G.N. v. Life Insurance Company of North America

Background

G.N. participated in an employee welfare benefit plan offered by Southern California Permanente Medical Group. The plan was governed by the Employee Retirement Income Security Act (ERISA) and provided short-term disability and long-term disability benefits. G.N. alleged that emotional and psychological disabilities caused her to take leave from work in September 2016. She alleged that she submitted claims for both types of benefits, that Life Insurance Company of North America (LINA) denied her short-term disability claim and appeals, and that LINA never issued a decision on her long-term disability claim. She brought a claim under ERISA section 502(a)(1)(B), which allows a participant to seek benefits allegedly due under an employee benefit plan.

Requests to Consider Documents

The parties both asked the court to consider the Southern California Permanente Medical Group Employee Benefit Handbook as though it were part of the complaint. The court granted that request because the complaint necessarily relied on the handbook and neither party disputed its authenticity or relevance.

LINA also asked the court to consider the claim consulting agreement, the group plan governing long-term disability benefits, and various letters, emails, and a call summary. The court denied those requests. It concluded that the claim consulting agreement and group plan were offered to contradict G.N.’s allegations, and that the other communications were not extensively referenced in the complaint or the basis of G.N.’s claim. The court stated that considering those materials would be more appropriate at the summary-judgment stage.

Motion to Dismiss

LINA moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. LINA made two arguments: that it was not a proper defendant for G.N.’s short-term disability claim, and that G.N. failed to exhaust administrative remedies for her long-term disability claim. Exhaustion means using the benefit plan’s required internal claim-review procedures before suing in federal court.

Short-Term Disability Claim

LINA argued that it could not be liable for the relief sought because, according to documents it offered, it only reviewed short-term disability claims and appeals while Southern California Permanente Medical Group was responsible for paying benefits. G.N. responded that LINA insured and administered the plan and had authority to resolve benefit claims.

The court relied on Ninth Circuit authority explaining that a defendant may be sued under ERISA section 1132(a)(1)(B) when the defendant’s individual liability is established. The authority discussed in the opinion includes insurers, administrators, and entities responsible for paying benefits, as well as entities that improperly deny or cause the improper denial of benefits. Because the court had declined to consider the documents on which LINA relied and was required at this stage to view the complaint’s allegations favorably to G.N., it denied LINA’s motion to dismiss the short-term disability claim.

Long-Term Disability Claim and Exhaustion

LINA argued that G.N. never submitted a long-term disability claim. G.N. alleged that she submitted claims for both short-term and long-term disability benefits and that LINA never decided the long-term claim.

The court explained that exhaustion is generally required for an ERISA benefits claim, but that a claimant need not exhaust procedures when a plan fails to establish or follow reasonable claims procedures. The court also explained that exhaustion is ordinarily an affirmative defense that the defendant must plead and prove. Dismissal at the motion-to-dismiss stage is appropriate only in the unusual situation where failure to exhaust is clear from the complaint itself.

The court found that failure to exhaust was not clear from G.N.’s complaint. The parties disputed what the plan required and whether G.N.’s communications about her leave and expected return to work amounted to submission of a long-term disability claim. The court therefore denied LINA’s motion to dismiss the long-term disability claim. It stated that the exhaustion issue could be decided at summary judgment if the defense succeeded there.

Disposition

The court denied LINA’s motion to dismiss. It also granted LINA’s request to incorporate the employee-benefits handbook by reference and denied all remaining incorporation requests. The court set a telephonic case-management conference for July 6, 2021, and directed the parties to submit a joint case-management statement by July 2, 2021.