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Columbus Light and Water Department v. UMR, Inc.

United States District Court, N.D. Mississippi, Aberdeen Division

May 7, 2018



         Plaintiff Columbus Light and Water Department ("the Department") sues Defendant UMR, Inc., the Deparment's health insurance claims administrator, for allegedly paying out claims for non-covered persons in breach of an agreement between the two. UMR filed a motion for judgment on the pleadings [6] arguing that the agreement requires the Department to notify UMR what persons were covered under the plan, the complaint does not state the Department informed UMR the persons were no longer covered, and therefore, the complaint does not allege that a breach occurred. Having considered the matter, the Court finds the motion should be granted.


         In 2016, the Department established a self-funded health insurance plan for its employees and contracted with UMR to administer the plan. Comp. [2] ¶ 3. According to the Department, children of employees were covered under the plan until their 26th birthday[1]. Id. ¶ 5.

         Nonetheless, in March 2017, a 26 year old child dependent of one of the Department's employees made a claim for insurance benefits under the plan. Id. ¶¶ 7-8. The claim submission formprovided to UMR by the claimant contained the claimant's date of birth. Id. ¶ 8. UMR recommended the claim be paid, even though the claimant was no longer covered under the policy. Id. ¶ 9.

         The Department sought reimbursement from UMR for this claim and others, which UMR refused to provide. Id. ¶ 18-19. The Department brought this action in state court for 1) breach of contract, negligence, and breach of duty against UMR for recommending the Department pay claims it knew or should have known were ineligible; 2) conversion for paying ineligible claims from the Department's self-funded account and refusing to return those funds to the account; and 3) breach of good faith and fair dealing for paying claims UMR knew were ineligible and refusing to reimburse the Department.[2]UMR timely removed based on diversity subject matter jurisdiction and filed the present motion. The Department has responded.[3] The matter is now ripe for review.


         Because it is not readily apparent from the facts of the complaint, the Court first takes a moment to examine whether it has jurisdiction to decide this matter. Giannakos v. M/V Bravo Trader, 762F.2d 1295, 1296 (5th Cir. 1985) ("Therefore, United States District Courts and Courts of Appeals have the responsibility to consider the question of subject matter jurisdiction sua sponte if it is not raised by the parties and to dismiss any action if such jurisdiction is lacking.") For this Court to have diversity subject matter jurisdiction, the parties must be diverse and the amount in controversy must exceed $75, 000. 28 U.S.C. § 1332(a). The Court is satisfied that the parties are diverse. The Department is a subsidiary of the city of Columbus, Mississippi. Compl. ¶ 1. As a political subdivision of the state of Mississippi, it is a citizen of Mississippi for purposes of establishing diversity jurisdiction. Moor v. Alameda Cnty., 411 U.S. 693, 717 (1973). UMR is a corporation organized under the laws of Delaware with its principal place of business in Wisconsin. Compl. ¶ 2. It is, therefore, a citizen of Wisconsin for purposes of establishing diversity jurisdiction. See Hertz Corp. v. Friend, 559 U.S. 77, 80 (2010).

         The amount in controversy requirement may be satisfied in two ways. First, it can be established if the removing party shows that 'it is facially apparent' from the plaintiffs' complaint that their 'claims are likely above [$75, 000].'" Garcia v. Koch Oil Co. of Texas Inc., 351 F.3d 636, 639 (5th Cir.2003) (quoting Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995)). It is not facially apparent from the complaint that the Department's claims exceed $75, 000. The complaint alleges only one incident where UMR recommended the Department pay an ineligible claim. Compl. ¶¶ 7-15. The complaint does not state the amount of money the Department paid out for this claim nor the total amount of money it believes UMR should reimburse it. Thus, UMR must establish jurisdiction under the second method: "by setting forth the facts-[either] in the removal petition [or] by affidavit-that support a finding of the requisite amount." Allen, 73 F.3d at 1135.

         UMR has attached to its removal petition two letters from the Department's counsel claiming that the Department's damages were "at least" $98, 886.94 and demanding that UMR pay that amount to the Department or litigation would ensue. See October 17, 2017 Letter [1-2]; November 1, 2017 Letter [1-3]. Pre-suit demand letters which demand more than $75, 000 can establish that the plaintiff is seeking more than $75, 000. St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1254 (5th Cir.1998) (examining the plaintiffs' pre-complaint demand letters to determine whether a claim for declaratory relief satisfied the requisite amount in controversy); Molina v. Wal-Mart Stores Texas, L.P., 535 F.Supp.2d 805, 808 (W.D. Tex. 2008) (holding pre-suit letter demanding $100, 000 was evidence that the amount in controversy exceeded $75, 000). Because these letters show that the Department is seeking more than $75, 000, the amount in controversy requirement is met. The Court is satisfied that it has subject matter jurisdiction over these claims.

         12(c) Judgment on the Pleadings Standard

         After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). A Rule 12(c) motion is governed by the same standards as a Rule 12(b)(6) motion. See Brown v. CitiMortgage, Inc., 472 Fed. App'x. 302, 303 (5th Cir. 2012) (per curiam) (citing St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n.8 (5th Cir. 2000)). "A motion brought pursuant to [Rule] 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (per curiam) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1367, at 509-10 (1990)).

         In analyzing a 12(b)(6) motion, the court determines whether the complaint contains 'sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." ' " Phillips v. City of Dallas, Tex., 781 F.3d 772, 775-76 (5th Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting BellAtl Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007))). A claim is facially plausible when the pleaded factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). "[P]laintiffs must allege facts that support the elements of the cause of action in order to make out a valid claim." Webb v. Morella, 522 Fed.Appx. 238, 241 (5th Cir. 2013) (per curiam) (quoting City of Clinton, Ark. v. Pilgrim's Pride Corp., 632 F.3d 148, 152-53 (5th Cir. 2010) (internal quotation marks omitted)). "[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss." Id. (quoting Fernandez-Montes v. Allied Pilots Ass% 987 F.2d 278, 284 (5th Cir. 1993) (internal quotation marks omitted)). "Dismissal is appropriate when the plaintiff has not alleged 'enough facts to state a claim to relief that is plausible on its face' and has failed to 'raise a right to relief above the speculative level.' " Emesowum v. Hous. Police Dep't, 561 Fed.Appx. 372, 372 (5th Cir. 2014) (per curiam) (quoting Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955).


         This case concerns a contract dispute. Thus, the Court should first determine what the contract requires in relation to the claims the Department has made. Under the Department's insurance plan, children of employees were eligible coverage until they turned 26. The dispute is ultimately about whether UMR had an independent duty to deny claims made by an employee's child who was at least 26 ...

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