MacNeill et al v. The Benefits Plan of the Presbyterian Church (U.S.A.) et al, No. 2:2016cv00189 - Document 26 (W.D. Wash. 2016)
Court Description: ORDER granting in part Defendants' 15 Motion to Dismiss by Judge Robert S. Lasnik. If plaintiffs believe they can amend the complaint to remedy the pleading and legal deficiencies identified above, they may file an amended complaint on or before June 10, 2016. If an amended complaint is not timely filed, judgment will be entered in favor of defendants and against plaintiffs. (AD)
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MacNeill et al v. The Benefits Plan of the Presbyterian Church (U.S.A.) et al Doc. 26 1 2 3 4 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 5 6 7 8 9 10 11 12 _______________________________________ ) NANCY MACNEILL, et al., ) ) Plaintiffs, ) v. ) ) THE BENEFITS PLAN OF THE ) PRESBYTERIAN CHURCH (U.S.A.), et al., ) ) Defendants. ) _______________________________________) Case No. C16-189RSL ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS 13 This matter comes before the Court on “Defendants’ Motion to Dismiss.” Dkt. # 15. In 14 September of 2013, plaintiff Angel MedFlight, a provider of air-ambulance services, transported 15 plaintiff Nancy MacNeill from Kentucky to Seattle following medical complications MacNeill 16 suffered while traveling. Plaintiffs together brought suit against defendants The Benefits Plan of 17 the Presbyterian Church (U.S.A.) (“Benefits Plan”) and Highmark Inc. (“Highmark”), alleging 18 that defendants improperly denied reimbursement for the cost of Angel MedFlight’s services. 19 Defendants now move to dismiss on the basis that plaintiffs have failed to state a claim and that 20 Angel MedFlight lacks standing to bring suit. Having reviewed the memoranda, declarations, 21 and exhibits submitted by the parties, the Court determines that this matter can be decided 22 without oral argument and finds as follows: 23 I. Failure to State a Claim 24 Under federal pleading rules, plaintiffs must provide “a short and plain statement of the 25 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS Dockets.Justia.com 1 claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).1 This pleading 2 requirement serves to “give the defendant fair notice of what the claim is and the grounds upon 3 which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007) (internal marks and 4 citation omitted). When a defendant attacks a complaint’s adequacy pursuant to Federal Rule of 5 Civil Procedure 12(b)(6), the question for the court is whether the facts alleged in the complaint 6 sufficiently state a “plausible” ground for relief. Id. at 544. When reviewing the complaint, all 7 well-pleaded allegations of material fact are accepted as true and are construed in the light most 8 favorable to the non-moving party. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 9 1031 (9th Cir. 2008). Although the complaint’s factual allegations need not be detailed, they 10 must include “more than labels and conclusions” and must contain more than a “formulaic 11 recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. “Dismissal is proper 12 only where there is no cognizable legal theory or an absence of sufficient facts alleged to support 13 a cognizable legal theory.” Taylor v. Yee, 780 F.3d 928, 935 (9th Cir. 2015) (internal citation 14 omitted). Dismissal without leave to amend is proper “only if it is absolutely clear that the 15 deficiencies of the complaint could not be cured by amendment.” Grogan v. Health Officer of 16 Cty. of Riverside, 221 F.3d 1348 (9th Cir. 2000) (quotation marks and citation omitted). 17 A. Pleading a Contract Versus Trust Violation 18 In their complaint, plaintiffs claim that the Benefits Plan, to which MacNeill belongs, is 19 an enforceable contract that entitles plaintiffs to reimbursement for Angel MedFlight’s air- 20 ambulance services. Dkt. # 1-2 at ¶ 5.1. Defendants assert that the Benefits Plan is actually a 21 trust, which entails different legal standards and different elements of breach than a contract. 22 23 24 25 26 1 Although this case was initially brought in state court, the Federal Rules of Civil Procedure govern pleading standards after removal. See Willy v. Coastal Corp., 503 U.S. 131, 134 (1992) (citing Fed. R. Civ. P. 1 (“These rules govern the procedure in all civil actions and proceedings in the United States district courts, except as stated in Rule 81.”); id. 81(c) (“These rules apply to a civil action after it is removed from a state court.”)). ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -2- 1 Dkt. # 23 at 11-12. Defendants ask that the complaint be dismissed because plaintiffs not only 2 pled an improper legal claim, but also failed to plead facts that would sustain a cause of action 3 under trust law. Id. at 11, 13-14. 4 When identifying whether a plaintiff’s complaint properly states a claim, the question is 5 whether the complaint’s factual allegations make that claim plausible. The Supreme Court has 6 made clear that a complaint need not “set out a legal theory for the plaintiff’s claim for relief,” so 7 long as the plaintiff has “[pled] facts sufficient to show that her claim has substantive 8 plausibility.” Johnson v. City of Shelby, 135 S. Ct. 346, 347 (2014). The Court in Johnson 9 clarified that the pleading requirements refined in Twombly, 550 U.S. 554, and Ashcroft v. 10 Iqbal, 556 U.S. 662 (2009), dealt with the factual allegations a complaint must contain to survive 11 a motion to dismiss rather than the legal theory a complaint must include. A claim should not be 12 dismissed on the basis of a technicality when the claim’s factual allegations are sufficient to 13 demonstrate the plaintiff is entitled to relief. See Johnson, 135 S. Ct. at 347 (allowing plaintiffs 14 to amend their Fourteenth Amendment claim to include a citation to 42 U.S.C. § 1983). 15 Even after Johnson, a complaint should be dismissed when its factual allegations fail to 16 support a legal theory. For example, defendants cite Bornstein v. County of Monmouth, No. 17 11-cv-5336, 2015 WL 2125701 (D.N.J. May 6, 2015), in which the court rejected a plaintiff’s 18 belated attempt to add a § 1983 claim to an existing medical malpractice suit when the plaintiff 19 had not alleged any Monell-type custom or policy of wrongdoing. Id. at *12 (“Plaintiff’s 20 [amended complaint] fails to include reference to a single element of or any specific facts to 21 support a § 1983 claim . . . .”). As made clear in Johnson, however, a plaintiff’s failure to state 22 the correct legal theory should not preclude her from litigating a potentially meritorious claim if 23 that claim is factually supported. 24 25 The factual elements that support a claim for breach of contract and breach of trust are essentially the same. In the first, a plaintiff must show that a contract existed, that the defendant 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -3- 1 breached a duty created by the contract, and that damages resulted. J.F. Walker Co. v. Excalibur 2 Oil Grp., Inc., 792 A.2d 1269, 1272 (Pa. Super. Ct. 2002). For the second, Pennsylvania applies 3 the Restatement rule, see In re Scheidmantel, 868 A.2d 464, 481 (Pa. Super. Ct. 2005), which 4 states that “[a] breach of trust is a violation by the trustee of any duty which as trustee he owes to 5 the beneficiary.” Restatement (Second) of Trusts § 201 (1959). The source of a trustee’s duty is 6 either the trust document itself or a background statutory or common-law requirement. Id. 7 cmt. b. Both types of claims require the same basic showing: the presence of a formative 8 instrument; a duty owed by the defendant to the plaintiff; and a breach of that duty. The 9 differences between contract and trust law are not in the elements of breach, but in the parties’ 10 substantive duties – the contours of the promisor-promisee and trustee-beneficiary relationships 11 entail significantly different obligations. See Shick v. Norristown-Penn Trust Co., 36 A.2d 482, 12 483-84 (Pa. 1944). For example, while a party to a contract owes only what was contracted for, 13 a trustee holds trust property for the benefit of the trust’s beneficiaries, and owes them a 14 fiduciary duty. In re Estate of Warden, 2 A.3d 565, 572 (2010). 15 In this case, as a threshold matter, the Court agrees with defendants’ assertion that the 16 plan under which plaintiffs seek reimbursement is an ERISA-exempt church plan governed by 17 Pennsylvania trust law. Other courts have analyzed the Benefits Policy at issue here and come 18 to the same conclusion. See Leacock v. Bd. of Pensions of Presbyterian Church USA, No. 19 09-cv-754-C, 2010 WL 2653345 (W.D. Ky. July 1, 2010); McAninch-Ruenzi v. Bd. of Pensions 20 of The Presbyterian Church (U.S.A.), No. 06-cv-1040-PA, 2007 WL 1039495 (D. Or. Apr. 2, 21 2007). That plaintiffs have instead pled that the dispute is controlled by contract law, however, 22 does not justify dismissal without leave to amend. 23 Plaintiffs’ complaint has provided defendants with notice about the factual basis for their 24 claim and includes sufficient factual allegations to make that claim plausible. Plaintiffs’ 25 allegations, taken as true, identify the existence of a formative document, a duty held by 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -4- 1 defendants, and a breach of that duty: “MacNeill was a participant in and covered by the 2 Benefits Plan,” Dkt. # 1-2 at ¶ 2.1; “Air-ambulance transportation is a service covered by the 3 Benefit Plan,” id. at ¶ 4.4; and “Because air-ambulance transportation was medically necessary 4 and met the terms of the Benefits Plan, Defendants are obligated to reimburse Plaintiffs.” Id. at 5 ¶ 4.9. These statements satisfy the requirements laid out in Rule 8 and clarified by Twombly 6 and Iqbal. Dismissing plaintiffs’ claim without leave to amend would unnecessarily deny a 7 potentially meritorious lawsuit. As currently pled, however, plaintiffs’ complaint asserts a legal 8 theory unsupported by sufficient factual allegations: there is no underlying contract to support a 9 contract-based cause of action. Providing an opportunity to correct that mismatch will avoid 10 11 future confusion while allowing plaintiffs to litigate the merits of their claim. For the foregoing reasons, defendants’ motion to dismiss is granted. Dismissal, however, 12 is without prejudice, in order to allow plaintiffs to amend their complaint to state the correct 13 theory of breach. 14 B. 15 Should plaintiffs file an amended complaint, defendants’ assertions regarding the Benefits Coverage Under the Plan 16 Plan’s coverage will still be relevant and are addressed here to conserve the resources of the 17 parties and the Court. Plaintiffs allege that while MacNeill was in Kentucky, she suffered from 18 symptoms related to a liver disease that had previously been treated in Seattle. Despite receiving 19 treatment at Jewish Hospital in Louisville, her symptoms continued. Her Louisville and Seattle 20 doctors determined she should be treated in Seattle and that “[t]he severity of her condition and 21 complications made it unsafe to fly commercially or to take ground transportation.” Dkt. # 1-2 22 at ¶ 4.3. Defendants assert two reasons why these facts are insufficient to state a claim. The first 23 is that plaintiffs failed to show that air-ambulance services were medically necessary. Dkt. # 15 24 at 15. The second is that plaintiffs failed to demonstrate that Seattle was the nearest facility able 25 to treat MacNeill. Id. at 16-17. 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -5- Defendants’ arguments over whether the Benefits Plan’s substantive requirements are met 1 2 are premature in a motion to dismiss. Defendants nonetheless cite ample authority holding that 3 certain types of procedures or other medical expenses (including air-ambulance services) are not 4 “medically necessary.” Dkt. # 15 at 12-13. Nearly all of these decisions were decided on 5 summary judgment, where the parties could establish medical necessity with the benefit of 6 discovery. By contrast, the “short and plain statement” required by Rule 8 need only “contain 7 sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” 8 Iqbal, 556 U.S. at 678 (citation omitted). Plaintiffs’ allegations, taken as true, state a plausible claim for reimbursement. Although 9 10 defendants are correct that the complaint contains legal conclusions the Court is not required to 11 accept, Dkt. # 15 at 14; see, e.g., Dkt. # 1-2 at ¶ 4.7 (“[I]t was medically necessary to transport 12 MacNeill . . . .”), it also contains factual allegations regarding MacNeill’s condition sufficient to 13 make plaintiffs’ claim for medical necessity plausible. E.g., id. at ¶ 4.2 (“[MacNeill’s] 14 hemoglobin and platelet levels remained well outside normals ranges. She also experienced 15 additional complications, including problems with clotting.”); id. at ¶ 4.3 (“[Her doctors] 16 recommended that MacNeill be transferred to Seattle for further treatment.”). The medical 17 necessity of air-ambulance services and whether Seattle was the nearest facility available to treat 18 MacNeill are matters to be addressed on summary judgment. 19 II. 20 Angel MedFlight’s Standing The parties dispute whether MacNeill could properly assign her claim to Angel 21 MedFlight. Dkt. # 15 at 20; Dkt. # 20 at 11. Plaintiffs’ complaint simply states that, “under its 22 agreement with MacNeill, [Angel MedFlight] is entitled to any reimbursement paid by 23 Highmark or the Benefits Plan.” Dkt. # 1-2 at ¶ 2.2. Plaintiffs assert in their briefing that 24 MacNeill has assigned her claim. Dkt. # 20 at 11. Plaintiffs will have the opportunity to clarify 25 the basis of their respective claims for reimbursement when amending their complaint, including 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -6- 1 2 each plaintiff’s post-assignment standing to bring suit. Because the current state of Pennsylvania’s assignment law will bear on plaintiffs’ 3 amendment, it is worth clarifying the limits of assignment. Despite the inclusion of an anti- 4 assignment clause in the Benefits Plan document, Dkt. # 16-2 at 34, Pennsylvania courts have 5 long held that “‘[a] provision in a policy, prohibiting an assignment after loss has occurred, is 6 generally regarded as void, in that it is against public policy.’” Egger v. Gulf Ins. Co., 903 A.2d 7 1219, 1224 (Pa. 2006) (quoting Nat’l Mem’l Servs., Inc. v. Metro Life Ins. Co., 49 A.2d 382 (Pa. 8 1946)).2 The Egger court’s rationale was that post-loss assignment does not increase the risk to 9 an insurer associated with an undesirable assignee – for example, if a pre-loss assignee elected to 10 stop paying premiums and allow the policy to lapse. Id. at 1223. Although defendants point to 11 other jurisdictions that uphold all health insurance anti-assignment clauses, see Dkt. # 23 at 16 12 (citing Somerset Orthopedic Assocs. v. Horizon Blue Cross & Blue Shield of N.J., 785 A.2d 457 13 (N.J. App. Div. 2001)), that does not appear to be the rule in Pennsylvania. 14 15 Based on the reasons discussed, defendants’ motion to dismiss for failure to state a claim, 16 Dkt. # 15, is GRANTED in part. If plaintiffs believe they can amend the complaint to remedy 17 the pleading and legal deficiencies identified above, they may file an amended complaint on or 18 before June 10, 2016. If an amended complaint is not timely filed, judgment will be entered in 19 favor of defendants and against plaintiffs. 20 21 22 23 24 25 2 The two Pennsylvania cases defendants cite do not alter this rule. Dkt. # 23 at 10-11. In the first, the plaintiff sought “to compel defendant to make certain changes in the subscription agreements and related fee schedules which it issues to its subscribers.” Boyd v. Pa. Blue Shield & Med. Serv. Ass’n of Pa., 54 Pa. D. & C.2d 724 (Com. Pl. 1971). That case only tangentially bears on the question of assignment at issue here. Although the second, Kassab v. Medical Services Ass’n of Pennsylvania, 39 Pa. D. & C.2d 723 (Com. Pl. 1966), aff’d, 230 A.2d 205 (Pa. 1967) (mem.), applied an insurance plan’s anti-assignment restriction to the parties’ assignment made “[a]t the time of the performance” of medical services, that opinion was decided after National Memorial Services and before Egger. To the extent Kassab conflicts with both pre- and post-dated Pennsylvania decisions, it is an outlier. 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -7- 1 Dated this 26th day of May, 2016. 2 3 4 A 5 Robert S. Lasnik United States District Judge 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ORDER GRANTING IN PART DEFENDANTS’ MOTION TO DISMISS -8-
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