United States District Court, D. New Jersey
Trevor J. Cooney, Esquire, Archer & Greiner, PC, Haddonfield, New Jersey, Counsel for Plaintiffs.
Matthew S. Marrone, Esquire, Goldberg Segalla LLP, Princeton, New Jersey, and Saleel Vijay Sabnis, Esquire, Goldberg Segalla LLP, Philadelphia, Pennsylvania, Counsel for Defendant Corporate Synergies Group, LLC.
Melissa J. Kanbayashi, Esquire, Sean X. Kelly, Esquire, Marks, O'Neill, O'Brien, Doherty & Kelly, PC, Pennsauken, New Jersey, Counsel for Defendants Kistler Tiffany Benefits and Suzanne Bruce.
Meghan Catherine Goodwin, Esquire, Clyde & Co U.S. LLP, Florham Park, New Jersey, Counsel for Defendant Standard Security Life Insurance Company of New York.
NOEL L. HILLMAN, District Judge.
Presently before the Court is the motion [Doc. No. 16] of Defendants, Kistler Tiffany Benefits (hereafter, "KTB") and Suzanne Bruce (hereafter, "Bruce"), seeking dismissal of the complaint pursuant to Fed.R.Civ.P. 12(b)(6). The Court has considered the submissions of the parties and decides this matter pursuant to Fed.R.Civ.P. 78.
For the reasons that follow, the motion to dismiss will be denied.
Plaintiff Johnson & Towers, Inc. (hereafter, "J&T") is a family business that sells and services diesel engines, transmissions and related components, parts and accessories for markets that include medium and heavy duty vehicles and equipment. (Compl. [Doc. No. 1] ¶ 12.) J&T provided health insurance to its eligible employees and their dependents through the Johnson & Towers, Inc. Employee Healthcare Plan (hereafter, the "Plan"), a self-funded insurance plan. (Id. ¶ 13.) The Plan was established through and governed by a Master Plan Document. (Id.) In addition to J&T, the Plan and David Johnson, as Plan Trustee and Named Fiduciary, are also plaintiffs in this action. (Compl. ¶¶ 3, 4.)
This case arises out of the responsibility to pay medical bills for Patricia Johnson, the widowed spouse of Walter Johnson Jr., who had been a shareholder of J&T. J&T provided health insurance to eligible employees and their dependents up to $125, 000, and any additional amounts were to be paid through through stop-loss insurance policies. (Id. ¶¶ 17, 28.) In 2013, Ms. Johnson incurred medical bills in the amount of $387, 710.82. (Id. ¶¶ 36, 37.) After J&T paid the $125, 000 deductible, the amount due was $262, 710.82. (Id. ¶ 39.)
J&T believed that the remaining balance should have been paid through its stop-loss insurance policies, but the stop-loss carrier - Standard Security Life Insurance Company of New York (hereafter, "Standard"), also a defendant in this action - refused payment on the ground that Ms. Johnson was no longer eligible for benefits after her husband, the covered employee, died in 2005. (Id. ¶ 41.) J&T argues that Ms. Johnson should have been covered under a "Widowed Spouse Amendment" to the Master Plan Document. (See id. ¶ 42.) Pursuant to the Widowed Spouse Amendment, the Master Plan Document would include as covered individuals the widowed spouses of J&T's shareholders until age 65 or until the spouse remarried, whichever came first. (Id. ¶ 20.) However, when J&T switched stop-loss carriers to Standard in 2008, it appears that the new insurance policy did not include the Widowed Spouse Amendment. (Id. ¶¶ 29, 50.)
Plaintiffs bring this action against J&T's insurance brokers, Corporate Synergies Group, LLC (hereafter, "CSG") and KTB, as well as Defendant Bruce, an agent who had been employed by CSG and later KTB and was the primary point of contact between the brokers and J&T. (Id. ¶ 18.) CSG was first engaged to procure the stop-loss health insurance policies for J&T. (Id.) When Bruce left the employment of CSG and joined KTB, J&T engaged KTB as its insurance broker and Bruce remained the primary point of contact. (Id. ¶ 35.) Plaintiffs allege that when J&T changed stop-loss carriers to Standard in 2008, they instructed CSG and Bruce to ensure that the substantive provisions of the stop-loss policy and the Master Plan Document with Standard matched the prior policy and Master Plan Document, including the Widowed Spouse Amendment. (Id. ¶¶ 29, 30.) As Standard has taken the position that the stop-loss policy does not include coverage for widowed spouses, J&T contends that CSG, KTB and Bruce failed in their duty as J&T's insurance broker to procure and maintain stop-loss insurance that provided the coverage requested by J&T. (Id. ¶¶ 50-51, 55.)
Plaintiffs thus assert a claim against CSG, KTB and Bruce on the basis that these defendants breached the fiduciary duties they owed to the Plan under Section 409(a) of the Employee Retirement Income Security Act (hereafter, "ERISA"), 29 U.S.C. § 1109(a). (Compl. ¶¶ 49-51.) Plaintiffs also assert a state law claim against these defendants for professional malpractice based on their alleged failure to procure and maintain proper and adequate stop-loss coverage. (Id. ¶¶ 54-56.) In addition, Plaintiffs assert a claim against Standard for declaratory judgment on the issue of whether Plaintiffs are entitled to stop-loss coverage under the Standard policy for the claim for Ms. Johnson. (Id. ¶ 58.)
In the motion to dismiss, KTB and Bruce argue that Plaintiffs do not have standing to bring this action, and that the case is not ripe for disposition. The crux of Defendants' argument is that Plaintiffs were not denied benefits and have no right to bring a claim to recover the unpaid medical bills of Ms. Johnson. (Br. in Supp. of Defs., Kistler Tiffany Benefits and Suzanne Bruce's, Mot. to Dismiss the Compl. for Failure to State a Claim Pursuant to Fed.R.Civ.P. 12(b)(6) [Doc. No. 16-3] (hereafter, "Defs.' Br.") 1.) Defendants contend that Plaintiffs lack standing under either ERISA, which they argue only gives the right to bring a civil action to a "participant or beneficiary seeking to recover benefits due, " or under common law because Plaintiffs have not suffered an injury in fact. (Id. at 8-10.) Defendants argue that Plaintiffs' claims are not ripe because Plaintiffs suffered no damages, noting in this regard that Plaintiffs have not yet paid the outstanding medical bills. (Id. at 11-12.)
In response, Plaintiffs clarify that they are not pursuing a "denial of benefits" claim, but instead are alleging a breach of fiduciary duty claim. (Pls.' Br. in Opp. to Mot. to Dismiss Compl. Filed by Defs. Kistler Tiffany Benefits and Suzanne Bruce [Doc. No. 27] (hereafter, "Pls.' Opp. Br.") 1.) Plaintiffs argue that because they are "fiduciaries" under the Plan, they have standing to bring a claim for the losses to the Plan that resulted from the insurance brokers' failure to comply with their fiduciary duties. (Id.) They also submit a letter from their third-party administrator of health benefits, which indicates that any payments made by the Plan to the third-party administrator would first be applied to pay the outstanding claims for Ms. Johnson before being applied to fund any other claims under the group health program. (Cert. of David Johnson in Opp. to Mot. to Dismiss Compl. (hereafter, "Johnson Cert."), Ex. A.) Plaintiffs also request leave to amend the complaint in the event the Court finds that the complaint is deficient. (Pls.' Opp. Br. 8.)
Subsequent to the filing of the complaint, and after the motion to dismiss was filed, Plaintiffs through the consent of all parties filed an amended complaint. The Consent Order granting Plaintiffs leave to file the amended complaint provides that KTB and Bruce "are not required to file a responsive pleading to Plaintiffs' First Amended Complaint until the Court decides their pending Rule 12(b)(6) motion[.]" (Consent Order [Doc. No. 38], at 2.) Because the original complaint is no longer the operative pleading, it appears that the pending motion to dismiss is moot. Indeed, KTB and Bruce stated several times in their reply brief that if Plaintiffs are granted leave to amend, they will evaluate and address the averments in the amended pleading and respond accordingly. (Reply Br. in Supp. of Defs., Kistler Tiffany Benefits and Suzanne Bruce's, Mot. to Dismiss the Compl. for Failure to State a Claim Pursuant to Fed.R.Civ.P. 12(b)(6) [Doc. No. 28] (hereafter, "Defs.' Reply Br.") 2, 3.) However, KTB and Bruce continue to seek a decision ...