Allegiance Benefit Plan Management, Inc. v. Reliastar Life Insurance Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

ALLEGIANCE BENEFIT PLAN

MANAGEMENT, INC., a Montana

corporation,

Plaintiff,

v. Case No.: 2:19-cv-839-FtM-38MRM

RELIASTAR LIFE INSURANCE

COMPANY,

Defendant.

____________________________/

OPINION AND ORDER1

Before the Court is Defendant ReliaStar Life Insurance Company’s Motion to

Dismiss (Doc. 7) and Plaintiff Allegiance Benefit Plan Management, Inc.’s Response in

Opposition (Doc. 17). For the reasons below, the Motion is granted in part and denied

in part with leave to amend.

BACKGROUND

This is an insurance dispute in which a third-party claims administrator seeks

reimbursement as an assignee from an insurer under an excess coverage policy.

ReliaStar issued an excess risk “Stop-Loss” insurance policy to the District School

Board of Collier County, effective January 1, 2015 through December 31, 2017, with

Policy Number 68716-2 EXRSK (the “Policy”). (Doc. 5 at 1-2; Doc. 4-3). Previously,

the School Board and Allegiance entered into an Administrative Services Agreement

1 Disclaimer: Documents hyperlinked to CM/ECF are subject to PACER fees. By using hyperlinks, the

Court does not endorse, recommend, approve, or guarantee any third parties or the services or products

they provide, nor does it have any agreements with them. The Court is also not responsible for a

hyperlink’s availability and functionality, and a failed hyperlink does not affect this Order.

under which Allegiance administered the School Board’s insurance claims. (Doc. 5 at

2). In late 2017, Allegiance filed a claim for reimbursement on behalf a School Board

employee, which ReliaStar denied. (Doc. 5 at 4). That claim is the subject of this suit.

On August 6, 2019, the School Board assigned their right to reimbursement for

all benefits incurred by the School Board prior to June 1, 2019 to Allegiance by signing

an “Assignment of Benefits.” (Doc. 5 at 1-2, 4-5; Doc. 4-5). Thus, Allegiance brings this

breach of contract and declaratory judgment action as an assignee of the School Board

pursuant to a purportedly valid and complete post-loss assignment of benefits of the

right to receive reimbursements owed under the Policy filed on behalf of a School Board

employee. (Doc. 5-2). ReliaStar removed the case and now moves to dismiss with

prejudice and without leave to amend under Rule 12(b)(1) and (6) for lack of standing

because the Assignment of Benefits is precluded by the terms of the Policy. (Doc. 1;

Doc. 7).

STANDARD

Motions to dismiss based upon lack of standing “attack the court’s subject matter

jurisdiction[] and are therefore considered pursuant to Rule 12(b)(1).”2 Honeywell v.

Harihar Inc, No. 2:18-cv-618-FtM-29MRM, 2018 WL 6304839, at *2 (M.D. Fla. Dec. 3,

2018) (citing Doe v. Pryor, 344 F.3d 1282, 1284 (11th Cir. 2003)). A defendant’s attack

on subject matter jurisdiction occurs in two forms: facial and factual. See Garcia v.

Copenhaver, Bell & Assoc., M.D.’s PA, 104 F.3d 1256, 1260 (11th Cir. 1997). When

there is a facial attack, like ReliaStar raises here, the Court takes the allegations in the

2 Although ReliaStar cites both Rules 12(b)(1) and 12(b)(6) in its motion, only Rule 12(b)(1) applies

because ReliaStar’s only basis for dismissal is “lack of standing.” (Doc. 7 at 3-9).

complaint as true in deciding the motion. See Morrison v. Amway Corp., 323 F.3d 920,

924 n.5 (11th Cir. 2003).

“Standing is a threshold jurisdictional question of whether a court may consider

the merits of a dispute. Standing originates from the Constitution’s Article III

requirement that a federal court’s jurisdiction is limited to actual cases and

controversies.” Navtech US Surveyors USSA Inc. v. Boat/Us Inc., No. 2:19-cv-184-FtM-

99MRM, 2019 WL 3219667, at *1 (M.D. Fla. July 17, 2019). Standing has three

elements: “(1) [plaintiff] suffered an injury in fact, (2) that is fairly traceable to the

challenged conduct of the defendant, and (3) that is likely to be redressed by a

favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). The

plaintiff bears the burden of establishing standing in the complaint. Uberoi v. Labarga,

769 F. App’x 692, 696-97 (11th Cir. 2019). “The Court should not speculate concerning

the existence of standing. Nor should it attempt to piece together an injury sufficient to

confer standing to the plaintiff; the plaintiff must demonstrate that [it] has satisfied this

burden.” Id. (citations omitted).

DISCUSSION

In the Complaint, Allegiance seeks to establish standing as an assignee of the

School Board. (Doc. 5 at 1) (“Allegiance has all rights and powers to bring this action as

the assignee of the rights of the named insured, the District School Board of Collier

County (i.e., the Policy Holder). As assignee, Allegiance has standing . . ..”). ReliaStar

argues that Allegiance has not met the “injury-in-fact” element of standing because the

School Board’s assignment to Allegiance is invalid. (Doc. 7 at 4-5). To determine if an

assignee has suffered a valid injury-in-fact, the Eleventh Circuit uses a two-step

analysis. Courts consider (1) whether the original assignor suffered an injury-in-fact and

(2) whether the assignment was valid. MSPA Claims 1, LLC v. Tenet Fla., Inc., 918

F.3d 1312, 1318 (11th Cir. 2019).

Starting with the first step, the School Board, the original assignor, must have

suffered an injury-in-fact. An injury-in-fact is “an invasion of a legally protected interest

that is [(1)] concrete and [(2)] particularized . . ..” Spokeo, Inc., 136 S. Ct. at 1548

(2016) (citations and internal quotations omitted). Concrete injuries are “real[,] not

abstract.” Id. And particularized injuries “affect the plaintiff in a personal and individual

way.” Id. Here, the Court finds that the School Board suffered an injury-in-fact. The

Complaint states that ReliaStar denied the School Board’s claim for excess coverage as

untimely in late 2017. (Doc. 5 at 4). A School Board employee, covered by the School

Board’s policy, sought a $320,388.12 reimbursement for medical expenses covered by

the Policy. (Doc. 5 at 3-4). Because ReliaStar has not reimbursed the School Board

employee, the School Board’s injury is concrete and particularized. (Doc. 5 at 6). Thus,

Allegiance meets the first requirement.

Next, the School Board’s assignment to Allegiance must be valid. Because this

is a diversity action, Florida law controls the validity of the assignment. Royalty

Network, Inc. v. Harris, 756 F.3d 1351, 1357 (11th Cir. 2014) (stating that federal courts

“apply state substantive law” in diversity jurisdiction cases). In Florida, the insurance

contract terms generally control whether a policy is assignable. See Fla. Stat.

§ 627.422. “Anti-assignment provisions only cover claims within their scope.” MSPA

Claims 1, LLC, 918 F.3d at 1319. Here, the insurance contract has an anti-assignment

clause that prohibits the School Board’s assignment to Allegiance. See Doc. 4-4 at 7.

The Policy’s anti-assignment clause states in its entirety: “ASSIGNMENT: You may not

assign, pledge or transfer, in whole or in part, this [p]olicy or any interest therein or any

benefits payable hereunder without [o]ur prior written consent. Any such action will be

void and of no effect.”

Even so, Allegiance argues that the Policy’s anti-assignment clause does not

prohibit the School Board’s assignment to Allegiance because that assignment occurred

“post-loss.” (Doc. 17 at 1-9; Doc. 5 at 1-2). There is a post-loss exception in Florida at

§ 627.422 that prohibits property insurance policies from restricting post-loss

assignment of benefits. See CMR Constr. & Roofing LLC v. ACE Ins. Co. of the

Midwest, No. 2:19-cv-771-FtM-60NPM, 2020 WL 263661, at *2 (M.D. Fla. Jan. 17,

2020). Courts have rarely extended this post-loss exception to anything but property

insurance policies. And the Florida Legislature recently amended Fla. Stat. § 627.422

and added subsection (2), which expressly limits the post-loss exception to property

insurance policies. See Fla. Stat. § 627.422(2) (effective July 1, 2019) (“A residential or

commercial property insurance policy may not prohibit the assignment of post-loss

benefits . . ..”).

Because the School Board held an excess risk “Stop-Loss” insurance policy

which covered “[p]rescription [d]rugs” and “[m]edical” benefits – not a property insurance

policy – Florida’s post-loss exception does not apply. See Doc. 4-3 at 1. Instead,

ReliaStar imposed conditions upon the assignment of the Policy, and in the absence of

a contrary statute, the general rule in Florida that the contract terms control assignment

prevails, and the Policy’s unambiguous anti-assignment provision prohibits the School

Board’s assignment to Allegiance. See Fla Stat. § 627.422; Doc. 4-4 at 7. Thus,

Allegiance does not meet the second requirement. And Allegiance lacks standing to

sue ReliaStar as an assignee of the School Board. See MSPA Claims 1, LLC, 918 F.3d

at 1318.

Nor does Allegiance allege any alternative methods of standing in the Complaint.

Because the Court cannot “speculate” on standing or “attempt to piece together” a

cognizable claim, this case is subject to dismissal. Uberoi, 769 F. App’x at 697.

However, rather than dismiss the Complaint with prejudice, the Court will grant

Allegiance leave to amend the Complaint to establish standing. See Stalley ex rel. U.S.

v. Orlando Reg’! Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008) (“A

dismissal for lack of subject matter jurisdiction is not a judgment on the merits and is

entered without prejudice.”).

Accordingly, it is now ORDERED:

(1) ReliaStar Life Insurance Company’s Motion to Dismiss (Doc. 7) is

GRANTED in part and DENIED in part to the extent that the Complaint (Doc. 5) is

dismissed, but the Court does so without prejudice.

(2) Allegiance Benefit Plan Management, Inc. may file an Amended

Complaint by April 6, 2020 that addresses the issues of subject matter jurisdiction as

stated in this Opinion and Order. If no Amended Complaint is filed this case will be

closed without further notice.

DONE and ORDERED in Fort Myers, Florida this 23rd day of March, 2020.

UNITED STATES DISTRICT JUDGE

Copies: All Parties of Record