Steele-Brown v. Stoddard

192 F. Supp. 3d 812, 2016 U.S. Dist. LEXIS 77604, 2016 WL 3269542
CourtDistrict Court, E.D. Michigan
DecidedJune 15, 2016
DocketCase No. 15-11817
StatusPublished
Cited by1 cases

This text of 192 F. Supp. 3d 812 (Steele-Brown v. Stoddard) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Steele-Brown v. Stoddard, 192 F. Supp. 3d 812, 2016 U.S. Dist. LEXIS 77604, 2016 WL 3269542 (E.D. Mich. 2016).

Opinion

OPINION AND ORDER REGARDING DEFENDANT’S MOTION TO DISMISS

PRESENT:

Honorable Gerald E. Rosen, United States District Judge .

I. INTRODUCTION

Plaintiff Sally Steele-Brown, a recently retired public schoolteacher, commenced this action in this Court on May 20, 2015, asserting federal civil rights claims under 42 U.S.C. § 1983 and a state-law claim of gross negligence against Defendant Phil Stoddard, a state official who serves as the director of the Michigan Office of Retirement Services (“MORS”). In support of these claims, Plaintiff alleges that MORS, under Defendant’s direction, sent her misleading communications that led her to inadvertently opt out of employer-provided retiree .health insurance, and to instead elect a personal healthcare fund that was grossly underfunded at the time of her retirement. This Court’s subject matter jurisdiction rests upon Plaintiffs assertion of claims arising under federal law. See 28 U.S.C. § 1331.

In lieu of answering Plaintiffs complaint, Defendant has filed a July 17, 2015 motion in which he seeks the dismissal of each of Plaintiffs claims on various grounds. In particular, Defendant argues (i) that Plaintiff has failed to state viable due process or takings claims under 42 U.S.C. § 1983(ii) that Plaintiffs federal § 1983 claims for money damages and her state-law claim - of gross negligence are defeated by the immunity conferred under the Eleventh Amendment to the U.S. Constitution, (iii) that Plaintiffs claims are barred by the doctrine of res judicata, in light of the parallel proceedings instituted by Plaintiff before an administrative law judge and in the Michigan courts,, and (iv) that, in the event it is determined that Plaintiffs claims are not subject to dis^ missal, the Court nonetheless should abstain from addressing these claims while Plaintiffs state court challenge remains pending.

On November 17, 2015, Plaintiff filed a response in opposition to Defendant’s motion to dismiss. Having reviewed the parties’ briefs in support of and in opposition to Defendant’s motion, as well as the accompanying exhibits and the remainder of the record, the Court finds that the pertinent facts, allegations, and legal issues are adequately presented in these written submissions, and that oral argument would not assist in the resolution of this motion. Accordingly, the Court will decide Defendant’s motion “on the briefs.” See Local Rule 7.1(f)(2), U.S. District Court, Eastern District of Michigan. This opinion sets forth the Court’s rulings on this motion.

II. FACTUAL AND PROCEDURAL BACKGROUND

Prior to her retirement on July 1, 2013, Plaintiff Sally Steele-Brown was employed as a public school teacher for 31 years. Shortly before Plaintiff retired, the Michigan Legislature amended the state law governing the retirement benefits granted to public school employees. Under this 2012 amendment, employees hired on. or after September 4, 2012 were no longer eligible upon their retirement for health insurance coverage that was paid for in part by their employer. See Mich. Comp. Laws § 38.1391a(l). Instead, these em[815]*815ployees could contribute to a so-called “Tier 2” account, with limited matching contributions from their employer, that they could draw upon to pay the health care expenses they incurred- after - their retirement. See Mich. Comp. Laws § 38.1391a(l),(2). Public; school employees who, like Plaintiff, were hired prior, to September 4, 2012 could elect to-either (i) maintain their existing employer-provided retiree health insurance, with the employer paying 80 percent of the monthly premiums for this coverage, or (ii) opt .out of this health insurance coverage and instead open a “Tier 2” account that would be used to pay health care expenses upon the employee’s retirement. See. Mich. .Comp, Laws §§ 38.1391,38.1391a(5).

In September of 2012, the Michigan Office of Retirement Services (“MORS”), under the direction of Defendant Phil Stod-dard, sent correspondence to Plaintiff and other public school employees advising them of the options available to them under the recent amendments to the law governing their retirement benefits. According to Plaintiff’s complaint, the mailings sent by MORS were misleading in various respects, and neither this correspondence nor the MORS website provided the notice and complete information needed by Plaintiff-to make an appropriate selection among the retiree health Care options offered under Michigan law. In particular, Plaintiff alleges that the mailings she received from MORS (i) indicated that she was compelled to select one of the two options referenced in the correspondence, when in fact she “did not have to 'elect either and could simply maintain [her existing] retiree health insurance,” (ii) misstated the deadline by which she had to act, (iii) used “technical jargon” that operated to “obfuscate[ ] the decision”-faced by Plaintiff, (iv) omitted any mention that'if she selected the “personal healthcare fund” option referenced in the MORS correspondence, she “would forfeit or waive her entitlement to employer-provided retiree health insurance and would have to go oil the open market to purchase insurance,” (v) failed to advise Plaintiff that the “personal healthcare fund” was “more appropriate for a young employee who is sufficiently] far away from retirement to build [up] such account or has access to retiree health insurance through an alternative source,” and (vi) lacked notice of Plaintiffs opportunity to revoke her selection of a “personal healthcare fund” within a specified time after making this election. (Complaint at ¶¶ 7,9,13-15.)

Upon receiving these mailings from MORS, Plaintiff “unknowingly” elected to surrender her existing retiree health insurance coverage, and to instead begin contributing to a personal healthcare fund. (Id. at ¶ 16.)- Plaintiff alleges that MORS did not send her notice - of this election until February 26,2013, after the statutory period for rescinding this choice had already expired, and that this notice used “healthcare jargon” rather than “plain English” to characterize her selection. (Id. at ¶ 17.) Thus, Plaintiff alleges that she did not become aware of her “inadvertent[ ]” surrender of her -retiree health insurance coverage - until August 2, 2013, a month after she retired. (Id. at 118.)

Upon learning that she had inadvertently chosen a personal healthcare fund over continued retiree health insurance, Plaintiff “immediately contacted [M]ORS to change her selection,” but this request was denied. (Id.)'As a result, Plaintiffs personal healthcare fund is significantly underfunded, with “a value of approximately $1,000 upon her'retirement,” and she “has been forced to purchase health care insurance on the open market for a premium amount significantly higher than what she would have had to pay” if she had retained the retiree health insurance coverage that was largely paid for by her employer. (Id. at ¶¶ 19-20.)

[816]*816In an effort to rectify this situation, Plaintiff first requested a hearing before an administrative law judge (“ALJ”) as provided for under Michigan law.

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192 F. Supp. 3d 812, 2016 U.S. Dist. LEXIS 77604, 2016 WL 3269542, Counsel Stack Legal Research, https://law.counselstack.com/opinion/steele-brown-v-stoddard-mied-2016.