United States District Court, D. Arizona
Before the Court is Defendant United of Omaha Life Insurance Company’s (“Omaha”) Motion to Dismiss Count II of Plaintiff’s Complaint. (Doc. 20.) The motion is fully briefed, and the Court heard oral argument on January 4, 2016. For the following reasons, Defendant’s motion is denied.
This action arises under the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq. (Doc. 1, ¶ 1.) Plaintiff Cynthia Mullin formerly worked as a nurse for Defendant HonorHealth. (Id., ¶¶ 3, 18, 47.) She participated in and was a beneficiary of the Scottsdale Healthcare Corporation Long Term Disability Plan (“the Plan”), an ERISA benefit plan offering long-term disability (“LTD”) benefits for HonorHealth’s employees. (Id., ¶¶ 2-3.) Defendant Omaha insures and administers the Plan’s LTD benefits. (Id., ¶¶ 8-9.)
In March 2014, Mullin was involved in a motor vehicle accident that aggravated her existing medical conditions. (Id., ¶¶ 20, 31, 34, 36.) She applied for short-term disability (“STD”) benefits, which Omaha approved. (Id., ¶ 34.) After Mullin exhausted her STD benefits, Omaha reviewed her claim to determine whether she was eligible to transition to LTD benefits. (Id., ¶ 37.) Omaha denied Mullin’s claim in September 2014. (Id.) Mullin administratively appealed, and in June 2015, Omaha upheld its denial. (Id., ¶¶ 40, 46.) Thereafter, HonorHealth terminated Mullin’s employment because her leave had been exhausted and LTD benefits denied. (Id., ¶ 47.)
In her complaint, Mullin asserts four claims against the Plan, Omaha, and HonorHealth. Only Counts I and II require discussion. In Count I, Mullin alleges that Omaha and the Plan acted arbitrarily and capriciously in denying her LTD benefits, and seeks to recover those benefits pursuant to 29 U.S.C. § 1132(a)(1)(B). (Id., ¶¶ 61-94.) Omaha concedes that Count I properly states a claim to relief under ERISA. (Doc. 20 at 2.) In Count II, Mullin alleges that Omaha breached its fiduciary duties in its handling of her LTD benefits claim, and seeks “other equitable relief . . . including but not limited to surcharge” pursuant to 29 U.S.C. § 1132(a)(3). (Id., ¶¶ 95-108.) Omaha moves to dismiss Count II because it is duplicative of Count I.
When analyzing a complaint for failure to state a claim to relief under Federal Rule of Civil Procedure 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). To avoid dismissal, the complaint must plead sufficient facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
“The civil enforcement provisions of ERISA, codified in § 1132(a), are ‘the exclusive vehicle for actions by ERISA-plan participants and beneficiaries asserting improper processing of a claim for benefits.’” Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 953-54 (9th Cir. 2014) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52 (1987)). Under § 1132(a)(1)(B), a plan participant may sue “to recover benefits due to [her] under the terms of [her] plan, to enforce [her] rights under the terms of the plan, or to clarify [her] rights to future benefits under the terms of the plan.” Section 1132(a)(3) allows a plan participant to bring a civil action: “(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.” A plaintiff asserting a fiduciary misconduct claim under § 1132(a)(3) must allege “both (1) that there is a remediable wrong, i.e., that the plaintiff seeks relief to redress a violation of ERISA or the terms of a plan, and (2) that the relief sought is appropriate equitable relief.” Gabriel, 773 F.3d at 954 (internal quotations and citations omitted). Additionally, “actual harm must be shown.” CIGNA Corp. v. Amara, 563 U.S. 421, 444 (2011).
“Section 1132(a)(3) is a ‘catchall’ or ‘safety net’ designed to ‘offer appropriate equitable relief for injuries caused by violations that [§ 1132] does not elsewhere adequately remedy.” Wise v. Verizon Commc’ns Inc., 600 F.3d 1180, 1190 (9th Cir. 2010) (quoting Varity Corp. v. Howe, 516 U.S. 489, 512 (1996)). Thus, “a claimant cannot pursue a breach-of-fiduciary duty claim under [§ 1132(a)(3)] based solely on an arbitrary and capricious denial of benefits where the [§ 1132(a)(1)(B)] remedy is adequate to make the claimant whole.” Rochow v. Life Ins. Co. of N. Am., 780 F.3d 364, 371 (6th Cir. 2015). A claimant may simultaneously bring claims under both sections “only where the breach of fiduciary duty claim is based on an injury separate and distinct from the denial of benefits or where the remedy afforded by Congress under [§ 1132(a)(1)(B)] is otherwise shown to be inadequate.” Id. at 372.
I. Distinct and Separate Injury
Mullin bases her § 1132(a)(3) fiduciary misconduct claim on the following allegations:
99. . . . . Omaha’s arbitrary and capricious claims handling generally constitutes a breach of fiduciary duty, because Omaha’s claims handling was discharged imprudently . . . .
100. . . . Omaha instructs and/or incentivizes certain employee(s) to terminate fully insured LTD claims and ...