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Traughber v. Sun Life Financial U.S. Services Company, Inc.

United States District Court, W.D. Kentucky, Bowling Green Division

November 19, 2018

JEFFREY B. TRAUGHBER as the Administrator of the Estate of Erin Schutt PLAINTIFF
v.
SUN LIFE FINANCIAL U.S. SERVICES COMPANY, INC. DEFENDANT

          MEMORANDUM OPINION AND ORDER

          GREG N. STIVERS, CHIEF JUDGE UNITED STATES DISTRICT COURT

         This matter is before the Court on Plaintiff's Motion for Leave to File an Amended Complaint (DN 13) and Defendant's Motion to Dismiss for Failure to State a Claim, or in the alternative, for Partial Summary Judgment (DN 8). For the reasons provided below, Plaintiff's motion is DENIED, and Defendant's motion is GRANTED.

         I. BACKGROUND

         This action arises from a denial of accidental death benefits under a life insurance plan governed by the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. On December 26, 2015, Erin M. Nynas-Schutt (“Decedent”) was involved in a fatal motor vehicle accident. (Notice Removal Ex. B, ¶ 4, DN 1-2 [hereinafter Compl.]). Plaintiff Jeffrey B. Traughber (“Plaintiff”) is the administrator of Decedent's estate. (Compl. ¶ 1). Decedent's employer, Metalsa Structural Products, Inc., established and maintained an employee welfare benefit plan (“the Plan”) funded by group policies issued by Defendant Sun Life Assurance Company of Canada (“Sun Life”). (Haarstick Decl. ¶ 5, DN 8-2). Decedent was a participant in the Plan and, shortly following her death, her estate filed a claim for life insurance and accidental death benefits with Sun Life. (Haarstick Decl. ¶ 8).

         Kevin Haarstick (“Haarstick”) is the Life Claims Analyst for Sun Life who dealt with Plaintiff during the claim process. (Haarstick Decl. ¶¶ 3-4). Sun Life reviewed Plaintiff's claims and paid life insurance benefits, but after receiving the toxicology report from the coroner indicating Decedent tested positive for nonprescribed drugs, Sun Life determined that accidental death benefits were not payable under several provisions of Decedent's policy. (Haarstick Decl. ¶¶ 7-8).

         Haarstick communicated Sun Life's denial of accidental death benefits to Decedent's estate by letter dated March 16, 2017 (“Denial Letter”). (Haarstick Decl. ¶ 9). The Denial Letter also contained instructions for appealing Sun Life's determination, including the statement that “[i]f you disagree with our decision, you may request in writing a review of the denial within 180 days after receiving this notice of denial.” (Haarstick Decl. ¶ 10).

         Sun Life received a letter dated April 25, 2017, from Plaintiff on behalf of Decedent's estate. (Haarstick Decl. ¶ 11). The letter indicated Plaintiff had received the Denial Letter and referred to an unanswered email requesting a copy of the toxicology report and the information on which Sun Life based its decision to deny accidental death benefits. (Haarstick Decl. ¶ 11). Haarstick replied by letter dated May 9, 2017, stating that Sun Life had no record of Plaintiff's earlier email, and including a copy of the requested toxicology and prescription reports. (Haarstick Decl. ¶ 11). Haarstick also provided two phone No. for Plaintiff to use for other inquiries to Sun Life or to request a complete copy of the claim file. (Def.'s Mot. Dismiss Ex. F, at 4, DN 8-8).

         Sun Life received no further communication from Plaintiff until January 2018, several months after the 180-day deadline for seeking review of Sun Life's Denial Letter. (Haarstick Decl. ¶ 12). On January 22, 2018, Sun Life received a demand letter from Plaintiff's counsel with a draft of the Complaint alleging violations of multiple Kentucky laws. (Haarstick Decl. ¶ 12).

         This suit was initially filed in state court in Todd County, Kentucky, asserting claims under the Kentucky Unfair Claims Settlement Practices Act (“KUCSPA”) and the Kentucky Consumer Protection Act (“KCPA”). (Compl. ¶¶ 5-9, DN 1-2). Plaintiff asserts that Defendant violated its duties set forth in the KUCSPA when it denied the claim because, “[p]ursuant to the terms of the policy, Defendant was obligated to pay the Plaintiff . . . .” (Compl. ¶ 5). Plaintiff contends that “[d]efendant either knew there was no reasonable basis for denying Plaintiff's claim or acted with reckless disregard for whether such a basis existed.” (Compl. ¶ 6). Plaintiff alleges Defendant's failure to abide by the KUCSPA constituted “oppression, fraud, malice, and bad faith” in violation of the KCPA to the point the Plaintiff is entitled to punitive damages. (Compl. ¶¶ 8-9). Sun Life removed the action to this Court under 28 U.S.C. § 1441. (Notice Removal, DN 1).

         In the Complaint, Plaintiff misidentified Sun Life Financial (U.S.) Services Company, Inc. as the defendant. (Compl. ¶ 2). That company is not an insurance company, did not issue the policies in this case, and has no responsibility for paying benefits under Decedent's policies. Instead, as discussed above, the policies involved here were issued and underwritten by Sun Life Assurance Company of Canada. (Haarstick Decl. ¶ 13; Def.'s Mot. Dismiss, DN 8). Plaintiff's proposed First Amended Complaint names the correct defendant, but otherwise restates the state law claims originally filed in Kentucky state court. (First Am. Compl., DN 13-1).

         II. JURISDICTION

         This Court has “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.

         III. STANDARD OF REVIEW

         Rule 15(a)(2) of the Federal Rules of Civil Procedure instructs that leave to amend a pleading should be freely given “when justice so requires.” Fed.R.Civ.P. 15(a)(2). A motion to amend a pleading should be denied, however, “if the amendment is brought in bad faith, for dilatory purposes, results in undue delay or prejudice to the opposing party, or would be futile.” Colvin v. Caruso, 605 F.3d 282, 294 (6th Cir. 2010) (internal quotation marks omitted) (quoting Crawford v. Roane, 53 F.3d 750, 753 (6th Cir. 1995)). A proposed amendment to a pleading is deemed futile if the amendment ...


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