HALL v. REGENCE BLUECROSS BLUESHIELD OF OREGON/HMO OREGON, (D.Or. 2000)

DONALD C. ASHMANSKAS, United States Magistrate Judge

Presently before the court is defendants BlueCross BlueShield of Oregon and Regence HMO Oregon's ("Defendants") motion to dismiss for failure to state a claim. Plaintiff B.J. Hall ("Plaintiff") concedes that his claims are preempted by the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. § 1001-1161) ("ERISA") but argues that he has alleged viable claims under ERISA's civil enforcement provision and under an equitable estoppel theory.

Plaintiff, who suffers from Post Polio Syndrome, had health insurance with Defendants through his employment. In the fall of 1997, Plaintiff's physician prescribed a stairway lift for Plaintiff's residence to prevent further acceleration of the deterioration of Plaintiff's leg muscles and respiratory capacity. Plaintiff contacted Defendants before purchasing the lift and was assured by a representative of Defendants that the lift was covered by the insurance, subject to applicable co-payments. In early January 1998, Plaintiff purchased and installed the lift and paid the $8,625 bill. Thereafter, Defendants denied coverage for the lift and refused to reimburse Plaintiff for the lift. Plaintiff filed this action in state court asserting claims for breach of contract and breach of duty. Defendants removed the action to this court on May 23, 2000 and filed their motion to dismiss the next day.

Courts grant motions to dismiss under Rule 12(b)(6) only if "it appears beyond a reasonable doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Gibson v. United States, 781 F.2d 1334, 1347 (9th Cir. 1986), cert. denied, 479 U.S. 1054 (1987). The review is limited to the complaint, and all allegations of material fact are taken as true and viewed in the light most favorable to the non-moving party. Cassettari v. County of Nevada, 824 F.2d 735, 737 (9th Cir. 1987).

The Federal Rules of Civil Procedure do not require technical pleadings; they only require that a party be put on notice of the claim against him. Rule 8(a) provides that a complaint shall contain a "short and plain statement of the claim showing that the pleader is entitled to relief" and "a demand for judgment for the relief to which he deems himself entitled." A complaint in federal court need only set out a "generalized statement of facts from which [a] defendant will be able to frame a responsive pleading. Few complaints fail to meet this liberal standard. . . ." C. Wright A. Miller, 5 Federal Practice and Procedure § 1357 at 598 (1969).

Plaintiff's first claim is for breach of insurance contract. Plaintiff alleges that Defendants breached the contract when it failed to reimburse Plaintiff for the costs associated with the lift even though the lift was covered by the terms of the insurance contract. Construing the allegations of the complaint in the light most favorable to Plaintiff, it is clear that plaintiff is asking the court to review and reverse the plan administrator's decision denying his claim for benefits. That is sufficient to state a claim for relief under 29 U.S.C. § 1132(a)(1)(B), which authorizes a participant or beneficiary to bring a civil action "to recover benefits due to him under the terms of his plan, or to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Plaintiff's failure to cite the specific statute entitling him to relief is not fatal. See Crull v. Gem Insurance Co., 58 F.3d 1386, 1391 (9th Cir. 1995).

In his second claim for relief, Plaintiff alleges that he relied on Defendants' representation that the lift was covered in purchasing the lift and that, as a result, Defendants should cover the cost of the lift, minus any applicable co-payments. Defendants acknowledge the existence of a federal common law equitable estoppel claim but argue that Plaintiff has failed to allege such a claim.

A claim for equitable estoppel may be asserted upon a plaintiff establishing material misrepresentations by the fund, reasonable and detrimental reliance by the plaintiff, extraordinary circumstances, ambiguous terms in the plan and an oral interpretation of those terms. Spink v. Lockheed Corp., 125 F.3d 1257, 1262 (9th Cir. 1997); DeVoll v. Burdick Painting, Inc., 35 F.3d 408, 412 (9th Cir.), cert. denied, 514 U.S. 1027 (1995). Defendants argue that Plaintiff has failed to allege extraordinary circumstances, ambiguous terms in the plan or an oral interpretation of those terms by Defendants.

Plaintiff alleges that the plan covered "durable medical equipment and/or appliances." This term could be construed to cover a lift and the allegation that Defendants found the lift not covered establishes the ambiguousness of this term.

Additionally, although Defendants did not specifically refer to this term when it represented to Plaintiff that the lift was covered, it is reasonable to assume that Defendants interpreted the coverage of the term when making this representation. However, the court agrees that Plaintiff has failed to allege the extraordinary circumstances needed to support an equitable estoppel claim.

Plaintiff argues that his reliance on the representation that the lift was covered under the plan qualifies as extraordinary circumstance and relies on the case of Devlin v. Transportation Communications, Int'l., 173 F.3d 94, 102 (2nd Cir. 1999). In Devlin, the Second Circuit held that the mere reliance on a misrepresentation is not "extraordinary," noting that reliance is a separate element for a equitable estoppel claim. Instead, the court required a showing that the misrepresentation was intended to induce certain behavior beneficial to the defendant. Here, Plaintiff has not alleged that Defendants intended him to purchase the lift when it made the misrepresentation or that Defendants were benefitted in any way by the Plaintiff's purchase of the lift. Plaintiff's second claim for relief does not state a claim for equitable estoppel.

Defendants' motion (#4) to dismiss should be DENIED with regard to Plaintiff's First Claim for Relief and GRANTED with regard to Plaintiff's Second Claim for Relief.

Objections to these Findings and Recommendation(s), if any, are due August 15, 2000. If no objections are filed, the Findings and Recommendation(s) will be referred to a district court judge and go under advisement on that date.

If objections are filed, the response is due no later than August 29, 2000. When the response is due or filed, whichever date is earlier, the Findings and Recommendation(s) will be referred to a district court judge and go under advisement.