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O'Keeffe v. Continental Casualty Co.

United States District Court, N.D. Ohio, Eastern Division

December 16, 2019

KATHLEEN O'KEEFFE, as successor trustee of the O'Connell Family Trust, individually and as a class representative, PLAINTIFF,



         Before the Court is the motion to dismiss under Fed.R.Civ.P. 12(b)(6) filed by defendant, Continental Casualty Company (“CNA”).[1] (Doc. No. 13 [“Mot.”].) Plaintiff Kathleen O'Keeffe (“O'Keeffe” or “plaintiff”) filed a memorandum in opposition (Doc. No. 15 [“Opp'n”]) and CNA filed a reply (Doc. No. 16 [“Reply”]). For the reasons set forth herein, CNA's motion is granted.


         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief[.]” Fed.R.Civ.P. 8(a)(2). Although this pleading standard does not require great detail, the factual allegations in the complaint “must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing authorities). In other words, “Rule 8(a)(2) still requires a ‘showing,' rather than a blanket assertion, of entitlement to relief.” Id. at 555, n.3 (criticizing the Twombly dissent's assertion that the pleading standard of Rule 8 “does not require, or even invite, the pleading of facts”) (internal citation omitted).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570). Rule 8 does not “unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 679. “The court need not, however, accept unwarranted factual inferences.” Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).


         A. Background

         Prior to her death in 2018, plaintiff's decedent, Vivian O'Connell (“O'Connell”), a North Dakota resident, was insured under a CNA long-term care policy, effective September 2, 1992. (Doc. No. 1, Complaint [“Compl.”] ¶¶ 8, 15, 22; Mot. at 225.)[2] A copy of this policy is attached to the complaint as Exhibit B. (Doc. No. 1-2, Vivian O'Connell LTC Policy [the “Policy”].) CNA has allegedly sold “tens of thousands” of these, or similar, policies. (Compl. ¶ 1.) There are two types of benefit covered by the policies: the long-term care facility benefit (the “LTCF Benefit”) and the “Alternate Plan of Care Benefit” (the “APC Benefit”). (Id. ¶ 2; Mot. at 225; Policy at 130- 31.)

         In 2007, a nationwide class of plaintiffs (which included O'Connell) sued CNA. See Pavlov v. Cont'l Cas. Co., N.D. Ohio Case No. 5:07-cv-2580. The Pavlov litigation challenged CNA's practice of denying LTCF Benefit claims on the basis that the facility for which coverage was sought did not have a nurse on-site 24 hours a day, seven days a week. The plaintiffs in Pavlov argued that there was no on-site requirement in the policy.

         In 2009, this Court approved a settlement agreement in Pavlov, a copy of which is attached as Exhibit A to the instant complaint. (Doc. No. 1-1 [“Pavlov Settlement”].) Under the terms of the Pavlov Settlement, as to Class II policyholders, [3] CNA agreed to abandon the 24/7 on-site requirement for the policies at issue and agreed to pay the full daily LTCF Benefit Amount as long as the facility had a qualified nurse on-site for at least five hours per day, seven days per week (“the 35-Hour Standard”). (Compl. ¶¶ 3, 37.) In circumstances where a facility did not satisfy the new 35-Hour Standard, CNA was required by the settlement to offer an APC Benefit equal to 25% of the greater of the daily LTCF Benefit under the policy or the daily cost of the facility, provided such benefit did not exceed the lesser of the daily LTCF Benefit or the daily cost of the facility. (Id. ¶ 3 (citing Pavlov Settlement at 44, Section V.B.2.ii.a); ¶¶ 4, 38.) Notably, the Pavlov Settlement also provided: “The claims handling changes discussed in this section [relating to the policy's Nursing Services Requirement] shall not affect any other term of the policy.” (Pavlov Settlement at 45, Section V.B.4.)

         On or about June 30, 2010, to be closer to her family, O'Connell moved from a facility where she had been receiving her full LTCF Benefit for approximately two (2) years to the Edgewood Vista facility in Bismarck, North Dakota. (Id. ¶ 42.) Because CNA determined that Edgewood Vista did not provide the required level of nursing coverage to qualify for the LTCF Benefit under the Pavlov Settlement, O'Connell was offered coverage under the APC Benefit, which she received for approximately four (4) years. (Id. ¶¶ 43-44.)

         On or about September 16, 2014, CNA sent O'Connell a letter, stating in relevant part:

This letter serves as notification that benefits under the above Long Term Care policy have reached the policy's Maximum Benefit Period of 2190 days. The Maximum Benefit Period ended on August 29, 2014.

(Id. ¶ 45.)

         The instant putative class action complaint[4] alleges, in Count I, that CNA breached the Pavlov Settlement by prematurely terminating the APC Benefit coverage allegedly owed to O'Connell and to similarly situated policyholders. (Id. ΒΆΒΆ 14, 15, 71.) Count II raises a claim under an Illinois statute for recovery of reasonable attorney fees and ...

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