“shall [not] be decmed to be an insurance company . . . for purposes of any law of any State
purporting to regulate insurance companies [or] insurance contracts... .” 29 U.S.C. §
1144(b)(2)(B).

The determination of whether a state law is preempted by Section 514(a) requires a two-
step analysis: 1) there must be an employee welfare bencfit plan, and 2) the state law must “relate
to” the employee benefit plan. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 8.C1.
1549 (1987). With respect to the welfare benefit plan requirement, there must be “(1) a plan,
fund or program, (2) established or maintained, (3) by an employer or by an employce
organization, or by both, (4) for the purpose of providing medical, surgical, hospital care,
sickness, accident, disability, death, unemployment or vacation benefits . . . (5) to participants or
their beneficiaries.” Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 738 (7th Cir.
1986). In this case, the parties do not dispute that the group life and accidental death and
dismemberment insurance policy issued to Casey O*Neil was an “employee welfare benefit
plan.” The complaint indicates that Casey O’Neil was an employee of Brinson Partners, Inc., and
that this company established or maintained the policy through Unum for the purpose of
providing its employees, iner alia, accidental death insurance benefits, Based on these
allegations, we conclude that the accidental death and dismembennent insurance policy issucd to
Brinson Partners by Unum was an employee welfare benefit plan for purposes of Section 514(a)
of ERISA.

The second prong of Section 514(a) requires the state law to “relate to” the employee
benefit plan. The Supreme Court has instructed that the phrase “relate[s] to” should be given a

“broad common-sense meaning.” Metropolitan Life Ins. Co, v. Massachusetts, 471 U.S. 724,



CONCLUSION
For the foregoing reasons, the defendant’s motion to dismiss the plaintiff's complaint for
failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil
Procedure 12(b)(6) is granted, This case is terminated. This is a final and appealable order.

Tt is so ordered,

Je 4 LAR
Wayne R. Andersen *

United States District Judge

putea: Lt fp bee /b Ped



ERISA plan, See, e.g., Dobner v. Heath Care Service Corp., 2002 WL 1348910, at *4 (NLD, ILL
June 19, 2002); Cencula, 174 F. Supp. 2d at 799; Gawrysh v. CNA Ins. Cos., 978 F. Supp. 790,
793 (N.D. Ill. 1997); Lutheran Gen. Hosp., Inc. v. Massachusetts Mut. Life Ins. Co., 1996 WL
124449, at *3 (N.D. Ill. Mar. 12, 1996); Goodhart v. Benefit Trust Life Ins. Co., 1990 WL
205821, at *3 (N.D. TIl. Nov. 29, 1990); Buehler Ltd. v. Home Life Ins. Co., 722 F. Supp. 1554,
1560-61 (N.D, Ill. 1989). Section 155 certainly “relate[s] to” Casey O’Neil’s accidental death
and dismemberment policy with Unum because the plaintiff is using Section 155 in an attempt to
recover damages associated with the denial of a claim under that policy. Given the persuasive
precedent in this district and the broad sweep of Section 514(a) of ERISA, the plaintiffs claim
will be preempted unless it falls within ERISA’s “savings clause.”

A state law will only be saved from preemption if all prongs of a three-part test are met:
1) acommon-sense interpretation of the state law must suggest it regulates insurance; 2) the state
law must regulate the “business of insurance” as defined by casc law interpreting the McCarran-
Ferguson Act, and 3) allowing the state claim to proceed must not undermine ERISA’s civil
enforcement procedures. See Cencula, 174 F. Supp. 2d al 800; Gawrysh, 978 F. Supp. at 793.
As both the Cencula and Gawrysh courts have properly noted, because Section 155 provides
remedies for unreasonable or vexatious delays in insurance claim processing, a common-sense
interpretation of Section 155 suggests that it regulates insurance, See id.

The McCatran-Ferguson prong of the “savings clause” test has three elements: 1) whether
the state law has the effect of transferring or spreading policyholder risk; 2) whether the state law

is an integral part of the policy relationship between the insurer and the insured; and 3) whether

the state law is limited to entities within the insurance industry, See Pilot Life, 481 U.S. at 48



739, 105 §.Ct. 2380 (1985). Accordingly, a state law “rclate[s] to” a benefit plan “in the normal
sense of the phrase, if it has a connection with or reference to such a plan.” Shaw v. Delta Air
Lines, Inc., 463 U.S. 85, 97, 103 S.Ct. 2890 (1983), The character of the action is the
“controlling factor of the analysis: ‘It is not the label placed on a state Jaw claim that determines
whether it is preempted, but whether in essence such a claim is for the recovery of an ERISA
plan benefit.”” Cencula v, John Alden Life Ins, Co., 174 F. Supp. 2d 794, 799 (N.D. Ill. 2001)
(quoting Zuniga v. Blue Cross & Blue Shield of Michigan, 52 F.3d 1395, 1401 (6th Cir, 1995),

In this case, the plaintiff has assiduously avoided identifying which section of the Illinois
Insurance Code provides the relief he is seeking in his amended complaint. Accordingly, it is left
for us to decipher the allegations as well as the requested relief in order to determine which
provision of Illinois insurance law permits recovery. We have concluded that Section 155 of the
Insurance Code, 215 TLCS § 5/155, is the only statutory provision which could conceivably
provide the plaintiff with the relief he seeks. Section 155 expressly provides that “[iJn any action
by or against a company . . , for an unreasonable delay in settling a claim [where] it appears to
the court that such action or delay is vexatious and unreasonable,” the Court may award
attomey’s fees and statutory damages. 215 ILCS § 5/155(1). In his prayer for relief in his
amended complaint, the plaintiff seeks to recover the benefits under the policy plus damages and
attomey’s fees for “vexatious delay and wrongful refusal to pay... .” (Complt. at 4 20.)
Therefore, based on his allegations, we find that the plaintiff is seeking recovery under Section
155 of the Illinois Insurance Code.

This conclusion is significant because cvery court in the Northern District of Illinois that

has addressed the issue has found that Section 155 of the Illinois Insurance Code “Telate[s] to” an



The plaintiff also relics on the recent Supreme Court decision in Rush Prudential LIMO,

Inc. v. Moran, _ USS. 122 S.Ct. 2151 (2002). In this case, the issue was whether the

Minois HMO Act, which requires an HMO to provide a medical service “[iJn the cvent that [a]
reviewing physician determines the covered service to be medically necessary," was preempted
by ERISA. In reaching its conclusion, the Court, as in Unum, validated the Section 1132(a)
preemption analysis discussed both in Pilot Life and in this opinion. 122 §.Ct. at 2159-61. The
precise issue at stake in Moran was whether the remedies available in the Illinois HMO Act
conflicted with the explicit ERISA remedies listed in 29 U.S.C. § 1132(a). The Court concluded
that the state regulatory scheme at work in the Illinois HMO Act did not provide a “new cause of
action under state law and authorize[d] no new form of ultimate relief,” and it did not “cnlarge
the claim beyond the benefits available in any action brought under § 1132(a).” Jd. at 2167.
What the Court did not do in Moran was change the preemption regime that has been in place
since the 1980s. Unlike the “medically necessary” provision of the Illinois HMO Act, which the
Court held was not preempted because it was consistent with the civil remedies of ERISA,
Section 155 undoubtedly would expand, and thus undermine, Congress’ carefully crafted civil

enforcement scheme in Section 1132(a),

Therefore, we conclude that, based on the binding precedent in this area, the plaintiff's

request for relief pursuant to Section 155 of the Illinois Insurance Code is preempted by ERISA.



Minute Order Forni (0697)

Joe United States District Court, Northern District of Iinois

Name of Assigned Judge Sitting Judge if Othe:
or Magistrate Judge Wayne R. Andersen than Assigned Judge
CASE NUMBER 105419 DATE 10/16/2002
CASE Casey R. O’Neil vs. Unum Life Insurance
TITLE
Lin the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented,]

DOCKET ENTRY:

(1) Oo Filed motion of [ use listing in “Motion” box above.]

(2) 0 Bricf in support of motion due

(3) Oo Answer brief to motiondue__. Reply toanswerbriefdue_

(4) Oo Ruling/Hearingon__ set for_ at

(8) Qa Status hearing[held/continued to] [set for/re-set for]on__——s set for at

(6) o Pretrial conference[held/continued to] [set for/re-set for]on___—ssetfor_— ss at_—
(7) Oo Trial[set for/re-set for] on at

(8) Oo {Bench/Jury trial] [Hearing] held/continued to___at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OOFRCP4(m) OLocat Rule 41.1 OFRCP41(a)\(Q) O FRCP41(a)(2).

a0) ff [Other docket entry] Enter MEMORANDUM, OPINION AND ORDER: The defendant’s
motion to dismiss the plaintiff’s complaint for failure to state a claim upon which relief may be
granted pursuant to FRCP 12(b)(6) is granted. This case is terminated. This is a final and
appealable order,

ab [For further detail see order attached to the original minute order.]

No notices required, advised in open court,

No notices required.

Notices mailed by judge’s staff,
Nojified counsel by telephone,

ra ya fo mail notices.

| /| Mail AO 450 form.

Copy to judge/magistrate judge.

oer | 7 pane

date dockgted

docketing deputy initials

courtroom
TSA deputy's

iniGals
Date/time received in
central Clerk’s Office

availing deputy tials



(citing Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129, 102 $.Ct. 3002 (1982)). With
respect to this prong of the test, there is split in this Court when it comes to Section 155. For
instance, some courts have found that Scction 155 is not an integral part of the relationship
between the insured and insurer, while others have. See generally, Gawrysh, 978 F. Supp. at 793
(citing cases). However, just like the Cencula and Gawrysh courts, this Court need not
contribute to this debate because the third savings clause prong is controlling, Tt is axiomatic that
Section 1132(a) is meant to be the exclusive provision for civil enforcement of rights under
ERISA. See Pilot Life, 481 U.S. at 51-54, Allowing the plaintiff to assert a claim under Section
155 would almost certainly undermine ERISA’s explicit enforcement procedures. Therefore, the
plaintiffs claim under Section 155 of the Illinois Insurance Code is preempted. See Cencula,
174 F. Supp. 2d at 800; Gawrysh, 978 F. Supp. at 794. If the plaintiff wants the relief he is
seeking, he must first look to ERISA itself.

In his response to the motion to dismiss and in a supplemental filing, the plaintiff relies
on two recent United States Supreme Court decisions. We will briefly address each of these
rulings. First, plaintiff cites to the Court’s holding in Unum Life Ins. Co. of America v. Ward,
526 U.S. 358, 119 S.Ct. 1380 (1999). In that case, the Court did not address Section 1132(a)’s
exclusivity except to state that the issuc was not implicated by the facts of the case. See id. at
376-77. Hence, Unum did not dramatically alter the landscape when it comes to the preemptive
effect of ERISA on state law enforcement actions such as those based on Section 155 of the
Lllinois Insurance Code. Consequently, Pilot Life remains good law. See Ceneula, 174 F. Supp.

2d at 801. According to Pilor Life, plaintiff cannot recover statutory damages and attorney’s fees

under Section |55 because that claim is preempted by ERISA, See Pilot Life, 481 U.S. at 51-54.



certain provisions of the Illinois Insurance Codc. Specifically, he seeks a recovery of his son’s
accidental death benefits, attorney’s fees, costs, and other unspecified amounts.
DISCUSSION

In ruling on a motion to dismiss, the Court must accept all factual allegations in the
complaint as true and draw all reasonable inferences in favor of the plaintiff. Szuwmny v. Am.
Gen, Fin., inc., 246 F.3d 1065, 1067 (7th Cir. 2001). The purpose of a motion to dismiss is not
to decide the merits of the challenged claims but to test the sufficiency of the complaint.

Weiler vy. Household Fin. Corp., 101 F.3d 519, 524 n. 1 (7th Cir. 1996), A court will grant a
motion to dismiss only if it is impossible for the plaintiff to prevail under any set of facts that
could be proven consistent with the allegations. Fi ‘orseth y, Village of Sussex, 199 F.3d 363, 368
(7th Cir, 2000).

In its motion to dismiss, Unum has argued that the plaintiff's claim for benefits and
attomey’s fees under the Illinois Insurance Code is preempted by ERISA. The plaintiff, on the
other hand, asserts that his complaint is not preempted by ERISA but rather is protected by
ERISA’s savings clause, 29 U.S.C. § 1144(b)(2)(A). We agrec with the defendant that this cause
of action is completely preempted by ERISA.

Section 514(a) of ERISA provides that ERISA “shall supersede any and all State laws
insofar as [the state law] may now or hereaf_cr relate to any employec benefit plan... .” 29
U.S.C. § 1144(a), Ifa state law falls within the scope of Section 514(a), it may still be valid if it
comes within ERISA’s “savings clause,” which states ERISA will not preempt any state law
“which regulates insurance, banking, or securities.” 29 U.S.C. § 1144(b)(2)(A). The subsequent

“deemer clause,” however, qualifies the savings clause and states that an employee benefit plan



1999, a post-mortem examination was conducted by the Medical Examiner's Office of Cook
County, linois. This examination concluded with the opinion that Casey O’Neil died as a result
of opiate and alcoho) intoxication. On November 12, 1999, Donald O'Neil, the decedent’s father
and the plaintiff in this casc, was appointed independent administrator of the estate of Casey
O’Neil, The plaintiff has alleged in the amended complaint that any opiate or alcoho! present in
his son’s body at the time of his death must have becn involuntarily ingested since it was his
belief that Casey did not use “so-called controlled substances.” (Complt. at § 12.)

Though it is unclear exactly when he did so, the plaintiff filed a claim with Unum under
his son’s accidental death and dismemberment insurance policy, On April 14, 2000, Unum sent
the plaintiff notification in writing that his claim under the policy was denied. The letter
indicated that, because Casey’s death was caused by the use of morphine, a controlled substance
and the immediate metabolite of heroin, the claim must be denied because the policy was explicit
that it did not cover a loss “caused by or contributed to by the voluntary use of a controlled
substance.” (Complt., Ex. D.) On July 5, 2000, the plaintiff filed an appeal to Unum of the
denial of insurance coverage referenced in the April 14 Ictter. On September 12, 2000, the
plaintiff was informed in writing that his appeal was denied. Again, the appeal was denicd
because the medical examiner concluded that Casey died as the result of morphine and alcohol
intoxication, and the policy did not cover accidental losses caused by or resulting from the use of
a controlled substance. (Complt., Ex. E.)

On March 22, 2002, the plaintiff filed his amended one count complaint against Unum.
While acknowledging that this complaint implicates the Employment Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., the plaintiff seeks relief pursuant to


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
ESTATE OF CASEY R. O’NEIL, )
)
Plaintiff, ) my
) No. 0165419 ¥
Vv. )
) Wayne R. Andersen.
UNUM LIFE INSURANCE COMPANY ) District Judge a 9
OF AMERICA, a foreign insurance company, —) ,
)
Defendant, ) ry
s+ Bi

MEMORANDUM OPINION AND ORDER

This case is before the Court on the motion of the defendant Unum Life Insurance
Company of America to dismiss the plaintiff's complaint for failure to state a claim upon which
relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following
reasons, the motion to dismiss is granted.

BACKGROUND

The following factual background is taken from the plaintiffs amended complaint and
the partics’ briefs on this motion. Defendant Unum Life Insurance Company of America
(“Unum”) is a corporation licensed to write life and accidental death benefit insurance in the state
of Illinois, Casey Ryan O’Ncil, the plaintiff's decedent, was issued a group life and accidental
death and dismemberment policy by Unum. The plaintiff in this case, Donald R. O’Neil, is the
father and independent administrator of the estate of Casey O'Neil.

On September 3, 1999, while the insurance policy was in full force, the amended

complaint states that Casey O’Neil dicd as the result of accidental causcs. On September 4,

3