The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
JAMES J. DONELON
CIVIL ACTION
VERSUS
20-604-SDD-EWD
JESSICA K. ALTMAN
RULING
Pending before the Court is the Motion to Dismiss Plaintiff’s Amended Complaint1
filed by Defendant Jessica K. Altman, the Insurance Commissioner of the Commonwealth
of Pennsylvania, in her capacity as Statutory Rehabilitator (“the Rehabilitator”). Plaintiff
James J. Donelon, the Commissioner of Insurance for the State of Louisiana (“Donelon”
or “Plaintiff”) filed an Opposition,2 to which the Rehabilitator filed a Reply.3 For the
following reasons, the Rehabilitator’s Motion4 shall be GRANTED and Plaintiff’s claims
dismissed without prejudice.
I. FACTUAL BACKGROUND
Senior Health Insurance Company of Pennsylvania, or “SHIP,” is an insolvent long-
term care insurance company that the Commonwealth Court of Pennsylvania placed in
rehabilitation in January 2020 after a long financial decline.5 The rehabilitation process
was established under Pennsylvania law, specifically the Pennsylvania Insurance
Department Act (“PID Act”), to provide a regulatory scheme for handling insolvent insurers
1 Rec. Doc. No. 11.
2 Rec. Doc. No. 20.
3 Rec. Doc. No. 24.
4 Rec. Doc. No. 11.
5
while protecting the interests of the insureds, creditors, and the public generally.6 A similar
statute – the Rehabilitation, Liquidation, Conservation Act (“RLCA”)7 – applies to insurers
in Louisiana. Defendant Jessica K. Altman, as the Insurance Commissioner for
Pennsylvania, acts as the Rehabilitator for SHIP. The Rehabilitator is bound to propose
a plan that will increase SHIP’s revenues and decrease its liabilities, subject to the
approval of the Commonwealth Court. Two such proposed plans have been filed: an initial
Proposed Plan of Rehabilitation (“Initial Plan”) on January 29, 2020, and an Amended
Plan on October 21, 2020.8 These proposed plans are the subject of the instant action.
Commissioner Donelon asserts that the proposed plans include “a menu of policy
changes. . .any of which would materially alter the rates charged to and paid by SHIP
policyholders and/or the benefits accorded to the policyholders under their respective
existing policies.”9 Donelon objects to these changes because of the possibility that they
could be imposed “without the approval of any of the departments of insurance in the
states. . .without regard to whether the plan violates the laws of the respective states and
jurisdictions.”10 The relief sought by Donelon is twofold: first, a declaratory judgment
forbidding the SHIP plan from altering rates and benefits for Louisiana policyholders
without the approval of the Commissioner, and second, a permanent injunction forbidding
the imposition of a rehabilitation plan that violates Louisiana laws and regulations.11
The Rehabilitator filed the instant Motion to Dismiss, asserting a bevy of arguments
6 See FBT Bancshares, Inc. v. Mutual Fire, Marine, and Inland Ins. Co., No. 95-1702, 1995 WL 599039 at
*4 (E.D. La. Oct. 11, 1995).
7 La. Stat. Ann. §22:2001, et seq (2012).
8 Rec. Doc. No. 10, ¶ 18. The Court takes judicial notice of the fact that, since the parties filed their briefs,
a Second Amended Plan was filed on May 3, 2021 (See
https://www.insurance.pa.gov/Regulations/LiquidationRehab/Documents/SHIP/SHIP_MAY_18_2021_SE
COND_AMENDED_REHABILITATION_PLAN.pdf).
9 Rec. Doc. No. 10, p. 3-4, ¶ 19.
10 Id. at p. 4, ¶ 10.
11
against what it calls Donelon’s “preemptive collateral attack” on SHIP’s rehabilitation plan.
In short, the Rehabilitator complains that Donelon’s case is fatally flawed because it
“complains of a speculative injury that has not occurred and may never occur, suffers
from fatal jurisdictional infirmities, and strives to intervene impermissibly with a pending
state court proceeding . . .”12 After reviewing the briefs of the parties, the materials
referenced in the Amended Complaint, and the applicable law, the Court agrees with the
Rehabilitator that Donelon has failed to establish that his claims are justiciable.
II. LAW AND ANALYSIS
A. Motions Under Federal Rule of Civil Procedure 12(b)(1)
“When a motion to dismiss for lack of jurisdiction ‘is filed in conjunction with other
Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before
addressing any attack on the merits.’”13 “A motion to dismiss under Rule 12(b)(1) is
analyzed under the same standard as a motion to dismiss under Rule 12(b)(6).”14
Therefore, the Court must accept all well-pleaded facts in the complaint as true and view
them in the light most favorable to the plaintiff.15 Ultimately, “[t]he burden of proof for a
Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. Accordingly, the
plaintiff constantly bears the burden of proof that jurisdiction does in fact exist.”16
12 Rec. Doc. No. 11-1, p. 2.
13 Crenshaw-Logal v. City of Abilene, Texas, 436 Fed.Appx. 306, 308 (5th Cir. 2011) (quoting Ramming v.
United States, 281 F.3d 158, 161 (5th Cir. 2001); see also Randall D. Wolcott, MD, PA v. Sebelius, 635
F.3d 757, 762 (5th Cir. 2011); Fed.R.Civ.P. 12(h)(3)).
14 Wagster v. Gautreaux, 2014 WL 3546997, at *1 (M.D. La. July 16, 2014) (quoting Hall v. Louisiana, et al,
974 F.Supp.2d 978, 985 (M.D. La. Sept. 30, 2013)) (citing Benton v. U.S., 960 F.2d 19, 21 (5th Cir. 1992)).
15 Lewis v. Brown, 2015 WL 803124, at *3 (M.D. La. Feb. 25, 2015)(citing Thompson v. City of Waco, Texas,
764 F.3d 500 (5th Cir. 2014)).
16
“Article III standing is a jurisdictional prerequisite.”17 If a plaintiff lacks standing to
bring a claim, the Court lacks subject matter jurisdiction over the claim, and dismissal
under Rule 12(b)(1) is appropriate.18 The party seeking to invoke federal jurisdiction bears
the burden of showing that standing existed at the time the lawsuit was filed.19 Article III
of the Constitution limits federal courts’ jurisdiction to certain “cases” and “controversies.”
“No principle is more fundamental to the judiciary’s proper role in our system of
government than the constitutional limitation of federal-court jurisdiction to actual cases
or controversies.”20 “One element of the case-or-controversy requirement” is that
plaintiffs “must establish that they have standing to sue.”21 The United States Supreme
Court has held that “the irreducible constitutional minimum of standing contains three
elements”22:
First, the plaintiff must have suffered an “injury in fact”—an invasion of a
legally protected interest which is (a) concrete and particularized, and (b)
actual or imminent, not conjectural or hypothetical. Second, there must be
a causal connection between the injury and the conduct complained of—
the injury has to be fairly traceable to the challenged action of the defendant,
and not the result of the independent action of some third party not before
the court. Third, it must be likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.23
17 Crenshaw-Logal, 436 Fed.Appx. at 308 (citing Steel Co. v. Citizens for a Better Environment, 523 U.S.
at 101, and Xerox Corp. v. Genmoora Corp., 888 F.2d 345, 350 (5th Cir. 1989)).
18 Whitmore v. Arkansas, 495 U.S. 149, 154-55 (1990); Chair King, Inc. v. Houston Cellular Corp., 131 F.3d
507, 509 (5th Cir. 1997).
19 M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001); Howery v. Allstate Ins. Co., 243
F.3d 912, 916 (5th Cir. 2001); Ramming, 281 F.3d at 161.
20 DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 341 (2006) (internal quotation marks omitted); Raines v.
Byrd, 521 U.S. 811, 818 (1997) (internal quotation marks omitted); see, e.g., Summers v. Earth Island
Institute, 555 U.S. 488, 492-493 (2009).
21 Raines, 521 U.S. at 818, 117 S.Ct. 2312; see also Summers, 555 U.S. at 492-493, DaimlerChrysler
Corp., 521 U.S. at 342, 126 S.Ct. 1854; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
22 Lujan, 504 U.S. 555, 560–61 (1992).
23
To establish Article III standing, an injury must be “concrete, particularized, and
actual or imminent.”24 A particularized injury is one which “affect[s] the plaintiff in a
personal and individual way.”25 “Although ‘imminence’ is concededly a somewhat elastic
concept, it cannot be stretched beyond its purpose, which is to ensure that the alleged
injury is not too speculative for Article III purposes—that the injury is certainly
impending.”26 “Allegations of possible future injury”27 do not suffice.
Related to standing is ripeness, which is “a question of timing.”28 To be justiciable,
a case must be “ripe,” meaning “not dependent on ‘contingent future events that may not
occur as anticipated, or indeed may not occur at all.’”29 Ripeness ensures that federal
courts do not decide disputes that are “premature or speculative.”30 A case becomes ripe
when it “would not benefit from any further factual development and when the court would
be in no better position to adjudicate the issues in the future than it is now.”31 The ripeness
inquiry reflects “‘Article III limitations on judicial power’ as well as ‘prudential reasons for
refusing to exercise jurisdiction.’”32 Ripeness is part of subject matter jurisdiction, which
must be established by the party invoking federal jurisdiction.33
24 Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, –––– (2010).
25 Gill v. Whitford, 138 S. Ct. 1916, 1920 (2018) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560,
and n. 1 (1992).
26 Lujan, 504 U.S. at 564, n.2 (1992).
27 Whitmore v. Arkansas, 495 U.S. 149, 158 (1990).
28 Regional Rail Reorganization Act Cases, 419 U.S. 102, 140 (1974).
29 Trump v. New York, 141 S. Ct. 530, 535 (2020)(quoting Texas v. United States, 523 U.S. 296, 300
(1998)).
30 Shields v. Norton, 289 F.3d 832, 835 (5th Cir. 2002) (citing United Transp. Union v. Foster, 205 F.3d 851,
857 (5th Cir. 2000)).
31 Pearson v. Holder, 624 F.3d 682, 684 (5th Cir. 2010).
32 Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 670 n.2 (2010)(quoting Reno v. Catholic Soc.
Servs., Inc., 509 U.S. 43, 57 n.18 (1993)).1
33
B. Analysis
In the Rehabilitator’s view, this matter is not yet ripe, and Donelon has not
demonstrated that he has suffered an injury that gives rise to standing. Thus, she argues
that a ruling from this Court would be an impermissible advisory opinion because Donelon
“seeks declaratory relief based on a proposed rehabilitation plan that both parties agree
can materially change.”34 Donelon counters that the “case or controversy standard differs
in an action for a declaratory judgment.”35 That is true, to some extent, but not true enough
to save this suit.
“The Declaratory Judgment Act provides that, ‘[i]n a case of actual controversy
within its jurisdiction ... any court of the United States ... may declare the rights and other
legal relations of any interested party seeking such declaration, whether or not further
relief is or could be sought.’”36 “When considering a declaratory judgment action, a district
court must engage in a three-step inquiry.”37 The court must ask (1) “whether an ‘actual
controversy’ exists between the parties” in the case; (2) whether it has authority to grant
declaratory relief; and (3) whether “to exercise its broad discretion to decide or dismiss a
declaratory judgment action.”38
Although “[d]eclaratory judgments cannot be used to seek an opinion advising
what the law would be on a hypothetical set of facts ..., declaratory judgment plaintiffs
need not actually expose themselves to liability before bringing suit.”39 “Basically, the
question in each case is whether the facts alleged, under all the circumstances, show that
34 Rec. Doc. No. 11-1, p. 8 (emphasis original).
35 Rec. Doc. No. 20, p. 5.
36 Frye v. Anadarko Petroleum Corp., 953 F.3d 285, 293–94 (5th Cir. 2019).
37 Orix Credit All., Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000).
38 Id.
39
there is a substantial controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”40
This Court finds that none of the above-cited articulations of justiciability in the
declaratory judgment context obviate the need for the plaintiff to show a concrete, non-
speculative injury that gives rise to a case or controversy under Article III. Indeed, the
United States Court of Appeals for the Fifth Circuit has clearly held that the Declaratory
Judgment Act’s “requirement of a ‘case of actual controversy’ refers to an Article III case
or controversy.”41 Donelon fails to demonstrate such an injury. He essentially complains
that the Rehabilitator may propose a plan that could have the effect of materially altering
rates and/or benefits for Louisiana policyholders. After Donelon’s initial Complaint was
filed, an amended rehabilitation plan was proposed, leading Donelon to file an Amended
Complaint that addressed the changes to the proposed plan. The Court takes judicial
notice of the fact that, after the briefing on the instant motion, yet another amended
proposed plan was filed by the Rehabilitator on May 3, 2021. The ongoing amendments
to the plan render it impossible for Donelon to demonstrate that his injury is concrete and
imminent or certainly impending. While “imminence is concededly a somewhat elastic
concept,”42 it is simply common sense that one cannot be injured by the provisions of a
plan that does not yet exist.
Donelon attempts to sidestep this reality by arguing that, no matter what the
contours of the rehabilitation plan when it is finalized, his injury is concrete now because
40 MedImmune, Inc. v. Genentech, Inc., 549 U.S. at 127 (2007)(quoting Md. Cas. Co. v. Pac. Coal & Oil
Co., 312 U.S. 270, 273 (1941)).
41 Frye v. Anadarko Petroleum Corp., 953 F.3d 285, 294 (5th Cir. 2019)(citing MedImmune, 549 U.S. at
126).
42
“the Plan’s stated intentions are unequivocal,”43 namely to “cram down the rate increases
and benefit modifications.”44 In other words, Donelon contends, his injury arises out of the
existence of a rehabilitation plan, generally. This is not a concrete and particularized injury
that can bestow upon Donelon Article III standing.
Further, it is apparent that this case is not ripe; it is “riddled with contingencies and
speculation that impede judicial review.”45 Without further factual development in the form
of a finalized rehabilitation plan, it would be premature for this Court to assess the legality
of the plan’s effects. Donelon’s repeated conjecture that the plan will undoubtedly harm
Louisiana policyholders in some way does not suffice. This suit is the equivalent of
challenging the constitutionality of a law before the law has even passed. The jurisdiction
of this Court is not properly invoked to adjudicate circumstances that may or may not
occur.
Therefore, because Plaintiff has failed to demonstrate that his claims are
justiciable, they must be dismissed. In this case, the Court sees fit to dismiss his claims
without prejudice, allowing for them to be reasserted if and when a finalized rehabilitation
plan is in place. Because the Court’s decision is based on justiciability, it does not at this
juncture reach the other arguments raised by the Rehabilitator.
43 Rec. Doc. No. 20, p. 7.
44 Id. at p. 6.
45
III. CONCLUSION
For the above reasons, the Rehabilitator’s Motion to Dismiss Plaintiff’s Amended
Complaint46 is hereby GRANTED and Plaintiff’s claims dismissed without prejudice.
IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana on September 15, 2021.
S
CHIEF JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
46