affirming that detrimental reliance claim was preempted
How later courts described this case
- affirming that detrimental reliance claim was preempted
Written by the judges who cited it.
The opinion
Case: 10-31134 Document: 00511588220 Page: 1 Date Filed: 08/30/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 30, 2011
No. 10-31134
Lyle W. Cayce
Clerk
MICHAEL KING, JR.,
Plaintiff–Appellant
v.
BLUECROSS BLUESHIELD OF ALABAMA; LOUISIANA HEALTH SERVICE
& INDEMNITY COMPANY, also known as BlueCross BlueShield of Louisiana,
Defendants–Appellees
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:10-CV-418
Before KING, DAVIS, and GARZA, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Michael King, Jr. appeals the district court’s summary
judgment for Defendants–Appellees Bluecross Blueshield of Alabama and
Bluecross Blueshield of Louisiana (collectively, “Blue Cross”), as well as the
district court’s denial of his Rule 59 motion for new trial. Substantively, this
appeal asks whether ERISA can preempt state law claims brought by former
employee health benefit plan participants and beneficiaries. Because our
precedents clearly answer that question in the affirmative, we AFFIRM.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
Case: 10-31134 Document: 00511588220 Page: 2 Date Filed: 08/30/2011
No. 10-31134
I
King sued Blue Cross in Louisiana state court for damages related to his
January 2009 hip replacement surgery. King’s complaint alleged that he was
covered under a Blue Cross health insurance policy in effect at the time of the
surgery, and that Blue Cross wrongfully refused to pay his claims in violation
of Louisiana law. See LA. REV. STAT. §§ 22:657, 22:1220. In the alternative,
King also sued for detrimental reliance under La. Civ. Code art. 1967.
Specifically, King’s complaint alleged that he was issued a Blue Cross
policy in 2004 through his wife’s employee health benefit plan, and that this
policy remained “in full force and effect” at all times relevant to this case. King
averred that he never cancelled the policy and that he never received any notice
of a change in coverage. After consulting with his physician, King underwent
hip replacement surgery in January 2009. King’s complaint stated that he had
conferred with Blue Cross representatives by phone and confirmed that his
policy was in effect and would cover the surgery. King’s treating physician, who
performed the operation, similarly verified coverage under the policy. And, in
addition, Baton Rouge General Hospital called Blue Cross on the day King’s
surgery was scheduled to take place, and it too verified that King was insured
for 80% of the costs associated with the procedure. After King’s surgery was
complete, Blue Cross refused to pay his treating physician or Baton Rouge
General Hospital on the ground that King’s policy had been cancelled at some
earlier date not specified in the complaint. King maintained that he would not
have elected to undergo the procedure had it not been for Blue Cross’s oral
representations that his policy was in effect and would cover a portion of the
related costs.
Blue Cross removed the lawsuit to federal district court based on federal
question jurisdiction—the parties agreed that King’s policy was an employee
benefit plan regulated under the Employee Retirement Income Security Act of
2
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No. 10-31134
1974 (“ERISA”), 29 U.S.C. § 1001, et seq. Blue Cross then moved the district
court to dismiss the suit under Fed. R. Civ. P. 12(b)(1), (2), or (6), or in the
alternative, to grant it summary judgment (“the July 1, 2010 motion”). Blue
Cross argued that ERISA preempted King’s wrongful denial of coverage claims
and, with help from a supporting affidavit, Blue Cross established that King had
failed to exhaust his administrative remedies as required by ERISA.1
King did not submit a response to Blue Cross’s July 1, 2010 motion.
On August 11, 2010, the district court granted Blue Cross’s motion, noting
that King had failed to file an opposition within 20 days as required by local
rules. See M.D. La. LR 7.5M. The court alternatively found that Blue Cross’s
motion should be granted as a matter of fact and law, and the court dismissed
King’s suit with prejudice.
Nine days later, King moved for a new trial. See FED. R. CIV. P. 59. In his
Rule 59 motion, King did not challenge Blue Cross’s earlier contention that
ERISA preempted his wrongful denial of coverage claim. Instead, King focused
entirely on the district court’s dismissal of the state detrimental reliance claim.
King abandoned his denial of coverage claim and now agreed with Blue Cross
that he was not covered by the policy when he underwent hip replacement
surgery in January 2009. This waiver was tactical: King argued that because
he was not covered as an employee health benefit plan participant or beneficiary
in late 2008 and January 2009—when Blue Cross’s oral misrepresentations
allegedly occurred—Louisiana law provided an independent cause of action for
detrimental reliance that was not preempted by ERISA. This is because, King
argued, ERISA preemption is explicitly limited to claims brought by qualifying
plan “participants” and “beneficiaries.” See 29 U.S.C. § 1132(a)(1).
1
The Blue Cross policy had an administrative review process that required King to
timely submit his claims and appeals internally before filing any lawsuit. King never filed an
administrative claim or appeal from the denial of his benefits.
3
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No. 10-31134
Blue Cross opposed the Rule 59 motion on several grounds, arguing, in
pertinent part, that King’s state detrimental reliance claim failed because (1) it
“relates to” an employee health benefit plan, and (2) because ERISA precludes
oral modifications to such plans.
The district court denied King’s motion for new trial, summarily finding
that his Louisiana state detrimental reliance claim was preempted by ERISA in
fact and law. This appeal followed.
II
We review a district court’s grant of summary judgment de novo, applying
the same standards as the district court. United States v. Caremark, Inc., 634
F.3d 808, 814 (5th Cir. 2011). A trial judge’s ruling on a Rule 59 motion for new
trial is reviewed for an abuse of discretion. Wallace v. Texas Tech. Univ., 80 F.3d
1042, 1052 (5th Cir. 1996). “This standard of review is somewhat narrower
when a new trial is denied and somewhat broader when a new trial is granted.”
Bailey v. Daniel, 967 F.2d 178, 179–80 (5th Cir. 1992). “We review the district
court’s legal determination that ERISA preempts a state law claim de novo.”
Bank of La. v. Aetna U.S. Healthcare, Inc., 468 F.3d 237, 241 (5th Cir. 2006).
III
The question before us is whether King’s state claim for detrimental
reliance falls outside the scope of ERISA’s preemption clause because King was
not an employee health benefit plan “beneficiary” at the time of the alleged oral
misrepresentations.
“The purpose of ERISA is to provide a uniform regulatory regime over
employee benefit plans.” Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004).
To that end, § 514(a) of ERISA, 29 U.S.C. § 1144(a), states that ERISA “shall
supersede any and all State laws insofar as they may now or hereafter relate to
any employee benefit plan . . . .” The Supreme Court has characterized this
preemption provision as “broadly worded,” “clearly expansive,” and “conspicuous
4
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No. 10-31134
for its breadth,” among other things. See Cal. Div. of Labor Stds. Enforcement
v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 324 (1997) (citations omitted).
And, in keeping with this broad construction, the Court has noted that a state
law “relates to” a covered employee benefit plan for purposes of § 1144(a) “if it
has a connection or reference to the plan.” Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41, 47 (1987).
In light of ERISA’s statutory objectives, we apply a two-prong test to
determine whether any given state law “relates to” an employee health benefit
plan for ERISA-preemption purposes. See Mem’l Hosp. Sys. v. Northbrook Life
Ins. Co., 904 F.2d 236, 245 (5th Cir. 1990). We consider “(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 ERISA entities—the employer, the
plan and its fiduciaries, and the participants and beneficiaries.” Woods v. Tex
Aggregates, L.L.C., 459 F.3d 600, 602 (5th Cir. 2006).
Here, the gravamen of King’s argument is that because he was not an
ERISA-plan “beneficiary” at the time of Blue Cross’s oral misrepresentations, his
state detrimental reliance claim cannot “relate to” an employee health benefit
plan (i.e., the claim could not be preempted by ERISA). This is so, King argues,
because ERISA preemption is explicitly limited to claims brought by qualifying
plan “participants” and “beneficiaries.” See 29 U.S.C. § 1132(a)(1). We have
previously considered and rejected similar arguments by former (and potential)
ERISA-plan participants and beneficiaries. See, e.g., Lee v. E.I. DuPont de
Nemours & Co., 894 F.2d 755 (5th Cir. 1990) (state law claims of former
beneficiaries for misrepresentation of plan benefits were preempted); Cefalu v.
B.F. Goodrich, 871 F.2d 1290, 1294 (5th Cir. 1989) (state law claims of potential
plan participant for misrepresentation of pension benefits were preempted); see
also Hall v. Newmarket Corp., 747 F. Supp. 2d 711, 716–18 (S.D. Miss. 2010)
5
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(surveying district court cases and finding former plan participant’s claims for
promissory estoppel, among other state causes of action, were preempted by
ERISA). The parties are familiar with these cases and we need not discuss them
at length, other than to note that this court has already determined that ERISA
can preempt state claims brought by former plan participants and beneficiaries
where those claims “relate to” a qualifying employee benefit plan. Such is the
case here. For the reasons described in Lee and Cefalu, we find that King’s state
detrimental reliance claim relates to a qualifying employee health benefit plan
and is preempted by ERISA.
King’s reliance on Weaver v. Employers Underwriters, Inc., 13 F.3d 172
(5th Cir. 1994), is understandable, but ultimately mistaken. In Weaver, we
considered an independent contractor’s various claims, grounded in Texas law,
and found that since he was not an employee, he was not a plan participant or
beneficiary; thus, his claims could not be preempted by ERISA. Id. at 176–77.
The distinction drawn in Weaver—between independent contractors and
employees—is subtle, but considerable. Weaver unequivocally sets apart those
cases in which this court has found state law claims from former and potential
plan participants and beneficiaries are preempted by ERISA, from those cases
in which claimants who were never classified (and were incapable of being
classified) as plan participants or beneficiaries were able to assert similar claims
unencumbered by ERISA’s preemption provision. Here, there is no question that
King was a plan beneficiary at one time. Accordingly, this case is governed by
Lee, not Weaver.
It is quite likely that even if King had filed a timely administrative claim
or appeal based on Blue Cross’s oral representations, any such claim would have
been denied outright. This is because ERISA requires that “[e]very employee
benefit plan shall be established and maintained pursuant to a written
instrument.” 29 U.S.C. § 1102(a)(1); see also Degan v. Ford Motor Co., 869 F.2d
6
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889, 895 (5th Cir. 1989) (“ERISA precludes oral modifications to benefit plans
. . . .”). This court has observed that ERISA’s writing requirement “protects [a]
plan’s actuarial soundness by preventing plan administrators from contracting
to pay benefits to persons not entitled to such under the express terms of the
plan.” Cefalu, 871 F.2d at 1296 (citations omitted). We reiterated this principle
in Rodrigue v. W. & S. Life Ins. Co., 948 F.2d 969 (5th Cir. 1991), on facts
strikingly similar to this case.
In Rodrigue, the district court granted summary judgment for the
employee health benefit plan after finding that the plaintiff’s state law claims
were preempted by ERISA. 948 F.2d at 970. We affirmed. In doing so we
observed that holding an employee benefit plan liable for claims by individuals
who were not otherwise entitled to benefits, based solely on an oral agreement,
would threaten the stability of the plan. Id. at 971–72. Here, it is likely that
even if King had filed a timely administrative claim under ERISA seeking
redress for Blue Cross’s oral misrepresentations, that claim would have been
denied outright. But that lack of a remedy does not take King’s state claim
outside the scope of ERISA’s preemption clause. Instead, Rodrigue, Cefalu, and
Degan underscore why ERISA preemption applies here—allowing King’s state
claims to go forward could undermine the stability of the employee benefit plan
at issue and encroach upon the plan fiduciaries’ management of plan assets.
IV
The district court’s summary judgment for Blue Cross, and the court’s
denial of King’s motion for new trial, are AFFIRMED.
7