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Becher v. United Healthcare Services, Inc.

United States District Court, D. Kansas

March 20, 2019

THOMAS BECHER, individually and on behalf of those similarly situated, Plaintiff,
v.
UNITED HEALTHCARE SERVICES, INC., et al.,

          MEMORANDUM AND ORDER

          Daniel D. Crabtree, United States District Judge

         Plaintiff Thomas Becher, individually and on behalf of those similarly situated, filed this lawsuit against defendants United Healthcare Services, Inc. (“United”), The Prudential Insurance Company of America (“Prudential”), and AARP. Plaintiff asserts that he and his wife, Jerri Becher, purchased an insurance policy from an AARP agent, and that this policy insured both of them. Since purchasing this policy, plaintiff alleges, both Prudential and United have underwritten the policy. Plaintiff's Complaint asserts that defendants breached the insurance policy when United refused to indemnify him for a hospital visit. Now, all defendants, together, ask the court to dismiss plaintiff's Complaint under Federal Rule of Civil Procedure 12(b)(6). Doc. 14. They argue dismissal is proper because plaintiff was not an insured party under the policy.

         Plaintiff has filed a Response (Doc. 22), and defendants have filed their Reply (Doc. 23). But, plaintiff asks the court to strike defendants' Reply because it includes a copy of what defendants assert is the application form for the insurance policy at issue. Doc. 24. This application, plaintiff alleges, falls outside the collection of materials that a federal court can consider on a motion to dismiss. The court discusses this issue first, and then addresses the merits of defendants' Motion to Dismiss. Ultimately, the court concludes that plaintiff has stated plausible claims and denies defendants' Motion to Dismiss.[1]

         I. Motion to Strike

         Defendants attached the application form for the insurance policy at issue to their Reply in support of their Motion to Dismiss. Doc. 23-2. Plaintiff asks the court to strike defendants' Reply. While the court agrees with plaintiff that it cannot consider the application form when ruling on a 12(b)(6) motion, the court declines to strike defendants' Reply in its entirety. Instead, for reasons explained below, the court declines to consider the application form and any argument relying on it.

         When considering a motion to dismiss under Rule 12(b)(6), the court generally “may not look beyond the four corners of the complaint.” Am. Power Chassis, Inc. v. Jones, No. 13-4134-KHV, 2017 WL 3149291, at *3 (D. Kan. July 25, 2017) (citing Rubio ex rel. Z.R. v. Turner Unified Sch. Dist. No. 202, 475 F.Supp.2d 1092, 1097 n.3 (D. Kan. 2007)). However, “if a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to plaintiff's claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss.” Geer v. Cox, 242 F.Supp.2d 1009, 1016 (D. Kan. 2003) (internal quotation marks and citation omitted). Otherwise, to consider a matter outside the pleadings, the court must convert the motion to dismiss into one for summary judgment under Federal Rule of Civil Procedure 56. Id. at 1015-16 (“Reversible error may occur . . . if the district court considers matters outside the pleadings but fails to convert the motion to dismiss into a motion for summary judgment.”). At the motion to dismiss stage, the court cannot properly consider extrinsic evidence that isn't central to a plaintiff's claim. This is the rule even if the extrinsic evidence is central to the defendant's “theories of defense.” Capital Sols., LLC v. Konica Minolta Bus. Sols. USA, Inc., Nos. 08-2027-JWL, 08-2191-JWL, 2008 WL 3538968, at *3 (D. Kan. Aug. 11, 2008).

         The court agrees that the insurance policy itself is a document that is central to plaintiff's claim. Indeed, plaintiff already has attached the policy to the Complaint. But defendants ask the court also to consider the application form that led to the insurance policy. The court may not do so without converting the motion into a summary judgment motion. The application does not fall within any of the three exceptions recognized by the Tenth Circuit that permit a district court to consider a matter outside the pleadings without converting the motion into one seeking summary judgment. The Circuit has recognized the following three exceptions to the four corners of the complaint rule: (1) “documents that the complaint incorporates by reference”; (2) “documents referred to in the complaint if the documents are central to the plaintiff's claim and the parties do not dispute the documents' authenticity”; and (3) matters “which a court may take judicial notice.” Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010) (internal quotation marks and citations omitted).

         Defendants here do not argue that the application qualifies under any of the three exceptions. Doc. 25 at 1-3. Instead, defendants argue that the court should consider the application as part of the policy based on Kansas law. Id. at 3 (citing Lightner v. Centennial Life Ins. Co., 744 P.2d 840, 843 (Kan. 1987) (holding that “[t]he application for insurance is to be construed with the policy as a whole to determine the parties' intent”)). Plaintiff responds, arguing that an application is part of the policy only when the insurer meets certain requirements. See Doc. 26 at 1 (citing Kan. Admin. Regs. § 40-4-12 (requiring insurer to attach the application and disclose the following: “This application is a part of the policy and the policy was issued on the basis that answers to all questions and the information shown on the application are correct and complete.”)); see also Kan. Stat. Ann. § 40-2205 (providing that “[t]he insured shall not be bound by any statement made in an application for a policy unless a copy of such application is attached to or endorsed on the policy when issued as a part thereof”). Here, the facts that the court properly can consider on a motion to dismiss do not show that the court can construe the application at issue as part of the insurance policy.

         With a different showing, the issue whether the court could consider the application for insurance would pose an interesting question. But the Kansas Administrative Regulation above and several Kansas case authorities require insurers to comply with that regulation before an application is part of an insurance policy. Here, nothing establishes that the application form qualifies for one of the limited exceptions to the rule against considering matters outside the pleadings. Also, defendants have not demonstrated that they complied with the Kansas regulation. The court thus cannot consider the application form as part of plaintiff's policy and, subsequently, when deciding defendants' Motion to Dismiss.

         The court also declines to convert defendants' Motion into a motion for summary judgment. Several reasons support this outcome. First, none of the parties ask the court to convert the Motion in this fashion. See Geer, 242 F.Supp.2d 1009, 1016 (D. Kan. 2003). Second, defendants “filed their motion at an early stage” in this case. See Ledbetter v. Bd. of Cty. Comm'rs, No. 00-2180-KHV, 2001 WL 705806, at *2 (D. Kan. May 31, 2001) (“Because defendants filed their motion at an early stage of the proceedings and discovery is not scheduled to close [for more than one month], the Court decline[d] to consider evidence outside the pleadings.”). Third, the court also “has not notified the parties that it will apply a summary judgment standard.” Grogan v. O'Neil, 292 F.Supp.2d 1282, 1292 (D. Kan. 2003). Fourth, defendants' Motion does not provide “a concise statement of material facts, ” as D. Kan. Rule 56.1 requires for summary judgment motions. Id. Together, these reasons convince the court that it should not convert defendants' motion into one seeking summary judgment.

         Finally, plaintiff asks the court to strike defendants' Reply in its entirety. Rather than striking the whole Reply, the court exercises its discretion and simply will disregard the application form and all arguments that reference it. See Rezac Livestock Comm'n Co. v. Pinnacle Bank, 255 F.Supp.3d 1150, 1163-64 (D. Kan. 2017) (concluding that a bank check was a matter outside the pleadings and, after declining to convert the motion to dismiss into a motion for summary judgment, the court disregarded only the check when considering a motion to dismiss). The court thus grants plaintiff's Motion to Strike (Doc. 24) in part and denies it in part.

         II. Defendants' Motion to Dismiss (Doc. 14)

         The court now turns to the substance of defendants' Motion to Dismiss (Doc. 14). Its analysis begins by identifying the operative facts governing defendants' motion.

         A. Facts

         The following facts come from plaintiff's Complaint (Doc. 1). The court accepts facts asserted by the Complaint as true and views them in the light most favorable to plaintiff. Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013) (citing Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)).

         Around April 1, 1993, plaintiff and his wife, Jerri Becher, met with an AARP agent and purchased an insurance policy titled “Plan B8.” Plan B8 policies provide fixed daily benefits for specified hospital stays, intensive care unit stays, and outpatient hospital care (collectively called “covered events”). The Plan B8 policy was issued on April 1, 1993.

         In the mid- to late-1990s, United began underwriting and administrating Plan B8 policies. Prudential underwrote and administered Plan B8 policies when it issued the policy at issue here. In the section of the Plan B8 policy titled, “Who is Covered, ” the policy provides: “The person or persons (the member and the spouse of the member) named above are covered from the Effective Date shown if the required premium contribution has been paid when due. The term you refers individually to each person named.” Doc. 1-1 at 1. “Mrs. Jerri Becher” is named under the heading “issued to.” Id. These provisions appeared in Doc. 1-1-the document plaintiff attached to his Complaint.

         (Image Omitted)

         From April 1993 to about October 2004, plaintiff and his wife paid a monthly premium of $36.25 in exchange for coverage under Plan B8. And from November 2004 to January 2016, plaintiff and his wife paid a monthly ...


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