# Amicus Curiae Brief — Aetna Health Inc. v. Davila

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2004
- **Citation:** 542 U.S. 200

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0681%3A23. Public record. Not legal advice.