Holick v. Aetna Life Insurance Company

September 08, 2020

David J. Bradley, Clerk

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

KIMBERLY HOLICK, § CIVIL ACTION NO.

Plaintiff, § 4:19-cv-02976

§

§

vs. § JUDGE CHARLES ESKRIDGE

§

§

AETNA LIFE §

INSURANCE §

COMPANY, §

Defendant. §

MEMORANDUM AND OPINION

GRANTING MOTION TO DISMISS

The motion to dismiss filed by Defendant Aetna Life

Insurance Company is granted. Dkt 13.

1. Background

Plaintiff Kimberly Holick was an employee of Parkway

Chevrolet in Montgomery County, Texas and covered under its

Aetna-issued group insurance policy. See Dkt 9 at ¶ 6; Dkt 13-1

at ¶¶ 2, 4. She alleges that her doctor ordered an MRI on her left

foot in July 2017. The nature of her injury and how it occurred

aren’t clear. Aetna originally denied coverage. Dkt 9 at ¶ 6. It later

reversed this decision after receiving an appeal from Holick’s

doctor. Id at ¶¶ 6, 9.

Holick did eventually receive the MRI. But she claims that

Aetna wrongfully denied her treatment and failed to timely

reverse its denial of coverage. She asserts that the delay impeded

her doctors from determining the extent of any damage to her

left foot and developing a surgical plan. Id at ¶ 9. This, she says,

prevented its timely repair and caused her pain and deformities.

Id at ¶ 10.

Holick sued Aetna in state court in August 2019. Dkt 1-3.

Aetna removed the action based on diversity and federal question

jurisdiction. Dkt 1. Holick then amended her complaint and now

asserts claims for breach of the insurance contract, breach of the

duty of good faith and fair dealing, and violations of the Texas

Insurance Code and the Texas Deceptive Trade Practices Act.

Dkt 9. These are all claims under state law.

Aetna filed the instant motion to dismiss. Dkt 13. It attached

a 142-page document titled “Benefit Plan” and “Aetna Life

Insurance Booklet Certificate.” Dkt 13-1 at 5–146. It also

attached a letter indicating Aetna’s reversal of denial of coverage.

Dkts 13-2. The Court heard argument on the motion. Dkt 33

(transcript).

2. Legal standard

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires

a plaintiff’s complaint to provide “a short and plain statement of

the claim showing that the pleader is entitled to relief.” Rule

12(b)(6) allows the defendant to seek dismissal if the plaintiff fails

“to state a claim upon which relief can be granted.”

Read together, the Supreme Court has held that Rule 8 “does

not require ‘detailed factual allegations,’ but it demands more

than an unadorned, the-defendant-unlawfully-harmed-me

accusation.” Ashcroft v Iqbal, 556 US 662, 678 (2009), quoting Bell

Atlantic Corp v Twombly, 550 US 544, 555 (2007). To survive a Rule

12(b)(6) motion to dismiss, the complaint “must provide the

plaintiff’s grounds for entitlement to relief—including factual

allegations that when assumed to be true ‘raise a right to relief

above the speculative level.’” Cuvillier v Taylor, 503 F3d 397, 401

(5th Cir 2007), quoting Twombly, 550 US at 555.

A complaint must therefore contain enough facts to state a

claim to relief that is plausible on its face. Twombly, 550 US at 570.

A claim has facial plausibility “when the plaintiff pleads factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Iqbal, 556

US at 678, citing Twombly, 550 US at 556. This standard on

plausibility is “not akin to a ‘probability requirement,’ but it asks

for more than a sheer possibility that a defendant has acted

unlawfully.” Id at 678, quoting Twombly, 550 US at 556.

Review on motion to dismiss under Rule 12(b)(6) is

constrained. The reviewing court must accept all well-pleaded

facts as true and view them in the light most favorable to the

plaintiff. Walker v Beaumont Independent School District, 938 F3d 724,

735 (5th Cir 2019) (citations omitted). The court must also

generally limit itself to the contents of the pleadings and its

attachments. Brand Coupon Network LLC v Catalina Marketing Corp,

748 F3d 631, 635 (5th Cir 2014) (citations omitted).

But a notable exception allows a defendant to attach

documents “if they are referred to in the plaintiff’s complaint and

are central to her claim.” Collins v Morgan Stanley Dean Witter, 224

F3d 496, 498–99 (5th Cir 2000), quoting Venture Associates Corp v

Zenith Data Systems Corp, 987 F2d 429, 431 (7th Cir 1993). Where

appropriate, the practice can assist the court “in making the

elementary determination of whether a claim has been stated.”

Collins, 224 F3d at 498–99.

3. Analysis

a. Inclusion of the Plan Booklet-Certificate

Aetna attached to its motion to dismiss what it asserts to be

the pertinent Plan Booklet-Certificate. Dkt 13-1. The title on the

cover of this document states, “BENEFIT PLAN Prepared

Exclusively For Parkway Chevrolet Inc.” Id at 5. The cover also

states, “This Booklet-Certificate is part of the Group Insurance

Policy between Aetna Life Insurance Company and the

Policyholder.” Ibid. The Plan Booklet-Certificate spans 127

pages and includes information on eligibility of employees and

dependents, enrollment, covered expenses, and claim procedures

and appeal processes, among other information. Id at 5–136.

Another nine pages at the end includes “Additional Information

Provided by Parkway Chevrolet Inc.” Id at 137–46.

ERISA requires that employers who provide a benefits plan

to employees must also provide them with a summary plan

description (SPD). See 29 USC § 1022(a). An SPD “is a shorter,

simplified version of the plan itself and is provided to employees

with the goal of allowing them to understand what would

otherwise be a complex, somewhat incomprehensible

document.” Washington v Murphy Oil USA, Inc, 497 F3d 453, 456

(5th Cir 2007). Aetna asserts that the foregoing materials together

make up the pertinent SPD here. Dkt 13 at 7 n 4.

With respect to the responsibilities of plan fiduciaries,

ERISA provides, “Every employee benefit plan shall be

established and maintained pursuant to a written instrument.” 29

USC § 1102(a)(1). The Fifth Circuit holds that the regulations

require only a written instrument, without requiring a formal

document designated as the plan itself. Memorial Hospital System v

Northbrook Life Insurance Co, 904 F2d 236, 241 (5th Cir 1990). It

further holds that where there is “no alternative plan document

in the record,” the SPD is treated as “a plan’s written

instrument.” Rhea v Alan Ritchey Inc Welfare Benefit Plan, 858 F3d

340, 344 (5th Cir 2017) (quotation marks and citations omitted).

And it directs that even where there is a formal document

designated as the plan, “the SPD is binding and if there is conflict

between the SPD and the terms of the plan itself, the SPD

controls.” McCall v Burlington N/Santa Fe Co, 237 F3d 506, 512

(5th Cir 2000).

Courts have thus readily determined the existence of an

ERISA plan based solely on review of the SPD. See Hansen v

Continental Insurance Co, 940 F2d 971, 974, 978 (5th Cir 1991),

abrogated on other grounds by Perez v Broister, 823 F3d 250, 274

(5th Cir 2016); see also Hutchinson v ReliaStar Life Insurance Co,

2007 WL 2687610, *5 (ND Tex). And federal courts in the Fifth

Circuit regularly accept and consider the applicable SPD on

motions to dismiss asserting ERISA-preemption of claims. For

example, see Young v Prudential Insurance Co of America, 2007 WL

1234929, *2 (SD Tex).

Holick argues that Aetna’s inclusion of the Plan-Booklet

Certificate is improper because it is neither referred to in the

amended complaint nor central to her claims. Dkt 19 at 3. She

doesn’t assert that it is impertinent or otherwise inapplicable. Her

main contention is that the Plan Booklet-Certificate is “a discrete

document that is merely a subpart of Plaintiff’s policy,” and so

the Court cannot consider it alone. Ibid.

Holick naturally references her insurance policy with Aetna

at numerous points in her complaint. Dkt 9 at ¶¶ 6, 8, 14, 16, 18,

19, 20, 22, 34. And it is naturally central to her claims. The Plan

Booklet-Certificate and attachments define the employer-

sponsored group insurance policy at issue here, making them the

pertinent SPD. Holick references no other documents for

consideration. But even if she did, and even if Aetna had attached

the further documents to which she has referred, the terms of the

SPD would still control. McCall, 237 F3d at 512.

The Court finds that Aetna properly attached the Plan

Booklet-Certificate to its motion to dismiss. It will be considered

as part of the pleadings for purposes of the motion to dismiss.

b. ERISA preemption

ERISA governs claims arising out of employee benefit plans.

Its purpose is to provide a uniform regulatory regime over such

plans. Aetna Health Inc v Davila, 542 US 200, 208 (2004). There are

two sections of ERISA that can operate to preempt a party’s

causes of action under state law. One pertains to conflict

preemption. 29 USC § 1444(a). The other pertains to complete

preemption. 29 USC § 1132(a).

Aetna proceeds under 29 USC § 1444(a), which provides that

ERISA “shall supersede any and all State laws insofar as they may

now or hereafter relate to an employee benefit plan . . . .” In

analyzing preemption under this provision, a court first asks

whether the benefit plan at issue constitutes an ERISA plan.

Woods v Texas Aggregates LLC, 459 F3d 600, 602 (5th Cir 2006). If

the answer is yes, then the court must determine whether the state

law claims relate to the plan. Ibid.

i. Qualification as an ERISA plan

ERISA defines an “employee welfare benefit plan” as:

[A]ny plan, fund, or program . . . established or

maintained by an employer or by an employee

organization, or by both, to the extent that such

plan . . . was established or is maintained for the

purpose of providing for its participants or their

beneficiaries, through the purchase of insurance

or otherwise, (A) medical, surgical, or hospital

care or benefits in the event of sickness,

accident, or disability, death or unemployment,

or vacation benefits, apprenticeship, or other

training programs, or day care centers,

scholarship, or prepaid legal services . . . .

29 USC § 1002(1).

To determine whether a particular plan qualifies as an employee

welfare benefit plan subject to ERISA, the Fifth Circuit asks whether

a plan exists, whether it falls within the safe-harbor provision

established by the Department of Labor, and whether it satisfies

the primary elements of an ERISA employee benefit plan—

establishment or maintenance of the plan by an employer

intending to benefit employees. McNeil v Time Insurance Co, 205

F3d 179, 189 (5th Cir 2000), citing Meredith v Time Insurance

Co, 980 F2d 352, 355 (5th Cir 1993). It isn’t an ERISA plan if any

part of this inquiry is answered in the negative. Meredith, 980 F2d

at 355. But the parties dispute only whether the plan falls under

the safe-harbor provision.

The plan must meet four statutory criteria if it is to fall within

the Department of Labor’s safe-harbor provision and avoid

ERISA preemption:

o First, “the employer does not contribute to the

plan”;

o Second, “participation is voluntary”;

o Third, “the employer’s role is limited to collecting

premiums and remitting them to the insurer”; and

o Fourth, “the employer receives no profit from the

plan.”

29 CFR § 2510.3–1(j); see also McNeil, 205 F3d at 190. Failure to

meet any one of these inquiries puts the plan outside the safe-

harbor provision. House v American United Life Insurance Co, 499

F3d 443, 449 (5th Cir 2007).

It is permissible to look to the SPD to determine whether the

safe-harbor provision applies. Hansen, 940 F2d at 974. Review of

the Plan-Booklet Certificate clearly shows that Parkway

Chevrolet did more as Holick’s employer than simply collect and

remit premiums. For instance, Parkway Chevrolet is listed as the

policyholder on the plan. Id at 129. And the Plan-Booklet

Certificate states, “The Policyholder selects the products and

benefits levels under the plan.” Dkt 13-1 at 8. It also provides,

“Aetna will rely upon your employer to determine whether or not

a person meets the definition of a dependent for coverage under

the plan.” Id at 12. And further, “Your employer will determine

the amount of your plan contributions, which you will need to

agree to before you can enroll.” Id at 14.

Selecting the plan’s products and benefits levels, determining

coverage for dependents, and determining the amount of an

employee’s plan contributions are duties that go beyond the

“mere ministerial collection and remittance of policy premiums

to the insurer.” Flesner v Flesner, 845 F Supp 2d 791, 798 (SD Tex

2012). As such, the Parkway Chevrolet benefits plan in which

Holick was enrolled doesn’t fall within the safe-harbor provision.

No other aspect is challenged. The Court thus finds that the

plan at issue qualifies as an ERISA plan.

ii. Relation of pleaded claims to the plan

The next step is to determine whether the state law claims

relate to the plan. Woods, 459 at 602. Holick in candor conceded

at the hearing that her claims would be preempted if the Court

were to reach this step. Dkt 33 at 40. And they are.

To determine whether a state law relates to a plan for

purposes of ERISA preemption under 29 USC § 1444(a), the

Fifth Circuit directs that courts should ask “(1) whether the state

law claims address areas of exclusive federal concern, such as the

right to receive benefits under the terms of an ERISA plan; and

(2) whether the claims directly affect the relationship among the

traditional ERISA entities—the employer, the plan and its

fiduciaries, and the participants and beneficiaries.” Woods, 459

F3d at 602.

Holick’s state law claims are for breach of the insurance

contract, breach of the duty of good faith and fair dealing,

violations of the Texas Insurance Code, and violations of the

Texas Deceptive Trade Practices Act. Each is based on Aetna’s

alleged delay in making a coverage determination under her

ERISA plan. Supreme Court and Fifth Circuit precedent is clear

that state law claims such as these are preempted because they

arise out of a claim for benefits under an ERISA plan. For

example, see Hogan v Kraft Foods, 969 F2d 142, 144–45 (5th Cir

1992) (ERISA preempts state law claims for breach of contract,

violations of the Texas Insurance Code, and breach of the duty

of good faith and fair dealing); Ramirez v Inter–Continental Hotels,

890 F2d 760 (5th Cir 1989) (ERISA preempts statutes such as

Tex Ins Code art 21.21, which provides an action for improper

handling of insurance claims); Boren v NL Industries, Inc, 889 F2d

1463 (5th Cir 1989), cert denied, 497 US 1029 (1990) (ERISA

preempts Texas DTPA); Hermann Hospital v MEBA Medical & Ben

Plan, 845 F2d 1286 (5th Cir 1988) (ERISA preempts common-

law claims for breach of fiduciary duty, negligence, equitable

estoppel, breach of contract, and fraud).

Holick’s causes of action under state law are thus preempted

under 29 USC § 1444(a). Seeking to replead preempted state law

claims would be futile, so each must be dismissed with prejudice.

See Burgos v Group & Pension Administrators, Inc, 286 F Supp 2d

812, 819 (SD Tex 2003) (dismissing preempted state law claims

with prejudice); Wright v Louisiana Corrugated Products, LLC, 59 F

Supp 3d 767, 770, 779 (WD La 2014) (same).

Aetna alternatively seeks dismissal under Rule 12(b)(6),

asserting that it didn’t even cause the delay in treatment of which

Holick complains because it reversed the denial of coverage in

August 2017. Dkt 13 at 1; see also Dkt 13-2. The Court needn’t

reach this argument because it finds all claims preempted by

ERISA.

4. Conclusion

The motion to dismiss by Defendant Aetna Life Insurance

Company is GRANTED. Dkt 13.

All claims against Defendant Aetna Life Insurance Company

are DISMISSED WITH PREJUDICE.

Holick may seek leave to amend her complaint to plead a

claim under ERISA by September 30, 2020. Failure to do so will

result in dismissal with prejudice and final judgment entered in

favor of Defendant Aetna Life Insurance Company.

SO ORDERED.

Signed on September 8, 2020, at Houston, Texas.

Che (2 Falaades le (6 Caled

Hon. Charles Eskridge

United States District Judge