Opposition Brief — Kuhl v. Lincoln National Health Plan of Kansas City, Inc.

In The

Supreme Court of the United States

October Term, 1993

MARY UHL. BUDDY KUHI

MARNIE K. KUHI

LINCOLN NATIONAL HI

OF KANSAS CIT’

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

2

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

.

MARK E. |

IK. (

bE. |

W aM E. Han:

Morrison & H

2600 Grand Avenue

Kansas City, Missouri 64108

§$16-691-2600

‘Counsel otf Recs

QUESTIONS PRESENTED

1. Whether the court of appeals correctly decided

that the Employee Retirement Income Security Act of

1974 (“ERISA”), 29 U.S.C. § 1001, ef seq., preempts state

law claims, including tort claims, against an ERISA plan

administrator?

2. Whether the district court and court of appeals

properly considered Lincoln National’s motion for sum-

mary judgment by reviewing the facts in the light most

favorable to petitioners?

LIST OF PARTIES

Petitioner Mary Kuhl

Petitioner Buddy Kuhl, Jr.

Petitioner Marnie K. Kuhl

Respondent Lincoln National Health Plan of Kansas City,

Inc.*

*The following corporations are related to Lincoln National

Health Plan of Kansas City, Inc.: Lincoln National Corporation

TakeCare, Inc; TakeCare Administrative Services Corporation

The Medical Protective Company; Lexington Insurance Com-

pany; Kansas Health Care Stabilization Fund; Kansas Medical

Mutual Insurance Company, on behalf of The Kansas Health

Care Provider Insurance Availability Plan; Reliance National

Insurance Company; National Union Fire Insurance Company;

American States Insurance Company; Chubb Group of Insur-

ance Companies.

TABLE OF CONTENTS ~— Continued

Page

F. The Eighth Circuit Correctly Ruled That

ERISA Preempts Petitioner Mary Kuhl’s Emo-

tional Distress Claim ....................... 25

H. THE COURT OF APPEALS PROPERLY CONSID-

ERED THE EVIDENCE IN AFFIRMING THE

DISTRICT COURT'S GRANT OF LINCOLN

NATIONAL’S MOTION FOR SUMMARY JUDG-

RUMNER eK cca ans hovau Ke val ee Wae oss poe Ewa cesar 26

A. There Exists No Issue Of Material Fact .... 26

B. The District Court’s Ruling Was Correct ... 28

C. The Eighth Circuit’s Ruling Was Correct... 29

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--— —

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

This case involves claims made with respect to the

death of a participant in an ERISA-covered group health

plan. Respondent Lincoln National Health Plan of Kansas

City, Inc. (“Lincoln National”) was the plan administra-

tor. All relevant actions of Lincoln National were taken in

the course of determining whether benefits were payable

under the plan. Petitioners’ claims therefore are pre-

empted, and their arguments to the contrary defy this

Court’s well-established precedent, which has been

applied as recently as last.year to deny certiorari in a case

strikingly similar to this case. Accordingly, Lincoln

National respectfully requests that this Petition for Writ

of Certiorari to review the judgment of the United States

Court of Appeals for the Eighth Circuit be denied.

STATUTES AND RULES INVOLVED

[his case involves the application of the preemptive

effect of the Employee Retirement Income Security Act of

1974, 29 U.S.C. § 1001, ef seq., particularly § 514(a), 29

U.S.C. § 1144(a).

STATEMENT OF THE CASE

A. Factual Background.

[here is no dispute as to any of the facts material to

the district court’s grant of summary judgment, and the

affirmance of that ruling by the Eighth Circuit Court of

Appeals.! Buddy Kuhl was an employee of Belger Car-

tage Services, Inc. (“Belger”), and was a participant in the

1! Lincoln National takes issue with many of the factual

characterizations made by petitioners. However, because

]

5

Belger Group Medical Plan (“Belger Plan”), a group med-

ical plen sponsored by Belger. Lincoln National was the

administrator of the Belger Plan, which is both an

“employee benefit plan” and an “employee welfare bene-

fit plan” within the meaning of ERISA. As the court of

appeals noted, “Lincoln National Health Plan is an ‘inde-

pendent physician’ HMO, which means that it pays inde-

pendent physicians, hospitals, and other health care

providers to render medical services for its members.”

See Petitioners’ Appendix (“P.App.”) at A-2. Mr. Kuhl

never was examined or treated by any physician or nurse

employed by Lincoln National, and Lincoln National

never rendered medical services to Mr. Kuhl. Lincoln

National’s responsibilities were limited to decisions

respecting the payment of claims or benefits under the

Belger Plan.

Mr. Kuhl, as a Belger employee, and his dependents,

Mary and Marnie Kuhl, agreed to the terms of and

became members in the Belger Plan. Pursuant to the

contract between Lincoln National and Beiger, Lincoln

National paid for medical services provided to Belger

employees according to the restrictions, limitations and

exclusions of the Belger Plan. As the court of appeals

highlighted, “Lincoln National is not contractually obli-

gated to pay for medical services rendered outside the

‘Service Area’ of the Lincoln National network or for

medical services rendered by personnel not participating

in the Lincoln National network.” P.App. at C-2. The

principal document governing the Belger Plan provided:

“Service Area” is the geographical area within

which HMO’s covered services are available.

petitioners cannot dispute any fact material to ERISA’s

preemptive scope, the extraneous factual allegations made by

petitioners will not be addressed here.

ee

3

This includes the counties of Jackson, Clay,

Platte, Cass, Buchanan, Ray and LaFayette in

Missouri and Johnson and Wyandotte in Kansas.

The Service Area may be revised by HMO

HMO deems necessary.

* + +

Except for Emergency Services as provided in

Section L,? these services and benefits are avail-

able only in the Service Area and only if, and to

the extent that, they are provided, prescribed, or

directed by a Plan Phy Sician in accordance with

the terms of the Group Medical and Hospital

Service Certificate.

[he district court ruled that “Lincoln National is not

obligated to automatically pay for medical services ren-

dered outside the ‘Service Area’ of the Lincoln National

network.” P.App. at C-2.

Lincoln National became involved with considering

whether payment would be authorized under the Belger

Plan for Mr. Kuhl’s proposed surgery at Barnes Hospital

(“Barnes”) of St. Louis, Missouri in June, 1989. At that

time, Barnes contacted Lincoln National to verify that the

Belger Plan would pay for Mr. Kuhl’s surgery scheduled

to take place on July 3, 1989. Lincoln National did not

initially certify benefits for the surgery because Barnes

was outside the Lincoln National “Service Area” as

defined by the Belger Plan.* Lincoln National, after fur-

ther consideration of Mr. Kuhl’s precertification request,

The “Emergency Services” exception, as defined in the

ee Plan, did not apply in this case.

Lincoln National offered a PPO (“preferred provider pro-

gram”) option under the Belger Plan, which provided benefits

regardless of whether a doctor or institution was a “preferred

provider”, although the amount of the benefit was less if a-plan

member chose a non-preferred provider. Mr. Kuhl did not

choose the PPO option, instead choosing Lincoln National's

authorized payment of benefits for the non-“Service

Area” surgery, but the surgery was not performed and

Mr. Kuh! died while awaiting a heart transplant. Pre-

sumably the physicians who in fact were caring for Mr.

Kuhl throughout this time period did not believe there

was a risk in the delay. Petitioners have not made any

claims against these parties.

As stated by the district court, “Lincoln National

conducts a precertification review of hospital admissions.

In the precertification review, Lincoln National deter-

mines whether a particular provider or hospitalization is

covered by the Plan.” P.App. at C-3. The precertification

procedure under which Mr. Kuhl’s surgery allegedly was

“cancelled” was a condition precedent to the payment of

benefits under the Belger Plan, and Lincoln National’s

precertification process was a claims administrative func-

tion under the Belger Plan. Lincoin National made such

decisions by reviewing coverage for benefits and deter-

mining whether a particular procedure or hospitalization

met the requirements of Lincoln National’s contract with

the employer and participant.

These facts, although ignored almost entirely by peti-

tioners in their attempt to characterize Lincoln National's

administrative actions as “medical malpractice”, are the

only facts material to the dispositive issue in this case -

ERISA preemption. Petitioners have not disputed any of

these material facts.

HMO option which provides a higher benefit percentage, but

only fer certain physicians and institutions within the Belger

Plan’s “Service Area.”

+.

B. Proceedings In The Lower Courts.

Petitioners originally filed suit against Lincoln

National in the Circuit Court of Jackson County, Mis

souri, alleging four causes of action: (1) medical malpra¢

tice; (2) tortious interference with contractual relations:

(3) intentional infliction of emotional! distress; and (4)

breach of contract.4 Petitioners did not allege that any of

their claims were made under ERISA

Lincoln National removed the case to federal court

pursuant to 28 U.S.C. § 1441(b) and ERISA‘s “complete

preemption doctrine.” Petitioners sought remand, argu

ing ERISA preemption did not apply. Lincoln National

opposed petitioners’ motion to remand, and subsequently

moved for summary judgment on the grounds of ERISA

preemption

1. The District Court’s Order In Kuhl |.

In an order dated December 26, 1991, the district

court granted Lincoln National's summary judgment

motion and denied petitioners’ motion to remand opeci

fix ally, the district court ruled that ERISA preempts peti

tioners’ alleged causes of action

Plaintiffs in this case do not make a direct « laim

for contractual benefits under the Group Medi

cal Plan. However, plaintiffs are asserting claims

that arise from the administration of that Plan

+ As set forth below petitioners filed two : eparate lawsuit

against Lincoln National. The first suit was captioned Mary

Kuhl, Marnie Kuhl, and Buddy Kuhl, |) Lincoln National Health

Plan of Kansas City, Inc., Case No. 91-0330-CV-W-9. and will be

referred to hereafter as “Kuhl I”. Petitioners also filed a second

suit captioned Mary Kuhl, Marnie Kuhl and Buddy Kuhl, |r

Lincoln National Health Plan of Kansas City, In Case No

91-1146-CV-W-9, which will be referred to hereafter as “Kuhl I]

6

According to the normal meaning of the statu-

tory words “relate to”, each of plaintiffs’ claims

“has a connection with” the Plan or, more speci-

fically, each claim “arises from the administra-

tion of the Plan.” Plaintiffs’ claims are based on

the manner in which Lincoln National

responded to the request for “Pre-certification”

of Buddy Kuhl’s heart surgery.

PApp. at C-15, 16 (emphasis in origina Phe district

court then concluded:

Artful pleading by characterizing Lincoln

National’s actions in refusing to pay for the

surgery as “cancellation” or by characterizing

the same administrative decisions as “malprac-

tice” does not change the fact that plaintiffs’

claims ere based on the contention that Lincoln

National improperly processed Kuhl’s claims for

medical benefits. Thus, plaintiffs’ claim “relate

to” the Plan and are preempted by § 514(a).

P.App. at C-16, 17. Finally, even though petitioners made

no attempt to allege a cause of action under ERISA, the

district court reviewed the complaint to determine if peti-

tioners could properly state an ERISA-based claim. After

discussing every potential subsection under which peti-

tioners even arguably could allege an ERISA-based cause

of action, the court determined no ERISA claim existed.

P.App. at C-21.°

5 Petitioners make no claim to this Court that the district

court or the court of appeals erred in determining that 29 U.S.C.

§ 1132(a)(3) does not provide for “extra-contractual relief,” and

do not seek certiorari to address this issue. Indeed, this Court’s

recent decision in Mertens v. Hewitt Assocs., 113 S. Ct. 2063

(1993), establishes that the rulings by the courts below were

correct.

7

2. Petitioners File Suit In Kuhl II.

On December 27, 1991, one day after the Court issued

its order in Kuhl I, petitioners filed suit in Kuhl II based

upon facts and circumstances identical to those in Kuhl I.

Petitioners alleged in their Kuhl I] complaint that Lincoln

National breached a fiduciary duty under ERISA.

Lincoln National moved to dismiss petitioners’ com-

plaint because, alternatively: (1) res judicata barred peti-

tioners’ claims; (2) petitioners had no cause of action

under ERISA for any alleged breach of fiduciary duty;

and (3) ERISA does not provide for extracontractual dam-

ages under 29 U.S.C. § 1132(a)(3).

3. Petitioners Move To Amend Their Complaint

In Kuhl I.

After the district court dismissed the case in Kuhl |

and entered judgment on Lincoln National’s behalf, peti-

tioners moved to amend their Kuhl | complaint. The

“amended” complaint in Kull I was identical to the com-

plaint filed by petitioners in Kuhl II, alleging a cause of

action under ERISA.

4. The District Court Denies Petitioners’

Motion To Amend In Kuhl I And Dismisses

Petitioners’ Complaint In Kuhl II.

Even after dismissing the Kull | complaint, the dis-

trict court held oral argument to consider, among other

issues: (1) petitioners’ motion that the court reconsider its

grant of summary judgment in Kuhl I; (2) petitioners’

motion to amend in Kuhl J; (3) petitioners’ claim that the

district court should have “recharacterized” their state

law claims in Kuhl I as claims under ERISA; and (4)

Lincoln National’s motion to dismiss in Kuhl IJ. At the

conclusion of oral argument, the district court thoroughly

8

reviewed each issue and entered judgment from the

bench. In addressing petitioners’ argument regarding the

scope of ERISA’s preemptive force during oral argument,

the district court stated:

It makes no difference whether defendant can

celled the surgery or caused it to be cancelled by

not agreeing to pay for it or by rescinding the

previous certification or agreement it would pay

for it. However one characterizes what hap

pened, the end result is that whatever Lincoln

National did it did in response to and as part of

the procedures under the plan that were

required before payment could be expected by

the plan for the surgical procedure that was

being contemplated. In fact, it was my beliet

that no matter how one characterizes the facts

advanced by the plaintiffs, the facts involve the

allegation or contention that defendant improp

erly processed a claim for benefits by doing

things that it shouldn’t have done, and/or not

doing things it should have done. In any event,

these actions were done by the administrator of

the plan in response to a request for a claim for

benefits.

The district court went on to deny petitioners’ motion to

amend in Kull 1. Additionally, the court granted Lincoln

National’s motion to dismiss the Kull II] complaint on

three grounds: (1) the final judgment in Kuhl I was res

judicata as to petitioners’ complaint in Kuhl II; (2) apply-

ing the same reasoning that warranted summary judg-

ment in Kuhl I, petitioners could state no claim under

ERISA for breach of fiduciary duty, and (3) the “the other

equitable relief” clause in 29 U.S.C. § 1132(a)(3) does not

include monetary damages.

5. The Eighth Circuit’s Ruling.

The Eighth Circuit Court of Appeals affirmed the

. district court’s judgments in favor of Lincoln National.

Y

Upon careful review of the facts, the Eighth Circuit held

that petitioners’ claims were preempted because all

actions taken by Lincoln National were performed in its

role as an ERISA plan administrator:

laking the facts in the light most favorable to

the Kuhls, as we must for purposes of Lincoln

National's motion for Summary judgment, we

are compelled to agree with the district court

Lincoln National became involved in the can-

cellation of the St. Louis surgery only after the

Barnes Hospital staff requested a precertifica-

tion review. Lincoln National’s admission that it

“cancelled” the surgery cannot be stretched to

imply that Lincoln National went beyond the

administration of benefits and undertook to pro-

vide Buddy Kuhl with medical advice. Although

the surgery in St. Louis was unquestionably can-

celled as a result of Lincoln National's decision

not to precertify payment, the decision not to

precertify payment relates directly to Lincoln

National's administration of benefits

App. at A-11. The Eighth Circuit also ruled that ERISA

preempts petitioner Mary Kuhl’s claim for intentional

infliction of emotional distress, citing Johnson v. District 2

Marine Eng’rs Beneficial Ass'n, 857 F.2d 514 (9th Cir. 1988)

and i-owell v. ( hesapeake and Potomac Tel. Co., 780 F.2d 419

(4th Cir. 1985), cert. denied, 476 U.S. 1170 (1986). Finally,

relying upon this Court’s decision in Mertens v. Hewitt

Assocs., 113 S. Ct. 2063 (1993), the Eighth Circuit ruled

that monetary damages are not available under section

1132(a)(3). The pending petition for certiorari followed

REASONS FOR DENYING THE WRIT

[he dispositive issue in this case has been addressed

by this Court on several prior occasions: does ERISA

preempt a state law cause of action against an ERISA plan

10

administrator for alleged improper processing of a claim

for benetits? Because the answer to this question ts affir

mative, and because none of the facts material to the

application of ERISA’s preemptive scope are disputed,

the findings of preemption by both the district court and

court of appeals are correct as a matter of law

Moreover, petitioners have not demonstrated any

special or important reason why this Court should grant

their petition. Petitioners fail to present any decisions of

this Court or any other circuit court of appeals that

conthict with the decision below. Rather, the decisions of

both lower courts are consistent with established prece

dent trom this Court and other federal appellate courts

Relying primarily on a series of cases decided by this

Court, numerous courts uniformly have held that state

law claims of the nature alleged in this case are pre

empted. Further, this Court recently denied certiorari ina

case with issues similar, if not identical, to those present

here. Corcoran v. Untted Healthcare, Inc., 965 F.2d 1321 (5th

Cir.), cert. dented, 113 S. Ct. 812 (1992).

Petitioners also claim, without merit, that the lower

courts incorrectly applied the legal standard applicable to

motions for summary judgment. An examination of the

opinion below demonstrates that in evaluating Lincoln

National's motion, the court of appeals properly viewed

all material facts in the light most favorable to peti-

tioners, and that there is no dispute as to any fact mate-

rial to ERISA’s application.

1. THE COURT OF APPEALS PROPERLY FOLLOWED

THIS COURT’S PRIOR DECISIONS INTERPRET-

ING ERISA’S PREEMPTIVE SCOPE.

The decision of the court of appeals is legally correct

and consistent with prior decisions by this Court and

those of other circuit courts.

Petitioners try to deflect attention from Lincoln

National's administration of the Belger Plan by emphasiz

ing, alleged facts which are irrelevant to the issue of

whether ERISA preempts the state law claims. Petitioners

cite cases which are legally and factually insufficient to

support their petition. All Lincoln National's actions were

taken in relation to the administration of the Belger Plan

and, therefore, ERISA preempts petitioners’ alleged

causes of action

A. Substantial Precedent From This Court And

Other Circuit Courts Supports The Court Of

Appeals’ Decision.

[his Court has directly addressed the application of

ERISA’Ss preemptive scope E.g., Shaw v. Delta Atr Lines,

Inc., 463 U.S. 85 (1983). In Shaw, the Court ruled that New

York laws forbidding discrimination in employee benefit

plans on the basis of pregnancy, and a law requiring

employers to pay sick-leave benefits to employees unable

to work because of pregnancy, were preempted by ERISA

[his Court noted that “a law ‘relates to’ an employee

benefit plan, in the normal sense of the phrase, if it has a

connection with or reference to such a plan.” Id. at 96-97

Critically, the Court ruled that Congress used the “relate

to” language in 29 U.S.C. § 1144(a) in its broad sense

to preempt only state laws spec fic ally designed

to effect employee benefit plans would be to

ignore the remainder of § 514(a). It would have

been unnecessary to exempt generally applica

ble state criminal statutes from preemption from

§ 514(a), for example, if § 514(a) applied only to

state laws dealing specifically with ERISA plans

iLa

It was further observed in Shaw. based on

] ’ l a ~. » He BD aie ’ + °

legislative history, that the preemption clause was no

i

12

—

limited to matters specifically covered by ERISA, such as

reporting, fiduciary responsibilities and the like. Id. at 98.

ERISA preempts state laws that relate to employee benefit

plans regardless of whether they directly conflict with

substantive provisions of an ERISA plan. Id. By giving the

“relate to” phrase in § 514(a) its “broad, common-sense

meaning,” Metropolitan Life Ins. Co. v. Massachusetts, 471

U.S. 724, 739 (1985), it is clear that state law claims,

including those in this case, are intended to be preempted

within the parameters of section 514.° This Court has

“repeatedly stated that a law ‘relates to’ a covered

employee benefit plan for purposes of § 514(a) ‘if it has a

connection with or reference to such a plan.’ ” District of

Columbia v. Greater Washington Bd. of Trade, 113 S. Ct. 580,

583 (1992) (quoting Shaw, 463 U.S. at 97 (1983)); see also

Ingersoll-Rand Co. v.. McClendon, 498 U.S. 133, 139 (1990);

‘MC Corp. v. Holliday, 498 U.S. 52, 58-59 (1990); Pilot Life

Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (1987).

6 Indeed, the breadth of the preemptive effect of ERISA is

evidenced by Congress’ refusal to enact proposed legislation

which would have allowed preemption only of state laws

specifically dealing with employee benefit plans. See Shaw, 463

U.S. at 98-99, nn. 18, 19 and 20; Champion Int'l Corp. v. Brown, 731

F.2d 1406, 1409 (9th Cir. 1984) (broad preemption to prevent

conflicting and inconsistent state regulation); American

Progressive Life & Health Ins. Co. v. Corcoran, 715 F.2d 784, 786 (2d

Cir. 1983) (sweeping preemptive effect); Hotel and Restaurant

Employees and Bartenders Int'l Union Local 54 v. Danzinger, 709

F.2d 815, 830 (3d Cir. 1983) (preemption as broad as “relate to”

language), vacated on other grounds, 468 U.S. 491 (1984); Stone and

Webster Eng'g Corp. v. Ilsley, 690 F.2d 323, 329 (2d Cir. 1982)

(Section 1141(a) clearly eliminates the threat of conflicting or

inconsistent state laws), aff'd, 463 U.S. 1220 (1983); General

Motors Corp. v. Buha, 623 F.2d 455, 459 (6th Cir. 1980)

(preemption central to ERISA).

14

company is saying I’m not going to pay for it.

Now, that’s what insurance companies do all the

time . . . as I wrote in the first opinion, I don’t

think it makes any difference, actually, how you

characterize it... . Your view just doesn’t make

any sense to me because it isn’t supported by

any facts.

Regardless of how petitioners wish to characterize Lin-

coln National's action in connection with the precertifica-

tion request, the action taken by Lincoln National was in

connection with Lincoln National’s interpretation of ben-

efits afforded under the terms and conditions of the Bel-

ger Plan. As such, Lincoln National’s actions and

obligations are governed by ERISA and petitioners’ state

law claims are preempted.

B. The Eighth Circuit's Decision Does Not Conflict

With Any Supreme Court Decision.

Contrary to petitioners’ assertion, the Eighth Cir-

cuit’s decision does not conflict with any Supreme Court

decision. Petitioners’ reliance upon Mackey v. Lanier Col-

lections Agency, 486 U.S. 825 (1988) is simply misplaced.

Mackey already has been held by this Court to be distin-

guishable from, and therefore consistent with, the other

Supreme Court decisions relied upon by the Eighth Cir-

cuit.

In Mackey, this Court affirmed a Georgia Supreme

Court decision that a state statute barring garnishment of

ERISA welfare plan benefits was preempted, while the

general state garnishment law was not preempted. This

Court held the anti-garnishment statute’s “express refer-

ence to ERISA plans” suffices to bring it within the fed-

eral law’s preemptive reach. Id. at 830. With respect to the

general garnishment statute, however, this Court relied

15

on ERISA provisions and the statute's structure to con-

clude Congress did not intend to forbid state garnish-

ment procedures against welfare plans. Id. at 831.

In Ingersoll-Rand Co. v. McClendon, 498 U.S. 133

(1990), this Court held ERISA preempts a state common

law claim of wrongful discharge to prevent attairmment of

ERISA pension benefits. The Court noted that although it

had recognized certain limits to ERISA preemption, citing

Mackey and Ft. Halifax Packing Co. v. Coyne,” these limita-

tions were not applicable in the case before it:

We are not dealing here with a generally appli-

cable statute that makes no reference to, or

indeed functions irrespective of, the existence of

an ERISA plan. Nor is the cost of defending this

lawsuit a mere administrative burden. Here, the

existence of a pension plan is a critical factor in

establishing liability under the State’s wrongful

discharge law. As a result, this cause of action

relates not merely to pension benefits, but to the

essence of the pension plan itself.

Ingersoll-Rand, 498 U.S. at 139. Here, as in Ingersoll-Rand,

the existence of the Belger Plan not only is a critical

factor, but the only reason Lincoln National had any

dealings whatsoever with Mr. Kuhl. Because petitioners’

alleged causes Of action relate directly to the limitations,

restrictions and exclusions of the Belger Plan, they are

preempted by ERISA.

The Eighth Circuit explained why the limitation on

preemption recognized in Mackey is not applicable in the

present case:

Under Pilot Life, any state law claim that Buddy

Kuhl may have had against Lincoln National for

> 482 U.S. 1, 23 (1987) (holding that a state law which

required payment of severance benefits was not preempted

because the statute did not require the estaolishment or

maintenance of an ongoing plan).

16

its conduct in delaying the surgery scheduled

for July 6, 1989, arose from Lincoln National's

denial of benefits under the Belger Plan. The

Kuhls’ attempt to invoke Mackey and to charac-

terize their claims as merely tangentially related

to the Plan is unpersuasive. Accordingly, the

Kuhls’ state law claims through Buddy Kuhl

“relate to” the Belger Plan and are preempted by

ERISA.

P.App. at A-12. As in Ingersoll-Rand, the Court’s inquiry

in this case necessarily is directed to the Belger Plan,

because the action which forms the basis of the alleged

causes of action “arose from Lincoln National’s denial of

benefits under the Belger Plan.” P.App. A-12.

Petitioners rely on dicta in Mackey which lists “run of

the mill” state law claims not preempted by ERISA,

including claims against plans for unpaid rent, unpaid

attorneys’ fees, and libel. See Mackey, 486 U.S. at 833 n.8.

Petitioners’ characterization of the instant claim as within

the “run of the mill tort claim” category simply is without

support from the Mackey decision itself, or from the

Eighth Circuit. None of these examples is analogous here

because they are totally unrelated to the performance by

the detendant plan of any ERISA functions. The Eighth

Circuit referenced the Mackey list of “run of the mill”

state claims, P.App. at A-12, but concluded the case was

outside this category.

A cause of action for alleged medical negligence in

connection with a benefit determination is neither a “run

of the mill” state law claim, nor a “generally applicable”

cause of action that “functions irrespective of the exis-

tence of an ERISA plan.” Ingersoll-Rand, 498 U.S. at 139.

Thus, the Eighth Circuit’s conclusion that ERISA pre-

empts such a cause of action does not conflict with

Mackey, and there is no basis to claim that the decisions

are in conflict with one another.

17

C. As In Corcoran, Certiorari Is Not Warranted

Here.

his Court recently denied the petition for certiorari

‘tiled in a case with issues similar, if not identical, to those

present here. Corcoran v. United Healthcare, Inc., 965 F.2d

1321 (5th Cir), cert. dented, 113 S. Ct. 812 (1992). In Cor-

coran, plainti., ‘s obstetrician placed her in a category of

high risk pregnancy and ordered that she be hospitalized

so that he could monitor the fetus around the clock. In

accordance with the plan, the doctor sought precertifica-

tion from the administrator for the participant’s hospital

stay. The administrator solicited a second opinion on the

participant’s condition from another obstetrician who

advised that “the company would be at considerable risk

denying her doctor’s recommendation.” Id. at 1322.

Despite both doctors’ recommendations, the administra-

tor determined that hospitalization was not necessary

and refused to precertify the hospitalization, instead

authorizing payment for 10 hours per day of home nurs-

ing care. Upon learning that precertification was denied,

the participant left the hospital and returned home. Id. at

1324. Less than two weeks after returning home, during a

time when no nurse was on duty, the fetus went into

distress and died. Id.

Plaintiffs in Corcoran filed a wrongful death action in

state court, alleging that their unborn child died as a

result of various acts of negligence by the plan adminis-

trator and others. Defendant removed to federal court

pursuant to ERISA, and thereafter moved for summary

judgment. Id. As here, plaintiffs argued that the plan

administrator (“United”) made medical decisions, not

benefit determinations. The Fifth Circuit rejected this the-

ory:

18

In our view, United makes medical decisions as

part and parcel of its mandate to decide what

benefits are available under the Bell Plan.

When United’s actions are viewed from this per-

spective, it becomes apparent that the Corcorans

are attempting to recover for a tort allegedly

committed in the course of handling a benefit

determination. The nature of the benefit deter-

mination is different than the type of decision

that was at issue in Pilot Life, but it is a benefit

determination nonetheless. The principle of Pilot

Life that ERISA preempts state law claims alleg-

ing improper handling of benefit claims is broad

enough to cover the cause of action asserted

here.

Id. at 1324. Concluding that “the central purpose of the

lawsuit is to hold United liable for actions it took in

connection with its duties under the plan,” the Fifth

Circuit affirmed the district court’s grant of summary

judgment against plaintiffs. Id. at 1334.

The same reasons why this Court denied the result-

ing petition for certiorari in Corcoran apply here. In this

case, like Corcoran, petitioners seek to hold Lincoln

National liable for actions taken in connection with its

role as administrator of an ERISA plan. As in Corcoran,

Lincoln National initially denied the participant’s request

for payment of benefits, and second opinions of physi-

cians were reviewed in re-assessing the initial denial of

benefit payments. Further, the policies in favor of apply-

ing ERISA’s “unique preemptive force” are even stronger

in this case. As opposed to the Corcoran plan administra-

tor that did not necessarily rely upon an interpretation of

the applicable ERISA plan when making its decisions,

Lincoln National fully relied upon the restrictions and

exclusions of the Belger Plan to determine whether the

Plan provided benefits for a surgery to be performed by

19

non-participating doctors at a hospital outside the “Ser-

vice Area.” After concluding the Belger Plan did not

provide benefits in such a situation, Lincoln National

informed Barnes that it could not precertify the surgery.

Corcoran directly addresses, and rejects, petitioners’

contention that Lincoln National provided “medical treat-

ment” to Mr. Kuhl. Indeed, the Corcoran court ruled that

medical decisions occur “in the context of making a

determination about the availability of benefits under the

plan,” and therefore “relate to” an ERISA plan. Id. at

1311. Such a finding is further supported in this case,

where petitioners allege Lincoln National provided “neg-

ligent medical treatment” to Mr. Kuhl without any evi-

dence that Lincoln National provided any treatment to

Mr. Kuhl at all.

If arguments such as those advanced by petitioners

had any merit, this Court would have addressed them by

granting certiorari in Corcoran, where essentially the same

issues were presented for review. Just as Corcoran was

consistent with prior Supreme Court precedent, thereby

leaving no need for this Court to accept certiorari in that

case, this case presents no novel legal issue warranting

the grant of certiorari.

D. Federal Courts Consistently Rule That ERISA

Preempts Wrongful Death Claims for Medical

Malpractice.

Case law consistently establishes that ERISA pre-

empts wrongful death claims. Corcoran v. United Health

Care, Inc., 965 F.2d 1321 (5th Cir.), cert. denied, 113 S. Ct.

812 (19¢2); Holmes v. Pacific Mut. Life Ins. Co., 706 F. Supp.

733 (C.D. Cal. 1989); Settles v. Golden Rule Ins. Co., 715 F.

Supp. 1021 (D. Kan. 1989), aff'd, 927 F.2d 505 (10th Cir.

1991). Petitioners are unable to cite a single case from any

20

jurisdiction in which a wrongful death claim arising out

of plan administration was not preempted by ERISA, nor

can petitioners distinguish their wrongful death claim

from those preempted by ERISA in every other case to

have addressed the issue.

A wrongful death claim with facts strikingly similar

to the present case also was dismissed due to ERISA

preemption in Holmes v. Pacific Mut. Life Ins. Co., 706 F.

Supp. 733 (C.D. Cal. 1989). In Holmes, the plan participant

developed a liver disorder and made arrangements for

surgery to be performed. The defendant insurance com-

pany erroneously affirmed that it provided coverage for

the surgery. After arrangements for surgery had been

made, the medical center called to verify that the insurer

covered the cost of the surgery. This time the insurer

answered that it did not. After a delay, the surgery was

rescheduled. However, before another donor liver was

available, the participant died. Id. at 734.

Plaintiffs filed a wrongful death action in California

state court. Defendant removed to federal court and

moved for summary judgment because ERISA preempted

plaintiffs’ state law claims, which were based entirely on

representations made by the defendant acting in its

capacity as the plan’s administrator. Id.

The Holmes court reasoned that even if the state law

in question is one of general application and is not

designed to affect ERISA plans other than in an indirect

manner, it is preempted if it is caught within ERISA’s

“expansive sweep.” Id. at 736. The court also ruled that

ERISA requires preemption of actions against plan

administrators as well as plans themselves. Id. After

granting defendant's petition for removal, the court dis-

missed all plaintiffs’ causes of action.

21

In the present case, as in Holmes, a hospital which

scheduled a surgery to be performed called the plan

administrator to verify that benefits had been certified for

surgery and was informed that the surgery was not a

covered benefit under the plan. As in this case, the

patient in Holmes died before the surgery could be

rescheduled. Like Lincoln National, the defendant in

Holmes made an assessment directly relating to benefits

provided under an ERISA plan, and therefore the alleged

causes of action are preempted by ERISA.

The Tenth Circuit Court of Appeals also ruled that a

wrongful death cause of action was preempted by ERISA

in Settles v. Golden Rule Ins. Co., 715 F. Supp. 1021 (D. Kan.

1989), aff'd, 927 F.2d 505 (10th Cir. 1991). In Settles, after

notification that his coverage was terminated by his

ERISA plan administrator, plaintiff’s husband allegedly

suffered a heart attack and died as result of this notifica-

tion. Plaintiff filed an action against her late husband's

group health insurer, alleging causes of action (breach of

contract, outrage, fraudulent denial of coverage, and

wrongful death) similar to those alleged by petitioners in

this case. The district court, relying upon ERISA preemp-

tion, granted defendant’s motion to dismiss.

The Tenth Circuit ruled on appeal in Settles that

ERISA preempted all plaintiff’s claims:

Here the injury alleged was a direct result of the

termination of plan benefits and cannot be char-

acterized as “wholly remote from the benefit

plan” (citations omitted) . . . the factual basis for

each of plaintiff’s state law claims directly con-

cerns the alleged improper administration of the

benefit plan. Although plaintiff is not seeking

benefits under the insurance policy, her claims

22

require a finding that defendant wrongfully ter-

minated Mr. Settles’ insurance coverage. There-

fore, the claims relate to the employee benefit

plan.

Id. at 509.

Just as the Settles plaintiff claimed her husband's

death was caused “as a direct consequence of defendant's

action in terminating her husband’s health insurance,” id.

at 507, petitioners claim Mr. Kuhl’s death was caused as a

direct result of Lincoln National’s actions. In the present

case, as in Corcoran, Holmes and Settles, the injuries

alleged by petitioners are a direct result of supposed

improper handling of Mr. Kuhl’s claim for payment of

benefits to cover his contemplated surgery. Petitioners

have not cited a single case holding to the contrary and

Lincoln National has not found any such case. Every

applicable case leads to the conclusion that federal courts

have resolved this issue identically each time it is raised,

and there is no reason for the Court to grant certiorari

here.

E. The Eighth Circuit’s Decision Furthers The Pur-

poses Behind ERISA’s Preemption Provision.

In Mertens v. Hewitt Assocs., 113 S. Ct. 2063 (1993),

this Court recently expressed its reluctance to tamper

with the delicate balance crafted by Congress when

enacting ERISA:

There is, in other words, a “tension between the

primary [ERISA] goal of benefitting employees

and the subsidiary goal of containing pension

costs.” Alessi v. Raybestos-Mankattan, Inc., 451

U.S. 504, 515 (1981); see also Massachusetts Mut.

Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985);

we will not attempt to adjust the balance

between those competing goals that the text

adopted by Congress has struck.

23

Id. at 2072. By seeking reversal of the lower courts, peti-

tioners invite this Court not only to disrupt the statutory

scheme adopted by Congress, but also to undercut sub-

stantial precedent interpreting ERISA since its enactment.

Criticisms of ERISA’s preemptive scope should be

addressed to Congress and not this Court.

In enacting ERISA, Congress intended that “plans

and plan sponsors would be subject to a uniform body of

benefit law” and not subject to the “burdens of comply-

ing with conflicting directives among States or between

States and the Federal Government.” Ingersoll-Rand Co. v.

McClendon, 498 U.S. 133, 142 (1990). The Eighth Circuit's

ruling furthers this purpose by avoiding a decision that

could lead to the variant regulatory schemes Congress

sought to avoid. State laws that subject plans to inconsis-

tent regulations in different states, thereby increasing

inefficiency and potentially causing the plan to respond

by reducing benefit levels, consistently are preempted by

ERISA. See Corcoran v. United Health Care, Inc., 965 F.2d

1321, 1333 (5th Cir.) cert. denied, 113 S. Ct. 812 (1992). As

this Court stated in Ingersoll-Rand:

It is foreseeable that state courts, exercising

their common law powers, might develop differ-

ent substantive standards applicable to the same

employer conduct, requiring the tailoring of

plans and employer conduct to the peculiarities

of the law of each jurisdiction. Such an outcome

is fundamentally at odds with the goal of uni-

formity that Congress sought to implement.

498 U.S. at 143. Similarly, there is a significant risk that

state liability rules would be applied differently to the

conduct of utilization review companies in different

states. The cost of complying with varying substantive

standards would increase the cost of providing utilization

review services and ultimately would decrease the pool

24

of plan funds available to reimburse participants. See

Corcoran, 965 F.2d at 1333.

A plan administrator that makes a commitment to

pay certain benefits undertakes a host of obligations,

such as determining the eligibility of claimants, calculat-

ing benefit levels, monitoring the availability of funds for

benefit payments, and other tasks. The most efficient way

to meet these responsibilities is to establish a uniform

administrative scheme, which provides a set of standard

procedures to guide claims processing and benefit dis-

bursement. However, such a system is difficult, if not

impossible, to achieve if a plan administrator is subject to

liability beyond what is set forth in ERISA.

Clearly, if plan administrators are subjected to state

law claims, the resulting costs will be passed on to plans

in the form of higher fees and lower benefits, all to the .

detriment of the vast majority of persons covered by the

plans. With the national crisis facing this country in con-

nection with health care and its costs, the balance struck

by Congress in preempting claims such as those asserted

by petitioners in this case ultimately benefits all plan

participants. Subjecting a plan administrator to such

uncertainty introduces inefficiencies and vulnerabilities

that ultimately lead to reduced benefits in existing plans,

and to certain plan administrators refraining from offer-

~_

ing benefits at all. Shaw, 463 U.S. at 104.

Recognizing the threat of such uncertainty, Congress

intended ERISA’s preemptive scope to shield ERISA plan

administrators from unforeseen liabilities. This is critical

to the entire statutory scheme. H. R. Rep. No. 533, 93rd

Cong. Ist Sess. 8, reprinted in 1974 U.S. Code Cong. &

Admin. News 4639, 4646. Congress’ comprehensive legis-

lative scheme, including an integrated system of pro-

cedures for enforcement, is implicated in this case. It is

-

25

not for the courts to disturb the balance Congress deter-

mined appropriate. See Massachusetts Mut. Life Ins. Co. v.

Russell, 473 U.S. 134, 147 (1985).

F. The Eighth Circuit Correctly Ruled That ERISA

Preempts Petitioner Mary Kuhl’s Emotional Dis-

tress Claim.

Petitioners attempt to rely on one circuit court case,

Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821 (lst

Cir. 1988), cert. denied, 488 U.S. 909 (1988), which purpor-

tedly conflicts with decisions of other circuit courts as to

whether emotional distress claims are preempted by

ERISA. Drinkwater is distinguishable under the law and

on its facts.

While Drinkwater did not preempt the emotional dis-

tress cause of action alleged in that case, the court nev-

ertheless entered summary judgment because plaintiff

neither alleged nor established that she suffered any

injury to support her emotional distress claim. Id. at 826.

lherefore, the language relied upon by petitioners in

Drinkwater addressing ERISA is dicta at best.

Further, the failure of the Drinkwater court to recog-

nize ERISA’s preemption of claims for emotional distress

places it directly at odds with virtually every other court

which has addressed this issue. See Powell v. Chesapeake

and Potomac Tel. Co., 780 F.2d 419 (4th Cir. 1985), cert.

denied, 476 U.S. 1170 (1986); Johnson v. District 2 Marine

Eng’rs Beneficial Assoc., 857 F.2d 514 (9th Cir. 1988).” In

® See also Meyer v. Employers Health Ins. Co., 722 F. Supp. 547

(E.D. Wis. 1989); Rollo v. Maxicare of Louisiana, Inc., 698 F. Supp.

111 (E.D. La. 1988); Pane v. RCA Corp., 667 F. Supp. 168 (D.N.J.

1987), aff'd, 868 F.2d 631 (3d Cir. 1989); Smith v. Electronical Data

Sys. Corp., 657 F. Supp. 1242 (D. Colo. 1987); Folz v. Marriott

Corp., 594 F. Supp. 1007 (W.D. Mo. 1984).

Powell, a case cited by both the Eighth Circuit and the

district court, plaintiff brought a claim for intentional

intliction of emotional distress against her former

employer and her former benefit plan. The Fourth Circuit

26

ruled that ERISA preempted plaintift’s claim:

Powell, 780 F.2d at 421. The application of ERISA’s broad

preemptive scope in Powell to claims against an HMO

that are identical to those of petitioners’ here provides

In this case, none of the state laws under which

(plaintiff) claims relief have any intrinsic con-

nection with employee benefit plans. The ques-

tion is therefore whether state law claims which

relate to the administration of an ERISA-gov-

erned plan, but which arise under general state

laws, which themselves have no impact on

employee benefit plans, are within the scope of

ERISA preemption. Given the “unparalleled

breadth of the preemption clause,” Holland v.

Burlington Indus., Inc., 772 F.2d 1140, 1147 (4th

Cir. 1985), and the broad remedial policies of

ERISA, we hold that state laws, insofar as they

are invoked by beneficiaries claiming relief for

injuries arising out of the administration of

employee benetit plans, “relate to” such plans

and, absent an applicable exemption, are pre-

empted by ERISA.

additional support for the Eighth Circuit’s ruling.

THE COURT OF APPEALS PROPERLY CONSID-

ERED THE EVIDENCE IN AFFIRMING THE DIS-

TRICT COURT'S GRANT OF LINCOLN

NATIONAL’S MOTION FOR SUMMARY JUDG-

MENT.

A. There Exists No Issue Of Material Fact.

In reviewing the district court’s decision to grant sum-

mary judgment, the court of appeals properly considered

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28

National takes issue with many of the factual characteriz-

ations made by petitioners, none of the facts material to

ERISA’s application have been disputed. The courts

below correctly ruled that ERISA preempts petitioners’

claims

B. The District Court’s Ruling Was Correct.

The district court set forth an exhaustive analysis ot

the applicable tacts, law and the appropriate standard for

summary judgment in tts order. The district court was

well aware of the burden imposed upon a party moving

for summary judgment:

In ruling on a motion for summary judgment, it

is the court’s obligation to view the facts in the

light most favorable to the adverse party and to

allow the adverse party the benefit of all reason-

able interences to be drawn from the evidence.

Adickes v. S.H. Kress & Co., 398 U.S. 144, 157

(1970); Inland Oil and Trans. Co. v. United States,

600 F.2d 725, 727-28 (8th Cir.), cert. denied, 444

U.S. 991 (1979)... . A genuine issue of material

tact exists “if the evidence is such that a reason-

able jury could return a verdict for the nonmov-

ing party.” Anderson v. Liberty Lobby, Inc., 106

S.Ct. 2505, 2510 (1986) . . . The inquiry to be

made mirrors the standard for a directed ver-

dict: whether the evidence presented by the

party with the onus of proof is sufficient that a

jury could properly proceed to return a verdict

for that party. Anderson v. Liberty Lobby at 2511.

P.App. at C-7, 8.

Far from ignoring the appropriate summary judg-

ment standard, the district court took great pains both to

set forth the appropriate standard in its order, and to

apply that standard to the facts of this case.

EL ee |

a9

Additionally, six months after initially granting Lin-

coln National’s motion for summary judgment, the dis-

trict court entertained oral argument to further insure

that petitioners’ arguments had been thoroughly

analyzed. During the oral argument, the district court

again studied all factual and legal arguments raised by

petitioners and again dismissed their claims. Thus, peti

tioners’ contention that the district court erred in review-

ing the evidence ignores the painstaking steps taken by

the court to do exactly that

C. The Eighth Circuit’s Ruling Was Correct.

[he court of appeals also applied the correct stan-

dard in reviewing the district court’s grant of summary

judgment. The court of appeals expressly recognized its

obligation to view all inferences from the facts in the light

most favorable to petitioners. Even doing so, however,

the court of appeals ruled Lincoln National was entitled

to summary judgment:

faking the facts in the light most favorable to

the Kuhls, as we must for purposes of Lincoln

National’s motion for summary judgment, we

are compelled to agree with the district court.

P App. at A-11.

Petitioners claim that the Eighth Circuit was disin-

genuous by “repeating the maxim” regarding the stan-

dard for summary judgment but then “flatly reject[ing]

the facts averred by the Kuhls.” Petitioners’ Brief at 23.

Not only does petitioners’ argument improperly dispar-

age the court of appeals, it also has no basis in law or

fact. The lower court properly focused on those facts

material to Lincoln National’s motion for summary judg-

ment, and correctly ruled there was no dispute as to any

such fact. While petitioners make much of the testimony

30

of Dr. Levi, the Eighth Circuit correctly noted that there is

no evidence that Mr. Kuhl sought medical treatment from

Lincoln Nationai at any time. Further, the court’s review

of the record made “clear that [Mr. Kuhl] was not under

the misconception that Lincoln National had taken the

place of his treating physicians. ...” P.App. at A-12. This

additional tinding demonstrates that the court of appeals

properly considered all evidence and correctly affirmed

the judgment of the district court.

CONCLUSION

For the reasons stated herein, the Petition for Writ of

Certiorari to the United States Court of Appeals for the

Eighth Circuit by Petitioners Mary Kuhl, Buddy Kuhl, Jr.

and Marnie K. Kuhl should be denied.

Respectfully submitted,

Mark E. JOHNSON

R. CHRISTOPHER ABELI

Terry L. Tyrreti

WittiAmM E. HANNA

Morrison & HecCKER

2600 Grand Avenue

Kansas City, Missouri 64108-4606

(816) 691-2600

(FAX) 474-4208

Attorneys for Respondent

Lincoln National Health Plan

of Kansas City, Inc.