Opposition Brief — Pilot Life Ins. Co. v. Dedeaux

Supreme Court, US.

No. 85-1043 JAN 14 1986

22 IR.

| JOSEPH Des

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

PILOT LIFE INSURANCE Co.,

Petitioner,

V.

EVERATE W. DEDEAUX,

Respondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit

RESPONDENT’S BRIEF IN OPPOSITION

WILLIAM L. DENTON

(Counsel of Record)

WILLIAM C. WALKER, JR.

RONALD S. COCHRAN

DENTON, PERSONS, DORNAN

& BILBO

P. O. Box 1204

Biloxi, MS 39533

(601) 374-8722

Attorneys for Respondent

WILSON - Eras Printing Co... Inc. - 789-0096 - WasnincTon, D.C. 20001

QUESTION PRESENTED

Whether the Employee Retirement Income Security

Act preempts state common-law claims against an in-

surer for failure to pay insurance benefits to a bene-

ficiary of an insured plan?

(i)

TABLE OF CONTENTS

Page

ee i

eg iii

STATEMENT OF THE CASE ....................................... 1

REASONS WHY THE WRIT SHOULD BE DENIED. 3

r è 1... 5

TABLE OF AUTHORITIES

CASES

Dedeauz v. Pilot Life Insurance Co., 770 F. 2d 1311

e Taitncdlanicenninseccsctvevenneseesnscceesenes-~- 2, 3

Eversole v. Metropolitan Life Insurance Co., 500

F.Supp. 1262 (C.D. Cal. 1980) 5

Massachusetts Mutual Life Insurance Co. v. Rus-

Vw ee 4

Metropolitan Life Insurance Co. v. Massachusetts,

eee 2, 3-4, 5

Russell v. Massachusetts Mutual Life Insurance

Co., 722 F.2d 482 (9th Cir. 1983), rev’d, 105

r . 4

STATUTES

Employee Retirement Income Security Act of 1974

(“ERISA”), § 514(a), 29 U.S.C. § 1144 (a) 4

ERISA § 514(b) (2) (A), 29 U.S.C. § 1144(b) (2)

; a — 4,5

ERISA § 514(c) (1), 29 U.S.C. § 1144 (c) (1) ........ 5

5

McCarran-Ferguson Act, 15 U.S.C. §§ 1011 et seq...

(iii)

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-1043

PILOT LIFE INSURANCE Co.,

Petitioner,

V.

EVERATE W. DEDEAUX,

Respondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit

RESPONDENT’S BRIEF IN OPPOSITION

Respondent, Everate W. Dedeaux, respectfully requests

that this Court deny the petition for the writ of cer-

tiorari seeking review of the decision of the Court of

Appeals for the Fifth Circuit to reverse and remand this

case. The opinion is reported at 770 F.2d 1311. .

STATEMENT OF THE CASE

Pilot Life Insurance Company (“Pilot”) issued a

group insurance policy to Entex, Inc. (“Entex”) to in-

sure a long-term disability benefits plan provided by

Entex to its employees. Respondent was an employee of

Entex on March 26, 1975, when he injured his back.

2

Respondent filed a claim with Pilot for long-term dis-

ability benefits, which were paid for two years. Pilot

then refused to pay further disability benefits until em-

ployees of both Entex and Pilot urged it to do so. A

short time later, however, Pilot again attempted to ter-

minate Respondent’s benefits which were reinstated only

after Respondent hired an attorney and after Pilot’s

in-house legal counsel informed Pilot that, based on

Mississippi law, the termination of benefits could not be

defended. Pilot, nevertheless, continued its attempts to

terminate Respondent’s long-term disability benefits and

finally did so in 1980 in spite of an independent medical

examination confirming continued total disability at the

time.

On May 30, 1980, Respondent filed a Complaint de-

manding, in pertinent part, actual and punitive dam-

ages for Pilot's wrongful refusal to pay the long-term

disability benefits. Subsequently, on April 19, 1983, Pilot

filed a motion for summary judgment, asserting that the

Employee Retirement Income Security Act (“ERISA’’)

preempted Respondent’s state law claims. The motion

was overruled pursuant to a memorandum opinion signed

by the Court on September 29, 1983. Pilot then filed a

motion to reconsider this adverse ruling, asserting the

same grounds as previously presented. By opinion dated

March 19, 1984, the trial court sustained Pilot’s motion

for reconsideration and granted summary judgment in

its favor.

On appeal, the Fifth Circuit reversed the District

Court ruling on the authority of Metropolitan Life In-

surance Co. v. Massachusetts; —— U.S. , 105 S. Ct.

2380, 85 L.Ed.2d 728 (1985), decided after the decision

of the District Court.” Dedeaux v. Pilot Life Insurance

Co., 770 F.2d 1311, 1312 (5th Cir. 1985). The Fifth

Circuit noted that the insurer in the Metropolitan Life

case raised the same arguments Pilot raised in the Fifth

Circuit. It concluded that the Supreme Court’s unani-

3

mous rejection of those arguments clearly and unequivo-

cally repudiated the same arguments Pilot raised on

appeal.“ Having concluded that Pilot’s first four argu-

ments for preemption had been decided against it in

Metropolitan Life, the Fifth Circuit rejected Pilot’s ar-

gument that Congress could not have intended to permit

states to do the same thing as it did in ERISA with

the epithet “ipsi dixit.“ Dedeaux, 770 F.2d at 1316.

The Fifth Circuit concluded that the proper analysis of

whether a particular law is saved from preemption “ends

once it is determined that a law falls within the saving

clause and is not exempt by the narrow deemer clause.”

Id., citing Metropolitan Life, 105 S. Ct. at 2393. The

Fifth Circuit was, thus, left with the unavoidable con-

clusion that Respondent’s common-law causes of action

for Pilot’s failure to pay disability benefits were not

preempted.

REASONS WHY THE WRIT SHOULD BE DENIED

Since the decision of the Fifth Circuit Court of Ap-

peals correctly followed this Court’s decision in Metro-

politan Life, and since this Court settled the question of

preemption in that decision, the writ should be denied.

Both Petitioner and amici argue that important con-

gressional policy will be thwarted by the Fifth Circuit

decision. In doing so, both ignore the careful considera-

tion of congressional policy given by this Court in the

Metropolitan Life decision. In short, both re-argue what

this Court has already clearly decided:

If a state law “regulates insurance,” . . it is not

preempted. Nothing in the language, structure, or

1 Pilot argued that national uniformity would be destroyed, that

common-law causes of action could not be laws which regulate

insurance, that a distinction between plans that are self-insured

and those that are insurance-funded would be indefensible, and that

only traditional insurance laws were saved from preemption.

Dedeauz, 770 F.2d at 1314.

4

legislative history of the Act supports a more narrow

reading? of the clause, whether it be the Supreme

Judicial Court’s attempt to save only state regula-

tions unrelated to the substantive provisions of

ERISA, or the insurers’ more speculative attempt to

read the saving clause out of the statute.

We are aware that our decision results in a dis-

tinction between insured and uninsured plans, leav-

ing the former open to indirect regulation while the

latter are not. By so doing we merely give life to a

distinction created by Congress in the “deemer

clause,” a distinction Congress is aware of and one

it has chosen not to alter. We also are aware that

appellants’ construction of the statute would elimi-

nate some of the disuniformities currently facing

national plans that enter into local markets to pur-

chase insurance. Such disuniformities, however, are

the inevitable result of the congressional decision to

“save” local insurance regulation. Arguments as to

the wisdom of these policy choices must be directed

at Congress.

Metropolitan Life, 105 S. Ct. at 2393 (footnote omitted).

The disingenuous argument made by amici that a

conflict in “approaches” must be resolved by this Court

ignores the factual distinction between insured and self-

insured plans giving rise to the so-called difference in

approaches.“

2 Elsewhere in the opinion, this Court observed that the pre-

emption language of §514(a) of ERISA is “substantially quali-

fied” by a “broad” and explicit“ limitation in § 514(b) (2) (A).

Metropolitan Life, 105 S. Ct. at 2385-86, 2389.

The centerpiece of the briefs filed in support of the petition is

Massachusetts Mutual Life Insurance Co. v. Russell, 105 S. Ct.

3085 (1985). It is used by both the Petitioner and amici to manu-

facture a non-existent conflict of “approaches” between circuits.

Russell, however, presents an entirely different factual background,

as was recognized by the Ninth Circuit at the outset of its opinion:

“Neither plan [in Russell] involves an insurance policy.” Russell

v. Massachusetts Mutual Life Insurance Co., 722 F.2d 482, 486

(9th Cir. 1983), rev’d, 105 S. Ct. 3085 (1985).

5

The arguments concerning the effect of the McCarran-

Ferguson Act, 15 U.S.C. $§ 1011 et seg., made by both

Petitioner and amici also ignore this Court’s decision in

Metropolitan Life. Perhaps more importantly, those ar-

guments ignore § 514(c) (1) as well.“ That section makes

clear that the laws that are saved by § 514(b) (2) (A)

include state decisional law.“ Thus, Respondent’s com-

mon-law claims for relief based on a breach of duty of

an insurer to its beneficiary clearly are covered both by

the McCarran-Ferguson Act and by the very explicit

ERISA saving clause.

The Fifth Circuit correctly followed this Court’s de-

cision in Metropolitan Life in holding that Respondent’s

state law claims against an insurance company for fail-

ure to pay benefits were not preempted since the plan in

question was insured.

CONCLUSION

For these reasons, the petition for writ of certiorari

should be denied.

Respectfully submitted,

WILLIAM L. DENTON

(Counsel of Record)

WILLIAM C. WALKER, JR.

RONALD S. COCHRAN

DENTON, PERSONS, DORNAN

& BILBO

P. O. Box 1204

Biloxi, MS 39533

(601) 374-8722

Attorneys for Respondent

4 Amici does mention that section in footnote 14 but fails to

quote it in its appendix of relevant statutory provisions.

5 For a thorough discussion, see Eversole v. Metropolitan Life

Insurance Co., 500 F.Supp. 1162, 1168 (C.D. Cal. 1980), a case with

which this Court is familiar, Metropolitan Life, 105 S. Ct. at 2390

n.18, but which is wholly ignored by Petitioner and only noted by

am ci.