United States District Court, D. Montana, Billings Division
CHARLES M. BUTLER, III and CHLOE BUTLER Plaintiffs,
UNIFIED LIFE INSURANCE COMPANY; HEALTH PLANS INTERMEDIARIES HOLDINGS, LLC, doing business as Health Insurance Innovations, doing business as Health Insurance Innovations, Inc.; ALLIED NATIONAL, INC.; NATIONAL BROKERS OF AMERICA, INC.; THE NATIONAL CONGRESS OF EMPLOYERS, INC.; and DOES 1-10 Defendants.
FINDINGS AND RECOMMENDATION REGARDING MOTIONS TO
TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE
Charles M. Butler, III and Chole Butler
(“Plaintiffs”) bring this action against
Defendants Unified Life Insurance Company (“Unified
Life”), Health Plan Intermediaries Holdings, LLC d/b/a
Health Insurance Innovations, d/b/a Health Insurance
Innovations, Inc. (“HII”), Allied National, Inc.
(“Allied National”), National Brokers of America,
Inc. (“NBoA”), and National Congress of
Employers, Inc. (“NCE”). Plaintiffs' Amended
Complaint relates to a health insurance policy Mr. Butler
purchased in February 2016, and consists of claims for breach
of contract, violation of the Unfair Claims Settlement
Practices Act, fraudulent inducement, deceit, constructive
fraud, negligent misrepresentation, breach of insurance agent
duty, estoppel, violation of the Montana Consumer Protection
Act, malice, and several alterative claims handling counts.
before the Court are Defendants Unified Life, Allied
National, and HII and NCE's Motions to Dismiss, which
have been referred to the undersigned under 28 U.S.C. §
636(b)(1)(B). (Docs. 3, 5, 19.) Plaintiffs have also filed a
Motion to Strike portions of Defendants HII and NCE's
reply in support of their Motion to Dismiss. (Doc. 36.) The
motions are fully briefed and ripe for the Court's
review. (Docs. 4, 6, 10, 16, 20, 27, 32, 38, 39.)
considered the parties' submissions, the Court
RECOMMENDS Defendants' Motions to
Dismiss be GRANTED IN PART and DENIED IN
PART, and Plaintiffs' Motion to Strike be
allege that Plaintiff Chole Butler requested health insurance
information for her husband through a website operated by
HII. (Doc. 9 at ¶ 11.) On or about February 27, 2016,
Plaintiff Charles Butler was contacted by William Corchado
who was acting as an agent of NBoA and the other named
Defendants. (Id.) Mr. Corchado sold Mr. Butler a
Unified Life health insurance policy. (Id.) The
policy had an effective date of April 1, 2016, and
termination date of February 28, 2017. (Id. at
¶ 13.) The insurance card Mr. Butler received stated
that it was an NCE membership card, and instructed Mr. Butler
to send claims to Allied National, and direct “billing
& non-claims related questions” to HII.
(Id.) Plaintiffs allege that Mr. Corchado
represented the policy had 80/20 coverage, a $5, 000
deductible, and provided major medical
“Obamacare” health insurance coverage.
(Id. at ¶¶ 11-12.) Plaintiffs allege that
Mr. Corchado did not tell Mr. Butler that the policy was
subject to cancellation or non-renewal if he got sick.
(Id. at ¶ 12.)
August 2016, Mr. Butler was diagnosed with testicular cancer,
and began incurring medical costs. (Doc. 9 at ¶ 14.)
Plaintiffs allege that although the providers submitted
medical bills to Allied National, none of the bills were
paid. (Id. at 14-15.) In February 2017, Mr. Butler
was diagnosed with metastasis in his lungs. (Id. at
about February 23, 2017, Plaintiffs received a message on
their home answering machine advising them that the insurance
policy was set to expire, and they needed to call back to
avoid any lapse in coverage. (Doc. 9 at ¶ 18.) Mrs.
Butler called Mr. Corchado that night and spoke with him.
(Id.) Plaintiffs claim Mr. Corchado assured them he
would personally make sure the policy would be renewed, and
that Mr. Butler would be “grandfathered” in.
(Id.) Contrary to these representations, however,
Plaintiffs allege the policy lapsed and was not renewed as of
February 28, 2017, without further notice to Mr. Butler.
(Id. at ¶ 19.)
March 1, 2017, Plaintiffs were contacted by a representative
of MD Anderson Cancer Treatment Center in Houston, Texas, who
told them MD Anderson could not treat Mr. Butler because he
no longer had health insurance. (Id. at ¶ 20.)
Mr. Butler began chemotherapy under the supervision of the
Billings Clinic at the Sidney Health Care Cancer Wing, but
had no health insurance coverage for the month of March 2017.
(Id. at ¶ 21.) Plaintiffs were able to obtain
coverage through a different insurer starting on April 1,
2017. (Id. at ¶ 21, n.5.)
March 2017, after Plaintiffs filed a complaint with the
Montana Insurance Department and contacted legal counsel,
Allied National began issuing Explanations of Benefits
(“EOBs”). (Doc. 9 at ¶¶ 22-23.)
Plaintiffs allege the EOBs improperly excluded certain
charges, steeply discounted other billed charges, charged the
discounted amounts against the $5, 000 deductible, and payed
limited charges after the deductible subject to the 20%
co-insurance. (Id. at ¶ 23.) Plaintiffs state
they were also exposed to balance billing above the steeply
discounted allowed charges. (Id. at ¶ 24.)
Plaintiffs further allege that Defendants improperly
terminated Mr. Butler's coverage without taking any steps
to determine if he was totally disabled for purposes of
triggering the Extension of Benefits clause under the policy,
despite having received months of medical bills for the
treatment of Mr. Butler's cancer. (Id. at ¶
Motions to Dismiss
under Rule 12(b)(6) is proper when the complaint either (1)
lacks a cognizable legal theory or (2) fails to allege
sufficient facts to support a cognizable legal theory.”
Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir.
2013) (quoting Mendiondo v. Centinela Hosp. Med.
Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). The
Court's standard of review under Rule 12(b)(6) is
informed by Rule 8(a)(2), which requires that a pleading
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Ashcroft v. Iqbal, 556 U.S. 662, 677-678 (2009)
(quoting Fed. R. Civ. P 8(a)).
survive a motion to dismiss under Rule 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.'” Iqbal, 556 U.S. at 678.
“A claim has facial plausibility 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. A plausibility
determination is context specific, and courts must draw on
judicial experience and common sense in evaluating a
complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135
(9th Cir. 2014).
considering a Rule 12(b)(6) motion must accept as true the
allegations of the complaint and must construe those
allegations in the light most favorable to the nonmoving
party. See e.g., Wyler Summit P'ship v.
Turner Broad. Sys., Inc. 135 F.3d 658, 661 (9th Cir.
1998). However, “bare assertions… amount[ing] to
nothing more than a ‘formulaic recitation of the
elements'…for the purposes of ruling on a motion
to dismiss are not entitled to an assumption of truth.”
Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th
Cir. 2009) (quoting Twombly, 550 U.S. at 555). Such
assertions do nothing more than state a legal conclusion,
even if the conclusion is cast in the form of a factual
move to dismiss Counts IV-X, of the Amended
Complaint.Defendants argue Plaintiffs' claims for
negligent misrepresentation, deceit, estoppel, constructive
fraud, and breach of insurance agent duty are barred as a
matter of law by the Montana Unfair Trade Practices Act.
Defendants further contend there is no private right of
action against insurers under the ...