N. v. Gillette Childrens Specialty Healthcare Medical Benefit Plan

Background

The plaintiffs brought one stated claim under the Employee Retirement Income Security Act (ERISA), seeking benefits under 29 U.S.C. § 1132(a)(1)(B). They alleged that the Gillette Children’s Specialty Healthcare Medical Benefit Plan denied payment for J.G.’s residential mental-health treatment at Wingate Wilderness Therapy in Utah and Spring Ridge Academy in Arizona. Shani N. and J.G. reside in St. Paul, Minnesota, and Shani N. works for Gillette. The Plan is a self-funded employee welfare benefit plan, and its claims administrator, HealthPartners Administrators, Inc., is also in Minnesota.

The Plan moved under Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6). Rule 12(b)(2) concerns personal jurisdiction, Rule 12(b)(3) concerns improper venue, and Rule 12(b)(6) concerns failure to state a legally sufficient claim. The Plan argued that Utah lacked personal jurisdiction over it, that venue was improper, and that any intended claim for breach of fiduciary duty was inadequately pleaded. Alternatively, it sought transfer to Minnesota under 28 U.S.C. § 1404(a). The plaintiffs opposed dismissal and argued that any transfer should instead be to Arizona.

Personal Jurisdiction and Venue

The court denied the motion to dismiss for lack of personal jurisdiction. ERISA authorizes nationwide service of process, but the exercise of jurisdiction still must comply with due process. Although the Plan had few, if any, contacts with Utah and had no Utah offices or employees, the court concluded that litigating there would not impose a constitutionally excessive burden. The Plan had Utah counsel, did not dispute its ability to litigate there, and modern transportation and communications reduced the burden of defending the case away from Minnesota. The court also found that the Plan’s nationwide health-benefit activity and the out-of-state treatment gave Utah sufficient connection for this purpose.

The court also denied dismissal for improper venue. Under ERISA, venue may be proper where the plan is administered, where the alleged breach occurred, or where the defendant resides or may be found. Because the court found personal jurisdiction over the Plan in Utah, it concluded venue was not improper there.

Transfer to Minnesota

The court granted the Plan’s alternative motion to transfer under § 1404(a). It gave little weight to the plaintiffs’ choice of Utah because neither plaintiff resided there and the treatment in Utah was the principal identified connection to that state. The court found that all parties and the Plan’s claims administrator were in Minnesota, that the alleged ERISA breach occurred in Minnesota where the participant resided and would have received benefits, and that potential witnesses and records would likely be in Minnesota. It also considered the District of Minnesota’s shorter case-disposition time compared with the District of Utah’s. The court rejected Arizona as an alternative because Arizona would be similarly inconvenient for the Minnesota parties and witnesses.

Pleading Challenge

The court did not decide the Rule 12(b)(6) issues concerning any possible breach-of-fiduciary-duty claim. It stated that the Minnesota court receiving the transferred case should address those issues. The court therefore denied that part of the motion without prejudice to refiling before the Minnesota court.

Disposition

The court stated that the Motion to Dismiss was DENIED IN PART and GRANTED IN PART. Specifically, it denied dismissal based on personal jurisdiction and improper venue; granted the alternative request to transfer under § 1404(a); and denied the Rule 12(b)(6) request without prejudice to refiling before the Minnesota court. The clerk was directed to transfer the action to the District of Minnesota and close the Utah case.