Court Holds Plaintiff’s State Claims Preempted by ERISA and Dismissed Complaint

In Lowe v. Lincoln Nat’l Life Ins. Co., Plaintiff suffered a stroke in May 2016 while working for Diversicare Healthcare Services, Inc. Diversicare provided its employees with long-term disability (LTD) benefits under a policy issued by The Lincoln National Life Insurance Company (Lincoln).

The stroke rendered Plaintiff unable to work. She was initially awarded benefits under the plan from November 6, 2016 to June 6, 2017. Lincoln then notified her that her benefits were terminated. Benefits were reinstated following Plaintiff’s submission of additional records pursuant to her administrative appeal. She then received benefits from June 6, 2017 to December 31, 2017. It appears benefits were again terminated and she again appealed.

While an additional appeal was pending, Plaintiff filed a lawsuit initially alleging five causes of action, but later amended her complaint to add two additional causes of action. The Amended Complaint against Lincoln alleged:

  1. Negligence.
  2. Negligent infliction of emotional distress.
  3. Outrage.
  4. Fraudulent misrepresentation.
  5. Violations of Kentucky’s Consumer Protection Act.
  6. Bad faith.
  7. Violations of Kentucky’s Unfair Claims Settlement Practices Act.

Meanwhile, Lincoln issued a favorable decision for Plaintiff whose benefits were reinstated. She was still receiving monthly benefits from Lincoln as of October 3, 2019, when the United States District Court for the Eastern District of Kentucky, Northern Division, Ashland, issued its decision dismissing Plaintiff’s complaint.

Lincoln’s Motion to Dismiss Under Federal Rule of Civil Procedure Rule 12(b)(6)

Lincoln filed a Motion to Dismiss Plaintiff’s civil lawsuit under Federal Rule of Civil Procedure Rule 12(b)(6) on the grounds that all of Plaintiff’s claims were preempted by the Employment Retirement Income Security Act (ERISA).

The Court first analyzed the standard it was required to apply in order to dismiss a case under Rule 12(b)(6). It concluded that “The Court must determine not whether plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support his claims.” In doing this, the facts in the complaint must be construed in the light most favorable to the plaintiff. Since the Court concluded the claims were preempted by ERISA, Plaintiff was not entitled to present evidence to support her claims, so the case was dismissed.

ERISA Preemption

The parties agreed that the case was governed by ERISA. The policy referenced in Plaintiff’s Amended Complaint was the group LTD insurance policy issued by Lincoln to Diversicare, Plaintiff’s employer. The plan is an “employee welfare benefit plan governed by ERISA because it is funded by Diversicare and was for the purpose of providing benefits to its employees.”

The Court noted that under the provision of 29 U.S.C. section 1132(a)(1)(B), ERISA preemption provides that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.’ A key inquiry that must be made is “whether the cause of action is based on the terms of the ‘ERISA-regulated employee benefit plan’ itself as opposed to an independent legal duty.”

The Plaintiff argued that her claims “are beyond ERISA’s purview because she asserts violations of duties that are not related to ERISA or the Plan under which she receives benefits.” She relied on one case to support her claim, but that case was not a claim for disability, and did not involve a wrongful denial of disability benefits. The Court found the Plaintiff’s reliance on that case misplaced.

The Court noted that in this case “Plaintiff alleges a panoply of state law claims…” and determined that each of Plaintiff’s claims were based upon “Lincoln’s allegedly wrongful denial of benefits.”

Plaintiff’s own pleadings support this conclusion. She described her claims as arising from Lincoln’s rejection of her claim. She also alleged that Lincoln used unfair and false practices “to deny her long-term disability claim.” The Court then analyzed carefully each cause of action and explained which Sixth Circuit or Supreme Court case it was relying on to determine the specific claim was preempted.

The Court concluded that “As Plaintiff’s own allegations make clear, none of Plaintiff’s claims allege wrongdoing independent of Lincoln’s handling of her claim. Further, Plaintiff does not allege any relationship between Defendants and Plaintiff other than through the policy. This is an ERISA case. Plaintiff’s claims fall squarely within the scope of section 1132(a)(1)(B) and are preempted by ERISA.” The Court then granted Lincoln’s Motion to Dismiss.

If you have a disability claim or are thinking about filing such a claim for either STD or LTD benefits with your disability insurance company, contact one of our attorneys at Dell & Schaefer for a free consultation.

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Bruce R. (Arizona)

Steve Dell has done an exceptional job with my disability application process. The firm is extremely well managed. They have acquired an incredible amount of experience over many years. I recommend them for disability insurance claims without reservation. 

Don (Florida)

I called this firm a few months ago completely disparaged due to a company cutting off disability benefits at a time that nearly caused me to lose everything.

Attorney Alex Palmera and Danielle worked hard to reach an amicable settlement and my case was settled a few months later. This is a good firm and the specific expertise in disability claims saved me countless hours of hassle at a time when an already fragile state existed.

Thank you Mr. Palamara and Danielle.

Sandra B. (Arkansas)

I have nothing but good things to say about how my buyout was handled with my disability claim. The level of professionalism was amazing. All of my questions and concerns were answered either by Danielle L. or Alex P. in such a timely manner and with such care I would recommend them in a heartbeat to anyone needing to approach their provider with buyout options.

They did a fantastic job communicating between the provider and me, always keeping my best interest at heart and always answering my many many questions. They really did take most of the stress out of this whole situation. I would give them a 10 out of 10 for every step of this crazy journey. Thank you so much for helping me through this.

Brenda R. (New York)

I needed assistance with an appeal for a LTD claim that was initially denied. Stephen understood what needed to happen to win the appeal and he did win the appeal for me.

Michael C. (Virginia)

Greg Dell and his assistant Anneli have been extremely responsive and helpful, not only our initial consultations, but in follow-ups 1 and 2 years later with the insurance company to ensure that they comply with their agreements (which they did), as well as a separate and only slightly-related inquiry about our health insurance. I always hear back from them very quickly, which is rare and greatly appreciated.

Jeff P. (Oklahoma)

After a very long and frustrating ordeal to keep my LTD payments coming I decided to seek assistance from and attorney. After much research and asking those in the legal profession Dell & Schaefer seemed to be the top choice. I reached out and Alex Palamara was the attorney assigned to my case. All I can say is the experience was outstanding. Both Alex and his Paralegal, Danielle Lauria were excellent to work with. They were very kind, concerned, understanding of my frustrations and treated me with the utmost respect. Communication was excellent with regular updates and telling me what I could expect in each stage of the process.

Alex was also very straight forward with what to expect and no pie in the sky promises or expectations were made. In the end we won our case and I believe it was solely due to their experience and knowledge of not only the laws but the insurance companies as a whole. I would highly recommend them and am very grateful for the help they afforded to me.

Chad B. (Illinois)

I originally spoke with 3 other long term disability lawyers about my case before contacting Dell and Schaefer. None of those law firms would take it. They said the chances of me winning was not good. After finding Dell and Schaefer online I spoke with one of the attorneys that has since left. He did take my case but later it was picked up by Rachel Alters. Rachel is amazing and a very intelligent attorney. She not only won my case but also was able to get my back pay for 6 months.

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