No. 01-30922
IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT
___________________
JULIO ARANA,
Plaintiff-Appellee,
v.
OCHSNER HEALTH PLAN, INC.,
Defendant-Appellant
___________________
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF LOUISIANA
___________________
BRIEF OF AMICUS CURIAE ELAINE L. CHAO, SECRETARY OF THE
UNITED STATES DEPARTMENT OF LABOR
____________________
For the Secretary of
Labor:
HOWARD M. RADZELY Acting Solicitor of
Labor
TIMOTHY D. HAUSER Associate Solicitor
ELIZABETH
HOPKINS Counsel for Appellate and Special Litigation
JAMES L.
CRAIG, JR. U.S. Department of Labor Office of the Solicitor Plan
Benefits Security Division 200 Constitution Avenue, N.W., Room
N-4611 Washington, D.C. 20210 (202) 693-5600
TABLE OF CONTENTS
STATEMENT
OF THE ISSUES
INTEREST
OF THE SECRETARY OF LABOR
STATEMENT
OF THE CASE
SUMMARY
OF ARGUMENT
ARGUMENT
I. A State Court Action by a Plan Participant to Enforce the Terms of a
State Anti-subrogation Statute is Properly Recast as a Suit Under Section
502 and Is Thus Removable to Federal Court Under the "Complete Preemption"
Doctrine
A. Arana's Claim Is Actionable Under ERISA Section 502 As A Claim to
Clarify His Rights to Benefits
B. Alternatively, Arana's Suit May Be Viewed
As An ERISA Action to Enforce His Rights Under The Terms Of The Plan If
Louisana Statute 22:663, Which Is Saved As An Insurance Regulation, Is
Incorporated Into His Insurance Contract As A Matter Of State Law
C. This Court Need Not Decide Whether OHP Could Properly Seek
Reimbursement From Arana Under Great West and Bauhaus
II. ERISA Completely Preempts The State Law Provisions That Impose
Double Damages And Attorney's Fees For Improper Claims Processing
CONCLUSION
TABLE OF AUTHORITIES
Cases:
Arana v. Ochsner Health Plan, Inc., 134 F.
Supp.2d 783 (E.D. La. 2001) Arana v. Ochsner Health Plan,
Inc., 302 F.3d 462 (5th Cir. 2002) Bauhaus USA, Inc. v.
Copeland , 292 F.3d 439 (5th Cir. 2002) Carducci v. Aetna
, No. 01-4675, 2003 WL 722477 (D.N.J. Mar. 4, 2003)
Caterpillar Inc. v. Williams , 482 U.S. 386 (1987)
Donovan v. Cunningham , 716 F.2d 1455 (5th Cir. 1983),
cert. denied, 467 U.S. 1251 (1984) Egelhoff v. Egelhoff ,
532 U.S. 141 (2001) FMC Corp. v. Holliday , 498 U.S. 52
(1990) Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1 (1983) Great-West Life & Annuity Ins.
Co. v. Knudson , 534 U.S. 204 (2002) Hotz v. Blue Cross
& Blue Shield of Massachusetts, 292 F.3d 57 (1st Cir. 2002)
John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav.
Bank, 510 U.S. 86 (1993) Kentucky Ass'n of Health Plans v.
Miller, No. 00-1471, 2003 WL 1726508 (U.S. Apr. 2, 2003)
Louisville & Nashville R.R. v. Mottley, 211 U.S. 149
(1908) Medical Mut. of Ohio v. deSoto, 245 F.3d 516 (6th
Cir. 2001) Metropolitan Life Ins. Co. v. Massachusetts, 471
U.S. 724 (1985) Metropolitan Life Ins. Co. v. Taylor, 481
U.S. 58 (1987) New York State Conference of Blue Cross &
Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995)
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)
Plumb v. Fluid Pump Serv., Inc., 124 F.3d 849 (7th Cir.
1997) Ramirez v. Inter-Continental Hotels, 890 F.2d 760
(5th Cir. 1989) Rivet v. Regions Bank, 522 U.S. 470 (1998)
Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 122 S.
Ct. 2151 (2002) Secretary of Labor v. Fitzsimmons, 805 F.2d
682 (7th Cir. 1986) Shaw v. Delta Air Lines, Inc., 463 U.S.
85 (1983) Steel Co. v. Citizens for a Better Env't, 523
U.S. 83 (1998) UNUM Life Ins. Co. v. Ward, 526 U.S. 358
(1999) Whitlinger v. Continental Casualty Co., 129 F.
Supp.2d 924 (E.D. Va. 2001)
Statutes:
Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et
seq.:
Section 502, 29 U.S.C. § 1132 Section 502(a), 29
U.S.C. § 1132(a) Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)
Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3) Section
502(g)(1), 29 U.S.C. § 1132(g)(1) Section 505, 29 U.S.C. § 1135
Section 514, 29 U.S.C. § 1144 Section 514(a), 29 U.S.C. §
1144(a) Section 514(b)(2), 29 U.S.C. § 1144(b)(2) Section
514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A) Section 514(b)(2)(B), 29
U.S.C. § 1144(b)(2)(B) 28 U.S.C. § 1292 28 U.S.C. §
1292(b) 28 U.S.C. § 1331 28 U.S.C. § 1441(a) 28
U.S.C. § 1441(b) Louisiana Rev. Stat. 22:657 Louisiana
Rev. Stat. 22:663
Other Authorities:
Fed. R.
App. P. 29(a)
2 Lee R. Russ. & Thomas F. Segalla, Couch on
Insurance 3d § 19:1 (1996)
STATEMENT OF THE ISSUES
1. Whether an ERISA health plan
participant's declaratory judgment action to enforce the terms of a state
anti-subrogation insurance statute is removable to federal court under the
"complete preemption" doctrine.
2. Whether a state court action for
penalties and attorney fees under a state insurance law is completely
preempted.
INTEREST OF THE SECRETARY OF LABOR
The Secretary of the
United States Department of Labor (the "Secretary") has primary authority
to interpret and enforce the provisions of Title I of ERISA and therefore
has a strong interest in ensuring that the fiduciary duties of loyalty and
prudence in the administration of plan assets are strictly applied. 29 U.S.C. §§ 1132, 1135. See
Donovan v.
Cunningham , 716 F.2d 1455,
1462-63 (5th Cir. 1983), cert. denied, 467 U.S. 1251
(1984). The Secretary's
interests further include promoting the uniform application of the Act,
protecting plan participants and beneficiaries, and ensuring the financial
stability of plan assets.
Secretary of Labor v. Fitzsimmons, 805 F.2d 682 (7th Cir.
1986) (en banc). Here the
Secretary has an interest in ensuring that claims to enforce the terms of
ERISA plans, including terms incorporated into plans from saved state
insurance laws, are brought under § 502 of ERISA, 29 U.S.C. § 1132, and
not through state proceedings.
This brief is filed
pursuant to Fed. R. App. P. 29(a) and this Court's April 3, 2003
order granting the Secretary an extension of time until April 11, 2003 to
file.
STATEMENT OF THE CASE
Ochsner Health Plan
(OHP), which is an HMO insurer providing health benefits to an
ERISA-covered employee benefit plan, paid approximately $180,000 in health
benefits on behalf of Julio Arana, a plan beneficiary, in connection with
treatment he received for serious injuries he received in an automobile
accident. Arana subsequently
obtained recoveries totaling roughly $1.1 million from various automobile
insurers; $150,000 of this amount is in a trust account maintained by
Arana's attorney pursuant to the terms of a settlement agreement with one
of the insurers, while the remaining amounts have been disbursed. Relying on a provision in OHP's
agreement with the employer allegedly giving OHP subrogation and
reimbursement rights, OHP demanded reimbursement of the $180,000 in health
benefits that OHP paid.
Arana filed a class
action in Louisiana state court, on behalf of himself and a class of
similarly situated persons, seeking a declaratory judgment that OHP was
prohibited from enforcing the subrogation provisions by a provision of
Louisiana insurance law.
Arana's action is based on Louisiana Statute 22:663, which
prohibits group health insurers from issuing a policy that excludes or
reduces the payment of benefits to an individual because benefits have
been paid under any other individually written contract or plan of
insurance. In addition, Arana sought
statutory penalties and attorney fees under Louisiana Statute 22:657.
OHP removed the
case to federal district court, claiming that the state law cause of
action was completely preempted by ERISA.
The district court accepted removal based on complete preemption,
and granted partial summary judgment to Arana, ruling that OHP has no
subrogation or reimbursement rights against him. Arana v. Ochsner Health Plan,
Inc., 134 F. Supp.2d 783, 789 (E.D. La. 2001). The court held that the state law
prohibits subrogation or reimbursement by OHP with respect to payments
made by other insurers under individually written insurance contracts such
as those from which Arana had obtained recoveries. The court further held that
although the Louisiana anti-subrogation law "relates to" an employee
benefit plan within the meaning of the basic preemption clause, 29 U.S.C.
§ 1144(a), the statute escapes preemption because it regulates insurance
within the meaning of ERISA's saving clause, id. § 1144(b)(2)(A).
134 F. Supp.2d at 788-89. The
court further concluded that the claim did not arise under state law, as
Arana claimed, but rather under § 502(a) of ERISA, 29 U.S.C. § 1132(a),
while the state anti-subrogation law merely supplies the "rule of
decision" on the claim. 134
F. Supp.2d at 788. In
particular, the court noted that Arana's action attempted to prevent OHP
from reducing the amount of Arana's benefits and thus was properly viewed
as a claim to obtain benefits under § 502(a) of ERISA. 134 F. Supp.2d at 788 n.9. The case is before the court of
appeals as an interlocutory appeal under 28 U.S.C. § 1292.
On appeal, a panel of
the Fifth Circuit reversed the district court, holding that there was no
complete preemption, and therefore no federal jurisdiction. Arana v. Ochsner Health Plan,
Inc., 302 F.3d 462 (5th Cir. 2002). The panel thus ordered that the
case be remanded to state court for proceedings under state law. In so holding, the panel disagreed
with the lower court's conclusion that Arana's claim for declaratory
judgment was properly viewed as a claim for benefits and thus as an action
under ERISA § 502(a)(1)(B).
The panel reasoned that Arana was not seeking an award of benefits
because OHP had already paid contractually owed benefits, and that Arana
was not seeking to enforce the terms of the benefit plan because the plan
as written provides OHP with subrogation and reimbursement rights. 302 F.3d at 470-72. The panel stated that the true
gravamen of Arana's action -- that Louisiana law should be enforced
instead of the terms of the plan -- had no analogue in ERISA's civil
enforcement scheme.
Id. at 472.
Accordingly, having concluded that Arana neither seeks benefits
under the terms of the plan nor seeks to enforce the terms of the plan,
the panel held that his cause of action does not fall within the scope of
§ 502(a) and is not completely preempted by ERISA.
The panel further
ruled that Arana's claim for penalties and attorney's fees under Louisiana
Statute 22:657 was not completely preempted. 302 F.3d at 473-74. The panel observed that ERISA's
civil enforcement scheme does not afford a mechanism for obtaining
punitive damages and mandatory attorney's fees. Because ERISA § 502(a) does not
authorize such a suit, the panel reasoned, Arana's suit cannot form the
basis for federal court jurisdiction. Id. at 473. Instead, the panel reasoned,
OHP could raise in state court its arguments that the state insurance
provisions, including the anti-subrogation provision, and the penalty and
punitive damages provisions are subject to ordinary preemption under ERISA
§ 514. Id. at
474. The panel decision has
been vacated pending en banc review.
SUMMARY OF ARGUMENT
The panel erred in
holding that Arana's lawsuit was not removable to federal court. Under the removal statute, a case
filed in state court may be removed to federal court
when it "arises under"
federal law. Normally, a
cause of action arises under federal law in the relevant sense only when
issues of federal law appear on the face of plaintiff's complaint. However, under the "complete
preemption" doctrine, a claim that is brought under state law is properly
viewed as federal in character and thus removable to federal court if
Congress has created an exclusive federal cause of action that occupies
the field in which the plaintiff's claim arises.
This doctrine has been applied in
the ERISA context such that a state court action that comes within the
scope of § 502(a) of ERISA, 29 U.S.C. § 1132(a), must be recharacterized
as an action arising under federal law for purposes of removal
jurisdiction. Thus, Arana's
state court declaratory judgment action to clarify the applicability of a
state anti-subrogation provision such as Louisiana Statute 22:663 is
properly recast as an action under ERISA § 502(a)(1)(B) to clarify
his right to future benefits or to enforce his rights under the terms of
the plan, and is removable to federal court under the "complete
preemption" doctrine. Because
Arana's suit is correctly viewed as one under § 502(a)(1)(B) and is
removable on that basis, this Court need not transpose the parties and
decide if OHP could enforce a hypothetical claim against Arana for
subrogation or reimbursement in order to resolve the jurisdictional
issue.
In addition, Arana's
claim for double damages and attorney's fees under Louisiana Statute
22:657 also comes within the scope
of § 502, which provides the exclusive cause of action for improper claims
processing, and allows for attorney's fees in certain circumstances. It is therefore likewise
completely preempted, even if a federal court cannot award the remedy
sought.
ARGUMENT
I. A
State Court Action by a Plan Participant to Enforce the Terms of a State
Anti-subrogation Statute Is Properly Recast as a Suit Under § 502 and Is
Thus Removable to Federal Court under the "Complete Preemption" Doctrine
The general removal
statute provides that, absent an express exception, any action filed in
state court may be removed to federal court if it is "[a] civil
action . . . of which the
district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). Here, removal is based on the
original jurisdiction of the district courts over "[a]ny civil action . .
. founded on a claim or right arising under the . . . laws of the United
States." 28 U.S.C.
§ 1441(b); see 28 U.S.C. § 1331. Whether an action "aris[es] under"
the laws of the United States is determined by the well-pleaded complaint
rule, which provides that "federal jurisdiction exists only when a federal
question is presented on the face of the plaintiff's properly pleaded
complaint." Caterpillar
Inc. v. Williams, 482 U.S. 386, 392 (1987). Because a defense is not part of
the plaintiff's well-pleaded statement of his claim, a plaintiff may not
obtain federal jurisdiction by anticipating and refuting a federal
defense. Louisville &
Nashville R.R. v. Mottley, 211 U.S. 149, 152 (1908).
A corollary of the
well-pleaded complaint rule, however, developed in the case law is the
rule that "a plaintiff may not defeat removal by omitting to plead
necessary federal questions."
Rivet v. Regions Bank, 522 U.S. 470, 475 (1998) (quoting
Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S.
1, 22 (1983)). Under that
rule, known as the "complete preemption" or "artful pleading" doctrine,
"if a federal cause of action completely preempts a state cause of action
any complaint that comes within the scope of the federal cause of action
necessarily 'arises under' federal law" and may be removed to federal
court. Franchise Tax
Bd., 463 U.S. at 24.
Thus, complete
preemption occurs whenever Congress has created an exclusive federal cause
of action and the plaintiff's claim, as presented in the facts set out in
the complaint, falls within the scope of that cause of action. When federal law provides a cause
of action that occupies the field in which the plaintiff's claim arises,
the plaintiff's claim necessarily is encompassed by the federal cause of
action and arises under federal law.
And, as described above, the text of the removal statute provides
that any action "arising under" federal law "shall be removable" to
federal court. 28 U.S.C.
§ 1441(b).
The complete
preemption rule advances the purposes of the removal statute without
encroaching on the legitimate rights of plaintiffs or offending principles
of comity and federalism.
Federal question removal jurisdiction is designed both to promote
the accurate and uniform interpretation of federal law by ensuring the
availability of a forum with special expertise in that law and to protect
the federal rights of defendants.
The complete preemption rule advances those purposes because it
ensures that defendants retain access to the district courts to litigate
federal claims even when plaintiffs -- artfully or inadvertently --
incorrectly characterize those claims as arising under state law. At the same time, the rule also
respects the autonomy of state courts. Removal is not permitted if
federal law provides only a defense -- even if the defense is that state
law is preempted under conflict preemption or ordinary field preemption
analysis. The complete
preemption rule therefore preserves both state court primacy in resolving
questions of state law and state court authority to determine in the first
instance whether state law must yield to contrary federal law. The rule provides for removal only
when federal law actually provides the plaintiff's cause of action. In that circumstance, removal is
entirely appropriate, because, in our federal system, federal courts have
primary responsibility for resolving questions of federal
law.
A.
Arana's Claim Is
Actionable Under ERISA § 502 As A Claim to Clarify His Rights To
Benefits
The Supreme Court has
applied the complete preemption doctrine in the ERISA context to hold that
state court actions that come within the scope of § 502(a) of ERISA, 29
U.S.C. 1132(a), such as for improper processing of benefits under state
law, are "displaced by [ERISA § 502]" and are thus "removable to
federal court." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58,
60 (1987). Because such a
claim within the scope of Section 502 is "necessarily federal in
character," it "'arise[s] under the . . . laws . . . of the United
States,' 28 U.S.C. § 1331, and is removable to federal court." Id. at
67.
Arana's claim under
Louisiana Statute 22:663 is completely preempted under the reasoning of
Taylor. ERISA §
502(a)(1)(B) provides that a plan participant or beneficiary may bring
suit under ERISA "to recover benefits due him under the terms of the 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." 29 U.S.C. § 1132(a)(1)(B). Under this provision, any claim,
such as Arana's, intended to clarify the rights of a plan participant with
regard to an employee benefit plan, is encompassed by the federal cause of
action. Therefore,
Arana's suit is properly viewed as one to clarify rights under the plan,
and, as such, is no different than any other claim he might have brought
under ERISA § 502(a)(1)(B) to enforce or clarify his rights.
B.
Alternatively, Arana's Suit May Be Viewed As An
ERISA Action to Enforce His Rights Under The Terms Of The Plan If
Louisiana Statute 22:663, Which Is Saved As An Insurance Regulation, Is
Incorporated Into His Insurance Contract As A Matter Of State
Law
Under § 514(a) of
ERISA, 29 U.S.C. § 1144(a), the provisions of ERISA "shall supersede any
and all State laws insofar as they . . . relate to any employee benefit
plan." In general, a state
law "relate[s] to" an ERISA plan "'if it has a connection with or
reference to such a plan.'"
Egelhoff v. Egelhoff, 532 U.S. 141, 147 (2001) (quoting
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983)). Although "relates to" preemption
is not without limits, New York State Conference of Blue Cross &
Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655 (1995),
where a state law purports to regulate matters at the core of ERISA --
such as the content or administration of ERISA plans or the mechanisms for
enforcing rights under the plans -- the requisite connection to ERISA
plans is present. Louisiana
Statute 22:663 does have the requisite connection to ERISA plans inasmuch
as it purports to regulate the content of such plans with respect to
insurers' rights to subrogation or reimbursement from payments made by
other insurers.
However, it is equally
plain that Louisiana Statute 22:663 is saved under ERISA's insurance
saving clause, ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), which
provides that "nothing in this subchapter shall be construed to exempt or
relieve any person from any law of any State which regulates
insurance." That clause
is one of a series of provisions of § 514 that preserves certain other
laws -- state and federal -- even though they "relate to" ERISA
plans. By saving state laws
that "regulate[] insurance," § 514(b)(2)(A) "leaves room for complementary
or dual federal and state regulation." John Hancock Mut. Life Ins. Co.
v. Harris Trust & Sav. Bank, 510 U.S. 86, 98 (1993), and preserves
the States' traditional role in insurance regulation.
In FMC Corp. v.
Holliday, 498 U.S. 52, 58-59 (1990), the Supreme Court explained that
a Pennsylvania anti-subrogation provision "directly controls the terms of
insurance contracts by invalidating any subrogation provisions that they
contain." Id. at 61,
citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724,
740-41 (1985). And, the Court
noted, the law "does not merely have an impact on the insurance industry;
it is aimed at it."
Id. (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S.
41, 50 (1987)). Although the
Court ultimately concluded that the Pennsylvania provision was not saved
under the facts of that case, it did so only because the plan there was
self-funded, and thus "excluded from the reach of the saving clause by
virtue of the deemer clause."
498 U.S. at 61. However, on the general question
of whether a statutory anti-subrogation provision of state law constitutes
an insurance regulation, FMC Corp. is controlling on this question
and dictates that a state anti-subrogation clause is saved under ERISA
§ 514(b)(2)(A) in its application to an insured employee benefit
plan. This reading of
FMC is affirmed by the Supreme Court's decision last week in
Kentucky Ass'n of Health Plans v. Miller, No. 00‑1471, 2003 WL
1726508, slip op. at 5 (U.S. Apr. 2, 2003) (referring to the Pennsylvania
anti-subrogation provision as a "state law[] we held saved from preemption
in FMC Corp."). Thus, because Arana's
health plan at issue here is insured, the "deemer clause" is inapplicable
to this case, and the insurance saving clause applies to save the state
law from preemption.
See UNUM Life Ins. Co. v. Ward, 526 U.S. 358, 367 n.2
(1999).
Many saved state
insurance laws will in effect add terms to ERISA plans. So long as the state insurance law
does not attempt to add a contract term that conflicts with a provision of
ERISA, the state law may impose terms that contradict policy
language. See Rush
Prudential HMO, Inc. v. Moran, 536 U.S. 355, 122 S. Ct. 2151, 2171
(2002) ("[t]his effect of eliminating an insurer's autonomy to guarantee
terms congenial to its own interest is the stuff of garden variety
insurance regulation through the imposition of standard policy terms.");
UNUM, 526 U.S. at 375-77 (rejecting insurer's argument that ERISA
preempts state insurance laws "altering the . . . provisions of the
insurance contract"); Metropolitan Life Ins. Co. v. Massachusetts,
471 U.S. at 739-47 (giving effect to state law mandating mental health
coverage). As the Seventh
Circuit noted regarding an Illinois insurance statute limiting the scope
of pre-existing condition clauses in insurance contracts, "it is
fundamental insurance law that '[e]xisting and valid statutory provisions
enter into and form part of all contracts of insurance to which they are
applicable,'" and supercede contrary provisions in the insurance
contract. Plumb v. Fluid
Pump Serv., Inc., 124 F.3d 849, 861 (7th Cir. 1997) (quoting 2 Lee R.
Russ. & Thomas F. Segalla, Couch on Insurance 3d § 19:1, at
19-2 to 19-4 (1996)). Such a
provision thus becomes part of all insurance contracts in the state and "§
502(a)(1)(B) of ERISA allows [the claimant] to sue to recover benefits
under those terms." 124 F.3d
at 861.
Similarly, here,
Louisiana Statute 22:663 is saved by ERISA § 514(b)(2)(A) under
FMC Corp., and it is likely that its terms apply to Arana's
insurance contract with OHP.
See e.g., Medical Mut. of Ohio v. deSoto, 245
F.3d 561, 572-74 (6th Cir. 2001) (California provision prohibiting health
insurer from recouping payments made after settlement of malpractice claim
is saved from preemption as state insurance regulation); Carducci v.
Aetna, No. 01-4675, 2003 WL 722477 (D.N.J. Mar. 4, 2003) (New Jersey's
collateral source rule, which New Jersey Supreme Court held prohibited
insurers from recouping funds through subrogation or reimbursement lien,
is saved as an insurance regulation); Whitlinger v. Continental
Casualty Co., 129 F. Supp.2d 924, 930 (E.D. Va. 2001) (Virginia
anti-subrogation provision saved as an insurance regulation in its
application to insured plan).
If the Louisiana statute is incorporated into the insurance policy
(and therefore the plan) as a matter of state law, § 502(a)(1)(B) can also
be viewed as providing the mechanism by which Arana can "enforce his
rights under the terms of the plan," and the state court declaratory
judgment action was properly removed to federal court on this basis as
well. See Rush
Prudential HMO, Inc., 122 S. Ct. at 2167 (giving effect to state
independent review law where "relief ultimately available would still be
what ERISA authorizes in a suit for benefits under § 1132(a)");
UNUM, 526 U.S. at 377 (holding that state insurance law merely
provided the rule of decision in a § 502(a) suit); cf.
Pilot Life, 481 U.S. at 53 (§ 502(a)(1)(B) authorizes
declaratory judgments regarding benefit entitlements).
C.
This Court Need Not Decide Whether OHP Could Properly Seek
Reimbursement From Arana Under Great West and Bauhaus
OHP also argues
alternatively (OHP Supplemental Brief on Rehearing En Banc at 32), that
federal jurisdiction exists because it could bring a claim against Arana
for reimbursement under § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3),
which entitles the court to award "equitable relief." OHP asserts that the federal court
can assume jurisdiction based on the nature of the potential action
against Arana because federal courts assume original jurisdiction of
declaratory judgment actions in which "if the declaratory judgment
defendant brought a coercive action to enforce its rights, that suit would
necessarily present a federal question." Franchise Tax Bd., 463 U.S.
at 19. Because, as we have
shown, Arana's claim is properly recast as a claim under § 502, there is
no occasion for this court to decide the difficult issues presented by the
Supreme Court's recent decision in Great-West Life & Annuity Ins.
Co. v. Knudson, 534 U.S. 204 (2002) and by this court's decision in
Bauhaus USA, Inc. v. Copeland, 292 F.3d 439 (5th Cir. 2002),
concerning what constitutes available "equitable relief" under
§ 502(a)(3). Thus, we disagree with OHP's
view that "[t]he essential question now before the Court is whether an
attempt by [OHP] to subrogate or to obtain reimbursement from the specific
settlement funds now in the trust account of Mr. Arana's attorney would
constitute 'typical' equitable relief available under ERISA." See OHP Petition for
Rehearing at 7.
Any Great West
issue in this case would be premised on a suit by OHP to enforce the
subrogation provision.
However, this case was brought by Arana and not OHP, and seeks not
to enforce the Plan's subrogation provision, but to block it as a matter
of saved state insurance law.
Although it may be proper in some circumstances to invert the
plaintiff and defendant in deciding whether a declaratory judgment action
under state law is completely preempted, it is far from clear under
Franchise Tax Bd. that this is the correct approach under
ERISA. See 463 U.S. at
20-21 (rejecting the view that the State's declaratory judgment action
against a union benefit plan was removable simply because the benefit
trust could have brought suit under ERISA to prevent application of state
tax law to it; the Court noted that ERISA "did not go so far as to provide
that any suit against [ERISA plaintiffs] must also be brought in
federal court when [the ERISA plaintiffs] themselves did not choose to
sue"). Whether or not OHP
could, as a general matter, enforce the subrogation provision under the
remedial provision of § 502(a)(3), and concomitantly whether a
federal court would have jurisdiction over such an action, there can be no
doubt that Arana, as a plan beneficiary, may bring his suit under
§ 502(a)(1)(B) to enforce the terms of the plan or clarify his rights
under the plan. Thus,
his suit is completely preempted and removable to federal court. Because there is a relatively
straightforward approach to the jurisdictional issue, there is no need for
the en banc Court to resolve the issue of whether Franchise Tax Bd.
allows removal based on an inversion of the plaintiff and defendant, or to
engage in the difficult task of hypothesizing a claim for subrogation or
reimbursement and then attempting to decide, in an abstract context, what
constitutes equitable relief such as unjust enrichment.
II.
ERISA Completely Preempts The State Law Provisions That Impose
Double Damages And Attorney's Fees For Improper Claims Processing
Arana's claim under
Louisiana Statute 22:657 – which provides, in some circumstances, for
payment of "double damages"
and attorney's fees if the insurer fails to pay benefits that are due – is
likewise completely preempted under Taylor and thus removal is
properly supported on this basis as well. Both the penalty
provision
and the provision for attorney's fees, come within the scope of § 502,
which provides exclusive remedies for improper claims processing, and
allows for attorney's fees in certain circumstances.
As discussed above,
the dispute about whether state law prohibits the ERISA plan's insurer
from invoking the reimbursement provision of the plan is one that falls
within the scope of § 502(a)(1)(B), and is removable on that basis. As in Taylor, where the
plaintiff also sought relief that went beyond what ERISA ordinarily
provides in a suit under ERISA § 502(a)(1)(B), the relief that Arana seeks
(statutory penalties in the amount of twice what is due under the policy
plus attorney's fees) would be recoverable, if at all, only in a suit
under § 502 of ERISA, Arana's suit for that relief therefore is likewise
subject to complete preemption, irrespective of whether the courts, after
removal, ultimately hold that those remedies are preempted by ERISA or are
saved from preemption by the insurance saving clause. Courts, including the Fifth
Circuit, have thus correctly held that suits seeking recovery under
penalty provisions such as 22:657 are completely preempted and properly
recast as ERISA claims, even while rejecting the availability of such a
remedy in an ERISA action.
Ramirez v.
Inter-Continental Hotels, 890 F.2d 760, 762-64
(5th Cir. 1989) (holding both that plaintiff's action under Texas' treble
damages insurance statute was completely preempted under Taylor and
thus removable to federal court, and also that the Texas law was preempted
and not saved as a rule of decision under Pilot Life); Hotz v.
Blue Cross & Blue Shield of Massachusetts, 292 F.3d 57, 59-61
& n. 4 (1st Cir. 2002) (citing Ramirez and opinions of other
courts of appeals, and holding a Massachusetts insurance statute providing
for multiple damages to be both completely preempted and not saved as a
matter of ordinary preemption under Pilot Life).
Even if a federal law
does not permit the remedy sought, the claim is removable if, as here, it
falls within the scope of an exclusive federal action. Caterpillar Inc., 482 U.S.
at 391 n.4. Nor is
jurisdiction precluded because the plaintiff's claim fails on the merits
or fails to state a claim on which relief may be granted. See Steel Co. v.
Citizens for a Better Env't, 523 U.S. 83, 88
(1998).
CONCLUSION
The decision of the
district court concerning removal jurisdiction should be affirmed, and the
federal action reinstated for further proceedings on the
merits.
Respectfully submitted,
April 10, 2003
JAMES L. CRAIG, JR. U.S. Department of Labor Office of the
Solicitor Office of the Solicitor Plan Benefits Security
Division 200 Constitution Avenue, N.W. Room N-4611 Washington,
D.C. 20210 (202) 693-5600
CERTIFICATE OF COMPLIANCE WITH RULE 32(a)
1. This brief complies
with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because
this brief contains 5,804 words, excluding the parts of the brief exempted
by Fed. R. App. P. 32(a)(7)(B)(iii).
2. This brief complies
with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type
style requirements of Fed. R. App. P. 32(a)(6) because this brief has been
prepared in a proportionally spaced typeface using Microsoft Word 2000, in
14 point Times New Roman typeface, except that footnotes have been
prepared in 12 point Times New Roman typeface as permitted by Fifth
Circuit Rule 32.1.
3. The undersigned
understands that a material misrepresentation in completing this
Certificate, or circumvention of the type-volume limits in Fed. R. App. P.
32(b)(7), may result in the Court's striking this brief and imposing
sanctions against the person signing this brief.
____________________________ James L. Craig, Jr.
Attorney for Amicus Curiae Elaine L. Chao,
Secretary of the United States Department of Labor
Dated: April 10,
2003
CERTIFICATE OF SERVICE
I hereby certify that two (2) paper copies and one (1) 3½ diskette
containing a PDF version of Brief of Amicus Curiae Elaine L. Chao,
Secretary of the United States Department of Labor, were sent to counsel
listed below by Federal Express overnight courier service, this 10th day
of April 2003:
George D. Fagan, Esq.,
Leake & Anderson, 1100 Poydras Street, Suite 1700, New Orleans, LA
70163, counsel for Julio Arana, Appellee and
Plaintiff;
Perry R. Staub, Jr.,
Esq., Taggart, Morton, Ogden, Staub, Rougelot, Brocato & O’Brien, 1100
Poydras Street, Suite 2100, New Orleans, LA 70163, counsel for Ochsner
Health Plan, Inc., Appellant and Defendant;
Errol J. King, Esq.,
McGlinchey Stafford, Ninth Floor, One American Place, Baton Rouge, LA
70825, counsel for Louisiana Managed Healthcare Association, Inc.,
Healthcare Recoveries, Inc. and United HealthCare of Louisiana, Inc.,
Amici Curiae;
Thomas H. Lawrence, Esq.,
Lawrence & Russell, 5050 Poplar Avenue, Suite 1717, Memphis, TN 38157,
counsel for Benefit Recovery, Inc., Amicus Curiae;
Howard Shapiro, Esq.,
Shook, Hardy & Bacon, L.L.P., LL&E Tower, Suite 1100, 909 Poydras
Street, New Orleans, LA 70112-4017, counsel for Benefit Recovery, Inc.,
Amicus Curiae;
Professor Edward H.
Cooper, University of Michigan School of Law, 330 Hutchins Hall, 625 South
State, Ann Arbor, MI 48109-1215, Amicus Curiae.
_____________________________
JAMES L. CRAIG, JR.
§663. Hospitalization,
accident and health insurance; reduction of benefits prohibited
Notwithstanding any
other provisions in this title to the contrary, no group policy of
accident, health or hospitalization insurance, or of any group combination
of these coverages, shall be issued by any insurer doing business in this
state which by the terms of such policy group contract excludes or reduces
the payment of benefits to or on behalf of an insured by reason of the
fact that benefits have been paid under any other individually
underwritten contract or plan of insurance for the same claim
determination period. Any group policy provision in violation of this
section shall be invalid.
§657. Payment of
claims; health and accident policies; prospective review; penalties;
self-insurers; telemedicine reimbursement by
insurers
A. All claims arising under the terms
of health and accident contracts issued in this state, except as provided
in Subsection B, shall be paid not more than thirty days from the date
upon which written notice and proof of claim, in the form required by the
terms of the policy, are furnished to the insurer unless just and
reasonable grounds, such as would put a reasonable and prudent businessman
on his guard, exist. The
insurer shall make payment at least every thirty days to the insured
during that part of the period of his disability covered by the policy or
contract of insurance during which the insured is entitled to such
payments. Failure to comply
with the provisions of this Section shall subject the insurer to a penalty
payable to the insured of double the amount of the health and accident
benefits due under the terms of the policy or contract during the period
of delay, together with attorney's fees to be determined by the
court. Any court of competent
jurisdiction in the parish where the insured lives or has his domicile,
excepting a justice of the peace court, shall have jurisdiction to try
such cases.
In Pilot Life Ins.
Co. v. Dedeaux, 481 U.S. 41 (1987), a case decided the same day as
Taylor, the Supreme Court reasoned that § 502(a) provides the
exclusive avenue for judicial relief for ERISA participants and
beneficiaries whose claims for benefits are denied. After noting that causes of action
outside § 502(a) would lead to the award of judicial remedies, such as
compensatory and punitive damages, that Congress had rejected, 481 U.S. at
53-54, the Court concluded that "[t]he policy choices reflected in the
inclusion of certain remedies and the exclusion of others under the
federal scheme would be completely undermined if ERISA-plan participants
and beneficiaries were free to obtain remedies under state law that
Congress rejected in ERISA."
Id. at 54.
Pilot Life (like Taylor), however, involved state
common law of general applicability, not a state statute, like Louisiana
Statute 22:657, that is directed to the insurance industry. In our view, that distinction does
not affect the conclusion that Arana's suit to recover the penalties
provided under 22:657 is necessarily one arising under ERISA §
502(a). The question whether
La. Rev. Stat. 22:657 is preempted on the merits – i.e., whether it
is saved from preemption under the saving clause – does not appear to be
before the Court. See n.9,
supra.
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