Court Opinion

ID: 6323641
Source: CourtListenerOpinion
Date Created: 2022-03-16 00:01:30.722314+00
Date Added: 2024-06-11T09:21:40.544927
License: Public Domain

Case: 21-20246     Document: 00516239770         Page: 1     Date Filed: 03/15/2022

              United States Court of Appeals
                   for the Fifth Circuit
                                                                      United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                       March 15, 2022
                                  No. 21-20246                          Lyle W. Cayce
                                                                             Clerk

   Steven Long,

                                                           Plaintiff—Appellant,

                                       versus

   Dearborn National Life Insurance Company,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:20-CV-1783

   Before Barksdale, Stewart, and Dennis, Circuit Judges.
   Per Curiam:*
          This case arises from a dispute involving a long-term disability
   insurance policy. The district court granted Appellee Dearborn National Life
   Insurance Company’s Rule 12(b)(6) motion to dismiss and dismissed
   Appellant Steven Long’s suit. For the following reasons, we AFFIRM.

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-20246      Document: 00516239770          Page: 2    Date Filed: 03/15/2022

                                    No. 21-20246

                 I. Facts & Procedural Background
          Steven Long was employed by the University of Texas Medical
   Branch-Galveston (“UTMB-Galveston”) as a registered nurse. UTMB-
   Galveston offers group long-term disability insurance as part of an employee
   benefit plan, in which Long participated as an employee, through Dearborn
   National Life Insurance Company (“Dearborn”).
          Long stopped working due to disability on May 2, 2016, while covered
   under the long-term disability policy (“the Policy”). Long’s disability
   resulted from a combination of degenerative disc disease, lower back injuries,
   and a history of intensive spinal fusion surgery. Long filed an application for
   long-term disability benefits under the Policy, and by letter dated September
   8, 2016, Dearborn approved Long’s claim and awarded him monthly benefits
   in the gross amount of $4,263.55. Long received benefits for the period
   between July 31, 2016, through July 30, 2018. The Policy defines Total
   Disability for long-term disability purposes as follows:
          Total Disability or Totally Disabled means that during the first
          24 consecutive months of benefit payments due to Sickness or
          Injury:
                 1. You are continuously unable to perform the Material
                 and Substantial Duties of Your Regular Occupation, and
                 2. Your Disability Earnings, if any, are less than 20% of
                 Your pre-disability Indexed Monthly Earnings.
          After the LTD Monthly Benefit has been paid for 24
          consecutive months, Total Disability or Totally Disabled
          means that due to Injury or Sickness:
                 1. You are continuously unable to engage in any Gainful
                 Occupation, and
                 2. Your Disability Earnings, if any, are less than 20% of
                 Your pre-disability Indexed Monthly Earnings.

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          In a December 10, 2018 letter (“Initial Denial Letter”), Dearborn
   terminated Long’s long-term disability benefits based on a determination by
   its own medical consultants that Long had not submitted sufficient evidence
   to show his inability to perform sedentary work; Dearborn determined that
   Long could perform full-time work as a nurse consultant, nurse case
   manager, or telephonic nurse.
          Long alleges that Dearborn “disregard[ed] the results of the
   functional capacity evaluation Plaintiff had undergone, stating that it lacked
   certain validity measures such as a heart rate assessment and coefficient
   variables,” and “disregarded the medical notes and the opinions of Plaintiff’s
   treating physicians.” Long further alleged that, “[t]hough Defendant had the
   right under the Policy to have Plaintiff examined by a physician or perform
   its own functional capacity evaluation to assess his eligibility for benefits, it
   did not do so and instead chose to rely on file reviewing consultants . . . whose
   opinions . . . differed from Plaintiff’s treating physicians[.]” Long appealed
   the Initial Denial Letter and gave Dearborn “written notice that Dearborn
   National was in violation of its contractual and statutory duties[.]” Dearborn
   upheld its initial determination.
          Long brought suit against Dearborn in Texas state court, alleging
   claims for (1) breach of contract, (2) breach of the duty of good faith and fair
   dealing, (3) violations of the Texas Insurance Code, (4) violations of the
   Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”), and
   (5) fraud. Long attached a copy of the Policy as Exhibit 1 to his state court
   petition.
          Dearborn removed the case to federal district court based on diversity
   jurisdiction; Long moved to remand. The district court denied Long’s
   motion to remand and allowed him to file an amended complaint, instructing
   him to provide specific factual allegations to support his pleadings. Dearborn

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   moved to dismiss Long’s amended complaint, and the district court directed
   Long to file a second amended complaint.
          Long then filed his Second Amended Complaint (“Complaint”).
   Dearborn filed another motion to dismiss. The district court held a
   conference to discuss the motions. Long alleges that, despite being given
   permission to appear telephonically, the district court inadvertently called his
   office, rather than his direct line, which resulted in Long’s counsel missing
   the conference. The district court then had a conversation with Dearborn’s
   counsel—and without Long’s—which included a five minute “off the
   record” discussion.
          After the conference, the district court ruled in favor of Dearborn and
   dismissed Long’s Complaint. The district court concluded that Long “has
   pleaded largely vague conclusions and statutory language. He has pleaded no
   facts of how Dearborn breached the [P]olicy. He must give more than his
   disagreement with Dearborn’s conclusions.” The district court dismissed
   Long’s breach of contract claim, and then dismissed all of Long’s extra-
   contractual causes of action, because Long failed to plead a breach of
   contract. The district court then entered final judgment, and Long appealed.
                          II. Standard of Review
          We review a district court’s dismissal of a complaint de novo. Innova
   Hosp. San Antonio, L.P. v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719,
   726 (5th Cir. 2018). We must “accept all well-pleaded facts as true and view
   those facts in the light most favorable to the plaintiff.” Richardson v. Axion
   Logistics, L.L.C., 780 F.3d 304, 304–05 (5th Cir. 2015) (quoting Montoya v.
   FedEx Ground Package Sys., Inc., 614 F.3d 145, 146 (5th Cir. 2010)). But we
   need not accept as true a legal conclusion unsupported by fact. Ashcroft v.
   Iqbal, 556 U.S. 662, 678 (2009). Thus, to survive a motion to dismiss, a
   complaint must contain sufficient factual matter that, when taken as true,

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   states “a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
   Twombly, 550 U.S. 544, 570 (2007). This court may affirm the district court’s
   decision “on any ground supported by the record, including one not reached
   by the district court.” Gilbert v. Donahoe, 751 F.3d 303, 311 (5th Cir. 2014)
   (citing Ballew v. Cont’l Airlines, Inc., 668 F.3d 777, 781 (5th Cir. 2012)).
                                 III. Discussion
                                          A.
          Because this is a diversity action, Texas law “provides the elements
   of the plaintiff’s case.” Thrash v. State Farm Fire & Cas. Co., 992 F.3d 1354,
   1356 (citing Ayres v. Sears, Roebuck & Co., 789 F.2d 1173 (5th Cir. 1986). Long
   first contends that the district court erred in granting Dearborn’s motion to
   dismiss because he alleged sufficient facts to support each element of his
   breach of contract claim. “Under Texas law, a plaintiff alleging a breach of
   contract must show ‘(1) the existence of a valid contract; (2) performance or
   tendered performance by the plaintiff; (3) breach of the contract by the
   defendant; and (4) damages to the plaintiff resulting from that
   breach.’” Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 767 (5th Cir.
   2016) (quoting Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.
   1997)).
          Long’s Complaint alleges the following:
          28. Plaintiff has suffered and continues to suffer from a disabil-
          ity as defined in the Policy and/or as defined under Texas state
          law. At all material times, Plaintiff has complied with all Policy
          provisions and conditions precedent to qualify for benefits
          prior to filing suit.

          29. In exchange for Plaintiff’s continuing compliance with all
          Policy provisions and conditions precedent to qualify for bene-
          fits, Defendant owed Plaintiff a duty to pay him disability

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          benefits on a monthly basis if he became disabled as defined by
          the Policy.

          30. Plaintiff became disabled under the terms of the Policy and
          made a timely claim for benefits.

          31. Defendant, under the terms of the contract of insurance, is
          indebted to Plaintiff for disability benefits due under the terms
          of the Policy.

          32. Defendant has breached its contract with Plaintiff to timely
          provide all benefits due to him under the contract.

          33. Defendant has failed and refused to honor its contractual
          obligations under the [P]olicy of insurance that was issued to
          Plaintiff’s employer for the benefit of Plaintiff.

          34. As a direct and proximate result of Defendant’s breach of
          its contractual duties, Plaintiff has been damaged and is enti-
          tled to actual damages from Defendant in an amount equal to
          the amount of benefits due under the [P]olicy from July 30,
          2018 through the present.
   These conclusory allegations are not facially plausible and do not establish a
   breach of contract claim. See Iqbal, 556 U.S. at 678 (“A claim has facial
   plausibility when the plaintiff pleads factual content that allows the court to
   draw the reasonable inference that the defendant is liable for the misconduct
   alleged.”). Indeed, Long merely lists conclusory statements that are devoid
   of factual allegations. Long fails to identify a specific provision of the contract
   that was allegedly breached, and he fails to show how his performance under
   the Policy was sufficient.
          Further, Long’s allegation that Dearborn breached the Policy by
   choosing to rely on assessments by Dearborn’s medical consultants is belied
   by the Complaint itself, which states that “Defendant had the right under the

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   Policy to have Plaintiff examined by a physician or perform its own functional
   capacity evaluation to assess his eligibility[.]” The mere fact that Dearborn
   could consult their own medical expert or perform its own evaluation does not
   mean that Dearborn breached the Policy by failing to do so. As Long himself
   pleads, this was Dearborn’s own “right.” Thus, on the facts alleged, Long’s
   breach of contract claim fails and was properly dismissed by the district court.
                                          B.
          Long also contends that the district court erred in granting Dearborn’s
   motion to dismiss because he alleged sufficient facts to support his causes of
   action for extra-contractual damages based on Dearborn’s breach of its duty
   of good faith and fair dealing, and for violating the Texas Insurance Code and
   Texas DTPA.
          Long alleges that Dearborn breached a duty of good faith and fair
   dealing because Dearborn “conducted an unreasonable and incomplete
   investigation in violation of its duty of good faith and fair dealing, seeking to
   find ways to deny Plaintiff’s claim rather than fairly evaluating it.” Long
   alleges that (a) Dearborn “contravened its own medical reviewer’s
   recommendation that benefits should continue when it denied Plaintiff’s
   claim,” (b) “hired a medical file reviewing company, University Disability
   Consortium (“UDC”) . . . known for providing biased and insurer-friendly
   opinions,” and that (c) UDC’s physician “provided Dearborn with an
   opinion that supported that Plaintiff could perform full-time sedentary work,
   but inappropriately arrived at his conclusion by citing to selectively quoted
   portions of medical records . . . while at the same time ignoring evidence that
   contradicted his thesis[.]” This “displayed a refusal to err in favor of Plaintiff
   or resolve ambiguities and doubt in his favor,” and ultimately, “constitutes a
   breach of Dearborn National’s common law duty of good faith and fair

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   dealing and was bad faith claims handling because Dearborn had no
   reasonable basis to deny Plaintiff’s claim.”
          Under Texas law, “a cause of action for breach of the duty of good
   faith and fair dealing exists when the insurer has no reasonable basis for
   denying or delaying payment of a claim, or when the insurer fails to determine
   or delays in determining whether there is any reasonable basis for denial.”
   Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 459 (5th Cir.
   1997). To prevail on such a claim, the insured must set forth allegations to
   demonstrate “the absence of a reasonable basis for denying or delaying
   payment of the claim and that the insurer knew, or should have known, that
   there was no reasonable basis for denying or delaying payment.” Id.
          Long has failed to plead sufficient facts to support his breach of the
   duty of good faith claim. While it is true that Texas law has imposed a duty
   on the insurer to act in good faith and deal fairly with the insured, “there is
   no duty beyond the contract itself.” Id. at 460. In other words, absent a
   breach of the Policy in this case, there is no violation of the insurer’s duty to
   act in good faith and deal fairly with the insured. See id.
          The materials attached to Long’s Complaint establish that Dearborn
   acted in accordance with the Policy’s terms when it denied Long’s long-term
   disability claim after the initial twenty-four-month period. Although Long
   was eligible for the initial twenty-four months of benefits when his functional
   impairment precluded him from performing his original, assigned job,
   Dearborn determined that, after the initial twenty-four months, Long was
   now able to perform another occupation that he was or could become
   qualified for. Long’s conclusory allegation that Dearborn improperly denied
   his benefits is insufficient to survive dismissal because it is contradicted by
   the documents attached to his Complaint. Hollingshead v. Aetna Health Inc.,
   589 F. App’x 732, 737 (5th Cir. 2014) (citing Associated Builders, Inc. v. Ala.

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   Power Co., 505 F.2d 97, 100 (5th Cir. 1974)) (“Conclusory allegations and
   unwarranted deductions of fact are not admitted as true especially when such
   conclusions are contradicted by facts disclosed by a document appended to
   the complaint.”) (internal citation omitted)).
          Further, Long’s failed breach of contract claim defeats this claim, as
   he has alleged no salient facts beyond Dearborn’s alleged breach of contract.
   Moreover, Long’s allegations are conclusory at best. Long does not allege
   that he provided specific medical evidence that demonstrated that he could
   not perform the sedentary jobs listed by Dearborn. Instead, Long merely
   alleged that Dearborn relied on assessments “contrary to the credibility
   determinations of medical providers”; that “Dearborn’s claim review
   displayed a refusal to err in favor of Plaintiff”; that evidence was “cherry-
   picked”; that “Dearborn had no reasonable basis to deny [his] claim”; and
   that Dearborn was aware that denying his claim “created a real risk of causing
   him extreme hardship and oppression financially[.]” Long’s allegation that
   Dearborn is liable for bad faith because it engaged an outside reviewer, UDC,
   to assist in its review is also conclusory. Long does not allege that this violated
   the terms of the Policy, nor does he allege that UDC was biased in its review
   of Long’s claims: just that UDC is “known for providing biased and insurer-
   friendly opinions.” Such an assertion, supported only by an unreported
   district court case from Nevada, is nothing more than a conclusory allegation.
   Long’s claim of breach of duty of good faith and fair dealing was properly
   dismissed.
          Long’s claims that Dearborn violated the Texas Insurance Code
   similarly fail, as Long merely lists the elements of each cause of action,
   without specific factual allegations. For example, Section 541.060(a)(2)(A)
   of the Texas Insurance Code prohibits an insurer from refusing to effectuate
   “a prompt, fair, and equitable settlement of . . . a claim with respect to which
   liability has become reasonably clear.” Tex. Ins. Code Ann. § 541.060.

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   Long’s Complaint alleges the following with respect to Section
   541.060(a)(2)(A):
          Defendant violated Section 541.060(a)(2)(A) of the Texas
          Insurance Code by continuing to deny Plaintiff despite having
          already received all necessary evidence to substantiate his
          claim and recognize that its liability was reasonably clear.
          Defendant received all necessary evidence to recognize liability
          under the Policy prior to its initial denial on December 10,
          2018, and was provided with even more evidence
          substantiating Plaintiff’s claim when receiving Plaintiff’s
          appeal on June 27, 2019.
   Long’s allegations amount to no “more than labels and conclusions, and a
   formulaic recitation of a cause of action’s elements will not do.” Twombly,
   550 U.S. at 555. Long’s remaining Texas Insurance Code claims fare no bet-
   ter, as they too amount to no more than formulaic recitations of the elements
   of each cause of action. The district court therefore properly dismissed
   Long’s Texas Insurance Code claims.
          Finally, Long’s claim for violations of the DTPA also fails, as it is
   merely a conclusory allegation devoid of any facts. Long’s Complaint alleges
   the following:
          55. Texas’ Deceptive Trade Practices-Consumer Protection
          Act (DTPA) provides additional protections to consumers who
          are victims of deceptive, improper or illegal practices. Defend-
          ant’s violations of the Texas Insurance Code create a cause of
          action under the DTPA. As such, Defendant’s violations of the
          Texas Insurance Code, as set forth above, specifically violate
          the DTPA as well.
          56. The violations by Defendant are also “unconscionable” as
          that term is legally defined, and subjects Defendant to liability
          for such “unconscionable” acts as set forth by the DTPA.

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   This is insufficient to state a claim for violations of the DTPA, and the district
   court properly dismissed this claim.
                                  IV. Conclusion
          For the foregoing reasons, the district court’s judgment dismissing
   Long’s claims against Dearborn is AFFIRMED. 1

          1
            Because we conclude that the district court properly dismissed Long’s claims
   pursuant to Fed. R. Civ. P. 12(b)(6), we need not address his argument that the case
   should be reassigned to a different judge on remand.

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