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DaCosta v. Prudential Insurance Company of America

November 12, 2010

CAROL DACOSTA, WAYNE COOPER, M.D., DANA DICOCCO, AND MELANIE GREEN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Seybert, District Judge

MEMORANDUM AND ORDER

On February 18, 2010, Plaintiffs filed a putative class action Complaint against Defendant, alleging violations of the Employment Retirement Income Security Act ("ERISA"). Defendant has moved to dismiss. For the following reasons, that motion is GRANTED IN PART AND DENIED IN PART.

BACKGROUND

I. Summary

This is an ERISA case concerning what impact, if any, ERISA has on "voluntary appeals" that an insurer conducts after denying an insured's initial ERISA-mandated appeal. The parties agree that ERISA does not require insurers to provide or conduct voluntary appeals. Plaintiffs contend, however, that if an insurer chooses to provide voluntary appeals, these appeals must fully comply with ERISA's rules and regulations. Defendant disagrees.

II. Factual Allegations

Defendant insured Plaintiffs under various group long- term disability policies. At one point, Defendant provided Plaintiffs Carol DaCosta, Dana DiCocco, and Melanie Green with disability benefits, but eventually terminated those benefits after finding that these Plaintiffs were no longer disabled. Defendant denied Plaintiff Wayne Cooper's benefits application, and never provided him with benefits.

Each Plaintiff commenced an administrative appeal of Defendant's decision to terminate or deny benefits. In each case, Defendant denied the appeal. In denying the appeal, Defendant informed Plaintiffs that they could "again appeal this decision to Prudential's Appeals Review Unit for a final decision." (Kohn Aff. Ex. 1-4.*fn1 Defendant also informed Plaintiffs that "this second appeal is voluntary," and that, "[s]ince you have now completed the first level of appeal, you may file a lawsuit under [ERISA]." (Id.) In addition, Defendant told Plaintiffs that, although "a second appeal will not affect your rights to sue under ERISA," "[y]ou are entitled to receive, upon request, sufficient information to make a decision about filing this appeal." (Id.) Finally, Defendant informed Plaintiffs that "[y]ou are entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim." (Id.)

After receiving this letter, Ms. DeCosta requested a complete copy of her claim file. Mr. Cooper, Ms. DeCocco, and Ms. Green requested both a copy of his/her claim file, and "sufficient information to make a decision about filing" the second appeal. In each case, Plaintiffs allege that Defendant failed to provide the requested information. Among other things, Plaintiffs allege that Defendant failed to inform them that it would assign the same claims administrator and physicians who handled the initial appeal to handle the voluntary appeal. (Compl. ¶ 64.) In addition, Plaintiffs allege that Defendant failed to inform them that the voluntary appeal was not de novo and, in fact, lacked any "hard and fast rules."*fn2 (Id.)

Plaintiffs contend that, in so doing, Defendant violated ERISA in two ways. First, Plaintiffs claim, Defendant procedurally flouted ERISA by not providing "sufficient information" about the voluntary appeal process, including the "internal rules, guidelines and protocols" it uses. (Compl. ¶¶ 95(e), 96.) Second, Plaintiffs contend, Defendant's voluntary appeals substantively violated ERISA because they were not "full and fair review[s]," as required by 29 U.S.C. § 1133(c) and 29 C.F.R. § 2560.503-1. (Compl. ¶ 97.) Based on these alleged violations, Plaintiffs seek relief under both ERISA and a breach of fiduciary duty theory. Plaintiffs demand damages, equitable relief, and injunctive relief, in addition to attorneys' fees and costs.

DISCUSSION

I. Standard of Review on a Motion to Dismiss

In deciding FED. R. CIV. P. 12(b)(6) motions to dismiss, the Court applies a "plausibility standard," which is guided by "[t]wo working principles," Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949, 173 L.Ed. 2d 868 (2009); Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009). First, although the Court accepts all factual allegations as true, and draws all reasonable inferences in the plaintiff's favor, this "tenet" is "inapplicable to legal conclusions"; thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Harris, 572 F.3d at 72 (quoting Ashcroft); Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Management LLC, 595 F.3d 86, 91 (2d Cir. 2010). Second, only complaints that state a "plausible claim ...


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