Melesky v. SummaCare, Inc. , 2012 Ohio 1336 ( 2012 )

[Cite as Melesky v. SummaCare, Inc., 2012-Ohio-1336.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
JUDGES:
CHRISTA M. MELESKY, ET AL : Hon. W. Scott Gwin, P.J.
: Hon. William B. Hoffman, J.
Plaintiffs-Appellants : Hon. Julie A. Edwards, J.
:
-vs- :
: Case No. 2011-CA-00206
SUMMACARE, INC., ET AL :
:
Defendants-Appellees : OPINION
CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of
Common Pleas, Case No. 2011CV01048
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: March 27, 2012
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
PAUL L. JACKSON
JON A. TROYER ROETZEL & ANDRESS, LPA
1953 Gulf St. N.W. 222 South Main Street
Uniontown, OH 44685 Akron, OH 44308
For Appellees
MICHAEL V. DEMCZYK
McNamara, Demczyk & DeHaven Co.,
L.P.A.
12370 Cleveland Avenue N.W.
P.O. Box 867
Uniontown, OH 44685-0867
[Cite as Melesky v. SummaCare, Inc., 2012-Ohio-1336.]
Gwin, P.J.
{1} Plaintiffs-appellants Christa M. and Michael J. Melesky appeal a judgment
of the Court of Common Pleas of Stark County, Ohio, entered in favor of defendant-
appellee SummaCare, Inc. which sustained SummaCare’s motion to dismiss made
pursuant to Civ. R. 12 (B)(6). Appellants assign three errors to the trial court:
{2} “I. THE TRIAL COURT ERRED IN HOLDING THAT SUMMACARE, INC. IS
ENTITLED TO RELY ON ERISA AS GROUNDS FOR DISMISSAL OF ALL CLAIMS
AGAINST IT.
{3} “II. THE TRIAL COURT ERRED IN HOLDING THAT NONE OF
APPELLANTS’ CLAIMS WERE EXEMPT FROM ERISA PREEMPTION.
{4} “III. IF ERISA APPLIES TO APPELLANTS’ CLAIMS, THE TRIAL COURT
ERRED BY NOT ASSERTING CONCURRENT JURISDICTION OVER CLAIMS THAT
CHALLENGED THE DENIAL OF BENEFITS DUE UNDER A GROUP HEALTH
INSURANCE POLICY.”
{5} In considering a motion to dismiss under Civ. R. 12(B)(6), a court must
consider only the facts alleged in the complaint and any material incorporated into it.
State ex rel. Crabtree v. Franklin County Bd. of Health, 77 Ohio St.3d 247, 249, 673
N.E.2d 1281 (1997). For purposes of the Rule, the trial court must presume all facts
alleged in the complaint are true and it must draw all reasonable inferences in favor of
the non-moving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d
753 (1988). A court may not dismiss a complaint for failure to state a claim unless it
appears beyond doubt that plaintiff can prove no set of facts warranting a recovery.” Id. If
there is a set of facts, consistent with the plaintiff's complaint, which would allow the
Stark County, Case No. 2011-CA-00206 3
plaintiff to recover, the court may not grant the motion to dismiss. York v. Ohio State
Highway Patrol, 60 Ohio St.3d 143, 145, 573 N.E.2d 1063 (1991). Dismissal is proper if
the complaint fails to sufficiently allege an essential element of the cause of action. State
ex rel. Cincinnati Enquirer v. Ronan, 124 Ohio St.3d 17, 2009–Ohio–5947, 918 N.E.2d
515, at ¶ 7–8. However, because of the notice pleading requirements of the Ohio Rules
of Civil Procedure, “a plaintiff is not required to prove his or her case at the pleading
stage. Very often, the evidence necessary for a plaintiff to prevail is not obtained until
[he] is able to discover materials in the defendant's possession.” Id.{6} This Court reviews an order granting a Civil Rule 12(B)(6) motion to
dismiss de novo. Perrysburg Twp. v. City of Rossford, 103 Ohio St.3d 79, 2004–Ohio–
4362, 814 N.E.2d 44, at ¶ 5.
{7} Appellee suggests we may consider its answer and cross-claim in reviewing
the matter, but we find the Rule directs that the trial court, and this court in our de novo
review, may look only to the four corners of the complaint and any attachments to the
complaint. “A motion to dismiss for failure to state a claim upon which relief can be
granted tests the sufficiency of the complaint.” Volbers–Klarich v. Middletown Mgt., 125
Ohio St.3d 494, 2010–Ohio–2057, 929 N.E.2d 434, ¶ 11. The movant may not rely on
allegations or evidence outside the complaint. Id.{8} Appellants originally brought suit against several other defendants
associated with appellant Michael Melesky’s employer. The complaint named Air
Solutions Heating & Cooling, LLC, E-Zee Heating & Cooling, LLC, MAP Heating &
Cooling, LLC, Michael D. Pitzo, Mary A. Pitzo, Matthew A. Pitzo, Michael A. Pitzo and
David P. Pitzo. These defendants are not parties to this appeal.
Stark County, Case No. 2011-CA-00206 4
{9} Appellants’ complaint alleges appellant Michael Melesky was covered by a
group health insurance plan offered by his then employer MAP Heating & Cooling, and
subsequently E-Zee Heating & Cooling and/or Air Solutions Heating & Cooling, and
issued by SummaCare. Appellant Michael Melesky’s wife Christa Melesky was covered
under her husband’s group health insurance plan. The coverage began on December
1, 2008. Beginning December 29, 2008, and continuing through at least May 29, 2009,
appellant Christa Melesky was treated for kidney stones, and incurred over $25,000 in
medical expenses, including treatment at Summa Health Systems-owned facilities as
well as two hospitalizations for surgical procedures at a Summa Health System-owned
facility.
{10} The complaint alleges prior to undergoing treatments in April and May 2009,
appellant Christa Melesky and her health care providers received a pre-certification
authorization of coverage from SummaCare. The complaint does not state what date
SummaCare certified coverage.
{11} Despite issuing the pre-certification authorization of coverage for services in
May 2009, in June, 2009 SummaCare denied benefit payments for services appellant
Christa Melesky received in May, 2009. Subsequently, appellants received a “model
COBRA continuation coverage election notice”, dated June 12, 2009, which advised
them that if they elected to participate in COBRA continuation coverage, it would begin
on June 7, 2009, and could last until December 10, 2010.
{12} On September 2009, SummaCare rescinded payments initially made for
services appellant Christa Melesky received in April 2009. On October 27, 2009,
SummaCare sent appellants a letter stating the group health insurance plan was
Stark County, Case No. 2011-CA-00206 5
terminated for non-payment of premiums retroactively to March 31, 2009, not June 7, as
the COBRA notification implied. SummaCare notified appellants’ claims submitted for
services received in April and May of 2009 would not be covered.
{13} Appellants’ complaint asserts at no time in April or May of 2009 did they
receive a notice of cancellation of the group health insurance, and did not receive an
option for conversion into an individual health policy during those months. At no time in
April through May of 2009, did appellants receive notice of any failure to make a
required premium payment or contribution.
{14} The complaint alleged various claims against SummaCare, including breach
of contract for failing to provide appellants with timely and accurate information of the
status of their coverage, of the fact the coverage had been terminated, and of their
option to convert to an individual health insurance policy. Appellants assert
SummaCare provided inaccurate information upon which they relied to their detriment
and damage. The breach of contract claim alleges SummaCare should be estopped
from denying coverage for the pre-certified authorized health care services in April and
May 2009.
{15} Appellants’ complaint also alleged a claim for lack of good faith against
SummaCare, alleging in their complaint SummaCare had a duty to act in good faith in
handling and paying their claims. Because of the misleading information SummaCare
gave, and its failure to notify appellants of termination and the option to convert to the
individual health policy, appellant suffered damages. Appellants’ claim for promissory
estoppel and negligent misrepresentation alleges the same acts and omissions. There
is also a claim for punitive damages.
Stark County, Case No. 2011-CA-00206 6
{16} The trial court found appellants’ claims against SummaCare are pre-empted
by the Employee Retirement Income Security Act, rejecting appellants’ argument that
either their claims against SummaCare are exempt because they are based upon the
state law or, if ERISA applies, the state court has concurrent jurisdiction over it.
{17} The trial court found all the allegations contained in the complaint were
based upon the health insurance plan issued by SummaCare, and found there was no
concurrent jurisdiction because none of the claims involve state law.
{18} For the reasons that follow, we find the court erred in dismissing the
complaint for failure to state a claim.
I., II., & III.
{19} Appellants’ assignments of error are interrelated and we analyze them
together.
{20} In the case of Cunningham v. Aultcare Corporation, 5th Dist. No. 2002-CA-
00375, 2003-Ohio-3085, this court discussed the preemption of Ohio law by federal law.
We said:
At issue in this case is whether, in the case sub judice, Ohio law is
preempted by federal law with respect to the enforceability of the
reimbursement clause in the insurance contract between appellant and
appellees. In order to address such issue, we must first distinguish
between complete preemption and ordinary preemption. * * * [A] plaintiff
may generally avoid federal jurisdiction entirely by pleading solely state
law claims. Franchise Tax Bd. of Calif. v. Constr. Laborers Vacation Trust
for S.Cal. (1983), 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420. However,
Stark County, Case No. 2011-CA-00206 7
there is an exception to this general rule. If federal law completely
preempts a plaintiff's state law claim, regardless of the artfulness of the
pleading, a plaintiff cannot escape federal jurisdiction. Botsford v. Blue
Cross and Blue Shield of Montana, Inc. (2002), 314 F.3d 390. “To preempt
state-law causes of action completely, federal law must both: (1) conflict
with state law (conflict preemption) and (2) provide remedies that displace
state law remedies (displacement).” Id. at 393 While ordinary preemption
is a defense to the application of state law and may be invoked in either
federal or state court, in contrast, complete preemption provides a basis
for federal jurisdiction as opposed to simply a defense. See Caterpiller,
Inc. v. Williams (1987), 482 U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318. In
the case of complete preemption, removal to federal court is proper. See
Bastien v. AT & T Wireless Services, Inc., (2000) 205 F.3d 983.
Cunningham, ¶ 15, emphasis sic.
{21} In Richland Hospital, Inc. v. Ralyon, 33 Ohio St. 3d 87, 516 N.E. 2d 1236(1987), the Ohio Supreme Court found state and federal courts have concurrent
jurisdiction to determine benefits and award attorney fees in an appropriate case, but
state courts have no jurisdiction to determine what the court termed “extracontractual
benefits”, in this case, punitive damages. The court also found federal courts have
exclusive jurisdiction over claims for breach of fiduciary duty.
{22} Appellants’ cause of action for breach of fiduciary duty names only the
employers’ representatives. Appellants did not bring a breach of fiduciary duty claim
against SummaCare.
Stark County, Case No. 2011-CA-00206 8
{23} In Raylon, the Ohio Supreme Court reviewed a case similar to the one at
bar. Plaintiffs received verification of medical benefits coverage from a plan trustee, and
one of the plaintiffs then received treatment requiring a forty-day stay in a hospital.
Subsequently, the insurance provider denied the plaintiffs’ claim for benefits,
determining that, because the hospital lacked on-site surgical facilities, it was not a
“hospital” within the plan's definition of a covered hospital. The patient and her husband
brought suit against the insurance company for expressly, intentionally and maliciously
misrepresenting the plan coverage and asked for indemnification of the hospital and
doctor bills they had incurred, as well as punitive damages and attorney fees. The Ohio
Supreme Court cited Section 1132(e)(1), Title 29, U.S. Code distinguishing between
exclusive jurisdiction of federal courts and concurrent jurisdiction between state and
federal courts. It provides:
(e)(1) Except for actions under subsection (a)(1)(B) of this
section, the district courts of the United States shall have exclusive
jurisdiction of civil actions under this subchapter brought by the
Secretary or by a participant, beneficiary, or fiduciary. State courts of
competent jurisdiction and district courts of the United States shall
have concurrent jurisdiction of actions under subsection (a)(1)(B) of
this section.
{24} Subsection (a)(1)(B) provides a participant may bring a civil action “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.”
Stark County, Case No. 2011-CA-00206 9
{25} The Supreme Court interpreted the above language to mean the common
pleas court had concurrent jurisdiction over the claims for denial of benefits and for
attorney fees, but ERISA vested exclusive jurisdiction to federal courts for punitive
damages. The court vacated the award of punitive damages and remanded the
remainder of the case to the trial court because it had applied Ohio state law instead of
ERISA. It did not order the trial court to dismiss the action for lack of jurisdiction even
though it appears there were no state-law claims in the case.
{26} In Halley v. Ohio Company, 107 Ohio App. 3d 518, 669 N.E. 2d 70 (8th Dist.
1995), the Court of Appeals for Cuyahoga County explained there is no simple test to
determine whether a state law relates to an insurance plan, but it found at least four
situations in which ERISA generally preempts state law. First, if the laws are specifically
designed to affect employee benefits. Second, if the state law and common law claims
are for the recovery of an ERISA plan benefit. Third, if ERISA provides a specific
remedy. Fourth, if state and common law claims provide remedies for misconduct in
administering the plan. By contrast, Ohio law may apply if the law involves an area of
traditional state regulation, does not affect relations among the ERISA entities, or the
effect on the plan is incidental in nature. Id. at p. 552, citations deleted.
{27} The court here found all the claims against SummaCare were covered by
ERISA. We find, however, the issue set out in count six for promissory estoppel may
state a claim under state law. Section 11, 1132(e)(1), Title 29, U.S. Code provides a
participant may bring a civil action based upon the plan, which is a contract between the
parties. Appellants’ complaint alleging promissory estoppel does not claim past or future
benefits based upon the plan. Raylon, supra, is distinguishable because in Raylon the
Stark County, Case No. 2011-CA-00206 10
insurance company did not cancel the insurance contract, but only asserted the
services the plaintiff received were not covered under the plan. Here, SummaCare
cancelled the plan retroactively and does not argue the treatments Appellant Christa
Melesky received in April and May would not have been covered even if the policy had
remained in effect.
{28} Appellants argue SummaCare cannot have it both ways: ERISA applies
because the claim arises out of the contract, but also the contract between the parties
ended on March 31, 2009. Appellants argue if SummaCare acted properly in cancelling
the plan effective on March 31, then the portion of their complaint alleging actions
SummaCare took after March 31 cannot be based on the plan, but on promissory
estoppel alone. Raylon, supra, is distinguishable because the insurance company there
was not denying the existence of a contract but only what services the contract would
cover.
{29} Applying the tests outlined in ¶ 25, we find Ohio law has traditionally allowed
claims of promissory estoppel outside the context of a contractual relationship and the
doctrine is not specifically designed to enforce employee benefits. One of the counts of
the complaint may state a claim for SummaCare’s actions after the contract terminated,
not to recover benefits because of the contract. Ohio law cannot affect the relations
among the ERISA entities, if there is no relationship. Whether appellants prevail on this
claim will not affect the plan itself.
{30} We have reviewed the complaint and find it does not appear beyond doubt
that appellants can prove no set of facts warranting a recovery under both state law and
federal law. We further find the trial court has concurrent jurisdiction with the federal
Stark County, Case No. 2011-CA-00206 11
courts and can apply federal law to the ERISA claims. For this reason we find the court
erred in dismissing the matter pursuant to Civ. R. 12(B)(6) for lack of jurisdiction.
{31} Each of the assignments of error is sustained.
{32} For the foregoing reasons, the judgment of the Court of Common Pleas of
Stark County, Ohio, is reversed, and the cause is remanded to the court for further
proceedings in accord with law and consistent with this opinion.
By Gwin, P.J.,
Hoffman, J., and
Edwards, J., concur
_________________________________
HON. W. SCOTT GWIN
_________________________________
HON. WILLIAM B. HOFFMAN
_________________________________
HON. JULIE A. EDWARDS
WSG:clw 0214
[Cite as Melesky v. SummaCare, Inc., 2012-Ohio-1336.]
IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CHRISTA M. MELESKY, ET AL :
:
Plaintiffs-Appellants :
:
:
-vs- : JUDGMENT ENTRY
:
SUMMACARE, INC., ET AL :
:
:
Defendants-Appellees : CASE NO. 2011-CA-00206
For the reasons stated in our accompanying Memorandum-Opinion, the judgment of
the Court of Common Pleas of Stark County, Ohio, is reversed, and the cause is
remanded to the court for further proceedings in accord with law and consistent with this
opinion. Costs to appellees.
_________________________________
HON. W. SCOTT GWIN
_________________________________
HON. WILLIAM B. HOFFMAN
_________________________________
HON. JULIE A. EDWARDS