United States District Court, D. New Mexico
ELDIE L. CRUZ, M.D., Plaintiff,
LOVELACE HEALTH SYSTEM, INC., LOVELACE HEALTH SYSTEM, INC. dba LOVELACE MEDICAL GROUP, LOVELACE HEALTH SYSTEM, LOVELACE MEDICAL GROUP, AHS MANAGEMENT COMPANY, INC., AHS MANAGEMENT COMPANY, INC. dba ARDENT HEALTH SERVICES, AHS NEW MEXICO HOLDINGS, INC., AHS ALBUQUERQUE HOLDINGS, LLC, BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC, ARDENT HEALTH SERVICES, INC., ARDENT HEALTH SERVICES, LLC, ARDENT HEALTH SERVICES, and RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendants.
MEMORANDUM OPINION AND ORDER
C. BRACK SENIOR U.S. DISTRICT JUDGE
Eldie Cruz (Plaintiff) filed for long-term disability (LTD)
following a leave of absence from the hospital where he
worked. He was eventually fired and lost his medical
privileges. Plaintiff named 13 defendants in his suit, with
most somehow connected to his employer through a web of
corporate ownership. Having previously addressed several
motions in two Memorandum Opinions and Orders (Opinions)
(see Docs. 88; 90), the Court will now take up the
Motion to Dismiss of AHS Management Company, Inc., AHS New
Mexico Holdings, Inc.,  AHS Albuquerque Holdings, LLC, and AHS
Medical Holdings, LLC (collectively AHS) (Doc. 16), as well as
the Motion to Dismiss of BHC Management Services of New
Mexico, LLC (BHC). (Doc. 12.) After evaluating Plaintiffs
claims and the complex business relationships at issue, the
Court dismisses all claims against AHS and BHC for failure to
state a claim.
facts of this case were extensively recounted in Opinions
filed on August 26, 2019 (Doc. 88) and September 3, 2019
(Doc. 90.) The Court will briefly repeat pertinent background
information and include a few additional facts applicable to
the current motions.
employed Plaintiff as a general surgeon. (Doc. 71 (Am.
Compl.) ¶ 22.) Lovelace was the sponsor and “plan
administrator” of an LTD plan. (Id. ¶
23.) Reliance was the “claims administrator” of
the LTD plan. (Id. ¶ 25.) Plaintiff received
limited short-term disability payments in early 2016,
(id. ¶ 36), but made an LTD benefits claim on
March 1, 2016. (Id. ¶ 30.) Reliance, however,
“denied Plaintiffs claim for LTD Benefits.”
(Id. ¶ 30.) After a failed appeal in February
2017, Reliance determined in September 2018 “that
Plaintiff was entitled to three months of LTD benefits to be
paid by Lovelace based upon Reliance's finding that
Plaintiff met the policy definition of Totally
Disabled.” (Id. ¶ 34.) But Lovelace did
not pay any LTD benefits to Plaintiff. (Id.)
this period, Plaintiff “repeatedly” asked
Lovelace for ADA accommodation so that he could continue to
work, but Lovelace failed to provide the requested
accommodation. (Id. ¶¶ 38-39.) Lovelace
“responded by demanding more and more information over
a period of many months, ” then informed Plaintiff on
July 1, 2016, without notice, that he was fired.
(Id. ¶ 39.) On February 27, 2018,
“Lovelace notified Plaintiff that his medical
privileges with Lovelace were being terminated . . . .”
(Id. ¶ 41.) He filed a claim with the Equal
Employment Opportunity Commission (EEOC) alleging that
Lovelace violated the ADA by refusing his requests for
accommodation, and on October 15, 2018, received a right to
sue letter from the EEOC. (Id. ¶ 42.)
Opinion takes on the residual issues remaining from the first
two Opinions (Docs. 88; 90.) In its motion, the remaining AHS
parties argue that the Court should dismiss Counts I-VII for
failure to state a claim. (Doc. 16.) BHC also asks the Court to
dismiss Counts I-VII.
Failure to State a Claim
complaint must contain a “short and plain statement of
the claim showing that the pleader is entitled to relief,
” Fed.R.Civ.P. 8(a)(2), but it need not include
“detailed factual allegations.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation
omitted). A failure to adequately plead permits district
courts to dismiss a complaint for “failure to state a
claim upon which relief may be granted.” Fed.R.Civ.P.
12(b)(6). To survive a motion to dismiss for failure to state
a claim, the court, taking all allegations in the complaint
as true, must evaluate whether the complaint contains
“a plausible claim for relief.” Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009) (citation omitted).
Though no probability requirement exists, the
plausibility standard “asks for more than a
sheer possibility that a defendant has acted
unlawfully.” Id. at 678 (citation omitted).
Dismissal becomes appropriate when it is
“obvious” that there is no way to prevail using
the pleaded facts. See Brown v. Sherrod, 284
Fed.Appx. 542, 543 (10th Cir. 2008); Hall v.
Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991).
Employee Retirement Income Security Act of 1978 (ERISA)
permits employee participants or beneficiaries “to
recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the
plan.” 29 U.S.C. § 1132(a)(1)(B). Despite the lack
of explicit statutory language defining which parties may be
subject to suit, courts have coalesced around the idea that
plan administrators are the primary defendants in ERISA
suits. See Caffey v. Unum Life Ins. Co., 302 F.3d
576, 584 (6th Cir. 2002) (“It is well established that
only plan administrators are liable for statutory
penalties.”); Garren v. John Hancock Mut. Life Ins.
Co., 114 F.3d 186, 187 (11th Cir. 1997) (“The
proper party defendant in an action concerning ERISA benefits
is the party that controls administration of the
plan.”); Averhart v. U.S. WEST Mgmt. Pension
Plan, 46 F.3d 1480, 1489 (10th Cir. 1994) (holding that
only the plan administrator could be held liable under
ERISA). A plan administrator owes a “duty of care to
the beneficiaries, and is legally responsible both for its
own decisions and also for decisions made by its
agent.” Geddes v. United Staffing All. Emp. Med.
Plan, 469 F.3d 919, 931 (10th Cir. 2006) (citations
omitted). The Tenth Circuit has made it clear that
“ERISA beneficiaries may bring claims against the plan
as an entity and plan administrators.” Id.
some circuits have “found that entities other than the
benefits plan or the employer plan administrators may be held
liable under § 1132(a)(1)(B).” LifeCare Mgmt.
Servs. LLC v. Ins. Mgmt. Adm'rs Inc., 703 F.3d 835,
843 (5th Cir. 2013) (citations omitted); see also Cyr v.
Reliance Standard Life Ins. Co., 642 F.3d 1202, 1206
(9th Cir. 2011) (en banc) (holding that defendants
are not limited to plan administrators); Mein v. Carus
Corp., 241 F.3d 581, 585 (7th Cir. 2001) (holding that
defendants beyond the plan administrator may be named). This
deviation only occurs, however, when a non-administrator
entity “exercises ‘actual control' over the
administration of the plan.” LifeCare, 703
F.3d at 844 (citations omitted). To subject a de
facto administrator to suit, the entity must effectively
manage the plan. See Law v. Ernst & Young, 956
F.2d 364, 373-74 (1st Cir. 1992) (discussing how defendant
used its stationary to communicate with plan participants,
managing the information flow and behaving as the de
facto plan administrator).