Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-03242/USCOURTS-ca10-89-03242-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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PUP];, ISH PILED 

United States Coutt of Appeals 

Teneh Circuit 

UNITED STATES COURT OF APPEALS 

lviAR 5 19et 

PATRICIA JOANNE SETTLES, 

Plaintiff-Appellant, 

TENTH CIRCUIT 

! 

! 

ROBERT L. HOECKER 

Clerk 

v. ) 

) 

) 

) 

) 

No, 89-3242 

GOLDEN RULE INSURANCE CO., 

Defendant-Appellee. 

Appeal from the United States District Court 

for the District of Kansas 

(D.C. No. 88-2541-0) 

Philip J. Adams, Jr. of Watson, Ess, Marshall & Enggas, Kansas 

City, Missouri (Dwight D. Sutherland, Jr, of Watson, Ess, Marshall 

& Enggas, Olathe, Kansas, with him on the brief) for PlaintiffAppellant. 

Anthony F. Rupp of Shughart, Thompson & Kilroy, P.C., Overland 

Park, Kansas (Thomas G. Kokoruda of Shughart, Thompson & Kilroy, P.C., Kansas City, Missouri, and .Guy E. McGaughey, Jr. of 

McGaughey & McGaughey, Ltd., Lawrenceville, Illinois, with him on 

the brief) for Defendant-Appellee, 

aefore MOORE, BRORaY, and EBEL, Circuit Judges. 

EBEL, Circuit Judge, 

Appellate Case: 89-3242 Document: 01019301395 Date Filed: 03/05/1991 Page: 1 
Plaintiff Patricia Joanne Settles brought suit in the United 

States District Court for the District of Kansas, alleging that 

defendant Golden Rule Insurance Company's actions in terminating 

her husband's insurance coverage caused him to have a heart attack 

and die. Jurisdiction is based on diversity of citizenship. 

Plaintiff's cause of action specifically alleged state law claims 

of breach of contract, the tort of outrage, fraudulent denial of 

insurance coverage, and wrongful death. The district court, in 

response to defendant '.s motion to dismiss 1 held that the Employee 

Retirement Income Security Act {ERISA) preempted plaintiff's state 

law claims and dismissed the action for failure to state a claim 

upon which relief could be granted. 1 Arguing that ERISA does not 

preempt her state law claims, plaintiff appeals the district 

court's order dismissing her cause of action against Golden Rule. 

We affirm. 

BACKGROUND 

We recite the facts as they are alleged in the plaintiff's 

complaint. In 1984, plaintiff's husband, William L. Settles, was 

employed as an accounting clerk for the Long Motor Corporation 

(Long Motor) of Lenexa, Kansas. As an employment benefit·, Mr. 

1 The district court dismissed the cause of action only as 

against Golden Rule Insurance Company and entered a final judgment 

pursuant to Fed. R. Civ. P. 54(b). Therefore, the present appeal 

only addresses whether the cause of action against Golden Rule was 

properly dismissed. 

Plaintiff's complaint also listed Jim Toyne Insurance, Inc,, 

as a defendant. The district court retains jurisdiction of the 

cause of action against Jim Toyne Insurance, Inc. On September 

21, 1989, the district court stayed the proceedings against Jim 

Toyne Insurance, Inc., pending this appeal. 

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Settles was insured under a group policy issued by defendant which 

provided both life and health insurance. Under the group 

insurance policy, Long Motor paid a monthly premium to defendant 

and was required to give advance written notice to defendant if it 

intended to terminate coverage of an employee. 

On October 17, 1986, Mr. Settles was advised by a 

representative of defendant that his health insurance coverage had 

been terminated. However, on October 22, 1986, Mr. Settles was 

told by an agent of defendant that his health insurance coverage 

had not been terminated and that he had effectively exercised an 

extension of his health insurance coverage, On October 24, 1986, 

Mr. Settles was notified by defendant that it had unilaterally 

terminated his health insurance coverage effective October 7, 

1986. Plaintiff alleges that as a direct consequence of 

defendant's actions in terminating her husband's health insurance,. 

he became severely depressed and suffered a heart attack on 

october 24, 1986. As a result of the heart attack, Mr. Settles 

died on October 29, 1986. 

Plaintiff filed suit against defendant, alleging breach of 

contract, the tort of outrage, fraudulent denial of insurance 

coverage, and wrongful death under Kansas law. Defendant filed a 

motion to dismiss, arguing both that ERISA preempted plaintiff's 

state law claims, and alternatively that plaintiff had failed to 

state a claim under Kansas Law. The district court granted 

defendant's motion to dismiss, holding that ERISA preempted 

plaintiff's claim. Settles v. Golden Rule Ins, Co., 715 F. Supp. 

1021 (D. Kan. 1989). Arguing that there were insufficient facts 

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before the district court for it to find that ERISA applied to 

Long Motor's employee benefit plan and that ERISA does not preempt 

her wrongful death claim, plaintiff appeals the dismissal of her 

cause of action. 

DISCUSSION 

We review de novo the granting of a motion to dismiss for 

failure to state a claim for which relief can be granted, and we 

presume that the allegations of the complaint are true. ~ 

M9rgan v. City of RawlinP, 792 F.2d 975, 978 (lOth Cir. 1986). In 

reviewing the dismissal, we must determine whether plaintiff can 

prove any set of facts to support her claim. ~ 

A, Whether ERISA preemption Can Be Raised as a Defense !n this 

Case. 

ERISA applies only to benefit plans offered by employers 

engaged in interstate commerce. See 29 u.s.c. § 1003(a)(l). On 

appeal, plaintiff first argues that ERISA cannot be applied to 

this case because there was no evidence before the district court 

which proved that Long Motor was engaged in business affecting 

interstate commerce. The defendant has the burden of proving the 

preemption defense. See Kanne v. connecticut Gen. Life Ins. co., 

867 F.2d 489, 492 n.4 (9th Cir. 1988), cert. denieg, 109 s. Ct. 

3216 (1989). However, because plaintiff's complaint pleads ample 

facts to support the conclusion that Long Motor participated in 

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Appellate Case: 89-3242 Document: 01019301395 Date Filed: 03/05/1991 Page: 4 
business affecting interstate commerce 1 we find that plaintiff 

conceded that issue. 2 

Plaintiff also argues that because she brought her action in 

diversity and did not ra1se any claims under ERISA in her 

complaint, we should look only to her complaint to establish 

jurisdiction. However, in Metropolitan Life Ins. Co. v. Taylor, 

481 u.s. 58, 63-64 (1987), the Court held that an action alleging 

only state law claims is removable to federal court if it gives 

rise to the defense of ERISA preemption. The Court explained that 

11 [o]ne corollary of the well-pleaded complaint rule developed in 

the case law . . . is that Congress may so completely pre-empt a 

particular area that any civil complaint raising this select group 

of claims is necessarily federal in character. u l£L_ See also 

Ingersoll-R~nd Co. v. MCClendon, 59 U.S.L.W. 4033 (1990). 

Plaintiff's complaint alleged sufficient facts for the district 

court to determine whether it gave rise to the defense of ERISA 

preemption. The district court did not err in considering whether 

plaintiff's claims were preempted by ERISA. 

B. Whether ERISA Preempts Plaintiff's Wrongful Death Claim. 

Because the defense of ERISA preemption was properly 

considered by the district court, we must now determine whether 

the district court properly held that ERISA preempted plaintiff's 

2 Additionally, plaintiff's argument that Mr. Settles extended 

his health insurance coverage creating a new contract which was 

not an employment benefit and therefore not covered by ERISA was 

not raised below. Consequently, we do not consider it on appeal. 

See Curtis Ambulance v, Shawnee, 811 F.2d 1371, 1386 (lOth Cir. 

1987). 

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wrongful death claim under Kansas law. Section 514(a) of ERISA 

states thata 

"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 in§ofar as they may now or hereafte; 

relate to any employee beneftt plan described in section 

1003(a) of this title and not exempt under section 

1003(b) of this title,• 

29 u.s.c. S 1144(a) (emphasis added). In Pilot Life Ins, Co. v. 

Dedeayx, 481 u.s. 41, 48 (1987), the Supreme Court held that ERISA 

preempts state common law causes of action that assert improper 

processing of claims under a benefit plan regulated by ERISA. In 

so holding, the Court emphasized that ERISA'S preemption provision 

is not limited to state laws specifically designed to affect 

employee benefit plans. The Court noted that the preemption 

provision is 11 deliberately expansive,u JJL.. at 46, and that the 

statutory 11phrase 'relate to' [i]s given its broad common-sense 

meaning." 1.fL. at 47, quoting Shaw v. Delta Air Lines, 463 u.s. 

85, 97-98 (1983), The Court has specifically stated that a law 

relates to a benefit plan "if it has a connection with or 

reference to such a plan." Metropolitan Life Ins. Co. v, 

Massachusett§, 471 u.s. 724, 739 (1985), guoting ~' 463 u.s. 

at 97. The Court in Ingersoll-Rand Co, y, McClendon, 59 U.S.L.W. 

4033 (1990) once again emphasized that preemption under § 514(a) 

must be interpreted expansively. There it held that § 514(a) 

preempted a claim that an employer wrongfully terminated an 

employee in order to avoid contributing to, or paying benefits 

under, an employee pension fund. 

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The Tenth Circuit has given a similarly broad reading to the 

phrase 11 relate to 11 and has found that common law tort and breach 

of contract claims are preempted by ERISA if the factual basis of 

the cause of action involves an employee benefit plan. See, ~, 

Eelley v, Sears, Roebuck and Co,, 882 F.2d 453 (lOth Cir. 1989); 

Straub v, Western Union Telegraph, 851 F.2d 1262 (lOth Cir. 1988). 

Other circuits have likewise held that common law tort and 

contract claims may be preempted by ERISA. See, ~, Pane v. RCA 

Corp., 868 F.2d 631 (3d Cir. 1989); Jghnson y, District 2 Marine 

Eng. Beneficial Aaa•n, 857 F.2d 514 (9th Cir. 1988). 

However, ERISA does not preempt claims that are only 

tangentially involved with a benefit plan. See~' 463 u.s. 

at 100 n.21; Clark v. Coats & Clark, Inc., 865 F.2d 1237, 1243-44 

(11th Cir. 1989); ~ Al§Q Ethridge y. Harbor Hguae Restaurant, 

861 F.2d 1389, 1404 (9th Cir. 1988); Giardie1lo v. Balboa Ina. 

~. 837 F.2d 1566, 1571 n.8 (11th Cir. 1988) (ERISA preemption 

nctoes not extend to every state law claim that, however remotely, 

factually involves an employee benefit plan."). In Clark, the 

court held that Clark's claim of wrongful discharge was not 

preempted because the complaintz 

11 alludes to conduct which was proximate (or even 

concurrent) in time to the alleged ERISA violation, but 

wholly remote in content. , , , In its present form, the 

complaint makes no statement which ties together the 

tort claim and the ERISA claim in such a way that one 

'relates to' the other in the statutory sense. 11 

Clark, 865 F.2d at 1243-44 (emphasis in original). 

The present case is distinguishable from Clark and those 

other cases that held state law claims not preempted by ERISA 

because here the injury alleged was a direct result of the 

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termination of plan benefits and cannot be characterized as 

"wholly remote" from the benefit plan. See, ~, Farlow v. Union 

Cent. Life. Ins. Co,, 874 F.2d 791, 794 (11th Cir. 1989) 

(distinguishing Clark because in Farlow the "alleged conduct is 

intertwined with the refusal to pay benefits 11 ). 

The factual basis for each of plaintiff's state law claims 

directly concerns the alleged improper administration of the 

benefit plan. Although plaintiff is not seeking benefits under 

the insurance policy, her claims require a finding that defendant 

wrongfully terminated Mr. Settles' insurance coverage. Therefore, 

the claims relate to the employee benefit plan. Plaintiff alleges 

in her complaint that: 

"[a]s a direct result ·of the defendants' termination of 

insurance .and breach of the insurance contract, decedent 

William L. Settles became severely emotionally 

distressed, suffered extreme mental anguish and was 

caused to suffer [a heart attack]." 

R. Doc. 1 at ~ 16; see·~ id. at ~ 32, 44, 53. We hold that, 

because plaintiff's claims "relate to" an employee benefit plan 

covered by ERISA, they are preempted by ERISA. See 29 u.s.C. 

§ 1144(a) (§ 514(a) of ERISA), 

Plaintiff argues that even if her other claims are preempted 

by ERISA, her wrongful death claim is not preempted. HoWever, 

because Kansas' wrongful death statute limits causes of actions to 

those that the decedent could have brought had he lived, 

plaintiff's wrongful death claim must be analyzed like any other 

state law claim. The wrongful death statute in Kansas provides 

that: 

"If the death of a person is caused by the wrongful act 

or the omission of another, an action may be maintained 

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for the damages resulting therefrom if the former might 

have maintained the action had he or she liyed, in 

accordance with the provisions of this article, against 

the wrongdoer, or his or her personal representative if 

he or she is deceased." 

Kan. Stat. Ann.§ 60-1901 (emphasis added). Had Mr. Settles 

survived the wrongful termination of his benefits, any claim that 

he could have brought based on the wrongful termination of his 

benefits would have been barred by ERISA because it would have 

related to his employee benefit plan, Therefore, because the 

decedent could not have brought suit under these facts, 

plaintiff's wrongful death claim is similarly barred. 

Plaintiff's argument that the legislative history of ERISA 

demonstrates that Congress did not intend ERISA to preempt state 

law wrongful death actions is flawed. First plaintiff relies in 

large part on a House Report which was prepared subsequent to the 

original passage of § 5l4(a) and which discussed a House Bill 

which ultimately was not adopted by Congress. See Appellant's Br. 

at 12-13, citing H,R. Rep. No. 801, 100th Cong., 2d Seas., pt. 2, 

at 63 (1988). Therefore, the legislative history cited by 

plaintiff does not give a clear indication of congressional intent 

in drafting S 514(a). See Consumer prod, Safety Comm•n y. GTE 

Sylvania, Inc., 447 u.s. 102, 117-18 (1980) (subsequent statements 

are not clear indication of original congressional intent). 

Moreover, the Supreme Court in Pilot Life reviewed the 

legislative history of ERISA when it found that the preemption 

provision of ERISA was written to be "deliberately expansive." 

481 u.s. at 45-47. One commentator explains that: 

"the Court has shown deep sensitivity to congressional 

intent regarding preemption. hlessi, Shaw, and Pilot 

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Life demonstrate that ERISA must prevail where any 

potential conflict between ERISA and a state statute or 

state law cause of action exists, or where a state 

statute or state law cause of action may in any way 

hinder the development of a uniform body of federal 

labor law governing employee benefit plans." 

Steinman, Federal Preemption: The Labor Management Relations Act 

and the Employee Retirement Income Security Act of 1974, 1988 Ann. 

Surv. of Am. L. 739, 777 (footnotes omitted). Plaintiff's 

interpretation of the legislative history is overly restrictive 

and conflicts with the supreme Court's reading of the legislative 

history. Therefore, we reject plaintiff's 1egislatl.ve history 

argument. 

Plaintiff also argues that because 29 u.s.c. § 1132(a)(3)(B) 

authorizes the courts to use 11 other appropriate equitable relief 11 

to redress ERISA violations, the court should allow state wrongful 

death claims as a form of equitable relief. Plaintiff's reading 

of§ 1132(a)(3)(B) is not persuasive. Giving courts flexibility 

in granting relief should not be confused with giving courts power 

to evade the broad preemption provision enacted by Congress. The 

Supreme Court in Pilot Life held that § 1132(a) is "the exclusive 

vehicle for actions by ERISA-plan participants and beneficiaries 

asserting improper processing of a claim for benefits, and that 

varying state causes of action for claims within the scope of 

[§ 1132(a)) would pose an obstacle to the purposes and objectives 

of Congress." 481 u.s. at 52. In Massachusetts Mutual Life Ins. 

Co. v, Russell, 473 u.s. 134, 146, 147 (1985), the Court explained 

that Congress had created an 11 interlocking, interrelated, and 

interdependent remedial scheme~~ which the Court is 11 reluctant to 

tamper with." If we were to read § 1132(a) (3) as permitting 

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plaintiff's state wrongful death action, we would be tampering 

unnecessarily with the remedial scheme designed by Congress. Cf. 

Cefalu v. B,F. Goodrich Co,, 871 F.2d 1290, 1297 (5th Cir. 1989) 

(§ 1132(a)(3)(B) does not permit the creation of an ERISA cause of 

action based on an oral contract). Therefore,§ 1132(a)(3)(B) 

cannot be read as permitting plaintiff's wrongful death claim. 

CONCLUSION 

Because the facts asserted in support of plaintiff's state 

law claims, including her wrongful death claim, directly relate to 

an employee benefit plan covered by ERISA, plaintiff's state law 

claims are preempted by§ 514(a) of ERISA. 3 Therefore, we AFFIRM 

the district court's June 8, 1989 order dismissing plaintiff's 

claims against defendant Golden Rule Insurance Company. 

3 Because the district court properly held that plaintiff's suit 

was preempted by ERISA, we do not reach defendant's alternative 

argument that plaintiff's suit failed to state any claim upon 

which relief could be granted under Kansas law. 

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