Petition for Writ of Certiorari — Corcoran v. United Healthcare, Inc.

Supreme Court brief1992

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92-547 |

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SEP 23 Wade

In the

Supreme Court of the United States

OCTOBER TERM, 1992

FLORENCE B. CORCORAN, WIFE OF/AND

WAYNE D. CORCORAN

Petitioners

Vv.

UNITED HEALTHCARE, INC.

AND BLUE CROSS AND

BLUE SHIELD OF ALABAMA, INC.

Respondent

PETITION FOR A WRIT OF CERTIORARI

SCOTT LaBARRE

Gauthier & Murphy

3500 North Hullen Street

Metairie, Louisiana 70002

Telephone: (504) 456-8600

A B Letter Service, Inc., 327 Chartres St., New Orleans, La. (504) 581-5555

¢ ; .

QUESTIONS PRESENTED

1. Whether § 514(a) of the Employee Income Security

Act (“ERISA’”’), 29 USC § 1144(a), preempts state law

causes of action for the wrongful death of an unborn child

based on medical negligence?

2. Whether § 502(a)(3) of ERISA, 29 USC §

1132(a)(3), permits plan beneficiaries to recover extracon-

tractual damages for the wrongful death of their unborn

child due to the medical negligence of a plan fiduciary?

PARTIES TO THE PROCEEDINGS

Florence Corcoran

Wayne Corcoran

United HealthCare Incorporated

Blue Cross and Blue Shield of Alabama, Inc.

iil

TABLE OF CONTENTS

QUESTIONS PRESENTED

PARTIES TO THE PROCEEDINGS

pe OP Se) 8 vy 4 yy.

TABLE OF AUTHORITIES ..... ee |

OPINIONS BELOW.

JURISDICTIONAL STATEMENT .......

Page No.

ill

STATUTES AND REGULATIONS INVOLVED ..... x

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

REASONS FOR GRANTING THE WRIT...

II.

TO RESOLVE A CONFLICT IN THE

CIRCUITS OVER WHETHER PRO-

FESSIONAL MALPRACTICE AC-

TIONS SUCH AS THIS ONE ARE

PREEMPTED BY 29 USC § 1144(a) .

THE FIFTH CIRCUIT’S DECISION

CONFLICTS WITH 1) THIS

COURT’S PRIOR DECISIONS CON-

STRUING 29 USC § 1144(a), AND 2)

THE LEGISLATIVE PURPOSE EM-

BODIED IN ERISA...... ese

TABLE OF CONTENTS (continued)

Page No.

Ill. TO RESOLVE A SPLIT IN THE CIR-

CUITS OVER WHETHER EXTRACON-

TRACTUAL MONEY DAMAGES ARE

RECOVERABLE UNDER 29 USC §

1332(a)(3)(B) AS “OTHER AP-

PROPRIATE EQUITABLE RELIEF” ..... 18

PEE ees wd ar ee eee 27

APPENDIX

I BN sev vena: Ficca cea ehh eae me ..A-1

PN 5S ar cca Ae ee ee A-39

fk I rn re ee ern rary re ers A-48

PE Ga eee eee ee ee ....A-5l

ET 5s os, wea ee eo Poe ae A-53

PE i A EO re Cee ee eee eee A-54

TABLE OF AUTHORITIES

CASES: Page No.

Albemarle Paper Co. v. Moody, 422 U.S. 405, 418,

96 S.Ct. 2973 (1975) ..... 2. ec eee. Pee:

Albert Einstein Medical Center v. Action Manu-

facturing Company, 697 F.Supp. 883, 885 (E.D.

ee ree ere 13

Alessi v. Raybestos-Manhattan, Inc., 451 U.S.504,

§22, 101 S.Ct. 1895, 1905 (1981) ............... 15

Bishop v. Osborn Transp., Inc., 838 F.2d 1173

(11th Cir.), cert. denied, 488 U.S. 832, 109 S.Ct.

90, 102 L.Ed.3d 66 (1968)... ..... 22... cece 19

Cipolione v. Liggett Group, Inc., __.. U.S. ___,

nacumety LAM . BOO, Owe LIGSL). cs on ec eee 16

Danos v. St. Pierre, 402 So.2d 633 (La. 1981) ........ 10

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

821 (1st Cir.), cert. denied, 488 U.S. 909, 109 S.Ct.

261, 102 L.Bd.2a 369 (1966)... 2 6 6 iv cee eens .19

Firestone Tire and Rubber Company v. Bruch, 489

US. » 100 BAK. OSS COO .. «ob eens tens 17,24

Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1,

B, TOT DAS. TRAE Bere Cee oe ho ee eevee 15

Franklin v. Gwinnett County Public Schools,

U.S. —__, 112 S.Ct. 1026, 1033 (1907) ............ 26

TABLE OF AUTHORITIES (continued)

CASES: Page No.

Green v. Walker, 910 F.2d 291, 296 (5th Cir. 1990) ...11

Harsch v. Eisenberg, 956 F.2d 651 (7th Cir. 1992),

petition for cert. filed, 60 U.S.L.W. (U.S. May 11,

1992) (no. 91-1835) .............. oer ae, 19

Independence HMO, Inc. v. Smith, 733 F.Supp. 983

(.D. Pa. 1000)......... RAM Teter se rae 13

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

umns 111 S.Ct. 478, 462 (11900)... ...... ..15, 23-25

Mackey v. Lanier Collections Agency & Service, 486

U.S. 825, 108 S.Ct. 2182 (1988) .............12,14,18

Massachusetts Mutusl Life Ins. Co. v. Russell, 473

U.S. 134, 105 S.Ct. 3085 (1985) ...............18-24

Metropolitan Life Ins. Co. v. Massachusetts, 471

U.S. 724, 738, 740, 105 S.Ct. at 2380, 2388-9

NED hc 6 ee cs eh ee ee ee ae ees ee

Novak v. Anderson Corp., 962 F.2d 757 (8th Cir.

RR kine en eee ee eae ee eee oe 19

Painters of Philadelphia District Council No. 21

Welfare Fund v. Price Waterhouse, 879 F.2d 1146

gt eee ty Tre 11,12

frappas v. Buck Consultants, Inc., 923 F.2d 531 (7th

Ot EAA ere Ast a Sng yh Ss a. 12

Vil

TABLE OF AUTHORITIES (continued)

CASES: Page No.

Pickett v. Cigna Healthplan of Texas, Inc., 742

F.Supp. 946 (S.D. Tex. 1990) . 7 12

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct.

1549 (1987) Mahe bree oats PS oanls 10,16

Pitre v. Opelousas General Hospital, 530 So.2d

1151, 1157 (La. 1988) | | eras i 10

Schultz v. National Coalition of Hispanic M.H.H.S.

Org., 678 F.Supp. 936, 938 (D.D.C. 1988)..........15

Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90, 103

OE Bee Be Chee oc Os ke oe ce ea be eee ee 15

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 104

S.Ct. 615 (1984)... | | 16-17

Singer v. Black & Decker Corp., 964 F.2d 1449,

Cig 8S i er

Sokol v. Bernstein, 803 F.2d 532 (9th Cir. 1986)......19

Walters v. Marathon Oil Co., 642 F.2d 1098, 1100

(7th Cir. 1982).... rep paar . , 26-27

Warren v. Society Nat. Bank, 905 F.2d 975 (6th Cir.

1990), cert. denied, 11] S.Ct. 2256

(1991) .... ee Pee ... es O21, 24,26

viil

STATUTES: Page No.

29 USC § 1132(a)(3B)............. v1i,6,7,9,16,18-24,26

ee re ko SE ee

Be Ue @ bi6e Oe). i... oe x,10,11,14,15,16,18,25

sce he a eo eee

OTHER AUTHORITIES: Page No.

Gregory, “The Scope of ERISA Preemption of

State Law: A Study of Effective Federalism,’’ 48

U. Pitt. Law Rev. 427, 457 (1987) ..............

Mellas, Adopting the Judicial Approach to Medical

Malpractice Claims Against Physicians to Reflect

Medicare Cost Containment Measures, 62

U.Colo.L.Rev. 287, 316 (1991) .................

Note, Paying the Piper: Third Party Payor Liability

for Medical Treatment Decisions, 25 Ga.L.Rev.

eng TEE CERN Ss site he ce ee ees cee aa ks

Note, ‘‘Participant and Beneficiary Remedies Under

ERISA: Extracontractual and Punitive Damages

After Massachusetts Mutual Life Ins. Co. v.

Russell,’’ 71 Cornell Law Review 1014, 1226

Pare ene ayaa aie Say ye ne en

U.S. Dep’t of Labor, Labor Management Services

Admin., Pension and Welfare Benefits Programs,

Estimates of Participant and_ Financial

Characteristics of Private Pension Plans at 1

Ds eee ik) pe ae ae ee Ra ein

OTHER AUTHORITIES: (continued) Page No.

U.S. Dep’t. of Labor, Bureau of Labor Statistics,

Employee Benefits in Medium and Large Firms,

Se ee ee ee ee ei ks 8

4 Health and Population Study Center, Battelle

Human Affairs Research Centers, Employee

Welfare Benefits Plans and Plan Sponsors in the

Private Nonfarm Sector in the United States,

Pr te re a as Se a

OPINIONS BELOW

The opinion of the United States Court of Appeals

for the Fifth Circuit is reported at 965 F.2d 1321 (5th Cir.

1992), and is reproduced in the appendix at A-1 - A-38, The

minute entry of the United States District Court for the

Eastern District of Louisiana granting summary judgment

to Respondent on preemption grounds, and that Court s

minute entry denying Petitioners’ motion for reconsidera-

tion pursuant to Federal Rule of Civil procedure 59 are

unreported, and are reproduced in the appendix at A-48.

JURISDICTIONIONAL STATEMENT

The judgment of the Court of Appeals for the Fifth

Circuit was entered on June 26, 1992. This Court has

jurisdiction under 28 USC § 1254(1).

STATUTES AND REGULATIONS INVOLVED

This case involves §§ 502(a) and 514(a) of the

Employee Retirement Income Security Act of 1974

(“ERISA’’), as amended, 29 USC §§ 1132(a), 1144(a) (1990),

and Louisiana Civil Code article 2315. These provisions are

reproduced in the appendix at A-51 - A-54.

STATEMENT OF THE CASE

This case raises two related questions concerning the

effect of ERISA on the quality of health care provided

through employee benefits plans established pursuant to

ERISA. The Petitioners, Wayne and Florence Corcoran,

alleged that the medical negligence of United HealthCare,

Inc. caused the wrongful death of their unborn son, Lloyd.

The Court of Appeals for the Fifth Circuit concluded that,

although there was evidence that ‘‘a serious mistake”’ had

been made, ERISA afforded the Corcorans neither a state

nor federal remedy for medical malpractice — in essence

holding that when Congress passed ERISA in 1974, it in-

tended to deprive beneficiaries of their state law causes of

action for medical negligence, and all remedies for wrongful

death occasioned by such negligence.

The Fifth Circuit’s conclusion is clearly at odds with

Congress’ express legislative purpose of securing employee

rights in their pension plans, 29 USC § 1001, and results

from an overly broad construction and application of

ERISA’s preemption provision without adequate regard

for the purpose of the statute as a whole and its other

provisions.

1. In approximately February, 1989, petitioner,

Florence Corcoran, became pregnant with what would have

been her third child. Mrs. Corcoran was an employee of

South Central Bell at the time, and was covered by a health

plan funded by Bell and administered by Blue Cross and

Blue Shield of Alabama, Inc. Several medical factors made

Mrs. Corcoran’s third pregnancy a complicated and dif-

ficult one. Dr. Jason Collins, her obstetrician, felt that the

pregnancy was sufficiently complicated to require Mrs.

Corcoran to have complete bed rest during the final months

of the pregnancy.

This was not Mrs. Corcoran’s first high risk pregnan-

cy. Her daughter, Amanda, aged six months, was also the

result of a high risk pregnancy. Dr. Collins was Mrs. Cor-

coran’s treating obstetrician for that pregnancy, and was

well acquainted with the medical problems posed by Mrs.

Corcoran’s condition.

As Mrs. Corcoran approached her delivery date, Dr.

Collins ordered her hospitalized so her condition could be

monitored around the clock. This was precisely the same

course of action he had taken during her previous pregnan-

cy, which resulted in the healthy birth — albeit by

caesarean section — of Amanda Corcoran.

One component of the Blue Cross insurance plan was

known as the Quality Care Program (‘‘QCP’’), which was

operated by defendant, United HealthCare, Inc. United

HealthCare, Inc. contracted with Blue Cross to provide

this service, which was essentially a medical review or

utilization review service. Mrs. Corcoran was a member of

the Quality Care Program during the pregnancy at issue.

United HealthCare set forth the features of the

Quality Care Program in a booklet. On page 1 of that

booklet, United HealthCare made the following representa-

tions concerning the services provided to members of the

program, such as Florence Corcoran:

WHAT QCP DOES

Whenever your doctor recommends surgery or

hospitalization for you or a covered dependent,

QCP will provide an independent review of your

condition (or your covered dependent’s). The pur-

pose of the review is to assess the need for the

surgery or hospitalization and to determine the

appropriate length of stay for a hospitalization,

based on nationally accepted medical guidelines.

As part of the review process, QCP will discuss

with your doctor the appropriateness of the

treatments recommended and the availability of

alternative types of treatments - or locations for

treatment - that are equally effective, involve less

risk, and are more cost effective.

INDEPENDENT, PROFESSIONAL REVIEW

United HealthCare, an independent professional

medical review organization, has been engaged to

provide services under QCP. United’s staff in-

cludes doctors, nurses, and other medical profes-

sionals knowledgeable about the health care

delivery system. Together with your doctor, they

work to assure that you and your covered family

members receive the most appropriate medical

care.

Similar representations are made at page 2 of the booklet,

in response to the query ‘““What does It Do?”’:

Provides independent, professional review when

hospitalization is recommended — to assist you in

making an enlightened decision regarding your

treatment.

(emphasis added). In the same section, the participant is in-

formed that failure to follow the medical advice of United

HealthCare could result in increased health risks.

Elsewhere in the booklet, United HealthCare informs

participants that much of the care recommended by their

own doctors is unnecessary. For example, at pages 5 and 6

of the booklet, in a section entitled, ‘Quality Care’ The

What and The Why’, the following information is

provided:

ONE-THIRD OF SURGERY

MAY BE UNNECESSARY

Recent studies suggest about one-third of all

surgery performed in the U.S. may be medically

necessary. Why is there all this unnecessary

surgery?

UNNECESSARY HOSPITAL STAYS

It used to be that the hospital was the only place

for many kinds of treatments and tests. That’s

not the case any longer. Today, many kinds of

treatments — even many surgeries — can be per-

formed in a doctor’s office or a free-standing

clinic. The advantage? You’re in and out the same

day and there’s no hospital stay which can be

dangerous and can cost as much as $300 per day

just for room and board.

Review by United HealthCare is not elective. At

page 8 of the QCP booklet, United HealthCare plainly

states that it must be called as a condition of every propos-

ed hospitalization, so that United HealthCare could pre-

certify the treatment to be received. Pursuant to these pro-

visions, United HealthCare was notified when Dr. Collins

ordered Mrs. Corcoran to be hospitalized for the remainder

of her pregnancy.

Upon notification, United HealthCare made its own

determination of Mrs. Corcoran’s medical needs. It deter-

mined that hospitalization was not medically necessary,

despite the fact that the same course of treatment had

proved successful during Mrs. Corcoran’s prior pregnancy,

and despite the further fact that two medical doctors — Dr.

Collins and independent medical examiner, Dr. Ward, hired

by South Central Bell! — agreed that Mrs. Corcoran’s

1 When Dr. Collins first ordered bed rest for Mrs. Corcoran, she applied

namie

medical condition was dangerous. Indeed, Dr. Ward ex-

plicitly stated that Dr. Collins’ recommendation should be

followed. Dr. Collins personally and specifically advised

personnel of United HealthCare that, if Mrs. Corcoran were

not hospitalized as he had ordered, both she and her baby

could die. Nevertheless, United HealthCare made the

medical judgment that 10 hours of home nursing care a day

would be adequate treatment for Mrs. Corcoran’s

condition.

Consequently, Mrs. Corcoran was discharged from

the hospital on October 12, 1989. On October 25, 1989, dur-

ing a period of time when no home nurse was on duty, the

Corcorans’ unborn son went into distress and ultimately

died. Dr. Collins believed that, had the fetus been

monitored around the clock as he had ordered, he would

have been able to intervene and save the child, as he had

done the year before when the same thing happened to

Amanda.

2. The Corcorans brought this wrongful death action

alleging medical negligence in Louisiana state court. The

Corcorans contended that United HealthCare, through the

statements made in the QCP booklet, held itself out as a

medical professional, and that its negligent medical judg-

ment subjected it to tort liability for Lloyd’s death under

Louisiana tort law. The Corcorans distinguished United

HealthCare’s actions as a medical professional from those

undertaken as an ERISA plan administrator. The suit was

not premised on improper claims processing or coverage

determination, but rather upon United HealthCare’s

Footnote 1 continued.

for temporary disability benefits, which Bell promptly denied. When Dr.

Collins complained that no obstetrician was on the benefits review

panel, Bell secretly sent her file to Dr. Ward for review. Even though Dr.

Ward agreed with Dr. Collins, Bell did not pay disability benefits until

Lloyd died.

negligence in failing to determine the appropriate medical

care for Mrs. Corcoran. The Corcorans sought damages for

the lost love and affection of their son, as well as medical

expenses, lost wages and general damages for Mrs. Cor-

coran’s depression triggered by Lloyd’s wrongful death.

United Healthcare removed the suit to the United

States District Court for the Eastern District of Louisiana,

and pled ERISA preemption as a defense. United

Healthcare then moved for summary judgment.

3. The district court granted summary judgment in

favor of United Healthcare on preemption grounds.

Without actually analyzing the nature and source of the

Corcorans’ claim, the district court held that ‘“‘but for the

ERISA plan, the defendants would have played no role in

Mrs. Corcoran’s pregnancy,” and thus held the claim

preempted because it ‘‘related to’’ an ERISA plan.

The Corcorans then moved for reconsideration on the

grounds that the preempted remedies were available as

‘other appropriate equitable relief,’’ pursuant to 29 USC §

1132 (a)(3), for violations by ERISA fiduciaries of their

responsibilities under the plan. A contrary conclusion

would leave the Corcorans without a remedy for the

wrongful death of their son, a result directly at odds with

ERISA’s stated purpose of protecting employees and their

families.

The district court denied the motion, holding that

the only monetary relief recoverable under ERISA was

‘medical expenses covered by the plan’’; that is, contrac-

tual damages. Further, the court appeared to conclude that

United Healthcare had no substantive duty to make cor-

rect medical decisions, and thus could not be responsible

for damages in any event. The Corcorans appealed to the

Fifth Circuit.

EEE EE en

4. The Court of Appeals affirmed in a lengthy and

detailed opinion. Finding the facts to be undisputed, the

Fifth Circuit agreed with the Corcorans’ position that

United HealthCare made medical decisions and gave

medical advice concerning appropriate care for Mrs. Cor-

coran in the last month of her pregnancy. Further, the

court recognized that the context in which such medical ad-

vice was given — a prospective utilization review — was

calculated to induce reliance by the participant upon the

advice. The court noted and discussed the coercive effect

such a procedure produces, and is designed to produce.

Finally, the court acknowledged evidence that a serious

medical mistake resulted in the death of Lloyd Corcoran.

Nevertheless, the Fifth Circuit held that the Cor-

corans’ medical malpractice claim against United

HealthCare was preempted because it ‘‘related to’’ an

ERISA plan. The court felt that United HealthCare’s

medical decision-making was too closely intertwined with

its coverage determinations to avoid preemption. The court

also determined that compensatory money damages were

unavailable under 29 USC § 1132(a)(3). Although the court

suggested that an award of money damages would be ap-

propriate in certain cases as ‘“‘make whole’’ relief, and

would not conflict with the legislative purposes of ERISA,

it concluded that the type of damages sought by the Cor-

corans was not recoverable. The court acknowledged that

its result left the Corcorans without a remedy for the

wrongful death of their son.

The Court of Appeal found its holding ‘‘troubling”’

for several reasons. First, it realized that the absence of a

damage remedy for medical negligence eliminated an im-

portant check on substandard medical decisions. Second, it

exacerbated the inherent tension between the beneficiary

and the plan over entitlement to plan funds (although the

.e)

court also acknowledged that liability in this case would

not compromise plan funds, since United HealthCare

would be directly responsible), and further tilted the scales

in favor of the plan. Finally, the court believed that the

widespread institution of prospective utilization review

programs, subsequent to ERISA’s enactment and

operating in a field where no liability rules applied to deter

negligent conduct, undermined ERISA’s purpose of protec-

ting beneficiaries. The Corcorans now seek review of the

court’s decision.

REASONS FOR GRANTING THE WRIT

As the current presidential campaign reflects, health

care and the current system for providing it are issues of

national importance. Much of the health care received by

Americans is provided through health plans established as

part of a benefit plan governed by ERISA. Studies by the

Department of Labor indicate that in the United States

there are approximately 500,000 private pension plans,

which alone cover over 50,000,000 individuals, as well as an

estimated 1.6 million sponsors of private employee welfare

benefit plans. See U.S. Dep’t of Labor, Labor Management

Services Admin., Pension and Welfare Benefits Programs,

Estimates of Participant and Financial Characteristics of

Private Pension Plans at 1 (1983); 4 Health and Population

Study Center, Battelle Human Affairs Research Centers,

Employee Welfare Benefits Plans and Plan Sponsors in the

Private Nonfarm Sector in the United States, 1978-79 at 24

(1980). More recently, it has been estimated that 81% of all

workers in medium and large firms were covered by at least

one retirement plan in 1989. See U.S. Dep't. of Labor,

Bureau of Labor Statistics, Employee Benefits in Medium

and Large Firms, 1989 at 2 (1990).

The Court of Appeals held that there is no remedy

aa aan intact ital

available for the consequences of negligent medical

judgments made by those affiliated with ERISA plans. In

other words, under ERISA liability rules are ‘generally in-

applicable’ to acts of medical malpractice. The Court of

Appeals recognized that its holding would have a

deleterious effect on the quality of health care provided

under the auspices of ERISA plans, because liability rules

are one deterrent to arbitrary medical decision-making.

Note, Paying the Piper: Third Party Payor Liability for

Medical Treatment Decisions, 25 Ga.L.Rev. 861, 907-11

(1991) (arguing that without liability for negligence in

utilization review decisions, third party payors have incen-

tives to control costs but not to use reasonable care in the

decision making process); Mellas, Adopting the Judicial

Approach to Medical Malpractice Claims Against Physi-

cians to Reflect Medicare Cost Containment Measures, 62

U.Colo.L.Rev. 287, 316 (1991) (liability will reduce

possibility that poor medical decisions will be made in

order to cut costs). When one recalls the vast number of

Americans covered by benefit plans, many if not most with

health plan components, it becomes evident that the issue

presented in this case — whether state or federal law pro-

vides a remedy for medical negligence committed by an

ERISA fiduciary — is one of pressing national significance.

There is a split in authority over whether ERISA

preempts professional malpractice claims. The Fifth Cir-

cuit said yes in this case, but the Third Circuit and the

Seventh Circuit have indicated otherwise. Several district

courts have held that ERISA does not preempt medical

negligence claims.

The Courts of Appeals are also divided over whether

§ 1132(a)(3) authorizes an award of money damages as

‘other appropriate equitable relief.’’ The Sixth Circut held

such relief was permitted where necessary to do complete

justice, but numerous other circuits have disagreed. This

issue is ripe for resolution, but it only becomes pressing in

this case if the Petitioners’ tort claims are held preempted.

Both issues present the critical question whether ERISA

allows a remedy for wrongful death due to the medical

negligence of an ERISA fiduciary, and its answer will

substantively impact the quality of health care received in

America today.

I. | TORESOLVE A CONFLICT IN THE CIR-

CUITS OVER WHETHER PROFES.

SIONAL MALPRACTICE ACTIONS

SUCH AS THIS ONE ARE PREEMPTED

BY 29 USC § 1144(a)

The Fifth Circuit characterized the Corcorans’ claim

as one for ‘‘malpractice,’’ and expressly concluded that

United HealthCare’s actions with regard to Florence Cor-

coran constituted medical decision-making. In so holding,

the Court of Appeals specifically rejected United

HealthCare’s position, maintained throughout this litiga-

tion, that it did nothing more than process the Corcorans’

claim for health benefits, and that consequently the suit

should be summarily dismissed under Pilot Life Ins. Co. v.

Dedeaux, 481 U.S. 41, 107 S.Ct. 1549 (1987), as one for im-

proper claim processing. The Fifth Circuit further noted

that Louisiana law did not foreclose a tort action for

malpractice against a utilization review company such as

United HealthCare that dispensed erroneous medical

judgments.* However, the Court of Appeals held that any

2 Indeed, Louisiana law favors such a cause of action. Louisiana law

already recognizes a cause of action under Louisiana Civil Code article

2315 for the wrongful death of an unborn fetus. Danos v. St. Pierre, 402

So.2d 633 (La. 1981). Moreover, Louisiana jurisprudence places

heightened obligations upon those possessing medical skills. Pitre v.

Opelousas General Hospital, 530 So.2d 1151, 1157 (La. 1988) (persons

with medical expertise ‘‘owe a heavy moral obligation to use them

carefully and to avoid foreseeable harm ...’’). Inasmuch as United

HealthCare made specific representations of medical expertise to

state law causes of action for malpractice arising from

United HealthCare’s negligent medical decisions were

preempted by 29 USC § 1144(a).

The Third Circut reached the opposite conclusion

with respect to professional malpractice actions generally

in Painters of Philadelphia District Council No. 21 Welfare

Fund v. Price Waterhouse, 879 F.2d 1146 (3rd Cir. 1989).

The plaintiff in Painters of Philadelphia was an employee

welfare fund who brought an action under ERISA against

the fund’s former auditor, the accounting firm of Price

Waterhouse. The fund sought to hold Price Waterhouse

liable for excessive fees charged in connection with audits

performed for the fund. One of the fund's arguments was

that, in the absence of an express cause of action for profes-

sional malpractice under ERISA, the court should find an

implied right of action for professional malpractice under

ERISA. The fund’s implied right of action theory ap-

parently was premised on its assumption that 29 USC §

1144(a) would preempt any state law malpractice action.

The Third Circuit refused to find an implied right of

action for professional malpractice under ERISA. 879 F.2d

at 1153. The court first found that an implied right of ac-

tion was not consistent with ERISA’s legislative scheme.

987 F.2d at 1152. Then the court noted that ‘‘state law has

traditionally prescribed the standards of professional

liability and in the absence of clear indicia in the act or

legislative history we are reluctant to ascribe to Congress

an intention to intrude in this area.”’ Id. (emphasis added).

Footnote 2 continued.

Florence Corcoran, it follows as a matter of Louisiana law that its ac-

tions should be judged by applicable medical standards of care. See also

Green v. Walker, 910 F.2d 291, 296 (5th Cir. 1990) (person ‘‘held out to

the world as skilled in a medical profession’’ has duty of due care) (apply-

ing Louisiana law).

The court then addressed and rejected the fund’s

argument that ERISA preempted ‘‘state professional

malpractice claims as they related to ERISA.”’ 879 F.2d at

1153 n.7. Relying upon this Court’s decision in Mackey v.

Lanier Collections Agency & Service, 486 U.S. 825, 108

S.Ct. 2182 (1988), which acknowledged that torts commit-

ted by an ERISA plan were not preempted, 486 U.S. at

833, 108 S.Ct. at 2187, the Third Circuit stated:

... in the absence of an explicit corresponding pro-

vision in ERISA allowing a professional malprac-

tice cause of action, Conyress did not intend to

preempt a whole panoply of state law in this area.

Thus, we conclude that ERISA does not general-

ly preempt state professional malpractice actions.

Painters of Philadelphia, 879 F.2d at 1153 n.7 (emphasis

added). The court premised its conclusion upon the facts

that 1) professional malpractice liability was a matier of

traditional state regulations, and 2) there was no ex’ it

provision in ERISA to permit such actions under its .ovi-

sion if state law were preempted.®

Numerous district courts have concluded that

medical malpractice actions are not preempted by ERISA.

In Pickett v. Cigna Healthplan of Texas, Inc., 742 F.Supp.

946 (S.D. Tex. 1990), the court remanded a medical

malpractice case brought against the administrator of an

ERISA plan (Cigna) and three doctors, alleging no specific

act of malpractice but rather claiming that a doctor rota-

tion system devised by Cigna was an unreasonable medical

3 See also Pappas v. Buck Consultants, Inc., 923 F.2d 531 (7th Cir.

1991), where the Seventh Circuit relied in part on Painters of

Philadelphia to conclude state law malpractice actions are not preemp-

ted by ERISA.

procedure. The case had originally been brought in state

court and was removed to federal court on the basis that it

was actually an ERISA claim raising questions of plan ad-

ministration. The district court remanded the case because

it presented no question under ERISA but instead raised

‘‘a question of medical care not claims administration.”

742 F.Supp. at 946. The court recognized that Cigna,

although an ERISA plan manager, was being sued for

medical negligence, and that the suit sought tort damages

which were unavilable under ERISA, and not plan benefits.

The court plainly held that medical malpractice actions

were not preempted by ERISA.

In Independence HMO, Inc. v. Smith, 733 F.Supp.

983 (E.D. Pa. 1990), the court similarly concluded that a

medical malpractice action brought by an ERISA plan

beneficiary against her HMO, who was an ERISA plan

fiduciary, was not preempted. The court concluded that the

state law tort action did not ‘‘affect the scheme carefully

devised by Congress in the ERISA statute,” 733 F.Supp.

at 988, even though the claim was made by an ERISA plan

beneficiary against an ERISA entity for negligent medical

decisions. The court determined that:

The congressional purpose underlying’ the

breadth of ERISA’s preemption provision — to

secure uniform federal laws regulating employee

benefit plans — is not advanced by preemption of

state common law claims which are not premised

on the violation of duties imposed by ERISA.

Id., quoting Albert Einstein Medical Center v. Action

Manufacturing Company, 697 F.Supp. 883, 885 (E.D. Pa.

1988).

This Court should grant a writ in this case to resolve

the conflict in the circuit courts over whether medical

malpractice actions are preempted by ERISA, particularly

in view of the impact the question has on the quality of

health care received by Americans covered by ERISA

plans.

Il. THE FIFTH CIRCUIT'S DECISION CON-

FLICTS WITH 1) THIS COURT'S PRIOR

DECISIONS CONSTRUING 29 USC §

1144(a), AND 2) THE LEGISLATIVE PUR-

POSE EMBODIED IN ERISA

A second reason for granting the writ in this case is

that the Fifth Circuit's decision that ERISA preempts a

traditional state law tort claim like medical malpractice

conflicts with this Court’s decision construing 29 USC §

1144 (a), and frustrates the legislative purpose in enacting

ERISA. In Mackey, supra, 486 U.S. 825, 108 S.Ct. 2182

(1988), this Court considered whether ERISA § 514(a), 29

USC § 1144(a), preempted state garnishment laws as they

applied to plan funds. In so doing, the Court identified a

range of state law claims left undisturbed by ERISA,

stating:

ERISA plans may be sued in a second type of

civil action, as well. These cases — lawsuits

against ERISA plans for run-of-the-mill state-law

claims such as unpaid rent, failure to pay

creditors, or even torts committed by an ERISA

plan — are relatively commonplace. Petitioners

and the United States (appearing here as amicus

curiae) concede that these suits, although ob-

viously affecting and involving ERISA plans and

their trustees, are not pre-empted by ERISA §

514(a).

486 U.S. at 833, 108 S.Ct. at 2187 (emphasis added).

The Mackey court, after noting that ERISA contain-

ed a ‘‘sue and be sued”’ provision, held that state garnish-

ment law was not preempted because to hold otherwise

would produce an absurd result: an ERISA plan could be

sued but a money judgment against it could not be col-

lected. The Fifth Circuit’s decision, finding preemption of

a run-of-the-mill tort claim for medical malpractice against

an ERISA fiduciary, produces similarly absurd results.

The Court of Appeals erred in failing to construe § 1144(a)

in light of ERISA as a whole, notably § 1132(a)(3)(B), and

the purposes for which it was enacted.

Although § 1144(a) may be “‘conspicuous for its

breadth,’ Ingersoll-Rand Co. v. McClendon, 498 U.S. ____,

____, 111 S.Ct. 478, 482 (1990), this Court has never applied

it to frustrate the purposes of Congress in enacting

ERISA.4 Whether or not a federal statute preempts state

law depends upon ‘Congress’ intent in enacting the federal

statute at issue.’ Metropolitan Life Ins. Co. v.

Massachusetts, 471 U.S. 724, 738, 106 S.Ct. 2380, 2388

(1985); Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1,

8, 107 S.Ct. 2211, 2216 (1987). Congress enacted ERISA

“to promote the interests of employees and their

beneficiaries in employee benefits plans.’’ 29 USC § 1001;

Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90, 103 S.Ct.

2890, 2896 (1983).

The preemption analysis ‘“‘must be guided by respect

for the separate spheres of governmental authority

preserved in our federalist system.’’ A/essi v. Raybestos-

Manhattan, Inc., 451 U.S. 504, 522, 101 S.Ct. 1895, 1905

(1981). In this regard, the Court must presume that Con-

4 Or as one district judge succinctly stated, “the cases stressing the

broad reach of ERISA preemption clause also stress that common sense

should not be left at the courthouse door.’’ Schultz v. National Coalition

of Hispanic M.H.H.S. Org., 678 F.supp. 936, 938 (D.D.C. 1988).

gress did not intend to preempt areas of traditional state

regulation. Metropolitan Life, supra, 471 U.S. at 740, 105

S.Ct. at 2389.

The preemption provision must not be read in a

vacuum. This Court has explained that ‘‘in expounding a

statute, [it] must not be guided by a single sentence or

member of a sentence, but look to the provisions of the

whole law, and to its object and policy.”’ Pilot Life, 481 U.S.

at 51; 107 S.Ct. at 1555 (1987). Accordingly, § 1144(a) must

be read in light of the statute as a whole — including the

remedies available at § 1132(a)(3)(B), and those not

available — in order for it to be applied in a manner consis-

tent with Congress’ intent to pretect the rights and welfare

of beneficiaries.

The Fifth Circuit concluded that ERISA provided no

remedy for wrongful death due to medical negligence under

§ 1132(a)(3)(B). If correct, that conclusion strongly sug-

gests that Congress did not intend to preempt state law

medical malpractice claims. In Silkwood v. Kerr-McGee

Corp., 464 U.S. 238, 104 S.Ct. 615 (1984), this Court held

that the Atomic Energy Act did not preempt state law

punitive damage claims, even though Congress intended

through the Act to establish nuclear regulation and safety

as a solely federal concern. In holding state tort claims not

preempted, the Court relied heavily on the absence of any

federal remedy for persons injured by conduct governed by

the Act. Justice White wrote, ‘“‘[i]t is difficult to believe

that Congress would, without comment, remove all means

of judicial recourse for those injured by illegal conduct.”’

Silkwood, 464 U.S. at 251, 104 S.Ct. at 623. See also

Cipollone v. Liggett Group, Inc., ___, U.S. ___, ___, 112

S.Ct. 2608, 2628, 112 (1991) (BLACKMUN, J., concurring

in part and dissenting in part) (‘‘The Court in the past has

hesitated to find preemption where federal law provides no

comparable remedy’’).

The same difficulty described in Silkwood obtains in

this case. It is difficult to believe that Congress, who

sought to protect beneficiaries like the Corcorans through

ERISA, intended to deprive them of all remedies for

wrongful death due to medical negligence. There is no sug-

gestion in the legislative history of ERISA that Congress

intended to make medical malpractice one of the acceptable

costs of securing workers’ pension plan rights. Congress’

failure to provide a remedy for medical negligence under

ERISA reinforces the initial presumption that Congress

did not intend to preempt traditional state control of the

field of medicine.

Nor is this conclusion altered by the fact that

ERISA contains a civil enforcement scheme. This Court

has characterized the ERISA enforcement scheme as

‘““comprehensive,’’ and so it may be where an entitlement to

plan benefits is concerned. But the Corcorans’ claim lies

beyond the pale of the ERISA enforcement scheme. The

Corcorans do not seek plan benefits, but rather an award of

money damages for wrongful death, previously available

under state law prior to ERISA’s enactment, and, accord-

ingly to the Fifth Circuit, not recoverable under ERISA.°

Moreover, the Atomic Energy Act at issue in Silkwood,

supra, also contained a civil enforcement scheme, but this

Court rejected the argument, advanced by the United

States as amicus curiae, that state law tort claims were

preempted because they conflicted with that scheme. The

Court found no such conflict in Silkwood, and there is none

5 This Court in Firestone Tire and Rubber Company v. Bruch, 489 U.S.

____, 109 S.Ct. 948 (1989), cautioned against a construction of ERISA

that would ‘afford less protection to employees and their beneficiaries

than they enjoyed before ERISA was enacted.”’ 109 S.Ct. at 956. The

Fifth Circuit’s decision does just that.

in this case.

An application of § 1144(a) in this case consistent

with the legislative purpose of ERISA, the remedies

authorized by § 1132(a)(3)(B), and the presumption against

preemption of traditional state areas of control such as

medical and tort law, results in the conclusion that Peti-

tioners’ claim for medical malpractice must not be pre-

empted. Indeed, United HealthCare apparently con-

templated the potential for malpractice suits against it for,

as the Fifth Circuit noted at 965 F.2d 1338 n.20, its con-

tract with Blue Cross provided that it would bear the cost

of its negligence. Accordingly, the Petitioners’ claim does

not threaten any fund assets.

This case falls within the dicta in Mackey that state

law claims like torts committed by an ERISA plan — here

the tort of medical malpractice — are not preempted. To

hold otherwise frustrates Congress’ purpose of protecting

worker's rights.

III. TO RESOLVE A SPLIT IN THE CIR-

CUITS OVER WHETHER EXTRACON-

TRACTUAL MONEY DAMAGES ARE

RECOVERABLE UNDER 29 USC §

1332(a(3(B) AS “OTHER APPROPRIATE

EQUITABLE Re&LiEF”

If the Fifth Circuit properly concluded that Peti-

tioners’ medical negligence claims were preempted, then

this application squarely presents the question specifically

reserved by this Court in Massachusetts Mutual Life Ins.

Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085 (1985): whether

extracontractual money damages are available as ‘‘other

appropriate equitable relief’’ under 29 USC § 1132(a)(3)(B).

The lower courts are divided over the question. The

Sixth Circuit held such damages were available in Warren

v. Society Nat. Bank, 905 F.2d 975 (6th Cir. 1990), cert.

denied, 111 S.Ct. 2256 (1991). Every other circuit which has

considered the question determined that such extracon-

tractual damages were available under ERISA.

Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821 (1st

Cir.), cert. denied, 488 U.S. 909, 109 S.Ct. 261, 102 L.Ed.2d

249 (1988); Harsch v. Eisenberg, 956 F.2d 651 (7th Cir.

1992), petition for cert. filed, 60 U.S.L.W. (U.S. May 11,

1992) (no. 91-1835); Novak v. Anderson Corp., 962 F.2d 757

(8th Cir. 1992); Sokol v. Bernstein, 803 F.2d 532 (9th Cir.

1986); Bishop v. Osborn Transp., Inc., 838 F.2d 1173 (11th

Cir.), cert. denied, 488 U.S. 832, 109 S.Ct. 90, 102 L.Ed.2d

66 (1988). The Fifth Circuit in this case did not decide the

question because it concluded that, even if extracontrac-

tual damages were available, the type of tort damages

sought by petitioners would nevertheless be barred.

1. In Russell, supra, this Court held that extracon-

tractual damages were unavailable under 29 USC § 1109,

which authorized suits by beneficiaries or plans to recover

for losses suffered by the plan. The Court specifically

reserved the question whether such relief would be

available under § 1132 (a)(3)(B) for a fiduciary’s breach of a

duty owed to the beneficiary. Jd., 473 U.S. 139 n.5, 105

S.Ct. 3088 n.5. Four justices concurred in Russell, however,

in an opinion by Justice Brennan, and indicated that the

decision should not be applied beyond its narrow holding

under § 1109. The concurrence explicitly stated that an ex-

tension of the Court’s reasoning beyond § 1109 to support

a conclusion, advanced by United HealthCare below, that

extracontractual damages were nowhere authorized by

ERISA would be ‘“‘simply incompatible with the structure,

legislative history, and purposes of ERISA.” /d., 473 U.S.

at 152, 105 S.Ct. at 3095 (Brennan, J., concurring).

Justice Brennan especially emphasized throughout

his concurring opinion Congress’ intent to impose strict

fiduciary obligations upon plan administrators. ERISA §

404(a), codified at 29 USC § 1104(a), provides in part that

‘“‘a fiduciary shall discharge his duties with respect to a

plan solely in the interest of the participants and

beneficiaries and — (A) for the exclusive purpose of (i) pro-

viding benefits to participants and beneficiaries.’’ The con-

currence then analyzed the legislative history of ERISA,

noting that ‘‘Congress intended federal courts to develop

federal common law in fashioning the additional ‘ap-

propriate equitable rellief’,’’ explicitly provided as a

remedy under § 1132(a)(3). Russell, 473 U.S. 156, 105 S.Ct.

3097 (Brennan, J., concurring).6 Justice Brennan conclud-

ed that extracontractual damages were available as ‘’ap-

propriate equitable relief’’ under 29 USC § 1132(a) in ap-

propriate cases for violations of the fiduciary respon-

sibilities set fort at § 1104(a).

In fashioning an appropriate remedy, Justice Bren-

nan stated that courts should first look to trust law.

Russell, 473 U.S. 157, 105 S.Ct. 3098. But he noted that to

resort to trust law was not the only step, but merely the

first in considering remedies. At footnote 17 of his opinion,

Justice Brennan wrote:

17 The absence of such relief under tradi-

tional trust law is not necessarily dispositive,

however, because ‘‘in enacting ERISA, Congress

made more exacting the requirements of the com-

mon laws of trust relating to employee benefit

funds.”’

6 Federal courts may look to preempted state law in developing federal

common law for ERISA. Singer v. Black & Decker Corp., 964 F.2d 1449,

1452-3 (4th Cir. 1992).

(citations omitted; original emphasis). Such damages are

necessary to make beneficiaries whole, especially if all state

law causes of action providing relief have been preempted.

The Sixth Circuit Court of Appeals in Warren, supra,

relied extensively on Justice Brennan’s Russell concur-

rence in expressly holding that § 1132(a)(3)(B) authorized

extracontractual money damages as ‘other appropriate

equitable relief.’’ The Warren court first noted that the

Supreme Court in Russell expressly left open the question

of extracontractual damages under § 1132(a)(3), Warren,

905 F.2d at 981, then proceeded to rely upon Justice Bren-

nan’s concurring opinion in concluding they were available.

Id., 905 F.2d at 982 (‘‘... a beneficiary is entitled to a

remedy that will put him in the position he would have been

in if the fiduciary had not committed a breach of trust, and

... such a remedy included monetary damages.’’).

The Warren court also relied on Justice Brennan's

opinion in Russell in determining the type of remedy to

allow. 905 F.2d at 982. In concluding that § 1132(a)(3)

authorized a payment of money damages, Judge Lively

wrote:

..equitable relief includes monetary damages

where required to afford complete relief. It is the

histeric purposes of equity to secure complete

justice, and courts may adjust their remedies so

as to grant the necessary relief. Equitable relief

may include monetary damages if necessary to do

complete justice.

The term ‘’other appropriate equitable relief”

implies a broad range of remedies. We adhere to

the principle ‘‘endorsed repeatedly ... by the

federal judiciary,’’ that ‘“‘when Congress uses

broad generalized language in a remedial statute,

and that language is not contravened by

authoritative legislative history, a court should

interpret the provision generously so as to effect-

uate the important congressional goals.”

Id. (citations omitted). Inasmuch as Congress enacted

ERISA as a remedial statute to protect and advance the in-

terests of workers and plan beneficiaries, a narrow con-

struction of ERISA impedes Congressional intent that

courts develop a federal common law to shape relief. See:

Note, ‘Participant and Beneficiary Remedies Under

ERISA: Extracontractual and Punitive Damages After

Massachusetts Mutual Life Ins. Co. v. Russell,’’ 71 Cornell

Law Review 1014, 1226 (1986). See also: Russell, supra, 473

U.S. 157, 103 S.Ct. 3098 (Congress intended the courts to

undertake the process of delineating appropriate rights and

remedies) (Brennan, J., concurring). A narrow construction

of available remedies to ERISA beneficiaries under the Act

would stand in ironic contrast to the broad application of

the ERISA preemption clause, in that both have the effect

of limiting the rights of the workers Congress sought to

protect.

The scholarly literature also supports a finding that

extracontractual damages should be available under §

1132(a)(3), in the wake of Russell. See, generally, Note,

supra, 71 Cornell Law Review, 1014-1036, July 1986, which

concluded that extracontractual but not punitive damages

under § 1132(a)(3) were consistent with the purposes and

language of ERISA, and not foreclosed by Russell. Accord:

Gregory, ‘““The Scope of ERISA Preemption of State Law:

A Study of Effective Federalism,’ 48 U. Pitt. Law Rev.

427, 457 (1987). Gregory discusses the breadth of the

preemption clause in the context of decisions limiting

remedies under ERISA. His conclusion is that ‘if ERISA

preempted all state law relating to employee benefit plans,

a dangerous vacuum would result.’ Gregory, supra, at 457

(emphasis added). If this court concludes that ERISA

preempts plaintiffs’ state law wrongful death claim, this

‘dangerous vacuum”’ can only be filled by finding that ex-

tracontractual damages are available in this case under 29

USC § 1132(a)(3).

This Court denied an application for certiorari filed

by the ERISA plan, 111 S.Ct. 2256 (1991), and the Solicitor

General filed a brief on behalf of the United States endors-

ing the Sixth Circuit's decision.

In Ingersoll-Rand, supra, 498 U.S. ____, 111 S.Ct.

478 (1990), this Court considered § 1132 (a)(3) and clearly

suggested that extracontractual money damages were

recoverable thereunder. Although the Court in /ngersoll-

Rand did not discuss in detail what remedies are available

as ‘‘other appropriate equitable relief’’ under § 1132 (a)(3),

the Court, in reversing the judgment below, held that

‘there is no basis in § 502(a)’s language for limiting ERISA

actions to only those which seek ‘pension benefits’.”’ 111

S.Ct. at 486. The Court added: “‘it is cleer that the relief re-

quested’’ — which included a prayer for compensatory

damages — “‘is well within the power of federal courts to

provide.” Jd. Thus, the Court acknowledged that remedies

beyond benefits were available under § 1132 (a), and could

include compensatory damages.

The Courts of Appeals that have held extracontrac-

tual damages unavailable under § 1132 (a)(3) have essential-

ly applied the rationale of Russell, developed for a section

authorizing suits to recover for plan losses, to § 1132 (a)(3),

which authorizes suits for losses suffered by the

beneficiary. Justice Brennan’s concurrence in Russell

warned against this approach, noting that the sections

serve different interests and warrant differing analyses.

Further, the holdings of these courts limit remedies under

§ 1132 (a)(3) to plan benefits and the traditional equitable

remedies of injunction and declaratory relief (under the

term ‘‘other appropriate equitable relief’’).

This construction of the statute is implausible. First,

this Court in Ingersoll-Rand plainly stated that the

language of § 1132(a) could not be limited to provide only

for benefits as a remedy, intimating a broader range of

remedies. Second, this construction of the ‘“‘other ap-

propriate equitable relief’ language virtually reads it out of

the statute. § 1132 (a)(1)(B) authorizes declaratory judg-

ment actions and coercive relief by providing that any par-

ticipant or beneficiary may bring suit ‘‘to enforce his rights

under the terms of the plan, or to clarify his rights to future

benefits under the terms of the plan.’ In addition, §

1132(a)(3)(B) authorizes courts ‘‘to enjoin any act or prac-

tice which violates any provision of this [title] or the terms

of the plan.’’ Thus, the phrase ‘‘other appropriate equitable

relief.’’ if it is to have any significance, must authorize

equitable remedies in addition to injunctions and

declaratory judgments.

Finally, the statute’s heavy reliance on principles of

trust law, recognized by this Court in Firestone, 489 U.S.

at , 109 S.Ct. at 954, forecloses a reading of § 1132(a)(3)

which does not at least include ‘‘make whole’’ relief, for the

reasons set forth by Justice-Brennan in his Russell concur-

rence, and by Warren. Thus, the Sixth Circuit in Warren

correctly determined that an award of money damages is

available under 29 USC § 1132(a)(3).

2. The range of remedies available under § 1132(a)(3)

as ‘‘other appropriate equitable relief’’ should include, in a

wrongful death action due to a fiduciary’s medical

negligence, traditional tort compensatory damages. The

purpose of compensatory damages in a tort suit is the same

as that of ‘make whole’”’ relief under equitable principles: to

restore the victim as nearly as possible to the position he

occupied prior to the wrongful act.

This Court signalled in Ingersoll-Rand, supra, that

federal courts had broad power in ERISA suits to grant

compensatory relief. The Court held plaintiff's claims, in-

cluding a demand for compensatory damages such as men-

tal anguish as well as punitive damages, preempted by

ERISA. One justification given by Justice O’Connor for

finding the state law claims preempted was that “‘it is clear

that the relief requested here is well within the power of the

federal courts to provide.” Jd., 111 S.Ct. at 486 (emphasis

added). Such a holding is critical to the efficacy of ERISA

if § 1144(a) continues to receive indiscriminatively broad

application, or beneficiaries such as the Corcorans will

routinely find themselves without a remedy for breaches of

fiduciary duty.

The Fifth Circuit concluded that, assuming the

availability of extracontractual damages under ERISA,

the Corcorans would still be unable to recover. The court

reached this result by assuming that any such damages

recoverable under ERISA would be limited to damages for

breach of trust or contract. But as Justice Brennan ex-

plained in his concurring opinion in Russell, ‘‘Congress

made more exacting the requirements of the common laws

of trusts relating to employee benefit funds.’’ Jd., 473 U.S.

at 157 n.17, 105 S.Ct. at 3098 n.17 (emphasis added). Thus,

the consideration of appropriate remedies is not limited, as

the Fifth Circuit assumed, to remedies available under

trusts or contract law, but must be determined with

reference to ‘’whether allowance or disallowance of par-

ticular relief would best effectuate the underlying purposes

of ERISA.” Russell, 473 U.S. at 158, 105 S.Ct. 3098.

Under this standard, a remedy for wrongful death

due to breach of a fiduciary’s duty is clearly necessary to

the ‘’enforcement of strict fiduciary standards of care in

the administration of all aspects of pension plans and pro-

motion of the best interests of participants and

beneficiaries.’’ Jd. If ERISA is broad enough to include a

utilization review company making medical decisions as a

fiduciary, then it should also allow a remedy broad enough

to correspond to potential damages caused by breach of the

fiduciary’s high duty. Otherwise the underlying purpose of

ERISA will be thwarted, and a perversely anomalous situa-

tion will arise: those upon whom ERISA imposes high and

exacting standards of care will be effectively relieved from

any obligations to perform those duties responsibly. A

remedy for a breach of duty is necessary to ERISA’s

purpose.

The terminology of § 1132(a)(3)(B) also reinforces this

result. The statute speaks in terms of equitable relief. The

foregoing demonstrates that this term is to be applied

broadly, not literally. It has long been the law that ‘‘where

legal rights have been invaded, and a federal statute pro-

vides for a general right to sue for such invasion, federal

courts may use any available remedy to make good the

wrong done.”’ Franklin v. Gwinnett County Public Schools,

, U.S. ___, 112 S.Ct. 1028, 1033 (1992). This is so, this

Court continued in Franklin, because the existence of a

statutory right implies the existence of all necessary and

appropriate remedies. /d., 112 S.Ct. at 1034.

Equitable relief encompasses the necessary money

damages required to do complete justice. Albemarle Paper

Co. v. Moody, 422 U.S. 405, 418, 95 S.Ct. 2372 (1975); War-

ren, supra. Further, because it is the historic purpose of

equity to secure complete justice, courts may adjust their

remedies so as to grant necessary relief. Walters v.

Marathon Oil Co., 642 F.2d 1098, 1100 (7th Cir. 1982). Ac-

cordingly, where the wrong done results in the death of an

unborn child, a court awarding equitable relief may fashion

a money damage award as necessary to ‘‘make whole’ the

victim, to the extent money can. The purposes of ERISA

to secure the welfare of covered employees require that an

adequate remedy be provided for whatever breach of

fiduciary duty might occur, and that remedy must include

the type of damages sought herein.

CONCLUSION

The ‘’troubling”’ result the Fifth Circuit felt compell-

ed by ERISA to reach — that the Corcorans were afforded

no remedy for the wrongful death of their unborn son —

was required by neither the statute itself, nor Congress’

purpose in enacting it. Instead, the Fifth Circuit's decision

frustrates the intent of ERISA by depriving the

beneficiaries Congress sought to protect of remedies they

enjoyed prior to ERISA’s passage. Further, the effect of

the decision will be to reduce the quality of health care pro-

vided through plans governed by ERISA by removing all

incentives for correct medical decision-making — an absurd

result in light of express Congressional intent to secure the

welfare of employees and their families through ERISA.

Petitioners’ application for a writ of certiorari to the

Court of Appeals for the Fifth Circuit should be granted.

Respectfully submitted,

SCOTT LaBARRE (BAR NO. 17659)

GAUTHIER & MURPHY

3500 North Hullen Street

Metairie, Louisiana 70002

Phone: (504) 456-8600

ATTORNEYS FOR PLAINTIFF

A-1

APPENDIX A

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Filed

JUN 26 1992

No. 91-3322

FLORENCE B. CORCORAN

Wife of/fand WAYNE D. CORCORAN,

Plaintiffs-Appellants,

UNITED HEALTHCARE, INC.,

and BLUE CROSS and BLUE SHIELD

OF ALABAMA, INC.,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Louisiana

Before THORNBERRY, KING, and DeMOSS, Circuit

Judges.

KING, Circuit Judge:

This appeal requires us to decide whether ERISA

pre-empts a state-law malpractice action brought by the

beneficiary of an ERISA plan against a company that pro-

vides ‘utilization review”’ services to the plan. We also ad-

dress the availability under ERISA of extracontractual

damages. The district court granted the defendants’ mo-

tion for summary judgment, holding that ERISA both pre-

empted the plaintiffs’ medical malpractice claim and

A-2

precluded them from recovering emotional distress

damages. We affirm.

I. BACKGROUND

The basic facts are undisputed. Florence Corcoran, a

long-time employee of South Central Bell Telephone Com-

pany (Bell), became pregnant in early 1989. In July, her

obstetrician, Dr. Jason Collins, recommended that she

have complete bed rest during the final months of her

pregnancy. Mrs. Corcoran applied to Bell for temporary

disability benefits for the remainder of her pregnancy, but

the benefits were denied. This prompted Dr. Collins to

write to Dr. Theodore J. Borgman, medical consultant for

Bell, and explain that Mrs. Corcoran had several medical

problems which placed her “in a category of high risk

pregnancy.’ Bell again denied disability benefits.

Unbeknownst to Mrs. Corcoran or Dr. Collins, Dr.

Borgman solicited a second opinion on Mrs. Corcoran’s

condition from another obstetrician, Dr. Simon Ward. In a

letter to Dr. Borgman, Dr. Ward indicated that he had

reviewed Mrs. Corcoran’s medical records and suggested

that ‘“‘the company would be at considerable risk denying

her doctor’s recommendation.’’ As Mrs. Corcoran neared

her delivery date, Dr. Collins ordered her hospitalized so

that he could monitor the fetus around the clock.!

Mrs. Corcoran was a member of Bell’s Medical

Assistance Plan (MAP or ‘“‘the Plan’). MAP is a self-

funded welfare benefit plan which provides medical

benefits to eligible Bell employees. It is administered by

1 This was the same course of action Dr. Collins had ordered during Mrs.

Corcoran’s 1988 pregnancy. In that pregnancy, Dr. Collins intervened

and preformed a successful Caesarean section in the 36th week when the

fetus went into distress.

A-3

defendant Blue Cross and Blue Shield of Alabama (Blue

Cross) pursuant to an Administrative Services Agreement

between Bell and Blue Cross. The parties agree that it is

governed by ERISA.? Under a portion of the Plan known

as the ‘Quality Care Program’”’ (QCP), participants must

obtain advance approval for overnight hospital admissions

and certain medical procedures (‘‘pre-certification’’), and

must obtain approval on a continuing basis once they are

admitted to a hospital (‘concurrent review’’), or plan

benefits to which they otherwise would be entitled are

reduced.

QCP is administered by defendant United

HealthCare (United) pursuant to an agreement with Bell.

United performs a form of cost-containment services that

has commonly become known as “‘utilization review.’’ See

Blum, An Analysis of Legal Liability in Health Care

Utilization Review and Case Management, 26 Hous. L.

Rev. 191, 192-93 (1989) (utilization review refers to ‘‘exter-

nal evaluations that are based on established clinical

criteria and are conducted by third-party payors, pur-

chasers, or health care organizers to evaluate the ap-

propriateness of an episode, or series or episodes, of

medical care’’). The Summary Plan Description (SPD) ex-

plains QCP as follows:

The Quality Care Program (QCP), administered

by United HealthCare, Inc., assists you and your

covered dependents in securing quality medical

care according to the provisions of the Plan while

helping reduce risk and expense due to un-

necessary hospitalization and surgery. They do

this by providing you with information which will

permit you (in consultation with your doctor) to

. Employee Retirement Income Security Act of 1974, Pub. L. 93-406, 88

Stat. 829, 29 U.S.C. §§ 1001-1461.

A-4

evaluate alternatives to surgery and hospitaliza-

tion when those alternatives are medically ap-

propriate. In addition, QCP will monitor any cer-

tified hospital confinement to keep you informed

as to whether or not the stay is covered by the

Plan.

Two paragraphs below, the SPD contains this statement:

When reading this booklet, remember that all decisions

regarding your medical care are up to you and your doctor.

It goes on to explain that when a beneficiary does not con-

tact United or foilow its pre-certification decision, a ‘““QCP

Penalty” is applied. The penalty involves reduction of

benefits by 20 percent for the remainder of the calendar

year or until the annual out-of-pocket limit is reached.

Moreover, the annual out-of-pocket limit is increased from

$1,000 to $1,250 in covered expenses, not including any ap-

plicable deductible. According to the QCP Administrative

Manual, the QCP penalty is automatically applied when a

participant fails to contact United. However, if a partici-

pant complies with QCP by contacting United, but does

not follow its decision, the penalty may be waived following

an internal appeal if the medical facts show that the treat-

ment chosen was appropriate.

A more complete description of QCP and the services

provided by United is contained in a separate booklet.

Under the heading “WHAT QCP DOES” the booklet

explains:

Whenever your doctor recommends surgery or

hospitalization for you or a covered dependent,

QCP will provide an independent review of your

condition (or your covered dependent’s). The pur-

pose of the review is to assess the need for

surgery or hospitalization and to determine the

appropriate length of stay for a hospitalization,

”

A-5

based on nationally accepted medical guidelines.

-As part of the review process, QCP will discuss

with your doctor the appropriateness of the

treatments recommended and the availability of

alternative types of treatments — or locations for

treatment — that are equally effective, involve

less risk, and are more cost effective.

The next paragraph is headed “INDEPENDENT, PRO-

FESSIONAL REVIEW” and states:

United Health Care, an independent professional

medical review organization, has been engaged to

provide services under QCP. United's staff in-

cludes doctors, nurses, and other medical profes-

sionals knowledgeable about the health care

delivery system. Together with your doctor, they

work to assure that you and your covered family

members receive the most appropriate medical

care.

At several points in the booklet, the themes of ‘‘independ-

ent medical review’ and ‘‘reduction of unnecessary risk

and expense”’ are repeated. Under a section entitled ‘THE

QUALITY CARE PROGRAM...AT A GLANCE” the

booklet states the QCP ‘Provides independent, profes-

sional review when surgery or hospitalization is recom-

mended — to assist you is making an enlightened decision

regarding your treatment.’’ QCP “provides improved

quality of care by eliminating medically unnecessary treat-

ment,’’ but beneficiaries who fail to use it ‘‘may be exposed

to unnecessary health risks. . . ."’ Elsewhere, in the course

of pointing out that studies show one-third of all surgery

may be unnecessary, the booklet explains that programs

such as QCP “‘help reduce unnecessary and inappropriate

care and eliminate their associated costs.’’ Thus, ‘‘one im-

portant service of QCP will help you get a second opinion

when your doctor recommends surgery.”’

A-6

The booklet goes on to describe the circumstances

under which QCP must be utilized. When a Plan member’s

doctor recommends admission to the hospital,

[iIndependent medical professionals will review,

with the patient's doctor, the medical findings

and the proposed course of treatment, including

the medically necessary length of confinement.

The Quality Care Program may require additional

tests or information (including second opinions),

when determined necessary during consultation

between QCP professionals and the attending

physician.

When United certifies a hospital stay, it monitors the con-

tinuing necessity of the stay. It also determines, for certain

medical procedures and surgeries, whether a second opin-

ion is necessary, and authorizes, where appropriate, certain

alternative forms of care. Beneficiaries are strongly en-

couraged to use QCP to avoid loss of venefits: ‘‘ ‘fully us-

ing’ QCP means following the course of treatment that’s

recommended by QCP’s medical professionals.”’

In accordance with the QCP portion of the plan, Dr.

Collins sought pre-certification from United for Mrs. Cor-

coran’s hospital stay. Despite Dr. Collins’s recommenda-

tion, United determined that hospitalization was not

necessary, and instead authorized 10 hours per day of home

nursing care.? Mrs. Corcoran entered the hospital on Oc-

tober 3, 1989, but, because United had not pre-certified her

stay, she returned home on October 12. On October 25, dur-

ing a period of time when no nurse was on duty, the fetus

went into distress and died.

3 The record does not reveal the name of the person or persons at United

that made the decision concerning Mrs. Corcoran.

= Ll

A-7

Mrs. Corcoran and her husband, Wayne, filed a

wrongful death action in Louisiana state court alleging

that their unborn child died as a result of various acts of

negligence committed by Blue Cross and United. Both

sought damages for the lost love, society and affection of

their unborn child. In addition, Mrs. Corcoran sought

damages for the aggravation of a pre-existing depressive

condition and the loss of consortium caused by such ag-

gravation, and Mr. Corcoran sought damages for loss of

consortium. The defendants removed the action to federal

court on grounds that it was pre-empted by ERISA‘ and

that there was complete diversity among the parties.

Shortly thereafter, the defendants moved for sum-

mary judgment. They argued that the Corcorans’ cause of

action, properly characterized, sought damages for im-

proper handling of a claim from two entities whose respon-

sibilities were simply to administer benefits under an

ERISA-governed plan. They contended that their relation-

ship to Mrs. Corcoran came into existence solely as a result

of an ERISA plan and was defined entirely by the plan.

Thus, they urged the court to view the claims as “relating

to’’ an ERISA plan, and therefore within the broad scope

of state law claims pre-empted by the statute. In their op-

position to the motion, the Corcorans argued that ‘‘[t]his

case essentially boils down to one for malpractice against

United HealthCare. .. .’’ They contended that under this

court’s analysis in Sommers Drug Stores Co. Employee

Profit Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d

1456 (5th Cir. 1986), cert. denied, 479 U.S. 1034 (1987),

their cause of action must be classified as a state law of

4 See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987)

(because ERISA pre-emption is so comprehensive, pre-emption defense

provides sufficient basis for removal to federal court notwithstanding

‘“‘well-pleaded complaint”’ rule).

A-8

general application which involves an exercise cf tradi-

tional state authority and affects principal ERISA entities

in their individual capacities. This classification, they

argued, together with the fact that pre-emption would con-

tavene the purposes of ERISA by leaving the Corcorans

without a remedy, leads to the conclusion that the action

is premissible notwithstanding ERISA.

The district court, relying on the broad ERISA pre-

emption principles developed by the Supreme Court and

the Fifth Circuit, granted the motion. The court noted that

ERISA pre-emption extends to state law claims “ ‘of

general application,’ including tort claims where ERISA

ordinarily plays no role in the state law at issue.’’ (citing

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) and

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

court found that the state law claim advanced by the Cor-

corans ‘‘relate[d] to’’ the employee benefit plan (citing the

statutory pre-emption clause, ERISA § 514(a)), and

therefore was pre-empted, because

[bjut for the ERISA plan, the defendants would

have played no role in Mrs. Corcoran’s pregnan-

cy; the sole reason the defendants had anything

to do with her pregnancy is because the terms of

the ERISA plan directed Mrs. Corcoran to the

defendants (or at least to United HealthCare) for

approval of coverage of the medical care she in-

itially sought.

The court held that, because the ERISA plan was the

source of the relationship between the Corcorans and the

defendants, the Corcorans’ attempt to distinguish United's

role in paying claims from its role as a source of profes-

sional medical advice was unconvincing.

A-9

The Corcorans filed a motion for reconsideration

under Rule 59 of the Federal Rules of Civil Procedure. They

did not ask the district court to reconsider its pre-emption

ruling, but instead contended that language in the district

court’s opinion had implicitly recognized that they had a

separate cause of action under ERISA’s civil enforcement

mechanism, § 502(a)(3).° They argued that the Supreme

Court’s decision in Massachusetts Mutual Life Ins. Co. v.

Russell, 473 U.S. 134 (1985), did not foreclose the possibili-

ty that compensatory damages such as they sought con-

stituted ‘“‘other appropriate equitable relief’’ available

under § 502(a)(3) for violations of ERISA or the terms of an

ERISA plan. The district court denied the motion.

Although the court recognized that there was authority to

the contrary, it pointed out that “‘[t]he vast majority of

federal appellate courts have . . . held that a beneficiary

under an ERISA health plan may not recover under section

509(a(3) [sic] of ERISA compensatory or consequential

damages for emotional distress or other claims beyond

medical expenses covered by the plan.”’ (citations omitted).

Moreover, the court pointed out, a prerequisite to recovery

under § 502(a)(3) is a violation of the terms of ERISA itself.

ERISA does not place upon the defendants a substantive

responsibility in connection with the provision of medical

advice which, if breached, would support a claim under §

502 (a)(3). The court entered final judgment in favor of Blue

Cross and United, and this appeal followed.

° The district court had stated that “‘[blecause the plaintiffs concede

that the defendants have fully paid any and all medical expenses that

Mrs. Corcoran actually incurred that were covered by the plan, the plain-

tiffs have no remaining claims under ERISA.”’ In a footnote, the court

indicated that Mrs. Corcoran could have (1) sued under ERISA, before

entering the hospital, for a declaratory judgment that she was entitled

to hospitalization benefits; or (2) gone into the hospital, incurred out-of-

pocket expenses, and sued under ERISA for these expenses.

A-10

Il. STANDARD OF REVIEW

Because this case is on appeal from the district

court’s grant of summary judgment, our review is plenary.

Dorsett v. Board of Trustees for State Colleges & Univer-

sities, 940 F.2d, 121, 123 (5th Cir. 1991). We view the

evidence in the light most favorable to the nonmoving par-

ty, id., and must affirm if ‘‘the pleadings, depositions,

answers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine

issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law.”’ Fed. R. Civ. P.

56(c). As this case currently stands, the parties dispute not

the relevant facts, but the legal conclusions that must be

applied to those facts. As the Corcorans put it, “‘[t]he ques-

tion on appeal is whether the plaintiffs are afforded any

relief, under state law or ERISA, for damages caused by

{the defendants’ actions].”’

Ill. PRE-EMPTION OF THE STATE LAW

CAUSE OF ACTION

A. The Nature of the Corcorans’ State Law Claims

The Corcorans’ original petition in state court alleg-

ed that acts of negligence committed by Blue Cross and

United caused the death of their unborn child. Specifically,

they alleged that Blue Cross wrongfully denied appropriate

medical care, failed adequately to oversee the medical deci-

sions of United, and failed to provide United with Mrs. Cor-

coran’s complete medical background. They alleged that

United wrongfully denied the medical care recommended

by Dr. Collins and wrongfully determined that home nurs-

ing care was adequate for her condition. It is evident that

the Corcorans no longer pursue any theory of recovery

against Blue Cross. Although they mention in their

A-11

appellate brief the fact that they asserted a claim against

Blue Cross, they challenge only the district court’s conclu-

sion that ERISA pre-empts their state law cause of action

against United.® We, therefore, analyze solely the question

of pre-emption of the claims against United. See Hulsey v.

State of Texas, 929 F.2d 168, 172 (5th Cir. 1991) (issues

stated but not briefed need not be considered on appeal).

The claims against United arise from a relatively re-

cent phenomenon in the health care delivery system — the

prospective review by a third party of the necessity of

medical care. Systems of prospective and concurrent

review, rather than traditional retrospective review, were

widely adopted throughout the 1980s as a method of con-

taining the rapidly rising costs of health care. Blum, supra,

at 192; Furrow, Medical Malpractice and Cost Contain-

ment: Tightening the Screws, 36 Case Western L. Rev. 985,

986-87 (1986). Under the traditional retrospective system

(also commonly known as the fee-for-service system), the

patient obtained medical treatment and the insurer review-

ed the provider's claims for payment to determine whether

they were covered under the plan. Denial of a claim meant

that the cost of treatment was absorbed by an entity other

than the one designed to spread the risk of medical costs —

the insurer.

Congress's adoption in 1983 of a system under which

hospitals are reimbursed for services provided to Medicare

patients based upon average cost calculations for patients

with particular diagnoses spurred private insurers to in-

stitute similar programs in which prospective decisions are

made about the appropriate level of care. Although plans

vary, the typical prospective review system requires some

6 They also do not mention Blue Cross when arguing that extracontrac-

tual damages are available under § 502(a)(3).

A-12

form of pre-admission certification by a third party (e.g.,

the HMO if an HMO.-associated doctor provides care; an

outside organization such as United if an independent

physician provides care) before a hospital stay. Concurrent

review involves the monitoring of a hospital stay to deter-

mine its continuing appropriateness. See generaily, Blum,

supra, at 192-93; Tiano, The Legal Implications of HMO

Cost Containment Measures, 14 Seton Hall Legis. J. 79, 80

(1990). As the SPD makes clear, United performs this sort

of prospective and concurrent review (generically, ‘‘utiliza-

tion review’’) in connection with, inter alia, the hospitaliza-

tion of Bell employees.

The Corcorans based their action against United on

Article 2315 of the Louisiana Civil Code, which provides

that ‘‘[e]very act whatever of man that causes damage to

another obliges him by whose fault it happened to repair

it.’ Article 2315 provides parents with a cause of action for

the wrongful death of their unborn children, Danos v. St.

Pierre, 402 So. 2d 633, 637-38 (La. 1981), and also places

liability on health care providers when they fail to live up

to the applicable standard of care. Chivleatto v. Divinity,

379 So. 2d 784, 786 (La. App. 4th Dist. 1979). Whether Ar-

ticle 2315 permits a negligence suit against a third party

provider of utilization review services, however, has yet to

be decided by the Louisiana courts. The potential for im-

posing liability on these entities is only beginning to be ex-

plored, with only one state exnlicitly permitting a suit bas-

ed on a utilization review company’s allegedly negligent

decision about medical care to go forward. Wilson v. Blue

Cross of So. California, 22 Cal. App. 3d 660, 271 Cal. Rptr.

876, 883 (1990) (reversing summary judgment for utiliza-

tion review company which determined that further

hospitalization was not necessary; ERISA not

A-13

implicated);’ see also Wickline v. State of California, 192

Cal. App. 3d 1630, 239 Cal. Rptr. 810, 819 (1986) (stating,

in dicta, that negligent implementation of cost contain-

ment mechanisms such as utilization review can lead to

liability; ERISA not implicated), cert. granted, 727 P.2d

753, 231 Cal. Rptr. 560, review dismissed, cause remanded,

741 P.2d 613, 239 Cal. Rptr. 805 (1987).8

’ The case went to trial, but the plaintiff settled with Western Medical,

the provider of utilization review services. See Milt Freudenheim, When

Treatment and Costs Collide, N.Y. Times, Apr. 28, 1992, at C2 col. 1.

8 Numerous commentators have weighed in on the propriety of liability

for utilization review decisions. See e.g, Macaulay, Health Care Cost

Containment and Medical Malpractice: On a Collision Course, 19 Suffolk

U.L. Rev. 91, 106-107 (1986) (arguing for higher standard of negligence

in ‘‘Wickline suits’’); Morreim, Cost Containment and the Standard of

Medical Care, 75 Calif. L. Rev. 1719, 1749-50 (1987) (arguing that liabili-

ty should be limited because patient's physician makes the ultimate

decision about treatment); Note, Paying the Piper: Third Party Payor

Liability for Medical Treatment Decisions, 25 Ga. L. Rev. 861, 907-911

(1991) (by David Griner) (arguing that without liability for neglizence in

utilization review decisions, third party payors Lave incentives to con-

trol costs but not to use reasonable care in the decisionmaking process);

Mellas, Adapting the Judicial Approach to Medical Malpractice Claims

Against Physicians to Reflect Medicare Cost Containment Measures, 62

U. Colo. L. Rev. 287, 316 (1991) (liability will reduce possibility that poor

medical decisions will be made in order to cut costs).

Even if courts put their imprimatur on negligence actions against

utilization review organizations, plaintiffs would face difficulties in

proving that the organization’s decision was a significant cause of an in-

jury. See Wickline, 239 Cal. Rptr. at 819 (decision of doctor to discharge

patient after Medi-Cal (state utilization review body) would not

authorize additional hospital stay, not decision of Medi-Cal on ap-

propriate length of stay, is act upon which liability should be premised);

Note, supra, 25 Ga. L. Rev. at 902-05 (discussing problem of proving

that utilization review organization’s decision is proximate cause of in-

jury); but see Wilson, 271 Ca. Rptr. at 883 (find.ng that plaintiffs had

adduced enough evidence as to causal effect of utilization review com-

pany’s decision on decedent's suicide to avoid summary judgment).

A-14

In the absence of clear Louisiana authority for their

lawsuit, the Corcorans rely on Green v. Walker, 910 F.2d

291 (5th Cir. 1990). We held in Green that Article 2315 im-

poses a duty of due care upon physicians hired by

employers to conduct employment-related exams on

employees. Jd. at 296. The cause of action recognized in

Green, however, is not analogous to the cause of action

brought against United because Green involved an actual

physical examination by a doctor hired by an employer, not

the detached decision of a utilization review company.

Despite the lack of clear Louisiana authority supporting

the Corcorans’ theory of recovery against United, we can

resolve the pre-emption question presented in this appeal.

The law in this area is only beginning to develop, and it

does not appear to us that Louisiana law clearly forecloses

the possibility of recovery against United. Thus, assuming

that on these facts the Corcorans might be capable of

stating a cause of action for malpractice,? our task now is

to determine whether such a cause of action is pre-empted

by ERISA.

B. Principles of ERISA Pre-emption

The central inquiry in determining whether a federal

statute pre-empts state law is the intent of Congress. FMC

Corp. v. Holiday, 111 S. Ct. 403, 407 (1990); Allis-Chalmers

Corp. v. Lueck, 471 U.S. 202, 208 (1985). In performing this

analysis we begin with any statutory language that ex-

presses an intent to pre-empt, but we look also to the pur-

pose and structure of the statute as a whole. FMC Corp.,

111 S. Ct. at 407; Ingersoll-Rand Co. v. McClendon, 111 S.

Ct. 478, 482 (1990).

9 1f the Corcorans could sue United on a negligence theory, it would ap-

pear that they could recover damages incurred in connection with the

death of their unborn child. Danos, 402 So. 2d at 637.

rein pence amen

A-15

ERISA contains an explicit pre-emption clause,

which provides, in relevant part:

Except as provided in subsection (b) of this sec-

tion, the provisions of this subchapter and sub-

chapter III of this chapter shall supersede any .

and all State laws insofar as they may now or

hereafter relate to any employee benefit plan

described in section 1003(a). . . .

ERISA § 514(a).!° It is by now well-established that the

‘deliberately expansive’ language of this clause, Pilot Life

Insurance Co. v. Dedeaux, 481 U.S. 42, 46 (1987), is a signal

that it is to be construed extremely broadly. See FMC

Corp., 111 S. Ct. at 407 (‘[t]he pre-emption clause is con-

spicuous for its breadth’’); Jngersoll-Rand, 111 S. Ct. at

482.1! The key words “‘relate to’’ are used in such a way as

10 Statutory, decisional and all other forms of state law are included

within the scope of the preemption clause. ERISA § 514(c)(1) (“The term

‘State law’ includes all laws, decisions, rules, regulations, or other State

action having the effect of law, of any State’’). Section 514(b)(2)(A) ex-

empts certain state laws from pre-emption, but none of these exceptions

is applicable here.

11 The legislative history indicates that Congress intended the preemp-

tion provision to be applied expansively. In Shaw v. Delta Air Lines,

Inc., 463 U.S. 85 (1983), the Court explained:

The bill that became ERISA originally contained a limited pre-

emption clause, applicable only to state laws relating to the

specific subjects covered by ERISA. The Ccnference Committee

rejected those provisions in favor of the present language, and in-

dicated that section’s pre-emptive scope was as broad as its

language. See H.R. Conf. Rep. No. 93-1280, p. 383 (1974); S. Conf.

Rp. No. 93-1090, p. 383 (1974).

463 U.S. at 98. Senator Williams, one of ERISA’s sponsors, remarked:

It should be stressed that with the narrow exceptions specified in

the bill, the substantive and enforcement provisions of the con-

ference substitute are intended to preempt the field for Federal

A-16

to expand pre-emption beyond state laws that relate to the

specific subjects covered by ERISA, such as reporting,

disclosure and fiduciary obligations. Jd. at 482. Thus, state

laws “‘relate[] to’’ employee benefit plans in a much

broader sense — whenever they have ‘‘a connection with or

reference to such a plan.”’ Shaw v. Delta Air Lines, Inc., 463

U.S. 85, 96-97 (1983). This sweeping pre-emption of state

law is consistent with Congress’s decision to create a com-

prehensive, uniform federal scheme for the regulation of

employee benefit plans. See Ingersoll-Rand, 111 S. Ct. at

482; Pilot Life, 481 U.S. at 45-46.

The most obvious class of pre-empted state laws are

those that are specifically designed to affect ERISA-

governed employee benefit plans. See Mackey v. Lanier

Collection Agency & Serv., Inc., 486 U.S. 825, 829-30 (1988)

(statute explicitly barring garnishment of ERISA plan

funds is pre-empted); Jngersoll-Rand, 111 S. Ct. at 483

(cause of action allowing recovery from employer when

discharge is premised upon attempt to avoid contributing

to pension plan is pre-empted). But a law is not saved from

pre-emption merely because it does not target employee

benefit plans. Indeed, much pre-emption litigation involves

laws of general application which, when applied in par-

ticular settings, can be said to have a connection with or a

reference to an ERISA plan. See Pilot Life, 481 U.S. at

47-48 (common law tort and contract causes of action seek-

(footnote 11 continued)

regulations, thus eliminating the threat of conflicting or inconsis-

tent State and local regulation of employee benefit plans. This

principle is intended to apply in its broadest sense to all actions

of State or local governments, or any instrumentality thereof,

which have the force or effect of iaw.

120 Cong. Rec. 29933 (1974). See also Pilot Life, 481 U.S. at 46.

A-17

ing damages for improper processing of a claim for benefits

under a disability plan are pre-empted); Shaw, 463 U.S. at

95-100 (statute interpreted by state court as prohibiting

plans from discriminating on the basis of pregnancy is pre-

empted); Christopher v. Mobil Oil Corp., 950 F.2d 1209,

1218 (5th Cir. 1992) (common law fraud and negligent

misrepresentation claims that allege reliance on

agreements or representations about the coverage of a plan

are pre-empted), petition for cert. filed 60 U.S.L.W. 3829

(U.S. May 26, 1992) (No. 91-1881); Lee v. E.J. DuPont de

Nemours & Co., 894 F.2d 755, 758 (5th Cir. 1990) (same). On

the other hand, the Court has recognized that not every

conceivable cause of action that may be brought against an

ERISA-covered plan is pre-empted. ‘“‘Some state actions

may affect employee benefit plans in too tenuous, remote

or peripheral a manner to warrant a finding that the law

‘relates to’ the plan.’’ Shaw, 463 U.S. at 100 n.21. Thus,

“run-of-the-mill state-law claims such as unpaid rent,

failure to pay creditors, or even torts committed by an

ERISA plan” are not pre-empted, Mackey, 486 U.S. at 833

(discussing these types of claims in dicta).

C. Pre-emption of the Corcorans’ Claims

Initially, we observe that the common law causes of

action advanced by the Corcorans are not that species of

law ‘‘specifically designed’’ to affect ERISA plans, for the

liability rules they seek to invoke neither make explicit

reference to nor are premised on the existence of an ERISA

plan. Compare Ingersoll-Rand, 111 S. Ct. at 483. Rather,

applied in this case against a defendant that provides

benefit-related services to an ERISA plan, the generally

applicable negligence-based causes of action may have an

effect on an ERISA-governed plan. In our view, the pre-

emption question devolves into an assessment of the

significance of these effects.

A-18

1. United’s position — it makes benefit determina-

tions, not medical decisions

United’s argument in favor of pre-emption is ground.

ed in the notion that the decision it made concerning Mrs.

Corcoran was not primarily a medical decision, but instead

was a decision made in its capacity as a plan fiduciary

about what benefits were authorized under the Plan. All it

did, it argues, was determine whether Mrs. Corcoran

qualified for the benefits provided by the plan by applying

previously established eligibility criteria. The argument’s

coup de grace is that under well-established precedent, !?

participants may not sue in tort to redress injuries flowing

from decisions about what benefits are to be paid under a

plan. One commentator has endorsed this view of lawsuits

against providers of utilization review services, arguing

that, because medical services are the ‘‘benefits’’ provided

by a utilization review company, complaints about the

quality of medical services (i.e., lawsuits for negligence)

‘‘can therefore be characterized as claims founded upon a

constructive denial of plan benefits.’’ Chittenden, Malprac-

tice Liability and Maraged Health Care: History & Prog-

nosis, 26 Tort & Ins. Law J. 451, 489 (1991).

In support of its argument, United points to its ex-

planatory booklet and its language stating that the com-

pany advises the patient's doctor ‘‘what the medical plan

will pay for, based on a review of [the patient’s] clinical in-

formation and nationally accepted medical guidelines for

the treatment of [the patient’s] condition.’’ It also relies on

statements to the effect that the ultimate medical decisions

are up to the beneficiary’s doctor. It acknowledges at

various points that its decision about what benefits would

be paid was based on a consideration of medical informa-

12 Pilot Life, 481 U.S. at 47-48.

A-19

tion, but the thrust of the argument is that it was simply

performing commonplace administrative duties akin to

claims handling.

Because it was merely performing claims handling

functions when it rejected Dr. Collins’s request to approve

Mrs. Corcoran’s hospitalization, United contends, the prin-

ciples of Pilot Life and its progeny squarely forecloses this

lawsuit. In Pilot Life, a beneficiary sought damages under

various state-law tort and contract theories from the in-

surance company that determined eligibility for the

employer’s long term disability benefit plan. The company

had paid benefits for two years, but there followed a period

during which the company terminated and reinstated the

beneficiary several times. 481 U.S. at 43. The Court made

clear, however, that ERISA pre-empts state-law tort and

contract actions in which a beneficiary seeks to recover

damages for improper processing of a claim for benefits. Jd.

at 48-49. United suggests that its actions here were

analogous to those of the insurance company in Pilot Life,

and therefore urges us to apply that decision. ;

2. The Corcorans’ position — United makes medical

decisions, not benefit determinations

The Corcorans assert that Pilot Life and its progeny

are inapposite because they are not advancing a claim for

improper processing of benefits. Rather, they say, they

seek to recover solely for United’s erroneous medical deci-

sion that Mrs. Corcoran did not require hospitalization dur-

ing the last month of her pregnancy. This argument, of

course, depends on viewing United’s action in this case as

a medical decision, and not merely an administrative deter-

mination about benefit entitlements. Accordingly, the Cor-

corans, pointing to the statements United makes in the

QCP booklet concerning its medical expertise, contend that

sialetiie le

A-20

United exercised medical judgment which is outside the

purview of ERISA pre-emption.

The Corcorans suggest that a medical negligence

claim is permitted under the analytical framework we have

developed for assessing pre-emption claims. Relying on

Sommers Drug Stores Co. Employee Profit Sharing Trust

v. Corrigan Enterprises, Inc., 793 F.2d 1456 (5th Cir. 1986),

cert. denied, 479 U.S. 1034 (1987), they contend that we

should not find the state law under which they proceed pre-

empted because it (1) involves the exercise of traditional

state authority and (2) is a law of general application which,

although it affects relations between principal ERISA en-

tities in this case, is not designed to affect the ERISA

relationship.!3

3. Our view — United makes medical decisions inci-

dent to benefit determinations

13 Amicus curiae Louisiana Trial Lawyers Association (LTLA) argues

that United is not an ERISA fiduciary, and that therefore the tort

claims against it cannot be pre-empted. The parties, however, agree that

United is a fiduciary, and we have no reason to dispute this. United's

contract with Bell would appear to give it ‘“‘discretionary authority or

discretionary control respecting management of [the] plan”’ or ‘“‘authori-

ty or control respecting management or disposition of its assets. . . [,]"’

thus satisfying the statutory definition of a fiduciary. 29 U.S.C. §

1002(21)(A)(i). In any event, all courts of appeals to have considered the

issue have held that ERISA pre-emption may apply regardless of

whether the defendant is a plan fiduciary. Consolidated Beef Indus., Inc.

v. New York Life Ins. Co., 949 F.2d 960, 964 (8th Cir. 1991); Gibson v.

Prudential Ins. Co., 915 F.2d 414, 417-18 (9th Cir. 1990); Howard v. Pari-

sian, Inc., 807 F.2d 1560, 1564 (11th Cir. 1987). Despite the suggestion

in Howard that this circuit so held in Light v. Blue Cross and Blue

Shield of Alabama, 790 F.2d 1247 (5th Cir. 1986), there is no indication

that the defendant in Light was not a fiduciary, and even if it was not,

no part of the opinion considers the precise question whether ERISA

pre-empts suits against nonfiduciaries.

A-21

We cannot fully agree with either United or the Cor-

corans. Ultimately, we conclude that United makes medical

decisions — indeed, United gives medical advice — but it

does so in the context of making a determination about the

availability of benefits under the plan. Accordingly, we

hold that the Louisiana tort action asserted by the Cor-

corans for the wrongful death of their child allegedly

resulting from United’s erroneous medical decision is pre-

empted by ERISA.

Turning first to the question of the characterization

of United’s actions, we note that the QCP booklet and the

SPD lend substantial support to the Corcorans’ argument

that United makes medical decisions. United’s own booklet

tells beneficiaries that it ‘‘assess[es] the need for surgery or

hospitalization and . . . determine[s] the appropriate length

of stay for a hospitalization, based on nationally accepted

medical guidelines.’’ United ‘‘will discuss with your doctor

the appropriateness of the treatments recommended and

the availability of alternative types of treatments.”’ Fur-

ther, ‘‘United’s staff includes doctors, nurses, and other

medical professionals knowledgeable about the health care

delivery system. Together with your doctor, they work to

assure that you and your covered family members receive

the most appropriate medical care.’’ According to the SPD,

United will ‘‘provid[fe] you with information which will per-

mit you (in consultation with your doctor) to evaluate alter-

natives to surgery and hospitalization when those alter-

natives are medically appropriate.”’

United makes much of the disclaimer that decisions

about medical care are up to the beneficiary and his or her

doctor. While that may be so, and while the disclaimer may

support the conclusion that the relationship between

United and the beneficiary is not that of doctor-patient, it

does not mean that United does not make medical decisions

etl

A-22

or dispense medical advice. See Wickline, 239 Cal. Rptr. at

819 (declining to hold Medi-Cal liable but recognizing that

it made a medical judgment); Macaulay, Health Care Cost

Containment and Medical Malpractice: On a Collision

Course, 19 Suffolk U.L. Rev. 91, 106-107 (1986) (‘‘As il-

lustrated in [Wickline], an adverse prospective determina-

tion on the ‘necessity’ of medical treatment may involve

complex medical judgment.’’) (footnote omitted). In

response, United argues that any such medical determina-

tion or advice is made or given in the context of administer-

ing the benefits available under the Bell plan. Supporting

United’s position is the contract between United and Bell,

which provides that ‘‘[United] shall contract the Partici-

pant’s physician and based upon the medical evidence and

normative data determine whether the Participant should

be eligible to receive full plan benefits for the recommended

hospitalization and the duration of benefits.”

United argues that the decision it makes in this, the

prospective context, is no different than the decision an in-

surer makes in the traditional retrospective context. The

question in each case is ‘‘what the medical plan will pay for,

based on a review of [the beneficiary's] clinical information

and nationally accepted medical guidelines for the treat-

ment of [the beneficiary's] condition.’’ See QCP Booklet at

4. A prospective decision is, however, different in its im-

pact on the beneficiary than a retrospective decision. In

both systems, the beneficiary theoretically knows in ad-

vance what treatments the plan will pay for because

coverage is spelled out in the plan documents. But in the

retrospective system, a beneficiary who embarks on the

course of treatment recommended by his or her physician

has only a potential risk of disallowance of all or a part of

the cost of that treatment, and then only after treatment

has been rendered. In contrast, in a prospective system a

beneficiary may be squarely presented in advance of treat-

A-23

ment with a statement that the insurer will not pay for the

proposed course of treatment recommended by his or her

doctor and the beneficiary has the potential of recovering

the cost of that treatment only if he or she can prevail in

a challenge to the insurer’s decision. A beneficiary in the

latter system would likely be far less inclined to undertake

the course of treatment that the insurer has at least

preliminarily rejected.

By its very nature, a system of prospective decision-

making influences the beneficiary's choice among treat-

ment options to a far greater degree than does the

theoretical risk of disallowance of a claim facing a

beneficiary in a retrospective system. Indeed, the percep-

tion among insurers that prospective determinations result

in lower health care costs is premised on the likelihood that

a beneficiary faced with the knowledge of specificially what

the plan will and will not pay for will choose the treatment

option recommended by the plan in order to avoid risking

total or partial disallowance of benefits. When United

makes a decision pursuant QCP, it is making a medical

recommendation which — because of the financial ramifica-

tions — is more likely to be followed. !4

Although we disagree with United’s position that no

14 It is the medical decisionmaking aspect of the utilization review proc-

ess that has spawned the literature assessing the application of mal-

practice and other negligence-based doctrines to hold these entities

liable for patient injuries. See Blum, supra, at 199 (‘‘The overriding in-

centive for [utilization review] may be cost containment, but the process

itself is triggered by a medical evaluation of a particular case, an evalua-

tion that requires a clinical judgment.’’) (footnote omitted); Tiano, supra,

at 80 (‘‘The patient faces conflicting judgments by two medical profes-

sionals: the treating physician and the utilization review consultant’ ’);

Chittenden, supra, at 476 (‘‘negligent implementation of cost-control

mechanisms may affect the medical judgment of the physician or other

provider resulting in physical injury to the patient’’).

2 ——

A-24

part of its actions involves medical decisions, we cannot

agree with the Corcorans that no part of United’s actions

involves benefit determinations. In our view, United makes

medical decisions as part and parcel of its mandate to

decide what benefits are available under the Bell plan. As

the QCP Booklet concisely puts it, United decides ‘‘what

the medical plan will pay for.’’ When United’s actions are

viewed from this perspective, it becomes apparent that the

Corcorans are attempting to recover for a tort allegedly

committed in the course of handling a benefit determina-

tion. The nature of the benefit determination 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 pre-empts state-law claims alleging

improper handling of benefit claims is broad enough to

cover the cause of action asserted here.

Moreover, allowing the Corcorans’ suit to go forward

would contravene Congress’s goals of ‘‘ensur[ing] that

plans and plan sponsors would be subject to a uniform

body of benefit law’’ and ‘‘minimiz[ing] the administrative

and financial burdens of complying with conflicting direc-

tives among States or between States and the Federal

Government.” Ingersoll-Rand Co., 111 S. Ct. at 484; see

also Fort Halifax Packing, 482 U.S. at 9-10. Thus, statutes

that subject plans to inconsistent regulatory schemes in

different states, thereby increasing inefficiency and poten-

tially causing the plan to respond by reducing benefit

levels, are consistently held pre-empted. See Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 524 (1981) (strik-

ing down law which prohibited plans from offsetting

benefits by amount of worker compensation payments);

Shaw, 463 U.S. at 105 n.25 (striking down law which com-

pensation payments); Shaw, 463 U.S. at 105 n.25 (striking

down law which prohibited plans from discriminating on

basis of pregnancy); FMC Corp., 111 S. Ct. at 408 (striking

A-25

down law which eliminated plans’ right of subrogation

from claimant’s tort recovery). But in Jngersoll-Rand, the

Court, in holding pre-empted the Texas common law of

wrongful discharge when applied against an employer who

allegedly discharged an employee to avoid contributing to

the employee’s pension plan, made clear that a state com-

mon law cause of action is equally capable of leading to the

kind of patchwork scheme of regulation Congress sought to

avoid:

It is foreseeable that state courts, exercising their

common law powers, might deveiop different

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 fun-

damentally at odds with the goal of uniformity

that Congress sought to implement.

111 S. Ct. at 484. Similarly, although imposing liability on

United might have the salutary effect of deterring poor

quality medical decisions,!° there is a significant risk that

state liability rules would be applied differently to the con-

duct of utilization review companies in different states. The

cost of complying with varying substantive standards

would increase the cost of providing utilization review ser-

vices, thereby increasing the cost of health benefit plans of

including cost containment features such as the Quality

Care Program (or causing them to elirninate this sort of

cost containment program altogether) and ultimately

decreasing the pool of plan funds available to reimburse

15 See Comment, A Cost Containment Malpractice Defense: Implica-

tions for the Standard of Care and for Indigent Patients, 26 Hous. L.

Rev. 1007, 1021 (1989) (by Leslie C. Giordani).

A-26

participants. See Macaulay, supra, at 105.16

It may be true, as the Corcorans asert, that Loui-

siana tort law places duties on persons who make medical

judgments within the state, and the Louisiana courts may

one day recognize that this duty extends to the medical

decisions make by utilization review companies. But it is

equally true that Congress may pre-empt state-law causes

of action which seek to enforce various duties when it deter-

mines that such actions would interfere with a carefully

constructed scheme of federal regulation. See Pilot Life,

481 U.S. at 48. The acknowledged absence of a remedy

under ERISA’s civil enforcement scheme for medical

malpractice committed in connection with a plan benefit

determination does not alter our conclusion. While we are

not unmindful of the fact that our interpretation of the pre-

emption clause leaves a gap in remedies within a statute

16 We find Independence HMO, Inc. v. Smith, 733 F. Supp. 983 (E.D.

Pa. 1990), cited by the Corcorans, distinguishable on its facts. In Smith,

the district court did not find pre-empted a state court malpractice ac-

tion brought against an HMO by one of its members. The plaintiff

sought to hold the HMO liable, under a state-law agency theory, for the

alleged negligence of a surgeon associated with the HMO. The case ap-

pears to support the Corcorans because the plaintiff was attempting to

hold an ERISA entity liable for medical decisions. However, the medical

decisions at issue do not appear to have been made in connection with

a cost containment feature of the plan or any other aspect of the plan

which implicated the management of plan assets, but were instead made

by a doctor in the course of treatment.

We also find Eurine v. Wyatt Cafeterias, No. 3-91-0408-H (N.D.

Tex. Aug. 21, 1991), cited in the Corcorans’ reply brief, irrelevant to this

case. In Eurine, an employee of Wyatt Cafeterias sued after she slipped

and fell at work. Wyatt had opted out of Texas’s workers’ compensation

scheme, but provided benefits for injured employees pursuant to an

ERISA plan. The court held that a tort suit against the employer for its

negligence in failing to maintain the floor in a safe condition had nothing

to do with the ERISA relationship between the parties, but instead

arose from their distinct employer-employee relationship.

en caaeanaaeeaninieneiainetaiacecaaeaeenimaiiiiaaaneiiil

A-27

intended to protect participants in employee benefit plans,

see Shaw, 463 U.S. at 90; Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101, 113 (1989), the lack of an ERISA

remedy does not affect a pre-emption analysis. Memorial

Hosp., 904 F.2d at 248 & n.16; Lee, 894 F.2d at 757. Con-

gress perhaps could not have predicted the interjection into

the ERISA ‘‘system’”’ of the medical utilization review

process, but it enacted a pre-emption clause so broad and

a statute so comprehensive that it would be incompatible

with the language, structure and purpose of the statute to

allow tort suits against entities so integrally connected

with a plan.

We are not persuaded that Sommers Drug, on which

the Corcorans rely heavily, commands a different outcome.

In Sommers Drug, we observed that courts are less likely

to find pre-emption when the state law involves an exercise

of traditional state authority than when the law affects an

area not traditionally regulated by the states. Jd. at 1467.

The Corcorans contend that they easily pass this hurdle, as

tort law traditionally has been reserved to the states, but

this victory only puts them back at the starting line again.

We went on to say in Sommers Drug that we were ‘‘not con-

vinced”’ that the traditional or nontraditional nature of the

state law properly bears upon the initial question whether

it is pre-empted by § 514(a), because the distinction had no

support in the statutory language. /d. at 1468. We continue

to adhere to this view. As cases such as Ingersoll-Rand and

Christopher illustrate, the fact that states traditionally

(footnote 16 continued)

Finally, to the extent that two other decisions cited by the Cor-

corans, Kohn v. Delaware Valley HMO, Inc., No. 91-2745 (E.D. Pa. Dec.

20, 1991 and Feb. 5, 1992), and Cooney v. South Central Bell Tel. Co.,

No. 91-3870 (E.D. La. March 5, 1992), conflict with our holding, we

decline to follow them.

A-28

have regulated in a particular area has functioned as no im-

pediment to ERISA pre-emption. See Ingersoll-Rand, 111

S. Ct. at 483 (wrongful discharge action pre-empted);

Christopher, 950 F. 2d at 1218 (fraud action pre-empted).

ERISA’s pre-emption section itself contains an explicit ex-

emption for state laws that regulate in at least one area of

traditional state function — insurance. ERISA §

514(b)(2)(A). There is no reason to believe that Congress in-

tended implicitly to exempt a whole range of state laws

when it showed itself perfectly capable of carving out

specific exemptions.

The second factor identified in Sommers Drug as

bearing on pre-emption — whether the state law affects

relations among principal ERISA entities — continues to

be relevant in this circuit, see Memorial Hospital Systems

v. Northbrook Life Insurance Co., 904 F.2d 236, 245, 248-50

(5th Cir. 1990), but it does not help the Corcorans. In the

case before us, of course, the cause of action affects rela-

tions between principal ERISA entities. Nevertheless, the

Corcorans argue, Sommers Drug holds that the claim will

not be pre-empted where the state law is one of general ap-

plication and it does not affect relations among the prin-

cipal ERISA entities ‘‘as such,”’ but in their capacities as

entities in another kind of relationship. They analogize to

Sommers Drug, where we held that a pension plan, acting

in its ‘“‘non-ERISA”’ capacity as a shareholder in a com-

pany, could invoke the state common law of corporate

fiduciary duty against an officer and director of the com-

pany and a plan fiduciary to redress an alleged breach of

fiduciary duty. 793 F.2d at 1468-70. The short answer to

this argument is that the cause of action in this case is not

between parties acting in the kind of non-ERISA context

we found in Sommers Drug. Although the claims in Som-

mers Drug nominally affected relations between ERISA

entities, the lawsuit had nothing to do with the plan. Here,

A-29

however, the central purpose of the lawsuit is to hold

United liable for actions it took in connection with its

duties under the plan. Sommers Drug does not mitigate the

pre-emptive force of ERISA § 514(a).

IV. EXTRACONTRACTUAL DAMAGES

The Corcorans argue in the alternative that the

damages they seek are available as ‘‘other appropriate

equitable relief’’ under ERISA § 502(a)(3). That section

provides:

(a) A civil action may be brought —

(3) by a participant, beneficiary, or fiduciary (A)

to enjoin, any act or practice which violates any

provision of this subchapter or the terms of the

plan, or (B) to obtain other appropriate equitable

relief (i) to redress such violations or (ii) to enforce

any provisions of this subchapter or the terms of

the plan;

Although the Corcorans did not assert a cause of action

under § 502(a)(3) in their original state court complaint,

they asked the district court in their motion for recon-

sideration to award damages pursuant to this section. The

defendants agreed at oral argument that the issue was

properly raised and preserved for appeal, and we proceed to

consider it.

Section 502(a)(3) provides for relief apart from an

award of benefits due under the terms of a plan. When a

beneficiary simply wants what was supposed to have been

distributed under the plan, the appropriate remedy is

ieee

A-30

§ 502 (a)(1)(B). See, e.g., Cathey v. Dow Chemical Co.

Medical Care Program, 907 F.2d 554, 555 (5th Cir. 1990),

cert. denied, 111 S. Ct. 964 (1991). Damages that would

give a beneficiary more than he or she is entitled to receive

under the strict terms of the plan are typically termed ‘‘ex-

tracontractual.’’ Section 502(a)(3) by its terms permits

beneficiaries to obtain ‘‘other appropriate equitable relief”’

to redress (1) a violation of the substantive provisions of

ERISA or (2) a violation of the terms of the plan. Although

the Corcorans have neither identified which of these two

types of violations they seek to redress nor directed us to

the particular section of the Plan or ERISA which they

claim was violated, we need not determine this in order to

resolve the issue before us. As outlined below, we find that

the particular damages the Corcorans seek — money for

emotional injuries — would not be an available form of

damages under the trust and contract law principles which,

the Corcorans urge, should guide our interpretation of

ERISA’s remedial scheme. Thus, we hold that even under

the interpretation of § 502(a)(3) urged by the Corcorans,

they may not recover.

The question whether extracontractual or punitive

damages are available to a beneficiary under § 502(a)(3) has

been left open by the Supreme Court ever since

Massachusetts Mutual Life Insurance Co. v. Russell, 473

U.S. 134 (1985). In Russell, the beneficiary of a plant

sought compensatory and punitive damages under ERISA

§§ 502(a)(2) and 409(a)!7 for the improper processing of her

claim for disability benefits. Jd. at 136, 138. The Court re-

jected the argument that such damages were available

under § 409(a), holding that §409(a) (1) authorized only ac-

tions on behalf of the plan as a whole, not individual

17 Section 502(a)(2) permits ‘‘the Secretary. . .a participant, beneficiary

or fiduciary’’ to sue for appropriate relief under § 409.

A-31

beneficiaries, for losses to the plan; and (2) provided no im-

plied cause of action for extracontractual damages caused

by improper claims processing. Russell, 473 U.S. at 140,

147. Because the beneficiary expressly disclaimed reliance

on § 502(a)(3), however, the Court had no occasion to con-

sider whether the damages the plaintiff sought were

available under that section. Jd. at 139 n.5.

In a concurrence joined by three other Justices,

Justice Brennan emphasized that he read the court’s

reasoning to apply only to § 409(a), and that the legislative

history of ERISA suggested that courts should develop a

federal common law in fashioning ‘other appropriate

equitable relief’’ under § 502(a)(3). Jd. at 155-56 (Brennan,

J., concurring in the judgment). Justice Brennan argued

that Congress “‘intended to engraft trust-law principles on-

to the enforcement scheme”’ of ERISA, including the prin-

ciple that courts should give to beneficiaries of a trust the

remedies necessary for the protection of their interests. Jd.

at 156-57. Consequently, he encouraged courts faced with

claims tor extracontractual damages first to determine to

what extent state and federal trust and pension law pro-

vide for the recovery of damages beyond any benefits that

have been withheld, and second to consider whether ex-

tracontractual relief would conflict with ERISA in any

way. /d. at 157-58. With respect to the first inquiry he in-

dicated that any deficiency in trust law in the availability

of make-whole remedies should not deter courts from

authorizing such remedies under § 502(a)(3), for Congress

intended in ERISA to strengthen the requirements of the

common law of trusts as they relate to employee benefit

plans. Jd. at 157 n.17. Finally, Justice Brennan suggested,

courts should keep in mind that the purpose of ERISA is

the ‘‘enforcement of strict fiduciary standards of care in

the administration of all aspects of pension plans and pro-

motion of the best interests of participants and

A-32

beneficiaries.’’ Jd. at 158.

The Corcorans urge us to apply Justice Brennan’s

concurrence and hold that the damages they seek amount

to ‘‘other appropriate equitable relief.’’ The defendants, on

the other hand, urge us to interpret ‘“‘other appropriate

equitable relief’’ to include only declaratory and injunctive

relief. Under the defendants’ view of § 502(a) (3), which has

been adopted by a number of circuits,!8 no money

damages would be awardable and our discussion would be

at an end. However, even assuming that Justice Brennan's

view of ‘‘other appropriate equitable relief’’ as potentially

encompassing make-whole relief is a proper construction of

that section, the damages the Corcorans seek would not be

available.

The characterization of equitable relief as encom-

passing damages necessary to make the plaintiff whole

may well be consistent with the trust law principles that

were incorporated into ERISA and which guide its inter-

pretation. See Firestone, 489 U.S. at 110-11 (because

ERISA is largely based on trust law, those principles guide

interpretation); H.R. Rep. No. 533, 93d Cong., Ist Sess.

_ (1973), reprinted in 1974 U.S. Code Cong. & Admin. News

4639; S. Rep. No. 127, 93d Cong., Ist Sess., reprinted in

1974 U.S. Code Cong. & Admin. News 4838 (indicating in-

tent to incorporate the law of trusts into ERISA). Section

205 of the Restatement (Second) of Trusts allows for

monetary damages as make-whole relief, providing that a

beneficiary has ‘‘the option of pursuing a remedy which will

18 Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821 (1st Cir.), cert.

denied, 488 U.S. 909 (1988); Harsch v. Eisenberg, 956 F.2d 651 (7th Cir.

1992), petition for cert. filed, 60 U.S.L.W. 3816 (U.S. May 11, 1992) (No.

91-1835); Novak v. Andersen Corp., No. 91-1957 (8th Cir. April 9, 1992);

Sokol v. Bernstein, 803 F.2d 532 (9th Cir. 1986); Bishop v. Osborn

Transp., Inc., 838 F.2d 1173 (11th Cir.), cert. denied, 488 U.S. 832 (1988).

A-33

put him in the position in which he was before the trustee

committed the breach of trust”’ or ‘“‘of pursuing a remedy

which will put him in the position in which he would have

been if the trustee had not committed the breach of trust.”’

In the context of the breach of a trustee’s investment

duties, “‘the general rule [is] that the object of damages is

to make the injured party whole, that is, to put him in the

same condition in which he would have been if the wrong

nad not been committed. .. .Both direct and consequential

damages may be awarded.’’ G. Bogert & G. Bogert, The

Law of Trusts and Trustees § 701, at 198 (2d ed. 1982). See

also Estate of Talbot, 141 Cal. App. 309, 296 P.2d 848

(1956); In re Cook’s Will, 136 N.J. Eg. 123, 40 A.2d 805

(1945).

This view may also be consistent with the common

law contract doctrine which assists us in interpreting

ERISA. As the Court observed in Russell, ERISA was

enacted ‘‘to protect contractually defined benefits.’’ 473

U.S. at 148. Prior to the enactment of ERISA, the rights

and obligations of pension beneficiaries and trustees were

governed not only by trust principles, but in large part by

contract law. Firestone, 489 U.S. at 112-13; see also

Rochester Corp. v. Rochester, 450 F.2d 118, 120-21 (4th Cir.

1971); Audio Fidelity Corp. v. Pension Benefit Guaranty

Corp., 624 F.2d 513, 517 (4th Cir. 1980); Hoefel v. Atlas

Tack Corp., 581 F.2d 1, 4-7 (1st Cir. 1978). It is well-

established that contract law enables an aggrieved party to

recover such damages as would place him in the position he

would have occupied had the contract been performed,

Restatement (Second) of Contracts § 347 & comment a

(1981), including those damages that could reasonably

have been foreseen to flow from the breach. Jd. § 351; see

Warren v. Society Nat. Bank, 905 F.2d 975, 980 (th Cir.

1990) (§ 502 (a)(3) allows for recovery of beneficiaries’ in-

creased tax liability after plan administrators failed to

A-34

follow instructions regarding distribution), cert. denied,

111 S. Ct. 2556 (1991).

However, the Corcorans seek a form of extracontrac-

tual damages that is never, as far as we can tell, awarded

for breach of trust duties, and is granted only in the most

limited of circumstances for a breach of contract. Certainly,

patients and their physicians can enter into contracts and

physicians may incur liability for breach. The cases are

uniform, however, in holding that there can be no recovery

against a physician on a contractual theory, as opposed to

the usual recovery on a tort theory of medical negligence,

unless there is an express agreement to perform a par-

ticular service or to achieve a specific cure. E.g., Bobrick v.

Bravstein, 497 N.Y.S.2d 749, 751, 116 A.D.2d 682 (App.

Div. 1986); Cirafici v. Goffen, 85 Ill. App. 3d 1102, 407

N.E.2d 633, 635, 41 Ill. Dec. 135 (1980); Depenbrok v.

Kaiser Foundation Health Plan, Inc., 79 Cal. App. 3d 167,

144 Cal. Rptr. 724, 726 (1978). In a few cases, courts,

recognizing a distinction between commercial contracts

and contracts for the performance of personal services,

have found inapplicable the general rule that emotional

distress damages are not available in contract actions!

and have allowed damages for emotional injuries within the

contemplation of the parties. Stewart v. Rudner, 349 Mich.

459, 84 N.W.2d 816, 824 (1957) (‘‘the parties may

reasonably be said to have contracted with reference to the

payment of [emotional distress] damages therefor in event

of breach’); Sullivan v. O’Connor, 363 Mass. 579, 296

N.E.2d 183, 188-89 (1973) (although mental anguish

damages are not available for breach of a commercial con-

tract, psychological injury may be contemplated in a con-

19 See J. Calamari & J *Perillo, The Law of Contracts §§ 14-3, 14-5(b),

at 595-96 (3d ed. 1987); 11 W. Jaeger, Williston on Contracts § 1341, at

214 (3d ed. 1968); 5 Corbin on Contracts § 1076, at 426 (2d ed. 1964).

A-35

tract for an operation) (citing Stewart). The Stewart rule,

however, has not been widely adopted, and the Michigan

courts recently have characterized its holding concerning

damages as applying only to contracts involving deep, per-

sonal relationships, Chrum v. Charles Heating & Cooling,

Inc., 121 Mich. App. 17, 327 N.W.2d 568, 570 (1982), and

contracts to perform very specific acts. Penner v. Seaway

Hosp., 169 Mich. App. 502, 427 N.W.2d 584, 587 (1988).

The strictness with which courts have viewed doctor-

patient contracts thwarts the Corcorans’ claim that emo-

tional distress damages would be available here under a

make-whole interpretation of § 502(a)(3). The existence of a

true doctor-patient relationship between Mrs. Corcoran

and United which could support a contractual theory of

recovery is dubious at best. Related to this problem is the

lack of an express agreement for a particular service or for

a particular result that serves as a prerequisite to a

contract-based recovery. Even assuming that United's

booklet could be considered an aspect of the ‘‘plan,’’ breach

of which would give rise to a cause of action under §

502(a)(3), it cannot be construed as making an agreement to

perform any particular medical procedure or to arrive at

any result. At most it makes promises to act in accordance

with accepted standards of medical care. But courts have

not recognized these sorts of promises as creating contrac-

tual duties between physicians and patients. Cirafici, 407

N.E.2d at 635-36 (failure to perform with requisite skill and

care leads to action for negligence, not breach of contract);

Awkerman v. Tri-County Orthopedic Group, P.C., 143

Mich. App. 722, 373 N.W.2d 204, 206 (1985) (physician’s

breach of express or implied promise to act in accordance

with standard of care not actionable in contract). Indeed,

the Massachusetts Supreme Judicial Court has emphasiz-

ed that in an action seeking damages under Sullivan, one of

A-36

the leading cases allowing mental distress damages for a

breached medical contract, recovery is not for the doctor’s

failure to live up to the standard of care but solely for a

failure to perform the specific promise contained in the

agreement. Salem Orthopedic Surgeons, Inc. v. Quinn, 377

Mass. 514, 386 N.E.2d 1268, 1271 (1979). See also Murray

v. University of Pennsylvania Hosp., 490 A.2d 839, 841

(Pa. Super. 1985) (action for breach of contract to achieve

particular result may lie even if doctor has exercised

highest degree of skill and care).

The fact that courts regularly view doctors and their

patients as standing in a fiduciary relationship, e.g., Black

v. Littlejohn, 312 N.C. 626, 325 S.E.2d 469, 482 (1985);

Liebergesell v. Evans, 93 Wash. 2d 881, 613 P.2d 1170,

1176 (1980); State ex rel. Stufflebaum v. Appelquist, 694

S.W.2d 882, 885 (Mo. App. 1985), also is of no avail.

Although a plan beneficiary certainly may sue under §

502(a)(3) for a breach of the fiduciary duties set forth in §

404, the lack of a true doctor-patient relationship between

Mrs. Corcoran and United undermines this ground of

recovery. In any event, courts have not held that patients

may sue their doctors under any independent ‘‘breach of

fiduciary duty’’ theory. The remedies are limited to con-

tract actions (where an express agreement has been made)

and, in the vast majority of cases, tort actions for

negligence. Assuming without deciding, therefore, that §

502(a)(3) permits the award of make-whole relief as ‘‘other

appropriate equitable relief,’’ we hold that the emotional

distress and mental anguish damages sought here by the

Corcorans are not recoverable.

* * *

The result ERISA compels us to reach means that

- the Corcorans have no remedy, state or federal, for what

A-37

may have been a serious mistake. This is troubling for

several reasons. First, it eliminates an important check on

the thousands of medical decisions routinely made in the

burgeoning utilization review system. With liability rules

generally inapplicable, there is theoretically less deterrence

of substandard medical decisionmaking. Moreover, If the

cost of compliance with a standard of care (reflected either

in the cost of prevention or the cost of paying judgments)

need not be factored into utilization review companies’ cost

of doing business, bad medical judgments will end up being

cost-free to the plans that rely on these companies to con-

tain medical costs.29 ERISA plans, in turn, will have one

less incentive to seek out the companies that can deliver

both high quality services and reasonable prices.

Second, in any plan benefit determination, there is

always some tension between the interest of the beneficiary

in obtaining quality medical care and the interest of the

plan in preserving the pool of funds available to compen-

sate all beneficiaries. In a prospective review context, with

its greatly increased ability to deter the beneficiary (cor-

rectly or not) from embarking on a course of treatment

recommended by the beneficiary’s physician, the tension

between interest of the beneficiary and that of the plan is

exacerbated. A system which would, at least in some cir-

cumstances, compensate the beneficiary who changes

course based upon a wrong call for at least some of the

20 We note that, were the Corcorans able to recover against United

under state law, the contract between Bell and United indicates that

United would bear the cost. However, the general application of a liabili-

ty system to utilization review companies would ultimately result in in-

creased costs to plans such as the Bell plan as it became more expensive

for companies such as United to do business.

A-38

costs of that cali might ease the tension between the con-

flicting interests of the beneficiary and the plan.

Finally, cost containment features such as the one at

issue in this case did not exist when Congress passed

ERISA. While we are confident that the result we have

reached is faithful to Congress’s intent neither to allow

state-law causes of action that relate to employee benefit

plans nor to provide beneficiaries in the Corcorans’ position

with a remedy under ERISA, the world of employee benefit -

plans has hardly remained static since 1974. Fundamental

changes such as the widespread institution of utilization

review would seem to warrant a reevaluation of ERISA so

that it can continue to serve its noble purpose of safe-

guarding the interests of employees. Our system, of course,

allocates this task to Congress, not the courts, and we

acknowledge our role today by interpreting ERISA in a

manner consistent with the expressed intentions of its

creators.

V. CONCLUSION

For all the foregoing reasons, we find that ERISA

pre-empts the Corcorans’ tort claim against United and

that the Corcorans may not recover damages for emotional

distress under § 502(a)(3) of ERISA. Accordingly, the judg-

ment of the district court is AFFIRMED.

A-39

APPENDIX B

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

Filed

MAR 8 91

FLORENCE B. CORCORAN and

WAYNE D. CORCORAN Civil Action

VERSUS No. 90-4303

UNITED HEALTHCARE, INC.

and BLUE CROSS AND BLUE

SHIELD OF ALABAMA, INC. Section ‘J’

JUDGMENT

Considering the Order and Reasons of March 7, 1991,

IT IS HEREBY ADJUDGED, ORDERED, AND

DECREED that there is judgment against the plaintiffs

(Florence B. Corcoran and Wayne D. Corcoran) and in favor

of the defendants (United HealthCare, Inc. and Blue Cross

and Blue Shield of Alabama, Inc.), dismissing the plain-

tiffs’ complaint at the plaintiffs’ costs.

New Orleans, Louisiana, this 7th day of March, 1991.

/s/ Patrick E. Carr

UNITED STATES DISTRICT JUDGE

RECEIVED

MAR 11 1991

DATE OF ENTRY MAR 8 1991

A-40

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

Filed

MAR 8 91

FLORENCE B. CORCORAN and

WAYNE D. CORCORAN Civil Action

VERSUS No. 90-4303

UNITED HEALTHCARE, INC.

and BLUE CROSS AND BLUE

SHIELD OF ALABAMA, INC. Section ‘‘J"’

Order and Reasons

CARR, J.

This matter came before the Court on February 27,

1991 for hearing on the defendants’ motion for summary

judgment [Record Document No. 7]. The Court took the

motion under submission and now GRANTS the motion.

This action concerns the interplay betweeen a state

wrongful death claim and ERISA, 29 U.S.C. §§ 1001-1461.

The sole issue before the Court is the legal issue whether

the plaintiffs’ action relates to the plaintiffs’ ERISA-

governed group health plan. All agree that if the answer is

yes, then the plaintiffs’ entire complaint is preempted by

ERISA and that if the answer is no, then ERISA provides

no impediment to the plaintiffs’ complaint.

The material facts are undisputed, at least for

DATE OF ENTRY MAR 8 1991

- |

A-41

purposes of this motion. Florence Corcoran works for

South Central Bell Telephone Company and is covered by

its self-funded group health plan, which is governed by

ERISA. Defendant Blue Cross and Blue Shield of

Alabama, Inc. is the claims administrator under the plan;

defendant United HealthCare, Inc. is the delegated ad-

ministrator of the ‘Quality Care Program”’ provisions in

the plan. Among other things, the plan provides: ‘‘To

receive maximum Plan benefits, [a plan participant such as

Mrs. Corcoran] must comply with Quality Care Program

(QCP) requirements.’’ See Exh. B, at 16, attached to De-

fendants’ Motion for Summary Judgment. Essentially, the

QCP requires approval from United HealthCare for certain

medical care before the plan will fully cover the expenses

for that care. To operate the QCP, United HealthCare often

seeks independent medical advice as to the necessity and

cost of the health care for which a plan participant seeks

coverage under the plan.

In 1989, Mrs. Corcoran became pregnant. Her doc-

tor, Dr. Jason H. Collins, diagnosed her as suffering certain

medical conditions that might complicate her pregnancy.

Both Dr. Collins and Mrs. Corcoran contacted United

HealthCare about its approving certain in-patient hospital

care that Dr. Collins believed Mrs. Corcoran needed in the

last months of her pregnancy; according to Dr. Collins, he

believed that Mrs. Corcoran should be hospitalized the last

months of her pregnancy so that he cou’d monitor the fetus

on a 24-hour-a-day basis. While a doctor reviewing Mrs.

Corcoran’s medical history and records for United

HealthCare allegedly concurred that her ‘“‘pregnancy was

risky,’’ United HealthCare refused to authorize coverage

for 24-hour-per-day hospitalization, but did approve limited

home-nursing care. The plaintiffs do not allege, and present

no evidence, that any doctor or other person on behalf of

United HealthCare performed a physical diagnosis on Mrs.

A-42

Corcoran or ever personally saw or spoke to Mrs. Corcoran.

Presumably—at least in part—because United

~ HealthCare refused to authorize coverage for round-the-

clock hospitalization, Mrs. Corcoran forwent hospitaliza-

tion during the last months of her pregnancy and instead

remained at home and received the nursing care for which

United HealthCare had authorized full payment.

On October 25, 1989, during a portion of the day

when no nurse was at Mrs. Corcoran’s home, the unborn

baby allegedly ‘‘went into fetal distress ... and died.”’

Mr. and Mrs. Corcoran sued United HealthCare and

Blue Cross in Louisiana state court. The plaintiffs allege

that Blue Cross was negligent in (1) ‘“‘wrongfully denying

appropriate medical care’’ to Mrs. Corcoran, (2) failing to

adequately oversee United HealthCare, and (3) failing to

provide United HealthCare a complete medical history on

Mrs. Corcoran. The plaintiffs allege that United Health-

Care was negligent in (1) ‘‘wrongfully denying appropriate

medical care’’ to Mrs. Corcoran, (2) ‘“‘wrongfully determin-

ing that home nursing care was adequate medical care,”’

and (3) ‘‘failing to authorize the care recommended by her

doctor.’’ The plaintiffs seek damages under Louisiana Civil

Code article 2315 for loss of love, affection, and society of

their unborn child and for mental pain and anguish. The

plaintiffs concede that the defendants have fully paid all

medical expenses that Mrs. Corcoran actually incurred

that were covered by the plan.

The defendants removed the action to this Court on

the basis of both diversity and ERISA federal question.

Contending that the plaintiffs’ claims are wholly pre-

empted by ERISA, the defendants now move for summary

A-43

judgment on that basis alone.!

Il.

Section 514(a) of ERISA, 29 U.S.C. § 1144(a), pro-

vides that ERISA ‘“‘shall supersede any and all State laws

insofar as they may-.now or hereafter relate to any

employee benefit plan’’ governed by ERISA. As the

Supreme Court has recently emphasized, this preemption

clause includes “ ‘deliberately expansive’ language’’ and

“is conspicuous for its breadth.’’ Ingersoll-Rand Co. v.

McClendon, 498 U.S. ; , 111 S. Ct. 478, 482, 112

L.Ed.2d 474 (1990); FMC Corp. v. Holliday, 498 U.S. ___.,

___, 111 S. Ct. 403, 407, 112 L.Ed.2d 559 (1990). ERISA

preempts ‘‘any state law claim that relates to an employee

benefit plan, even if the action arises under general state

law that in and of itself has no impact on employee benefit

plans.”’ Lee v. E.I. DuPont de Nemours & Co., 894 F.2d

755, 756 (5th Cir. 1990@)-

‘‘[A] law relates to an employee [health] plan if it has

‘a connection with or a reference to such a plan.’ ’’ FMC

Corp., 498 U.S. at ___, 111 S. Ct. at 407 (citing Shaw v.

Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S. Ct. 2890,

2899-900, 77 L.Ed.2d 490 (1983)). This ERISA preemption

extends to state law claims ‘‘of general application,”’ in-

' The Court is not being asked to decide, and does not now decide, (1)

whether, as a matter of Louisiana state tort law, the doctor-patient duty

at issue in Green v. Walker, 910 F.2d 291 (5th Cir. 1990), should extend

to the factual scenario here notwithstanding the health plan’s specific,

bold-faced wernings that all health care decisions were for the plan par-

ticipant and her treating doctors to make, see Exh. B, at 22, 24, attached

to Defendants’ Motion for Summary Judgment, and notwithstanding

that no one on behalf of the defendants ever diagnosed or even saw Mrs.

Corcoran or (2) whether, even assuming Green should so extend, defend-

ant Blue Cross, which was not the designated administrator of the

plan’s QCP, could be held liable under state law.

A-44

cluding tort claims where ERISA ordinarily plays no role

in the state law at issue. Metropolitan Life Insurance Co.

v. Taylor, 481 U.S. 58, 62, 107 S. Ct. 1542, 1546, 95 L.Ed.2d

55 (1987) (citing Pilot Life Insurance Co. v. Dedeaux, 481

U.S. 41, 48-51, 107 S. Ct. 1549, 1553-55, 95 L.Ed.2d 39

(1987)); see, e.g., Brock v. Primedica, Inc., 904 F.2d 295, 297

(5th Cir. 1990) (on tort claims of mental anguish and emo-

tional distress); Lee 894 F.2d at 756 (on state law fraud and

negligent misrepresentation claims). In other words, ‘‘a

state law may ‘relate to’ a benefit plan, and thereby be pre-

empted, even if the law is not specifically designed to affect

such plans, or the effect is only indirect.’’ Ingersoll-Rand,

498 U.S. at __, 111 S. Ct. at 483.

Further, this preemption applies not only for claims

against the plan itself, but also for claims against the

plan’s various administrators. See, e.g., Boren v. N.L. In-

dustires, Inc., 889 F.2d 1463, 1466 (5th Cir. 1989), cert.

denied, ___, U.S. ___, 110 S. Ct. 3283, 111 L.Ed.2d 792

(1990).

III.

Here, the existence of the ERISA plan “‘is a critical

factor in establishing liability under”’ the plaintiffs’ would-

be state-law malpractice claim. Cf. Ingersoll-Rand, 498 U.S.

at ___, 111 S. Ct. at 483. But for the ERISA plan, the

defendants would have played no part in Mrs. Corcoran’s

pregnancy; the sole reason the defendants had anything to

do with her pregnancy is because the terms of the ERISA

plan directed Mrs. Corcoran to the defendants (or at least

to United HealthCare) for approval of coverage of the

medical care she initially sought.

Without the ERISA plan, the plaintiffs could not

establish—as an issue of fact—that the defendants

TM aiisicsnicisc A eben

A-45

breached any duty to them, for the source of the defend-

ants’ obligations arose from the ERISA plan itself (indeed,

the plaintiffs implicitly recognize this fact, for their state-

court petition specifically describes the plan and the de-

fendants’ roles under the plan). Contrast, e.g., Schultz v.

National Coalition of Hispanic Mental Health and Human

Services Organizations, 678 F. Supp. 936 (D.D.C. 1988);

Morningstar v. Meijer, Inc., 662 F. Supp. 555 (E.D. Mich.

1987). ‘‘As a result, this cause of action relates not merely

to [health] benefits, but to the essence of the [health] plan

itself.’’ Ingersoll-Rand, 498 U.S. at ___, 111 S. Ct. at 483

(emphasis in original).

The plaintiffs attempt to distinguish the defend-

ants’ role in paying claims to Mrs. Corcoran from their

alleged ‘“‘doctor-patient”’ role in deciding whether certain

medical care was appropriate for Mrs. Corcoran. Any such

distinction here, however, is immaterial, for the plaintiffs

ignore the source of the alleged doctor-patient relationship

between Mrs. Corcoran and the defendants: the ERISA

plan, which authorized and directed the defendants to

review Mrs. Corcoran’s medical condition and records.

The principal case relied upon by the plaintiffs,

Pickett v. CIGNA HealthPlan of Texas, 742 F. Supp. 946

(S.D. Tex. 1990), has no application here. There, CIGNA

was the plan administrator for the plaintiff's ERISA

health plan; the plaintiff brought a state-law malpractice

action for alleged injuries he suffered while seeking treat-

ment in a health maintenance organization (HMO) that

coincidentally CIGNA operated in a capacity wholly

separate from its capacity as an ERISA plan ad-

ministrator. Because the plaintiff's ERISA plan played no

part in his claim against CIGNA and various of its doctors

in the HMO (e.g., there is no hint that the ERISA plan re-

quired that the plaintiff seek care from this HMO), the

A-46

Court concluded that ERISA did not preempt the plain-

tiff’s malpractice claim. Here, by contrast, Mrs. Corcoran’s

ERISA plan is central to her malpractice claim: without

the ERISA plan, the defendants here would not have

reviewed Mrs. Corcoran’s medical condition and thus no

alleged malpractice by the defendants could possibly have .

occurred.

Directly affecting the relationship between the

plan’s administrators and beneficiaries, specifically, be-

tween the defendants and the plaintiffs, the state tort law

of malpractice ‘‘ as applied in this case’’ does not ‘‘affect[{ |

[the] benefit plan[ ] in too tenuous, remote, and peripheral

a manner [not] to warrant a finding that it ‘relate[s] to’ the

plan[{ ].’’ Contrast Sommers Drug Stores Co. Employee

Profit Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d

1456, 1467-70 (5th Cir.), reh’g & reh’g en banc denied mem.,

797 F.2d 977 (5th Cir. 1986), cert. denied sub nom. Corrigan

v. Sommers Drug Stores Co., 479 U.S. 1034, 107 S. Ct. 884,

93 L.Ed.2d 837 (1987) and cert. denied sub nom. Sommers

Drug Stores Co. Employee Profit Sharing Trust v. Cor-

rigan, 479 U.S. 1089, 107 S. Ct. 1298, 94 L.Ed.2d 154

(1987).

In sum, the Court holds that the plaintiffs’ complaint

relates to Mrs. Corcoran’s ERISA plan and thus is pre-

empted by ERISA. Because the plaintiffs concede that the

defendants have fully paid any and all medical expenses

that Mrs. Corcoran actually incurred that were covered by

the plan, the plaintiffs have no remaining claims under

ERISA.2 Thus, the plaintiffs’ entire action should be

2 Before going into the hospital, Mrs. Corcoran could have sued United

Health Care for a declaratory judgment under ERISA that she was en-

titled under the plan to have covereage for her doctor’s recommended

hospital care. Alternitively, she could have chosen to go into the

hospital and then have sued under ERISA IV coverage of the expenses

A-47

dismissed with prejudice.

IV.

For these reasons, the Court dismissss th plaintiffs’

complaint with prejudice at their costs

New Orleans, Louisiana, this 7th day of March, 1991.

/s/Patrick E. Carr

UNITED STATES DISTRICT JUDGE

Footnote 2 continued.

she incurred. Cf. Cathey v. Dow Chemical Co. Medical Care Program,

907 F.2d 554 (5th Cir. 1990), cert. denied, _.__ U.S. ____ 111 S.Ct.__,

___. L.Ed.2d ___, 59 U.S.L.W. 3562 (Feb. 15, 1991). She chose neither

alternative.

A-48

APPENDIX C

APR 04 1991

FILED

APR 3 91

FLORENCE B. CORCORAN and

WAYNE D. CORCORAN Civil Action

VERSUS No. 90-4303

UNITED HEALTHCARE, INC.

and BLUE CROSS AND BLUE

SHIELD OF ALABAMA, INC. Section “J”

This matter is the Court on the plaintiffs’ motion for

‘“‘reconsideration”’ pursuant F.R.Civ.P. 59 [Record Docu-

ment No. 21].

Determining that oral argument is not needed, the.

Court CANCELS the hearing on the motion, previously set

for April 3, 1991, and now DENIES the motion.

The plaintiffs contend that section 509 (a)(3) of

ERISA, 29 U.S.C. § 1132(a)(3), permits them to recover ex-

tracontractual compensatory and consequential damages.

In support, they cite the concurring opinion in

Massachussetts Mutual Life Insurance Co. v. Russell, 473

U.S. 134, 105 S. Ct. 3085, 87 L.Ed.2d 96 (1985); a

paragraph of dictum in a case solely on the amount an ad-

ministrator owed a widow under her husband’s retirement

plan, Lorenzen v. Employees Retirement Plan of Sperry &

Hutchinson Co., 896 F.2d 228, 230 (7th Cir. 1990) (2-1); and

a case where the plan administrator allegedly disobeyed,

DATE OF ENTRY APR 3 1991

A-49

contrary to the plan provisions, the plaintiff's instructions

on how to administer his retirement fund, Warren v. Socie-

ty National Bank, 905 F.2d 975 (6th Cir.), cert. filed, No.

90-870 (1990).

The vast majority of federal appellate courts have re-

jected the Russell concurrence and held that a beneficiary

under an ERISA health plan may not recover under section

509(a)\(3) of ERISA compensatory or consequential

damages for emotional distress or other claims beyond

medical expenses covered by the plan. See McRae uv.

Seafarers’ Welfare Plan, 920 F.2d 819, 821-22 & n.8 (11th

Cir. 1991) (Wisdom, J.) (collecting cases, including Som-

mers Drug Stores Co. Employee Profit Sharing Trust v.

Corrigan Enterprises, Inc., 793 F.2d 1456, 1462-64 (5th

Cir.), reh’g & reh’g en banc denied mem., 797 F.2d 977 (5th

Cir. 1986), cert. denied sub nom. Corrigan v. Sommers Drug

Stores Co., 479 U.S. 1034, 107 S. Ct. 884, 93 L.Ed.2d 837

(1987) and cert. denied sub nom. Sommers Drug Stores Co.

Employee Profit Sharing Trust v. Corrigan, 479 U.S. 1089,

107 S. Ct. 1298, 94 L.Ed.2d 154 (1987)). These cases are per-

suasive. Further, the Tenth Circuit has recently held that

section 509(a)(3) of ERISA does not permit a plaintiff to

sue for wrongful death from denial of health benefits where,

as here, the state-law wrongful death claim is preempted by

ERISA. See Settles v. Golden Rule Insurance Co., ___

F.2d ___, 1991 WL 26223, at *5 (10th Cir. Mar. 5, 1991)

(No. 89-3242( (citing Cefalu v. B.F. Goodrich Co., 871 F.2d

1290, 1297 (5th Cir. 1989)).

The concern the plaintiffs, following the Russell con-

currence, note—the possibility of some wrong by a plan ad-

ministrator to a plan beneficiary that is not covered by

ERISA—is, in any event, not at issue here: the plaintiffs

here were not without a remedy when United HealthCare

informed them that it would not authorize 24-hour-a-day

A-50

hospital care. As the Court noted in footnote 2 of its Order

and Reasons, Mrs. Corcoran could have (1) immediately

sued for an expedited declaratory judgment that she was

entitled to coverage for such care under the plan or (2)

nonetheless chosen to go into a hospital and thereafter

sued under ERISA for coverage of the expenses she had

incurred.

The plaintiffs’ position also fails for another reason,

even ignoring the question what damages may be

recoverable for an ERISA violation: the plaintiffs can show

no duty that the defendants allegedly breached under

ERISA. On the one hand, the plaintiffs’ state-law wrongful

death claim is preempted by ERISA, and ERISA itself

does not provide that, irrespective of the terms of a health

policy, a doctor-patient relationship is always deemed to

exist between a plan beneficiary and a plan administrator.

On the other hand, the ERISA plan here concerned only

the payment, not the medical propriety, of health care ex-

penses and expressly provided that no such doctor-patient

relationship was created by the plan: the plan contained

specific warnings that all health care decisions were for the

plan participant and her treating doctors to make, see, e.g.,

Exh B at 22, 24, attached to Defendant’s Motion for Sum-

mary Judgment.

/s/ P. E. Carr

A-51

APPENDIX D

§ 1132. Civil enforcement

(a) Persons empowered to bring a civil action

A civil action may be brought—

(1) by a participant or beneficiary—

(A) for the relief provided for in subsection (c) of

this section, or |

(B) to recover benefits due to him under the

terms of his plan, to enforce his rights under the

terms of the plan, or to clarify his rights to future

benefits under the terms of the plan;

(2) by the Secretary, or by a participant, beneficiary

or fiduciary for appropriate relief under section 1109

of this title;

(3) by a participant, beneficiary, or fiduciary (A) to

| enjoin any act or practice which violates any provi-

sion of this subchapter or the terms of the plan, or

(B) to obtain other appropriate equitable relief (i) to

redress such violations or (ii) to enforce any provi-

sions of this subchapter or the terms of the plan;

(4) by the Secretary, or by a participant, or

beneficiary for appropriate relief in the case of a

violation of 1025(c) of this title;

(5) except as otherwise provided in subsection (b)

of this section, by the Secretary (A) to enjoin any

act or practice which violates any provisions of this

A-52

subchapter, or (B) to obtain other appropriate

equitable relief (i) to redress such violation or (ii) to en-

force any provision of this subchapter; or

(6) by the Secretary to collect any civil penalty under

subsection (c)(2) or (i) or (/) of this section.

A-53

APPENDIX E

§ 1144. Other laws

(a) Supersedure; effective date

Except as provided in subsection (b) of this section,

the provisions of this subchapter and subchapter III of this

chapter shall supersede any and all State laws insofar as

they may now or hereafter relate to any employee benefit

plan described in section 1003(a) of this title and not ex-

empt under section 1003(b) of this title. This section shall

take effect on January 1, 1975.

A-54

APPENDIX F

C.C. Art. 2315 Book III

MODES OF ACQUIRING OWNERSHIP OF THINGS

CHAPTER 2—OF OFFENSES AND QUASI OFFENSES

Art. 2315. Liability for acts causing damages

Every act whatever of man that causes damage to

another obliges him by whose fault it happened to repair it.

Damages may include loss of consortium, service,

and society, and shall be recoverable by the same respect-

ive categories of persons who would have had a cause of ac-

tion for wrongful death of an injured person.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.