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A man’s complaint against his employer after insurance coverage for his child and wife, who has breast cancer, was canceled can proceed with his claim after a federal judge denied the company’s motion to dismiss.
Chief Judge Holly Brady of the Indiana Northern District Court issued the order Tuesday in Nick A. Taylor, Amber N. Taylor, and Z.T. by his next friends Nick A. Taylor and Amber N. Taylor v. BW Wings Management, LLC., 1:22-CV-0106.
BW Wings Management LLC is the plan fiduciary of the BW Wings Management LLC employee benefit plan, according to court records. Through this self-funded group plan, BW Wings provides eligible employees health insurance coverage.
CIGNA and Orchestrate HR administer the plan for BW Wings.
Nick Taylor began working for BW Wings as a regional manager in early 2017. BW Wings twice promoted him, making him area director and then the director of operations in February 2020.
Taylor is married, and he and Amber Taylor have a minor child, Z.T.
As a full-time employee of BW Wings, Taylor was eligible to receive benefits from the plan, which also provides dependent benefits to eligible family members of an employee.
As part of Taylor’s promotion to director of operations and his employment benefits, BW Wings promised Taylor that it would extend health insurance to his wife and child. BW Wings began doing so on March 1, 2020.
Later that spring, Taylor’s wife was diagnosed with an aggressive form of breast cancer and was scheduled for surgery on July 29, 2020.
On July 16, 2020, after the surgery was scheduled but before it had occurred, Mark Jones, co-owner of BW Wings, informed Taylor that his wife and child’s health insurance was improperly implemented under the plan outside the open enrollment period, and the health insurance for both of them would end on July 31.
The next day, Taylor contacted David Moore, an insurance liaison for BW Wings, about the cancellation of his wife and child’s health insurance. Moore confirmed the cancellation would be effective July 31, 2020.
On July 21, Taylor told Moore about his wife’s surgery scheduled for July 29.
The next day, Jones called Taylor and informed him that his wife and child’s and health insurance under the plan would be retroactively canceled to June 30, 2020.
Because Taylor’s wife had no health insurance and could not afford to pay out of pocket for the surgery, she was forced to postpone her surgery.
The Taylors brought suit asserting interference with their health benefits under the Employee Retirement Income Security Act of 1974, as well as state-law claims for promissory estoppel, breach of fiduciary duty, fraud, constructive fraud and intentional infliction of emotional distress.
BW Wings moves to dismiss the amended complaint, asserting that it fails to state an ERISA claim and that all the state -aw claims are preempted by ERISA.
The district court found that the amended complaint plausibly alleges facts that support an ERISA claim, and that the argument that the state-law claims are preempted is not properly raised in a motion to dismiss.
Brady dismissed BW Wings’ argument that the Taylors cannot state an interference claim under ERISA because they “cannot establish an entitlement to benefits” that were interfered with under the plan.
“Yet while BW Wings argues that the Amended Complaint does not plead facts which show an entitlement to benefits, what it is asking the Plaintiffs to do is prove their entitlement to benefits at the pleading stage,” she wrote. “But, the facts alleged must only sketch a claim that is ‘plausible.’”
Brady added that the complaint need not lay out all the facts that must eventually be proved to prevail at trial.
The district court also rejected BW Wings’ motion for dismissal of the Taylors’ state-law claims under §514(a) of ERISA, otherwise known as the “conflict preemption” provision.
Not only is preemption an affirmative defense, Brady wrote, but the 7th Circuit Court of Appeals has acknowledged that “[i]t follows from this structure and from the plain language of Rule 8(c)(1) that an affirmative defense must be raised in the answer, not by motion.”
“Given that preemption is an affirmative defense that must be raised in an answer and not in a motion to dismiss under Fed. R. Civ. P. 12(b)(6), Defendant’s preemption argument was not properly before the Court,” she wrote.
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