Melesky v. SummaCare, Inc.

[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