O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Rayna H. Jones, SBN 028564

OGLETREE, DEAKINS, NASH, SMOAK &

STEWART, P.C., SBN 00504800

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

Fax: 602.778.3750

Rayna.Jones@Ogletreedeakins.com

Attorney for Defendants

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Jeffrey Steven Hyman,

Plaintiff,

v.

Liberty Mutual Group Inc.; Hewitt

Associates, LLC

Defendants.

No. 2:15-CV-02522-JZB

DEFENDANTS’ MOTION TO

DISMISS ALL COUNTS OF

PLAINTIFF’S COMPLAINT

Defendants Liberty Mutual Group Inc. and Hewitt Associates, LLC (collectively

“Defendants”) hereby move to dismiss Plaintiff Jeffrey Steven Hyman’s Complaint in its

entirety under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

I. BACKGROUND INFORMATION AND SUMMARY OF MOTION

Plaintiff filed a Complaint in Maricopa County Justice Court alleging gross

negligence for Defendants alleged failure to administer Plaintiff’s Consolidated Omnibus

Budget Reconciliation Act of 1985 (“COBRA”) benefits in an efficient and timely

manner as required by the Employee Retirement Income Security Act of 1974, 29 U.S.C.

§§ 1001 et seq. (“ERISA”). (Doc. 1, Exh. A) Plaintiff also alleges that Defendants acted

in “bad faith by denying prescription coverage benefits” to Plaintiff. (Id.) Plaintiff seeks

to recover special damages “resulting from claim and coverage denials for prescription

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 1 of 11
2

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

benefits leading to significant bodily injury manifestation,” and general damages “for just

compensation.” (Id.)

Defendants timely removed this action on December 10, 2015 based on federal

question jurisdiction by virtue of 28 U.S.C. § 1331 because this matter involves claims

arising under the laws of the United States. More specifically, this Court has original

jurisdiction of this action under the provisions of ERISA as the “COBRA benefits” and

“prescription coverage benefits” referred to in Plaintiff’s Complaint relate to and are

dependent upon Liberty Mutual Employees’ Medical Plan – an employee welfare benefit

plan governed by ERISA (the “Plan”). (See Exh. 1, Liberty Mutual Employees’ Medical

Plan Summary Plan Description)1

As discussed in more detail below, Plaintiff asserts two causes of action in the

Complaint, both of which purport to arise under state law. The existence of the Plan is

critical and indispensable to all of the claims asserted in Complaint. Furthermore, the

terms of the Plan form an essential part of the state-law claims and alleged liability under

state law would not exist absent participation by Plaintiff in the in the Plan. In sum, all of

Plaintiff’s claims relate to the Plan and are completely preempted. Moreover, ERISA

Section 502 provides the only avenue for relief in this matter.

1 A court may consider documents that are referred to in the complaint, the authenticity

of which no party questions. Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994).

Even if the plaintiff does not attach the documents at issue to the complaint, they may be

incorporated into the complaint by reference if those documents “form[] the basis of the

plaintiff’s claim.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). The

Court’s consideration of documents that form the basis of the plaintiff’s claim does not

convert the motion to dismiss into a Rule 56 motion for summary judgment. Id. at 907-

08. Where plaintiff’s claims “rest on his membership in [an ERISA] plan and on the

terms of the plan, documents governing plan membership, coverage, and administration

are essential to his complaint,” and those documents are properly considered by a court in

deciding a motion to dismiss. Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998)

(citation omitted), superseded by statute on other grounds as recognized in Abrego v. The

Dow Chem. Co., 443 F.3d 676, 681 (9th Cir. 2006). The District Court may treat such

documents as part of the complaint and, thus, assume that the contents are true for

purposes of a Rule 12(b)(6) motion to dismiss. Ritchie, 342 F.3d at 908.

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 2 of 11
3

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In addition, Plaintiff’s claims should be dismissed as he failed to exhaust his

administrative remedies under the Plan as required by ERISA. Finally, Defendant Hewitt

Associates, LLC is not a property party under ERISA, and Plaintiff fails to allege any

basis for imposing liability against it. Plaintiff’s Complaint, therefore, must be dismissed

it its entirety.

II. LEGAL ANALYSIS

A motion to dismiss tests the legal sufficiency of the claim, not the facts

supporting it. In ruling on a Rule 12(b)(6) motion to dismiss, the court accepts the factual

allegations in the complaint as true and resolves all inferences in favor of the plaintiff.2

See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Dismissal under

Rule 12(b)(6) is appropriate where the plaintiff cannot prove any set of facts that would

entitle him to relief on the face of his pleadings. See id. at 338; see also Fernandes v.

Astrue, 2009 WL 3823922, at *3 (E.D. Cal. Nov. 13, 2009).

However, to survive a motion to dismiss, all well-pleaded factual allegations in the

Complaint “must . . . raise a right to relief above a speculative level.” Bell Atlantic Corp.

v. Twombly, 550 U.S. 544, 555 (2007). The Complaint “must contain something more ...

than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right

to action.” Id. The Supreme Court has emphasized two key principles courts should

follow in determining whether a claim has “facial plausibility.” Ashcroft v. Iqbal, 556

U.S. 662, 677-79 (2009). First, “the tenet that a court must accept as true all of the

allegations contained in a complaint is inapplicable to legal conclusions. Threadbare

recitals of the elements of a cause of action, supported by mere conclusory statements,

do not suffice.” Id. at 678 (citing Twombly, 550 U.S. at 555). Second, there must be

sufficient factual allegations in the complaint to make a plaintiff's claim plausible – it is

not enough for the pleader to establish the “mere possibility of misconduct.” Id. at

2 By accepting the facts as true for purposes of this Motion, Defendant is not admitting

any facts as true.

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 3 of 11
4

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

679. In other words, there must be sufficient factual content in Plaintiff’s Complaint to

move his claims “across the line from conceivable to plausible.” Twombly, 550 U.S. at

570.

Plaintiff, however, has failed to plead sufficient facts to identify the actual nature

of his claim. This failure alone is sufficient to require dismissal. In addition, the claim

should be dismissed for the numerous reasons identified below. Although Plaintiff filed

this action pro se, he still must follow the same rules of procedure that govern other

litigants. King v. Atiyeh, 814 F.2d 565, 567 (9th Cir.1986); see also Jacobsen v. Filler,

790 F.2d 1362, 1364 (9th Cir.1986) (pro se litigants “should not be treated more

favorably than parties with attorneys of record”). Accordingly, Plaintiff’s status as a pro

se litigant does not prevent the Court from dismissing causes of action that are not

properly asserted in this case.

A. Plaintiff’s State Law Claims Are Preempted By ERISA Because They

Relate To An ERISA-Governed Employee Welfare Benefit Plan

In his Complaint, Plaintiff alleges that Defendants “failed to properly administer

COBRA benefits” and “acted in Bad Faith by denying prescription coverage benefits” to

Plaintiff. (Doc. 1, Exh. A) It is clear from the face of the Complaint that all of the

allegations therein relate to Plaintiff’s alleged treatment with respect to the Plan. As such,

Defendants request this Court dismiss Plaintiff’s Complaint in its entirety because the

claims presented are preempted by Section 514(a) of ERISA, 29 U.S.C. § 1144(a). See

Pilot Life v. Dedeaux, 481 U.S. 41, 47-48, 52-45 (1987); Aetna Health Inc. v. Davila, 542

U.S. 200, 209 (2004).

The Plan unequivocally is an employee welfare benefit plan, as that term is

defined under ERISA. Subject to certain exceptions not applicable hereto, the Act defines

an “employee welfare benefit plan,” as:

any plan, fund, or program which was heretofore or is hereafter established

or maintained by an employer or by an employee organization, or by both,

to the extent that such plan, fund, or program was established or is

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 4 of 11
5

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

maintained for the purpose of providing for its participants or their

beneficiaries, through the purchase of insurance or otherwise, (A) medical,

surgical, or hospital care or benefits, or benefits in the event of sickness,

accident, disability, death or unemployment, or vacation benefits,

apprenticeship or other training programs, or day care centers, scholarship

funds, or prepaid legal services[] . . . .

29 U.S.C. § 1002(1). The Plan is unequivocally an employee welfare plan governed by

ERISA because it was maintained by an employer for the purposes of providing eligible

employees medical benefits, including, but not limited to, prescription drug benefits.

(Exh. 1 at p. 5) In sum, the Plan is an employee welfare benefit plan within the meaning

of and governed by ERISA.

Subject to certain exceptions not applicable hereto, Section 514(a) of ERISA

provides that "the provisions of [Title I and Title IV of ERISA] shall supersede any and

all State laws insofar as they may now or hereafter relate to any employee benefit plan."

29 U.S.C. § 1144(a). A state law "relate[s] to" an ERISA-governed plan for purposes of

Section 514(a) "if it has a connection with or reference to such a plan." Shaw v. Delta Air

Lines, Inc., 463 U.S. 85, 97 (1983); Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001); Bast

v. Prudential Ins. Co. of America, 150 F.3d 1003, 1007 (9th Cir. 1998).

Here, Plaintiff’s state law claims for gross negligence and bad faith relate to and

arise from the existence of the Plan. A claim makes “a reference to” an ERISA plan when

“the existence of the plan is essential” to the claim, in the sense that adjudication of the

claim would require the court to “interpret[] the plan” or “dictate” the proper

“distribution of benefits” under the Plan. Providence Health Plan v. McDowell, 385 F.3d

1168, 1172 (9th Cir. 2004). Likewise, a claim has “a connection with” an ERISA plan if

it will have a direct impact on the “relationship between the plan and a participant.” Id.

The Ninth Circuit holds that “[t]he ERISA preemptive provision is to be broadly

construed and extends to common law tort and contract actions.” Gibson v. Prudential

Ins. Co. (9th Cir. 1990) 915 F.2d 414, 416 (9th Cir. 1990). Accordingly, regardless of

how Plaintiff styles his state law claims, there can be no question that these claims are

preempted by ERISA. See California Div. of Labor Standards Enforcement v. Dillingham

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 5 of 11
6

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Constr., N.A., 519 U.S. 324-25 (1997) (under the ["reference to"] inquiry, we have held

pre-empted...a common-law cause of action premised on the existence of an ERISA

plan”) (internal citation omitted).

It is clear that Defendants’ alleged conduct at issue in this matter is intertwined

with the alleged failure to administer benefits relating to the Plan. Resolution of

Plaintiff’s claims, therefore, is governed solely by the Plan terms and will require

reference to and reliance on Plan terms. Moreover, Plaintiff’s own Complaint makes

explicit reference to standards contained in “ERISA Statutes.”(Doc. 1, Exh. A) It is

without question, therefore, that Plaintiff’s claims arise out of and relate to the Plan and

its administration and consequently are preempted by Section 514(a) of ERISA,

29 U.S.C. § 1144(a). Thus, Plaintiff’s state law claims must be dismissed.

B. ERISA Section 502 Provides The Only Avenue For Relief In This

Matter

Plaintiff’s claims are also preempted under the doctrine of “complete preemption,”

which is based on the exclusivity of ERISA’s civil enforcement provisions under ERISA

§ 502(a). See 29 U.S.C. § 1132(a); Davila, 542 U.S. at 208-09; Pilot Life Ins. Co. v.

Dedeaux, 481 U.S. 41, 54 (1987). As the Supreme Court explained in Davila, Congress

enacted ERISA with the intention to make “employee benefit plan regulation . . .

‘exclusively a federal concern.’” 542 U.S. at 208 (quoting Alessi v. RaybestosManhattan, Inc., 451 U.S. 504, 523 (1981)). To reach that goal, Congress established an

“integrated enforcement mechanism” in the remedial provisions of ERISA § 502(a).

Davila, 542 U.S. at 208. To serve Congress’s “purpose of creating a comprehensive

statute for the regulation of employee benefit plans,” the Davila Court explained that

courts cannot allow states to create and enforce claims that provide alternative or

additional remedies for allegedly erroneous plan benefit denials or plan administration

practices: “The policy choices reflected in the inclusion of certain remedies and the

exclusion of others under the federal scheme would be completely undermined if ERISA

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 6 of 11
7

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

plan participants and beneficiaries were free to obtain remedies under state law that

Congress rejected in ERISA.” Id. (quoting Pilot Life, 481 U.S. at 54). Not only are such

state law claims thus preempted by the civil remedies set forth in ERISA § 502(a), but the

preemptive force of § 502(a) is so “extraordinary” that it “converts an ordinary state

common law complaint into one stating a federal claim.” Id. at 2496 (internal quotation

marks omitted).

In his Complaint, Plaintiff requests special damages caused by Defendants’

alleged “claim [and] coverage denials for prescription benefits leading to significant

bodily injury manifestation” and general damages for “just compensation.” (Doc. 1, Exh.

A) Plaintiff’s request in this regard is nothing more than an attempt to circumvent the

limits on relief available in an action under ERISA. Regardless of Plaintiff's allegations

of wrongdoing, or the fact that he attempts to couch them in terms of common law tort

actions, the relief he seeks is not available in ERISA's remedial structure. Therefore, to

the extent Plaintiff has any claim related to an alleged denial of his rights under the Plan,

the exclusive remedy for such a claim is provided by ERISA Section 501(a). Any

additional state law claims or damage theories are extinguished.

Furthermore, to the extent that Plaintiff seeks extra-contractual or compensatory

damages in the Complaint, such damages are not recoverable under ERISA and must be

dismissed. Bast, 150 F.3d. at 1009; see also Alday v. Raytheon Co, 619 F.Supp.2d 726,

729-30 (D. Ariz. 2008) (holding that ERISA bars extra-contractual damages that give a

beneficiary more than he is entitled to receive under the terms and provisions of an

ERISA plan).

C. Plaintiff Failed To Exhaust His Administrative Remedies

Plaintiff’s Complaint must be dismissed because he has not exhausted

administrative remedies under the Plan, and therefore, he cannot state a claim for relief

under ERISA. Section 503 of ERISA, 29 U.S.C. § 1133, requires ERISA plans to provide

internal dispute resolution procedures for participants or beneficiaries whose claims have

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 7 of 11
8

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

been denied. “Quite early in ERISA’s history, [the Ninth Circuit] announced as the

general rule governing ERISA claims that a claimant must avail himself or herself of a

plan’s own internal review procedures before bringing suit in federal court.” Diaz v.

United Agr. Employee Welfare Benefit Plan, 50 F.3d 1478, 1483 (9th Cir. 1995), citing

Amato v. Bernard, 618 F.2d 559, 566-68 (9th Cir. 1980). “Consequently, the federal

courts have the authority to enforce the exhaustion requirement in suits under ERISA and

as a matter of sound policy they should usually do so.” Id.; see also Sarraf v. Standard

Ins. Co., 102 F.3d 991, 993 (9th Cir. 1996) (failure to request in writing review of

adverse benefit decision precluded action against ERISA plan).

Here, Plaintiff does not, and cannot, allege that he has timely exhausted the Plan’s

internal review procedures. The Plan clearly spells out the administrative procedures for

appealing denial of a claim for benefits. (Exh. 1 at p. 70-79) Consistent with ERISA’s

exhaustion requirements, the Plan states that participants “will not be entitled to

challenge a claim decision made by the Claims Administrator in federal or state court or

in any other administrative proceeding until all of the Claim and Appeal procedures

outlined [in the Plan] have been complied with and exhausted.” (Id. at 77) Plaintiff’s

Complaint, however, makes no mention of exhaustion, and this pleading defect alone is a

sufficient basis to dismiss the claim. See Landrith v. Madison Nat. Life Ins. Co., No.

CV08-1284-PHX-MHM, 2009 WL 2515622, at *2 (D. Ariz. Aug. 14, 2009) (dismissing

ERISA claim where “Plaintiffs [did] not claim that they satisfied the Plan’s

administrative process, or even attempted to do so”); Walters v. Odyssey Healthcare

Management Long Term Disability, 2011 WL 2714065 (D. Ariz. July 13, 2011)

(dismissing ERISA claim when the Complaint was “bereft of any factual content

supporting [Plaintiff’s] claim of exhaustion.”); Alloco v. Metro. Life Ins. Co., 256

F.Supp.2d 1023, 1033 (D.Ariz. 2003) (granting summary judgment in favor of defendant

based on plaintiff’s failure to exhaust her administrative remedies under ERISA before

commencing lawsuit); Golden v. Hubbell Inc., 343 Fed.Appx. 226, 228 (9th Cir. 2009)

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 8 of 11
9

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(affirming dismissal for failure to state a claim because Plaintiff failed to exhaust

administrative remedies).

Plaintiff has failed to allege that he ever appealed any initial decision, that he

followed the remaining appeals procedures set forth in the Plan or that he exhausted the

second level of review required under the terms of the Plan. Simply put, Plaintiff has

failed to put forth sufficient evidence that would suggest he properly and timely

exhausted his administrative remedies under the Plan, as ERISA requires, before bringing

this suit. Accordingly, the Court should dismiss his Complaint.

D. Hewitt Associates, LLC Is Not A Proper Defendant

Plaintiff has improperly named Hewitt Associates, LLC as a Defendant in this

lawsuit. Under ERISA Section 502(d)(2), a person other than the plan is not liable for a

money judgment in an action to recover benefits unless such person's liability is

established on some other basis. 29 U.S.C. § 1132(d)(2). Here, Plaintiff has failed to

allege any basis for imposing liability on Hewitt Associates, LLC. Plaintiff has not

alleged, nor can he allege, that Hewitt Associates, LLC was the administrator of the Plan.

(See Exh. 1 at p. 79) Moreover, Plaintiff has not alleged any other basis in his Complaint

for imposing liability on Hewitt Associates, LLC. For these reasons, Hewitt Associates,

LLC should be dismissed with prejudice as a party.

III. CONCLUSION

For the foregoing reasons, Defendants respectfully request that the Court dismiss

Plaintiff’s Complaint in its entirety, as any amendments to the Complaint would be futile.

Defendants alternatively request that Hewitt Associates, LLC be dismissed as it is an

improper party to Plaintiff’s claims.

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 9 of 11
10

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DATED this 17th day of December 2015.

OGLETREE, DEAKINS, NASH,

SMOAK & STEWART, P.C.

By: s/Rayna H. Jones

Rayna H. Jones

2415 East Camelback Road, Suite 800

Phoenix, Arizona 85016

Attorney for Defendants Liberty Mutual

Group Inc. and Hewitt Associates, LLC

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 10 of 11
11

O

gletree, Dea

kins, N

ash, S

m

o

a

k

&

Stew

a

rt, P.C.

Esplanade Center III, Suite 800

2415 East Camelback Road

Phoenix, AZ 85016

Telephone: 602.778.3700

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

CERTIFICATE OF SERVICE

I hereby certify that on the 17th day of December 2015, I electronically filed the

attached document,

and

COPY of the foregoing document

was served by first-class mail,

postage prepaid, this same day on:

Jeffrey Steven Hyman

3826 E. Lupine Ave.

Phoenix, AZ 85028

Pro Se Plaintiff

By: s/Susan Stimson

Susan Stimson

23318175.1

Case 2:15-cv-02522-DLR Document 5 Filed 12/17/15 Page 11 of 11