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Mitra v. Principal Insurance Co.

United States District Court, D. New Jersey

July 7, 2015

RANJIT MITRA, M.D., Plaintiff,
v.
PRINCIPAL INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION

JAMES B. CLARK, III, Magistrate Judge.

This matter has been opened to the Court upon Plaintiff Ranjit Mitra, M.D.'s ("Plaintiff") motion for leave to file an amended complaint to add one new cause of action alleging bad faith on the part of Defendant Principal Insurance Company ("Defendant"). [Docket Entry No. 12-1.] Defendant opposes Plaintiff's motion. [Docket Entry No. 13.] The Court has fully reviewed and considered all arguments made in support of, and in opposition to, Plaintiff's motion. The Court considers Plaintiff's motion without oral argument pursuant to L.Civ.R. 78.1(b). For the reasons set forth more fully below, Plaintiff's Motion to Amend is DENIED.

I. BACKGROUND

Plaintiff is a New Jersey physician who specializes in the field of psychiatry. Compl. at ¶1; Docket Entry No. 1. On June 21, 2011 Plaintiff entered into a written agreement with the State of New Jersey, Department of Law and Public Safety, to cease prescribing controlled dangerous substances. Afterward, the New Jersey Board of Medical Examiners issued charges against Plaintiff for alleged violations of the agreement, and Plaintiff agreed to a temporary suspension of his medical license while the charges were pending. Id. at ¶¶7-8. A Suspension Order was entered and filed on September 30, 2013, to be effective October 9, 2013. Id. Plaintiff's license to practice medicine and surgery was eventually revoked on July 10, 2014 by the New Jersey Board of Medical Examiners for the indiscriminate prescribing of Controlled Dangerous Substances, which presented a clear and imminent danger to the public health, safety, and welfare. Defendants' Brief in Surreply at 4; Docket Entry No. 20.

In accordance with his employment, Plaintiff is insured with Defendant Principal Life Insurance Company under two separate insurance policies (the "Policies"). See Compl. at ¶1. The first policy (Policy #779241) provides coverage for disability income, and the second policy (Policy #7779242) provides coverage for overhead expense. Id. at ¶3. The combined purpose of these policies is to "insure Plaintiff for monetary loss of income from his medical practice in the event of a medical disability." Id. According to the terms of the former policy, "total disability" is defined as "(1.) being unable to perform the substantial and material duties of one's occupation and (2.) not working." Id. at ¶4.

On February 3, 2014 Plaintiff submitted a Disability Claim Notice to Defendant, claiming total disability and inability to perform in his specialty as a physician beginning October 9, 2013, as a result of depression. Prop. Am. Compl. at ¶9; Docket Entry No. 14-2. Defendant subsequently reviewed the following information in evaluating Plaintiff's claim: Plaintiff's Disability Claim Notice, Medical Professional Occupational & Financial Questionnaire, a report of Plaintiff's treating physician, and financial information including profit and loss statements. Defendant also conducted an in-home interview of Plaintiff, arranged for an Independent Medical Examination ("IME") of the Plaintiff, and reviewed the IME physician's "comprehensive, ten-page report." Id. at ¶¶9-15. Ultimately, on June 26, 2014, Defendant sent Plaintiff a letter informing him that his illness "does not meet the contractual definition of total disability, " and that he had the option to appeal the decision through a request for reconsideration, within 180 days of the letter. Id. at ¶¶16-17. On November 4, 2014, via correspondence by his counsel, Plaintiff advised Defendant that he would appeal Defendant's decision, and also requested reconsideration of Defendant's decision. Id. at ¶18. In response, Defendant reviewed Plaintiff's additional proof of loss, requested and received further information, submitted the claim for medical review, and scheduled an updated IME. Id. at ¶¶8-23. Plaintiff did not appear at the updated IME, and instead filed suit against Defendant before the decision on his appeal was rendered. See Deft. Br. Surreply at 5.

Plaintiff filed the complaint in this action on February 18, 2015, seeking declaratory judgment for coverage pursuant to N.J.S.A. 2A:16-51 et. seq.; see generally Compl. Plaintiff alleges that Defendant has a clear duty to affirm his claim for total disability, and make payment on that claim for both Policies, in accordance with the parties' contract. Id. at Count 2 - ¶2(a). Defendant answered Plaintiff's complaint on March 31, 2015. By way of the instant motion, Plaintiff seeks to amend his Complaint to add a Second Count for Breach of the Implied Covenant of Good Faith and Fair Dealing or a Bad Faith Claim. Plaintiff's Brief in Support at 3; Docket Entry No. 12-1. Plaintiff alleges that Defendant acted in bad faith by being unreasonable and causing undue delay in the investigation, evaluation, and processing of Plaintiff's claim Prop. Am. Compl. at Count 2 - ¶11. Plaintiff claims that Defendant's actions are therefore "in breach of the parties' binding insurance agreement." Id. at ¶12. Additionally, Plaintiff claims that his reliance on Defendant's policy has resulted in further deterioration of his mental condition. Id. at ¶14.

Defendant filed an opposition to Plaintiff's motion on May 4, 2015 and Plaintiff filed a letter in reply on May 5, 2015. Additionally, Defendant was given leave to file a surreply and did so on June 4, 2015.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 15(a)(1), "[a] party may amend its pleading once as a matter of course within: (A) 21 days after serving it; or (B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier." Otherwise, pursuant to Rule 15(a)(2) "a party may amend its pleading only with the opposing party's written consent or the court's leave. The Court should freely give leave when justice so requires." See Foman v. Davis, 371 U.S. 178, 182 (1962); Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000).

Nevertheless, the Court may deny a motion to amend where there is "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment." Id. However, where there is an absence of undue delay, bad faith, prejudice or futility, a motion for leave to amend a pleading should be liberally granted. Long v. Wilson, 393 F.3d 390, 400 (3d Cir. 2004). "Futility' means that the complaint, as amended, would fail to state a claim upon which relief could be granted." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). To evaluate futility, the District Court uses "the same standard of legal sufficiency" as applied for a motion to dismiss under Rule 12(b)(6). Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000).

The Supreme Court refined the standard for summary dismissal of a complaint that fails to state a claim in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). The Court examined Rule 8(a)(2) of the Federal Rules of Civil Procedure, which provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED.R.CIV.P. 8(a)(2).[1] Citing its opinion in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), for the proposition that "[a] pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do, " Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555), the Supreme Court identified two working principles underlying the failure to state a claim standard.

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.... Rule 8... does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the ...

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