GILLESPIE v. CIGNA HEALTH MANAGEMENT INC

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

PATRICK GILLESPIE, )

)

Plaintiff, )

)

v. ) Docket No. 2:24-cv-00160-NT

)

CIGNA HEALTH MANAGEMENT, )

INC., )

)

Defendant. )

ORDER ON DEFENDANT’S MOTION TO DISMISS

The Plaintiff Patrick Gillespie sued the Defendant Cigna Health & Life

Insurance Company1 to recover benefits under Section 502(a)(1)(B) of the Employee

Retirement Income Security Act of 1974 (“ERISA”). The Defendant moves to dismiss

under Federal Rule of Civil Procedure 12(b)(6), arguing that the Plaintiff is not owed

any benefits and the complaint therefore fails to state a claim. For the following

reasons, the motion (ECF No. 11) is DENIED. The parties may engage in limited

discovery and summary judgment motion practice as explained below.

1 I refer to the Defendant throughout this order as Cigna Health & Life Insurance Company

(“Cigna”), which the Defendant states is the proper entity name. See Def. Cigna Health & Life Ins.

Co.’s Mot. to Dismiss 1 (“Mot.”) (ECF No. 11). The Defendant says that the Plaintiff erred by naming

“Cigna Health Management, Inc.” in the complaint. Mot. 1.

FACTUAL AND PROCEDURAL BACKGROUND2

I. The Plan

The Plaintiff is a Maine resident who suffers from “ambulatory dysfunction”

due to an above-knee amputation on the left leg and a below-knee amputation on the

right leg. Opp’n to Def.’s Mot. to Dismiss for Failure to State a Claim (“Opp’n”) 2

(ECF No. 13). He participates in a healthcare benefit plan documented in a booklet

dated January 1, 2023. See Opp’n Ex. 2 (the “Plan”) (ECF No. 13-2). The Defendant

“is the claim administrator for the Plan for the purpose of benefit determinations.”

2 I draw these facts from the complaint and three other documents: (1) the operative healthcare

benefit plan, Opp’n to Def.’s Mot. to Dismiss for Failure to State a Claim (“Opp’n”) Ex. 2 (the “Plan”)

(ECF No. 13-2); (2) the Defendant’s May 12, 2023 notice denying the Plaintiff’s request (ECF No. 13-4);

and (3) the Defendant’s related letter, also dated May 12, 2023, denying the request (ECF No. 21-2).

Though not attached to the complaint, I find that all three documents are nonetheless

incorporated by reference because they are “ ‘central to the [P]laintiff’s claim,’ ” “ ‘sufficiently referred

to in the complaint,’ ” and their “authenticity . . . [is] not disputed by the parties.’ ” Newman v. Lehman

Bros. Holdings Inc., 901 F.3d 19, 25 (1st Cir. 2018); see also Summersgill v. E.I. Dupont de Nemours

& Co., No. 13-CV-10279, 2014 WL 1032732, at *6 n. 4 (D. Mass. Mar. 18, 2014) (“Plaintiff has

incorporated by reference . . . the Summary Plan Description, an excerpt of which the Plaintiff attached

to the complaint, and the authenticity of which the parties do not otherwise dispute.”); Femino v.

Sedgwick Claims Mgmt. Servs., Inc., No. CV 20-11373-FDS, 2021 WL 3190817, at *1 n.2 (D. Mass.

July 28, 2021) (considering, on a motion to dismiss, a benefits document not attached to the complaint

because the plaintiff’s ERISA claim “depend[ed] on it”). Because I can evaluate the motion to dismiss

without relying on the Plaintiff’s medical records, Opp’n Ex. 3 (ECF No. 13-3), I need not consider

whether they are also incorporated by reference.

Regarding the Plan’s authenticity, the Plaintiff takes issue with the fact that the Defendant

originally submitted an outdated document from 2022 that does not govern this dispute. Resp. to Def.’s

Reply to Pl.’s Opp’n to Mot. to Dismiss 1 (ECF No. 21-1). However, the Defendant has since corrected

that error and agrees that “the January 1, 2023 plan document is the operative document.” Def.’s Resp.

in Opp’n to Pl.’s Mot. for Leave to File Surreply 3 (ECF No. 22). Regardless, both versions contain

identical language on the relevant issues. Accordingly, the Plaintiff does not meaningfully dispute the

Plan’s authenticity.

Compl. ¶ 3. The Plan is otherwise “sponsored by” the Plaintiff’s employer3 Beacon

Sales Acquisition, Inc. (“Beacon”). Compl. ¶ 14

The Plan summarizes all covered benefits, see Plan 32–42 (listing “Covered

Expenses”), and explains that “[i]n general, health services and benefits must be

Medically Necessary” to be covered, Plan 63; see also Plan 76 (defining “Medically

Necessary/Medical Necessity”). Covered expenses are subject to specific “Exclusions,

Expenses Not Covered, and General Limitations.” Plan 50. As relevant here, the Plan

covers some prosthetic appliances and devices, Plan 36, but it excludes:

• external and internal power enhancements for external prosthetic devices;

or

• microprocessor controlled prostheses and orthoses; and

• myoelectric prostheses and orthoses,

Plan 37 (the “Exclusion”); Compl. ¶ 14.

The Plaintiff alleges that the Plan is “funded through an insurance policy” that

the Defendant “issued” to Beacon. Compl. ¶ 2. He further alleges that the Plan

requires the Defendant to “pay for covered expenses.” Compl. ¶ 8. However, those

allegations are at odds with the following notice in the Plan:

This is not an insured benefit plan. The benefits described in this booklet or

any rider attached hereto are self-insured by Beacon Sales Acquisition, Inc.

which is responsible for their payment. [Cigna] provides claim administration

services to the plan, but Cigna does not insure the benefits described.

This document may use words that describe a plan insured by Cigna. Because

the plan is not insured by Cigna, all references to insurance shall be read to

indicate that the plan is self-insured. For example, references to “Cigna”

3 The Plaintiff calls Beacon Sales Acquisition, Inc. (“Beacon”) his “employer” in the Complaint.

Compl. ¶ 1. He calls Beacon his “former employer” in his opposition brief. Opp’n 1.

4 These allegations are consistent with a section of the Plan called “ERISA Required

Information,” which calls the Plan “a healthcare benefit plan,” states its name as “Beacon Sales Health

& Welfare Plan,” and identifies Beacon as the “sponsor.” Plan 69.

“insurance company,” and “policyholder” shall be deemed to mean your

“employer” and “policy” to mean “plan” and “insured” to mean “covered” and

“insurance” shall be deemed to mean “coverage.”

Plan 5; see also Plan 73 (defining “Employer” as “the plan sponsor self-insuring the

benefits described in this booklet, on whose behalf Cigna is providing claim

administration services”).

II. The Plaintiff’s Benefits Request

In 2023, the Plaintiff requested coverage for a microprocessor prosthetic device

recommended by his doctor. Compl. ¶¶ 12–13. On May 12, 2023, the Defendant

denied the request. Compl. ¶ 14; Opp’n Ex. 4, at 1–2 (ECF No. 13-4) (the “Denial

Notice”). The Denial Notice states that the Plan “simply does not cover these

services, no matter what the reason is that they are being requested.” Denial Notice

2. The Plaintiff appealed, and the Defendant “upheld its determination.” Compl.

¶¶ 15–16.

III. The Plaintiff’s ERISA Claim and the Maine Prosthetics Law

The Plaintiff filed this lawsuit on May 6, 2024. See Compl. He states a single

claim under ERISA § 502(a)(1)(B),5 Compl. ¶¶ 6–7, which allows a participant or

beneficiary to bring an action “to recover benefits” under a plan governed by the

statute, 29 U.S.C. § 1132(a)(1)(B). The Plaintiff concedes that the Exclusion’s plain

language bars coverage of the microprocessor device he seeks, Opp’n 1–2, but he

5 The Plaintiff has clarified that his sole claim arises under ERISA’s “civil enforcement

provision” under Section 502(a)(1)(B) and that he brings no state law causes of action. Opp’n 4; Def.

Cigna Health & Life Ins. Co.’s Reply Br. in Further Supp. of Its Mot. to Dismiss Pl.’s Compl. 3 (ECF

No. 20) (“[T]he parties are in agreement that ERISA, and not state law, controls the inquiry here.”).

Accordingly, I need not consider the Defendant’s argument that ERISA preempts the Plaintiff’s “state

law causes of action.” See Mot. 4–5.

asserts that the Exclusion “must be stricken” because it violates a Maine insurance

law concerning prosthetic devices, Opp’n 3. That Maine law requires any insurance

carrier to cover the prosthetic device “determined by the enrollee’s provider . . . to be

the most appropriate model that adequately meets the medical needs of the enrollee.”

M.R.S. 24-A § 4315(2) (the “Maine Prosthetics Law”).

The Plaintiff argues that because the Maine Prosthetics Law makes the Plan’s

Exclusion invalid, the Defendant’s denial of the Plaintiff’s coverage request was

“unreasonable and contrary to the medical evidence.” Opp’n 3. He seeks a judgment

ordering the Defendant “to approve and cover” the device he seeks and to provide “all

benefits due under the Plan and Policy.” Compl. 4.

IV. The Defendant’s Motion to Dismiss

The Defendant moved to dismiss the complaint under Rule 12(b)(6) for failure

to state a claim, arguing that because the Plan is “self-funded”—i.e., funded by

Beacon, not the Defendant—the Maine Prosthetics Law is preempted by ERISA and

does not govern the Plan at all. Def. Cigna Health & Life Ins. Co.’s Mot. to Dismiss

(“Mot.”) 1–2 (ECF No. 11). The Defendant contends that because the Maine law at

issue does not apply to the Plan, the Exclusion is valid, the Plaintiff is not owed any

benefits, and the complaint therefore fails to state a claim. Mot. 4–7.6

6 After the Defendant moved to dismiss the complaint, the Plaintiff filed an opposition brief

(ECF No. 13), and the Defendant filed a reply (ECF No. 20). The Plaintiff then sought leave to file a

surreply (ECF No. 21), attaching a copy of his surreply (ECF No. 21-1). The Defendant filed a brief

opposing the Plaintiff’s request and addressing the surreply’s merits (ECF No. 22). Finally, the

Plaintiff filed a reply to the Defendant’s opposition (ECF No. 23). Though surreplies generally are

disfavored, In re Light Cigarettes Mktg. Sales Pracs. Litig., 832 F. Supp. 2d 74, 78 (D. Me. 2011), I have

considered the Plaintiff’s proposed surreply in this case, along with the corresponding response and

reply. The Plaintiff’s motion for leave to file a surreply (ECF No. 21) is therefore granted.

LEGAL STANDARD

In evaluating a motion to dismiss under Rule 12(b)(6), I “ ‘accept the

complaint’s well-pleaded facts as true and indulge all reasonable inferences

therefrom in the plaintiff’s favor.’ ” Newman v. Lehman Bros. Holdings Inc., 901 F.3d

19, 23 (1st Cir. 2018) (brackets and internal citation omitted). I may also consider

“ ‘documents attached to or fairly incorporated into the complaint,’ ‘facts susceptible

to judicial notice,’ and ‘concessions in [the] plaintiff[’s] response to the motion to

dismiss. ’ ” Cheng v. Neumann, 51 F.4th 438, 441 (1st Cir. 2022) (internal citations

omitted). “[W]hen a written instrument contradicts allegations in the complaint . . . ,

the exhibit trumps the allegations.” Id. at 445 (internal citation omitted).

“Based on these materials, [I] assess whether there are sufficient facts ‘to raise

a right to relief above the speculative level on the assumption that all allegations in

the complaint are true.’ ” Newman, 901 F.3d at 25 (internal citation omitted).

Dismissal is warranted “ ‘[i]f the factual allegations in the complaint are too meager,

vague, or conclusory to remove the possibility of relief from the realm of mere

conjecture.’ ” Id. (internal citation omitted).

DISCUSSION

To state a claim under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), the

relief sought must “flow from the terms of the Plan,” Guerra-Delgado v. Popular, Inc.,

774 F.3d 776, 781 (1st Cir. 2014). Here, the scope of the Plan’s terms depends on

whether the Exclusion is valid, which turns on whether the Maine Prosthetics Law

applies to the Plan or is preempted by ERISA. If the Maine law applies, then the

Defendant cited an improper basis for denying the Plaintiff’s request for coverage.

But if ERISA preempts the Maine law, then the Plan excludes coverage of the device

the Plaintiff seeks, and his complaint therefore fails to state a claim.7

I. ERISA’s Preemption Framework

As relevant here, ERISA preempts “any and all State laws” that “relate to any

employee benefit plan.” 29 U.S.C. § 1144(a) (the “Preemption Clause”). ERISA

Section 514(b)(2)(A) (the “Saving Clause”) creates an exception to the general

preemption rule by “restor[ing] to the states the power to enforce state laws that

‘regulate[ ] insurance.’ ” Bergin v. Wausau Ins. Cos., 863 F. Supp. 34, 36 (D. Mass.

1994) (quoting 29 U.S.C. § 1144(b)(2)(A)); see also Harvey v. Machigonne Benefits

Adm’rs, 122 F. Supp. 2d 179, 185 (D. Me. 2000) (“ERISA does not preempt the

authority of the States to regulate insurance.”). Section 514(b)(2)(B) (the “Deemer

Clause”) then creates an exception to the Saving Clause by stating that no employee

benefit plan “shall be deemed to be an insurance company” or “engaged in the

business of insurance” for the purpose of any state law “purporting to regulate

insurance companies [or] insurance contracts.” 29 U.S.C. § 1144(b)(2)(B). See

generally FMC Corp. v. Holliday, 498 U.S. 52, 57 (1990) (discussing ERISA’s

Preemption, Saving, and Deemer Clauses). Put simply, “federal law governs employer

benefits plans, while state law regulates insurance.” Harvey, 122 F. Supp. 2d at 183.

7 My analysis makes several assumptions not disputed by the parties: (1) that the Maine

Prosthetics Law, if it applies to the Plan, would in fact invalidate the Plan’s exclusion of prosthetic

devices (the “Exclusion”); (2) that the Exclusion is valid so long as the Maine Prosthetics Law does

not apply; (3) that the Defendant is a “carrier” within the meaning of the Maine Prosthetics Law; and

(4) that the Exclusion, if valid, would in fact bar coverage of the Plaintiff’s microprocessor device.

Though the Deemer Clause refers generally to all “employee benefit plan[s]

described in section 1003(a),” 29 U.S.C. § 1144(b)(1)(B), the Supreme Court has held

that whether that clause applies depends on whether the health plan is (1) insured

by the employer (i.e., the employer funds benefits by buying a group health insurance

policy from an insurance company); or (2) “self-funded” (or “self-insured”) (i.e., the

employer uses its own funds to pay benefits), FMC Corp., 498 U.S. at 61. If a plan is

insured, then it falls within the scope of the Saving Clause, and “a State may regulate

[that plan] indirectly through regulation of its insurer.” Id. at 64. By contrast, if a

plan is self-funded, it may not be “deemed” insurance, and “the State may not regulate

it.” Id.

As a result, “[t]he Saving and Deemer Clauses result in the curious—even

unfair—disparate treatment of self-funded and insured ERISA plans, the latter being

capable of some state regulation and the former being free of nearly all state

oversight.” Am.’s Health Ins. Plans v. Hudgens, 915 F. Supp. 2d 1340, 1362 (N.D. Ga.

2012), aff’d, 742 F.3d 1319 (11th Cir. 2014) (citing Metro. Life Ins. Co. v.

Massachusetts, 471 U.S. 724, 747 (1985)).8 See generally Massachusetts v. U.S. Dep’t of

Health & Hum. Servs., 923 F.3d 209, 218 (1st Cir. 2019) (state laws “do not apply to self-

insured plans”); Harvey, 122 F. Supp. 2d at 185 (while insured plans “often must

comply with state insurance laws,” self-funded plans “generally are exempt”).

8 See also FMC Corp. v. Holliday, 498 U.S. 52, 65 (1990) (Stevens, J., dissenting) (critiquing the

majority for “draw[ing] a broad and illogical distinction between benefit plans that are funded by the

employer (self-insured plans) and those that are insured by regulated insurance companies (insured

plans)”); Erin C. Fuse Brown & Elizabeth Y. McCuskey, Federalism, ERISA, and State Single-Payer

Health Care, 168 U. Pa. L. Rev. 389, 430 (2020) (describing how “ERISA preemption catalyzed the

growth of self-funded plans by opening a loophole through which employers could provide their

employees with health benefits and avoid state insurance regulation”).

II. Whether ERISA Preempts the Maine Prosthetics Law

The parties do not dispute—and I agree—that: (1) the Plan is an “employee

welfare benefit plan” under ERISA, 29 U.S.C. § 1002(1); (2) the Maine Prosthetics

Law “relate[s] to any employee benefit plan” and would therefore be preempted by

ERISA, unless an exception applies, id. § 1144(a); and (3) the Maine Prosthetics Law

“regulates insurance” and would therefore be “saved” from preemption under the

Saving Clause (and therefore subject to state insurance regulation), unless an

exception—such as the Deemer Clause—applies, id. § 1144(b)(2)(A). In other words,

if the Plan is insured, then it is subject to state insurance laws. But if it is self-funded,

then it may not be “deemed” insurance, which means that ERISA preempts state law,

and the Maine Prosthetics Law does not apply. See Massachusetts, 923 F.3d at 218;

Harvey, 122 F. Supp. 2d at 185. Therefore, the only question before me is whether the

Plan is self-funded.

Here, the Plaintiff asserts that the Plan is “funded through an insurance

policy” “issued” by the Defendant, Compl. ¶ 2, and that the Defendant “pay[s] for

covered expenses,” Compl. ¶ 8. But these assertions are contradicted by the Plan’s

notice stating that it is “self-insured” by Beacon, that the Defendant “does not insure

the benefits described,” and that any references to insurance “shall be read to indicate

that the plan is self-insured.” Plan 5; see also Plan 73 (identifying Beacon as “the plan

sponsor self-insuring the benefits described in this booklet”).

Ordinarily, “when a written instrument contradicts allegations in the

complaint . . . , the exhibit trumps the allegations.” Cheng, 51 F.4th at 445 (internal

citation omitted); Schatz v. Republican State Leadership Comm., 777 F. Supp. 2d 181,

189 (D. Me. 2011) (same). But determining whether a health plan is self-funded or

insured for purposes of ERISA preemption is not always straightforward.9 And here,

the Plan is not exactly a model of clarity. For example, the introductory notice states

that although the Plan is “not insured by Cigna,” it nonetheless “may use words that

describe a plan insured by Cigna.” Plan 5; see also Plan 5 (“[R]eferences to ‘Cigna’

‘insurance company,’ and ‘policyholder’ shall be deemed to mean your ‘employer’ and

‘policy’ to mean ‘plan’ and ‘insured’ to mean ‘covered’ and ‘insurance’ shall be deemed

to mean ‘coverage.’ ”). For these reasons, I agree with the Plaintiff that, without

discovery, he lacks the information needed to clarify the dispositive issue of the Plan’s

funding status.

CONCLUSION

For the reasons set forth above, I DENY the Defendant’s motion to dismiss

(ECF No. 11) without prejudice to renewal as a Rule 56 summary judgment motion

limited to the question of whether the Plan is self-funded, following the completion of

9 See, e.g., Zell for Est. of Zell v. Neves, 423 F. Supp. 3d 231, 240 (D.S.C. 2019) (“[T]he court

issued a text order instructing to the parties to clarify their positions regarding whether the benefit

plan is a self-insured/self-funded plan.”); Seifts v. Consumer Health Sols. LLC, 61 F. Supp. 3d 306, 315

(S.D.N.Y. 2014) (“[S]ome Defendants began telling . . . members and health care providers seeking

payment that the FleetCare Plan was self-funded, knowing that such statements were incorrect and

misleading . . . .”); see also Guy O. Kornblum & Matt Garretson, 1 Negotiating and Settling Tort Cases

§ 16:18 (Feb. 2009) (stating that “[i]t is wise to verify a plan’s claim to ERISA preemption” because

“[i]nnocently or not, it is not uncommon for these declarations to be incorrect”); Russell Korobkin, The

Battle Over Self-Insured Health Plans, or “One Good Loophole Deserves Another,” 5 Yale J. Heath Pol’y

L. & Ethics 89, 95 (2005) (“[F]ew employees know whether their [employer health care benefit plan] is

insured or self-insured.”); cf. Cambridge Mut. Fire Ins. Co. v. Wesoja, No. 2:22-CV-00363-NT, 2024 WL

2749600, at *6 (D. Me. May 29, 2024) (quoting the First Circuit’s statement that when interpreting a

“follow form” provision in an insurance policy, “it would be ‘a mistake to assume precision in such

terminology’ ”) (quoting Insituform Techs., Inc. v. Am. Home Assurance Co., 566 F.3d 274, 278 n.3 (1st

Cir. 2009)).

limited, expedited discovery on that question. The parties are hereby permitted to

engage in limited discovery and summary judgment motion practice as follows:

1. The parties will conduct discovery solely on the issue of whether the Plan is

self-funded or insured by February 28, 2025.

2. If the Defendant believes the evidence supports its claim that the Plan is self-

funded, it may renew its motion to dismiss as a limited Rule 56 motion for summary

judgment by March 14, 2025.

3. If the Defendant files a summary judgment motion, the Plaintiff may file a

response within seven (7) days of the Defendant’s motion, and the Defendant may

then file a reply within seven (7) days of the Plaintiff’s response.

4. Both parties may file affidavits or sworn testimony in support of their briefs.

However, no surreply briefs are permitted.

5. The answer deadline and all discovery deadlines are stayed during this

discovery and motion period. If the Defendant decides not to file a Rule 56 motion, it

must promptly notify the Clerk, and the stay will be lifted.

SO ORDERED.

/s/ Nancy Torresen

United States District Judge

Dated this 27th day of January, 2025.