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Morcus v. Medi-Copy Services, Inc.

United States District Court, E.D. Kentucky, Central Division

November 28, 2017

MARK MORCUS, Plaintiff,
MEDI-COPY SERVICES, INC., et al., Defendants.


          Danny C. Reeves United States District Judge.

         This matter is pending for consideration of Defendants' Medi-Copy Services, Inc. and Menika Bobo's Motion for Judgment on the Pleadings or, alternatively, for Summary Judgment. [Record No. 1');">13] The defendants' motion will be granted, in part, and denied, in part.


         Plaintiff Mark Morcus was insured through his employer under policies with The Guardian Life Insurance Company of America (“Guardian”) for short and long-term disability. [Record No. 1');">1-1');">1, p. 4 ¶ 1');">12] He became unable to work in August 201');">15 due to medical conditions and initiated a short-term disability claim with Guardian. Id. at p. 4 ¶¶ 1');">13, 1');">16. Guardian approved the claim and Morcus began receiving short-term disability benefits. Id. at p. 5 ¶ 1');">19. Following expiration of the short-term disability period, Morcus submitted a claim for long-term disability benefits, which Guardian approved on February 8, 201');">16. Id. at p. 5 ¶¶ 1');">19-23. He received monthly payments from Guardian, during which time he received medical treatment from Dr. Joshua Bailey at Lexington Clinic. Id. at p. 6 ¶¶ 25, 27.

         Medi-Copy is a health information exchange that provides services to Lexington Clinic, which include medical record request processing. Id. at p. 4, ¶¶ 7-9. Medi-Copy sent a 1');">15-page fax to Guardian on August 31');">1, 201');">16, which contained medical records and three forms purporting to contain information regarding Morcus' claim for benefits. Id. at p. 6 ¶¶ 33-34. The first form indicated (erroneously) that Morcus had “no restrictions” and was able to return to work. Id. at p. 7 ¶ 39. The form was completed and signed by Medi-Copy's agent, Menika Bobo, without Dr. Bailey's approval.[1');">1" name="FN1');">1" id= "FN1');">1">1');">1] Id. at p. 7 ¶¶ 40-42. The second form also was signed by Bobo without Dr. Bailey's consent and incorrectly stated that Morcus was capable of performing sedentary or light work on a full-time basis. Id. at p. 7 ¶¶ 43-46. Bobo also completed and signed the third form without Dr. Bailey's consent and incorrectly indicated that Morcus was capable of performing heavy work on a full-time basis. Id. at p. 8 ¶¶ 51');">1-54.

         Bobo continued to seek clarification from Dr. Bailey regarding Morcus' physical limitations in the days that followed. Id. at p. 9-1');">10 ¶¶ 65-67. Dr. Bailey sent a message to Medi-Copy on September 1');">12, 201');">16, indicating that Morcus should avoid heavy lifting and significant lumbar twisting maneuvers. Bailey clarified that these were Family Medical Leave Act restrictions, as opposed to a disability assessment. Id. at p. 1');">10 ¶¶ 66-68. Bobo faxed the same three forms to Guardian the following day, which included revisions reflecting Dr. Bailey's comments from September 1');">12, 201');">16, and indicated that Morcus was able to return to work. Id. at p. 1');">11');">1-1');">13 ¶¶ 69-94.

         Guardian terminated Morcus' long-term disability benefits on September 8, 201');">16, citing items provided by Medi-Copy on August 31');">1, 201');">16.[2] Id. at p. 8 ¶¶ 58, 59. Lexington Clinic's Health Information Manager, Sharon Brown, issued a letter on September 23, 201');">16, stating that the information submitted by Medi-Copy on August 31');">1 was not accurate and that Medi-Copy notified Guardian accordingly on September 1');">14, 201');">16. Id. at p. 48. Morcus alleges that Medi-Copy did not notify Guardian regarding the inaccuracy of the forms, nor did it retract them. Id. at p. 9 ¶ 64.

         Morcus retained an attorney and filed an administrative appeal regarding the denial of benefits. Id. at p. 1');">13 ¶ 99. Guardian informed Morcus on March 1');">14, 201');">17, that it had reversed its decision to terminate benefits. He subsequently filed this action against Medi-Copy and Bobo alleging that their actions prevented him from receiving long-term disability benefits from September 8, 201');">16, through March 1');">14, 201');">17. Morcus does not seek lost long-term disability benefits but, instead, he seeks damages incurred in pursuing an appeal to recover those benefits. Additionally, he complains that he suffered emotional and financial distress, worry, and inconvenience as a result of the defendants' actions. Id. at p. 1');">14 ¶ 1');">102-03. Morcus asserts various claims under Kentucky state law including violations of the Consumer Protection Act; fraudulent and negligent misrepresentation; fraud by omission; interference with contractual relations; negligence and gross negligence; negligent hiring, training, supervision, and retention; and intentional and negligent infliction of emotional distress; and negligence per se.


         The defendants have moved for judgment on the pleadings or, in the alternative, for summary judgment. Motions for judgment on the pleadings under Rule 1');">12(c) are reviewed under the same standard as motions made under Rule 1');">12(b)(6). Lindsay v. Yates, 498 F.3d 434, 437 n.5 (6th Cir. 2007). To survive a motion to dismiss, a plaintiff must allege sufficient factual matter to state a claim for relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Peatross v. City of Memphis, 1');">18 F.3d 233');">81');">18 F.3d 233, 239-40 (6th Cir. 201');">16). A party's Rule 1');">12(c) motion is properly granted when there is no issue of material fact and the moving party is entitled to judgment as a matter of law. JPMorgan Chase Bank, N.A. v. Winget, 1');">10 F.3d 577');">51');">10 F.3d 577, 582 (6th Cir. 2007). The Court accepts as true “all well-pleaded material allegations, ” but “need not accept as true legal conclusions or unwarranted factual inferences.” Id. at 581');">1-82 (quoting Mixon v. Ohio, 1');">193 F.3d 389');">1');">193 F.3d 389, 400 (6th Cir. 1');">1999)).

         Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 1');">17');">477 U.S. 31');">17, 322-23 (1');">1986). Once the moving party has met its burden of production, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Keeneland Ass'n, Inc. v. Earnes, 830 F.Supp. 974, 984 (E.D. Ky. 1');">1993) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1');">1986)). The nonmoving party cannot rely on the assertions in its pleadings; rather, it must come forward with probative evidence to support its claims. Celotex, 477 U.S. at 324. In making its determination on the motion for summary judgment, the Court will view all the facts and inferences from those facts in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587.


         The defendants' motion is based largely on the argument that Morcus' claims are completely preempted by the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1');">1001');">1, et seq. ERISA provides a uniform regulatory regime over employee benefit plans and includes expansive preemption provisions intended to ensure that employee benefit plan regulation is “exclusively a federal concern.” Alessi v. Raybestos-Manhattan, Inc., 1');">1 U.S. 504');">451');">1 U.S. 504, 523 (1');">1981');">1). There is no dispute that Morcus' employer-sponsored disability plan is governed by ERISA. However, ERISA does not preempt every state-law claim that touches the Act in some tangential way.

         The Supreme Court examined the scope of § 502's preemptive force in Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004), declaring that “any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted.” The Court concluded that “Congress' intent to make the ERISA civil enforcement mechanism exclusive would be undermined if state causes of action that supplement the ERISA § 502(a) remedies were permitted, even if the elements of the state cause of action did not precisely duplicate the elements of an ERISA claim.” Id.

         ERISA § 502(a)(1');">1)(B), codified at § 1');">11');">132(a), provides:

A civil action may be brought-(1');">1) by a participant or beneficiary-. . . (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.

         The Court articulated a two-part test to determine whether state-law claims fall within the scope of this definition. A claim falls into the category of claims that is completely preempted when both of the following are satisfied: “(1');">1) the plaintiff complains about the denial of benefits to which he is entitled ‘only because of the terms of an ERISA-regulated employee benefit plan'; and (2) the plaintiff does not allege the violation of any ‘legal duty (state or federal) independent of ERISA or the plan terms.'” Gardner v. Heartland Indus. Partners, LP, 1');">15 F.3d 609');">71');">15 F.3d 609, 61');">15 (quoting Davila, 542 U.S. at 21');">10).

         The Sixth Circuit recently examined ERISA's preemption of state-law claims against third-party medical reviewers. Violet Hogan filed an ERISA lawsuit in federal court alleging the improper denial of disability benefits. See Hogan v. Life Ins. Co. of N. Am. (“Hogan I”), 521');">1 F. App'x 41');">10 (6th Cir. 201');">13). Following an adverse ruling in Hogan I, Hogan sued two nurses who worked for Life Insurance Company of North America and who had provided opinions regarding Hogan's eligibility for disability benefits under an ERISA plan. Hogan v. Jacobson, 823 F.3d 872 (6th Cir. 201');">16). Hogan's complaint made no reference to ERISA or the Life Insurance Company of North America and alleged only that the nurses had committed negligence per se by giving medical advice without being licensed under Kentucky state law. Id.

         Hogan argued that her claim was not preempted because the nurses were not plan administrators and thus were not proper defendants to a § 1');">11');">132 claim. The Court explained that a plaintiff may not evade complete preemption merely by suing the wrong party. Id. at 880. Determining whether a cause of action falls within § 1');">11');">132(a)(1');">1)(B) requires the Court to examine the complaint, the state laws upon which the plaintiff's claims are based, and, when necessary, the various plan documents. Id. (citing Davila, 542 U.S. at 21');">11');">1). Claims likely fall within the scope of § 1');">11');">132 when “the only action complained of” is the refusal to provide benefits under an ERISA plan and “the only relationship” between the parties is based in the plan. Id. (quoting Davila, 542 U.S. at 21');">11');">1).

         The Court emphasized that Hogan's relationship with the defendants was based solely on the existence of Hogan's ERISA plan. “[C]laims purporting to challenge the actions of medical providers are nonetheless claims for ERISA benefits when the medical determinations were made solely in the course of an ERISA-benefits determination and the damages alleged arise from the denial of benefits.” Id. at 880 (citing Gibson v. Prudential Ins. Co. of Am., 1');">15 F.2d 41');">14');">91');">15 F.2d 41');">14, 41');">17 (9th Cir. 1');">1990) (claims of fraud against a claim-processing company and doctors were preempted because the “complaint alleges violations of duties created by the administration of the disability benefit plan” and “[t]here would be no relationship or cause of action . . . without the plan”). Further, in addressing the first Davila factor, the Court explained that Hogan's alleged damages arose from the ultimate denial of disability benefits. Id. at 881');">1.

         With respect to the second part of the Davila test, the Court looked to the origin of the parties' relationship. “Whether a duty is ‘independent' of an ERISA plan does not depend merely on whether the duty nominally arises from a source other than the plan's terms.” Id. (quoting Gardner, 71');">15 F.3d at 61');">13). Instead, courts must determine whether the defendant's duty arose “solely because of and within the context of the benefits review required by the plan.” Id. at 882. The Sixth Circuit compared Hogan's claim to “truly independent” state-law tort claims and determined that the defendant nurses had no legal duty independent of ERISA. Id. at 882-83 (citing Gardner, 71');">15 F.3d at 61');">14-1');">15) (claim for tortious interference with a contract against company executives and investor who allegedly induced company to cancel an executive retirement plan in connection with sale of investor's share); Dishman v. UNUM Life Ins. Co. of Am., 269 F.3d 974, 984 (9th Cir. 2001');">1) (claim that insurance agency was liable for tortious invasion of privacy in connection with actions of investigators tasked with uncovering information regarding plaintiff's alleged return to other work).

         The Sixth Circuit expanded this holding in Milby v. MCMC LLC, 844 F.3d 605 (6th Cir. 201');">16). Milby was covered by a long-term disability insurance policy through her employer. She became unable to work in April 201');">11');">1 and received disability benefits for approximately seventeen months. Id. at 608. As part of an eligibility review, her ERISA plan engaged MCMC, a third-party reviewer, to provide an opinion regarding Milby's work restrictions. MCMC and its agent, Jamie Lewis, opined that Milby was able to return to work. The plan terminated Milby's benefits based, in part, on MCMC's recommendation.

         Milby filed an ERISA suit against her disability provider and a separate state-court action alleging negligence per se against MCMC for practicing medicine in Kentucky without a license. The court noted that “[b]ecause a third-party reviewer is not acting as the plan administrator nor making the benefits determination . . . the type of claim here may edge toward the category of those not preempted.” Milby, 844 F.3d at 61');">11');">1. However, Hogan determined the outcome for the first prong of the Davila test because MCM's conduct was “indisputably part of the process used to assess a participant's claim for a benefit payment under the plan, making [the state-law claim] an alternative enforcement mechanism to ERISA's civil enforcement ...

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