Long v. Dearborn National Life Ins

Case: 21-20246 Document: 00516239770 Page: 1 Date Filed: 03/15/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
March 15, 2022
No. 21-20246 Lyle W. Cayce
Clerk
Steven Long,
Plaintiff—Appellant,
versus
Dearborn National Life Insurance Company,
Defendant—Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:20-CV-1783
Before Barksdale, Stewart, and Dennis, Circuit Judges.
Per Curiam:*
This case arises from a dispute involving a long-term disability
insurance policy. The district court granted Appellee Dearborn National Life
Insurance Company’s Rule 12(b)(6) motion to dismiss and dismissed
Appellant Steven Long’s suit. For the following reasons, we AFFIRM.
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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I. Facts & Procedural Background
Steven Long was employed by the University of Texas Medical
Branch-Galveston (“UTMB-Galveston”) as a registered nurse. UTMB-
Galveston offers group long-term disability insurance as part of an employee
benefit plan, in which Long participated as an employee, through Dearborn
National Life Insurance Company (“Dearborn”).
Long stopped working due to disability on May 2, 2016, while covered
under the long-term disability policy (“the Policy”). Long’s disability
resulted from a combination of degenerative disc disease, lower back injuries,
and a history of intensive spinal fusion surgery. Long filed an application for
long-term disability benefits under the Policy, and by letter dated September
8, 2016, Dearborn approved Long’s claim and awarded him monthly benefits
in the gross amount of $4,263.55. Long received benefits for the period
between July 31, 2016, through July 30, 2018. The Policy defines Total
Disability for long-term disability purposes as follows:
Total Disability or Totally Disabled means that during the first
24 consecutive months of benefit payments due to Sickness or
Injury:
1. You are continuously unable to perform the Material
and Substantial Duties of Your Regular Occupation, and
2. Your Disability Earnings, if any, are less than 20% of
Your pre-disability Indexed Monthly Earnings.
After the LTD Monthly Benefit has been paid for 24
consecutive months, Total Disability or Totally Disabled
means that due to Injury or Sickness:
1. You are continuously unable to engage in any Gainful
Occupation, and
2. Your Disability Earnings, if any, are less than 20% of
Your pre-disability Indexed Monthly Earnings.
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In a December 10, 2018 letter (“Initial Denial Letter”), Dearborn
terminated Long’s long-term disability benefits based on a determination by
its own medical consultants that Long had not submitted sufficient evidence
to show his inability to perform sedentary work; Dearborn determined that
Long could perform full-time work as a nurse consultant, nurse case
manager, or telephonic nurse.
Long alleges that Dearborn “disregard[ed] the results of the
functional capacity evaluation Plaintiff had undergone, stating that it lacked
certain validity measures such as a heart rate assessment and coefficient
variables,” and “disregarded the medical notes and the opinions of Plaintiff’s
treating physicians.” Long further alleged that, “[t]hough Defendant had the
right under the Policy to have Plaintiff examined by a physician or perform
its own functional capacity evaluation to assess his eligibility for benefits, it
did not do so and instead chose to rely on file reviewing consultants . . . whose
opinions . . . differed from Plaintiff’s treating physicians[.]” Long appealed
the Initial Denial Letter and gave Dearborn “written notice that Dearborn
National was in violation of its contractual and statutory duties[.]” Dearborn
upheld its initial determination.
Long brought suit against Dearborn in Texas state court, alleging
claims for (1) breach of contract, (2) breach of the duty of good faith and fair
dealing, (3) violations of the Texas Insurance Code, (4) violations of the
Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”), and
(5) fraud. Long attached a copy of the Policy as Exhibit 1 to his state court
petition.
Dearborn removed the case to federal district court based on diversity
jurisdiction; Long moved to remand. The district court denied Long’s
motion to remand and allowed him to file an amended complaint, instructing
him to provide specific factual allegations to support his pleadings. Dearborn
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moved to dismiss Long’s amended complaint, and the district court directed
Long to file a second amended complaint.
Long then filed his Second Amended Complaint (“Complaint”).
Dearborn filed another motion to dismiss. The district court held a
conference to discuss the motions. Long alleges that, despite being given
permission to appear telephonically, the district court inadvertently called his
office, rather than his direct line, which resulted in Long’s counsel missing
the conference. The district court then had a conversation with Dearborn’s
counsel—and without Long’s—which included a five minute “off the
record” discussion.
After the conference, the district court ruled in favor of Dearborn and
dismissed Long’s Complaint. The district court concluded that Long “has
pleaded largely vague conclusions and statutory language. He has pleaded no
facts of how Dearborn breached the [P]olicy. He must give more than his
disagreement with Dearborn’s conclusions.” The district court dismissed
Long’s breach of contract claim, and then dismissed all of Long’s extra-
contractual causes of action, because Long failed to plead a breach of
contract. The district court then entered final judgment, and Long appealed.
II. Standard of Review
We review a district court’s dismissal of a complaint de novo. Innova
Hosp. San Antonio, L.P. v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719,
726 (5th Cir. 2018). We must “accept all well-pleaded facts as true and view
those facts in the light most favorable to the plaintiff.” Richardson v. Axion
Logistics, L.L.C., 780 F.3d 304, 304–05 (5th Cir. 2015) (quoting Montoya v.
FedEx Ground Package Sys., Inc., 614 F.3d 145, 146 (5th Cir. 2010)). But we
need not accept as true a legal conclusion unsupported by fact. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Thus, to survive a motion to dismiss, a
complaint must contain sufficient factual matter that, when taken as true,
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states “a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). This court may affirm the district court’s
decision “on any ground supported by the record, including one not reached
by the district court.” Gilbert v. Donahoe, 751 F.3d 303, 311 (5th Cir. 2014)
(citing Ballew v. Cont’l Airlines, Inc., 668 F.3d 777, 781 (5th Cir. 2012)).
III. Discussion
A.
Because this is a diversity action, Texas law “provides the elements
of the plaintiff’s case.” Thrash v. State Farm Fire & Cas. Co., 992 F.3d 1354,
1356 (citing Ayres v. Sears, Roebuck & Co., 789 F.2d 1173 (5th Cir. 1986). Long
first contends that the district court erred in granting Dearborn’s motion to
dismiss because he alleged sufficient facts to support each element of his
breach of contract claim. “Under Texas law, a plaintiff alleging a breach of
contract must show ‘(1) the existence of a valid contract; (2) performance or
tendered performance by the plaintiff; (3) breach of the contract by the
defendant; and (4) damages to the plaintiff resulting from that
breach.’” Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 767 (5th Cir.
2016) (quoting Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.
1997)).
Long’s Complaint alleges the following:
28. Plaintiff has suffered and continues to suffer from a disabil-
ity as defined in the Policy and/or as defined under Texas state
law. At all material times, Plaintiff has complied with all Policy
provisions and conditions precedent to qualify for benefits
prior to filing suit.
29. In exchange for Plaintiff’s continuing compliance with all
Policy provisions and conditions precedent to qualify for bene-
fits, Defendant owed Plaintiff a duty to pay him disability
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benefits on a monthly basis if he became disabled as defined by
the Policy.
30. Plaintiff became disabled under the terms of the Policy and
made a timely claim for benefits.
31. Defendant, under the terms of the contract of insurance, is
indebted to Plaintiff for disability benefits due under the terms
of the Policy.
32. Defendant has breached its contract with Plaintiff to timely
provide all benefits due to him under the contract.
33. Defendant has failed and refused to honor its contractual
obligations under the [P]olicy of insurance that was issued to
Plaintiff’s employer for the benefit of Plaintiff.
34. As a direct and proximate result of Defendant’s breach of
its contractual duties, Plaintiff has been damaged and is enti-
tled to actual damages from Defendant in an amount equal to
the amount of benefits due under the [P]olicy from July 30,
2018 through the present.
These conclusory allegations are not facially plausible and do not establish a
breach of contract claim. See 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.”). Indeed, Long merely lists conclusory statements that are devoid
of factual allegations. Long fails to identify a specific provision of the contract
that was allegedly breached, and he fails to show how his performance under
the Policy was sufficient.
Further, Long’s allegation that Dearborn breached the Policy by
choosing to rely on assessments by Dearborn’s medical consultants is belied
by the Complaint itself, which states that “Defendant had the right under the
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Policy to have Plaintiff examined by a physician or perform its own functional
capacity evaluation to assess his eligibility[.]” The mere fact that Dearborn
could consult their own medical expert or perform its own evaluation does not
mean that Dearborn breached the Policy by failing to do so. As Long himself
pleads, this was Dearborn’s own “right.” Thus, on the facts alleged, Long’s
breach of contract claim fails and was properly dismissed by the district court.
B.
Long also contends that the district court erred in granting Dearborn’s
motion to dismiss because he alleged sufficient facts to support his causes of
action for extra-contractual damages based on Dearborn’s breach of its duty
of good faith and fair dealing, and for violating the Texas Insurance Code and
Texas DTPA.
Long alleges that Dearborn breached a duty of good faith and fair
dealing because Dearborn “conducted an unreasonable and incomplete
investigation in violation of its duty of good faith and fair dealing, seeking to
find ways to deny Plaintiff’s claim rather than fairly evaluating it.” Long
alleges that (a) Dearborn “contravened its own medical reviewer’s
recommendation that benefits should continue when it denied Plaintiff’s
claim,” (b) “hired a medical file reviewing company, University Disability
Consortium (“UDC”) . . . known for providing biased and insurer-friendly
opinions,” and that (c) UDC’s physician “provided Dearborn with an
opinion that supported that Plaintiff could perform full-time sedentary work,
but inappropriately arrived at his conclusion by citing to selectively quoted
portions of medical records . . . while at the same time ignoring evidence that
contradicted his thesis[.]” This “displayed a refusal to err in favor of Plaintiff
or resolve ambiguities and doubt in his favor,” and ultimately, “constitutes a
breach of Dearborn National’s common law duty of good faith and fair
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dealing and was bad faith claims handling because Dearborn had no
reasonable basis to deny Plaintiff’s claim.”
Under Texas law, “a cause of action for breach of the duty of good
faith and fair dealing exists when the insurer has no reasonable basis for
denying or delaying payment of a claim, or when the insurer fails to determine
or delays in determining whether there is any reasonable basis for denial.”
Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 459 (5th Cir.
1997). To prevail on such a claim, the insured must set forth allegations to
demonstrate “the absence of a reasonable basis for denying or delaying
payment of the claim and that the insurer knew, or should have known, that
there was no reasonable basis for denying or delaying payment.” Id.Long has failed to plead sufficient facts to support his breach of the
duty of good faith claim. While it is true that Texas law has imposed a duty
on the insurer to act in good faith and deal fairly with the insured, “there is
no duty beyond the contract itself.” Id. at 460. In other words, absent a
breach of the Policy in this case, there is no violation of the insurer’s duty to
act in good faith and deal fairly with the insured. See id.The materials attached to Long’s Complaint establish that Dearborn
acted in accordance with the Policy’s terms when it denied Long’s long-term
disability claim after the initial twenty-four-month period. Although Long
was eligible for the initial twenty-four months of benefits when his functional
impairment precluded him from performing his original, assigned job,
Dearborn determined that, after the initial twenty-four months, Long was
now able to perform another occupation that he was or could become
qualified for. Long’s conclusory allegation that Dearborn improperly denied
his benefits is insufficient to survive dismissal because it is contradicted by
the documents attached to his Complaint. Hollingshead v. Aetna Health Inc.,
589 F. App’x 732, 737 (5th Cir. 2014) (citing Associated Builders, Inc. v. Ala.
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Power Co., 505 F.2d 97, 100 (5th Cir. 1974)) (“Conclusory allegations and
unwarranted deductions of fact are not admitted as true especially when such
conclusions are contradicted by facts disclosed by a document appended to
the complaint.”) (internal citation omitted)).
Further, Long’s failed breach of contract claim defeats this claim, as
he has alleged no salient facts beyond Dearborn’s alleged breach of contract.
Moreover, Long’s allegations are conclusory at best. Long does not allege
that he provided specific medical evidence that demonstrated that he could
not perform the sedentary jobs listed by Dearborn. Instead, Long merely
alleged that Dearborn relied on assessments “contrary to the credibility
determinations of medical providers”; that “Dearborn’s claim review
displayed a refusal to err in favor of Plaintiff”; that evidence was “cherry-
picked”; that “Dearborn had no reasonable basis to deny [his] claim”; and
that Dearborn was aware that denying his claim “created a real risk of causing
him extreme hardship and oppression financially[.]” Long’s allegation that
Dearborn is liable for bad faith because it engaged an outside reviewer, UDC,
to assist in its review is also conclusory. Long does not allege that this violated
the terms of the Policy, nor does he allege that UDC was biased in its review
of Long’s claims: just that UDC is “known for providing biased and insurer-
friendly opinions.” Such an assertion, supported only by an unreported
district court case from Nevada, is nothing more than a conclusory allegation.
Long’s claim of breach of duty of good faith and fair dealing was properly
dismissed.
Long’s claims that Dearborn violated the Texas Insurance Code
similarly fail, as Long merely lists the elements of each cause of action,
without specific factual allegations. For example, Section 541.060(a)(2)(A)
of the Texas Insurance Code prohibits an insurer from refusing to effectuate
“a prompt, fair, and equitable settlement of . . . a claim with respect to which
liability has become reasonably clear.” Tex. Ins. Code Ann. § 541.060.
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Long’s Complaint alleges the following with respect to Section
541.060(a)(2)(A):
Defendant violated Section 541.060(a)(2)(A) of the Texas
Insurance Code by continuing to deny Plaintiff despite having
already received all necessary evidence to substantiate his
claim and recognize that its liability was reasonably clear.
Defendant received all necessary evidence to recognize liability
under the Policy prior to its initial denial on December 10,
2018, and was provided with even more evidence
substantiating Plaintiff’s claim when receiving Plaintiff’s
appeal on June 27, 2019.
Long’s allegations amount to no “more than labels and conclusions, and a
formulaic recitation of a cause of action’s elements will not do.” Twombly,
550 U.S. at 555. Long’s remaining Texas Insurance Code claims fare no bet-
ter, as they too amount to no more than formulaic recitations of the elements
of each cause of action. The district court therefore properly dismissed
Long’s Texas Insurance Code claims.
Finally, Long’s claim for violations of the DTPA also fails, as it is
merely a conclusory allegation devoid of any facts. Long’s Complaint alleges
the following:
55. Texas’ Deceptive Trade Practices-Consumer Protection
Act (DTPA) provides additional protections to consumers who
are victims of deceptive, improper or illegal practices. Defend-
ant’s violations of the Texas Insurance Code create a cause of
action under the DTPA. As such, Defendant’s violations of the
Texas Insurance Code, as set forth above, specifically violate
the DTPA as well.
56. The violations by Defendant are also “unconscionable” as
that term is legally defined, and subjects Defendant to liability
for such “unconscionable” acts as set forth by the DTPA.
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This is insufficient to state a claim for violations of the DTPA, and the district
court properly dismissed this claim.
IV. Conclusion
For the foregoing reasons, the district court’s judgment dismissing
Long’s claims against Dearborn is AFFIRMED. 1
1
Because we conclude that the district court properly dismissed Long’s claims
pursuant to Fed. R. Civ. P. 12(b)(6), we need not address his argument that the case
should be reassigned to a different judge on remand.
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