United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
Carlton Tilley, Jr. Senior United States District Judge.
before this Court is Defendant Randolph Hospital, Inc.'s
(“Randolph”) Motion to Dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6). [Doc. #8.] This
Court has considered Randolph's Motion and supporting
brief [Doc. #9], Plaintiff Stacie Lawrence's Responses
[Docs. #10, 11], and Randolph's Reply [Doc. #12], and
concludes that Ms. Lawrence's Complaint asserts only
state law claims which are preempted by the Employee
Retirement Security Act of 1974 (“ERISA”).
Accordingly, and for the reasons stated fully below,
Randolph's Motion will be granted in part in that Ms.
Lawrence's claims are preempted and denied in part in
that she will be granted leave to amend her Complaint to
assert her claims under ERISA.
Lawrence was employed by Randolph, a North Carolina
corporation, at all times relevant to the Complaint. (Compl.
[Doc. #3] ¶¶ 2, 3.) Randolph offered health and
disability insurance plans administered by Key Benefit
Administrators to its employees as an employee benefit.
(Id. ¶ 3.) The health insurance plan, entitled
“Randolph Hospital Employee Health and Welfare
Plan” and the disability insurance plan, entitled
“Group Disability Insurance Policy” (collectively
“Insurance Plans” or the “Plan”) are
incorporated by reference. (Compl. ¶ 3; [Doc. #9], Ex. A, B.)
to Ms. Lawrence, she worked for Randolph full-time for almost
eight years, with a gap in full-time employment when her
daughter was born. (Compl. ¶ 5.) Ms. Lawrence does not
specify when this gap began, only that she returned to
full-time work in January 2014. (Id.) Her coverage
under the Plans began ninety (90) days from the start of her
most recent full-time employment, which, according to Ms.
Lawrence, was March 13, 2014. (Id.)
March 11, 2014, Ms. Lawrence was involved in a serious car
accident. (Id. ¶ 4.) She was airlifted to the
University of North Carolina at Chapel Hill and was in a coma
when she arrived. (Id.) As a result of the accident,
she suffered brain damage, skull injuries, a shattered
pelvis, broken arm and ribs, and other injuries.
(Id.) She was declared legally incompetent on April
24, 2014, and remained legally incompetent for a period
thereafter. (Id.) According to Ms. Lawrence, at the
time of her accident, she was a full-time employee of
Randolph and eligible for benefits under the Insurance Plans.
(Id. ¶ 6.)
Lawrence alleges that in April 2014, Randolph's Benefits
Coordinator, Ronda Staley, falsified documents to give the
appearance that Ms. Lawrence had been put “on
leave” on March 10, 2014, and was, accordingly, not
eligible for benefits under the Insurance Plans.
(Id. ¶ 7.) Ms. Lawrence alleges that this was
done so that Randolph could avoid paying the medical and
disability payments that were due to her as a result of her
accident. (Id. ¶ 8.) Ms. Lawrence asserts that
she was not placed on leave on March 10, 2014, or any time
before that, and that she was a full-time employee when her
accident occurred. (Id. ¶ 7.)
result of these events, on March 13, 2017, Ms. Lawrence filed
suit in Guilford County Superior Court against Randolph
alleging: (1) Breach of Contract for Hospitalization and
Medical Coverage Policy, (2) Breach of Disability Policy
Contract, and (3) Civil Obstruction of Justice. (Id.
¶¶ 9-24.) She also claims punitive
damages. (Id. ¶¶ 25, 26.) In the
alternative, Ms. Lawrence asserts a claim for Detrimental
Reliance. (Id. ¶¶ 27-29.) Randolph removed
the action to federal court on April 19, 2017, based on
federal question jurisdiction allegedly stemming from ERISA
preemption. (Pet. for Removal [Doc. #1].) Now, Randolph moves
to dismiss the action, because Ms. Lawrence's state law
claims are preempted by ERISA. (Def.'s Mot. to Dismiss
and Mot. to Strike [Doc. #8] at 1.) Randolph further requests
that, if the Court denies its Motion to Dismiss, both Ms.
Lawrence's claim for punitive damages and her jury demand
be struck. (Id.)
threshold question before analyzing preemption is whether or
not the plans in question are governed by ERISA. Randolph
argues that the Insurance Plans are governed by ERISA
(Def.'s Br. in Supp. of Mot. to Dismiss [Doc. #9] at 2),
and Ms. Lawrence does not contest this contention. ERISA
governs any “employee welfare benefit plan”
established or maintained by an employer or employee
organization that is “engaged in commerce or in [an]
industry or activity affecting commerce.” 29 U.S.C.
§ 1003(a). An employee welfare benefit plan is one that
“‘through the purchase of insurance or otherwise,
' provide[s] medical, surgical, or hospital care, or
benefits in the event of sickness, accident, disability, or
death.” Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41, 44 (1987) (quoting 29 U.S.C. § 1002(1)). Thus,
as Randolph is an employer engaged in commerce or an activity
affecting commerce and the Plans are welfare benefit plans,
the Plans are governed by ERISA.
enacted ERISA to provide a uniform federal regulatory regime
over employee benefit plans. Aetna Health Inc. v.
Davila, 542 U.S. 200, 208 (2004). To ensure such
uniformity, “ERISA includes expansive pre-emption
provisions, which are intended to ensure that employee
benefit plan regulation would be exclusively a federal
concern.” Id. Courts recognize two types of
ERISA preemption: complete preemption under § 502(a), 29
U.S.C. § 1132(a), and conflict preemption under §
514, 29 U.S.C. § 1144(a). See, e.g., Sonoco
Prod. Co. v. Physicians Health Plan, Inc., 338 F.3d 366,
370-371 (4th Cir. 2003); Darcangelo v. Verizon
Commc'n, Inc., 292 F.3d 181, 186-87 (4th Cir. 2002).
preemption is a jurisdictional doctrine that transforms a
claim into one arising under federal law “even if
pleaded in terms of state law.” Aetna, 542
U.S. at 208; Metro Life Ins. Co. v. Taylor, 481 U.S.
58, 63-64, 65, 67 (1987). To determine whether a claim has
such preemptive force, courts analyze whether or not the
claim falls within the scope of ERISA's civil enforcement
scheme, § 502(a), which provides the exclusive remedies
for plans governed by ERISA. Aetna, 542 U.S. at
208-09. “ERISA's civil enforcement section, §
502, gives plan participants and beneficiaries the right to
sue to force disclosure of certain information, to recover
benefits due under the plan, to clarify the right to future
benefits, or to enforce rights under ERISA or the
plan.” Darcangelo, 292 F.3d at 192. In
interpreting § 502(a), the Fourth Circuit Court of
Appeals has outlined a three-prong test for complete
preemption: “(1) the plaintiff must have standing under
§ 502(a) to pursue its claim; (2) the claim must come
within the scope of an ERISA provision that can be enforced
via § 502(a); and (3) the claim must not be capable of
resolution without an interpretation of the contract governed
by federal law, i.e., an ERISA-governed employee benefit
plan.” Prince v. Sears Holdings Corp., 848
F.3d 173, 177 (4th Cir. 2017) (quoting Sonoco, 338
F.3d at 372).
United States Supreme Court and the Fourth Circuit have
consistently held that common law claims stemming from
employee benefit claims are preempted by ERISA. See,
e.g., Pilot Life Ins. Co., 481 U.S. 41 (finding
state common law breach of contract, fraud, and bad faith
claims preempted by ERISA); Powell v. Chesapeake &
Potomac Tel. Co., 780 F.2d 419, 422 (4th Cir. 1985)
(finding state law claims based on the maladministration of
employee benefits preempted by ERISA).
Fourth Circuit has made clear that when a state law claim is
completely preempted under § 502(a) and has been removed
to federal court, dismissal of the claim is inappropriate.
See Darcangelo, 292 F.3d at 195 (“[W]hen a
claim under state law is completely preempted and is removed
to federal court because it falls within the scope of §
502, the federal court should not dismiss the claim as
preempted, but should treat it as a federal claim under
§ 502.”). Rather, the court “may choose to
grant plaintiff leave to amend her complaint in order to
clarify the exact scope of relief requested under §
502(a).” Singh v. Prudential Health Care Plan,
Inc., 335 F.3d 278, 292 (4th Cir. 2003).
Lawrence's first two causes of action are both for breach
of contract. She concedes that both claims are governed by
ERISA and that she is suing for benefits due. (Br. in
Opp'n to Def.'s Mot. to Dismiss [Doc. #10] at 3.)
[Plaintiff] timely paid ongoing hospitalization and medical
coverage insurance pursuant to ERISA believing that they were
covered and wishing to keep the policies in force, virtually
no medical bills had been paid and no disability was paid or
processed. The Plaintiff in filing this action at least
believed that it was possible that the action ...