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Pennsylvania class action disability insurance suit against Reassure and Swiss Re dismissed due to lack of subject matter jurisdiction

A federal district court in Pennsylvania recently dismissed Claimant Barry Sunshine’s complaint for lack of subject matter jurisdiction. Alleging that Reassure America Life Insurance and Swiss Re Life & Health America, Incorporated prematurely terminated his and other similarly-insured individual’s disability insurance benefits, Sunshine and his disability attorneys were attempting to right a wrong for not only Sunshine but for others in a similar situation. Unfortunately, the Eastern District Court of Pennsylvania dismissed Sunshine’s disability insurance class action lawsuit because the suit lacked federal subject matter jurisdiction. Fortunately, the dismissal was filed as a dismissal without prejudice, making it possible for Sunshine to file an amended complaint when his disability attorneys establish proper subject matter jurisdiction.

The district court’s ruling occurred during a hearing in which the Court considered the Reassure’s motion to dismiss and alternatively to strike the punitive damages request from the complaint. Before even considering Defendants’ request to strike punitive damages the Pennsylvania District Court addressed the subject matter jurisdiction issue. Generally, all class action cases are first assessed in the context of subject matter jurisdiction before class certification is considered. In the case of Barry Sunshine v. Reassure America Life Insurance Company and Swiss RE Life & Health America, Incorporated, the Court concluded that the complaint “raises no federal question.” Under the Class Action Fairness Act (CAFA) and its supplemental jurisdiction over state laws in subject matter jurisdiction, district courts are granted original jurisdiction once subject matter jurisdiction is established. In Sunshine’s case his disability attorney was required to show that this civil action’s controversial amount exceeds $5 million and that there is a minimal diversity between the parties involved.

In a class action lawsuit, the amount of damages of the individual claimants is combined to calculate the amount of a claim and it must exceed the $5 million total (exclusive of costs and interest). This amount doesn’t necessarily have to be strictly documented it just has to be a realistic, objective, “good faith” evaluation by the plaintiff(s). Once the $5 million amount is established, only the diversity issue must be met for a disability lawyer to pursue his plaintiffs’ class action lawsuit. Only proof that a claim is less than the jurisdictional amount by a legal certainty is grounds for dismissal of a class action complaint.

As to amount requirement, the complaint here did not state the total amount of Sunshine’s loss, nor any of the losses of any other class members as a result of premature termination of disability insurance benefits. Consequently, the Court was concerned about the lack of substantiating evidence that the class action claim could reach the $5 million mark as Sunshine listed only the amount of benefit payments he had been denied, which was a mere $46,000.00. The standard for an individual plaintiff to be heard in federal court is for the plaintiff to have or exceed $75,000.00 in damages; and since Sunshine’s complaint didn’t meet the $75,000.00 level for an individual Non-ERISA claimant, the Court could not be assured that the $5 million class action amount would be met either.

The minimum requirement to meet the diversity requirement of a federal case hearing requires that “at least one of the members of the proposed class is a citizen of a state other than the state(s) of the Defendants’ citizenship.” And, while Sunshine’s complaint did meet this requirement as Mr. Sunshine is a citizen of Pennsylvania, Defendant Reassure a citizen of Indiana, and Swiss Re a citizen of Delaware, both standards must be met to continue trying this case in federal court.

Subject Jurisdiction Standard

For a lawsuit to be heard in federal court a complaint must show damages of at least $75,000.00 and the parties must show diversity in citizenship (meaning that not every party resides in or are considered citizens of the same state). Since Sunshine’s complaint didn’t meet both provisions, the Court could not justify hearing the Sunshine case and ruled that the complaint did not show sufficient proof that the $5 million amount would be met once Sunshine joined other similarly-insured members to qualify as a class action case under CAFA.

Other concerns of the Court concerning Sunshine’s disability benefit claims

In addition to the subject matter jurisdiction matter, the Court made note that Sunshine’s claim did not set forth a firm compensatory amount nor did it quantify the punitive damages sought in the complaint. These two issues must also be addressed, if Sunshine and his disability insurance attorneys want to be heard.

A possible second chance for Sunshine’s disability attorneys to revive the complaint

The good news is that Sunshine’s complaint was dismissed without prejudice. This means that once Sunshine and his disability attorneys add similarly-situated claimants to their complaint who have suffered losses from having their disability insurance benefits prematurely terminated by Reassure America Life and Swiss Re Life with reasonably estimated damages in excess of $5 million dollars, they can file an amended complaint.

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Our disability insurance lawyers help policy holders seeking short or long term disability insurance benefits from Reassure America. We have helped thousands of disability insurance claimants nationwide with monthly disability benefits. With more than 40 years of disability insurance experience we have helped individuals in almost every occupation and we are familiar with the disability income policies offered by Reassure America.

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