652 F.Supp.3d 929
S.D. Ohio2023Background
- Dr. Marcos Estrada Gomez, employed by Bon Secours Mercy Health, was insured under an ERISA-governed employer-sponsored life-insurance Plan; Sun Life was the insurer, Sagewell the policyholder/plan sponsor, and Benefit Advisors Services Group (BASG) the plan administrator.
- In 2020 Dr. Estrada elected to increase coverage from two times to five times his base salary and paid increased premiums via payroll deduction; he was not provided plan documents at the time of election.
- Dr. Estrada died on August 29, 2020; his spouse, Patrick Igo, the named beneficiary, submitted a claim but received only two times salary from defendants, who denied the 5x benefit asserting missing "evidence of insurability."
- Igo sued (individually and as estate administrator) seeking the full five-times benefit; Sun Life answered, Sagewell and BASG moved to dismiss, and Mercy Health negotiated a settlement with Igo.
- The court denied Sagewell/BASG’s 12(b)(6) motion as untimely and, on the merits, concluded the complaint adequately alleged joint responsibility (group pleading) and put them on notice; the court granted dismissal of Mercy Health with prejudice under Rule 21 and declined to order early disclosure of the settlement agreement as a condition of dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of Sagewell/BASG 12(b)(6) motion | The motion was untimely; defendants waived the defense by missing the answer deadline. | Defendants offered no timely excuse. | Motion was untimely and may be denied on that ground; court also addressed merits. |
| Sufficiency of complaint / group pleading under Rule 8 | Complaint pleads that all defendants shared responsibility for administering the Plan and denying benefits; allegations give fair notice. | Complaint lumps defendants together and fails to fairly apprise Sagewell/BASG of specific misconduct. | Complaint survives — group pleading permissible here given joint role in administering and denying benefits. |
| Applicability of heightened pleading (Rule 9(b)) to negligent misrepresentation claim | Plaintiff argued Rule 8 sufficed and, even if Rule 9(b) applied, allegations give notice of claims and joint responsibility. | Defendants suggested Rule 9(b) may apply. | Court did not decide definitively; noted split in authority but found allegations adequate even under heightened standard. |
| Dismissal of one defendant and disclosure of settlement | Igo moved to dismiss Mercy Health with prejudice based on settlement. | Sun Life requested the settlement agreement be disclosed as a condition so it can offset any recovery. | Court construed dismissal as under Rule 21, granted dismissal with prejudice, denied conditioning dismissal on disclosure as premature and denied court-ordered early discovery. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim and not rely on labels and conclusions)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts raising claims above speculative level)
- Papasan v. Allain, 478 U.S. 265 (1986) (courts need not accept legal conclusions disguised as factual allegations)
- Philip Carey Mfg. Co. v. Taylor, 286 F.2d 782 (6th Cir. 1961) (Rule 41 in Sixth Circuit construed as permitting dismissal only of entire action)
- Grover v. Eli Lilly & Co., 33 F.3d 716 (6th Cir. 1994) (factors to consider in Rule 41 dismissals: effort/expense, delay, explanation, summary judgment filings)
- Gold Crest, LLC v. Project Light, LLC, 525 F. Supp. 3d 826 (N.D. Ohio 2021) (group pleading may be acceptable where corporate defendants act in concert)
- Bors v. Johnson & Johnson, 208 F. Supp. 3d 648 (E.D. Pa. 2016) (discussing split on whether Rule 9(b) applies to negligent misrepresentation)
- Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389 (6th Cir. 1998) (scope of discovery is broad and includes information reasonably calculated to lead to admissible evidence)