United States District Court, D. Columbia.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
RITA CAMPBELL, Plaintiff: Tracy Diana Rezvani, LEAD ATTORNEY,
REZVANI VOLIN P.C., Washington, DC; Robert Olin Wilson,
Rezvani Volin & Rotbert P.C., Washington, DC.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA,
doing business as AIG INSURANCE TRUST, AMERICAN INTERNATIONAL
GROUP, INC., Defendants: Raphaelle E. Monty, LEAD ATTORNEY,
Danielle J. Carter, SIDLEY AUSTIN LLP, Washington, DC; David
G Jorgensen, PRO HAC VICE, SIDLEY AUSTIN, LLP, Chicago, IL.
CATAMARAN HEALTH SOLUTIONS, LLC, formerly known as CATALYST
HEALTH SOLUTIONS INC., formerly known as HEALTHEXTRAS, INC.,
Defendant: Scott McIntosh, LEAD ATTORNEY, QUARLES & BRADY
LLP, Washington, DC; Patrick J. Murphy, PRO HAC VICE, QUARLES
& BRADY LLP, Milwaukee, WI.
ALLIANT INSURANCE SERVICES, INC., ALLIANT SERVICES HOUSTON,
INC., Defendants: Eric Damian Welsh, Sarah F. Hutchins, LEAD
ATTORNEY, PARKER POE ADAMS & BERNSTEIN, LLP, Charlotte, NC.
VIRGINIA SURETY COMPANY, INC., Defendant: Harvey Kurzweil,
LEAD ATTORNEY, Winston & Strawn LLP, New York, NY; Neal R.
Marder, LEAD ATTORNEY, WINSTON & STRAWN LLP, Los Angeles, CA;
Thomas M. Buchanan, LEAD ATTORNEY, WINSTON & STRAWN LLP,
Chicago, IL; Kelly A. Librera, PRO HAC VICE, WINSTON & STRAWN
LLP, New York, NY.
LLC, Defendant, Pro se, HEALTHEXTRAS, LLC.
CONTRERAS, United States District Judge.
in Part and Denying in Part Defendants' Motions to
2000 through 2014, Plaintiff Rita Campbell was enrolled in
the HealthExtras benefit program, which purported to provide
her with group disability insurance coverage. Ms. Campbell
now believes that the policy she paid for was illegal and
worthless, and she has brought this putative class action on
behalf of herself and similarly situated residents of the
District of Columbia against seven companies that she
believes contributed to and profited from the sale of
illusory insurance policies. Ms. Campbell never submitted a
claim for coverage and is no longer enrolled in the program,
but she seeks to recover her premium payments and damages,
alleging that Defendants sold her insurance coverage that
they never intended to honor, charged her premiums in excess
of her contractual obligation, and failed to provide truthful
information about the program. In her five-count complaint,
Ms. Campbell asserts numerous violations of the D.C. Consumer
Protection Procedures Act (" CPPA" ), and she
alleges that Defendants either breached their contractual
obligations or, alternatively, that Defendants
are liable for unjust enrichment, conversion, and money had
and received. In their motions to dismiss, Defendants argue
that Ms. Campbell lacks standing because her insurance policy
was enforceable under D.C. law and she suffered no injury,
that her claims are barred by the applicable statutes of
limitations, and that in any event, she has failed to plead
fraud with particularity and failed to state a claim for
relief. Upon consideration of the motions to dismiss, and the
memoranda in support thereof and opposition thereto, the
Court will grant in part and deny in part the Defendants'
motions to dismiss.
case marks one of at least eleven closely related actions
filed across the country seeking to recover premium payments
and damages in relation to the HealthExtras benefit program
(" the program" ), which plaintiffs in each case
allege was marketed and sold to them in violation of state
law. This particular action focuses on
allegations that Defendants advertised and purported to sell
disability insurance coverage through the HealthExtras
benefit program to 3 D.C. residents while violating D.C.
insurance laws and without any intent to provide the paid-for
or 2000, Ms. Campbell received marketing materials about the
HealthExtras benefit program from Defendant HealthExtras,
Inc., now known as Catamaran Health Solutions, LLC ("
Catamaran" ). See 1st Am. Compl. ¶ 53,
ECF No. 29. Catamaran had paid the actor Christopher Reeve to
serve as the face of its marketing campaign, and it reached
potential customers by entering into agreements with credit
card companies that allowed Catamaran to access
cardholders' financial information and to send marketing
flyers to selected cardholders along with their credit card
statements. Id. ¶ ¶ 41, 47. Ms. Campbell
expressed interest in the program, which included disability
insurance packaged together with an out of area emergency
accident and sickness medical expense benefit. Id.
¶ ¶ 56, 66. As a result, Catamaran
mailed her a program description along with a letter
advertising coverage in the form of a " $1,000,000 cash
payment if you are permanently disabled due to an
accident," and " $2,500 a year in reimbursements
for coinsurance and deductibles for healthcare expenses when
you are travelling." Id. ¶ 56.
Campbell then enrolled in the program and agreed to pay
premiums on a monthly or annual basis, with her premiums
being charged to her credit card. Id. ¶ ¶
60, 63. Catamaran's Member Services subsequently sent Ms.
Campbell an enrollment letter commending her for "
hav[ing] armed [her]self with one of the most exciting and
affordable disability plans found anywhere in America
today." Id. ¶ 61. The enrollment
confirmation letter also bore Christopher Reeve's picture
and attributed to him the statement that " [b]ecause
lives can change in an instant, as mine did, you should have
the additional security for yourself and your family that
HealthExtras can provide." Id.
Virginia Surety Company, Inc. (" Virginia Surety" )
served as the underwriter for Ms. Campbell's $2,500
medical expense benefit during the entire period of her
enrollment. Id. ¶ 68. Defendant National Union
Fire Insurance Company of Pittsburgh, PA (" National
Union" ) replaced non-party Federal Insurance Company as
the underwriter of her disability insurance policy effective
January 1, 2005. Id. ¶ ¶ 47(i), 67. Ms.
Campbell also alleges that Catamaran effectively acted as an
underwriter for her disability insurance policy as of July
2000, when it agreed with " at least one insurer"
that Catamaran would " pay disability benefits to any
person who does not qualify as permanently disabled, but who
is nonetheless unable to perform the material and substantial
duties of such person's regular occupation."
Id. ¶ 125.
Catamaran was not a licensed insurance broker in the District
of Columbia, the company paid " real licensed
broker[s]," like Defendant Alliant Services Houston,
Inc. (" Alliant Services" ), to use their names on
correspondence and program documents. Id. ¶ 58.
The Program Summary that Ms. Campbell received from Catamaran
identified Alliant Services' corporate predecessor as the
" Program Administrator," and her payment notices
listed Alliant Services as the " Broker of Record."
Id. ¶ 9.
2004, Ms. Campbell received a " Description of
Coverage" and " Accident Protection Plan Program
Summary" for her disability policy series C11695DBG.
Id. ¶ 70. The description of her policy
contained " extremely restrictive, conflicting and
confusing terms and exclusions which renders any disability
insurance 'coverage' virtually worthless to consumers
and is in sharp contrast to . . . representations made in the
marketing material" she had previously received.
Id. ¶ ¶ 70-75, 103-05. Specifically, Ms.
Campbell asserts that the policy exclusions contradicted
Defendants' marketing materials that had advertised
" valuable protection," " a $1,000,000
tax-free cash payment if you are permanently disabled due to
an accident," and a $1,000,000 payment " [a]fter 12
months of continuing and permanent disability caused by an
accident--including the inability to work." Id.
¶ ¶ 103-05.
materials that Ms. Campbell received in 2004 also stated that
" if any conflict should arise between the contents of
this Description of Coverage and the Master Policy SRG
9540519 or if any point is not covered herein, the terms and
conditions of the Master Policy will govern in all
cases." Id. ¶ 70. But Ms. Campbell claims
that " she has never been provided a copy of Master
Policy SRG 9540519," and she suspects that " [w]hat
little coverage escapes C11695DBG may be further trumped and
negated by Master Policy SRG 9540519." Id.
¶ ¶ 71, 76. Ms. Campbell notes that "
[a]lthough the coverage description disclosed some
limitations on the policy . . . [no] Defendant[s] disclosed .
. . [that] there was no intention to pay disability benefits
that fell within the terms of coverage." Id.
¶ ¶ 81-82.
fact, Ms. Campbell claims, Catamaran, National Union, and
Defendant American International Group, Inc. ("
AIG" ) developed the policies in question " with no
intent to pay ever [sic] disability claims and the specific
intent to deny any disability claims made by victims of the
HealthExtras Scheme." Id. ¶ 107. Public
records show that an individual in California who was
rendered a quadriplegic had his claim denied by National
Union, and that another individual in South Carolina had his
claim denied by National Union after he was rendered a
paraplegic. Id. ¶ 111. " Upon information
and belief," Ms. Campbell further asserts that "
there are thousands of these unfair and unconscionable
denials which are not in the public record."
Id. ¶ 114.
Ms. Campbell alleges that she was never provided with a copy
of the governing Master Policy, on an unspecified date, she
did receive the " Master Application for Blanket
Accident Insurance Policy" for Master Policy
9540519. Master Application, Pl.'s Ex. B at
2-3, ECF No. 29-2. The Master Application is printed on
letterhead naming National Union and Defendant AIG, doing
business as AIG Group Insurance Trust, (" AIG" or
" the Trust" ). 1st Am. Compl. ¶ 77. The
document describes a policy with an effective date of
September 2004, names the Trust as the policyholder, and
riders and endorsements that list the policyholder as "
HealthExtras." Id. ¶ 77. From these facts,
Ms. Campbell concludes that the Trust was created by National
Union, AIG, and Catamaran. Id. " [U]pon
information and belief," Ms. Campbell further alleges
that the corporate defendants issued a Master Policy to
themselves that they did not disclose to group members, and
that they " are in fact the alter-ego of" the
Trust. Id. at ¶ ¶ 73-74, 77.
asserts that the Trust is a " sham organization,"
that it does not constitute a " group that was or is
eligible to purchase group disability insurance under
District of Columbia law," and that the Trust was
created so that Defendants could " avoid regulatory
supervision and oversight." Id. ¶ ¶
93, 95, 97. Defendants purported to sell group insurance so
that they were able to issue a single, Master Policy to
themselves. See id. ¶ ¶ 89, 93. Individual
insureds were provided only with certificates of insurance
that summarized their coverage terms and rights under the
Master Policy, which Defendants did not provide. See
id. ¶ 89. " Because there was no legitimate
group, there was no one to look out for the interests of the
persons paying for the purported disability coverage,"
and policy-holders had " no mechanism for learning,
short of becoming disabled themselves and being denied
coverage, that the purported insurance coverage they were
being sold was illusory and worthless." Id.
¶ ¶ 45, 100.
Ms. Campbell alleges that Defendants issued her policy in
violation of D.C. Code § 31-4712, which forbids the
issuance of group accident and sickness insurance policies
without prior approval from the Commissioner of the D.C.
Department of Insurance, Securities and Banking ("
DISB" ). Id. ¶ ¶ 90-95. She also
claims that Defendants violated a number of DC insurance
regulations, including those prohibiting solicitation by
credit card and forbidding the use of insurance premiums to
pay rebates. Id. ¶ ¶ 84-88.
Campbell further alleges that Defendants' marketing
materials for the program failed to disclose that less than
15% of the premiums that she paid for disability coverage
actually went to the underwriter, National Union.
Id. ¶ ¶ 79-80. As a consequence, she
believes that " [r]oughly 80% of the insurance premiums
paid to the HealthExtras [program] by the Plaintiff has been
collected by [Catamaran] and has not paid for insurance
coverage or paid for anything that would benefit the
Plaintiff." Id. ¶ 80. Ms. Campbell also
complains that Defendants' " direct mail
advertisements did not disclose that the program was illegal,
fraudulent and illusory, and that harsh exclusions limited
almost all claims, or that there was no intent to pay
disability claims under the policy." Id. ¶
least two unspecified dates during the fourteen-year period
that Ms. Campbell was enrolled in the program, her premiums
were increased " without the approval of DISB," and
she was charged an amount that exceeded her contractual
obligation without her authorization. Id. ¶
¶ 27, 65. On August 1, 2012, Catamaran transferred Ms.
Campbell's disability policy to Defendant HealthExtras
LLC, which thereafter " service[d],
administer[ed], collect[ed] and allocate[d] the
premiums," id. ¶ 11, until the benefit
program was terminated at the conclusion of 2014, Notice of
Policy Terminations, Pl.'s Ex. A, ECF No. 43-1.
Campbell asserts that " each Defendant received money
and profited from the illegal" program. 1st Am. Compl.
¶ 117. Specifically, she alleges that Catamaran
and HealthExtras LLC collected her premium payments, see
id. ¶ 123, underwriters National Union and Virginia
Surety and broker Alliant Services all received "
nominal payments" to lend their names to the scheme,
id. ¶ ¶ 131, 150, 157, and AIG, which
developed and controlled the Trust named as the policyholder,
" received a portion of the illegal insurance premiums
paid by Plaintiff," id. ¶
2014, a few months before her coverage was terminated, Ms.
Campbell initiated this putative class action by filing a
complaint on her own behalf and on behalf of similarly
situated residents of D.C. who participated in the
HealthExtras program. See generally Compl., ECF No.
1. After Defendants filed motions to dismiss the matter, Ms.
Campbell rendered the motions moot by filing a first amended
complaint in August 2014. See generally 1st Am.
of the amended complaint asserts a claim of unjust enrichment
based primarily on the allegation that Defendants profited
from the sale of " illegal and void" coverage that
was worthless to purchasers. Id. ¶ ¶
167-84. Count II alleges that Defendants breached the terms
of their contracts and the duty of good faith and fair
dealing by charging Ms. Campbell more than her contractual
obligation and by selling HealthExtras policies while failing
to reveal that they were " illegal and of little
value." Id. ¶ ¶ 186-94. Count III is
a claim of conversion premised on Defendants raising her
premium and charging her more than her contractual
obligation. Id. ¶ ¶ 196-200. Count IV
asserts numerous violations of the CPPA, id. ¶
¶ 202-27, and Count V is a claim of money had and
received also based on the unauthorized premium increases,
id. ¶ ¶ 229-33. As relief, Ms. Campbell
seeks a declaration that the disability policy is illegal, an
award of actual damages, treble damages, statutory damages,
and punitive damages, an injunction prohibiting Defendants
from engaging in unlawful activities in D.C., and
attorneys' fees, costs, and expenses. Id. at 60.
She also seeks " restitution in the form of disgorgement
of all revenues, earnings, profits, compensation and benefits
which District of Columbia residents have paid . . . ."
Id. ¶ 184.
now seek to dismiss all claims pursuant to Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6), arguing that Ms.
Campbell lacks standing, that her claims are barred by the
applicable statutes of limitations, that she has failed to
plead fraud with particularity, and that she has failed to
state a plausible claim for relief.
D.C. Circuit has explained that a motion to dismiss for lack
of standing constitutes a motion under Rule 12(b)(1) of the
Federal Rules of Civil Procedure because " the defect of
standing is a defect in subject matter jurisdiction."
Haase v. Sessions, 835 F.2d 902, 906, 266 U.S.
App.D.C. 325 (D.C. Cir. 1987). Federal courts are courts of
limited jurisdiction, and the law presumes that " a
cause lies outside this limited jurisdiction . . . ."
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); see
also Gen. Motors Corp. v. E.P.A., 363 F.3d 442,
448, 361 U.S. App.D.C. 6 (D.C. Cir. 2004) (" As a court
of limited jurisdiction, we begin, and end, with an
examination of our jurisdiction." ). It is the
plaintiff's burden to establish that the court has
subject matter jurisdiction. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d
Because subject matter jurisdiction focuses on the
Court's power to hear a claim, the Court must give the
plaintiff's factual allegations closer scrutiny than
would be required for a 12(b)(6) motion for failure to state
a claim. See Grand Lodge of Fraternal Order of
Police v. Ashcroft, 185 F.Supp.2d 9, 13-14 (D.D.C.
2001). Thus, the court is not limited to the allegations
contained in the complaint. See Wilderness
Soc'y v. Griles, 824 F.2d 4, 16 n.10, 262 U.S.
App.D.C. 277 (D.C. Cir. 1987). Instead, " where
necessary, the court may consider the complaint supplemented
by undisputed facts evidenced in the record, or the complaint
supplemented by undisputed facts plus the court's
resolution of disputed facts." Herbert v. Nat'l
Acad. of Scis., 974 F.2d 192, 197, 297 U.S. App.D.C. 406
(D.C. Cir. 1992) (citing Williamson v. Tucker, 645
F.2d 404, 413 (5th Cir. 1981)).
Federal Rules of Civil Procedure require that a complaint
contain " a short and plain statement of the claim"
in order to give the defendant fair notice of the claim and
the grounds upon which it rests. Fed.R.Civ.P. 8(a)(2);
accord Erickson v. Pardus, 551 U.S. 89, 93,
127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam). A
motion to dismiss under Rule 12(b)(6) does not test a
plaintiff's ultimate likelihood of success on the merits;
rather, it tests whether a plaintiff has properly stated a
claim. See Scheuer v. Rhodes, 416 U.S. 232,
236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), abrogated on
other grounds by Harlow v. Fitzgerald, 457 U.S.
800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). A court
considering such a motion presumes that the complaint's
factual allegations are true and construes them liberally in
the plaintiff's favor. See, e.g., United
States v. Philip Morris, Inc., 116 F.Supp.2d 131, 135
(D.D.C. 2000). It is not necessary for the plaintiff to plead
all elements of a prima facie case in the complaint.
See Swierkiewicz v. Sorema N.A., 534 U.S.
506, 511-14, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002); Bryant
v. Pepco, 730 F.Supp.2d 25, 28-29 (D.D.C. 2010).
" [t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
'state a claim to relief that is plausible on its
face.'" Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell
A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955,
167 L.Ed.2d 929 (2007)). This means that a plaintiff's
factual allegations " must be enough to raise a right to
relief above the speculative level, on the assumption that
all the allegations in the complaint are true (even if
doubtful in fact)." Twombly, 550 U.S. at 555-56
(citations omitted). " Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements," are therefore insufficient to withstand a
motion to dismiss. Iqbal, 556 U.S. at 678. A court
need not accept a plaintiff's legal conclusions as true,
see id., nor must a court presume the veracity of
the legal conclusions that are couched as factual
allegations. See Twombly, 550 U.S. at 555.
In deciding a motion to dismiss under Rule 12(b)(6), the
Court may take judicial notice of facts litigated in a prior
related case. See Oveissi v. Islamic Republic of
Iran, 879 F.Supp.2d 44, 49-50 (D.D.C. 2012).
a claim of fraud or mistake is alleged, the " short and
plain statement" requirement of Rule 8(a) is joined by
the " particularized" pleading standards of Rule 9.
Federal Rule of Civil Procedure 9(b) requires that, "
[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake." Fed.R.Civ.P. 9(b). The complaint must
therefore " state the time, place and content of the
false misrepresentations, the fact misrepresented and what
was retained or given up as a consequence of the fraud."
Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1278,
305 U.S. App.D.C. 60 (D.C. Cir. 1994) (quoting United
States ex rel. Joseph v. Cannon, 642 F.2d 1373, 1385,
206 U.S. App.D.C. 405 (D.C. Cir. 1981)). Rule 9(b), in other
words, " requires that the pleader provide the 'who,
what, when, where, and how' with respect to the
circumstances of the fraud." Anderson v. USAA Cas.
Ins. Co., 221 F.R.D. 250, 253 (D.D.C. 2004) (quoting
DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.
Motion to Dismiss Pursuant to Rule 12(b)(1)
first argue that this matter must be dismissed pursuant to
Federal Rule of Civil Procedure 12(b)(1) because Ms. Campbell
" fails to allege an injury-in-fact to support Article
III standing." Catamaran's Mot. Dismiss at 1-2, ECF
No. 36. In short, Defendants claim that Ms.
Campbell's suit is premised on the hypothesis " that
if she had become disabled and submitted a covered
claim for benefits, Defendants would have wronged
her by denying it." Catamaran's Mem. Supp. Mot.
Dismiss at 14, ECF No. 36-1. Defendants argue that such
" speculative, counterfactual" claims are
insufficient to establish standing. Id. In response,
Ms. Campbell asserts that she has adequately alleged three
injuries in fact sufficient to establish standing: (1) she
paid premiums for insurance that she would not have purchased
" had she known that Defendants had no present intention
to pay claims covered by such insurance," (2) she was
debited " premiums higher than contractually permitted
for the insurance product," and (3) as to her CPPA
claim, Defendants violated her statutory right " to
truthful information from merchants about consumer goods and
services that are or would be purchased, leased, or received
in the District of Columbia."  Pl.'s Opp'n at
55-57, ECF No. 43 (internal quotation marks omitted). The
Court considers each alleged injury in turn.
Campbell readily acknowledges, to demonstrate standing, she
must " have suffered an injury in fact . . . which is
(a) concrete and particularized, and (b) actual or imminent,
not conjectural or hypothetical." Id. at 53
(citing Food & Water Watch v. EPA, 5 F.Supp.3d 62,
73 (D.D.C. 2013)). Such a showing is part of " the
irreducible constitutional minimum of standing," so to
survive a motion to dismiss, a plaintiff must have produced
at least " general factual allegations of injury
resulting from the defendant's conduct."
Defenders of Wildlife, 504 U.S. at 560, 561
(internal quotation marks and citations omitted).
assessing standing at this stage of litigation, the Court
will " accept the well-pleaded factual allegations as
true and draw all reasonable inferences from those
allegations in the plaintiff's favor," but it will
" not assume the truth of legal conclusions, nor . . .
accept inferences that are unsupported by the facts set out
in the complaint." Arpaio v. Obama, No.
14-5325, 797 F.3d 11, 2015 WL 4772774, at *6 (D.C. Cir. Aug.
14, 2015) (internal quotation marks and citations omitted).
" [T]hreadbare recitals of the elements of standing,
supported by mere conclusory statements, do not
suffice," and " [t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to state a claim of standing that is plausible on its
face." Id. (internal quotation marks and
citations omitted). Additionally, " a plaintiff must
demonstrate standing for each claim he seeks to press."
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352,
126 S.Ct. 1854, 164 L.Ed.2d 589 (2006).
Campbell's first alleged injury is premised on her having
paid for an illusory insurance policy that Defendants did not
intend to honor. Pl.'s Opp'n at 55; see also
1st Am. Compl. ¶ 82 (alleging that while " the
coverage description disclosed some limitations on coverage
under the policy, . . . [none of the] Defendant[s] disclosed
. . . that there was no intention to pay disability benefits
that fell within the terms of coverage." ). She argues
that " because the HealthExtras Scheme was designed to
deny all disability claims, through a list of undisclosed
conflicts and exclusions maintained in a Master Policy the
insureds are never shown, in reality the payment of premiums
purchased only the contractual right to file a legal action
against Defendants . . . not disability insurance."
Pl.'s Opp'n at ...