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Morris v. Appalachian Regional Healthcare, Inc.

United States District Court, Sixth Circuit

April 30, 2013

SANDRA MORRIS, individually and as Executrix for the Estate of Charlice Madonna Pennington and AMANDA PARKER, Plaintiffs,
v.
APPALACHIAN REGIONAL HEALTHCARE, INC., RELIASTAR LIFE INSURANCE CO., JAMES WILEY CRAFT, II and ANGELA HATTON MULLINS, Defendants.

MEMORANDUM OPINION AND ORDER

KAREN K. CALDWELL, District Judge.

This matter is before the Court on the motions by Defendant Appalachian Regional Healthcare, Inc. ("ARH") to dismiss the Plaintiffs' claims against it (DE 6) and to dismiss (DE 8) the cross-claim against it filed by co-Defendant Angela Hatton Mullins. Also before the Court is the Motion for Judgment on the Pleadings (DE 7) filed by Defendant Reliastar Life Insurance Co. in which it asks the Court to dismiss the Plaintiffs' claims against it.

I. Facts.

The Plaintiffs originally filed this action in Letcher Circuit Court alleging that they were the named beneficiaries of a $100, 000 life insurance policy issued to their mother, Charlice Madonna Pennington, while she was employed by the Defendant ARH. Pennington worked as a nurse for ARH from 1990 until her death on April 18, 2010. ARH offered a group life insurance plan to its employees and Pennington paid premiums for life insurance from the time she began working there until her death.

In their Complaint, the Plaintiffs assert that ARH offered group life insurance policies through two different insurers during Pennington's employment there. In 2009 ARH maintained a group life insurance policy with Defendant ReliaStar. The Plaintiffs assert that beginning January 1, 2010, ARH switched to Reliance Standard Life Insurance Company. Pennington died in April 2010, months after the Plaintiffs allege that ARH switched to Reliance Standard. The Plaintiffs appear to assert that, when ARH applied for insurance with Reliance, it failed to list Pennington as an employee. (DE 1, Complaint, § 21.)

The Plaintiffs also assert in their Complaint that, despite ARH's switch to Reliance as its group insurance provider in January 2010, Pennington remained insured under the ReliaStar policy until her death because she was on leave from ARH under the Family and Medical Leave Act until her death. They further assert that ARH was the administrator of the life insurance plan and that it continued to accept life-insurance premium payments from Pennington until the time of her death and never informed her that she was not covered under an employee life insurance plan.

The Plaintiffs assert that they made a claim to ReliaStar for life insurance benefits but that ReliaStar denied their claim stating that its policy was not in effect at the time of Pennington's death. The Plaintiffs further assert that they made a claim to Reliance for life insurance benefits and that Reliance denied the claim stating that Pennington was not insured under its policy either.

As will be explained below, the Plaintiffs previously filed a lawsuit against Reliance but that claim was dismissed for failure to exhaust administrative remedies. In this action, the Plaintiffs file suit against ReliaStar and ARH, asserting various state law claims including breach of contract, negligent misrepresentation, violation of the Kentucky Consumer Protection Act, and statutory and common law bad faith claims. They also assert a breach of fiduciary duty claim against ARH.

In addition to the state law claims, Plaintiffs assert claims against ReliaStar and ARH under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. The Plaintiffs cite three provisions of ERISA. First, they assert a claim under 29 U.S.C. § 1132(a)(1)(B) which permits ERISA plan beneficiaries to sue to recover benefits due under an ERISA plan. Second, the Plaintiffs cite 29 U.S.C. § 1132(a)(2) which permits beneficiaries to bring a claim for breach of fiduciary duty under 29 U.S.C. § 1109. Third, the Plaintiffs cite 29 U.S.C. § 1132(a)(3) which permits a beneficiary to bring an action to enjoin acts that violate ERISA or an ERISA plan; to obtain other equitable relief; to redress violations of ERISA or an ERISA plan; or to enforce any provision of ERISA or an ERISA plan.

The Plaintiffs also assert malpractice claims against two attorneys - Defendants James Wiley Craft, II and Angela Hatton Mullins - who represented the Plaintiffs in an earlier action against Reliance and ARH, which was dismissed. Parker, et al. v. Appalachian Regional Hospital, Inc. et al., No. 7:11-cv-00038 (E.D. Ky. filed Feb. 25, 2011). The defendants in that action removed the claim to this Court and Reliance moved to dismiss the Plaintiffs' Complaint asserting that its life insurance policy was governed by ERISA and the Plaintiffs had failed to exhaust administrative remedies before filing the action. Mullins and Craft filed no response to Reliance's motion on behalf of the Plaintiffs and the Court dismissed the action.

In this action, the Plaintiffs assert legal malpractice claims against Craft and Mullins. Defendant ReliaStar removed the entire action to this Court asserting that this Court has federalquestion jurisdiction over the ERISA claim.

After the action was removed, Defendant Angela Hatton Mullins answered the Complaint and filed a cross-claim (DE 2) against Defendants ReliaStar and ARH, alleging that, if she was negligent, then her negligence was secondary to that of ARH and ReliaStar for failing to pay the Plaintiffs the life insurance benefits. Mullins asserts that, if the Plaintiffs recover any damages from her, then she is entitled to indemnity from ARH and ReliaStar.

ARH moves to dismiss the Plaintiffs' claims against it and Mullins' cross-claim against it. Defendant ReliaStar moves for judgment on the pleadings, asking the Court to dismiss the Plaintiffs' claims against it and enter judgment in its favor.

II. Jurisdiction over Plaintiffs' Claims against Mullins and Craft.

Although no party has raised the issue, the Court first considers whether it has subjectmatter jurisdiction over the Plaintiffs' claims against Mullins and Craft. Where a federal claim is joined with claims over which the Court does not have original or supplemental jurisdiction, the entire action may be removed but the district court must sever the claims over which it does not have jurisdiction and remand them to state court. 28 U.S.C.§ 1441.

The Court does not have original jurisdiction over the Plaintiffs' claim against Mullins and Craft. The malpractice claim is not a federal claim and all the parties are from Kentucky. The next issue is whether the Court has supplemental jurisdiction over the malpractice claim. The court has supplemental jurisdiction over all claims that are "so related" to the claims over which the Court has original jurisdiction that they "form part of the same case or controversy." 28 U.S.C. § 1367(a).

The Court has original jurisdiction over the Plaintiffs' claim that ARH and ReliaStar violated ERISA by denying their claim for life insurance benefits. The Plaintiffs' malpractice claim against Mullins and Craft is not even remotely related to the ERISA ...


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