand, if the Segerbergs were properly denied benefits, then Local 597’s conduct was

consistent with its rights under the statute and could not have been tortious. Allowing

a tortious interference claim to go forward in that instance would thus thwart ERISA’s

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policies. See, e.g., Hospital Corp. of Am. v. Pioneer Life Ins. Co. of Ill., 837 F. Supp. 872,

875 (M.D. Tenn. 1993). Therefore, because Count Three is preempted by ERISA, and

there is no need to create an ERISA-based action for tortious interference, Local 597’s

motion to dismiss Count Three is granted.

IV. 

For the reasons discussed above, the Court grants Defendant’s motion to dismiss

the promissory estoppel claim (Count Two) and the tortious interference claim (Count

Three). R. 18.

ENTERED:

___________________________

Honorable Edmond E. Chang

United States District Judge

Date: January 22, 2013

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