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WIENER v. UNUMPROVIDENT CORPORATION

February 28, 2002

RUTH WIENER, PLAINTIFF,
V.
UNUMPROVIDENT CORPORATION, THE PAUL REVERE LIFE INSURANCE COMPANY, AND NEW ENGLAND LIFE INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Naomi Reice Buchwald, United States District Judge:

  OPINION AND ORDER

Plaintiff, Ruth Wiener ("Wiener"), commenced this lawsuit in New York Supreme Court in November of 2000, alleging claims for breach of contract, violation of General Business Law ("GBL") § 349, intentional infliction of emotional distress, and bad faith. Defendants Unumprovident Corporation ("Unum"), Paul Revere Life Insurance Company ("Paul Revere"), and New England Life Insurance Company ("New England") removed pursuant to 28 U.S.C. § 1441 on diversity grounds. Presently before the Court is defendants' motion to dismiss for failure to state a claim as a matter of law, pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants also argue that plaintiff's claims are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1144(a). Plaintiff moves for leave to amend to rectify any deficiencies in the complaint should the Court find merit in defendants' motion. For the following reasons, defendants' motion to dismiss is granted in part and denied in part. Plaintiff's motion for leave to amend the complaint is granted.

BACKGROUND

In January of 1992, plaintiff became extremely ill and was unable to continue working as an accountant. From that time until August of 2000, plaintiff received monthly disability benefit payments from defendants Paul Revere and New England*fn1, from which she had purchased individual disability insurance policies in 1988 and 1981 respectively. Wiener also received disability benefits under a group policy with Paul Revere. On August 21, 2000, Unum notified Wiener in writing that it no longer considered her to be totally disabled as defined in the group policy. Thereafter, defendants ceased making payments under both the individual and group policies. Plaintiff alleges that this decision was made by a customer care representative who is not a medical doctor based solely upon an incomplete review of her medical records.

A. Legal Standard

In considering a motion to dismiss pursuant to Fed. R. Civ. P. 12(b) (6), we accept as true all material factual allegations in the complaint, Atlantic Mutual Ins. Co. v. Balfour Maclaine Int'l, Ltd., 968 F.2d 196, 198 (2d Cir. 1992), and may grant the motion only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief." Still v. DeBuono, 101 F.3d 888, 891 (2d Cir. 1996); see Conley v. Gibson, 355 U.S. 41, 48 (1957). In addition to the facts set forth in the complaint, we may also consider documents attached thereto and incorporated by reference therein, Automated Salvage Transp., Inc. v. Wheelabrator Envtl. Sys., Inc., 155 F.3d 59, 67 (2d. Cir. 1998), as well as matters of public record, Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 75 (2d. Cir. 1998).

B. Applicability of ERISA

In their motion, defendants argue that plaintiff's claims concerning termination of her insurance benefits under the two individual policies named in her complaint are preempted by ERISA. Defendants ground this assertion on the fact of plaintiff's coverage by a third policy with Paul Revere that is a group insurance policy provided by plaintiff's employer and governed by ERISA. Defendants conclude that ERISA preempts determination of the claims asserted in this lawsuit because the individual policies at issue here are related to the group policy.*fn2

By its terms, ERISA governs employee benefit plans established or maintained by an employer or an employee organization. See 29 U.S.C. § 1002(1)-(6); see Rombach v. Nestle USA, Inc., 211 F.3d 190, 192-93 (2d Cir. 2000) (reviewing the kinds of employee plans covered by ERISA). Defendants seem to concede that the individual policies themselves do not fall within this description, but argue that the individual policies are so related to the third plan that they are preempted. See Defs.' Mot. to Dismiss at 19. However, without the benefit of any discovery, we are without the requisite knowledge to evaluate the inter-relationship, if any, between the individual policies purchased by plaintiff and the group policy. Cf. Agrawal v. Paul Revere Life Ins. Co., 205 F.3d 297, 299-302 (6th Cir. 2000) (discussing the fact-based analysis of whether individual and group policies should be categorized together as an ERISA plan); Waks v. Empire Blue Cross/Blue Shield, 263 F.3d 872, 874-776 (9th Cir. 2001) (discussing test for whether plan is subject to ERISA regulation and holding that an individual policy that has been converted from a group policy under an ERISA plan is no longer regulated by ERISA). For this reason, defendants' motion to dismiss plaintiff's claims as preempted by ERISA is denied without prejudice to its renewal if upon the development of the record there is a factual and legal basis for such renewal.

C. General Business Law § 349

Section 349 of New York's General Business Law makes unlawful deceptive acts or practices in conducting a business or furnishing a service. A person who has been injured by violation of this section may recover actual damages or $50, whichever is greater. If a Court finds that the defendant acted willfully or knowingly in violating § 349, damages may be tripled to a maximum of $1,000 and attorney's fees may be awarded.

In order to state a claim under § 349, a plaintiff must charge that a defendant has engaged in deceptive conduct that is consumer oriented causing injury to the plaintiff. New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 320 (1995). Defendants argue that the conduct alleged by plaintiff is not consumer oriented. To be consumer oriented conduct, "[t]he conduct need not be repetitive or recurring but defendant's acts or practices must have a broad impact on consumers at large." Id.; Oswego Laborers' Local 214 Pension v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 25 (1995) ("Plaintiff . . . need not show that the defendant committed the complained-of acts repeatedly . . . but instead must demonstrate that the acts or practices have a broader impact on consumers at large."). The sale of a standard form insurance policy has been held to constitute such consumer oriented conduct under this statute. Riordan v. Nationwide Mutual Fire Ins. Co., 977 F.2d 47, 51-53 (2d Cir. 1992) (holding § 349 applicable to the sale of a homeowner's insurance policy); New York Univ., 87 N.Y.2d at 321 (citing Riordan with approval, but distinguishing where the insurance policy at issue was not a "modest" type of transaction, but rather an individualized, complex contract for insurance coverage). Therefore, we disagree with defendants' contention that plaintiff's allegations fail to state a claim under GBL § 349 because they are not consumer oriented.

However, we find that plaintiff has failed to state a claim under § 349 for other reasons. First, plaintiff has not alleged that the practices being challenged as deceptive occurred within the State of New York, summarily asserting only that "[e]ach individual act, solicitation, contact or deposit is a separate instance of a deceptive and/or fraudulent trade practice." GBL § 349 prohibits deceptive practices "in the conduct of any business, trade or commerce or in the furnishing of a service in the state." See Goshen v. Mutual Life Ins. Co. of N.Y., 286 A.D.2d 229, 229-30, 730 N.Y.S.2d 46, 47 (1st Dept. 2001) (dismissing claim where plaintiff was a Florida resident who purchased a "vanishing premium" insurance policy in Florida). While it appears that plaintiff's application for the insurance policies was submitted in New York, she is a New Jersey resident and received her benefits in New Jersey during the eight year period prior to this lawsuit. See Cert. of Peter J. Heck, Ex. B, C, and D. Moreover, plaintiff's theory of deceptive conduct appears to be that the decision to transfer the administration of the disability policies from Paul Revere's Worchester, Massachusetts office to Unum's Chattanooga, Tennessee office shortly ...


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