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 MOTION TO
DISMISS SECOND AMENDED COMPLAINT
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”) relating to a health
insurance policy Mr. Butler purchased in February 2016.
their Second Amended Complaint, Plaintiffs assert 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, promissory estoppel, equitable estoppel, violation of
the Montana Consumer Protection Act, common law bad faith,
negligence, negligence per se, breach of fiduciary
duty, and malice. (Doc. 47.)
before the Court is Defendants Unified Life and Allied
National's Motion to Dismiss, which has been joined, in
part, by Defendants HII and NCE.(Doc. 50, 51, 54.) The Motion
has been referred to the undersigned under 28 U.S.C. §
636(b)(1)(B), and is fully briefed and ripe for the
Court's review. (Docs. 52, 55, 58, 64, 67.)
considered the parties' submissions, the Court
RECOMMENDS Defendants' Motion to Dismiss
be GRANTED IN PART and DENIED IN PART.
allege Plaintiff Chole Butler requested health insurance
information for her husband through a website operated by
HII. (Doc. 47 at ¶ 11.) Thereafter, Plaintiff Charles
Butler was contacted by William Corchado, who was allegedly
acting as an agent of NBoA and the other named Defendants.
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.)
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.)
purchasing the policy, Mr. Butler received an insurance card
which stated that it was an NCE membership card. The card
instructed Mr. Butler to send claims to Allied National, and
direct “billing & non-claims related questions”
to HII. (Id.)
August 2016, Mr. Butler was diagnosed with testicular cancer,
and began incurring medical costs. (Doc. 47 at ¶ 14.)
Plaintiffs allege that although the providers submitted
medical bills to Allied National, none of the bills were
paid. (Id. at 14-15.) He was later diagnosed with
metastasis in his lungs in February 2017, and chemotherapy
was ordered. (Id. at ¶ 17.)
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. 47 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.) Plaintiffs allege the Defendants
improperly terminated Mr. Butler's coverage under the
terms of the policy. (Id. at ¶ 25.)
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.)
Therefore, 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.)
Plaintiffs filed a complaint with the Montana Insurance
Department in March 2017, Allied National began issuing
Explanations of Benefits (“EOBs”). (Doc. 47 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 paid limited charges after the deductible
subject to the 20% co-insurance. (Id. at ¶ 23.)
Plaintiffs also state they were exposed to balance billing
above the steeply discounted allowed charges. (Id.
at ¶ 24.)
filed this action on April 25, 2017. (Doc. 1.) Thereafter,
they filed an Amended Complaint (Doc. 9), alleging multiple
claims against Defendants, including claims related to
claims-handling under the Unfair Trade Practices Act (UTPA),
common law tort claims for non-claims-handling conduct, a
claim under the Montana Consumer Protection Act, and claims
of loss of consortium by Mrs. Butler. Id. Defendants
subsequently moved to dismiss certain counts and claims.
(Docs. 3, 5, 19.)
December 15, 2017, this Court issued Findings and
Recommendations, which recommended that Defendants'
motion to dismiss be granted in part and denied in part.
(Doc. 40.) The Court recommended Plaintiffs be permitted to
proceed with their common law tort claims to the extent they
were based on non-claims-handling conduct. (Id. at
7-11.) The Court recommended dismissal with prejudice of
Plaintiffs' claim under the Montana Consumer Protection
Act. (Id. at 11-12.) The Court further recommended
dismissal without prejudice of Mrs. Butler's claims for
loss of consortium. (Id. at 12-14.) U.S. District
Judge Susan P. Watters adopted the Findings and
Recommendation without change on January 4, 2018. (Doc. 46.)
January 5, 2018, Plaintiffs filed a Second Amended Complaint.
(Doc. 47.) In the Second Amended Complaint, Plaintiffs
re-assert the same causes of action that appeared in the
Amended Complaint. Plaintiffs also add allegations to support
additional common law tort claims under Counts II-VII and
XI-XIV, and include more factual allegations regarding Mrs.
Butler's derivative loss of consortium claims.
now move to dismiss Count VII of the Second Amended Complaint
(breach of insurance agent absolute duty), Count X (violation
of Consumer Protection Act), Counts XI-XIV (alternative
common law claims relative to claims-handling), and all
claims of Mrs. Butler.
Motions to Dismiss
“Dismissal 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 ...