In Rosenthal v. Unum Group, 2018 WL 1250483 (D. Mass. 2018), the U.S. District Court of Massachusetts allowed the defendants' motion to transfer a case filed in Massachusetts to the U.S. District Court of Kansas.

 

Rosenthal was insured under an individual disability policy issued by Provident Life and Accident Insurance Company in 1992 while she resided in Pennsylvania. She moved to Kansas in 1999. In 2014, she filed a claim for disability benefits.

 

Rosenthal was approved for benefits for a period of time and then benefits were discontinued. All benefits were sent to Rosenthal in Kansas where she lived. She also worked nearby in Missouri and received all of her medical treatment in Kansas or reasonably close thereto.

 

Rosenthal filed suit in Massachusetts. The defendants moved to transfer the case to Kansas pursuant to 28 U.S.C. §1404(a).

 

While noting that there was a strong presumption in favor of the plaintiff's choice of forum, the court also noted that if that choice has little or no connection to the operative facts of the case, the court may afford less weight to it.

 

While conceding that almost all witnesses and documents resided in Kansas, or within the subpoena power of the U.S. District Court of Kansas, Rosenthal argued that because current or former employees of the defendants who handled her claim lived or worked in Massachusetts, the case should remain there. The court was not persuaded, noting that most of the company witnesses identified by Rosenthal were still employed by the company and therefore could be secured to testify in Kansas.

 

Ultimately, the court was persuaded by its analysis of which state had a more significant relationship with the case. The court found that Kansas would have the greater interest in the resolution of the claim given that the alleged breach occurred in Kansas and Rosenthal lived there.

 

The court granted the motion transferring the case to Kansas.

 

Joseph M. Hamilton and Kevin Kam of Mirick O'Connell represented Unum Group and Provident Life and Accident Insurance Company.

In Rodriguez-Lopez v. Triple-S Vida, Inc., 2018 WL 637397 (D. Puerto Rico 2018), the U.S. District Court of Puerto Rico, applying the de novo standard of review, found Rodriguez to be totally disabled from any occupation due to fibromyalgia.

 

The case had previously been heard by the district court under the arbitrary and capricious standard of review, 2015 WL 5792621, and the court had upheld the termination of benefits. On appeal, the First Circuit determined that the district court should have applied the de novo standard of review, 850 F.3d 14 (1st Cir. 2017). Thus, the case was returned to the district court.

 

Rodriguez had been paid 24 months of benefits under the mental illness provision of the ERISA plan. After those benefits were exhausted, Triple-S reviewed the claim for a physical disability and denied benefits.

 

Applying the de novo standard of review, the court found that Rodriguez had met her burden of demonstrating that she was disabled from any gainful occupation. The court primarily relied on the opinion of Rodriguez's treating physician, who had treated her for over 10 years. During that time the treating physician had provided three functional capacity estimates, all of which found that Rodriguez was totally disabled. The court placed significant weight on the treating physician, not only because he had treated Rodriguez for over a decade, but also because, in the court's view, diagnosing fibromyalgia depended on knowledge and long-term observation of subjective evidence, such as the patient's pain. The court found the treating physician's consistent diagnosis of fibromyalgia since 2004 based on physical examinations and clinical testing and consistent observations of physical manifestations of her condition constituted objective medical evidence of Rodriguez's condition and her inability to perform the duties of an occupation.

 

The court rejected one of the independent medical evaluations performed on behalf of Triple-S, finding that physician inappropriately did not give sufficient merit to Rodriguez's subjective evidence and based his analysis on dated information. The court also rejected a vocational assessment because it relied on the independent physician's medical evaluation, which the court had rejected. While Triple-S had another evaluation of Rodriguez's medical records performed, the court held it gave greater weight to the opinion of the treating physician given that he had conducted a multi-year and in-person assessment of Rodriguez's conditions.

 

Rodriguez had also obtained Social Security disability benefits. The court upheld Triple-S's rejection of that determination because it was based on a combination of both physical and mental impairments. The court also rejected Rodriguez's conflict of interest argument finding that she had provided no evidence that Triple-S was influenced by the conflict.

 

The court awarded Rodriguez total disability benefits retroactive to the date of denial.

COURT DENIES DISCOVERY IN ERISA CASE, INCLUDING DOCUMENTS PROTECTED BY THE ATTORNEY-CLIENT PRIVILEGE

COURT SEVERELY LIMITS PROPOSED ADDITIONS TO THE ADMINISTRATIVE RECORD

In Weddle v. Life Insurance Company of North America, 2018 WL 2376358 (D. Mass. 2018), a Magistrate Judge issued a Report and a Recommendation that Weddle's claim for intentional infliction of emotional distress be dismissed.  The District Court adopted the Magistrate Judge's Report and Recommendation.  See 2018 WL 2376323. 

 

Weddle was covered by a long-term disability plan provided by her employer and funded by a policy issued to the employer by Life Insurance Company of North America ("LINA").  After multiple efforts to schedule an IME for Weddle, LINA terminated the claim on the grounds that she had failed to cooperate in the administration of her claim.  Weddle filed an administrative appeal, but LINA upheld its decision.  Suit followed.

 

Weddle's complaint included a claim for benefits pursuant to ERISA.  She also included a state common law claim for intentional infliction of emotional distress.  She argued that LINA engaged in extreme and outrageous conduct beyond the bounds of decency by scheduling the IME on a day Weddle was unavailable due to a family illness and refusing to reinstate her benefits following her appeal. 

 

The Magistrate Judge held that Weddle's claim arose from two different allegations.  The first, that LINA terminated Weddle's benefits and then refused to reinstate them following her appeal knowing it would cause her emotional distress.  The Magistrate Judge held that portion of the claim related to an employee benefit plan and therefore was preempted by ERISA.

 

The Magistrate Judge, however, held that the allegation that LINA inflicted emotional distress on Weddle when it scheduled the IME for times that LINA knew Weddle would not be available and then refused to schedule the exam at a time when she would be available was an allegation of tortious conduct separate and distinct from any claim regarding LINA's administration of the plan, and held that portion of the claim would not preempted by ERISA because it would not require the court to evaluate or interpret the terms of the ERISA plan. 

 

The Magistrate Judge went on to then assess that claim pursuant to the standard for a motion to dismiss, that is whether that conduct, if true, rose to the level of extreme and outrageous conduct that would be utterly intolerable in a civilized society.  The Magistrate Judge found that it would not and therefore failed to state a valid claim for intentional infliction of emotional distress.

 

Lastly, given that it had dismissed the state common law claim, the Magistrate Judge held that Weddle would not be entitled to a jury and recommended that her jury demand be stricken. 

COURT UPHOLDS DENIAL OF LIFE INSURANCE BENEFITS FOR FAILURE TO SUBMIT EVIDENCE OF INSURABILITY

NO CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY FOR MINISTERIAL ACTS

In Erb v. Javaras, 2018 WL 3431959 (Mass. Super. 2018) a Superior Court in Massachusetts denied Javaras's motion for summary judgment based upon disputed issues of fact.

 

Javaras, an insurance agent, also served as a trustee of an irrevocable trust established by DiGeronimo. After Javaras was replaced as a trustee, the new trustee, Erb, alleged that Javaras had engaged in a churning scheme by repeatedly buying unnecessary, unsuitable, and expensive life insurance policies in order to increase his commissions. Erb brought claims of breach of fiduciary duty, fraud, negligence and violations of Chapter 93A.

 

Javaras brought a motion for summary judgment relying, in part, on the statute of limitations. The court held that the standard to be applied was that where a fiduciary relationship exists, the failure to disclose the facts that would give rise to knowledge of a cause of action would constitute fraudulent conduct and is equivalent to fraudulent concealment. Thus, the running of the statute of limitations would not begin until the plaintiff had actual knowledge of the wrong committed by the fiduciary.

 

In opposing the motion for summary judgement, Erb claimed that the trust did not have actual knowledge of the unsuitability of the insurance policies until he replaced Javaras as trustee. The court held that if the jury credited that testimony, the statute of limitations would not have begun to run until 2013, which would mean that all the claims asserted in the case were timely.

 

Javaras also sought summary judgment due to a release that had been issued by the trust to the insurer and its affiliates. While noting that an earlier decision in the case could be interpreted that Javaras was an affiliate of the insurer and therefore protected by the release, the court also held that if the jury found that Javaras was acting in a fiduciary capacity, the release would not apply without a full disclosure of the facts by Javaras to the trust. Thus, an issue of fact existed as to this claim.

 

Finally, the court rejected Javaras's motion to dismiss a collateral policy which had been obtained for the trust. The trust claimed that the policy should have been a term life policy instead of a whole life policy. Javaras claimed that because the trust received the product purchased he was entitled to summary judgment. The court disagreed. It held that an insurance broker who holds himself as possessing skill in obtaining appropriate insurance has a duty to exercise that skill and may be held liable if he recommends an inappropriate policy. Thus, summary judgment was denied on that issue as well.

In Torruella v. Transamerica Life Insurance Co., 2018 WL 1902595 (D. Puerto Rico 2018) the U.S. District Court of Puerto Rico remanded a case removed to that Court after finding a lack of diversity.

 

The case had a somewhat tortured procedural history. Torruella originally brought the case in the trial court for the Commonwealth of Puerto Rico. He sued both Transamerica and its agent, Global Insurance Agency. The suit arose from Torruella's claim that he was promised that his insurance premium would not increase over the life of the policy.

 

Transamerica removed the case to federal court and argued that the complaint stated no actionable claim against Global (a citizen of Puerto Rico) and therefore Global had been fraudulently joined. The district court agreed and denied Torruella's motion to remand the case to state court.

 

After Torruella unsuccessfully attempted to amend his complaint, he dismissed the federal court case. However, less than a month later Torruella filed a new complaint in the Commonwealth of Puerto Rico, again naming Transamerica and Global as defendants but also adding claims against the estate of the individual agent, Bruno, that had handled the sale of the policy.

 

In a flurry of activity prior to Transamerica again removing the case to federal court, Torruella obtained an order from the Puerto Rico Superior Court imposing a preliminary injunction against Transamerica and Global and making a series of findings of fact regarding the relationship of Transamerica, Global and Bruno to the transaction.

 

After Transamerica again removed the case to federal court, Torruella moved to remand.

 

Relying heavily on the findings made by the Puerto Rico Superior Court, the district court allowed Torruella's motion to remand the case. The court noted the additional claims made by Torruella in the new complaint as well as the findings made by the Puerto Rico Superior Court that Global and Bruno were agents of Transamerica, that they made assurances to Torruella that the policy met his required specification, and that there was a substantial likelihood that Torruella could establish that Transamerica waived various provisions of the policy. Therefore, the district court held that Torruella had cleared the hurdle of establishing a reasonable possibility of prevailing against Global and/or Bruno under Puerto Rico law.

 

The case is interesting for several other reasons. First, Torruella is a justice of the First Circuit Court of Appeals. Secondly, Torruella successfully managed to have the Superior Court issue a preliminary injunction and make detailed findings against the defendants without waiting for any response to the injunction from the defendants. Those findings were in large part the basis under which the district court allowed the motion to remand.