Cavanagh et al v. Northern New England Benefit Trust
ORDER denying 3 Motion to Remand to State Court. So Ordered by Magistrate Judge Landya B. McCafferty.(gla)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Robert V. Cavanagh
and Rhoda M. Cavanagh
Civil No. 12-cv-394-LM
Northern New England
O R D E R
In a case that has been removed from the New Hampshire
Superior Court, Robert and Rhoda Cavanagh have petitioned for a
Among other things, they seek a
declaration limiting the amount of the lien that may be asserted
by Northern New England Benefit Trust (“NNEBT”), the sponsor of
Mr. Cavanagh’s employee-benefit plan, against his $200,000
recovery from a third-party tortfeasor whose negligence resulted
in injuries for which NNEBT paid approximately $46,000 in
medical bills and disability benefits.1
Before the court is the
Cavanaghs’ motion to remand this case to the superior court.
Specifically, the Cavanaghs asked the superior court to:
(1) declare that NNEBT’s “liens are subject to a one-third
reduction for attorney’s fees incurred in recovering those
liens,” Notice of Removal, Attach. 1 (doc. no. 1-1), at 3; (2)
“charge [NNEBT] a pro-rata share of costs incurred in recovering
settlement proceeds,” id.; and (3) determine “the full and fair
value of [their] claims so that the recoveries of all parties
may be equitably apportioned,” id.
For the reasons that follow, the Cavanaghs’
motion to remand is denied.
In its notice of removal, NNEBT observed that the medical
and disability benefits it paid, and which underlie the lien it
has asserted, were provided under an employee-benefit plan
regulated by the Employee Retirement Income Security Act of 1974
For that reason, it argues that the Cavanaghs’
requests for relief are preempted by ERISA, see 29 U.S.C. §
1144(a), which gives this court subject-matter jurisdiction over
them and makes removal proper.
In their motion for remand, the Cavanaghs agree that NNEBT
provided benefits to Mr. Cavanagh pursuant to an ERISA-governed
Their argument for remand goes like
this: (1) Mr. Cavanagh’s NNEBT benefit plan does not cover
expenses for which a plan beneficiary has received payment from
a third-party tortfeasor, see Notice of Removal, Ex. A (doc. no.
1-2), at 35; (2) when NNEBT has paid expenses that later become
uncovered expenses due to a beneficiary’s recovery from a thirdparty tortfeasor, the plan’s subrogation provision allows NNEBT
to recover those uncovered expenses from its beneficiary, see
id.; and (3) because the plan does not cover expenses for which
a beneficiary has received compensation from a third-party
tortfeasor, the plan’s subrogation provision “create[s] rights
as to subjects that are not covered by the Plan,” Pet’r’s Mem.
of Law (doc. no. 3-1), at 3, which makes the subrogation
provision “legally untenable,” id.
What is legally untenable is the Cavanaghs’ argument
ERISA . . . preempts state laws to the extent that
they “relate to any employee benefit plan” governed by
ERISA. 29 U.S.C. § 1144(a). Thus, “[e]xpress ERISA
preemption analysis . . . involves two central
questions: (1) whether the plan at issue is an
‘employee benefit plan’ [within ERISA] and (2) whether
the cause of action ‘relates to’ this employee benefit
plan.” Hampers v. W.R. Grace & Co., Inc., 202 F.3d
44, 49 (1st Cir. 2000) (internal quotation marks
Colonial Life & Accident Ins. Co. v. Medley, 572 F.3d 22, 29
(1st Cir. 2009).
With respect to the interplay between
preemption and the issue on which the Cavanaghs base their
request for relief, i.e., the extent of NNEBT’s subrogation
rights, the court of appeals for this circuit has explained:
ERISA preempts state legislation designed to limit
plans’ subrogation and coordination of benefits
provisions. See FMC Corp. v. Holliday, 498 U.S. 52
(1990); Travitz v. Northeast Dept. ILGWU Health and
Welfare Fund, 13 F.3d 704 (3d Cir. 1994). Such
preemption applies a fortiori to state common law
doctrines (like the collateral source rule) which
purportedly alter the benefit limitation provisions of
a plan. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S.
41, 52-57 (1987) (precluding both state claims to
recover benefits under an ERISA plan and state claims
to recover compensation for harms suffered because of
improper denial of such benefits).
LaRocca v. Borden, Inc., 276 F.3d 22, 30 (1st Cir. 2002)
(parallel citations omitted).
Turning to the first requirement for preemption, the
Cavanaghs concede that Mr. Cavanagh’s NNEBT-sponsored plan is an
employee-benefit plan governed by ERISA.
As for the second
requirement, their cause of action relates to NNEBT’s right to
subrogation, which is a topic directly addressed by Mr.
Cavanagh’s ERISA-governed benefit plan.
While it is true that
injuries for which a plan beneficiary receives compensation from
a third-party tortfeasor are not a risk that is covered by the
plan, NNEBT’s right to recover from a plan beneficiary who has
recovered from a third-party tortfeasor is most assuredly a
subject that is expressly covered by the plan.
Thus, the issues
raised in the Cavanaghs’ petition are completely preempted by
See Colonial Life, 572 F.3d at 29.
court has subject-matter jurisdiction over their petition, which
makes removal proper.
See Metro. Life Ins. Co. v. Taylor, 481
U.S. 58, 66-67 (1987); Levine v. United Healthcare Corp., 402
F.3d 156, 161-63 (3d Cir. 2005) (affirming district court’s
denial of motion to remand beneficiary’s claim against ERISAgoverned employee-benefit plan to recover money paid to plan in
satisfaction of plan’s subrogation claim); Arana v. Ochsner
Health Plan, 338 F.3d 433, 440 (5th Cir. 2003) (holding that
declaratory judgment action challenging lien asserted by ERISAgoverned employee-benefit plan was properly removed to federal
court); Singh v. Prudential Health Care Plan, Inc., 335 F.3d
278, 292 (4th Cir. 2003) (affirming trial court’s denial of
motion for remand where beneficiary of ERISA-governed employeebenefit plan sought “return of a plan benefit unreduced by
For the foregoing reasons, the Cavanaghs’ motion to remand,
document no. 3, is denied.
United States Magistrate Judge
November 19, 2012
Kenneth M. Brown, Esq.
William R. Cahill, Jr., Esq.
William D. Pandolph, Esq.