Preemption

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Within days of one another, the U.S. Court of Appeals for the Ninth and Second Circuits ruled—on issues of first impression for both—that ERISA expressly preempts state law breach of contract and promissory estoppel claims asserted by out-of-network providers who allege that preauthorization communications with claim administrators impose reimbursement obligations independent and irrespective of the…

In 2010, Chief Justice John Roberts observed that that ERISA is “an enormously complex and detailed statute.” Conkright v. Frommert, 559 U.S. 506, 509 (2010).

Some things don’t change. A recent decision out of the District Court of New Jersey exemplifies how even the most seemingly mundane procedural act — removal — implicates legal nuances with which courts continue to grapple.
Continue Reading D.N.J. Rejects Plaintiff’s Fee Request In Connection With State Court Remand Of Action Removed Under ERISA, Scaling Back Earlier Charge That Defendant’s Removal Was Nonsensical

In Rutledge v. Pharmaceutical Care Mgt. Assoc., — U.S. –, 2020 WL 7250098 (Dec. 10, 2020), the Supreme Court held that ERISA’s broad express preemption will not reach a state law that focuses on the price of prescription drug benefits that a plan chooses to provide.

The particular question in Rutledge was whether ERISA preempted an Arkansas law regulating the price at which pharmacy benefit managers (PBMs) reimburse pharmacies for the cost of drugs covered by ERISA prescription drug plans. The Court described PBMs as

a little-known but important part of the process by which many Americans get their prescription drugs. Generally speaking, PBMs serve as intermediaries between prescription-drug plans and the pharmacies that beneficiaries use. When a beneficiary of a prescription-drug plan goes to a pharmacy to fill a prescription, the pharmacy checks with a PBM to determine that person’s coverage and copayment information. After the beneficiary leaves with his or her prescription, the PBM reimburses the pharmacy for the prescription, less the amount of the beneficiary’s copayment. The prescription-drug plan, in turn, reimburses the PBM.

Continue Reading Supreme Court Rules that ERISA Does Not Preempt State Law Regulating PBM Reimbursements

In Hansen v. Group Health Cooperative, 2018 U.S. App. LEXIS 25033, (9th Cir. Sep. 4, 2018), two psychotherapists (“Providers”) sued Group Health Cooperative (“GHC”) in Washington state court, alleging GHC engaged in unfair and deceptive practices, in violation of Washington’s Consumer Protection Act.

The Providers claimed that GHC engaged in unfair and deceptive business practices by utilizing so-called Milliman Care Guidelines as its primary and exclusive criteria for authorizing mental health treatment. The problem with GHC’s use of these guidelines, according to the Providers, was that they:  (1) were intrinsically biased against mental healthcare, (2) were utilized to avoid paying for mental healthcare required by Washington’s Mental Health Parity Act, and (3) enabled GHC to unfairly compete by employing its own psychotherapists and discouraging patients from seeking treatment from rival practitioners.
Continue Reading ERISA Does Not Preempt Third Party Providers’ Unfair And Deceptive Business Practice Claims Against Health Insurer, Rules Ninth Circuit

The U.S. Court of Appeals for the Second Circuit has ruled that New York’s anti-subrogation statute, N.Y. Gen. Oblig. Law § 5-335(a), applies both to “offsets” for prospective benefit payments and to reimbursements for prior benefit disbursements.  In so holding, the Second Circuit ruled that a Plan’s choice-of-law provisions may not be dispositive of which jurisdiction’s anti-subrogation statute will apply to govern disbursement and/or recovery of that Plan’s assets.

The case, Arnone v. Aetna Life Ins. Co., 860 F.3d 97 (2d Cir. 2017), arose after the plaintiff-appellant, Salvatore Arnone, a New York resident, was injured while working in New York at the site of a customer of his employer.   Arnone filed for, and received, disability benefits through an ERISA-governed plan (“Plan”) insured and administered by Aetna.  Arnone also commenced a personal injury action in New York state court against his employer’s customer.  Arnone eventually settled the personal injury suit for a lump-sum payment.
Continue Reading Second Circuit Clarifies New York Anti-Subrogation Law Prohibits Offsets For Settlements; Declares Plan’s Choice-of-Law Provisions May Not Govern Offset And Subrogation Rights

In Milby v. MCMC LLC, 844 F.3d 605 (6th Cir. 2016), the plaintiff had her claim for disability benefits terminated following a peer review by a doctor engaged through MCMC. The plaintiff lived in Kentucky, and the peer reviewer was not licensed there. Accordingly, the plaintiff sued MCMC for negligence per se for practicing medicine in Kentucky without a license. The district court granted defendants’ motion to dismiss, and the Sixth Circuit affirmed.
Continue Reading ERISA Preempts Negligence Claim Against Disability Peer Reviewer

In Prime Healthcare Servs. – Landmark LLC v. United Nurses & Allied Prof’ls, Local 5067, 848 F.3d 41 (1st Cir. 2017), the First Circuit ruled that an arbitration agreement required the arbitrator to determine whether ERISA preempted the claims at issue.

Plaintiff purchased a financially troubled hospital that had a pension plan, and a collective bargaining agreement (CBA) with defendant. The CBA contained a broad arbitration provision. After the acquisition, the pension plan was terminated by the Pension Benefit Guaranty Corp. (PBGC), and the defendant union sought arbitration of its grievance that the termination violated the CBA. Ultimately, the district court ruled that the union’s claims were preempted by ERISA.

The Court noted that courts will determine questions of arbitrability only when there is a dispute of “substantive arbitrability” – whether the parties are bound by an arbitration clause, or whether the particular clause governs a particular type of controversy. “Procedural arbitrability” questions, in contrast, are presumptively determined by the arbitrator; these questions include things like defenses of waiver, delay, or any other procedural rule that grows out of the dispute and bears on its final disposition.
Continue Reading First Circuit rules that ERISA preemption of claim is an arbitrable issue

The U.S. District Court for the Northern District of New York has ruled that the so-called “probate exception” to federal jurisdiction precludes federal courts from adjudicating cases implicating federal question jurisdiction, including cases arising under ERISA. In so doing, the N.D.N.Y. joins ranks with a small but growing number of federal district and circuit courts that recognize the “probate exception” as an absolute bar to federal jurisdiction over any in rem action in the custody of a state probate court.

The case, captioned In re Boisseau, 2017 U.S. Dist. LEXIS 11964 (N.D.N.Y. Jan. 30, 2017), came before the N.D.N.Y. by way of a notice of removal filed by Hanover HHR Employee Benefit Plan. The Plan sought removal of a “Petition to Extinguish Claim” that was filed by Brenda M. Boisseau, individually and as Executor of the Estate of Edward Boisseau in the Surrogate’s Court for the State of New York, Oswego County.

The decedent, Mr. Boisseau, was a beneficiary of the Plan who had prostate cancer. Upon Mr. Boisseau’s passing, his wife commenced a personal injury action against Mr. Boisseau’s treatment providers. That lawsuit was settled, at which time the Plan asserted a lien against the settlement fund for $299,975.73 in medical expenses it had paid on Mr. Boisseau’s behalf.
Continue Reading “Probate Exception” Bars Federal Jurisdiction over ERISA Dispute

In Gomez v. Ericsson, Inc., 828 F.3d 367, 369 (5th Cir. 2016), the central question was whether ERISA governed Ericsson’s Standard Severance Plan and Top Contributor Enhanced Severance Plan of 2010. The issue arose because, after plaintiff was laid off and signed a standard release, he wiped the hard drive on his company laptop before returning it. Ericsson asserted that the laptop had materials that did not exist elsewhere, and it denied plaintiff the benefits under the Plans. Plaintiff sued, and that brought up the question whether ERISA governed.
Continue Reading Fifth Circuit provides guidance on when ERISA governs severance plans