United States District Court, D. Connecticut
MARIE L. GARDNER, ET AL.
CNA FINANCIAL CORPORATION, ET AL.
RECOMMENDED RULING ON PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION
Joan Glazer Margolis U.S. Magistrate Judge
On December 27, 2013, plaintiff Marie L. Gardner ["Gardner"], individually and on behalf of all others similarly situated, commenced this action pursuant to 28 U.S.C. § 1332(d)(2)(A) against CNA Financial Corporation ["CNA"] and Continental Casualty Company ["Continental"] for violations of the Connecticut Unfair Trade Practices Act ["CUTPA"], fraudulent misrepresentation, negligent misrepresentation, unjust enrichment, breach of contract, money had and received, and bad faith. (Dkt. #1). On March 24, 2014, plaintiff Gardner, along with the estate of Francis R. Coughlin, M.D. ["Dr. Coughlin"], Barbara B. Coughlin ["Coughlin"],  and Janice B. Foster ["Foster"], filed an First Amended Class Action Complaint on behalf of themselves and all others similarly situated, alleging the same claims as alleged in the original Complaint. (Dkt #17; see also Dkts. ##12-13). That same day, plaintiffs filed the pending Motion for Preliminary Injunction and brief in support. (Dkt. #18). On May 29, 2014, defendants filed their Response to Plaintiff's Motion for Preliminary Injunction. (Dkt. #41; see also Dkts. ##32-33). On October 1, 2014, this motion was referred to this Magistrate Judge by U.S. District Judge Janet Bond Arterton. (Dkt. #59).
On October 22, 2014, plaintiffs Gardner, the Estate of Dr. Coughlin, Coughlin, Foster and Marie Miller filed a Second Amended Class Action Complaint on behalf of themselves and all others similarly situated against defendant Continental alleging CUTPA violations, unjust enrichment, breach of contract, and bad faith (Dkt. #63),  to which defendant Continental filed its Answer on December 2, 2014. (Dkt. #68; see also Dkts. ##64-65). On November 21 and December 1, 2014, plaintiffs filed their reply briefs (Dkts. ##66-67),  and on January 9, 2015, plaintiffs filed a Supplemental Statement of Facts in Support of their Motion for Preliminary Injunction. (Dkt. #73; see also Dkts. ##71-72).
On February 2, 2015, the Motion for Preliminary Injunction was terminated, without prejudice to renew, by agreement of counsel for both sides, in light of their ongoing mediation. (Dkt. #83; see also Dkt. #85). On June 16, 2015, plaintiffs filed a motion seeking leave to file additional evidence in support of their Motion for Preliminary Injunction, which motion was granted the same day, and plaintiffs subsequently filed their Second Supplemental Statement of facts in support of the Motion for Preliminary Injunction two days later. (Dkts. ##88-91). One week later, defendant filed its response to the supplemental statement. (Dkts. ##92-94).
On August 28, 2015 and again on November 9, 2015, plaintiffs the Estate of Gardner, the Estate of Coughlin, the Estate of Dr. Coughlin, Foster and Miller filed their Revised Second Amended Complaint and Second Revised Second Amended Class Action Complaint against defendant Continental, with the same four causes of action. (Dkts. ##106, 139).Currently pending before Judge Arterton is plaintiffs’ Motion to Certify Class. (Dkt. #108; see also Dkts. ##107, 109-20, 125-27, 135-37, 143-47).
For the reasons stated below, plaintiffs’ Motion for Preliminary Injunction (Dkt. #18) is denied without prejudice to renew if plaintiffs’ Motion to Certify Class is granted.
In their Motion for Preliminary Injunction, plaintiffs request "that this Court issue an order immediately enjoining [d]efendant from refusing to open claims and issue written claim denials when an insured seeks coverage for a stay at a facility determined by [d]efendant as not a covered facility under the insured's long term care policy." (Dkt. #18, Brief at 5). Plaintiffs later clarified that they seek to enjoin defendant so that it "compl[ies] with Conn. Gen. Stat. §§ 38a-816(6)(n) and 38a-501(a)(2)(B) and issue[s] all coverage decisions related” to Managed Residential Communities ["MRCs"] “to both insureds and the MRC in writing." (Dkt. #67, at 13).
A. FACTUAL BACKGROUND
Plaintiffs possess long-term care insurance policies through Continental that provide benefits in the event that an individual's health situation deteriorates to a point where she can no longer safely care for herself. (Dkt. #139, at 3-5; see also CNA Long-Term Care Basics, https://www.cna.com/portal/site/groupLTC/gltcpublic/?vgnextoid=a15b9c132d018210Vgn VCM1000005e780c0aRCRD& (last visited July 20, 2015)). Plaintiffs contend that in order to qualify for benefits under such a policy, a claimant must show (1) that she is medically eligible and (2) that the facility at which the claimant will reside meets the definition of a Long Term Care Facility. (Id. at 5-6; see also Dkt. #18, Brief at 7). The parties dispute whether an MRC in Connecticut can become a licensed assisted living facility, a necessary qualification to become approved under the policy as a Long Term Care Facility. (Compare Id. with Dkt. #41, at 6-7).
Plaintiffs claim that in the state of Connecticut, an MRC can become a licensed assisted living facility by either becoming licensed through the state's Department of Health as an Assisted Living Service Agency ["ALSA"], or by contracting with a Department of Health licensed ALSA. (Dkt. #18, Brief at 7). Conversely, defendant claims that under Connecticut law, MRCs are explicitly prohibited from providing the assisted living services that are covered by these policies. (Dkt. #41, at 6-7).
Plaintiffs also allege that defendant previously approved claims to certain MRC facilities but, under pressure to improve its profit margins, intentionally changed its policies in order to make it more difficult for long-term care claims, which generally have a high loss ratio, to be approved. (Dkt. #18, Brief at 8-11). Plaintiffs claim that these practices have violated CUTPA and resulted in unjust enrichment, breach of contract, and bad faith. (Dkt. #139, at 28-35).
Finally, and most relevant to the current motion, plaintiffs allege that defendant is deliberately avoiding opening claims for individuals seeking long term care benefits and is failing to send out written notices after such claims have been denied. (Dkt. #18, Brief at 11-12; see also Dkt #139, at 35). Plaintiffs claim that this failure to send written notices causes irreparable harm because claimants "are left wondering why their claims for long term care . . . are being denied, and what their options are moving forward[, ]" and that "[i]t is very difficult for an elderly insured to seek assistance from third-parties when there is no written basis for claim denial." (Id. at 16)(emphasis omitted). Plaintiffs also claim that failing to send written notices violates Conn. Gen. Stat. § 38a-501(a)(2)(B) which provides that
each insurance company . . . issuing for delivery, renewing, continuing or amending any long-term care policy in this state shall, upon receipt of a written authorization executed by the insured, . . . provide a copy of the initial acceptance or declination of a claim for benefits to the managed residential community at the same time such acceptance or declination is made to the insured.
(See Dkt. #18, Brief at 6-7). Because of this alleged failure to send written notices, plaintiffs seek a preliminary injunction, on behalf of both the named plaintiffs and the putative class of plaintiffs, requiring defendant to "comply with Conn. Gen. Stat. §§ 38a-816(6)(n) and 38a-501(a)(2)(B) and issue all coverage decisions related to MRCs to both insureds and the MRC in writing." (Dkt. #67, at 16).
Defendant responds that it has a procedure in place to make sure that claimants receive a written denial for their claims. (Dkt. #41, at 7-8). Defendant, relying on the declaration of Christine Michals-Bucher, the Vice President of Long Term Care Operations at Continental, claims that:
When a policyholder contacts Continental regarding a potential request for benefits, it is Continental's policy and procedure to have an intake specialist interview the policyholder. If the policyholder has begun to receive services, it is Continental's policy and procedure to have a ...