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Matthew Harris v. Ventyx Inc. and United Healthcare Insurance Company

August 12, 2011

MATTHEW HARRIS
PLAINTIFF,
v.
VENTYX INC. AND UNITED HEALTHCARE INSURANCE COMPANY DEFENDANTS.



MEMORANDUM AND ORDER

This matter is before the court on defendants Ventyx, Inc. ("Ventyx") and United Healthcare Insurance Company's ("United") (collectively, "defendants") motions for judgment on the pleadings pursuant to Federal Rule of Procedure ("FRCP") 12(c). Plaintiff, Matthew Harris, opposes the motion. For the reasons set forth below,*fn1 defendants' motions are granted with leave to amend.

BACKGROUND

Plaintiff was an employee of defendant Ventyx, and was an eligible participant in Ventyx's group welfare plan (the "plan"), governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq ("ERISA"). (Pl.'s Compl., filed Feb. 2, 2011, [Docket #1], ¶ 2.) Ventyx was the sponsor and administrator of the plan. (Id. ¶ 3.) United was the insurer for the plan. (Id. ¶ 4.) The terms of the plan provide a monthly benefit of the lesser of $20,00 or 66 2/3 percent of gross monthly earnings. (Id. ¶ 9.) Moreover, the plan contains a pre-exisiting condition provision which provides that coverage is unavailable for "any Disability during the first 12 months after the covered persons effective date of insurance that is caused or contributed to by a pre-Existing Condition." (Id. Ex. A at 17.) However, the plan also contains a continuity of insurance provision which provides that, where the plan participant has a pre-existing condition, but was insured by Ventyx's prior group insurance policy, the participant will be eligible for benefits under the policy, limited to the maximum monthly payment provided by the prior group insurance policy. (Id.)

In 2007, plaintiff was diagnosed with lung cancer, and has received continuous chemotherapy treatment since that time. (Id. ¶ 10.) Plaintiff was scheduled for additional chemotherapy treatments in the fall of 2009. (Id. ¶ 11.) In contemplation of these treatments, plaintiff approached Ventyx's human resources representative, Judy Mayo, to discuss the consequences of retirement and claiming long term disability benefits under the plan. (Id. ¶¶ 11--12.) According to the complaint, Ms. Mayo represented that the terms of the plan would provide "higher benefit caps as well as the post-tax features that Ventyx identified when it rolled out the plan." (Id. ¶ 14.) After this discussion, plaintiff elected to retire and go on disability. (Id. ¶ 15.)

Ventyx presented plaintiff's claim to United, who approved his claim for benefits. (Id. ¶ 16.) However, because of plaintiff's pre-existing condition, United concluded that, under the continuity of insurance provision, plaintiff was only entitled to $5,000 (the maximum monthly payment under his previous plan), not $10,766, the amount Ms. Mayo allegedly represented he would receive. (Id. ¶ 17.) Importantly, plaintiff does not allege that United misinterpreted the terms of the plan; instead, plaintiff alleges that but for Ms. Mayo's alleged misrepresentations, plaintiff "would have remained employed by Ventyx until after the one year requirement for pre-existing conditions." (Id. ¶ 20.) Plaintiff appealed United's determination of benefits under the plan. (Id. ¶ 21.) United, pursuant to the terms of the plan, denied the appeal. (Id. ¶ 22.)

Plaintiff claims that both Ventyx and United breached their fiduciary duties under ERISA and seeks recovery of additional disability benefits he claims he is owed under the plan. Since approving the plan, United has been paying plaintiff $5,000 a month; plaintiff, however, claims that he is entitled to a monthly benefit of $10,766, the amount Ms. Mayo allegedly represented he would receive. (See United's Mot. for J. on the Pleadings, filed Apr. 20, 2011, [Docket #22], at 2:1-7.) Both defendants filed substantially similar motions for judgment on the pleadings for failure to state a cognizable ERISA claim.

STANDARD

FRCP 12(c)provides that "[a]fter the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings." Fed. R. Civ. Proc. 12(c). Moreover, Rule 12(h)(2) of the Federal Rules of Civil Procedure provides in relevant part that a defense of failure to state a claim upon which relief can be granted may be made by motion for judgment on the pleadings. Fed. R. Civ. Proc. 12(h).

When considering a motion for judgment on the pleadings presenting a defense of failure to state a claim upon which relief can be granted, a court should employ those standards normally applicable to a motion to dismiss pursuant FRCP 12(b)(6). See Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd., 132 F.3d 526, 528-29 (9th Cir. 1997); 5B Wright & Miller, Federal Practice and Procedure, Civil § 1368 at 515-16 (3d ed. 2007).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570. "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." Iqbal, 129 S. Ct. at 1949.

Nevertheless, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While the pleading standard set forth in FRCP 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 129 S. Ct. at 1949. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; Iqbal, 129 S. Ct. at 1950 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately, the court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570). Only where a plaintiff has failed to "nudge [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. at 1952. While the plausibility requirement is not akin to a probability requirement, it demands more than "a sheer possibility that a defendant has acted unlawfully." Id. at 1949. This plausibility inquiry is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950.

In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. Of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. ...


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