State Law Claim Against ERISA Plan Avoids Preemption
In the case of Franciscan Skemp Healthcare, Inc. v. Central States Joint Board Health & Welfare Trust Fund No. 07-3456 (7th Cir.)(July 31, 2008), the Seventh Circuit Court of Appeals determined that when a party files a pure state law claim against an ERISA plan, preemption to Federal Court is improper.
In this case, a provider contacted the Plan to obtain precertification. The Plan advised that the proposed treatment would be covered by the Plan. Between the date of precertification and treatment, however, the patient termed from coverage. The Plan thusly denied coverage for the treatment.
The provider filed claims against the Plan for negligent misrepresentation and estoppel - claims based entirely on State Law. The Plan moved the case to Federal Court, based on ERISA preemption. The district court, applying (it thought) McDonald v. Household Intern, Inc., 425 F.3d 424 (7th Cir. 2005) which states that claims against an ERISA plan by parties assigned rights to file for benefits and regarding denials are Federal questions, was reversed by the Court of Appeals.
This time, the Court of Appeals stated that the provider did not bring a claim against the Plan as a beneficiary, nor did it stand in the shoes of a beneficiary. The Court went on to say that the provider was not arguing over plan terms or seeking to recover plan benefits. Rather, the suit at hand was one strictly relating to the Plan Administrator’s communication shortcomings. Because the claim, and damages, were all couched in State Law, the claim - likewise - should have remained in State Court.
Special thanks to Roy F. Harmon III (http://healthplanlaw.com/?p=678) and the Wisconsin Law Journal (http://wislawjournal.com/article.cfm/2008/08/04/073456-Franciscan-Skemp-Healthcare-Inc-v-Central-States-Joint-Board-Health–Welfare-Trust-Fund)