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Sloan v. Life Insurance Company of North America

United States District Court, D. Maryland

November 20, 2019

DOUGLAS SLOAN, Individually, and as Personal Representative of the Estate of Susan Sloan Plaintiff,
LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant/Cross-Claim Defendant and PRA HEALTH SCIENCES, INC., Defendant/Cross-Claim Plaintiff



         Currently pending before the court are plaintiff Douglas Sloan's Motion for Leave to File Second Amended Complaint (“Motion”) (ECF No. 29), defendant PRA Health Sciences, Inc.'s (“PRA”) Opposition to Plaintiff's Motion for Leave to File Second Amended Complaint (“Opposition”) (ECF No. 31), and Plaintiff's Reply to PRA's Opposition to Motion for Leave to File Second Amended Complaint (“Reply”) (ECF No. 32). The issues are fully briefed, and no hearing is necessary. Loc. R. 105.6. For the reasons stated below, plaintiff's Motion (ECF No. 29) is granted.

         I. BACKGROUND

         In this Employee Retirement Income Security Act of 1974 (“ERISA”) case, plaintiff asserts a claim against PRA and LINA for benefits arising from a life insurance policy (LINA and PRA hereinafter referred to collectively as “defendants”). (ECF No. 19 at ¶¶ 36-39). Plaintiff filed this lawsuit individually and as personal representative of the estate of his deceased wife, Susan Sloan. According to the Amended Complaint, Ms. Sloan was employed by PRA and participated in Group Life Insurance Policy No. FLX 963879 (the “Policy”) which provided life insurance benefits under an employee benefit plan (the “Plan”) established by PRA for its employees. (Id. at ¶ 14). LINA issued the Policy and PRA served as the Plan administrator. (Id. at ¶¶ 14, 20).

         Under the Policy, Ms. Sloan elected life insurance coverage in the amount of $360, 000 and named Plaintiff as the beneficiary. (Id. at ¶ 14). The Policy provided a conversion privilege wherein Ms. Sloan had the right to convert coverage under the Policy into an individual life insurance policy if coverage under the Policy was terminated. (Id. at ¶ 24). To obtain conversion insurance, the Policy required Ms. Sloan to submit an application within 31 days of termination of coverage under the Policy, which would be extended by 15 days, up to a maximum of 90 days, if Ms. Sloan was not notified of this right at least 15 days prior to the end of the conversion period. (Id.)

         Ms. Sloan's life insurance coverage under the Policy continued through September 30, 2016. (Id. at ¶ 20). After this date, however, PRA stopped its payment of Policy premiums and coverage terminated on October 1, 2016. (Id.) Ms. Sloan died on December 1, 2016. (Id. at ¶ 16). In January 2017, Plaintiff submitted a claim for life insurance benefits under the Policy. (Id. at ¶ 17). LINA denied plaintiff's claim and plaintiff's subsequent appeal on the grounds that PRA had stopped payment of premiums, and because Ms. Sloan had not converted coverage into an individual policy, her participation in the Policy terminated prior to her death. (Id. at ¶¶ 5, 17). Plaintiff alleges that either or both defendants were required to provide Ms. Sloan with written notice of PRA's intention to stop payment of premiums and of Ms. Sloan's right to convert the Policy into an individual life insurance policy with LINA. (Id. at ¶ 4). Plaintiff further alleges that neither of these notices were provided by defendants, which resulted in Plaintiff's loss of $360, 000 in life insurance benefits. (Id. at ¶¶ 25, 31, 40).[1]

         In his original Complaint (ECF No. 1), plaintiff asserted three claims under ERISA and two claims under state law. (ECF No. 1 at 11-15). Plaintiff's first two claims under ERISA included a claim for benefits under ERISA § 502(a)(1)(B) and a claim for equitable relief under ERISA § 502(a)(3), each for “violations of the terms of the policy/plan” against PRA and the insurance company.[2] (Id. at 11). Plaintiff's third claim under ERISA was a claim against PRA and the insurance company for equitable relief under ERISA § 502(a)(2) for a breach of fiduciary duty. (Id. at 12-13). PRA sought to dismiss plaintiff's claims for equitable relief for failure to state a claim. (ECF No. 11 at 1). PRA argued that dismissal of plaintiff's request for equitable relief under ERISA was appropriate because, contrary to Supreme Court and Fourth Circuit precedent, plaintiff's claim for equitable relief “simply recast an individual claim for Plan benefits as a breach of fiduciary duty claim.” (ECF No. 11-1 at 2 (citing Varity Corp. v. Howe, 516 U.S. 489, 512, 515 (1996); Mass. Mut Life Ins. Co. v. Russell, 473 U.S. 134, 140 (1985); Korotynska v. Metro. Life. Ins. Co., 474 F.3d 101, 107-08 (4th Cir. 2006))). In response, plaintiff filed an Amended Complaint (ECF No. 19) wherein he removed the state law claims and the claims for equitable relief under ERISA § 502(a)(3) and § 502(a)(2). (Id. at 11-12). The sole remaining claim in plaintiff's Amended Complaint is a claim against LINA and PRA for life insurance benefits under ERISA § 502(a)(1)(B). Plaintiff now seeks leave to file a Second Amended Complaint to reassert a claim for equitable relief under § 502(a)(3) against PRA and to remove the claim against PRA under § 502(a)(1)(B). (ECF No. 29 at 2). In sum, plaintiff's proposed Second Amended Complaint contains two claims: (1) a claim for benefits against LINA under § 502(a)(1)(B), and (2) a claim of breach of fiduciary duty against PRA under § 502(a)(3). (Id.)


         Pursuant to Federal Rule of Civil Procedure 15(a)(2), a party is permitted to amend his pleadings with the written consent of the opposing party or by leave of the court. Fed.R.Civ.P. 15(a)(2). Rule 15(a)(2) provides that “[t]he court should freely give leave when justice so requires.” Leave to amend a pleading should be denied, however, “when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile.” Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986). A proposed amendment is futile if it “fails to satisfy the requirements of the federal rules” or, in other words, could not survive a motion to dismiss. Katyle v. Penn Nat. Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011) (quoting U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)). Under Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6).

         When ruling on a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court must “accept[] all well-pleaded allegations in the plaintiff's complaint as true” and “draw[] all reasonable factual inferences from those facts in the plaintiff's favor.” Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). Nonetheless, “[t]he mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Rather, “a complaint must contain sufficient factual matter . . . to state a claim to relief that is plausible on its face.” Ashcroft, 556 U.S. at 678 (internal citation and quotation marks omitted). A plaintiff satisfies this standard not by forecasting evidence sufficient to prove the elements of the claim, but by alleging sufficient facts to establish those elements. Walters, 684 F.3d at 439. Accordingly, “while a plaintiff does not need to demonstrate in a complaint that the right to relief is ‘probable,' the complaint must advance the plaintiff's claim ‘across the line from conceivable to plausible.'” Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).


         Plaintiff seeks to amend the Complaint for a second time to “bring a separate cause of action against . . . PRA, under § 502(a)(3), . . . seeking equitable relief for breach of fiduciary duties.” (ECF No. 29 at 2). Plaintiff argues the “court should freely give leave [to amend] when justice so requires.” (Id. at 3 (quoting Fed.R.Civ.P. 15(a)(2)). Plaintiff maintains there is no prejudice to defendants in allowing this amendment because plaintiff previously consented to defendants' extension of time to respond to the Complaint and there are no court dates set or discovery requests pending. (Id.)

         PRA, however, opposes plaintiff's request to amend the Complaint, arguing that “[j]ustice does not require permitting leave to amend when [the] amendment would be futile.” (ECF No. 31 at 2). PRA contends plaintiff's proposed amendment is futile and could not withstand a motion to dismiss under Rule 12(b)(6) because it “impermissibly recasts an individual claim for benefits as a fiduciary breach.” (Id. at 6). Specifically, PRA argues that the breach of fiduciary claim is really a claim for benefits because plaintiff alleges the same facts under both causes of action and demands payment of the policy proceeds as a remedy for both causes of action. (Id. at 8). PRA contends that plaintiffs in the Fourth Circuit “are not permitted to ‘seek relief simultaneously under § 502(a)(1)(B) and § 502(a)(3) when the injury alleged creates a cause of action under § 502(a)(1)(B).'” (Id. at 9 (quoting Conn. Gen. Life Ins. Co. v. Advanced Surgery Ctr. of Bethesda, LLC, Civ. No. DKC 14-2376, 2015 WL 4394408, at *2 (D. Md. July 15, 2015))).

         Under ERISA Section 502(a)(1)(B), an ERISA plan participant or beneficiary may bring a claim “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) (2018). Under ERISA Section 502(a)(3), a plan participant or beneficiary may bring a claim to “(A) enjoin any act or practice which violates any provision of [ERISA] or the terms of the plan, or (B) to obtain other appropriate ...

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