Metz v. United States Life Insurance Company
Argued: September 28, 2011
Before: WALKER, STRAUB, and LIVINGSTON, Circuit Judges.
Plaintiff-Appellant Florence Metz ("Metz") appeals from a judgment and order of the United States District Court for the Southern District of New York (Jones, J.) granting Defendant-Appellee United States Life Insurance Company's ("U.S. Life") motion to dismiss Metz's complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Metz sued U.S. Life for failing to pay insurance benefits to which she claimed to be entitled under the terms of her insurance policy with U.S. Life, as those terms are putatively interpreted under New York law. U.S. Life contended that it was instead U.S. Life's refusal to pay benefits that was grounded in the proper definition given by New York law to the relevant terms. The district court agreed with U.S. Life's view and dismissed the complaint. Finding no error in the district court's interpretation of the insurance policy, we AFFIRM.
Plaintiff-Appellant Florence Metz ("Metz") sued United States Life Insurance Company ("U.S. Life"), with which she has a catastrophic medical insurance policy, because U.S. Life told her that she had not yet "incurred" sufficient charges to satisfy its deductible. Metz claimed that U.S. Life's refusal to pay benefits rested on a deliberate misinterpretation of "incurred" and breached the insurance contract. She appeals from a September 22, 2010 judgment of the United States District Court for the Southern District of New York (Jones, J.), granting U.S. Life's motion to dismiss for failure to state a claim. The district court held that Metz, a Medicare recipient, could not have incurred charges that her physicians had agreed with Medicare to forgo prior to providing treatment. On appeal, Metz argues that the district court incorrectly read "incurred" (as in "incurred charge") in the insurance policy as including only those amounts that the insured paid or was legally obligated to pay. She contends that, properly understood, the amount of an incurred charge for medical treatment is instead the full reasonable and customary charge for that treatment. We hold that the district court correctly interpreted "incurred," and therefore affirm.
In 1995, Florence Metz took out a catastrophic care insurance policy from U.S. Life. The policy, as it pertains to Metz, carries a $25,000 deductible. The policy's coverage and benefits go into effect once the insured has satisfied the deductible, which in turn requires the insured to have "incurred" at least $25,000 in "reasonable and customary" charges for certain medical treatments listed in the policy. At issue here is only whether Metz in fact "incurred" those charges.
In September 2007, Metz, under the belief that she had incurred the requisite $25,000 in charges, filed a claim with U.S. Life for medical benefits under the policy.
U.S. Life, however, denied her claim. Discussions between Metz and her representatives and U.S. Life failed to resolve the dispute, and in August 2009, Metz brought a putative class action, seeking declaratory and injunctive relief and damages, in California state court.*fn1 U.S. Life removed the matter to federal district court in California, under the court's general diversity jurisdiction, 28 U.S.C. § 1332(a),*fn2 and the Class Action Fairness Act, 28 U.S.C. § 1332(d), then obtained a transfer of venue to the Southern District of New York.
U.S. Life moved to dismiss under Federal Rule of Civil Procedure 12(b)(6); it argued that its denial of Metz's claim was consistent with the accepted definition of "incurred" for insurance purposes under New York law,*fn3 namely "to become liable or subject to." U.S. Life argued that Metz could not be liable for expenses that her doctors were legally bound, under their pre-existing agreements with Medicare, not to charge her. For her part, Metz argued that "incurred" refers to the full amount representing a reasonable and customary charge for treatment, regardless of whether an insured paid or was legally obligated to pay that full amount.
The district court concluded that one cannot be liable for or subject to medical treatment charges that a doctor has agreed ahead of time to forgo. Accordingly, the court held that Metz's construction of the contract was unreasonable and without basis in New York law, and thus that the complaint failed to state a claim upon which relief could be granted. This appeal followed.
We review de novo a district court's dismissal of a complaint under Rule 12(b)(6). Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190, 194 (2d Cir. 2008). We must "accept all factual allegations as true and draw all reasonable inferences in favor of the plaintiff." ECA & Local 134 IBEW Joint Pension Trust of Chi. v. JP Morgan Chase Co., 553 F.3d 187, 196 (2d Cir. 2009). "To survive a motion to dismiss, a complaint must ...