Archive for the ‘Preemption’ Category

The Boeing Company v. Thurmon, No. 4:09-cv-1456, in the United States District Court for the Eastern District of Missouri, December 7, 2009. This is a subrogation case, significant for its fresh and express reiteration of the bedrock proposition that purchase of stop loss insurance by the sponsor of a self-insured employee benefit plan does not affect pre-emption analysis. In other words, a self-insured plan is still a self-insured plan, despite the existence of excess loss coverage. Read more

An employee’s spouse sued the insurer of her cancer insurance policy in state court after it refused to pay for medical treatment she had received. The insurer removed the case to federal court, arguing that her claim was preempted by ERISA. The spouse argued that the case belonged in state court because the policy fit within the regulatory safe harbor that excepts from ERISA certain voluntary insurance arrangements. At issue was whether the policy, which was offered through a cafeteria plan, fell outside the voluntary plan safe harbor because the employer had endorsed it. Read more

W.E. Aubuchon Co. v. BeneFirst, LLC, 2009 WL 3272491 (D. Mass. 2009

The employer in this case sued the former TPA of its two self-insured medical plans for claims processing errors that allegedly created millions of dollars in additional costs for the plans. Asking the court to enter judgment in its favor, the TPA argued that the employer’s ERISA fiduciary breach claims failed because the TPA was not a fiduciary and that the employer’s state-law claims for breach of contract failed because they were preempted by ERISA. In this pre-trial decision, the court rejected the TPA’s position that the employer had no claims, saying that it would effectively render TPA contracts unenforceable. Instead, the court entered two alternative rulings: (1) that although the TPA was not an ERISA “functional” fiduciary, it might be a “named” fiduciary under the TPA contract, allowing the fiduciary breach claims to proceed, and (2) that, if the TPA was not a fiduciary, then the state-law claims should be allowed to proceed because they would not be preempted. Read more

By Stanley D. Baum – Erisalawyerblog.com

In Hitachi High Technologies America, Inc. v. Bowler, SJC-10386 (Supreme Judicial Court of Massachusetts 2009), the Court faced the question of whether ERISA preempts a State law action brought by a retirement plan fiduciary to recover money mistakenly paid to a plan participant. In this case, the plaintiff, Hitachi High Technologies America, Inc. (Hitachi), filed an action for unjust enrichment in the Mass. Superior Court against its former employee, the defendant Kevin Bowler, for his alleged failure to reimburse $29,315.75, with interest, in retirement benefits that Hitachi had overpaid to Bowler due to an accounting error. The lower court dismissed the case on the grounds that it lacked subject matter jurisdiction. Read more

by John H. Eggertsen, Esq. and Michael Friedman, Esq. of SIIA, www.siia.org

I. District of Columbia’s Efforts to Regulate PBMs Preempted by ERISA
In their efforts to combat the ongoing initiatives on the part of several states to regulate the business activities of pharmacy benefit managers (”PBMs”), the PBMs recently won a skirmish. In Pharmaceutical Care Management Association v. District of Columbia, et al. 2009 WL 711771 (D.C.D.C.), a Federal District Court for the District of Columbia held that by regulating the relationship between PBMs and ERISA plans, the District of Columbia’s Access Rx Act of 2004 (the “Act”) “impermissibly intrudes upon a field exclusively reserved for federal regulation,” and thus, is preempted under ERISA. Read more

In American Council of Life Insurers v. Ross, case, 2009 U.S. App. LEXIS 5748,F.3d (6th Cir. 2009), the Sixth Circuit held that a Michigan law prohibiting insurers from including discretionary language in insurance policies fell within the scope of ERISA preemption “savings clause” and was therefore enforceable. The court relied on the Supreme Court’s Miller decision, which articulated a new test for determining whether a state law “regulates insurance” and is, therefore, saved from ERISA preemption. Applying the Miller test, the Sixth Circuit held that this particular law regulated insurance because it directly controlled the terms of insurance contracts by prohibiting insurers and insureds from entering into contracts having discretionary language.The case is particularly noteworthy because the court cites the Glenn case in support of its decision that the state law should not be preempted. The Court stated that Glenn provides further support for holding that Michigan’s law is not preempted by ERISA. The Court reiterated that a conflict of interest exists when the same insurer is responsible for examining and paying a benefits claim. Read more

In Edward Marram as Trustee of the Geo-Centers, Inc. Profit Sharing Plan & Trust v. Kobrick Offshore Fund, Ltd. et al., 2009 Mass. Super. LEXIS 85, a state trial judge wrote extensively on ERISA preemption – something that is extremely rare. Read more

Thanks to the Self-Insurance Institute of America, Inc. (SIIA) for bringing this news to our attention.  It seems that a “model law” has been drafted by the National Conference of Insurance Legislators, with the purpose of ratification by member States in mind.

The law addresses concerns over PPO rental networks; situations where PPO networks negotiate discounts with non-payer, third party entities (such as third party administrators).  Read more

You may have heard of the case Benefit Recovery, Inc. v. Donelon, et al., 521 F.3d 326 (5th Cir. 2008); F.3d 2008 WL 642972 (5th Cir. La.), 43 Employee Benefits Cas. 1417.  It was likely brought to your attention by someone claiming there is a made whole rule in Louisiana that binds even self-funded employee benefit plans, coming within the purview of ERISA.  This is simply not the case. Read more

The parents of a minor child sued their health plan insurer when it denied their daughter’s claims for benefits.  The parents argued that the insurer failed to comply with a state external review law for insurers, which required an independent review process for denied claims. The insurer asked the court to dismiss the claim, arguing that the state external review law was preempted by ERISA. Read more

ERISA preempted an Illinois state law outlawing any claim on a workers’ compensation award, because the law related to benefits plans regulated by ERISA, a federal trial court decided. As a result, an employer may seek reimbursement of group health plan funds from workers’ compensation awards. The health plan paid the expenses before a determination was made that the claims were work related. The court determined that the settlements included reimbursement for health expenses that were paid by the plan. At least one of the awards was worded to assert that it was not a payment for health benefits, but the judge said that was an effort to stop a recovery attempt. Read more

In the matter of Sgro v. Danone Waters of North America, Inc., 2008 U.S. App. LEXIS 13973 (9th Cir. Jul. 2, 2008), an employee – Mitchell Sgro – applied for benefits from his employer’s ERISA Plan.  He incurred $412.00 in copying fees, in the process of supplying documentation and medical records to his employer as part of his claim. Read more

Many involved in the administration of ERISA Plans do not realize that some state insurance law is preempted even when a fully insured ERISA Plan is involved.

In Spellman  v. United Parcel Service, 540 F. Supp.2d 237 (D.C. Maine 2008), the Court addressed an issue of enforcing Maine’s  workers’ compensation statutes with regards to health plans under ERISA. Read more

Magellan Services v. Highmark Life Insurance Company, – N.W.2d –, 2008 WL 2221979 (Iowa) (May 30, 2008) brought forward a dispute about coordination of benefits against an ERISA preemption of state regulation of a self-funded health plan based upon the presence of stop loss coverage. Read more

In July of 2006 the San Francisco Health Care Security Ordinance (”the Ordinance”) allowing the city to mandate employers with more than 50 employees to pay a fee to help cover their employee health care costs was unanimously passed by the San Francisco Board of Supervisors. 

On December 26, 2007, the U.S. District Court for the Northern District of California, ruled in favor of The Golden Gate Restaurant Association’s (GGRA) application, contending that ERISA preempted the Ordinance.  Read more