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Cruz v. Lovelace Health System, Inc.

United States District Court, D. New Mexico

September 12, 2019

ELDIE L. CRUZ, M.D., Plaintiff,
v.
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

          ROBERT C. BRACK SENIOR U.S. DISTRICT JUDGE

         Dr. 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., [1] AHS Albuquerque Holdings, LLC, and AHS Medical Holdings, LLC[2] (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.

         I. Background

         The 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.

         Lovelace employed Plaintiff as a general surgeon.[3] (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.)

         Throughout 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.)

         This 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.[4] (Doc. 16.) BHC also asks the Court to dismiss Counts I-VII.

         II. Legal Standard

         a. Failure to State a Claim

         A 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).

         b. ERISA Standards

         The 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.

         Still, 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).

         c. ...


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