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Boster v. Reliance Standard Life Insurance Co.

United States District Court, District Circuit

August 8, 2013

RONALD S. BOSTER, Plaintiff,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY, et al., Defendants.

MEMORANDUM OPINION

AMY BERMAN JACKSON United States District Judge

On June 18, 2012, plaintiff Ronald S. Boster brought this action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq., to recover benefits he claims are due under an employee short term disability insurance plan (“Plan”) established and maintained by his former employer, the Public Company Accounting Oversight Board (“PCAOB”), and issued by Reliance Standard Life Insurance Company (“Reliance”). Compl. [Dkt. # 1] ¶¶ 1, 4–5. Because Reliance has failed to demonstrate that its decision to utilize a new approach in its construction and application of the Plan was the result of a deliberate, principled, and reasonable process, the Court will enter judgment in Boster’s favor against the insurer. But the claims against the employer, PCAOB will be dismissed.

Boster’s original complaint asserted two causes of action against both defendants: Count I asserted a loss of benefits claim under 29 U.S.C. § 1132(a)(1); and Count II asserted a breach of fiduciary duty claim under 29 U.S.C. § 1132(a)(2). Compl. ¶¶ 45–56. On October 3, 2012, PCAOB moved for judgment on the pleadings on both counts under Federal Rule of Civil Procedure 12(c). PCAOB Mot. for J. on the Pldgs. [Dkt. # 12] at 1. On October 23, 2012, Reliance moved for summary judgment on both counts under Federal Rule of Civil Procedure 56. Reliance Mot. for Summ. J. [Dkt. # 17] at 3. While these motions were pending, Boster filed a motion for leave to file an amended complaint. Pl.’s Mot. for Leave to File Am. Compl. [Dkt. # 26]. The proposed amended complaint revised Count II to assert a breach of fiduciary duty claim against PCAOB under 29 U.S.C. § 1132(a)(3)[1] and added allegations with respect to that claim. Am. Compl. [Dkt. # 26-1] ¶¶ 6, 11, 18, 20, 56-61.

On April 5, 2013, Boster filed a cross-motion for summary judgment against Reliance. Pl.’s Opp. to Def Reliance Mot. for Summ. J. and Cross-Mot. for Summ. J. and Mem. in Supp. (“Pl.’s Cross-Mot.”) [Dkt. # 33]. Then on April 18, 2013, Boster filed a motion for leave to file a second amended complaint; the proposed second amended complaint added information that Boster learned through discovery and added a new count against PCAOB for interference with the attainment of benefits under 29 U.S.C. § 1140 (Count III). Pl.’s Mot. for Leave to File 2d Am. Compl. and Mem. in Supp. [Dkt. # 35] at 5-6, 12-13.

With respect to Boster’s claims against Reliance, the Court will deny Reliance’s motion for summary judgment and grant Boster’s cross-motion. Under those circumstances, Boster’s motion for leave to file a second amended complaint as to Reliance will be denied as moot. Additionally, the Court will dismiss all of Boster’s claims against PCAOB.

Count I : The Court will grant PCA1OB’s motion for judgment on the pleadings because Boster has failed to plausibly allege that PCAOB acted as a fiduciary with respect to the benefits determination. The Court will also deny Boster’s motion for leave to file a second amended complaint because the proposed amendments do not cure this deficiency and are thus futile.
Count II: The Court will grant PCAOB’s motion for judgment on the pleadings on Count II of the original complaint because Boster has conceded that it failed to state a claim under 29 U.S.C. § 1132(a)(2). The Court has provided an adequate remedy for Boster’s only alleged injury -the loss of his benefits - by granting his motion for summary judgment against Reliance. Since Boster has failed to allege any separate injury that flowed from PCAOB’s alleged breach of its fiduciary duties, he has not pled facts establishing his entitlement to equitable relief under section 1132(a)(3), and the Court will deny Boster’s motion for leave to file an amended and second amended complaint to assert a breach of fiduciary duty claim against PCAOB as futile.
Count III: The Court will deny Boster’s motion for leave to file a second amended complaint to add a third count against PCAOB because the proposed second amended complaint does not plausibly allege that PCAOB interfered with Boster’s attainment of his rights.

BACKGROUND

The following facts are undisputed except where noted.[2]

I. PCAOB’s Short Term and Long Term Disability Insurance Plans

The Public Company Accounting Oversight Board (“PCAOB”) is a nonprofit corporation headquartered in the District of Columbia. Compl. ¶ 5. PCAOB sponsors a Group Short Term Disability Program (“Plan”) for its employees. Id. ¶ 5. The Plan qualifies as an employee welfare plan under 29 U.S.C. § 1002(1), and is therefore governed by ERISA. Id. ¶ 8. PCAOB contracted with Reliance Standard Life Insurance Company (“Reliance”) to provide the short term disability insurance benefits under the Plan. Id. ¶ 5. The Plan documents designate PCAOB as the plan administrator and Reliance as the claims fiduciary. Group Short Term Disability Insurance Program, Ex. A to PCAOB Mot. for J. on the Pldgs. (“Short Term Disability Plan”) [Dkt. # 12-2] at 24, 35.[3] As the claims fiduciary, Reliance “has the discretionary authority to interpret the Plan and the insurance policy and to determine eligibility for benefits. Decisions by the claims review fiduciary shall be complete, final and binding on all parties.” Id. at 10, 35.

Under the terms of the Plan, an employee may receive a maximum of sixteen weeks of benefits for one period of disability. Short Term Disability Plan at 5. The Plan requires Reliance to pay short term disability benefits “from the later of the exhaustion of sick leave; or . . . the eighth consecutive day of disability . . . .” Short Term Disability Plan at 5; Compl. ¶ 20. PCAOB does not offer “sick leave” to its employees, though. Instead, it “provides a Paid Time Off (‘PTO’) benefit to use as employees wish: for vacation, personal or family needs or in case of sickness.” PCAOB Employment Policies and Procedures Manual, Ex. 2 to Pl.’s Cross-Mot. [Dkt. # 33-2] at 12; Compl. ¶ 22.

Reliance also provides long term disability benefits to PCAOB employees. Compl. ¶ 38; Administrative Record, Ex. to Pl.’s Cross-Mot. (“AR-STD”) [Dkt. #s 33-9, 33-10, and 33-11] at 28. Under the long term disability plan, benefits begin 112 days after the first day of disability. AR-STD-0028. The long term disability plan permits Reliance to deduct other income that the plan participant simultaneously receives – including social security benefits and short term disability benefits – from the long term disability payment. See AR-STD-0028; Compl. ¶ 38.

II. Boster’s Disability Claim

Ronald Boster worked as a Special Advisor to a PCAOB Board Member from January 2003 to September 2010. Compl. ¶ 7. He was a participant in the short term and long term disability plans during his tenure at the corporation. Compl. ¶ 7. Boster was scheduled for back surgery on September 25, 2010. Comp. ¶ 11. He informed his supervisor that he anticipated a short absence from work for the surgery, and his supervisor approved his using paid time off during that absence. Comp. ¶ 11. Before the scheduled surgery, Boster became ill, and he underwent emergency surgery on September 11, 2010. Compl. ¶ 12. Boster became disabled due to complications from the surgery, and he has remained disabled since then. Compl. ¶¶ 12-13. His last day of work was September 10, 2010, and PCAOB charged Boster’s absence from work, starting on September 11, to his paid time off. Compl. ¶¶ 13, 15. Boster alleges that his wife kept his supervisor apprised of his condition during the period immediately after the surgery. Compl. ¶ 14.

In mid-October 2010, Boster filed for short term disability benefits. AR-STD-0121. The complaint alleges that Boster’s wife informed PCAOB that Boster preferred to receive short term disability benefits instead of paid time off. 2d Am. Compl. [Dkt. # 35-1] ¶ 18. But a PCAOB representative supposedly told Mrs. Boster that PCAOB had a “newly revised STD Plan” that required him to use of six weeks of paid time off before drawing short term disability benefits. 2d Am. Compl. ¶ 33.

On November 1, 2010, Tanya Janish, a human resources associate at PCAOB, sent the paperwork for Boster’s short term disability benefits claim by email to Amy Stephens, a claims examiner at Reliance. Nov. 1, 2010 Email, Ex. 3 to Reliance Mem. in Opp. to Pl.’s Mot. for Leave to File 2d Am. Compl. [Dkt. # 39-3] at 1.[4] In the transmittal email, Janish told Stephens that PCAOB had a “new process” for administering the Plan for employees who file for short term disability benefits after they have been out for a while: “The plan is for the employee to use PTO through the pay period in which they submit the STD paperwork. The STD period would start after the elim period, but the PTO used that pay period would be counted towards their 16 week balance.” Id. As the PCAOB representative explained it, under the new process, the paid time off received by the employee would offset the short term disability benefits. Id. That is, the short term disability benefits period would still be sixteen weeks, but Reliance would only pay benefits for the period during which the employee was not receiving paid time off.[5] The email explained that PCAOB would inform Reliance when the disabled employee stopped receiving paid time off, so that Reliance could begin paying short term disability benefits. Janish asked Stephens to “hold off” on paying Boster, and stated that she would “tell [Reliance] the date to start payments.” Id.

Amy Stephens of Reliance immediately rejected PCAOB’s proposal; she stated: “I did speak with [other members of my team] on the change. I don’t agree with the PTO counting towards the 16 week benefit duration. I don’t think we can do that.” Id.

On November 3, 2010, Janish at PCAOB spoke with Joseph Meehan, Reliance’s regional sales representative, regarding the new process. AR-STD-0121. The next day, Janish wrote an email to Reliance’s claims team to put the “new process” that she and Meehan discussed “in writing” and to make sure that PCAOB and Reliance were “on the same page.” AR-STD-0121. Under what the email reveals to be the revised version of the proposed new process, employees who filed for short term disability benefits after they had been out for a while would still be required to use their paid time off until the end of the pay period in which they submitted their benefits claims. Id. The short term disability benefits payments for those employees would then begin the day after the employee stopped receiving paid time off and would continue for the full sixteen weeks; paid time off would not be used to offset the sixteen weeks of benefits. Id. The long term disability benefits start date would not change based on the employee’s use of paid time off; as provided by the contract, it would still begin 112 days after the first day of disability. Id. Thus, under this scenario, the delayed start date for the sixteen weeks of short term disability benefits would overlap with the period in which the employee received long term disability benefits. AR-STD-0121. And, pursuant to the long term disability plan, during this overlap period, the long term disability benefits payments would be reduced by the amount of short term disability benefits paid. Id. Janish asked the Reliance claims team to confirm that her understanding of the new process was correct. Id. Meehan responded: “that is exactly how it will work.” Id.

In a November 9, 2010 letter, Reliance approved Boster’s claim for short term disability benefits. Compl. ¶ 18. In the approval letter, Reliance explained that since Boster had elected to use his paid time off through October 31, 2010, his benefits would start on November 1, 2010. AR-STD-0026; see also Compl.¶ 18. Boster then received short term disability benefits for the sixteen weeks from November 1, 2010 to February 21, 2011. AR-STD-0002. Based upon these facts, Reliance assures the Court that Boster has suffered no particular harm, since he received a full sixteen weeks of short term disability benefits. See Reliance Mem. in Supp. of Mot. for Summ. J. [Dkt. # 17-1] at 1.

But that is not where the story ends. On January 1, 2011, Boster began receiving long term disability benefits to which he was also entitled, and the start date for those payments was not – and could not be – correspondingly delayed. AR-STD-0028. So, Boster’s sixteen weeks of short term disability benefits payments overlapped with the period in which he was bound to receive his long term disability benefits for approximately seven weeks, from January 1 to February 21, 2011. Compl. ¶¶ 25–27. During that overlap period, Reliance deducted the amount of short term disability benefits that Boster was receiving from his long term disability benefits payment. See e.g., AR-STD-0028.

Boster's claim that under the ''new process, ” he lost six weeks of short term disability benefits, or approximately $18, 000, can be illustrated by the following chart:

Payments Boster would have received under previous Reliance/PCAOB process

Payments Boster actually received

Paid time off for 6 weeks (paid by PCAOB)

Paid time off for 6 weeks (paid by PCAOB)

Short term disability benefits for 16 weeks (paid by Reliance)

Short term disability benefits for 16 weeks (paid by Reliance)

Long term disability benefits (paid by Reliance)

Long term disability benefits

- 6 weeks of short term disability benefits[6]

(paid by Reliance)

Remaining accrued paid time off (paid by PCAOB)

Remaining accrued paid time off (paid by PCAOB)

Difference:-

18, 055.55

Thus, while Reliance's statement that Boster received his full sixteen weeks of short term disability benefits may be technically correct, that does not mean that he incurred no loss due to the delayed start of those payments. He received less from Reliance than he would have otherwise.[7] On October 6, 2011, Boster appealed Reliance's decision to start his benefits on November 1, 2010. AR-STD-0030. Reliance denied the appeal on November 18, 2011. AR-STD-0001.

III. Procedural History

On June 18, 2012, Boster filed this suit against PCAOB and Reliance. The procedural history is as follows:

• In the original complaint, Boster asserted two claims against both defendants. Count I alleged a loss of benefits claim under 29 U.S.C. § 1132(a)(1) on the grounds that “RELIANCE with the cooperation and participation of Defendant PCAOB, refused to commence benefits until November 1, 2010.” Compl. ¶¶ 45-51. Count II alleged that defendants breached their fiduciary duties and sought a remedy under 29 U.S.C. 1132(a)(2) and (g)(1). Compl. ¶¶ 52-56.
• On October 3, 2012, PCAOB moved for judgment on the pleadings on both counts. PCAOB Mot. for J. on the Pldgs. at 1. Boster opposed PCAOB’s motion. Pl.’s Opp. to PCAOB Mot. for J. on the Pldgs. [Dkt. # 24].
• On October 23, 2012, Reliance moved for summary judgment on both counts. Reliance Mot. for Summ. J. at 3.
• On February 7, 2013, Boster filed a motion for leave to file an amended complaint. Pl.’s Mot. for Leave to File Am. Compl. The new complaint revised Count II to assert a cause of action for a breach of fiduciary duty solely against PCAOB under 29 U.S.C. § 1132(a)(3) and added allegations to bolster that claim. Am. Compl. ¶¶ 6, 11, 18, 20, 56-61. PCAOB opposed the motion. PCAOB’s Mem. in Opp. to Pl.’s Mot. for Leave to File Am. Compl. [Dkt. # 28]. But Reliance did not. See Pl.’s Mot. for Leave to File Am. Compl. at 1.
• On April 5, 2013, Boster filed an opposition to Reliance’s motion for summary judgment and a cross-motion for summary judgment. Pl.’s Cross-Mot.
•On April 18, 2013, Boster filed a motion for leave to file a second amended complaint. Pl.’s Mot. for Leave to File 2d Am. Compl. In the proposed second amended complaint, Boster added information that he learned from discovery and a new claim against PCAOB for interference with his attainment of benefits under 29 U.S.C. § 1140 (Count III). See 2d Am. Compl. ¶¶ 20, 25, 28, 81-86.

The parties’ motions are fully briefed and ripe for decision.

STANDARD OF REVIEW

I. Motion for Judgment on the Pleadings

A motion for judgment on the pleadings pursuant to Rule 12(c) should be granted “only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” Longwood Vill. Rest., Ltd. v. Ashcroft, 157 F.Supp.2d 61, 66 (D.D.C. 2001), citing Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). Put another way, “[i]f there are allegations in the complaint which, if proved, would provide a basis for recovery[, ] the Court cannot grant judgment on the pleadings.” Nat&rsqu ...


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