Amicus Curiae Brief — Aetna Health Inc. v. Davila

JAN 22 2004}

OFFICE OF THE CLERK

| ——

Nos. 02-1845, 03-83

In the

Supreme Court of the United States

AETNA HEALTH INC. et al.,

Petitioners,

v.

JUAN DAVILA,

Respondent.

CIGNA HEALTHCARE OF TEXAS, ‘

Petitioner,

v.

RUBY R. CALAD,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit

BRIEF OF AMICI CURIAE

AMERICAN MEDICAL ASSOCIATION,

TEXAS MEDICAL ASSOCIATION AND

AMERICAN PSYCHIATRIC ASSOCIATION

IN SUPPORT OF RESPONDENTS

JON N. EKDAHL

LEONARD A. NELSON

GARY W. HOWELL

Counsel of Record

AMERICAN MEDICAL THOMAS CAMPBELL

ASSOCIATION CARRIE E. KIENSTRA

515 North State Street PETER C. KOCH

Chicago, Illinois 60610 GARDNER CARTON

(312) 464-5000 & DOUGLAS LLP

DONALD P. WILCOX eter Naa Drive

TEXAS MEDICAL oa

ASSOCIATION Chicago, Illinois 60606-1698

401 West 15th Street

Austin, Texas 78701

(512) 370-1336

(312) 569-1000

Attorneys for Amici Curiae

Midwest Law Printing Company /Photex — Chicago — (312) 321-0220

i

TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES ....................... il

INTEREST OF AMICI CURIAE ................445- 1

SUMMARY OF ARGUMENT ..................... 2

ET «60 cae dete e eke neds abeeteseniecss 6

I. Calad’s and Davila’s Claims under State

Law Are Not Claims for ERISA Plan

a Dal SE RT a ak ate Taare, 6

Il. The Court’s Previous ERISA Complete

Preemption Decisions Do Not Address

Claims Like Calad’s and Davila’s,

Which Seek Neither Benefits under an

ERISA Plan Nor Enforcement of a Sub-

stantive Provision of ERISA. .......... 12

III. This Court’s LMRA § 301 Complete Pre-

emption Jurisprudence Recognizes Lim-

its on Preemption and Provides a Re-

lated Body of Precedent, Applicable to

the Cases Before the Court. ........... 21

SPEED Co cedecoeadcccuceeceenseesesenns 30

ii

TABLE OF AUTHORITIES

Cases: PAGE(S)

Allis-Chalmers Corp. v. Lueck,

473 U.S. SEB CHRD occ vaccccseueueneeeee 22, 24

Avco Corp. v. Aero Lodge No. 735,

S00 U.S. GBT CRBGED oo v0 cccescsenneeenee 21, 23

Caterpillar Inc. v. Williams,

GBB US. SEB CRBSEP oc ccceesecseseeneee 24-26

Crosby v. Nat'l Foreign Trade Council,

GSO UD. SER Gee ooo ccceccesesss ee 22

Danca v. Private Health Care Sys., Inc.,

i Pe Ot) ft Se ee 30

Dukes v. U.S. Healthcare, Inc.,

yar ft [ ft 3 | ere i)

English v. General Elec. Co.,

436 US. TB CRGRRD oo ccccccesscccodusseeuneeal 28

Franchise Tax Bd. of Cal. v. Construction

Laborers Vacation Trust for S. Cal.,

G68 UD. 1 (RGD occ ccccsevenseveseenuaie passim

Hillsborough County v. Automated Med.

Labe., $71 US. TSF (BGS) oo oe ccccecvceeeuceseen 28

Hines v. Davidowitz,

$38 U.S. GRCIOGE oo. cccecccecceseensesieee 22

Hull v. Fallon,

188 F.3d 930 (Oth Cir. 1000) .. 0. wc cccccccccccce 30

iil

In re U.S. Healthcare, Inc.,

193 F.3d 151 (3d Cir. 1999)... 0... wc ccc eee ees 30

Ingersoll-Rand Co. v. McClendon,

i eed ence a seeseceees passim

International Bhd. of Elec.

Workers, AFL-CIO, et al. v. Hechler,

EE 22

Lingle v. Norge Div. of Magic Chef, Inc.,

486 U.S. 399 (1988) .............0eeeee 17, 24, 27

Livadas v. Bradshaw,

ee ee eees 24-25

Local 174, Teamsters v. Lucas Flour Ca.,

Nees cc eecoees 23

Maurer v. Hamilton,

ee eee ee in eee ees beses 28

Metropolitan Life Ins. Co. v. Taylor,

i eek eek eee ee séscccccees passim

N.Y. State Conf. of Blue Cross &

Blue Shield Plans v. Travelers Ins. Co.,

EE 9, 29

Northwestern Ohio Adm’rs, Inc.

v. Walcher & Fox, Inc..,

Se We Bene Cote Cle. BOG1) ... cc cccccccccces 25

Pegram v. Herdrich,

ieee eee edeaneectseeces 29

iv

Pennsylvania Nurses Assoc. v. -

Pennsylvania State Education Assoc.,

Se a EE ED oo co cacaceeecneeseeuns 25

Pilot Life Ins. Co. v. Dedeaux, .

Gee OEE Gc0cbséoevoocovecessece passim

Roark v. Humana, Inc.,

307 F.3d 298 (5th Cir. 2002) .................... 7

Rush Prudential HMO, Inc. v. Moran,

536 U.S. 355 (2002)-............. ce eeeee 12, 18-20

Sprewell v. Golden State Warriors,

266 F.3d 979 (9th Cir. 2001) .................4.. 25

Textile Workers Union of Am. v.

Lincoln Mills of Ala.,

i -« cece cue gaeeedenseedee 23

Thompson v. GenCare Health Sys., Inc.,

49 F. Supp. 2d 1145

(E.D. Mo. 1999), aff'd,

202 F.3d 1072 (Sth Cir. 2000) ... 0... cece ec ceeces 9

Trans Penn Wax Corp. v. McCandless,

50 F.3d 217 (3d Cir. 1906) .... 2... cece ec eecnees 25

U.A.W. v. Russell,

Se ED acoceccecscondesdceteedes 23

United Steelworkers of Am.,

AFL-CIO v. Rawson,

Ge SEED.» cctccennsekensuseaueweans 23

Statutes:

28 U.S.C. § 1441(b)

Pe PL. coeutcucdonsdsousuecuet passim

POTD. ccncecsacdueddvsuesines passim

Tex. Civ. Prac. & Rem. Code § 88.001

Ge 66 6 eb dndeedeceesseds passim

Other Authorities:

K. Jordan, The Complete Preemption Dilemma:

A Legal Process Perspective, 31 Wake Forest

SS . aa Tere err 22

R.G. Roetzheim et al., Effects of Health

Insurance and Race on Colorectal

Cancer Treatment and Outcomes,

90 Am. J. Pub. Health 1746 (2000) .............. 11

M.K. Wynia et al., Do Physicians Not

Offer Useful Services Because of

Coverage Restrictions?, Health Affairs,

Se EE ED ednecendandeccees cones 11

Insuring America’s Health: Principles and

Recommendations, report, available at,

http:/ /www.icom.edu/report .............. 11-12

1

INTEREST OF AMICI CURIAE

With the consent of the parties, reflected in letters on

file with the Clerk of the Court, the American Medical

Association (“AMA”), Texas Medical Association (“TMA”)

and American Psychiatric Association (“APA”) submit this

brief as amici curiae in support of Respondents, Calad and

Davila, pursuant to Rule 37 of this Court.’

The AMA, the largest nonprofit association of physicians

and medical students in the United States, was founded

in 1847 to promote the science and art of medicine and

the betterment of public health. These remain its pur-

poses today. It sponsors a vast array of educational, scien-

tific, and public health programs. The AMA engages in

advocacy on behalf of physicians and the patients they

serve, including efforts to bring quality to managed care.

The TMA is a private, voluntary, nonprofit association of

Texas physicians and medical students. The TMA was

founded in 1853 to serve the people of Texas in matters

of medical care, prevention and cure of disease, and im-

provement of public health. Today, its maxim continues

in the same direction: “Physicians Caring for Texans.” Its

more than 39,000 members practice in all fields of med-

ical specialization.

The APA, with more than 40,000 members, is the nation’s

leading organization of physicians specializing in psychia-

try. The APA has participated as amicus in many cases

in this Court, including prior ERISA cases.

' Pursuant to Rule 37.6 of the Rules of this Court, amici state

that no counsel for a party authored this brief in whole or in part,

and that no person or entity other than amici and their counsel

made any monetary contribution to the preparation or submission

of this brief. Pursuant to Rule 37.3 of the Rules of this Court, the

parties have consented to the filing of this brief, and the consent

letters have been filed with the Clerk of the Court.

2

In the present cases, amici are concerned that the re-

sult sought by Petitioner HMOs would insulate HMOs

who make medical treatment decisions for patients who

are participants and beneficiaries in ERISA group health

plans from accountability for those decisions. Without

such accountability, those patients will be more at risk

of treatment decisions made for reasons other than what

is best for the patient, and the quality of their medical

care will be lessened.

This result can be avoided by focusing on the nature of

Calad’s and Davila’s claims. Unlike the claims at issue

in this Court’s prior complete preemption decisions, Calad

and Davila do not seek payment or reimbursement from

an ERISA plan. Rather, they are patients suing HMOs

who made medical treatment decisions; they allege that

these treatment decisions caused them injury. This Court

has never had to consider whether ERISA complete pre-

emption would extend to such a suit. As amici will demon-

strate, reference to this Court’s complete preemption

decisions under the Labor Management Relations Act

(“LMRA”) provides a means to resolve these issues. This

resolution supports the result reached by the Court of

Appeals for the Fifth Circuit and is consistent with the

Court’s prior complete preemption holdings under ERISA

and the LMRA.

SUMMARY OF ARGUMENT

Respondents Calad and Davila were participants in

group health plans sponsored by their respective em-

ployers. Each employer’s plan was an “employee welfare

benefit plan” subject to the Employee Retirement Income

Security Act of 1974 (an “ERISA plan”). Each employer en-

tered into a contract with a health maintenance organ-

ization (“HMO”) to utilize a package of the HMO’s services

to provide benefits to the plan’s participants.

3

Petitioners are the HMOs utilized by the ERISA plans

to make medical benefits available to their participants

and beneficiaries. Calad and Davila each sought diagno-

sis or treatment for a medical condition and, doing so,

became a patient. The treating physician for each patient

determined a course of treatment that was appropriate

for the patient (extended hospitalization for Calad and a

particular drug for Davila). Each HMO made a med-

ical decision not to provide the treatment recommended

by the treating physician, so each patient had a different

course of treatment than prescribed by the treating physi-

cian (discharge for Calad and a different drug for Davila).

Each patient alleged that his or her medical condition

worsened because of the HMO’s treatment decision.

Calad and Davila filed suit in State court against their

respective HMOs, invoking the Texas Health Care Liabil-

ity Act (“THCLA”), which provides that “[a] health insur-

ance carrier, health maintenance organization, or other

managed care entity for a health care plan has the duty

to exercise ordinary care when making health care treat-

ment decisions and is liable for damages for harm to an

insured or enrollee proximately caused by its failure to

exercise such ordinary care.” Their suits were removed to

Federal court, but remanded by the Fifth Circuit.

The HMOs ask this Court to reverse the Fifth Circuit’s

holding that these suits may proceed in State court. The

HMOs argue that these patients’ claims are barred by

the “complete preemption” exception to the “well-pleaded

complaint doctrine,” which this Court has recognized un-

der the Employee Retirement Income Security Act of 1974

(“ERISA”). The HMOs are not seeking mere application

of the Court’s prior ERISA complete preemption holdings.

They seek to extend those holdings to deny any patient

who is a participant in an ERISA plan the right to hold an

HMO accountable for a treatment decision. The result that

4

the HMOs seek is beyond the scope of the complete preemp-

tion doctrine.

Amici support the holding of the Fifth Circuit and urge

the Court to affirm it. They believe that expansion of

ERISA preemption as advocated by the HMOs is incon-

sistent with the Court’s preemption jurisprudence and

would have the effect of depriving patients who are also

ERISA plan participants of State law protections, solely

because they are ERISA plan participants.

The nature of Calad’s and Davila’s claims is critical to

analysis of the complete preemption issue. Once a person

seeks medical diagnosis or treatment, that person is a

patient. As a patient, that person is entitled to State law

rights and protections available to patients.

The HMOs try to characterize Calad’s and Davila’s

claims as ordinary “claims for plan benefits.” They refuse

to acknowledge the fundamental difference of these

claims from those held subject to ERISA complete preemp-

tion in prior decisions of this Court. The HMOs deny

Calad’s and Davila’s rights as patients, as if ERISA par-

ticipant status strips them of those rights. Calad and Davila

did not seek anything from an ERISA plan that could

be provided under ERISA’s remedial scheme. They were

injured patients, alleging that the HMOs made treatment

decisions that violated Texas law standards for such

decisions. This has nothing to do with any payment or

reimbursement from an ERISA plan, or relief available

under ERJSA’s remedial scheme.

Prior holdings of this Court dealing with ERISA com-

plete preemption do not address claims involving medical

treatment decisions. Instead, those cases involved State law

suits alleging improper processing of disability benefit

claims, or a wrongful discharge claim based on termination

to avoid paying pension benefits. They involved claims

based on participant status. Here, the HMOs’ decisions

5

affected Calad and Davila as patients: Calad was discharged

from the hospital; Davila received a different drug than his

doctor prescribed.

This Court has repeatedly cautioned against expansive

Federal preemption of State law. In recent terms, the

Court has, in the context of ERISA’s statutory preemp-

tion provision, discussed a presumption against preemp-

tion of the State’s exercise of its “traditional police pow-

ers” and appeared skeptical of Congressional intent to

federalize medical negligence law through ERISA. The

bounds of ERISA complete preemption doctrine can best

be determined by referring to cases construing the

bounds of that doctrine vis-a-vis the LMRA, an act whose

preemptive effect has served as the “model” for the Court’s

ERISA preemption analysis.

LMRA complete preemption jurisprudence has always

recognized limits on such preemption. Under LMRA § 301,

State law claims that are founded on rights or duties

established by a collective bargaining agreement, or that

substantially depend on the interpretation or analysis

of that agreement, are preempted. However, State law

claims are not preempted if the rights protected by the

State law exist independently of the labor agreement,

and the State law claim can be resolved without interpret-

ing the labor agreement.

Applying these principles here, the complete preemp-

tion rule established by the Court’s prior decisions should

be clarified so that State law claims are not preempted if a

State law claim: (1) does not seek to recover benefits,

enforce rights or clarify rights to future benefits under the

terms of an ERISA plan, or to enforce any substantive

provision of ERISA; and (2) is independent of and can be

adjudicated without analysis or interpretation of the

ERISA plan. Applied to the present cases, the rule Amici

suggest would confirm that the remand of Calad’s and

Davila’s suits to State court was appropriate.

6

This result is appropriate and correct because it pro-

vides a symmetrical application of the complete preemp-

tion exception under ERISA and the LMRA, honors the

Court’s traditional restraint in the preemption of State

police powers, and provides a clear rule for application

by the lower Federal courts. It does not preclude any

arguments that the State law is preempted under ERISA

§ 514, as these may be raised, along with any other de-

fenses, on remand.

ARGUMENT

I. Calad’s and Davila’s Claims under State Law

Are Not Claims for ERISA Plan Benefits.

Respondent Ruby Calad, the spouse of an employee of

The Ryland Group-Ryland Homes, was covered under a

group health plan established and maintained by Ryland.

Calad Compl. 4 17. Respondent Juan Davila, an employee

of Monitronics, was covered under a group health plan

established and maintained by Monitronics. Davila Compl.

q 11.

Under the Employee Retirement Income Security Act

of 1974 (“ERISA”), 29 U.S.C. § 1001 et seg., each Respon-

dent’s employer’s group health plan is an “employee wel-

fare benefit plan” subject to ERISA (an “ERISA plan”). 29

U.S.C. §§ 1002(1), 1003(a). Respondent Calad is a “benefi-

ciary” under ERISA and Respondent Davila is a “partici-

pant.” Calad’s employer utilized an HMO arrangement

offered by Cigna to provide medical benefits to partici-

pants and beneficiaries of its ERISA plan, and Davila’s

2 29 U.S.C. §§ 1002(8), 1002(7). There is no difference between

the terms “participant” and “beneficiary” for purposes of this

analysis, so Calad and Davila are both described hereinafter as

“participants” in their respective ERISA plans.

7

employer utilized an HMO arrangement offered by Aetna »

for the same purpose.

In 1999, Calad had a hysterectomy with rectal, bladder,

and vaginal repair. Although the physician performing the

surgery recommended a longer stay, Cigna’s hospital

discharge nurse decided that a one-day hospital stay

was sufficient. Calad suffered complications that she at-

tributes to her early release, received emergency room

care and continued to suffer from these complications.

Roark v. Humana, Inc., 307 F.3d 298, 302 (5th Cir. 2002)

(“Roark”); Calad Compl. ¥{ 3-4.

Davila is a post-polio patient who suffers from diabetes

and arthritis. In 2000, his primary care physician pre-

scribed Vioxx for Davila’s arthritis pain. Aetna required

Davila to try two alternative drugs it considered appro-

priate for pain; only if he suffered a detrimental reaction to

the medications or failed to improve could he obtain Vioxx.

The first drug prescribed by Aetna was Naprosyn. After

three weeks on it, Davila was rushed to the emergency

room suffering from bleeding ulcers, which caused a

near heart attack. He received seven units of biood and

was in critical care for five days. As a result, he cannot

take any pain medication that would be absorbed

through the stomach. Roark, 307 F.3d at 303. Davila

Compl. {J 12-15.

Each Respondent sued the respective HMO under the

Texas Health Care Liability Act (“THCLA”), Tex. Civ. Prac.

& Rem. Code § 88.001 et seq. (Vernon’s 2003). The THCLA

provides that “[a] health insurance carrier, health mainte-

nance organization, or other managed care entity for a

health care plan has the duty to exercise ordinary care

when making health care treatment decisions and is

liable for damages for harm to an insured or enrollee

proximately caused by its failure to exercise such ordinary

care.” Tex. Civ. Prac. & Rem. Code § 88.002(a). “Health care

8

treatment decision” is defined as “a determination made

when medical services are actually provided by the

health care plan and a decision which affects the quality

of the diagnosis, care, or treatment provided to the plan’s

insureds or enrollees.” Tex. Civ. Prac. & Rem. Code

§ 88.001(5). “Ordinary care” is defined as “that degree of

care that a health insurance carrier, health maintenance

organization, or managed care entity of ordinary pru-

dence would use under the same or similar circumstances

{and in] the case of a person who is an employee, agent,

ostensible agent, or representative of a health insurance

carrier, health maintenance organization, or managed

care entity, ‘ordinary care’ means that degree of care that

a person of ordinary prudence in the same profession,

specialty, or area of practice as such person would use

in the same or similar circumstances.” Tex. Civ. Prac. &

Rem. Code § 88.001(10).

Calad’s suit alleged that Cigna had provided medical

services to her and, in doing so, violated the THCLA.

Davila’s suit alleged that Aetna influenced, controlled,

participated in or made health care treatment decisions

and, in doing so, violated the THCLA. Each sought relief

for lost earnings, pecuniary loss, physical pain and men-

tal anguish, and specifically disclaimed “reimbursement

for treatment, medical procedures, or hospitalization”

and “recoverly] for denial of any benefits.” Calad Compl.

{7 29, 33-34; Davila Compl. 74 17-24. When the HMOs

removed the cases to Federal court, they were only at

the pleading stage, so no facts have been adduced.

At the time they sought medical diagnosis or care, Calad

and Davila were participants in ERISA plans. Completely

independent of ERISA, though, when a participant seeks

and receives medical diagnosis or care, that person has

another status: that of a patient. As a patient, a person has

relationships with those who provide medical care or

9

diagnosis. The patient is protected in these relation-

ships. Sources of this protection include self-regulation by

professional associations such as amici, and the account-

ability under State law of those who provide medical care

or diagnosis.

When a participant becomes a patient, ERISA continues

to regulate the “participant” relationship, but the new

“patient” relationship is regulated from other sources.

ERISA does not protect patients from negligent diagnosis

or treatment,’ but nothing in ERISA or its legislative

history suggests that participants who become patients

are not to be protected from negligent diagnosis or treat-

ment.

[Njothing in the language of [ERISA] or the context

of its passage indicates that Congress chose to dis-

place general health care regulation, which historically

has been a matter of local concern... .

N.Y. State Conf. of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 661 (1995) (citations omit-

ted) (“Travelers”).

We find_nothing in the legislative history suggesting

that [ERISA] § 502 was intended as a part of a fed-

eral scheme to control vhe quality of the benefits

received by plan participants.

Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 357 (3rd Cir.

1995).

The rights of patients under State law are separate and

distinct from the rights of ERISA plan participants un-

der ERISA. The THCLA is a statute that regulates the

relationship between patients and those who make health

care treatment decisions for them.

= Thompson v. GenCare Health Sys., Inc., 49 F. Supp. 24 1145,

1147 (E.D. Mo. 1999), aff'd, 202 F.3d 1072 (8th Cir. 2000).

10

Calad’s treating physician prescribed a course of treat-

ment that included more time in the hospital. Cigna

determined that Calad was not hemorrhaging or exhibit-

ing a fever or high blood pressure and would have to leave

the hospital or pay approximately $1,500 per day to stay. As

a result, Calad’s course of treatment changed: she was

discharged from the hospital.

Davila’s treating physician prescribed a course of treat-

ment that included the drug Vioxx. A formulary prepared

by Aetna required Davila to try two other drugs in a “step

program” before he could receive Vioxx, unless he could

demonstrate “contraindication, intolerance, [or] allergy” to

the other drugs. Out of fifteen possible pain-relieving drugs

in its formulary, Davila received a prescription for

Naprosyn. Davila Compl. 74 13-15; Aetna Br. at 9.

As a result, Davila’s course of treatment changed: he

received a prescription for Naprosyn instead of Vioxx.

The actions of each HMO satisfy the THCLA’s definition

of a “health care treatment decision,” that is, “a determina-

tion made when medical services are actually provided

by the health care plan and a decision which affects the

quality of the diagnosis, care, or treatment provided to

the plan’s insureds or enrollees.” Tex. Civ. Prac. & Rem.

Code § 88.002(a)(5). Calad and Davila each allege serious

medical consequences as a result of the HMO health care

treatment decisions.

Against common sense and the plain allegations in the

_ Complaints, the HMOs disingenuously argue that they

do not make health care treatment decisions. Aetna Br. at

6-7, 14-15, 26-27; Cigna Br. at 37. But there can be no

question that each HMO made a decision involving discre-

tionary consideration of medical factors which affected

the quality of care or treatment received by Calad and

Davila. Cigna’s nurse (or someone who instructed the

nurse) had to determine that Calad was not hemorrhaging,

11

feverish or exhibiting high blood pressure and that the

absence of such symptoms justified denial of continued

hospitalization. Someone at Aetna had to determine that

Davila should take Naprosyn, out of fifteen permitted

drugs, for his pain.* These decisions are “health care

treatment decisions” within the THCLA definition and

within any plain-meaning sense of those words.”

* While Cigna and Aetna claim that they are not engaged in

making medical decisions, each of these companies employ

physicians and nurses as medical directors and engage in

extensive “utilization review.” On its web site at http://

www.cigna.com/general/careers/featured (visited Jan. 20, 2004),

Cigna provides the following job description for the position of

a nurse to act as a Case Manager: “As a case manager with

CIGNA HealthCare, you'll apply your professional skills and

expertise in the assessment, planning, implementation, and

coordination of necessary health care services for selected CIGNA

members.” At that same site, Cigna describes its nurse Patient

Care Coordinator position as follows: “[YJou’ll conduct daily

concurrent reviews for all assigned admissions and participate

in the care, treatment and discharge planning for members in

an inpatient setting.” (Emphasis added).

® The HMOs callously suggest that if they deny care, the patient

should simply pay for it out-of-pocket and then seek reimburse-

ment. As a practical matter, most people do not have the financial

resources to do this; they go without care and suffer the conse-

quences. This is well documented. See, e.g., M.K. Wynia et al., Do

Physicians Not Offer Useful Services Because of Coverage Restric-

tions?, Health Affairs, Jul.-Aug. 2003, at 190 (almost one in three

physicians surveyed reported not offering useful but uncovered

services to their patients, and the trend seems to be growing);

R.G. Roetzheim et al., Effects of Health Insurance and Race on

Colorectal Cancer Treatments and Outcomes, 90 Am. J. Pub.

Health 1746 (2000) (patients with colorectal cancer who were

uninsured or insured by Medicaid or commercial HMOs had

higher mortality rates than patients with commercial fee-for-

service insurance); Insuring America’s Health: Principles and

(continued...)

12

Calad’s and Davila’s Complaints each set out all neces-

sary elements of a claim against an HMO under the

THCLA. They allege, particularly in Davila’s claim against

Aetna, that the HMO affirmatively provided medical care

and was not a passive administrator. Nothing in either

Complaint seeks to recover benefits due under the terms

of the ERISA plan, to enforce rights under the terms of

the ERISA plan, or to clarify rights to future benefits

under the terms of the ERISA plan. Nothing in either

Complaint seeks to enforce any substantive provision of

ERISA. Their claims are the claims of injured patients

seeking accountability for health care treatment decisions,

not the claims of plan participants seeking remedies

under ERISA. Such claims are not subject to ERISA

complete preemption under this Court’s prior holdings.

Il. The Court’s Previous ERISA Complete Preemp-

tion Decisions Do Not Address Claims Like

Calad’s and Davila’s, Which Seek Neither Bene-

fits under an ERISA Plan nor Enforcement of a

Substantive Provision of ERISA.

The Court has dealt with the “complete preemption”

exception under ERISA to the well-pleaded complaint

doctrine in five cases. In Franchise Tax Bd. of Cal. v.

(...continued)

Recommendations, report, available at http://www.iom.edu/report,

(visited Jan. 21, 2004) (underinsured and uninsured individuals

are lower income and are less likely to pay out-of-pocket for

services; instead, they go without care). Amici recognize that the

beneficiary in Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355

(2002), did incur the expense of the HMO-denied treatment, but

in order to do so, she withdrew all funds from her unemployed

husband’s IRA and charged her mother-in-law’s and her own

credit cards to their limits.

-_

13

Construction Laborers Vacation Trust for S. Cal., 463 U.S.

1, 7-12 (1983) (“Franchise Tax Board”), the Court first

considered whether “ERISA, like § 301 [of the Labor

Management Relations Act of 1947 (“LMRA”), 29 U.S.C.

§ 141 et seq.), was meant to create a body of federal com-

mon law, and that ‘any state court action which would

require the interpretation or application of ERISA to a

plan document ‘arises under” the laws of the United

States.’” 463 U.S. at 24. Justice Brennan’s opinion sug-

gested such an extension of the LMRA doctrine to ERISA:

ERISA contains provisions creating a series of express

causes of action in favor of participants, beneficiaries,

and fiduciaries of ERISA-covered plans, as well as the

Secretary of Labor. § 502(a), 29 U.S.C. § 1132(a). It

may be that, as with § 301 as interpreted in Avco, any

state action coming within the scope of $ 502(a) of

ERISA would be removable -to federal district court,

even if an otherwise adequate state cause of action were

pleaded without reference to federal law.

Id. (emphasis added).

However, the extension did not occur in Franchise Tax

Board because “(njeither of appellant’s claims in this

case comes within the scope of one of ERISA’s causes of

action.” Id. While the state law claims may have involved

._ ERISA plans, they did not come within the scope of

§ 502(a)’s causes of action. In its subsequent decisions, the

Court dealt with State law claims which did come within

the scope of the § 502(a) causes of action.

In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) (“Pilot

Life”), a participant challenged the way his claims for

disability benefits under an ERISA plan were handled. He

made no claim under ERISA, but sued under three State

law causes of action, seeking various general, punitive and

exemplary damages. Pilot Life, 481 U.S. at 43-44. The

Court, in a unanimous opinion by Justice O’Connor, held

-

14

that the State law claims fell under ERISA’s statutory

preemption provision, § 514(a), and then went on to con-

sider whether they were “saved” under the “saving

clause” in § 514(a)(2). Pilot Life, 481 U.S. at 47-48. That

analysis, though, “must be informed by the legislative

intent concerning the civil enforcement provisions pro-

vided by ERISA 502(a), 29 U.S.C. § 1132(a).” Id. at 52. The

Court continued:

The Solicitor General, for the United States as amicus

curiae, argues that Congress clearly expressed an in-

tent that the civil enforcement provisions of ERISA

502(a) be the exclusive vehicle for actions by ERISA-

plan participants and beneficiaries asserting improp-

er processing of a claim for benefits, and that varying

state causes of action for claims within the scope of

502(a) would pose an obstacle to the purposes and

objectives of Congress . . . We agree.

Id. (emphasis added) (internal citations omitted). The

Court reviewed ERISA legislative history:

The Conference Report on ERISA describing the civil

enforcement provisions of 502(a) says:

“Under the conference agreement, civil actions may

be brought by a participant or beneficiary to re-

cover benefits due under the plan, to clarify rights

to receive future benefits under the plan, and for

relief from breach of fiduciary responsibility. .. .

[With respect to suits to enforce benefit rights under

the plan or to recover benefits under the plan which

do not involve application of the title I provisions,

they may be brought not only in U.S. district courts

but also in State courts of competent jurisdiction.

All such actions in Federal or State courts are to be

regarded as arising under the laws of the United

States in similar fashion to those brought under

section 301 of the Labor-Management Relations Act

ee a

15

of 1947.” H.R.Conf.Rep. No. 93-1280, p. 327 (1974),

U.S.Code Cong. & Admin.News 1974, pp. 4639, 5107.

Id. at 55 (italics in original) (underline emphasis added).

The Court next discussed the scope of preemption under

the LMRA:

[Tjhe broad pre-emptive effect of § 301 was first ana-

lyzed in Teamsters v. Lucas Flour Co., 369 U.S. 95

(1962). In Lucas Flour the Court found that “[tjhe

dimensions of § 301 require the conclusion that sub-

stantive principles of federal labor law must be para-

mount in the area covered by the statute.” Id., at 103.

Id. (emphasis added). The Court concluded:

Congress’ specific reference to § 301 of the LMRA to

describe the civil enforcement scheme of ERISA

makes clear its intention that all suits brought by

beneficiaries or participants asserting improper process-

ing of claims under ERISA-regulated plans be treated

as federal questions governed by § 502(a).

Id. at 56 (emphasis added).

On the same day, the Court decided Metropolitan Life Ins.

Co. v. Taylor, 481 U.S. 58 (1987) (“Taylor”). Taylor also

involved a challenge to claims processing under an ERISA

plan, but, unlike Pilot Life, was brought in State court.

Taylor, 481 U.S. at 60-61. In another unanimous opinion

by Justice O’Connor, the Court held that the State law

contract and tort claims seeking benefits owed plus addi-

tional damages were preempted, citing Pilot Life and

ERISA § 514(a). Jd. at 62. It went on to consider wheth-

er the State law claims “were also displaced by ERISA’s

civil enforcement provision, § 502(a)(1B), 29 U.S.C.

§ 1132(a)(1)(B), to the extent that complaints filed in state

courts purporting to plead such state common law causes

of action are removable to federal court under 28 U.S.C.

§ 1441(b).” Id. at 60. In deciding that they were, the

Court observed that the State lawsuit, “as a suit by a

16

beneficiary to recover benefits from a covered plan .. . falls

directly under § 502(a)(1)(B) of ERISA, which provides an

exclusive federal cause of action for resolution of such

disputes.” Jd. at 62-63 (emphasis added). Discussing the

same legislative history relied upon in Pilot Life, Justice

O’Connor described it as a “clear intention to make

§ 502(a)(1)B) suits brought by participants or benefici-

aries federal questions for the purposes of federal court

jurisdiction in like manner as § 301 of the LMRA.” Jd. at

66 (emphasis added).

Under Pilot Life and Taylor, certain State law actions by

participants and beneficiaries are removable to Federal

court and are treated as Federal questions governed by

§ 502(a). The class of actions subject to this “complete

preemption” is described in Pilot Life as “suits brought

by beneficiaries or participants asserting improper process-

ing of claims under ERISA-regulated plans,” Pilot Life,

481 U.S. at 56, and in Taylor as Ҥ 502(a)\(1)(B) suits

brought by participants or beneficiaries” (i.e., suits to

recover benefits due under the terms of the ERISA plan, to

enforce rights under the terms of the ERISA plan, or to

clarify rights to future benefits under the terms of the

ERISA plan). Taylor, 481 U.S. at 66.

Neither Complaint in the cases before the Court can be

accurately characterized in those terms. The preempted

class of cases is thus defined by the class of cases

that may be brought under § 502(a), which is logical, as

“[§ 502(a)] does not purport to reach every question relat-

ing to plans covered by ERISA.” Franchise Tax Board, 463

U.S. at 25.

The Court next addressed these issues in Jngersoll-Rand

Co. v. McClendon, 498 U.S. 133 (1990) (“Ingersoll-Rand”).

At issue there was a State wrongful discharge action

alleging that the primary reason for firing the employee

was “to deprive him of pension benefits under an ERISA

17

plan.” Ingersoll-Rand, 498 U.S. at 136. The Court found

that the suit was “explicitly preempted” under ERISA

§ 514(a), id. at 138-42, and then determined that the claim

was “implicitly preempted,” “because it conflict(ed] directly

with an ERISA cause of action.” Jd. at 142. Specifically, the

Court held: ERISA § 510 “protects plan participants from

termination motivated by an employer’s desire to prevent

a pension from vesting;” ERISA § 502(a) is “the exclusive

remedy for rights guaranteed under ERISA, including

those provided by § 510;” id. at 143-44, and “the exclu-

sive remedy provided by § 502(a) is precisely the kind of

‘special featur[e]’ that ‘warrant(s] pre-emption’ in this case.”

Id. at 144. The Court concluded:

[T]he Texas cause of action purports to provide a

remedy for the violation of a right expressly guar-

anteed by § 510 and exclusively enforced by § 502(a).

Accordingly we hold that “[wJhen it is clear or may

fairly be assumed that the activities which a State

purports to regulate are protected” by § 510 of

ERISA, “due regard for the federal enactment re-

quires that state jurisdiction must yield.”

Id. at 145. Thus, for there to be “implicit preemption” of

a State law claim under Jngersoll-Rand, the claim must

be for violation of ERISA § 510 (or, it would seem, some

other substantive provision of ERISA) which is “exclu-

sively enforced” under § 502(a). The Complaints in the

cases now before the Court cannot be characterized as

making such a claim.

6 This language is drawn from footnote 8 of the Court’s opinion in

Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399 (1988), an

LMRA preemption case. In that footnote, the Court discussed

Federal labor-law principles other than LMRA § 301 that may

preempt State law. 486 U.S. at 408-09 & n.8.

18

Finally, complete preemption was discussed in Rush

Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002)

(“Moran”). There, the Court held both that a State-man-

dated independent review of HMO “medical necessity”

decisions was “saved” from § 514 preemption as insur-

ance law, Moran, 536 U.S. at 365-75, and that the indepen-

dent review procedure was not completely preempted

either, because it “provides no new cause of action under

state law and authorizes no new form of ultimate relief.”

It “does not enlarge the claim beyond the benefits avail-

able in any action brought under § [502(a)],” and func-

tioned more like a “rule of decision” which would then be

enforced in a § 502(a) suit. Jd. at 379-80.

Moran’s holding does not add to the types of claims

completely preempted under Pilot Life, Taylor, and

Ingersoll-Rand. Indeed, the Court declined “to turn dictum

into holding by declaring that the state insurance regula-

tion . . . is preempted.” Moran, 536 U.S. at 377. Justice

Souter noted that, after Pilot Life, “we have found only

one other state law to ‘conflict’ with [§ 502(a)] in provid-

ing a prohibited alternative remedy.” Jd. at 379. That

case, of course, was Ingersoll-Rand, and the discussion of

that decision in Moran provides a useful summary of the

Court’s ERISA complete preemption holdings:

(In Ingersoll-Rand] we had no trouble finding that

Texas’s tort of wrongful discharge, turning on an em-

ployer’s motivation to avoid paying pension benefits,

conflicted with ERISA enforcement; while state law

duplicated the elements of a claim available under

ERISA, it converted the remedy from an equitable

one under [§ 502(a)(3)] (available exclusively in federal

district courts) into a legal one for money damages

(available in a state tribunal). Thus, Jngersoll-Rand

fit within the category of state laws Pilot Life had held

to be incompatible with ERISA’s enforcement scheme;

the law provided a form of ultimate relief in a judicial

19

forum that added to the judicial remedies provided

by ERISA.

Moran, 536 U.S. at 379.

Out of context, the last sentence just quoted from Moran

might be read to suggest a broader holding in Ingersoll-

Rand than was the case. Given the Court’s focus in

Ingersoll-Rand on the enforcement of § 510 through

§ 502(a), the statement “Ingersoll-Rand fit within the

category of state laws Pilot Life had held to be incom-

patible with ERISA’s enforcement scheme; the law pro-

vided a form of ultimate relief in a judicial forum that

added to the judicial remedies provided by ERISA” appears

limited to judicial remedies provided by ERISA for viola-

tions of ERISA.

In summary, a State law claim will be completely pre-

empted if it is a claim for benefits described in

§ 502(a\(1)(B), see Pilot Life, 481 U.S. at 57; Taylor, 481

U.S. at 62-63, or if it seeks to enforce a right protected by

ERISA and enforced through § 502(a). See Ingersoll-Rand,

498 U.S. at 145. In Pilot Life and Taylor, plan participants

were seeking disability benefits under State law, while

ERISA § 502(a)(1)(B) provided a specific cause of action to

seek such benefits. In Ingersoll-Rand, the former partici-

pant’s State lawsuit was premised on the employer's de-

sire not to pay pension benefits, while under ERISA § 510,

enforced through § 502(a)(3), “the relief requested . . . is

well within the power of federal courts to provide.”

Ingersoll-Rand, 498 U.S. at 145. In Moran, the State inde-

pendent review mechanism was held to be ancillary to

§ 502(a)(1)(B)_as the means to seek reimbursement for

health care expenses incurred by the participant. See

Moran, 536 U.S. at 380.

In each of the cases in which complete preemption was

found, the challenged actions raised a question that could

be specifically addressed under § 502(a): Were disability

20

benefits due to Dedeaux and Taylor under the terms of the

plan? Was McClendon discharged for the purpose of

interfering with the attainment of any right to which he

might become entitled under the plan? Similarly, in Moran:

could the State independent review procedure be used in

determining whether reimbursement of her medical

expenses was due to Moran under the terms of the plan?

By contrast, the questions raised by Calad and Davila

are not addressed by ERISA: Was the decision that Calad

did not have symptoms that required continued hospi-

talization made with the exercise of ordinary care? If not,

was that failure the proximate cause of harm to her? Was

the decision to prescribe Naprosyn for Davila’s pain

made with the exercise of ordinary care? If not, was that

failure the proximate cause of harm to him?

Here, the HMOs’ actions affect Calad and Davila as

patients; neither received the course of treatment pre-

scribed by his or her treating physician. This implicates

the protections which Texas has created in the THCLA

for patients who are injured by health care treatment

decisions. Calad and Davila assert claims under the

THCLA against the HMOs that are separate, distinct

and independent from ERISA’s causes of action, like the

claims in Franchise Tax Board, neither of which “[came]

within the scope of one of ERISA’s causes of action.” 463

U.S. at 24-25. The question the Court must resolve is

whether, under the complete preemption exception to the

well-pleaded complaint doctrine, they can bring these

claims in State court (subject, of course, to any defenses,

including ERISA § 514 defenses, raised by the HMOs).

The holdings in the Court’s ERISA complete preemption

cases do not answer this question. Calad’s and Davila’s

State lawsuits do not seek payments, reimbursement or

any other benefit from an ERISA plan. Cf. Pilot Life, 481

U.S. at 57; Taylor, 481 U.S. at 62-63. They do not seek

21

to enforce any statutory right under ERISA through

§ 502(a)(3). Cf. Ingersoll-Rand, 498 U.S. at 145. If we

study the basis for the holdings articulated in these

three opinions, we see that in each case the Court de-

scribed complete preemption, with reference to “RISA’s

legislative history, e.g., as “modeled after § 301 of the

LMRA.” Pilot Life, 481 U.S. at 54; see also Taylor, 481 U.S.

at 65-67 (“in like manner as § 301 of the LMRA”), and

Ingersoll-Rand, 498 U.S. at 144-45 (“the parallel between

§ 502(a) and § 301 of the LMRA”). Therefore, any consider-

ation of the scope of ERISA § 502 complete preemption

should be made with reference to the scope of LMRA § 301

complete preemption.

III. This Court’s LMRA § 301 Complete Preemption

Jurisprudence Recognizes Limits on Preemp-

tion and Provides a Related Body of Precedent,

Applicable to the Cases Before the Court.

The Court adopted the LMRA § 301 complete preemption

exception to the well-pleaded complaint rule in Avco Corp.

v. Aero Lodge No. 735, 390 U.S. 557 (1968), it then ex-

plained the scope of LMRA § 301 complete preemption in a

series of cases beginning in 1985. The development

of ERISA § 502 complete preemption occurred simulta-

neously with, and was intertwined with, these LMRA

decisions.” This Court has heard more cases, presenting

more issues, in connection with LMRA complete preemption

than ERISA complete preemption. Heeding the Congressio-

nal intent that cases under ERISA § 502 “be regarded .. . in

7 See Franchise Tax Board (1983) (ERISA); Lueck (1985) (LMRA);

Pilot Life (1987) (ERISA); Taylor (1987) (ERIS&»; Hechler (1987)

(LMRA); Caterpillar (1987) (LMRA); Lingle (1988>(L.MPA); Raw-

son (1990) (LMRA); Ingersoll-Rand (1990) “#RISA); Livadas

(1994) (LMRA).

22

-imilar fashion” to those brought under LMRA § 301, we

can turn to existing precedent of this Court under § 301 for

guidance in the present cases.

LMRA § 301 complete preemption is based on the Su-

premacy Clause of Article VI of the Constitution. See Allis-

Chalmers Corp. v. Lueck, 471 U.S. 202, 208 (1985)

(“Lueck”). Because Congress has never exercised the

authority to occupy the entire field of labor legislation, the

question of whether a State action is preempted is lim-

ited to Congressional intent. Jd." State law claims that

are founded on rights or duties established by a collective

bargaining agreement, or that substantially depend on the

interpretation or analysis of a collective bargaining agree-

ment, are preempted. Lueck, 471 U.S. at 213 (State tort

of bad faith handling of disability benefit payments due

under a labor contract is preempted by LMRA § 301; claim

is “inextricably intertwined” with, and substantially de-

pendent upon, interpretation of the labor contract);’ Inter-

national Brotherhood of Electrical Workers, AFL-CIO, et al.

v. Hechler, 481 U.S. 851 (1987) (negligence claim against

union preempted because claim depended on whether the

union had contractually assumed a duty of care for its

members, requiring the interpretation of the labor con-

® Accordingly, LMRA § 301 complete preemption is conflict

preemption, not express or implied preemption. See K. Jordan,

The Complete Preemption Dilemma: A Legal Process Perspective,

31 Wake Forest L. Rev. 927, 955 (1996). See also Lueck, 471 U.S.

at 208-09. See generally Crosby v. Nat'l Foreign Trade Council,

530 U.S. 363, 372-73 (2000); Hines v. Davidowitz, 312 U.S. 52, 70

(1941).

® In addition, the Court found that if the claim at issue were not

preempted, an employee would have the option of bypassing the

grievance procedures and going to State court, thereby compro-

mising the Federal right of the parties to choose arbitration as the

means to resolve labor contract disputes. Lueck, 471 U.S. at 219-

20; see also Lingle, 486 U.S. at 411 (same).

23

tract); United Steelworkers of America, AFL-CIO v. Rawson,

495 U.S. 362 (1990) (tort claim preempted where duty

allegedly assumed by union did not exist outside of col-

lective bargaining agreement).

Complete preemption under § 301 of the LMRA ad-

dresses the need for a unified body of Federal law to gov-

ern the interpretation and enforcement of collective bar-

gaining agreements. Textile Workers Union of America v.

Lincoln Mills of Alabama, 353 U.S. 448, 456-57 (1957).

Moreover, Congress intended, through § 301, to specifically

enforce promises to arbitrate grievance disputes under

collective bargaining agreements. Id. at 451; see also Local

174, Teamsters v. Lucas Flour Co., 369 U.S. 95, 105 (1962)

(“the basic policy of national labor legislation [is] to promote

the arbitral process as a substitute for economic warfare”);

Auvco, 390 U.S. at 559 (§ 301 of the LMRA was “fashioned

by Congress to place sanctions behind agreements to ar-

bitrate grievance disputes”).

Outside the scope of the rights and duties established

by the collective bargaining agreement and interpretation

of the collective bargaining agreement, the rationale for

preemption is not present.

But even under § 301 we have never intimated that any

action merely relating to a contract within the cov-

erage of § 301 arises exclusively under that section. For

instance, a state battery suit growing out of a vio-

lent strike would not arise under § 301 simply because

the strike may have been a violation of an employer-

union contract.

Franchise Tax Board, 463 U.S. at 25 & n.28 (citing U.A.W.

v. Russell, 356 U.S. 634, 640-42 (1958)).

[W]hile this sensible “acorn” of § 301 pre-emption

recognized in Lucas Flour has sprouted modestly in

more recent decisions of this Court .. . it has not yet

become, nor may it, a. . . “mighty oak.”

24

Livadas v. Bradshaw, 512 U.S. 107, 122 (1994) (citations

omitted).

This Court has held that State law claims are not pre-

empted if (1) the rights that the State law protects exist

independently of the labor agreement, and (2) the State law

claim can be resolved without interpreting the labor

agreement. Lueck, 471 U.S. at 212 (“it would be inconsis-

tent with congressional intent under [§ 301] to preempt

state rules that proscribe conduct, or establish rights and

obligations, independent of a labor contract”).

In Lingle v. Norge Division of Magic Chef, Inc., an em-

ployee’s State court claim for retaliatory discharge for

exercising rights under the Illinois Workers’ Compensation

Act was held not preempted by LMRA § 301, despite the

fact that the collective bargaining agreement protected

the employee from termination without “just cause.” Lingle,

486 U.S. at 408-10. The Court reasoned that the plain-

tiff’s claim rested on “purely factual questions pertain|ing]

to the conduct of the employee and the conduct and motiva-

tion of the employer.” Jd. at 407. Because the elements of

the State law retaliatory discharge claim did not turn on

the meaning of any provision of the collective bargain-

ing agreement, the claim was not preempted. Jd. Even if

resolution of the State law claim and a claim pursuant

to the collective bargaining agreement would require

addressing “precisely the same set of facts,” there is no

preemption as long as the State claim can be resolved

without interpreting the agreement. Jd. at 409-10; see also

Livadas, 512 U.S. at 123-24 (the n.ere fact that a collective

bargaining agreement would be consulted in the course of

the State law litigation did not give rise to preemption).

Similarly, in Caterpillar Inc. v. Williams, employees

brought claims that Caterpillar discharged them in vio-

lation of alleged individual employment agreements. 482

U.S. 386 (1987). Caterpillar argued that because the

25

employees were covered by a collective bargaining agree-

ment at the time of their termination, their breach of

contract claims were preempted by LMRA § 301. The Court

disagreed, reasoning that while the employees could have

brought suit under § 301, and had substantial rights

under the collective bargaining agreement as bargaining

unit members at the time of their termination, this did

not give rise to preemption. Jd. at 394-95. The Court

found that their complaint did not “substantially depend”

upon interpretation of the collective bargaining agree-

ment. Jd. at 394-95.

Most recently, in Livadas, the Court held that a State

statute requiring employers to pay immediately all wages

due to discharged employees, as applied to employees

governed by a collective bargaining agreement, was

not preempted by LMRA § 301, stating: “§$ 301 cannot be

read broadly to preempt nonnegotiable rights conferred

on individual employees as a matter of state law” and “it

is the legal character of a claim, as ‘independent’ of rights

under the collective bargaining agreement . . . that de-

cides whether a state cause of action may go forward.”

Livadas, 525 U.S. at 123-24 (internal citation omitted)."”

© Following this Court’s precedent, numerous Federal circuit

courts have refused to find LMRA § 301 complete preemption

where the State law claims could be resolved independently of the

collective bargaining agreement. See, e.g., Northwestern Ohio

Administrators, Inc. v. Walcher & Fox, Inc., 270 F.3d 1018 (6th

Cir. 2001) (claim that union fraudulently induced employer to sign

project agreements not preempted); Sprewell v. Golden State

Warriors, 266 F.3d 979 (9th Cir. 2001) (claims for intentional

interference with contract and business relations not preempted

to the extent based on California law and not collective bargaining

agreement); Pennsylvania Nurses Assoc. v. Pennsylvania State

Education Assoc., 90 F.3d 797 (3d Cir. 1996) (breach of fiduciary

duty and fraud claims were not preempted by § 301); Trans Penn

“(continued...)

26

Significantly, in Caterpillar, the Court recognized that

an “independent” State law claim could not be rechar-

acterized as a Federal § 301 claim in order to give rise

to preemption, merely because plaintiffs could have

brought suit under § 301. Caterpillar, 482 U.S. at 394-95.

Caterpillar impermissibly attempts to create the

prerequisites to removal by ignoring the set of facts

(i.e., the individual employment contracts) presented

by respondents, along with their legal characteriza-

tion of those facts, and arguing that there are differ-

ent facts respondents might have alleged that would

have constituted a federal claim. In sum, Caterpillar

does not seek to point out that the contract relied

upon by respondents is in fact a collective agreement;

rather it attempts to justify removal on the basis

of facts not alleged in the complaint. The “artful plead-

ing” doctrine cannot be invoked in such circumstances.

Id. at 396-97.

These well-established principles under LMRA § 301,

allowing bargaining unit members to assert claims that

arise independent of that status. Thus, the LMRA, the

statute that Congress and this Court have identified

as the “model” for ERISA § 502, instruct that the claims

at issue are not subject to complete preemption under

ERISA § 502.

Calad’s and Davila’s State law rights as patients are

independent of the ERISA plan. When an HMO makes a

health care treatment decision subject to the THCLA, that

act has legal consequences separate and distinct from

ERISA’s remedial scheme.

(...continued)

Wax Corp. v. McCandless, 50 F.3d 217 (3d Cir. 1995) (claims for

breach of individual employment agreements, fraud, and inten-

tional infliction of emotional distress were not subject to § 301

preemption).

27

Each element of Calad’s and Davila’s THCLA claims can

be determined without analysis or interpretation of the

ERISA plans. First, there must be a “health care treatment

decision,” as defined in the statute. That decision must be

made by a “health insurance carrier, health maintenance

organization, or other managed care entity for a health care

plan” (each term as defined in the statute) or an employee,

agent, ostensible agent or certain representative (terms

whose meanings can be determined under general law

principles). There must be a failure to exercise “ordinary

care” (as defined in the statute) in making the decision,

and that failure must be the “proximate cause” of “harm” to

the insured or enrollee. This is the stuff of ordinary tort

litigation, overlaid with some specific statutory definitions,

not analysis or interpretation of an ERISA plan.

The rights of Calad and Davila, as patients, under the

THCLA can be preserved with a rule that interprets the

scope of ERISA § 502 complete preemption to cover claims

(1) to recover benefits, enforce rights or clarify rights to fu-

ture benefits under the terms of an ERISA plan, or enforce

any substantive provision of ERISA; or (2) which are not

independent of or cannot be resolved without analysis or

interpretation of the ERISA plan. See Lingle, 486 U.S. at

408-10. Amici urge the Court to do so.

This result leaves the Court’s prior ERISA § 502 com-

plete preemption holdings undisturbed. The claims in

Pilot Life, Taylor and Ingersoll-Rand are covered by part

(1) of the rule proposed above, while Moran demonstrates

that there is no complete preemption of a State law claim

that does not provide a new cause of action described in

part (1). Franchise Tax Board continues to remind us that

the scope of § 502(a), and thus its preemptive effect, is

limited. The Court’s prior holdings would continue to be

precedent with respect to State law claims that seek to

recover benefits, enforce rights or clarify rights to future

benefits under the terms of an ERISA plan, or enforce any

28

substantive provision of ERISA. Part (2) of the rule urged

by amici today would provide the next step of ERISA § 502

complete preemption analysis. It derives directly from

Lueck and subsequent LMRA § 301 complete preemption

cases, substituting the ERISA plan for the collective

bargaining agreement. (The plan is to ERISA § 502 as the

collective bargaining agreement is to LMRA § 301.) Amici

believe that such a holding is appropriate for several

reasons.

First, it would honor the Court’s repeated admonitions

that preemption of State law is to be undertaken carefully

and narrowly in cases like this which involve a State’s

exercise of its “traditional police powers” for the health

and safety of its citizens. See English v. General Elec. Co.,

496 U.S. 72, 79 (1977); Maurer v. Hamilton, 309 U.S. 598,

614 (1940); see also Hillsborough County v. Automated

Med. Labs., 471 U.S. 707, 715 (1985).

Second, it would adhere to the ERISA legislative history

that ERISA § 502 be construed similarly to LMRA § 301.

LMRA § 301 complete preemption applies to claims that:

(1) are founded on rights or duties established by a collec-

tive bargaining agreement and enforced under § 301; or

(2) substantially depend on the interpretation or analysis

of a collective bargaining agreement. ERISA § 502 com-

plete preemption would apply to State law claims that: (1)

seek to recover benefits, enforce rights or clarify rights to

future benefits under the terms of an ERISA plan, or to

enforce any substantive provision of ERISA; or (2) are not

independent of or cannot be resolved without analysis or

interpretation of an ERISA plan. The ERISA § 502(a)

remedial scheme is preserved and kept exclusive for claims

available under it, as the LMRA § 301 enforcement scheme

is preserved and kept exclusive to enforce rights and duties

under a collective bargaining contract. The interpretation

of the ERISA plan, like the interpretation of the collective

bargaining contract, is reserved as a matter of Federal law.

29

Such a holding would also be consistent with the Court’s

presumption against preemption, regardless of the source

or type of preemption, expressed in Travelers with respect

to State regulation of health care:

Our past cases have recognized that the Supremacy

Clause, U.S. Const., Art. VI, may entail pre-emption of

state law either by express provision, by implication, or

by a conflict between federal and state law. And yet,

despite the variety of these opportunities for federal

preeminence, we have never assumed lightly that

Congress has derogated state regulation, but instead

have addressed claims of pre-emption with the starting

presumption that Congress does not intend to sup-

plant state law. Indeed, in cases like this one, where

federal law is said to bar state action in fields of tradi-

tional state regulation, we have worked on the “as-

sumption that the historic police powers of the States

were not to be superseded by the Federal Act unless

that was the clear and manifest purpose of Congress.”

Travelers, 514 U.S. at 654-55 (internal citations omitted).

In addition, it is also consistent with the Court’s observa-

tion in Pegram v. Herdrich, 530 U.S. 211 (2000), that “we

have seen enough to know that ERISA was not enacted .. .

to federalize malpractice litigation in the name of fiduciary

duty or for any other reason.” Pegram, 530 U.S. at 236. For

ERISA, which does not even mention health care treatment

standards, to preempt the remedies of a patient for negli-

gent diagnosis or treatment because that patient is also

an ERISA participant is at odds with the purpose of a

statute intended to be remedial, and protective of employ-

ees’ rights.

Finally, such a holding will provide useful guidance for

lower Federal courts, which often hear complete preemp-

tion challenges to State law negligence, wrongful death or

similar claims against an HMO that failed to provide a

30

particular course of treatment to a patient who was an

ERISA plan participant. The holdings in these cases often

turn on whether the court finds the HMO’s decision to

involve the “quality” of benefits provided (no complete

preemption) or the “quantity” of benefits sought (com-

plete preemption). However, this test invites judicial hair-

splitting, causing courts to reach conflicting results under

similar facts."

CONCLUSION

For the foregoing reasons, amici urge the Court to

recognize that when a State, in the course of its regula-

tion of matters of health and safety, provides a cause of

action like that available to injured patients under the

THCLA, that cause of action will not be denied to patients

’ who are also ERiSA plan participants, if the State law

claim (1) does not seek to recover benefits, enforce rights

or clarify rights to future benefits under the terms of an

ERISA plan, or to enforce any substantive provision of

ERISA, and (2) is independent of and can be adjudicated

without analysis or interpretation of the ERISA plan. Amici

believe that to do so provides a solution to the issues raised

in the present cases which is harmonious with the Court’s

prior ERISA decisions, consistent with its related jurispru-

dence under the LMRA, and mindful of the limits the Court

has repeatedly placed on the preemption of State law.

—S——_

" Cf. Danca v. Private Health Care Sys., Inc., 185 F.3d 1 (1st Cir.

1999); Hull v. Fallon,188 F.3d 939 (8th Cir. 1999); In re U.S.

Healthcare, Inc., 193 F.3d 151 (3d Cir. 1999).

31

~— aaa

Respectfully submitted,

JON N. EKDAHL

LEONARD A. NELSON

AMERICAN MEDICAL

ASSOCIATION

515 North State Street

Chicago, Illinois 60610

(312) 464-5000

DONALD P. WILCOX

TEXAS MEDICAL

ASSOCIATION

401 West 15th Street

Austin, Texas 78701

(512) 370-1336

GARY W. HOWELL

Counsel of Record

THOMAS CAMPBELL

CARRIE E. KIENSTRA

PETER C. KOCH

GARDNER CARTON

& DOUGLAS LLP

191 North Wacker Drive

Suite 3700

Chicago, Illinois 60606-1698

(312) 569-1000

Attorneys for Amici Curiae