SPINA v. METROPOLITAN LIFE INSURANCE COMPANY (METLIFE)

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

DANTE C. SPINA, SR. and

LYNDAJEAN K. SPINA, 1:20-cv-14129-NLH-KMW

Plaintiffs,

v. OPINION

METROPOLITAL LIFE INSURANCE

COMPANY,

Defendant.

APPEARANCES

DAVID A. AVEDISSIAN

135 KINGS HIGHWAY EAST

HADDONFIELD, NJ 08033

RICHARD F. KLINEBURGER , III

38 HADDON AVENUE

SUITE 100

HADDONFIELD, NJ 08033-2463

On behalf of Plaintiffs

SANDRA JONES

NICOLE CARROLL WIXTED

FAEGRE DRINKER BIDDLE & REATH LLP

ONE LOGAN SQUARE, SUITE 2000

PHILADELPHIA, PA 19103

On behalf of Defendants

HILLMAN, District Judge

This matter comes before the Court by way of Defendant

Metropolitan Life Insurance Company’s (Metlife) motion to

dismiss Plaintiffs Dante C. Spina, Sr. and Lyndajean K. Spina’s

Amended Complaint. For the reasons expressed below, Defendant’s

motion will be granted in part and denied in part.

BACKGROUND

On August 30, 2007, Defendant issued a long-term care

insurance policy to Plaintiff Dante Spina. The policy provides

that Plaintiff would be eligible for long-term care benefits if

he were to become “Chronically Ill,” which is defined under the

Policy as “unable to perform, without Substantial Assistance,

from another individual, at least two (2) Activities of Daily

Living (‘ADL’) for an expected period of at least ninety (90)

days due to loss of functional capacity; or You require

Substantial Supervision to protect You from threats to health

and safety due to Severe Cognitive Impairment.” (ECF No. 10-3,

Ex. A at 6, 9). The Policy lists and defines six specific ADLs:

Bathing, Dressing, Transferring, Toileting, Continence, and

Eating.

On March 10, 2014, Plaintiff was admitted to the hospital

with a series of medical issues; after being discharged on April

8, he was readmitted the following day, and diagnosed with a

long list of medical conditions. Over the course of the next

few months, Dante spent his time between a nursing home and

rehabilitation facility and a hospital, to which was readmitted

three times. Finally, on June 2, 2014, he was released from the

nursing home.

Prior to his release, the Spinas had filed a notice of

claim with Metlife on May 24, 2014, seeking benefits dating back

to his initial hospital stay on March 10 and extending into the

future. Plaintiffs allege that, during that time frame and

through the next several months after his return home, Dante was

unable to perform at least two ADLs without substantial

assistance from another individual, and was therefore eligible

for benefits. At some point after the filing of the notice of

claim, Defendant began investigating Plaintiffs’ claim.

Plaintiffs allege that, on August 14, 2014, an investigator

working for Metlife observed Dante sitting on a tractor, and

that Defendant had further observed that during this period he

had continued to perform his duties as an elected local

official.

Although Plaintiffs did not receive any notice from

Defendant that their benefits claim was being investigated, on

December 15, 2014, Defendant filed a report accusing Plaintiffs

of insurance fraud with either a state agency or the Salem

County Prosecutors Office, and at some other point informed

Plaintiffs their claim had been denied. On May 22, 2014,

“Plaintiffs were summoned by the Mid-Salem County Police

Department and were both charged with a violation of

N.J.S.A.2C:21-4.6A, Insurance Fraud-False Claim and

N.J.S.A.2C:5-2A(1), Conspiracy.” (ECF No. 6 at ¶ 26). Then, on

October 28, 2015, the Salem County Prosecutor’s Office presented

a grand jury with a bill of indictment against Plaintiffs; the

jury no-billed the charges that same day.

Finally, on August 5, 2020, Plaintiffs filed their initial

complaint in state court. (ECF No. 1-2). That complaint was

removed to this Court by Defendant on October 8, 2020, (ECF No.

1), and Defendants quickly filed their first motion to dismiss

on October 15. (ECF No. 3). Plaintiffs, rather than oppose

that motion, chose to file an Amended Complaint on November 2,

(ECF No. 6), within the 21-day time period for filing such an

amended pleading as of right under Federal Rule of Civil

Procedure 15(a)(1)(B). The Amended Complaint alleges claims for

bad faith (Count I), violations of the New Jersey Consumer Fraud

Act (NJCFA) (Count II), and breach of contract (Count III).

Defendant then followed with its second motion to dismiss,

(ECF No. 10), which seeks dismissal of all claims for

essentially the same reasons as its initial motion. Plaintiffs

filed an opposition to the motion on December 7, 2020, (ECF No.

11), and Defendant filed a reply brief in further support on

December 14. (ECF No. 12). The motions are therefore fully

briefed and ripe for adjudication.

DISCUSSION

I. Subject Matter Jurisdiction

The Court has subject matter jurisdiction over this case

pursuant to 28 U.S.C. § 1332, as there is complete diversity of

the parties and the amount in controversy exceeds $75,000.

II. Legal Standard for Motions to Dismiss

When considering a motion to dismiss a complaint for

failure to state a claim upon which relief can be granted

pursuant to Federal Rule of Civil Procedure 12(b)(6), a court

must accept all well-pleaded allegations in the complaint as

true and view them in the light most favorable to the plaintiff.

Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well

settled that a pleading is sufficient if it contains “a short

and plain statement of the claim showing that the pleader is

entitled to relief.” Fed. R. Civ. P. 8(a)(2).

“While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a

plaintiff’s obligation to provide the ‘grounds’ of his

‘entitle[ment] to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do . . . .” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (alteration in original)

(citations omitted) (first citing Conley v. Gibson, 355 U.S. 41,

47 (1957); Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc.,

40 F.3d 247, 251 (7th Cir. 1994); and then citing Papasan v.

Allain, 478 U.S. 265, 286 (1986)).

To determine the sufficiency of a complaint, a court must

take three steps: (1) the court must take note of the elements a

plaintiff must plead to state a claim; (2) the court should

identify allegations that, because they are no more than

conclusions, are not entitled to the assumption of truth; and

(3) when there are well-pleaded factual allegations, a court

should assume their veracity and then determine whether they

plausibly give rise to an entitlement for relief. Malleus v.

George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 664, 675, 679 (2009) (alterations,

quotations, and other citations omitted).

A district court, in weighing a motion to dismiss, asks

“not whether a plaintiff will ultimately prevail but whether the

claimant is entitled to offer evidence to support the claim.”

Twombly, 550 U.S. at 563 n.8 (quoting Scheuer v. Rhoades, 416

U.S. 232, 236 (1974)); see also Iqbal, 556 U.S. at 684 (“Our

decision in Twombly expounded the pleading standard for ‘all

civil actions’ . . . .”); Fowler v. UPMC Shadyside, 578 F.3d

203, 210 (3d Cir. 2009) (“Iqbal . . . provides the final nail in

the coffin for the ‘no set of facts’ standard that applied to

federal complaints before Twombly.”). “A motion to dismiss

should be granted if the plaintiff is unable to plead ‘enough

facts to state a claim to relief that is plausible on its

face.’” Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at

570).

A court in reviewing a Rule 12(b)(6) motion must only

consider the facts alleged in the pleadings, the documents

attached thereto as exhibits, and matters of judicial notice.

S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd.,

181 F.3d 410, 426 (3d Cir. 1999). A court may consider,

however, “an undisputedly authentic document that a defendant

attaches as an exhibit to a motion to dismiss if the plaintiff’s

claims are based on the document.” Pension Benefit Guar. Corp.

v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.

1993). If any other matters outside the pleadings are presented

to the court, and the court does not exclude those matters, a

Rule 12(b)(6) motion will be treated as a summary judgment

motion pursuant to Rule 56. Fed. R. Civ. P. 12(b).

III. Analysis

The Court first must address the fact that there are

currently two outstanding motions to dismiss in this action,

aimed at two separate versions of the complaint. As explained

above, Plaintiffs filed the Amended Complaint within the 21-day

period permitted for amending pleadings as of right under Rule

15(a)(1)(b); however, they also filed a brief opposing the

initial motion to dismiss, which Defendant replied to. However,

from the Court’s review of the two motions and the two

complaints, it is clear that insofar as Plaintiff still pursues

any of the claims from its initial complaint, Defendants’

arguments for dismissal are almost identical. The Court will

therefore deny Defendant’s first motion to dismiss (ECF No. 3)

as moot, will proceed with the Amended Complaint as the only

operable complaint in this action, and will address the

arguments for dismissal of those claims put forth by Defendant’s

second motion to dismiss.

1. Plaintiff Lyndajean Spina’s Claims

Before turning to the more substantive arguments put forth

by Defendant in its second motion to dismiss, the Court must

determine the extent to which Plaintiff Lyndajean Spina can

state any claims related to the Policy. Defendant argues that

“Mrs. Spina was not a party to the Policy with MetLife . . .

Therefore, any claims asserted by Mrs. Spina that are tied to or

based on the Policy are improper and must be dismissed.” (ECF

No. 10-1 at 1, n.1). After closely reviewing the Amended

Complaint as well as the parties’ exhibits, the Court agrees.

The Amended Complaint asserts each of its claims for both

Plaintiffs. Those claims include not only breach of contract,

but also bad faith and an NJCFA violation related to Defendant’s

denial of the benefits claim. And, as Defendant points out, the

Amended Complaint itself confusingly attaches an insurance

policy for Lyndajean Spina, despite the fact that the benefits

claim underlying this action was alleged to have been made on

behalf of Dante Spina. The Court, having reviewed the copy of

the Policy issued to Dante that was submitted by Defendant as an

exhibit — the accuracy of which Plaintiff has not disputed, and

which necessarily must be the focal document of this case, since

it was Dante Spina’s benefits claim which is being litigated —

finds no basis for any assertion that Lyndajean is also a party

to the Policy. Nor, for that matter, does Plaintiffs’

opposition brief appear to address this argument or attempt to

demonstrate that Lyndajean was a party to the specific policy

under which the benefits claims was made.

As Lyndajean Spina was not a party to the Policy, she

cannot assert claims related to the breach of that contract,

denial of benefits under that contract, or the breach of any

implied duty associated with that contract. See Kamden-Ouaffo

v. Task Mgm’t Inc., No. 1:17-cv-7506, 2018 WL 3360762, at *19

(D.N.J. July 9, 2018). Therefore, while the Court will further

address her claims focused on Defendant’s actions in reporting

her for insurance fraud in its analysis below, Plaintiff

Lyndajean Spina’s claims related to the Policy itself and

Defendant’s denial of Dante Spina’s benefits claim will be

dismissed with prejudice.

2. Statute of Limitations Argument

The Court next turns to the parties’ broader arguments

regarding Plaintiff’s claims. Defendant first argues that each

of Plaintiffs’ claims must be dismissed because they are barred

by the relevant statute of limitations imposed by the terms of

the Policy. New Jersey law requires that claims arising out of

a contract must be brought within six years of the cause of

action having accrued. N.J.S.A. § 2A:14-1. “In New Jersey, the

general rule is that the statute of limitations applicable to

contracts also governs insurance actions as well.” Gahnney v.

State Farm Ins. Co., 56 F. Supp. 2d 491, 495 (D.N.J. 1999).

However, under New Jersey law “the parties to a contract may

shorten the limitations period, and cannot then avail themselves

of a longer limitations period.” Biegalski v. Am. Bankers Ins.

Co., No. 14-6197, 2016 WL 1718101, at *4 (D.N.J April 29, 2016)

(citing Gahnney, F. Supp. 2d at 495).

Here, Defendant points to two provisions of the Policy in

arguing that Plaintiffs’ claims must have been brought by June

8, 2020. First, the Policy provides that “[n]o legal action .

. . may be brought after six (6) years from the time written

proof of claim is required to be given.” (ECF No. 10-3, Ex. A

at 23). Second, the Policy’s “Proof of Claim” provision

requires that the policyholder “must submit written proof of

claim no later than ninety (90) days after the day You are

requesting Benefits.” Id. at 20. Defendants argue that this

imposes a straightforward deadline by which Plaintiffs were

required to bring their claims: six years and 90 days after the

date Plaintiffs claim Dante Spina became eligible for benefits.

Since Plaintiffs acknowledge that they claimed Dante Spina was

entitled to benefits beginning on March 10, 2014, Defendants

argue that they had until June 8, 2014 to submit proof of the

claim and to June 8, 2020 file this action, and therefore their

original complaint filed on August 5, 2020 was time-barred.

Plaintiffs, unsurprisingly, interpret the Policy’s language

differently. They put forth two separate arguments in their

opposition brief. First, Plaintiffs argue that the deadline for

filing their written proof of claim is actually provided by a

separate sentence from the Proof of Claim provision, which

states:

“For periodic payment for a continuing claim, You

must submit written proof of claim to Us, at the

address stated on the claim form We provide You, no

later than ninety (90) days after the end of each

period for which We are liable, or no later than

ninety (90) days after the end of the calendar year

in which You incurred charges, whichever is later.”

(ECF No. 10-3, Ex. A at 20).

However, as Defendant points out, Plaintiffs have not

alleged here that they were seeking “periodic payment for a

continuing claim” — instead, even interpreting the allegations

in the Amended Complaint in the light most favorable to

Plaintiffs, it is clear that they have alleged that they were

submitting an entirely new benefits claim unrelated to any prior

continuing claims or periodic payments. Accordingly, under the

straightforward terms of the contract, their benefits claim was

seeking “payment of any other claim,” and the deadline for their

written proof of claim was therefore governed by the language

cited by Defendant instead.

Second, according to Plaintiffs, the 90-day period for

filing the written proof of claim did not start until the end of

the period for which they claimed Dante Spina was eligible for

benefits, placing in issue the time period for which they made

their claim. By Plaintiffs’ reading, the provision requires

them to file a written proof of claim only within 90 days of the

last day for which they are claiming benefits — granting them a

potentially substantially longer time within which to have

submitted a proof of claim. Since they claimed benefits through

at least June 2014, their complaint filed on August 5, 2020

would therefore be timely.

Before diving into contractual interpretation, the Court

will first briefly address a secondary argument put forth by

Plaintiffs. Beyond their arguments above, Plaintiffs also

contend that even were the Court to adopt Defendant’s

interpretation of the Proof of Claim provision, the applicable

limitations period would still be the New Jersey statutory

period quoted above, under which their claims would be timely.

Plaintiffs point the Court to a separate provision of the

Policy, which states that “Any provision in this policy which,

on the Original Coverage Effective Date of the policy, conflicts

with the laws of the state in which You reside on that date, is

amended to meet the minimum requirements of such laws.” Id. at

23. According to them, since Defendant’s interpretation would

shorten the limitations period for their claim, it therefore

conflicts with New Jersey law and must be amended.

However, the Third Circuit has previously addressed an

extremely similar provision in an insurance claim dispute. In

Koert v. GE Group Life Assur. Co., 231 F. App’x. 117 (3d Cir.

2007), the plaintiff made this exact argument, asserting that

her policy’s shorter limitations period conflicted with a

Pennsylvania statutory limitations period. Id. at 120. The

Third Circuit quickly dismissed of her argument:

“[Plaintiff] directs us to language in the policy

which specifies that ‘[t]he time limits for ...

filing legal action will be changed to comply with

the minimum requirements of any applicable law.’ Were

Pennsylvania's statutory limitation period a ‘minimum

requirement’ beneath which parties could not

contract, then Koert would be correct that the

applicable limitation period would be four years. It

is not. Pennsylvania law allows parties to contract

for limitation periods shorter than those specified

by statute, and a three year period is certainly

reasonable. Therefore, the statutory period is not a

minimum requirement, and the policy's shorter

limitation period is applicable.” Id. at 120.

While the Third Circuit there addressed Pennsylvania law, New

Jersey law similarly allows parties to contract for limitations

periods shorter than those specified by statute. See Klimowicz

v. Unum Life Ins. Co. of America, 296 F. App’x. 248, 250 (3d

Cir. 2008) (citing Hosp. Support Servs., Ltd. v. Kemper Group,

Inc., 889 F.2d 1311, 1314 (3d Cir. 1989)). Accordingly, the

Court finds that the New Jersey statutory limitations period is

not a minimum requirement, and the Policy’s limitations period

is applicable here regardless of which interpretation is

adopted.

The Court therefore turns to the parties’ arguments

regarding the specific language in question from the Proof of

Claim provision. Both parties appear to agree that New Jersey

law applies here. Under New Jersey law, the interpretation of

an insurance policy is a “question of law.” Selective Ins. Co.

of Am. v. Hudson E. Pain Mgmt. Osteopathic Med., 46 A.3d 1272,

1276 (N.J. 2012). And importantly, New Jersey courts have

emphasized that the language of an insurance policy “should be

interpreted according to its plain and ordinary meaning.”

Voorhees v. Preferred Mutual Ins. Co., 607 A.2d 1255, 1260 (N.J.

1992).

The Court, having reviewed the parties’ proposed

interpretations and the Policy itself in great detail, finds

that both parties have overlooked the plain and ordinary meaning

of the provision in question. The Policy states that the

policyholder must submit a written proof of claim “no later than

ninety (90) days after the day You are requesting Benefits,” and

the Court interprets the provision to mean exactly what it says:

that the Spinas were required to submit a written proof of claim

within ninety days of the day they submitted their request for

benefits. As Plaintiffs allege that they submitted the benefits

claim on May 24, 2014, they therefore had until August 22, 2014

to submit a written proof of claim, and until August 22, 2020 to

bring their claims without being time-barred. Accordingly,

Plaintiffs’ claims are timely under the language of the Policy.

While the Court does not disregard the interpretations

proposed by the parties lightly, it finds that this reading

flows most directly from the common and ordinary meaning of the

provision’s language. This finding is only further strengthened

by the respective weaknesses with both parties’ alternative

interpretations. First, Defendant’s preferred interpretation

stretches the common, ordinary meaning of the provision’s

language; Defendant is requesting that the Court effectively

alter the wording of the provision, reading it to state not that

a written proof of claim must be submitted “no later than ninety

(90) days after the day You are requesting Benefits,” but rather

than it must be submitted “no later than ninety (90) days after

the day for which You are requesting Benefits.” However, where

the language of the policy is clear and unambiguous, “the court

is bound to enforce the policy as it is written” — and may not

re-write the policy so as to favor either party. Delaware

Valley Plumbing Supply, Inc. v. Merchants Mutual Insurance Co.,

No. 1:20-cv-08257-NLH-KMW, 2021 WL 567994, at *3 (D.N.J. Feb.

16, 2021) (quoting Royal Ins. Co. v. Rutgers Cas. Ins. Co., 638

A.2d 924, 927 (N.J. Super. Ct. App. Div. 1994)).

Further, the specific facts of this case help demonstrate

why Defendant’s attempt to tie the limitations period to the

start date of the benefits period claimed by Plaintiffs

stretches beyond a clear reading of the Policy. Defendant

argues that March 10, 2014, the date which Plaintiffs claimed

was the beginning of the period for which they were eligible for

benefits, is the date on which the 90-day period must start

running. And while there are certain exceptions, the Policy

expressly provides that “[f]ailure to submit proof of claim

within this time limit will result in a claim denial . . .”

(ECF No. 10-3, Ex. A at 20). Accordingly, taking Defendant’s

interpretation to its logical conclusion, a policyholder would

be required to not only have submitted a benefits claim, but

also the written proof of claim, within 90 days of the start of

any benefits period or risk their claim being denied as untimely

— even if that period extended beyond 90 days.

This interpretation would transform a provision presumably

designed to create a simple deadline for submitting a proof of

claim into a deadline for when a party may make a benefits claim

altogether for a past period of eligibility. However, the

Policy already contains an entirely separate provision governing

the deadline for making a claim, which states that policyholders

“must provide [Metlife] with notice of claim within twenty (20)

days after the beginning of any loss covered by the policy, or

as soon as reasonably possible.” Id. Defendants not only ask

the Court to read into the Proof of Claim provision additional

language that changes its meaning; they ask the Court to read

the provision to institute a second deadline for providing

notice of a claim, above and beyond the deadline and standard

put forth by the Policy’s provision that explicitly covers that

question. Given the more straightforward interpretation of the

provision outlined above, which does not require the Court to

read in additional language or to encroach on the terms of the

Notice of Claim provision, the Court will decline to adopt

Defendant’s preferred reading.1

1 While Defendant points the Court to two cases dealing with

contractual limitations periods based on the date a proof of

claim was required to be submitted, Weinberger v. BAE Systems of

North America, No. 9-1767, 2009 WL 10690592 (D.N.J. July 27,

2009) and Smith v. Metropolitan Life Ins. Co., No. 14-2288, 2015

WL 5177633 (D. N.J. Sept. 3, 2015), the Court notes that the

proof of claim deadlines in those cases were not directly

comparable to the provision here.

So too does Plaintiffs’ interpretation stretch the plain

meaning of the Policy’s language. According to Plaintiffs, the

statute of limitations cannot possibly start running until the

end of the period for which they claim benefits, regardless of

when they made the claim or when the claim was denied. But

while Plaintiffs disagree on which specific day of the claimed

benefits period the clock begins ticking, their interpretation

essentially relies on the Court to re-write the Proof of Claim

provision in the exact same way as Defendant’s interpretation,

which the Court will not do. And Plaintiffs’ own attempt to

illustrate the application of their interpretation shows that it

can quickly devolve into a somewhat detailed analysis of the

relationship between the exact days the party decides to claim

benefits for, the later date on which they actually make the

claim, and exactly where the 90-day period for submitting the

written proof of claim overlaps with those dates.

Such an interpretation overcomplicates the question of when

the statute of limitations starts running and when a

policyholder’s claims become time-barred, a question which the

Court presumes the parties drafting the contract intended to

answer in as clear and straightforward a fashion as possible for

the benefits of all parties. Rather than interpreting the

Policy’s language in a manner which would run the risk of only

engendering more potential confusion for parties attempting to

accurately assess the date by which they must bring potential

claims, the Court adopts the clear and ordinary meaning of the

terms drafted. As Plaintiffs filed their claims prior to August

22, 2020, their claims were timely.

3. Failure to State a Claim

Defendant next argues that Plaintiffs’ claims must be

dismissed for failure to adequately state a claim. Plaintiffs

assert three separate types of claim: breach of contract, bad

faith, and violation of the NJCFA.

The Court will first address a point of apparent confusion:

Plaintiffs repeated assertion in their opposition brief that

their claims are sufficient because “New Jersey is a notice

pleading state.” (ECF No. 11 at 26). Regardless of the

pleadings standards applied in New Jersey state courts, the

federal courts do not apply state pleading standards, and

instead apply the pleading requirements outlined by the Court

above in its discussion of the legal standard for motions to

dismiss under Rule 12(b)(6). The Court will analyze the

sufficiency of Plaintiffs’ claims under that standard.

A. Breach of Contract

The Court turns first to Plaintiffs’ breach of contract

claim. Under New Jersey law, to state a claim for breach of

contract, a plaintiff must plead that (1) the parties entered

into a valid contract; (2) the defendant failed to perform its

contractual obligation; and (3) as a result, the plaintiff

sustained damages. Sheet Metal Workers Int'l Ass'n Local Union

No. 27, AFL–CIO v. E.P. Donnelly, Inc., 737 F.3d 879, 900 (3d

Cir. 2013) (citing Coyle v. Englander's, 488 A.2d 1083 (N.J.

Super. Ct. App. Div. 1985)). Plaintiffs’ general claim is

conceptually straightforward: they had a contract under which

Defendant agreed to provide long-term care benefits if Dante

Spina became chronically ill, and Defendant improperly denied

their claim for benefits.

Defendant argues that Plaintiffs have failed to put forth

sufficient factual allegations in their Amended Complaint to

move past the pleadings stage. Defendant first argues that

Plaintiffs claims must be dismissed because they “fail to allege

what part of the Policy, if any, MetLife breached by denying Mr.

Spina’s claim.” (ECF No. 10-1 at 13). They further go on to

state that “Plaintiffs cannot identify an applicable part of the

Policy that MetLife purportedly breached by denying Mr. Spina’s

claim. Rather, Plaintiffs merely regurgitate Policy language,

which does nothing to satisfy the elements required by law to

properly assert a claim.” Id. However, even a cursory review

of the Amended Complaint makes clear that Defendant is arguing

semantics; while the Amended Complaint may not cite to the

specific sub-provision of the Policy Plaintiffs claim was

breached, it does directly outline the relevant requirements for

receiving long-term care benefits under the Policy, and alleges

that despite the fact that Dante Spina qualified under these

requirements Defendant denied the claim. (ECF No. 6 at ¶¶ 10-

12). Defendant has cited no case law at all in arguing that

these allegations are insufficient simply because they do not

include a direct citation to a specific provision, and the Court

declines to make such a holding when the basis for Plaintiffs’

breach claim is as clear and straightforward as it is here.

Defendant’s second, and central, argument is that

Plaintiffs have simply failed to include sufficient factual

allegations that Dante Spina was in fact eligible for benefits.

While, as explained above, Plaintiffs have relied on the wrong

pleading standard in defending the sufficiency of their claims,

the Court notes that Defendant has similarly failed to cite any

case law at all, beyond basic citations for pleading standards,

to support its argument that the actual allegations here are

insufficient. Instead, Defendant simply asserts that they are,

and expects the Court to agree. However, Defendant appears to

largely overstate the Plaintiffs’ burden to adequately state a

claim, and the Court finds that Plaintiffs’ claims, while not

filled with extensive levels of detail, are sufficient to avoid

dismissal at the pleadings stage.

As mentioned above, Plaintiff’s theory for their breach of

contract claim is simple: Dante Spina was eligible for benefits

under the Policy, and Defendant denied his benefits claim

anyway. There is no dispute presented by the parties as to

whether Defendant denied the benefits claim or whether this

denial caused Plaintiffs to suffer damages, and therefore the

only true question is whether the Amended Complaint adequately

alleges that Dante Spina was eligible for benefits in the first

place. Under the Policy, Spina was required to demonstrate that

he was “Chronically Ill,” which is defined as “unable to

perform, without Substantial Assistance, from another

individual, at least two (2) Activities of Daily Living(‘ADL’)

for an expected period of at least ninety (90) days due to loss

of functional capacity; or You require Substantial Supervision

to protect You from threats to health and safety due to Severe

Cognitive Impairment.” (ECF No. 10-3, Ex. A at 6, 9).

Plaintiffs’ Amended Complaint explicitly outlines this

requirement. (ECF No. 6 at ¶ 10). It further alleges that even

months after discharge from the nursing home, he was still

struggling to walk with a cane, and provides an extremely

detailed list of the medical conditions Dante Spina suffered

from and was diagnosed with at the time:

“He was diagnosed with being in respiratory failure

secondary to hypercarbia, septic shock, adrenal

insufficiency, congestive heart failure, anemia,

atrial fibrillation, a bleeding duodenal ulcer,

acalculous cholecystitis orthostatic hypertension,

and acute kidney injury . . . The hospital records

note mild acute diastolic heart failure and recurrent

atrial fibrillation along with the above referenced

diagnoses. He was also diagnosed with degenerative

joint disease in the knee and sleep apnea.”

(ECF No. 6 at ¶¶ 4-6).

Plaintiffs also allege that “Between March 10, 2014 and

June 2, 2014, Plaintiff was admitted to the hospital on three

separate occasions and was inpatient for approximately six

weeks. The remaining time between March 10 and June 2, 2014 was

spent in a nursing home/rehabilitation facility,” and that he

was still at the nursing home at the time he filed the claim.

Id. at ¶¶ 8-9. Finally, most importantly, Plaintiffs directly

allege that Dante Spina was eligible for benefits “as a result

of his various ailments and medical conditions” as well as “his

continued inability to perform at least two ADLs defined under

the policy without substantial assistance from another person.”

Id. at ¶ 20.

Ultimately, Defendant’s argument for why Plaintiff has

failed to state a claim centers on the fact that they did not

specify the exact ADLs that Dante could not perform without

assistance; at one point, Defendant describes the allegation

above that he was unable to perform at least two ADLs under the

policy as a “legal conclusion” that “does not put MetLife on

notice for the basis of Plaintiffs’ claims.” The Court

disagrees on both fronts. First, that allegation is clearly not

a legal conclusion; the question of whether Dante Spina was

unable to perform at least two ADLs without substantial

assistance is a question of fact, which will ultimately play a

substantial role in determining whether a breach occurred, not a

legal question in and of itself. Second, the Court is

unconvinced that Defendant is not on notice of the basis of

Plaintiffs’ claims. Plaintiffs have made abundantly clear that

they believe they can prove Dante Spina could not perform at

least two of the six ADLs listed and defined in the Policy on

his own; Metlife therefore should have little difficulty in

determining what they are defending against, or even what

factual disputes will be central at the summary judgment or

trial stages of this action.

Viewing the allegations in the light most favorable to

Plaintiffs, as the Court must on a motion to dismiss, the Court

finds that Plaintiffs have sufficiently stated their claim.

While they certainly could have strengthened their complaint had

they included more detail, the allegations in their Amended

Complaint are adequate to meet Plaintiffs’ burden at the

pleadings stage. The Court will deny Defendants’ motion to

dismiss as to the breach of contract claim.

B. Bad Faith

Plaintiffs have also asserted a count for “bad faith,”

which the Court interprets as a claim for breach of the implied

duty of good faith and fair dealing. Under New Jersey law, it

is well settled that every insurance contract includes an

implied duty of good faith and fair dealing. Wadeer v. N.J.

Mfrs. Ins. Co., 220 N.J. 591, 610 (2015); see Pickett v.

Lloyd's, 131 N.J. 457, 467 (1993). “An insured may pursue a

cause of action against an insurer for a bad faith denial of

benefits to which the insured is entitled under the insurance

policy . . . A claim for bad faith may be based on, for example,

an insurer failing to conduct a reasonable investigation or not

attempting to negotiate in good faith with the insured.”

American Southern Home Insurance Company v. Unity Bank, No. 16-

3046 (FLW)(DEA), 2017 WL 1488128, at *3 (D.N.J. Apr. 25, 2017)

(internal citations omitted).

To succeed on their bad faith claim, Plaintiffs are

required to demonstrate: (i) the absence of a reasonable basis

for denying the claim for coverage; and (ii) that the insurer

knew or recklessly disregarded its absence of a reasonable

basis. Pickett, 131 N.J. at 481. “Such bad faith claims are to

be analyzed in light of a ‘fairly debatable’ standard, which

posits that ‘[i]f a claim is ‘fairly debatable,’ no liability in

tort will arise.’” Nationwide Mut. Ins. Co. v. Caris, 170 F.

Supp. 3d 740, 748 (D.N.J. 2016) (quoting Pickett, 131 N.J. at

473). Simplified, this means that “if an insurance company's

reasons for denying coverage are ‘fairly debatable,’ then the

insurance company cannot be liable for bad faith.” Nat'l Mfg.

Co. v. Citizens Ins. Co. of Am., No. 13-314, 2016 WL 7491805

(D.N.J. Dec. 30, 2016).

Here, Plaintiff essentially appears to be putting forth two

separate bad faith claims: one related to the failure to pay

their benefits under the Policy, and another focused on

Defendant’s actions in reporting them for alleged insurance

fraud.2 As to the first claim, the Court finds that Plaintiff

has pled sufficient facts at this stage. As outlined above,

Plaintiff has directly alleged that Dante Spina was eligible for

benefits under the Policy. The Amended Complaint goes further,

and alleges that Defendant denied his claim based “on having

2 The Court notes that the Amended Complaint has also alleged bad

faith based on Defendant’s alleged actions in violation of the

New Jersey Unfair Claims Settlement Practices Act, N.J.S.A. §

17:29B-4. Plaintiffs’ initial complaint included a stand-alone

claim for violation of this provision; after Defendant’s initial

moving brief pointed out that there is no private right of

action under that statute, Plaintiffs’ Amended Complaint

included it instead as an underlying basis for their bad faith

claim. As the parties have not truly briefed this issue, and

the Court finds otherwise that Plaintiff has adequately stated a

claim for bad faith, the Court will not discuss this potential

basis for their claims besides to note that, as Defendant itself

pointed out in its brief supporting its initial motion to

dismiss, (ECF No. 3 at 15-16), the New Jersey Supreme Court has

referenced the state’s codification of good faith practices for

insurers in § 17:29B-4 in a discussion of bad faith claims. See

Badiali v. New Jersey Mfrs. Ins. Grp., 107 A.3d 1281, 1287 (N.J.

2015). And while Defendant may genuinely believe that it is

somehow “unfairly prejudiced” by Plaintiffs having amended their

complaint in response to Defendant’s initial motion to dismiss,

(ECF No. 10-1 at 18, n.7), that is unequivocally what Plaintiffs

are permitted to do within the timeframe provided by Federal

Rule of Civil Procedure 15(a)(1)(B).

observed Plaintiff one time on a tractor on August 14, 2014 and

his continued involvement as a local government elected

official,” which they claim is entirely inadequate to determine

he was ineligible. (ECF No. 6 at ¶ 18). While the complaint

acknowledges that the Salem County prosecutor’s office

ultimately chose to charge Plaintiffs’ with insurance fraud, it

also states that a grand jury did not return an indictment, and

Defendant has provided no case law or support to demonstrate

that a county prosecutor’s failed prosecution is sufficient to

overcome Plaintiffs’ allegations at the pleadings stage. Given

the list of six separate ADLs defined in the Policy, the Court

finds that if Plaintiffs allegations are true and Defendant

denied their claim for benefits based upon nothing more

substantial than the observations outlined above, Plaintiff very

well may be able to demonstrate that Defendant did not have a

“fairly debatable” reason for denying coverage.

Defendants further counter by arguing that they had medical

evidence demonstrating that Plaintiff was in fact ineligible;

however, as Plaintiffs note, those facts are not in the record

at this stage, and this Court is required to assume the facts as

alleged in the complaint are true for the purposes of a motion

to dismiss. At least one court in this district has previously

stated that “a bad faith claim against the insurance company

fails at the motion to dismiss stage if the claimant cannot

establish a right to summary judgment on the substantive claim.”

Merchants Mutual Insurance Company v. 215 14th Street, LLC, No.

19-9206 (ES) (SCM), 2020 WL 634149, at *3 (D.N.J. Feb. 10,

2020). However, that court relied only on a Third Circuit

opinion which (1) assessed a bad faith claim at the summary

judgment stage, (2) cited itself only to other cases assessing

claims at the summary judgment stage, and (3) referred to the

following test propounded by the New Jersey Supreme Court: “To

establish a bad faith claim, plaintiff must be able to

establish, as a matter of law, a right to summary judgment on

the substantive claim; if plaintiff cannot establish a right to

summary judgment, the bad faith claim fails. In other words, if

there are material issues of disputed fact which would preclude

summary judgment as a matter of law, an insured cannot maintain

a cause of action for bad faith.” Ketzner v. John Hancock Mut.

Life Ins. Co., 118 F. App’x. 594, 599 (3d Cir. 2004) (citing

Pickett, 621 A.2d at 454).

The Court acknowledges that, in some cases, a question of

law, rather than a factual dispute, may make clear at the

pleadings stage that there was a fairly debatable, or even

clearly correct, basis for denial of a claim. However, it

appears clear that the Court simply cannot determine whether

Plaintiffs here can establish a right to summary judgment on

their breach of contract claim at the pleadings stage with no

developed factual record before it. See Gallerstein v.

Berkshire Life Ins. Co. of America, No. 05–05661 (JAG), 2006 WL

2594862, at *4 (D.N.J. Sept. 11, 2006) (“Application of the

‘fairly debatable’ standard requires an intensive factual

examination.”). Accordingly, the Court will follow the lead of

other courts in this district which have analyzed whether a

plaintiff’s claims, if true, would be sufficient to demonstrate

the lack of a fairly debatable reason to deny coverage. See

American Southern Home Insurance Company v. Unity Bank, No. 16-

3046 (FLW)(DEA), 2017 WL 1488128, at *3-4 (D.N.J. Apr. 25,

2017).

To the extent that Defendant believes it can put forward

evidence to prove that it had a “fairly debatable” reason to

deny the claim, such evidence will be considered at the summary

judgment stage. For now, the Court simply finds that, looking

only to the factual allegations in Plaintiffs’ complaint and

assuming them to be true, Plaintiffs have sufficiently stated a

claim for bad faith related to the denial of benefits. The

Court will therefore deny Defendant’s motion to dismiss as to

that claim.

As to Plaintiffs’ second basis for their bad faith claim,

the reporting of their alleged insurance fraud, Defendant argues

that it is statutorily protected from civil liability. Under

the New Jersey Insurance Fraud Prevention Act, insurers have a

mandatory obligation to report potential instances of insurance

fraud. See N.J.S.A. § 17:33A-9(a)(1) (“Any person who believes

that a violation of this act has been or is being made shall

notify the bureau and the Office of the Insurance Fraud

Prosecutor immediately after discovery of the alleged violation

of this act and shall send to the bureau and office, on a form

and in a manner jointly prescribed by the commissioner and the

Insurance Fraud Prosecutor, the information requested and such

additional information relative to the alleged violation as the

bureau or office may require.”). The Act further provides

protections from civil liability for insurers making such

reports, stating that “[n]o person shall be subject to civil

liability for libel, violation of privacy, or otherwise by

virtue of the filing of reports or furnishing of other

information, in good faith and without malice, required by this

section . . .” Id. at § 17:33A-9(b).

Defendant argues not only that they had a good faith belief

based on the evidence, but also that the simple fact that

charges were ultimately filed against Plaintiffs demonstrates

that their report as made in good faith, and therefore they are

statutorily protected. However, Defendant has again failed to

put forth any support for the proposition that a decision to

file charges is sufficient to demonstrate that a report was made

in good faith and without malice, and the Court’s own research

has found almost no case law discussing the provision in

question. The Court has already held above that Plaintiffs have

sufficiently alleged that Defendant did not have a good faith

basis to deny their benefits claim — which would presumably mean

that they similarly did not have a good faith basis to report

Plaintiffs for insurance fraud based on that claim. The Court

again emphasizes that it reaches no conclusion and makes no

holding as to whether these facts are true, and notes that it

very well may be the case that, with a developed factual record,

Defendant will be able to easily and quickly demonstrate that

they acted in good faith and without malice in making the

report. However, at this stage, the Court holds that Defendant

has failed to demonstrate that based only on the allegations

found in Plaintiffs’ Amended Complaint, they are statutorily

protected from civil liability for their report.

C. New Jersey Consumer Fraud Act

Finally, Plaintiff has similarly alleged that Defendant has

violated the New Jersey Consumer Fraud Act. To allege an NJCFA

claim, a plaintiff must show “1) unlawful conduct by defendant;

2) an ascertainable loss by plaintiff; and 3) a causal

relationship between the unlawful conduct and the ascertainable

loss.” Myska v. New Jersey Mfrs. Ins. Co., 114 A.3d 761, 776

(N.J. Super. Ct. App. Div. 2015).

Defendant argues first that Plaintiffs’ NJCFA claim

regarding the denial of benefits must be denied because the

NJCFA does not cover such claims. As Defendants correctly note,

New Jersey state courts have made clear that “while the CFA

‘encompass[es] the sale of insurance policies as goods and

services that are marketed to consumers,’ it was not intended as

a vehicle to recover damages for an insurance company's refusal

to pay benefits.” Id. at 777 (quoting Lemelledo v. Beneficial

Mgmt. Corp., 150 N.J. 255, 265 (1997)). Plaintiffs entirely

fail to refute, or even respond to, this argument, and their

opposition brief’s defense of their NJCFA claim consists of only

two short sentences. The Amended Complaint itself does

reference a recent Third Circuit case, Alpizar-Fallas v. Favero,

908 F.3d 910 (3d Cir. 2018). However, even a cursory review of

that case shows that the Third Circuit, rather than disagreeing

with the case law cited above, simply found that Myska was

inapposite because Alpizar-Fallas did not allege that she had

made an insurance claim nor had a claim denied. Id. at 917-18.

From the Court’s review of the Amended Complaint, it

appears clear that with the exception of the NJCFA claim based

on Metlife’s insurance fraud report, the rest of Plaintiff’s

bases for claiming a violation of the NJCFA are directly related

to their insurance claim and the subsequent denial of their

benefits. Accordingly, Defendant’s motion to dismiss the NJCFA

claim based on the denial of the insurance claim will be

granted, and Plaintiffs’ claim will be denied with prejudice.

Plaintiffs’ final claim, then, is that Defendant violated

the NJCFA when it reported their alleged insurance fraud.

Defendants argue both that they are protected from civil

liability for such a claim, and that Plaintiffs have failed to

state a claim. First, for the same reasons expressed above in

the Court’s analysis of Plaintiffs’ similar bad faith claim, the

statutory protection argument fails at this stage.

As to the second argument, the Court must take a close look

at the specific allegations made by Plaintiff. As the Third

Circuit’s opinion in Alpizar-Fallas demonstrates, statutory

fraud claims under the NJCFA must meet the heightened pleading

standard of Federal Rule of Civil Procedure 9(b). Id. at 918-

19. The heightened Rule 9(b) standard requires plaintiffs to

“state the circumstances of the alleged fraud with sufficient

particularity to place the defendant on notice of the ‘precise

misconduct with which [it is] charged’” and “plead or allege the

date, time and place of the alleged fraud or otherwise inject

precision or some measure of substantiation into a fraud

allegation.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d

Cir. 2007).

The Court finds that Plaintiffs have met even this

heightened burden. The Amended Complaint not only specifies the

date on which Defendant made the allegedly fraudulent report of

insurance fraud, (ECF No. 6 at ¶ 25), it specifically alleges

that Defendant made this report based simply “as a result of

observing certain behaviors (plaintiff sitting on a tractor and

going to a meeting) which would have in no way disqualified him

from benefit entitlement under the subject policy,” which

Plaintiffs assert was “misguided, misleading, and in reckless

disregard for [Defendant’s] obligations under the policy . . .”

Id. at Count II, ¶¶ 4-5. Finally, the Amended Complaint claims

that Defendant failed to share the inadequacy of their

investigation when making their report. Id. at ¶ 7(a).

Plaintiffs have therefore pled both the date of the allegedly

fraudulent report, and the specific, allegedly insufficient

observations on which Defendant relied in making the report.

The Court has little trouble finding that these allegations are

sufficient to put Defendant on notice of the precise fraudulent

misconduct with which it is charged. Accordingly, Defendant’s

motion to dismiss will be denied as to Plaintiffs’ NJCFA claim

for Metlife reporting them for insurance fraud.

CONCLUSION

For the reasons expressed above, Defendant’s first motion

to dismiss (ECF No. 3) will be denied as moot, and Defendant’s

second motion to dismiss (ECF No. 10) will be granted in part

and denied in part.

An appropriate Order will be entered.

Date: June 21, 2021 /s Noel L. Hillman

At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.