Central States, Southeast and Southwest Areas Health and Welfare Fund v. Health Special Risk Inc et al
Filing
65
MEMORANDUM OPINION AND ORDER granting 55 MOTION for Reconsideration re 53 Memorandum Opinion and Order, filed by Ace American Insurance Company, Federal Insurance Company, Health Special Risk Inc, Markel Insurance Company. This action is dismissed with prejudice by judgment filed today. (Ordered by Chief Judge Sidney A Fitzwater on 6/13/2013) (Chief Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
CENTRAL STATES, SOUTHEAST
AND SOUTHWEST AREAS HEALTH
AND WELFARE FUND, an Employee
Welfare Benefit Plan, by Howard
McDougall, a Trustee thereof,
in his representative capacity,
Plaintiff,
VS.
HEALTH SPECIAL RISK, INC., et al.,
Defendants.
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Civil Action No. 3:11-CV-2910-D
MEMORANDUM OPINION
AND ORDER
Defendants move the court to reconsider its decision holding that plaintiff, an
ERISA1-regulated employee welfare benefit plan, has stated a subrogation claim against
them. For the reasons that follow, the court grants the motion and dismisses this action with
prejudice.
I
Because this case is the subject of two prior opinions, Central States, Southeast &
Southwest Areas Health & Welfare Fund v. Health Special Risk, Inc., 2012 WL 1570981
(N.D. Tex. May 4, 2012) (Fitzwater, C.J.) (“Central States I”), and Central States, Southeast
& Southwest Areas Health & Welfare Fund v. Health Special Risk, Inc., 2012 WL 5006054
1
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.
(N.D. Tex. Oct. 18, 2012) (Fitzwater, C.J.) (“Central States II”), the court will recount only
the background facts and procedural history necessary to understand the present decision.
Plaintiff Central States, Southeast and Southwest Areas Health and Welfare Fund
(“Central States” or “the Central States plan”) is an ERISA-regulated employee welfare
benefit plan that provides health and welfare benefits, including medical and hospital
benefits, to participants in the Teamsters Union and their dependents. Cent. States II, 2012
WL 5006054, at *1. Three of the four defendants—Markel Insurance Company, Federal
Insurance Company, and Ace American Insurance Company (collectively, the “Insurer
Defendants”)—are insurance companies that provided accident medical insurance to various
institutions and organizations. Id. Central States alleges that, under the terms of its Health
and Welfare Fund Plan Document (“Plan Document”), the Insurer Defendants were required
to pay the medical expenses of eleven individuals (the “Insureds”) who were insured by both
Central States and the Insurer Defendants for the accidental injuries they sustained. Id. The
Plan Document’s coordination of benefits (“COB”) provision states that, if another plan
provides overlapping or duplicate coverage for an accidental injury, the other plan will be
primarily responsible for paying the Insureds’ medical claims. Cent. States I, 2012 WL
1570981, at *1. Because the Insurer Defendants allegedly provided overlapping or duplicate
coverage for the Insureds’ accidental injuries, Central States maintains that the Insurer
Defendants are primarily liable for the Insureds’ medical expenses. Id. The Insurer
Defendants have refused to pay these medical expenses. Id. They assert that the policies
they issued are accidental injury excess policies that the parties allegedly understood
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provided only excess coverage. Id.
To avoid financial hardship to the Insureds, Central States paid their covered expenses
and then sought reimbursement from the Insurer Defendants through defendant Health
Special Risk, Inc. (“HSR”), a third-party claims administrator for the Insurer Defendants.
HSR denied Central States’s demands for reimbursement. Id.
In Central States I the court addressed the Insurer Defendants’ Fed. R. Civ. P.
12(b)(6) motion to dismiss and concluded that Central States could not recover under ERISA.
With leave of court, Central States amended its complaint. It asserted, inter alia, a claim
seeking to recover against the Insurer Defendants by “step[ping] into the shoes of its
[Insureds] and . . . enforc[ing] their rights for coverage against the Defendants for payment
of their medical expenses.” Am. Compl. ¶ 73. The Insurer Defendants moved anew under
Rule 12(b)(6) to dismiss the amended complaint for failure to state a claim.
In Central States II the court granted the Insurer Defendants’ motion to dismiss except
as to Central States’s subrogation claim. Cent. States II, 2012 WL 5006054, at *1. The court
held that “an ERISA plan suing a third party as subrogee of its insureds is not . . . limited by
§ 503(a)(3), and, in its capacity as subrogee, may bring legal claims for damages against the
third party.” Id. at *6. The Insurer Defendants now move the court under Rule 59(e)2 to
2
Rule 59(e) does not apply to the court’s interlocutory decision to deny, in part, the
Insurer Defendants’ Rule 12(b)(6) motion. Instead, Rule 54(b) governs whether the court
should reconsiders its ruling. See Dos Santos v. Bell Helicopter Textron, Inc. Dist., 651
F.Supp.2d 550, 553 (N.D. Tex. 2009) (Means, J.). The court “possesses the inherent
procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by
it to be sufficient.” Colli v. S. Methodist Univ., 2011 WL 3524403, at *1 (N.D. Tex. Feb. 14,
-3-
reconsider this decision.
II
It is familiar jurisprudence that there are two types of ERISA preemption. See Ellis
v. Liberty Life Assur. Co. of Bos., 394 F.3d 262, 275 n.34 (5th Cir. 2004) (discussing ERISA
conflict and complete preemption). Conflict (or ordinary) preemption occurs (1) when there
is a direct conflict between the operation of federal and state law so that it is impossible to
comply with both, or (2) when the state law “‘stands as an obstacle to the accomplishment
and execution of the full purposes and objectives of Congress’” in the federal statute. Boggs
v. Boggs, 520 U.S. 833, 844 (1997) (quoting Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505
U.S. 88, 98 (1992)); see Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372-73
(2000). Complete preemption, on the other hand, “exists when a remedy falls within the
scope of or is in direct conflict with [29 U.S.C. § 1132(a)], and therefore is within the
jurisdiction of federal court.” Haynes v. Prudential Health Care, 313 F.3d 330, 333 (5th Cir.
2002) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987)).
The Insurer Defendants contend that Central States’s subrogation claim is preempted
under ERISA § 514(a), 29 U.S.C. § 1144(a), because it would “relate to” an ERISA plan and
2011) (Solis, J.) (internal quotation marks omitted) (quoting Melancon v. Texaco, Inc., 659
F.2d 551, 553 (5th Cir. 1981)). “Such a motion requires the court to determine ‘whether
reconsideration is necessary under the relevant circumstances.’” Brown v. Wichita Cnty.,
Tex., 2011 WL 1562567, at *2 (N.D. Tex. Apr. 26, 2011) (O’Connor, J.) (quoting Judicial
Watch v. Dep’t of the Army, 446 F.Supp.2d 112, 123 (D.D.C. 2006)). The decision “whether
to grant such a motion rests within the discretion of the court.” Colli, 2011 WL 3524403, at
*1 (citation omitted).
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“would also be preempted because it would conflict with the ERISA § 502(a) [29 U.S.C. §
1132(a)] civil enforcement scheme and the limitations therein on available remedies.” Ds.
Mot. Reconsider 4.
III
The court turns first to whether Central States’s subrogation claim is subject to
conflict preemption under ERISA § 514(a).3
A
The court will begin by explaining the test used in this circuit to determine whether
a state-law claim is conflict-preempted under ERISA. It will then analyze Central States’s
subrogation claim, determining initially whether a state-law subrogation claim brought by
the Insureds against the Insurer Defendants would be preempted, and then whether a statelaw subrogation claim brought by Central States against the Insurer Defendants is preempted.
3
In Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 220 (2002),
the Supreme Court expressly left open the possibility that an ERISA plan might bring a statelaw claim against a third party to recover funds allegedly due to the ERISA plan under its
subrogation provision:
We note, though it is not necessary to our decision, that there
may have been other means for petitioners to obtain the
essentially legal relief that they seek. We express no opinion as
to whether petitioners could have intervened in the state-court
tort action brought by respondents or whether a direct action by
petitioners against respondents asserting state-law claims such
as breach of contract would have been pre-empted by ERISA.
Knudson, 534 U.S. at 220.
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B
ERISA preempts all state laws that “relate to” employee benefit plans. 29 U.S.C.
§ 1144(a). A law “relates to” an employee benefit plan “if it has a connection with or
reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). “The
Supreme Court has ‘observed repeatedly that this broadly worded provision is clearly
expansive.’” Access Mediquip L.L.C. v. UnitedHealthCare Ins. Co., 662 F.3d 376, 382 (5th
Cir. 2011) (quoting Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 146 (2001)), panel
opinion reinstated en banc, 698 F.3d 229 (5th Cir. 2012) (per curiam). Yet the term “relate
to” should not be “taken to extend to the furthest stretch of its indeterminacy.” N.Y. State
Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655
(1995). The court should not apply “uncritical literalism,” but “must go beyond the
unhelpful text and the frustrating difficulty of defining its key term, and look instead to the
objectives of the ERISA statute as a guide to the scope of the state law that Congress
understood would survive.” Id. at 656. To determine whether a state law relates to a plan
for purposes of ERISA preemption, the court asks “‘(1) whether the state law claims address
areas of exclusive federal concern, such as the right to receive benefits under the terms of an
ERISA plan; and (2) whether the claims directly affect the relationship among the traditional
entities—the employer, the plan and its fiduciaries, and the participants and beneficiaries.’”
McAteer v. Silverleaf Resorts, Inc., 514 F.3d 411, 417 (5th Cir. 2008) (quoting Woods v. Tex.
Aggregates, L.L.C., 459 F.3d 600, 602 (5th Cir. 2006)). “The Fifth Circuit recently
emphasized that whether ERISA preempts a state-law cause of action turns on whether it ‘is
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dependent on, and derived from[,] the rights of the plan beneficiaries to recover benefits
under the terms of the plan.’” Mem’l Hermann Hosp. Sys. v. UnitedHealthCare Ins. Co.,
2012 WL 92563, at *3 (S.D. Tex. Jan. 11, 2012) (quoting Access Mediquip, 662 F.3d at 383).
C
The court holds that the Insureds could bring a state-law cause of action against the
Insurer Defendants to recover non-ERISA benefits owed under their contracts with the
Insurer Defendants. The action would not be preempted because, rather than suing as ERISA
beneficiaries, the Insureds would be suing as parties to insurance contracts that are not
governed by ERISA, to recover on those contracts from parties that are not ERISA entities.
The Insurer Defendants maintain, however, that such an action would be preempted
because, to determine whether and in what amount the contracts require the Insurer
Defendants to pay non-ERISA benefits to the Insureds, the court must construe the COB
provision of the ERISA Plan Document.4 Even assuming that a court addressing a state-law
cause of action between the Insureds and the Insurer Defendants must interpret the ERISA
Plan Document’s COB provision to apportion responsibility for overlapping coverage, such
a claim would not “relate to” the Central States plan. State causes of action are preempted
when the existence of an ERISA plan constitutes an element of the cause of action. See
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 140 (1990) (holding that conflict
4
Neither side addresses whether the Insureds could bring suit against the Insurer
Defendants, but the Insurer Defendants’ argument that the court must reference and interpret
the COB provision in the Plan Document would be equally applicable to a claim by the
Insureds against the Insurer Defendants.
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preemption applied where, “[i]n order to prevail [on state claim], a plaintiff must plead, and
the court must find, that an ERISA plan exists”). They are also preempted when the ERISA
plan is the subject of the action. See, e.g., Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 48
(1987) (holding that ERISA preempted cause of action by ERISA participant or beneficiary
alleging improper processing of claim for benefits). “[E]ven if [the cause of action] arises
under a general law which in and of itself has no connection to employee benefit plans,” a
claim may be preempted. Christopher v. Mobil Oil Corp., 950 F.2d 1209, 1218-19 (5th Cir.
1992) (addressing state-law fraud claim alleging that employer misrepresented benefits under
plan to induce early retirement) (citation omitted). But in a suit by the Insureds, the existence
of an ERISA plan would be unnecessary, and the plan would not be the subject of the
litigation. The Plan Document, and the COB provision in particular, would be relevant only
insofar as the amount of the Insurer Defendants’ contractual liability depends on how the
COB provision apportions responsibility for overlapping coverage. Put differently, the COB
provision would be relevant only when determining how much in non-ERISA benefits the
Insurer Defendants owed.
Nor would the mere need to refer to the Central States plan for purposes of calculating
damages support preemption. See E.I. DuPont de Nemours & Co. v. Sawyer, 517 F.3d 785,
800 n.11 (5th Cir. 2008) (“We have rejected the argument that ‘any lawsuit in which
reference to a benefit plan is necessary to compute plaintiff’s damages is preempted by
ERISA[.]’” (quoting Rozzell v. Sec. Servs., Inc., 38 F.3d 819, 822 (5th Cir. 1994))). It would
go against the thrust of the claim to conclude that it was necessary to refer to the Plan
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Document for more than the purpose of calculating damages. When the Fifth Circuit derived
its test for conflict preemption, it cited only prior decisions in which plaintiffs pursued state
claims as a means of recovering plan benefits or complaining of improperly processed claims
for benefits. See Mem’l Hospital Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th
Cir. 1990); see also Hartle v. Packard Elec., 877 F.2d 354, 356 (5th Cir. 1989) (per curiam)
(holding claim was not preempted because plaintiff’s suit “[was] not an action to recover
benefits under a plan” and did not “encompass the processing of claims for benefits under
a regulated plan”) (citations omitted), overruled on other grounds by Arana v. Ochsner
Health Plan, 338 F.3d 433 (5th Cir. 2003) (en banc). The goal of suits between the Insureds
and the Insurer Defendants would not be to recover plan benefits or to complain about plan
administration but to obtain non-ERISA contractual benefits; determining the amount of
benefits to be paid by the ERISA plan (as opposed to the contract) would not be the object
of the suit. Accordingly, although it might be necessary for the court to analyze the Plan
Document (including the COB), the Insureds’ claim would have “only a tenuous, remote, or
peripheral connection with” the Central States’s plan. See Travelers, 514 U.S. at 661.
Furthermore, the conclusion that an action by the Insureds against the Insurer
Defendants would be conflict preempted would thwart the purposes of ERISA’s conflict
preemption provision. Such a determination would entirely preclude the Insureds from
bringing an action to enforce their rights under non-ERISA insurance contracts.5 With no
5
Even if the court assumed that the Insureds’ action against the Insurer Defendants
was an ERISA claim, the Insurer Defendants would not be proper parties to a suit by a plan
-9-
available mechanism for plan beneficiaries to enforce non-ERISA contracts where there is
overlapping ERISA plan coverage, an ERISA plan would have no incentive to pay plan
benefits and then seek reimbursement from the beneficiaries who had recovered under
contracts with non-ERISA third parties. The Fifth Circuit has made clear in a different
context that this result would contradict ERISA’s goals. See Mem’l Hosp., 904 F.2d at 24748 (noting that where “providers have no recourse under either ERISA or state law . . . ,
[they] will be understandably reluctant to accept the risk of non-payment, and may require
up-front payment by beneficiaries—or impose other inconveniences—before treatment will
be offered, [and t]his does not serve, but rather directly defeats, the purpose of Congress in
enacting ERISA.”). The court therefore concludes that reference to the COB provision
would not result in conflict preemption of the Insureds’ action against the Insurer
Defendants.
Because an action by the Insureds against the Insurer Defendants to recover under
their contracts is not “dependent on, and derived from[,] the rights of the plan beneficiaries
beneficiary under § 502(a)(1)(B). See LifeCare Mgmt. Servs. LLC v. Ins. Mgmt. Adm’rs Inc.,
703 F.3d 835, 844-45 (5th Cir. 2013) (“We agree that ‘[t]he proper party defendant in an
action concerning ERISA benefits is the party that controls administration of the plan’ and
that ‘[i]f an entity or person other than the named plan administrator takes on the
responsibilities of the administrator, that entity may also be liable for benefits.’” (quoting
Gomez–Gonzalez v. Rural Opportunities, Inc., 626 F.3d 654, 665 (1st Cir. 2010)). And an
action seeking to recover money pursuant to the insurance contracts would be for legal relief,
which is impermissible under § 502(a)(3). See Cent. States I, 2012 WL 1570981, at *3
(holding that Central States’s declaratory judgment claim against the Insurer Defendants was
legal and not equitable because its demand for an injunction to pay funds was “essentially
indistinguishable from a demand for payment”) (citing Knudson, 534 U.S. at 210-11).
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to recover benefits under the terms of [an ERISA] plan,” and a contrary conclusion would
work against ERISA’s purposes, the court holds that the Insureds could bring a nonpreempted suit under the contracts against the Insurer Defendants.
D
The court next considers whether, as it held in Central States II, Central States can
bring a non-preempted state-law subrogation claim. On reconsideration, the court concludes
that Central States cannot. For reasons to be explained, the court holds that a state-law
subrogation claim would be conflict-preempted when brought by a plan or plan fiduciary via
subrogation because the claim would be transformed into one that addresses an area of
exclusive federal concern—the right to receive plan benefits—and would directly affect the
relationship between the Central States plan and the Insureds.
The Fifth Circuit’s decision in Arana guides this court in reaching this conclusion.
Arana addressed whether ERISA completely preempted the state-law claim of a plan
beneficiary seeking a declaratory judgment that he was not obligated to reimburse his ERISA
plan from the proceeds of a tort-action settlement for health benefits paid by the plan. Arana,
338 F.3d at 434. The en banc Fifth Circuit analyzed whether the declaratory judgment action
was a suit for benefits and therefore preempted under § 502(a)(1)(B), which states that “[a]
civil action may be brought by a participant or beneficiary to recover benefits due to him
under the terms of his plan[.]” In holding that the action was completely preempted, the
court stated:
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Arana’s claim can fairly be characterized either as a claim “to
recover benefits due to him under the terms of his plan” or as a
claim “to enforce his rights under the terms of the plan.” As it
stands, [his] benefits are under something of a cloud, for [the
plan] is asserting a right to be reimbursed for the benefits it has
paid for his account. It could be said, then, that although the
benefits have already been paid, [he] has not fully “recovered”
them because he has not obtained the benefits free and clear of
[the plan’s] claims. Alternatively, one could say that [he] seeks
to enforce his rights under the terms of the plan, for he seeks to
determine his entitlement to retain the benefits based on the
terms of the plan.
Id. at 438 (footnote omitted). This reasoning makes clear that, for the purpose of determining
whether a suit is for benefits and therefore completely preempted, funds obtained from a
settlement with a third-party tortfeasor cannot be strictly separated from benefits previously
paid by the plan to the beneficiary.6 Arana effectively rejected the contention that settlement
funds in the beneficiary’s possession were distinct from benefits previously paid by the plan,
so that a suit to defeat a plan’s reimbursement claim was not a suit for benefits or to enforce
ERISA plan rights. Applied to the present case, Arana’s reasoning would support the
conclusion that the Central States plan’s claim for subrogation and reimbursement is in
reality an action to recoup previously-paid ERISA plan benefits. See id. (stating that Arana
sued to contest the plan’s asserted right to be “reimbursed for the benefits” that the plan
already paid) (emphasis added); id. at 435 (stating that the plan “claimed . . . reimbursement
6
This distinction is critical for obtaining equitable relief under § 502 because relief is
equitable only where the plan is seeking particular funds. See ACS Recovery Servs., Inc. v.
Griffin, ___ F.3d ___, 2013 WL 1890258, at *3-4 (5th Cir. 2013) (en banc) (discussing
Knudson, 534 U.S. at 213-14).
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of benefits it paid for Arana’s injuries to the extent that Arana was compensated by other
insurers.”). Although Arana addressed complete, not conflict, preemption, its reasoning is
directly applicable to conflict preemption because it analyzed whether a suit to defeat an
obligation to reimburse previously-paid plan benefits was a suit for benefits, and the first
prong of conflict preemption is satisfied when the claim addresses the right to receive
benefits.7
Central States’s subrogation claim therefore involves “the right to receive benefits
under the terms of an ERISA plan,” which is an area of exclusive federal concern. McAteer,
514 F.3d at 417. Like the plan in Arana, Central States seeks reimbursement of plan benefits
previously paid. The subrogation clause in the Plan Document provides that “whenever
[Central States] makes any payment for any benefits on behalf of a [participant or
beneficiary] related to any [injury], [Central States] is immediately subrogated and vested
with subrogation rights . . . to all present and future rights of recovery . . . arising out of [that
injury.]” Plan Document at 58 (Emphasis added). This provision makes clear that these
subrogation rights arise only when Central States has paid plan benefits. The intent of the
7
In holding that the plaintiffs’ state-law cause of action was completely preempted,
Arana implied that the state statute that Arana alleged prevented reimbursement related to
an employee benefit plan and was preempted as a rule of decision unless ERISA’s savings
clause applied. See Arana, 338 F.3d at 439, 440 n.10. On remand to the panel, the panel did
not address conflict preemption because it concluded that the state law in question would not
have prevented reimbursement, even if not conflict preempted. Arana v. Ochsner Health
Plan, 352 F.3d 973, 979 (5th Cir. 2003).
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subrogation clause is to confer on Central States the right to recoup plan benefits.8 Cf.
Hamilton v. United Healthcare of La., Inc., 310 F.3d 385, 397 (5th Cir. 2002) (noting that
ERISA plan’s subrogation claim served two purposes: to reimburse payment of medical bills
and to prevent overcompensation). And because Central States would be seeking via
subrogation to reimburse the plan with funds that the Insurer Defendants allegedly owed
under contracts with the Insureds, Central States would be seeking to recover benefits it had
already paid. If Central States did not have this subrogation right, the Insureds would be able
to recover under their contracts with the Insurer Defendants and also retain the ERISA plan
benefits previously paid by Central States.
In reaching the conclusion that the instant subrogation claim would be conflict
preempted, the court does not suggest that, if the Insureds recovered from the Insurer
Defendants under their contracts, Central States would be precluded from enforcing the Plan
Document’s subrogation clause and thereby recouping previously-paid plan benefits from
the Insureds. See, e.g., Bombardier Aerospace Emp. Welfare Benefits Plan v. Ferrer, Poirot,
& Wansbrough, 354 F.3d 348, 355 (5th Cir. 2003) (allowing equitable suit to recover funds).
Nor does the court suggest that ERISA plans are powerless to require that beneficiaries assert
claims against third parties that would then enable the plans to recoup previously-paid
8
Aside from analogies to Arana, the exclusive purpose requirement of 29 U.S.C.
§ 1103(c)(1) further demonstrates that Central States is seeking benefits. Section 1103(c)(1)
provides that “the assets of a plan . . . shall be held for the exclusive purposes of providing
benefits to participants in the plan and their beneficiaries and defraying reasonable expenses
of administering the plan.”
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benefits (a question not presented or decided here). The Central States subrogation claim
against the Insurer Defendants is conflict preempted, however, because Central States is
seeking to recoup benefits already paid.
IV
The court now considers whether Central States’s subrogation claim is completely
preempted.9
Complete preemption applies under ERISA § 502(a), the statute’s civil enforcement
provision. Congress “designed [ERISA] to promote the interests of employees and their
beneficiaries in employee benefit plans.” Shaw, 463 U.S. at 90. As part of its comprehensive
regulation of employee benefit plans, the statute contains “six carefully integrated civil
enforcement provisions.” Aetna Health, Inc. v. Davila, 542 U.S. 200, 209 (2004) (internal
quotation marks omitted); see also 29 U.S.C. § 1132 (entitled “[c]ivil enforcement”). These
represent deliberate congressional policy choices that “would be completely undermined if
ERISA-plan participants and beneficiaries were free to obtain remedies under state law that
Congress rejected in ERISA.” Davila, 542 U.S. at 217 (citation and internal quotation marks
omitted). Because of this clear intent to make ERISA’s remedies exclusive, state-law causes
of action that duplicate, supplement, or supplant the remedies that § 502(a) provides are
displaced. Id. at 209; see also Haynes, 313 F.3d at 333 (“In general, complete preemption
9
Although the Insurer Defendants do not use the term “complete preemption,” they
clearly intend to argue that Central States’s subrogation claim is preempted by both conflict
and complete preemption.
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exists when a remedy falls within the scope of or is in direct conflict with ERISA § 502(a),
and therefore is within the jurisdiction of federal court.” (citing Taylor, 481 U.S. at 66)).
Nevertheless, § 502(a) “‘does not purport to reach every question relating to plans
covered by ERISA.’” Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 5 (1st Cir. 1999)
(quoting Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal.,
463 U.S. 1, 25 (1983)). In Davila the Supreme Court explained that “if an individual, at
some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where
there is no other independent legal duty that is implicated by a defendant’s actions, then the
individual’s cause of action is completely pre-empted by ERISA § 502(a)(1)(B).” Davila,
542 U.S. at 210.
Central States cannot bring a subrogation claim against the Insurer Defendants under
any provision of ERISA § 502(a). Section 502(a)(3) permits claims by plan fiduciaries “(A)
to enjoin any act or practice which violates any provision of [ERISA] or the terms of the
plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii)
to enforce any provisions of [ERISA].”
Assuming arguendo that Central States’s
subrogation claim is a suit to redress a violation, or to enforce a provision, of the Central
States plan, Central States is not seeking specified funds from the Insurer Defendants, and
therefore its claim is not equitable. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S.
208, 214 (2002). Accordingly, the court concludes that ERISA does not completely preempt
Central States’s subrogation claim.
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*
*
*
For the foregoing reasons, the court grants the Insurer Defendants’ motion for
reconsideration and concludes that Central States’s subrogation claim is conflict preempted
under ERISA. Because in Central States II the court dismissed all the counts in Central
States’s amended complaint except the count asserting a subrogation claim, and it is now
dismissing the remaining count, this action is dismissed with prejudice by judgment filed
today.
SO ORDERED.
June 13, 2013.
_________________________________
SIDNEY A. FITZWATER
CHIEF JUDGE
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