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Brende v. Reliance Standard Life Insurance Company

United States District Court, D. Kansas

May 24, 2019




         Plaintiff Kelly Dean Brende brings the present action pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et. seq., alleging that Defendant Reliance Standard Life Insurance Company (“Reliance”) improperly denied her long-term disability benefits under an employer provided disability plan.

         On September 22, 2017, this Court denied cross-motions for summary judgment and remanded for further administrative proceedings.[1] On January 25, 2019, Brende filed a second case, alleging wrongful denial of benefits-as alleged in her original case-as well as breach of fiduciary duty and statutory and regulatory non-compliance. The cases were consolidated for all purposes on April 30, 2019.

         This matter is before the Court on Reliance's Motion to Dismiss Counts II-IV (Doc. 49) pursuant to Fed R. Civ. P. 12(b)(6). For the reasons below, the Court grants in part and denies in part Reliance's motion. The Court grants the motion with regard to Count IV and denies the motion with regard to Counts II and III.

         I. Standard

         To survive a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), a complaint must contain factual allegations that, assumed to be true, “raise a right to relief above the speculative level”[2] and must include “enough facts to state a claim for relief that is plausible on its face.”[3]Under this standard, “the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.”[4] The plausibility standard does not require a showing of probability that “a defendant has acted unlawfully, ” but requires more than “a sheer possibility.”[5] “[M]ere ‘labels and conclusions,' and ‘a formulaic recitation of the elements of a cause of action' will not suffice; a plaintiff must offer specific factual allegations to support each claim.”[6] Finally, the court must accept the nonmoving party's factual allegations as true and may not dismiss on the ground that it appears unlikely the allegations can be proven.[7]

         The Supreme Court has explained the analysis as a two-step process. For the purposes of a motion to dismiss, the court “must take all the factual allegations in the complaint as true, [but is] ‘not bound to accept as true a legal conclusion couched as a factual allegation.'”[8] Thus, the court must first determine if the allegations are factual and entitled to an assumption of truth, or merely legal conclusions that are not entitled to an assumption of truth.[9] Second, the court must determine whether the factual allegations, when assumed true, “plausibly give rise to an entitlement to relief.”[10] “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.”[11]

         II. Background

         The following facts, relevant to Counts II-IV, are taken from Brende's Complaint in the member case, [12] and are assumed true for purposes of deciding this motion.

         Since March 2005, Swanson Midgley, LLC (“Swanson Midgley”) employed Brende as a tax attorney. Swanson Midgley sponsored a group welfare benefits plan for its participating employees (“Plan”), for which it was the administrator. At all relevant times, Brende was a covered employee and a Plan participant. Swanson Midgley delegated to Reliance the function of issuing the Plan's long-term disability (“LTD”) benefit claim determinations, and Reliance's group insurance policy (“Policy”) funded the Plan.

         On September 11, 2012, Brende ceased working for Swanson Midgley as a result of disabling impairments. She timely and properly submitted a claim for LTD benefits, which was approved on February 22, 2013. On October 20, 2014, Reliance notified Brende that it would not pay benefits beyond December 14, 2014. An appeal followed, which was denied on September 11, 2015. On November 30, 2015, Plaintiff brought suit against Reliance for wrongful denial of benefits. On September 22, 2017, this Court denied cross motions for summary judgment and remanded Brende's claim for further administrative review because Reliance acted arbitrary and capriciously in failing to “consider the non-physical/cognitive aspects of Brende's occupation as an attorney.”[13]

         On October 30, 2017, Brende underwent a neuropsychological examination by Dr. William Blessing, MD, at the behest of Reliance. The examination was coordinated by Reliance's contracted agent, Dane Street. Neither Reliance nor Street provided Blessing with Brende's job description, list or duties or functions required for an attorney or tax attorney, evidence that Brende had previously submitted on appeal, or reports of Brende's previous evaluators. Blessing issued a report. On November 7, 2017 Reliance sought clarification as to Blessing's finding that Brende was limited in “[p]erforming a variety of duties.”[14] On November 10, Reliance received Blessing's amended report in which he indicated that medication and/or behavioral compensation would improve Brende's performance. Minutes later, Reliance received an e-mail with an invoice for the report.

         On December 6, 2017, Reliance notified Brende in writing that it had upheld its decision terminating her benefits. On December 19, Brende requested from Reliance her updated claim file. On January 8, 2018, Reliance provided Brende's claim file, but that file did not contain the raw data underlying Blessing's testing and examination of Brende. Brende immediately requested Blessing's data, but on the same day, Reliance responded, indicating that it would not be provided.

         On January 31, 2018 Brende wrote to Blessing, asking that he provide his data to Dr. Terrie Price, PhD, and Dr. Richard Benson, PhD. That same day, Blessing provided an invoice to Brende's counsel for $307.46, the cost of providing his data. On February 5, 2018, Brende's counsel issued full payment, which was cashed by Blessing's office on February 16. On February 22, Brende's counsel contacted Blessing's office for an update, and a representative indicated she would call back with more information. On February 26, Brende's counsel again followed up with Blessing's office. A representative advised that they would not release the data and directed counsel to Street. No. refund was issued for the payment. On February 26 and 27, Brende's counsel called Street, requesting return calls. On February 28, Brende wrote Reliance explaining the events with Blessing's office and Street and renewed her request that Blessing's raw data be conveyed to Price and Benson. On March 1, Reliance indicated that it had contacted Street. On March 8, Brende again wrote to Reliance; on the same day, Reliance responded that “as a courtesy” it had contacted Street but would not provide Blessing's data. On March 15, Brende wrote Reliance and Street, again requesting the data. On March 23, 2018, Street provided the data to Price and Benson.

         On July 13, 2018, Brende submitted to Reliance her appeal of its December 2017 decision. That appeal included additional sources of Brende's medical records; a functional capacity evaluation; opinions from Dr. Allen, Dr. Price, and Dr. Benson; clinical research literature; Brende's Social Security disability file; a vocational evaluation; and information regarding counsel's efforts at communicating with Street. Brende's appeal letter also requested information about Reliance's administration and interpretation of the Court's remand order and the personnel responsible for those decisions, or alternatively, if Reliance invoked privilege, Brende sought its privilege log. Brende's appeal letter further noted that Reliance had not identified what she could produce that would satisfy its requirement for objective evidence of her limitations.

         On October 12, 2018, Reliance notified Brende in writing that it had upheld its prior decision terminating her benefits. Reliance indicated in a footnote that it attached the evidence that it considered in making its decision, but that evidence was not attached to the decision. In making its October 12 decision, Reliance cited to the opinions of two new medical consultants, a neuropsychologist and neurologist. These consultants did not receive Dr. Blessing's data.

         On October 12, 2018, Brende requested from Reliance her updated claim file. On November 21, Brende again requested from Reliance her updated claim file. On December 11, Brende requested her updated claim file for a third time. On December 26, Brende received her updated claim file. The claim file was not complete. It did not contain updated medical evidence or the evidence referenced in the footnote of its October 12, 2018 decision.

         III. Discussion

         Brende asserts four separate counts: Count I for recovery of wrongfully denied benefits; Count II for breach of fiduciary duty, seeking equitable remedies; Count III for statutory and regulatory noncompliance seeking de novo review of the disability benefits determination under the plan; and Count IV seeking imposition of a daily penalty for failure to provide requested documents and information. Reliance seeks dismissal of Counts II, III, and IV.

         a. Count II: Breach of Fiduciary Duty

         Brende brings a breach of fiduciary duty claim under 29 U.S.C. § 1132(a)(3), which provides that a civil action may be brought

by a participant, beneficiary, or fiduciary (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.[15]

         Brende seeks “other appropriate equitable relief, ” asserting that Reliance breached its fiduciary duty by: (1) needlessly delaying and obstructing the release of Blessing's data to Price and Benson; (2) influencing Blessing to supplement his report; (3) failing to convey complete and accurate information to Brende; (4) conducting a review that was inconsistent with its own guidelines and procedures; (5) failing to train and supervise employees; (6) using medical and vocational consultants for the purpose of denying benefits and compensating them at rates that did not comport with its duty to defray reasonable expenses; (7) treating Brende's claim disparately from similarly situated claimants; (8) terminating Brende's LTD benefits for the purpose of elevating its financial interests; and (9) failing to discharge its duties solely in the interests of its participants and beneficiaries. Reliance asserts that Plaintiff may not pursue simultaneous claims under 29 U.S.C. § 1132(a)(1)(B) and 29 U.S.C. § 1132(a)(3).

         As Judge Teeter noted in her recent opinion, “[t]he interplay between § [1132](a)(1)(B) and § [1132](a)(3) is the subject of much debate. Courts have grappled with whether ERISA permits participants and beneficiaries to seek-in the same action-benefits due under § [1132](a)(1)(B) and equitable relief § [1132](a)(3).”[16]

         In Varity Corp. v. Howe, the United States Supreme Court recognized:

[Section 1132(a)(3)] authorizes “appropriate” equitable relief. We should expect that courts, in fashioning “appropriate” equitable relief, will keep in mind the “special nature and purpose of employee benefit plans, ” and will respect the “policy choices reflected in the inclusion of certain remedies and the exclusion of others.” Thus, we should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be “appropriate.”[17]

         Citing Varity, the Tenth Circuit-in an unpublished opinion-held,

[C]onsideration of a claim under 29 U.S.C. 1132(a)(3) is improper when the Class, as here, states a cognizable claim under 29 U.S.C. § 1132(a)(1)(B), a provision which provides adequate relief for alleged class injury. “[W]e should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be ...

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