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Davis v. UNUM Life Insurance Co. of America

United States District Court, E.D. Arkansas, Western Division

March 22, 2016

MARY DAVIS and NITA SCOGGINS, on behalf of herself and all others similarly situated PLAINTIFFS


Kristine G. Baker United States District Judge

Before the Court is defendant Unum Life Insurance Company of America’s (“Unum”) motion to dismiss plaintiffs’ “exercise of discretion” claim pursuant to Rule 12(b)(6) (Dkt. No. 12). Plaintiffs Mary Davis and Nita Scoggins have responded in opposition to the motion to dismiss and move to amend their complaint (Dkt. No. 16). Unum opposes Ms. Davis and Ms. Scoggins’ motion to amend their complaint (Dkt. No. 18). Recently, Ms. Davis filed a motion to dismiss, representing to the Court that her individual claim has been settled, that the parties agree her claim should be dismissed with prejudice, and that each party should bear her or its own fees and costs (Dkt. No. 20). The Court grants Ms. Davis’s motion to dismiss with prejudice her claim (Dkt. No. 20). For the following reasons, the Court also grants Unum’s motion to dismiss and denies Ms. Scoggins’ pending motion to amend.

I. Background

Unless otherwise noted, the following alleged facts are taken from Ms. Scoggins’ amended complaint (Dkt. No. 4). Ms. Scoggins is a former employee of Regions Bank, where she participated in employer-provided disability insurance benefit plan underwritten by Unum. The Regions Bank plan provided that Unum would act as the administrator for any claims made for benefits. Ms. Scoggins alleges that Unum wrongly denied her claim for LTD benefits.

In addition to an individual breach of contract claim, Ms. Scoggins brings a class action claim against Unum, alleging that by denying long term disability benefits, Unum “exercised discretion in the interpretation of said policies in a manner that violates the law” (Dkt. No. 4, ¶ 12). Ms. Scoggins seeks to represent under all three categories of Rule 23(b) a class consisting of “all persons, who within three years prior to the filing of this lawsuit have been denied benefits by the Defendant under a policy governed by Arkansas law.” (Dkt. No. 4, ¶ 10).

II. Standard of Review

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “While a complaint attacked by a [Federal] Rule [of Civil Procedure] 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original) (citations omitted). “[T]he complaint must contain facts which state a claim as a matter of law and must not be conclusory.” Briehl v. General Motors Corp., 172 F.3d 623, 627 (8th Cir. 1999). “When ruling on a motion to dismiss, the district court must accept the allegations contained in the complaint as true and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party.” Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001).

III. Discussion

The Regions Bank policy contains language giving the claims administrator discretionary authority. The policy provides that, “[w]hen making a benefit determination under the policy, Unum has discretionary authority to determine your eligibility for benefits and to interpret the terms and provisions of the policy” (Dkt. No 12-1, at 12). This language is commonly referred to as a discretionary clause.

Ms. Scoggins makes two contentions regarding the discretionary clauses included in the Regions policy. First, she contends that Unum’s authority to grant or deny claims for benefits under the policies was derived from these discretionary clauses.[1] Second, she contends that these discretionary clauses violate Arkansas Department of Insurance Rule 101, which provides that:

No policy, contract, certificate or agreement offered or issued in this State providing for disability income protection coverage may contain a provision purporting to reserve discretion to the insurer to interpret the terms of the contract, or to provide standards of interpretation or review that are inconsistent with the laws of this State.

(Dkt. No. 13, at 7; No. 4, ¶ 6; No. 16, ¶ 2); see also Ark. Admin. Code 054.00.101-4. Based on these two contentions, Ms. Scoggins argues that Unum’s “exercise of discretion” in denying her claim for long term disability benefits was unlawful (Dkt. No. 4, ¶ 15). She seeks to represent a class of all persons who, within the last three years, were denied benefits by Unum under a policy governed by Arkansas law (Dkt. No. 4, ¶ 10).

Unum moves to dismiss Ms. Scoggins’ class claim, arguing that her allegation “that Unum ‘exercised discretion’ does not state any claim for relief” (Dkt. No. 13, at 3). The Court agrees that Count II of the amended complaint fails to state a claim. This conclusion is best explained by ...

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