Lister v. Bankers Life CV-02-83-B 09/05/02

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Althea Lister

v. Civil N o . 02-83-B Opinion N o .

Bankers Life and Casualty Company

MEMORANDUM AND ORDER

The plaintiff, Althea Lister, filed suit against the

defendant, Bankers Life and Casualty Company. Lister seeks a

declaratory judgment (Count I ) that she is entitled to coverage

under the home health care insurance policy she purchased from

Bankers. See Amend. Pet. (Doc. No. 9 ) ¶¶ 47-53. The plaintiff

also seeks relief for bad faith breach of contract (Count I I ) ,

intentional infliction of emotional distress (Count I I I ) , and

consumer fraud under N.H. Rev. Stat. Ann. ch. 358-A (Count I V ) .

See id. ¶¶ 54-86.

Bankers moves to dismiss Count I I , arguing that it is

“premature in light of the pendency of [Lister’s] declaratory

judgment claim.” Def’s. Mot. to Dismiss (Doc. N o . 13) ¶ 6. It

also moves to dismiss Counts III and IV pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, I grant

Bankers’ motion as it pertains to Count IV, and deny the motion

as it pertains to Counts II and III.

I. STANDARD OF REVIEW

When ruling on a motion to dismiss under Fed. R. Civ. P.

12(b)(6), the court must “accept as true the well-pleaded factual

allegations of the complaint, draw all reasonable inferences

therefrom in the plaintiff’s favor and determine whether the

complaint, so read, sets forth facts sufficient to justify

recovery on any cognizable theory.” Martin v . Applied Cellular

Technology, Inc.,

, 6 (1st Cir. 2002). Dismissal is

appropriate only if “it clearly appears, according to the facts

alleged, that the plaintiff cannot recover on any viable theory.”

Langadinos v . American Airlines, Inc.,

8 , 69 (1st Cir.

2000) (quotation omitted). The issue is not “what the plaintiff

is required ultimately to prove in order to prevail on her claim,

but rather what she is required to plead in order to be permitted

to develop her case for eventual adjudication on the merits.”

Gorski v . New Hampshire Dept. of Corrections,

(1st Cir. 2002) (emphasis in original).

-2- II. FACTS

Crediting the allegations set forth in Lister’s amended

petition as true, and drawing all reasonable inferences therefrom

in the light most favorable to her, the pertinent facts appear as

follows.

Lister, an elderly woman, discussed purchasing a home health

care insurance policy with Bryan Clark, a representative of

Bankers. Clark befriended her in order to obtain her business

and to “create an impression that Bankers would be approachable

and easy to work with if she ever had a claim.” Amend. Pet. ¶¶

63-64. Because of his efforts to gain her trust, Lister looked

upon him “as a personal and family friend.”

¶ 2 5 . In their

discussions about home health care insurance, Clark told her that

“she needed insurance coverage for medications, domestic care,

and medical supplies so that if she were sick, she could continue

to live at home and not ‘end up in a nursing home.’”

¶ 5 .

He assured her that the policy would “cover whatever was needed,”

and that “[e]verything would be taken care of.” Id. ¶¶ 6-7.

Relying upon his representations and Bankers’ promotional

materials, Lister purchased a home health care policy on March

3 0 , 1998.

-3- On March 1 6 , 2001, Lister was hospitalized because of severe

coronary artery disease and angina. She returned to the hospital

on May 1 4 , 2001 due to the same conditions. Upon release from

her second hospital stay, her doctor, Dr. VanderLinde, certified

that she was unable to perform some basic activities of daily

living without assistance. The physician claim form and home

health care plan, which Dr. VanderLinde completed, stated that

“[Lister] needs homemaking services as she is unable to perform

these duties due to her heart disease.” Id. ¶ 1 7 . Dr.

VanderLinde ordered her to obtain the home services of a

registered nurse, occupational therapist, and physical therapist.

Based upon Dr. VanderLinde’s orders, Lister’s daughter,

Cindy Addario, and granddaughter, Joyce Ninness, contacted Clark

and his supervisor, Gary Asker, to make a claim for benefits

under the policy. Initially, Clark told Ninness that Bankers

“will pay for whatever the doctor deems medically necessary,” and

instructed her to “[g]et grammy whatever services she needs and

the policy is now active.” Id. ¶ 2 1 . However, “[i]mmediately

after [Lister] made a claim, the agents refused to assist her in

processing it and actively avoided her.” Id. ¶ 6 5 . During one

of her attempts to seek assistance from Bankers on behalf of her

-4- grandmother, Ninness overheard Clark state “I don’t want to deal

with those people.” Id. ¶ 2 4 . The plaintiff was “shocked, hurt,

and betrayed by [the agents’] conduct and thought she had done

something wrong that offended [them] when she made a claim for

coverage. This caused her substantial emotional distress at a

time when she should have been focused on recovery.” Id. ¶ 27.

After repeated attempts to file her claim and receive

coverage under her policy, Bankers denied Lister’s claim,

alleging that she was not receiving personal care services under

a doctor’s home health care plan. This decision was rendered

despite Dr. VanderLinde’s certified home health care plan

specifically ordering personal care services, which was filed

with Lister’s claim. Lister suffered an angina attack due to

Bankers’ denial of coverage.

Lister, with the assistance of counsel, asked Bankers to

reconsider its decision. Bankers again denied coverage, this

time on the grounds that she did not need assistance with two or

more activities of daily living, as allegedly required by the

policy. A new letter from D r . VanderLinde was submitted to

Bankers, which stated that the Lister was unable to walk

unassisted, bathe and wash her hair, or shop and prepare food.

-5- Bankers denied the claim for the third time, again claiming that

she did not need assistance with two or more activities of daily

living.

III. DISCUSSION

A. Count II, Bad Faith Breach of Contract

Bankers argues that an insured may only bring a bad faith

breach of contract claim after it has obtained a declaratory

judgment in a separate action that the insured’s policy provides

the coverage in dispute. In support of this contention, Bankers

cites Jarvis v . Prudential Ins. Co.,

(1982),

which states: The underlying factor in determining whether there has been a bad-faith breach of contract is whether the terms of the insurance policy cover the services [in dispute]. A petition for declaratory judgment is pending in the superior court to determine this question. If it is determined in the declaratory judgment action that the plaintiffs’ policy did cover the services [in dispute], the plaintiffs will then, and only then, be able to assert their claim that the defendant’s denial of benefits was in bad faith.

Logic dictates that if an insured is not entitled to the

coverage in dispute, then the insured cannot maintain an action

for breach of contract – in bad faith or otherwise - for failure

to provide said coverage. I f , as in Jarvis, an insured opts to

-6- bring two separate actions - one for declaratory judgment on the

issue of coverage, and one for breach of contract - judicial

economy is indeed best served by dismissing the breach of

contract claim as premature. I glean no more and no less from

Jarvis. Thus, I reject Bankers’ argument that Jarvis somehow

bars an insured, as here, from bringing a declaratory judgment

and breach of contract claim in the same suit. Bankers’ argument

for dismissing Count II is unavailing.1

B. Count III, Intentional Infliction of Emotional Distress

The New Hampshire Supreme Court has set forth the elements

of intentional infliction of emotional distress as follows:

One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from i t , for such bodily harm.

Morancy v . Morancy,

(1991) (quotation omitted);

see also Konefal v . Hollis/Brookline Coop. School Dist.,

(1998). The definition of “extreme and outrageous

conduct” is guided by the Restatement (Second) of Torts, which

1 I note that the trier of fact can be directed to address the threshold question of coverage before addressing the remaining claims.

-7- the New Hampshire Supreme Court has embraced. See Jarvis,

(referencing Restatement (Second) of Torts § 4 6 ) ; see

also Morancy,

. Restatement of Torts § 4 6 ,

comment d, states:

Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, “Outrageous!”

Because Bankers believes that the alleged wrongful conduct

is a simple breach of an insurance contract for which emotional

distress damages are not available, it contends that the court

should dismiss Lister’s claim for intentional infliction of

emotional distress. It also contends that the conduct alleged

fails to rise to the level of extreme and outrageous, a necessary

element of a claim for intentional infliction of emotional

distress.

Bankers correctly points out that challenges to an insurer’s

benefits decision sound strictly in contract rather than tort

law. See Lawton v . Great Southwest Fire Ins. Co.,

(insurers wrongful or bad faith refusal to settle or pay a

-8- claim pursuant to its contractual obligations does not give rise

to a cause of action in tort); accord Jarvis,

.

Here, however, Lister’s claim for intentional infliction of

emotional distress rests upon more than mere allegations that her

coverage was wrongfully delayed or denied and, thus, this case

falls outside the scope of Lawton and Jarvis.

As for the allegations of extreme and outrageous conduct, it

can reasonably be inferred from Lister’s allegations that Bankers

took advantage of an elderly woman and then treated her with

utter disregard when she fell ill and needed assistance

understanding her policy and filing a claim. Indeed, Bankers and

its agents allegedly assured her that Bankers “would be

approachable and easy to work with if she ever had a claim.”

Amend. Pet. ¶ 6 4 . However, when she fell seriously ill, Bankers

and its agents “refused to assist her in processing it and

actively avoided her.”

¶ 6 5 . Given the liberal standard of

review that applies at this stage in the case, see generally

I conclude that Lister’s intentional infliction of

emotional distress claim is sufficient to withstand Bankers’

motion to dismiss. I reach this conclusion without prejudice to

Bankers’ right to renew its argument in a motion for summary

-9- judgment after discovery has been completed.

C. Count IV, Consumer Protection

Because Lister agrees to the dismissal of Count IV, no

further discussion is warranted regarding this Count. See Pls.

Mem. Supp. O b j . to Mot. to Dismiss at 1 .

IV. CONCLUSION

For the foregoing reasons, I grant Bankers’ motion to

dismiss (Doc. N o . 13) Count IV, and deny its motion as it

pertains to Counts II and III.

SO ORDERED.

Paul Barbadoro Chief Judge

September 5 , 2002

cc: Eleanor H. MacLellan, Esq. Douglas J. Miller, Esq.

-10-