ROCHE et al v. AETNA, INC. et al
Filing
45
OPINION. Signed by Judge Noel L. Hillman on 3/1/2016. (dmr)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
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MICHELLE ROCHE, JAY MINERLEY,
and TIM SINGLETON,
Individually and as Class
Representatives,
Plaintiffs,
v.
AETNA, INC., AETNA HEALTH,
INC. (a NJ corp.), AETNA
HEALTH INSURANCE CO., AETNA
LIFE INSURANCE CO., and THE
RAWLINGS COMPANY, LLC,
Defendants.
Civil No. 13-1377 (NLH/KMW)
APPEARANCES:
KLEHR HARRISON HARVEY BRANZBURG LLP
By: Charles A. Ercole, Esq.
Carianne P. Torrissi, Esq.
457 Haddonfield Road, Suite 510
Cherry Hill, New Jersey 08002
and
KANNEBECKER LAW
By: Charles Kannebecker, Esq.
104 West High Street
Milford, Pennsylvania 18337
Counsel for Plaintiffs
LOWEY DANNENBERG COHEN & HART, P.C.
By: Uriel Rabinovitz, Esq.
Richard W. Cohen, Esq. (pro hac vice)
Gerald Lawrence, Esq. (pro hac vice)
One North Broadway, Suite 509
White Plains, New York 10601-2310
Counsel for Defendants
1
OPINION
HILLMAN, United State District Judge:
This suit concerns alleged violations of New Jersey’s
insurance regulation laws brought by Plaintiffs Jay Minerley and
Tim Singleton (“Plaintiffs”) both individually and as putative
class representatives against Defendants Aetna, Inc., Aetna
Health, Inc., Aetna Health Insurance Co., and Aetna Life
Insurance Co. (collectively, the “Aetna Defendants”) and The
Rawlings Company, LLC (“Rawlings” and collectively with the
Aetna Defendants, “Defendants”).
Presently before the Court is
Defendants’ Motion for Summary Judgment (“Defendants’ Motion” or
“Defs.’ Mot.”) [Dkt. Nos. 18, 40].
For the reasons set forth
below, Defendants’ Motion will be GRANTED-IN-PART and DENIED-INPART.
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY1
Plaintiff Jay Minerley was involved in a car accident on
May 20, 2010 in Morris County, New Jersey.
(Defs.’ Statement of
Material Facts (“DSMF”) [Dkt. No. 20] ¶ 13.)
Minerley suffered
injuries, and in the course of treatment for his injuries, he
received benefits under his health insurance policy issued by
the Aetna Defendants.
(DSMF ¶ 14; Pls.’ Responsive Statement of
1
The Court recites those facts relevant to deciding the pending
motion for summary judgment, and resolves any disputed facts or
inferences in favor of Minerley and Singleton, the nonmoving
party. Trinity Indus., Inc. v. Chi. Bridge & Iron Co., 735 F.3d
131, 134–35 (3d Cir. 2013).
2
Material Facts (“PSMF”) [Dkt. No. 24-6] ¶ 14; Compl. [Dkt. No.
15] ¶¶ 14, 16.)
Plaintiff Tim Singleton was involved in a car
accident on December 4, 2006 in Pike County, Pennsylvania.
(DSMF ¶¶ 22–23.)
Similarly, Singleton suffered injuries and
received benefits under a health insurance policy issued by the
Aetna Defendants.
(DSMF ¶ 25; PSMF ¶ 25; First Am. Compl.
(“FAC”) [Dkt. No. 15] ¶¶ 15–16.)
There is some dispute about what insurance policy covered
Minerley.
Defendants assert that Minerley received benefits
from an employee group Pennsylvania HMO plan sponsored by WeissAug Company, Inc. and fully insured by Aetna Health Inc. (the
“Weiss-Aug HMO Plan”).
(DSMF ¶¶ 14, 16–17.)
Minerley denies he
was covered by this insurance plan and denied that the
certificate of coverage that Defendants refer to with respect to
this plan is applicable to him.
(PSMF ¶¶ 14, 16–17.)
Minerley
submits to the Court that he only received information about a
group insurance policy from his employer.
[Dkt. No. 24-3] ¶¶ 5–8, Ex. 1.)
The policy indicates that it is
to be governed by the laws of New Jersey.
Ex. 1.)
(See Minerley Decl.
(See Minerley Decl.
Defendants submit a slightly different policy that
explains it will be governed by the laws of Pennsylvania.
(See
Goodrich Decl. Ex. 3 [Dkt. No. 21-3].)
There is also some dispute about what insurance policies
covered Singleton.
The parties agree that Singleton was covered
3
by an employee group health plan of HLM Holdings, Inc. (the “HLM
Plan”).
(DSMF ¶ 25; PSMF ¶ 25.)
Defendants submit that
Singleton was also covered by an employee group health plan from
Hundley CPAS Corporation (the “Hundley Plan”), which Singleton
denies.
(DSMF ¶ 25; PSMF ¶ 25.)
Minerley and Singleton both filed civil lawsuits against
the respective tortfeasors in their car accidents.
¶ 17; DSMF ¶¶ 15, 24.)2
(See FAC
Subsequently, Rawlings contacted both
Minerley and Singleton’s personal injury attorney claiming it
had a right to reimbursement of any eventual recovery made in
their respective lawsuits under the terms of their insurance
policies.
(DSMF ¶ 19; Kannebecker Decl. [Dkt. No. 24-2] Ex. 1,
3; Van Natta Decl. Ex. 2 [Dkt. No. 22-2].)
As a result of these
letters, Minerley fearing negative credit ratings and a
potential loss of health insurance authorized payment to
Rawlings of $3,512.82 for reimbursement of benefits received.
(DSMF ¶ 20; Minerley Decl. ¶ 9.)
Singleton does not appear to
have paid anything to Defendants at this time.
2
Defendants
Minerley in the response to Defendant’s Statement of Material
Facts denies “that litigation was instituted by Plaintiff Jay
Minerley against the alleged tortfeasor.” (PSMF ¶ 15.)
However, that assertion is directly contradicted by the
complaint. (See Compl. ¶ 17.) While the Court must give
Plaintiffs all reasonable inferences, the complaint will control
in the event of directly contradictory evidence submitted by
Minerley.
4
assert that they have not asserted subrogation claims against
either of Minerley or Singleton’s respective tortfeasors.
(DSMF
¶ 31.)
On January 25, 2013, Plaintiffs along with a third person –
Michelle Roche – filed a complaint against the Defendants in the
New Jersey Superior Court, Law Division, Atlantic County.
Original Compl. [Dkt. No. 1-1].)
to this Court on March 7, 2013.
No. 1].)
(See
Defendants removed the action
(See Notice of Removal [Dkt.
Before any defendant answered or made a motion for
summary judgment, Plaintiffs amended the complaint to remove
Roche as a plaintiff from this suit.
(See generally FAC.)
Plaintiffs complain on behalf of themselves and a putative class
of persons similarly situated that the recovery actions taken by
Defendants violate New Jersey’s anti-subrogation laws – codified
at N.J.S.A. 2A:15-97 and N.J.A.C. 11:4-42.10 – as well as the
New Jersey Consumer Fraud Act (“NJCFA”), N.J.S.A. 56:88-19, and
other common law torts.
(See generally FAC.)
Defendants brought the instant motion, and afterwards
Plaintiffs filed a motion to consolidate this case with Roche’s
separately filed action, Civil Action No. 13-3933 (the “Roche
Action”).
Magistrate Judge Karen Williams denied the motion to
consolidate due to a pending motion to remand in the Roche
Action.
See Order, Dec. 4, 2013 [Dkt. No. 34].
5
Subsequently,
Judge Joseph H. Rodriguez3 dismissed without prejudice the
summary judgment motion with the right to reinstate the motion
by letter due to a potential jurisdictional issue in the Roche
Action.
See Order, Mar. 31, 2014 [Dkt. No. 38].
Plaintiffs informed this Court by way of letter on July 2,
2015 that the request for remand in the Roche Action was being
withdrawn, and urged the Court to proceed with the litigation.
(See Ercole Letter [Dkt. No. 39].)
Defendants then requested
the Court reinstate the motion for summary judgment.
Letter [Dkt. No. 40].)
II.
(See Cohen
The motion was subsequently reinstated.
JURISDICTION
Plaintiffs have brought suit as a representative of a
putative class on issues of New Jersey law.
Plaintiffs
initially filed this suit in the New Jersey Superior Court, Law
Division, and Defendants timely removed to this Court on the
grounds that Plaintiffs’ complaint stated a claim under the
Employee Retirement Income Security Act of 1974 (“ERISA”), Pub.
L. No. 93-406, 88 Stat. 829 (codified as amended at 29 U.S.C. §
1001, et seq.).
(See Notice of Removal [Dkt. No. 1].)
As will
explained in Section IV.C, infra, all of Plaintiffs’ state law
3
This matter was reassigned from Judge
E. Irenas on July 28, 2015. See Order,
41]. Judge Irenas unfortunately passed
which point this matter was transferred
Order, Oct. 29, 2015 [Dkt. No. 44].
6
Rodriguez to Judge Joseph
July 28, 2015 [Dkt. No.
away in October 2015, at
to the undersigned. See
claims are completely preempted by ERISA § 502.4
As such, this
Court exercises jurisdiction pursuant to 28 U.S.C. § 1331 and 29
U.S.C. § 1132(f).5
III. STANDARD OF REVIEW
Summary judgment is appropriate where the Court is
satisfied that “there is no genuine dispute as to any material
fact and that the movant is entitled to judgment as a matter of
law.”
Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett,
477 U.S. 317, 330 (1986).
A genuine dispute of material fact
exists only if the evidence is such that a reasonable jury could
find for the non-moving party.
477 U.S. 242, 248 (1986).
Anderson v. Liberty Lobby, Inc.,
When the Court weighs the evidence
presented by the parties, “[t]he evidence of the non-movant is
to be believed, and all justifiable inferences are to be drawn
in his favor.”
Id. at 255.
The moving party bears the burden of establishing that no
genuine issue of material fact remains.
See Celotex, 477 U.S.
4
ERISA presents an exception to the well-pleaded complaint rule
that would ordinarily require the complaint to state a federal
claim on its face. See Metro Life Ins. Co. v. Taylor, 481 U.S.
58, 63–64 (1987).
5
The Court need not reach the jurisdictional argument based on
the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 1092, 119 Stat. 4 (relevant portion codified at 28 U.S.C.
§ 1332(d)).
7
at 322–23.
A fact is material only if it will affect the
outcome of a lawsuit under the applicable law, and a dispute of
a material fact is genuine if the evidence is such that a
reasonable fact finder could return a verdict for the nonmoving
party.
See Anderson, 477 U.S. at 252.
Even if the facts are
undisputed, a disagreement over what inferences may be drawn
from the facts precludes a grant of summary judgment.
Ideal
Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 744 (3d
Cir. 1996).
The nonmoving party must present “more than a scintilla of
evidence showing that there is a genuine issue for trial.”
Woloszyn v. Cty. of Lawrence, 396 F.3d 314, 319 (3d Cir. 2005).
Further, the nonmoving party must come forth with affidavits and
evidence in support of their position; merely relying on the
pleadings and the assertions therein is insufficient to
demonstrate a genuine issue of material of fact on a motion for
summary judgment.
Celotex, 477 U.S. at 324; see also Saldana v.
Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001) (citing Fed. R.
Civ. P. 56(e) and Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574 (1986)).
The court’s role in deciding the
merits of a summary judgment motion is to determine whether
there is a genuine issue for trial, not to determine the
credibility of the evidence or the truth of the matter.
Anderson, 477 U.S. at 249.
8
Where the factual record has not yet been developed, as
here, plaintiffs are permitted to “show by affidavit or
declaration that, for specified reasons, it cannot present facts
essential to justify its opposition.”
Fed. R. Civ. P. 56(d).
The declaration “must identify with specificity what particular
information is sought; how, if uncovered, it would preclude
summary judgment, and why it has not been previously obtained.”
Lunderstadt v. Colafella, 885 F.2d 66, 71 (3d Cir. 1989)
(internal quotation omitted).
Although this motion comes before
discovery has been fully pursued, because Defendants have
characterized the motion as one for summary judgment, the
parties have filed statements and responses pursuant to Local
Civil Rule 56.1, and there has been submission by both
Plaintiffs and Defendants of materials outside the pleadings,
the Court will treat the motion as one for summary judgment.
See Hilfirty v. Shipman, 91 F.3d 573, 578–79 (3d Cir. 1996); see
also Lunn v. Prudential Ins. Co. of Am., 283 F. App’x 940, 943
(3d Cir. 2008).
IV.
DISCUSSION
Defendants move for summary judgment on Plaintiffs’ claims
under two broad theories:
(1) ERISA preempts all of Plaintiffs’
state law claims; (2) it would be futile to amend to restyle
Plaintiffs’ claims as ERISA claims.
9
Before going into the
merits of the arguments, it is necessary to clarify what parties
and what insurance plans are at issue here.
A.
PARTIES AND APPLICABLE INSURANCE CONTRACTS
The first step is to clarify who the proper plaintiffs are
in this matter.
Plaintiffs, in filing their amended complaint
dropped all claims of Roche.
(See generally FAC.)
Defendants
assert that this was an improper way to remove Roche from the
action and seek judgment against Roche in this action.6
(See
Def.’s Mot. Br. at 27–29; Def’s Reply [Dkt. No. 29] at 13–14.)
Plaintiffs argue that this act was sufficient to remove all
claims pertaining to Roche.
(Pls.’ Opp. at 37–39.)
Defendants are correct that simply amending the complaint
to remove a plaintiff is not technically the correct way for a
party to withdraw from an action.
The procedures governing
dismissal of an action are outlined in Federal Rule of Civil
Procedure 41.
At the time Plaintiffs filed the FAC, none of the
Defendants had answered or moved for summary judgment.
generally ECF Docket Sheet.)
(See
Thus, under the Rules, Plaintiffs
could have filed a notice of dismissal to dismiss Roche from the
action without consent from the Defendants or the Court.
Fed. R. Civ. P. 41(a)(1)(A)(i).
See
Despite Plaintiffs’ failure to
6
The Court recently dismissed the Roche Action without prejudice
for failure to exhaust administrative remedies.
10
directly adhere to the Rule, this Court will construe the FAC as
also containing a notice of voluntary dismissal under Rule
41(a)(1)(A)(i).
See Fed. R. Civ. P. 1 (“[The Rules] should be
construed, administered, and employed by the court and the
parties to secure the just, speedy, and inexpensive
determination of every action and proceeding.”).
Therefore,
Roche will be deemed dismissed from this action, and the Clerk
will be instructed to revise the case caption accordingly.
Additionally, the parties dispute under what plan Minerley
was covered, and also whether Singleton was covered by the
Hundley Plan, as discussed above.
At this time, the Court is
unable to determine which of the competing plan documents
submitted apply to Minerley, and so cannot make any
determination about the terms of any contract.
The evidence
produced by Defendants to show that Minerley was covered by the
Weiss-Aug HMO are the declaration of Myrna Goodrich, a multifunctional project manager/litigation paralegal in Aetna’s legal
department, (Goodrich Decl. ¶¶ 1–2), and a certificate of
coverage that Defendants claim covers Minerley (Goodrich Ex. 3).
Goodrich asserts that Minerley “received medical service . . .
under the employee group Pennsylvania HMO plan” which Defendants
submitted.
(Goodrich Decl. ¶ 13.)
The first page of the
certificate submitted by defendants at the top states “Aetna
Health Inc. (Pennsylvania),” is titled “Group Agreement Cover
11
Sheet,” and says that the governing law is “Federal law and the
laws of Pennsylvania.”
(Goodrich Ex. 3 at PageID 686.)
Minerley submits a different insurance agreement that he
claims was given to him by his employer.
7; Minerley Ex. 1.)
(Minerley Decl. ¶¶ 5–
The first page of the document submitted by
Minerley states at the top “Corporate Health Insurance Company
(New Jersey),” is titled “Group Insurance Policy Cover Sheet,”
and says the governing law is “Federal law and the laws of New
Jersey.”
(Minerley Ex. 1 at PageID 809.)
Otherwise, the two
cover sheets refer to the same contract holder, contract holder
number, the inclusion of the “Liberty FLEX Benefits Package” and
the same notice address for the insurer.
Ex. 3 with Minerley Ex. 1.)
(Compare Goodrich
Plaintiffs additionally deny that
the Certificate of Coverage submitted by Defendants is
applicable to Minerley.
(Pls.’ SMF ¶¶ 14, 16–17.)
Defendants do not point to anything that says Minerley is
actually covered by the plan they submit, nor do they do
anything to clarify the documents submitted by Minerley, other
than saying they are “irrelevant.”
(Def.’s Reply at 8 n.6.)
The Court cannot, at this procedural juncture, weigh the
evidence submitted and determine the credibility of that
evidence to determine which of the competing plans submitted
applies to Minerley.
See Anderson, 477 U.S. at 249.
12
However, regardless of which of the plans submitted covers
Minerley, it is clear by Minerley’s own admission that it is an
employee sponsored benefits plan.
(See Minerley Decl. ¶ 4 (“As
part of my employment with Weis[s] Aug Inc., I was provided
health insurance as part of my employment in New Jersey.”).)
This plan provided to him as part of his employment then falls
under the ambit of ERISA.
See ERISA § 3, 29 U.S.C. § 1002.
Thus, to the extent any of Minerley’s claims are preempted by
ERISA, that can be decided by the Court without knowing exactly
which of the competing plan documents submitted applies to
Minerley.
With respect to the dispute regarding the Hundley Plan’s
applicability to Singleton, this Court finds the Hundley Plan to
be properly before it.
Defendants again rely on Ms. Goodrich,
who does not tell the Court anything about any benefits
Singleton may have received under the Hundley Plan.
Attached to
her declaration are excerpts from the Hundley Plan.
(Goodrich
Ex. 5.)
Plaintiffs do not submit a declaration from Singleton, but
specifically dispute that he received any benefits from the
Hundley Plan, while at the same time admitting that benefits
were received under the HLM Plan.
(Pls.’ SMF ¶ 25.)
However,
Plaintiffs in their opposition, without conditioning their
argument, discuss the specifics of the Hundley Plan in
13
explaining why Defendants are the proper defendants to be sued
(see Pls.’ Opp. at 32), why New Jersey law should apply (see id.
at 34), and why exhaustion was not required (see id. at 35).
Despite the denial in Plaintiffs’ Responsive Statement of
Material Facts, Plaintiffs’ arguments in their opposition put
the Hundley Plan properly at issue.
As the laws and regulations in New Jersey regarding antisubrogation and their genesis are an important issue here, a
brief discussion of those laws is necessary before going into
the merits of Defendants’ theories.
B.
REGULATION OF SUBROGATION IN NEW JERSEY
The New Jersey Collateral Source Statute (“NJCSS”) provides
in relevant part that:
In any civil action brought for personal injury or death,
except actions brought pursuant to the provisions of
P.L. 1972, c. 70 (C. 39:6A-1 et seq.), if a plaintiff
receives or is entitled to receive benefits for the
injuries allegedly incurred from any other source other
than a joint tortfeasor, the benefits, other than
workers’ compensation benefits or the proceeds from a
life insurance policy, shall be disclosed to the court
and the amount thereof which duplicates any benefit
contained in the award shall be deducted from any award
recovered by the plaintiff, less any premium paid to an
insurer directly by the plaintiff or by any member of
the plaintiff's family on behalf of the plaintiff for
the policy period during which the benefits are payable.
N.J.S.A. 2A:15-97.
14
In 2001, the New Jersey Supreme Court held that the
collateral source rule embodied by the NJCSS does not “allow a
health insurer, who expends funds on behalf of an insured, to
recoup those payments through subrogation or contract
reimbursement when the insured recovers judgment against a
tortfeasor.”
Perreira v. Rediger, 169 N.J. 399, 403 (2001).
After determining that the statute did not permit subrogation,
the court determined that the NJCSS preempted an insurance
regulation on the books at the time that permitted subrogation
clauses in insurance contracts.
Id. at 415–16.
Following Perreira, a group of individuals who had paid
money to their insurers demanded under subrogation clauses sued
their insurers to get their money back, along with an individual
who had not yet paid and was seeking to avoid payment.
Levine
v. United Healthcare Corp., 402 F.3d 156, 159–60 (3d Cir. 2005).
As the Third Circuit noted, as a result of the Perreira
decision, “subrogation and reimbursement provisions are no
longer permitted in New Jersey health insurance policies.”
at 160.
Id.
The court then went on to discuss the NJCSS, finding
that it “essentially reverses the common law collateral source
doctrine” by deducting the benefits the plaintiff has received
from the judgment ex ante.
Id. at 164.
The Third Circuit
ultimately held that the NJCSS was preempted by ERISA in its
application to ERISA-covered insurance plans, because the NJCSS
15
applied to any collateral source, and not only to insurance
sources.
Id. at 164–67.
The New Jersey Administrative Code was updated following
Perreira but before Levine to reflect the policy of antisubrogation under the NJCSS.
(a)
(b)
The code now provides:
No policy or certificate providing group health
insurance shall limit or exclude health benefits as
the result of the covered person’s sustaining a
loss attributable to the actions of a third party.
Insurers shall file with the Commissioner no later
than December 31, 2002, endorsements that remove
any subrogation and third party recovery provisions
contained in previously filed contract, policy or
certificate forms.
N.J.A.C. 11:4-42.10 (“Section 42.10”).
C.
ERISA PREEMPTION
1.
CLAIMS UNDER THE NJCSS AND SECTION 42.10
As an initial matter, Levine has already held that ERISA
preempts any claim under the NJCSS for a covered plan.
Levine, 402 F.3d at 163–66.
Plaintiffs concede this point, and
so any NJCSS claims cannot survive summary judgment.
Opp. at 11–12.)
See
(See Pls.’
However, Plaintiffs argue that even if the
NJCSS claims are expressly preempted, their claims under the
applicable New Jersey Administrative Code section, Section
42.10, are saved from preemption under ERISA § 5147 and may
7
ERISA § 514(a), 29 U.S.C. § 1144(a) provides that “Except as
provided in subsection (b) of this section, the provisions of
this subchapter and subchapter III of this chapter shall
16
proceed.
(See Pls.’ Opp. at 10–15.)
Defendants submit that
Section 42.10 is completely preempted8 by ERISA § 502, which
renders any saving under ERISA § 514(b)(2)(A) irrelevant.9
Defs.’ Mot. Br. at 15–21, 25; Defs.’ Reply at 2–7.)
(See
Both
Plaintiffs and Defendants appear to misunderstand the interplay
between the exclusive remedy provided by ERISA § 502 and the
express preemption provision and attendant saving clause of
ERISA § 514.
As will be explained, the claims under Section
42.10 are conflict preempted by ERISA § 502(a) as claims for
benefits due, but Section 42.10 itself is saved from preemption
under ERISA § 514(b)(2)(A) as a law regulating insurance, and so
supersede any and all State laws insofar as they may now or
hereafter relate to any [ERISA-covered] employee benefit plan .
. . . .” ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), then
states in relevant part, “[N]othing in this subchapter shall be
construed to exempt or relieve any person from any law of any
State which regulates insurance, banking, or securities.”
8
“Complete preemption is a ‘jurisdictional concept,’ not a
substantive concept governing which law is applicable, like
express or conflict preemption.” Menkes v. Prudential Ins. Co.
of Am., 762 F.3d 285, 294 n.6 (3d Cir. 2014) (citing In re U.S.
Healthcare, Inc., 193 F.3d 51, 160 (3d Cir. 1999)). With
respect to whether the state law claims should be claims under
ERISA § 502, and thus federal claims, that is an issue of
complete preemption. But whether NJCSS and Section 42.10 can
provide guidance as to those claims under ERISA § 502 is an
issue of express preemption under ERISA § 514.
9
ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), provides “A
civil action may be brought by a participant or beneficiary to
recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the plan.”
17
provides the relevant rule of decision for determining what
benefits are due under a claim properly pleaded under ERISA
§ 502(a).
ERISA has not been lauded as an artfully drafted statute,
especially in the area of preemption.
See, e.g., Rush
Prudential HMO, Inc. v. Moran, 536 U.S. 355, 364–65 (2002) (“The
‘unhelpful’ drafting of these antiphonal clauses occupies a
substantial share of this Court’s time.”), overruled in part by
Ky. Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003);
Metro. Life Ins. v. Massachusetts, 471 U.S. 724, 739 (1985)
(“The two pre-emption sections . . . perhaps are not a model of
legislative drafting . . . .”)
The Supreme Court has explained:
ERISA § 514(b)(2)(A) must be interpreted in light of the
congressional intent to create an exclusive federal
remedy in ERISA § 502(a). Under ordinary principles of
conflict pre-emption, then, even a state law that can
arguably be characterized as “regulating insurance” will
be pre-empted if it provides a separate vehicle to assert
a claim for benefits outside of, or in addition to,
ERISA’s remedial scheme.
Aetna Health Inc. v. Davila, 542 U.S. 200, 217–18 (2004).
However, preemption of a claim does not mean preemption of
an entire theory of suit.
A state law claim may be preempted,
but if the claim is under a law or regulation that is saved
under ERISA § 514(b)(2)(A), then that law or regulation can
“suppl[y] the relevant rule of decision for [an ERISA] § 502(a)
suit” so long as it is not providing relief above and beyond
18
what ERISA § 502 would provide.
UNUM Life Ins. Co. of Am. v.
Ward, 526 U.S. 358, 377 (1999); accord Menkes, 762 F.3d at 296 &
n.11 (remarking that when the state law claim is preempted, the
remedy sought may still be available under ERISA § 502(a)).
If
a claim under Section 42.10 falls within the ambit of ERISA
§ 502(a), but Section 42.10 itself is saved from express
preemption under ERISA § 514(b)(2)(A), then Section 42.10 will
provide the “relevant rule of decision” for the suit to proceed
under ERISA § 502(a).
As the Third Circuit has determined, claims for return of
subrogation payments or to avoid payment of subrogation liens
are claims for “benefits due” under ERISA § 502(a).
F.3d at 163.10
Levine, 402
Clearly, the claims under Section 42.10 are then
10
The Second Circuit has expressly disagreed with this holding
of Levine. See Wurtz v. Rawlings Co., LLC, 761 F.3d 232, 243–44
(2d Cir. 2014). The court in Wurtz believed that the Supreme
Court’s test in Davila for determining complete preemption under
ERISA § 502(a) mandates that claims under state anti-subrogation
laws are not the type of claim that could be brought under ERISA
§ 502(a)(1)(B). Id. at 241–43. Plaintiffs urge this Court to
follow the reasoning of Wurtz rather than the decision in
Levine. (See Ercole Letter [Dkt. No. 39] at 2.) This Court
cannot. The Third Circuit has specifically reaffirmed its
holding from Levine when invited to depart from it. See Wirth
v. Aetna U.S. Healthcare, 469 F.3d 305, 308–309 (3d Cir. 2006)
(“The force of Levine’s reasoning has not diminished.”). Unless
the Third Circuit determines to overrule its earlier ruling in
Levine or is overruled by the Supreme Court, the law of this
circuit is that claims under anti-subrogation laws are claims
for “benefits due” under ERISA § 502(a)(1)(B). The decision of
the Supreme Court to deny a petition for writ of certiorari from
defendants in Wurtz is irrelevant to this analysis.
19
claims for “benefits due” under ERISA § 502(a), and so the state
law claims are preempted.
The issue then becomes whether
Section 42.10 has been expressly preempted under ERISA § 514.
In Levine, the Third Circuit found that ERISA § 514 expressly
preempted the NJCSS itself, and then found that the contractual
provisions within the plaintiffs’ insurance policies permitting
for reimbursement and subrogation were permissible.
66.
Id. at 163–
The court in Levine noted the existence of Section 42.10,
but did not opine on whether Section 42.10 would be expressly
preempted under ERISA § 514.
Id. at 159 n.2.
Thus, the issue
is an open question and one of first impression.
However, Defendants submit that they are not arguing
Section 42.10 is expressly preempted.
(Defs.’ Reply at 4 n.4
(“Defendants argued only that the other New Jersey statute at
issue, [the NJCSS], is expressly preempted by ERISA § 514 . . .
.”).)
Plaintiffs argue that Section 42.10 is saved from express
preemption under ERISA § 512(b)(2)(A).
(Pls.’ Opp. at 9–11.)
It thus appears to the Court that the parties are in agreement
that Section 42.10 is not expressly preempted under ERISA
§ 514.11
The subrogation prohibition contained with Section
11
This Court would agree that Section 42.10 is not expressly
preempted applying the two-factor test from Miller, 528 U.S. at
341–42, that for a state law to be saved under ERISA
§ 514(b)(2)(A), it must (1) be “specifically directed toward
entities engaged in insurance;” and (2) “substantially affect
the risk pooling arrangement between the insurer and the
20
42.10 therefore “supplies the relevant rule of decision” for any
ERISA § 502(a) claim.
See UNUM Life Ins. Co., 526 U.S. at 377.
In light of the preemption of claims of violation of the
NJCSS and Section 42.10 by ERISA § 502(a), claims on behalf of
Plaintiffs must be dismissed, and leave provided to Minerley
only12 to re-plead his causes of action properly under ERISA
§ 502(a).
See Gregory Surgical Servs., LLC v. Horizon Blue
Cross Blue Shield of N.J., Inc., Civ. No. 06-0462 (JAG), 2006 WL
3751385, at *2 (D.N.J. Dec. 19, 2006) (“While this Court has the
ability to recharacterize a plaintiff’s claims when determining
if it has removal jurisdiction, it is not required to rewrite
the plaintiff’s complaint.”).
If Minerley decides to replead
these claims, Section 42.10 may supply the relevant rule of
insured.” Section 42.10 was promulgated by the New Jersey
Department of Banking and Insurance and contained in the title
of the New Jersey Administrative Code pertaining to insurance,
making it specifically directed toward entities engaged in
insurance. See Section 42.10; see also Rule Proposal, 34 N.J.R.
647(a) (Feb. 4, 2002); Rule Adoption, 34 N.J.R. 2798(a) (Aug. 5,
2002). Section 42.10 was also enacted in light of a desire to
shift the burden for tort recovery from liability insurers to
health insurers, after the New Jersey Supreme Court found that
the NJCSS invalidated the original version of Section 42.10 that
permitted subrogation. See Perreira, 169 N.J. at 411
(discussing how the NJCSS was passed in order to favor liability
insurers rather than health insurers in tort recovery); Rule
Proposal, 34 N.J.R. 647(a) (Feb. 4, 2002) (discussing the
favorable economic impact of the regulation on insureds and the
indirect unfavorable economic impact on insurers).
12
Singleton’s claims would still fail if re-pleaded as claims
under ERISA § 502(a) as discussed in Section IV.D.2, infra.
21
decision for the ERISA § 502(a) claim as it has been saved from
express preemption under ERISA § 514(b)(2)(A), but the NJCSS may
not, as it has been ruled to be expressly preempted by ERISA
§ 514.13
2.
OTHER STATE LAW CLAIMS
Turning to the remainder of Plaintiffs’ state law claims,
they are broadly (1) claims for violation of the NJCFA and
misrepresentation; (2) claims for breach of contract and
breaches of various duties related to entering into contracts;
and (3) claims for theft or attempted theft as well as
conversion and unjust enrichment.14
As this Court has already
recognized, challenging the decision of the insurer to seek
subrogation is a claim for “benefits due” under ERISA § 502(a),
and so the claim must be preempted.
All of these claims
therefore are also preempted because they are all based on the
idea that the Defendants committed these torts by seeking
subrogation payments; they are merely different theories by
13
This does not express an opinion on Defendants’ argument made
in their reply brief that Section 42.10 is inapplicable to
Minerley entirely because his benefits were received under a
Pennsylvania plan. (See Defs.’ Reply at 10–11.) Because of the
genuine dispute about which plan covered Minerley, this Court
will not rule on this conflict of laws issue raised in the reply
brief at this juncture.
14
These claims are also pleaded on behalf of a proposed class.
(See FAC Counts XXI–XXXIII.)
22
which Plaintiffs seek recovery for the same conduct.
None of
these provisions can be saved by ERISA § 514(b)(2)(A) as none
are targeted to the insurance industry, and so cannot supply the
relevant rule of decision.
Thus, the remaining state law claims
must be dismissed.
D.
FUTILITY OF AMENDMENT
1.
MINERLEY
Defendants argue that permitting Minerley to replead claims
under ERISA § 502(a) would be futile because (1) they would
conflict with the express language of his plan’s reimbursement
terms; (2) they are asserted against the wrong Defendants; (3)
he has failed to exhaust; and (4) his claims are barred under
the voluntary payment doctrine.
(Defs.’ Mot. at 21–25.)
Each
of the Defendants’ first three arguments for why Minerley’s
amendments would be futile require the Court to assess the
language of the plan.
However, as explained above, due to the
dispute between the parties about what plan documents submitted
into the record actually cover Minerley, this Court cannot make
any determinations based on what the plan language is.
Accordingly, Defendants’ Motion will be denied with respect to
these theories due to the presence of a dispute of material
fact.
23
With respect to the voluntary payment doctrine, this does
not require assessment of the plan language, and so the Court
will address it.
The voluntary payment doctrine is an equitable
doctrine providing “where a party, without mistake of fact, or
fraud, duress or extortion, voluntarily pays money on a demand
which is not [enforceable] against him, he cannot recover it
back.”
Simonson v. Hertz Corp., Civ. No. 10-1585 (NLH/KMW),
2011 WL 1205584, at *3 (D.N.J. Mar. 28, 2011) (quoting In re
N.J. State Bd. of Dentistry, 84 N.J. 582, 588 (1980)).
“Since
the [voluntary payment doctrine] is equitable in nature,
‘factual as well as legal disputes’ are for the Court, and not
the jury, to decide.”
Boyko v. Am. Int’l Grp., Inc., Civ. No.
08-2214 (RBK/JS), 2012 WL 1495372, at *13 (D.N.J. Apr. 26,
2012), order vacated in part on reconsideration, 2012 WL 2132390
(D.N.J. June 12, 2012).
In Boyko, the court determined that
even where a plaintiff had the advice of counsel and was aware
that he did not owe money, being fearful of consequences of
nonpayment “including unwanted debt-collections communications
and potential reporting to credit ratings agencies” was
sufficient to constitute duress.
Id. at *14.
Here, Minerley has submitted a declaration indicating he
“authorized payment to Rawlings of the lien it claimed because
of the letters Rawlings had sent and [he] could not risk
negative credit ratings or the potential loss of health
24
insurance coverage.”
(Minerly Decl. ¶ 9.)
Defendants argue
that this is insufficient and is not a “cogent argument
connecting these Defendants and his imagined consequences.”
(Defs.’ Reply at 12.)
The Court disagrees with Defendants and
finds that Minerley’s declaration combined with the letters from
Rawlings are sufficient evidence to prove that Minerley had a
real fear of loss of insurance.
Accordingly, the Court agrees
with the reasoning of Boyko and finds the voluntary payment
doctrine inapplicable here.
The Defendants’ Motion will be
denied on this issue as a matter of law.
2.
SINGLETON
For Singleton, Defendants also argue that permitting
Singleton to replead his claims as ERISA § 502(a) claims would
be futile.
They argue that (1) Singleton sued the wrong
defendants; (2) Singleton’s plans do not prohibit subrogation;
(3) Singleton failed to exhaust; and (4) Pennsylvania law and
not New Jersey law applied to Singleton’s suit.
For the reasons
that follow, this Court finds that the exhaustion argument is
dispositive, and will agree with Defendants that Singleton’s
claims must be dismissed for failure to exhaust.
Defendants submit that Singleton was required to exhaust,
and that his failure to do so renders him unable to seek
recourse before this Court.
(Defs.’ Mot. at 23–24, 26.)
25
Singleton argues that he did not need to exhaust administrative
remedies because his claims arose only from an issue of law and
not an adverse benefits determination.
(Pls.’ Opp. at 35–36.)
He also argues that even if he did need to exhaust, it would
have been futile for him to do so.
(Id. at 36–37.)
“Except in limited circumstances . . . a federal court will
not entertain an ERISA claim unless the plaintiff has exhausted
the remedies available under the plan.”
Harrow v. Prudential
Ins. Co. of Am., 279 F.3d 244, 249 (3d Cir. 2002) (quoting
Weldon v. Kraft, Inc., 896 F.2d 793, 800 (3d Cir. 1990))
(omission in original).
However, “[a] plaintiff is excused from
exhausting administrative procedures under ERISA if it would be
futile to do so.”
Id. (citing Berger v. Edgewater Steel Co.,
911 F.2d 911, 916 (3d Cir. 1990)).
As to Singleton’s first argument, that his claims are not
subject to the exhaustion requirement, this Court disagrees.
Under both plans, an internal appeal is required when seeking to
have the plan “reconsider an adverse benefit determination.”
(HLM Plan (Goodrich Ex. 4) at 34; Hundley Plan (Goodrich Ex. 5)
at 34.)
As explained above in Section IV.C.1, supra, claims
seeking to avoid paying a subrogation lien are in fact claims
for “benefits due” in this circuit.
See also Wirth, 469 F.3d at
309 (reaffirming the decision in Levine and finding that Levine
foreclosed any argument that seeking recovery of a payment made
26
to extinguish a lien is not an action for “benefits due”).
Further, the Third Circuit has recently held in a nonprecedential opinion that the decisions in Levine and Wirth that
claims regarding subrogation liens are claims for “benefits due”
mean that such claims are subject to exhaustion.
Mallon v.
Trover Sols. Inc., 613 F. App’x 142, 144 (3d Cir. 2015).
Both
plans also specifically advise that the internal administrative
review processes must be exhausted before recourse is made to
any litigation, except in a few circumstances which Singleton
does not argue are applicable to him.
Hundley Plan at 35–36.)
(See HLM Plan at 35–36;
Therefore, this type of claim is
seeking reconsideration of an adverse benefit determination, and
the terms of both plans squarely require Singleton to pursue an
administrative remedy.
With respect to Singleton’s futility argument, this Court
also disagrees.
“Whether to excuse exhaustion on futility
grounds rests upon weighing several factors, including:
(1)
whether plaintiff diligently pursued administrative relief; (2)
whether plaintiff acted reasonable in seeking immediate judicial
review under the circumstances; (3) existence of a fixed policy
denying benefits; (4) failure of the insurance company to comply
with its own internal administrative procedures; and (5)
testimony of plan administrators that any administrative appeal
27
was futile.”
Harrow, 279 F.3d at 250.15
Singleton submits that
the letters from Rawlings “made it clear that their position
with regard to the validity of the asserted
subrogation/reimbursement demand would not change” and that
“Defendants had a fixed, rigid and global policy in place with
regard to this issue.”
(Pls.’ Opp. at 36.)
This Court cannot
agree that on the basis of those letters alone Singleton has
successfully shown any administrative appeal would have been
futile.
Accordingly, the Court will grant Defendants’ Motion
with respect to Singleton’s claims, but Singleton will be
permitted to refile if he successfully pursues administrative
remedies and still does not obtain his desired outcome, as
Singleton requests in the alternative.
V.
CONCLUSION
For the foregoing reasons, Defendant’s Motion will be
granted-in-part on the grounds that all of Plaintiffs’ claims
are preempted by ERISA § 502(a) and leave is provided to
Minerley only to amend the complaint within thirty (30) days to
state a claim under ERISA § 502(a).
15
Only Section 42.10 is saved
Plaintiffs also argue in a footnote that New Jersey’s law on
exhaustion is relevant. (See Pls.’ Opp. at 26 n.11.) Because
this Court has already determined that the claims must be styled
as claims under ERISA § 502(a), New Jersey’s law on exhaustion
plays no part in the exhaustion analysis.
28
from express preemption under ERISA § 514(b)(2)(A), and only
Section 42.10 can supply the relevant rule of decision for a
claim under ERISA § 502(a) should Minerley choose to amend the
complaint.
Defendants’ Motion will also be granted-in-part on the
grounds that Singleton’s claims, even if amended to be ERISA
§ 502(a) claims, would fail due to Singleton’s failure to
exhaust.
Singleton’s claims, therefore, are dismissed without
prejudice to his ability to file a new complaint if the internal
administrative remedies do not provide him with the outcome he
desires.
Defendants’ Motion will be denied-in-part on the grounds
that Minerley’s claims are not barred by the voluntary payment
doctrine.
Defendants’ Motion is otherwise denied with respect
to Minerley’s claims due to the genuine dispute of material fact
about which plan documents covered Minerley.
Finally, the Clerk will be instructed to revise the caption
of the case accordingly to reflect that only Jay Minerley
remains as a plaintiff in this matter to avoid confusion between
this matter and the Roche Action, Civ. No. 13-3933.
An appropriate order accompanies this opinion.
Date:
March 1st , 2016
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
29
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