Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-95-05064/USCOURTS-ca10-95-05064-0/pdf.json

Parties Involved:
Michael Burrage
Respondent
Pacificare of Oklahoma
Petitioner
Clare Davidson Schachter
Not Party

Document Text:

Patrick Fisher 

Clerk 

UNITED STATES COURT OF APPEALS 

Office of the Clerk 

Byron White United States Courthouse 

1823 Stout Street 

Denver, co 80257 

July 14, 1995 

Elisabeth Shumaker 

Chief Deputy Clerk 

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION 

RE: 95-5064, Pacificare of Oklahoma v. Burrage 

Filed July 11, 1995 by Judge Anderson 

Please be advised of the following correction to the 

captioned decision: 

Page 2, line 5, has been corrected to read "preempted 

by the Employee Retirement Income Security Act of 1974" 

instead of "Employee Income Retirement Security Act". 

Please make this correction to your copy. 

Very truly yours, 

Patrick Fisher, 

Clerk 

By. 

Barbara Schermerhorn 

Deputy Clerk 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 1 
PUBLISH FILED 

UDited States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS JUL 11 1995 

TENTH CIRCUIT 

PACIFICARE OF OKLAHOMA, INC., 

Petitioner, 

v. 

HONORABLE MICHAEL BURRAGE, United 

States District Court for the 

Northern District of Oklahoma, 

Respondent, 

) 

) 

) 

) 

) 

) 

) 

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) 

) 

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) 

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) 

CLARE DAVIDSON SCHACHTER, as Personal ) 

Representative of the Estate of BARBARA ) 

JEAN DAVIDSON, Deceased, and CLARE ) 

DAVIDSON SCHACHTER, individually, for ) 

and on behalf of Clare Davidson ) 

Schachter, Jack Davidson and Jill ) 

Davidson Rooney, as surviving children ) 

of BARBARA JEAN DAVIDSON, Deceased, ) 

Real Party in Interest. 

) 

) 

PATRICK FISHER 

Clerk 

No. 95-5064 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF OKLAHOMA 

(D.C. No. 94-C-203-BU) 

Submitted on the briefs: 

Reuben Davis, Kimberly Lambert Love, R. Tom Hillis, of Boone, 

Smith, Davis, Hurst & Dickman, Tulsa, Oklahoma, for Petitioner 

Pacificare of Oklahoma, Inc. 

Fred E. Stoops, Sr., John M. Schroeder, Brad Smith, of Richardson 

& Stoops, Tulsa, Oklahoma, for Real Party In Interest. 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 2 
Before ANDERSON, BRORBY, and HENRY, Circuit Judges. 

ANDERSON, Circuit Judge. 

This matter concerns a malpractice action originally filed in 

state court. Pacificare of Oklahoma, Inc., a health maintenance 

organization (HMO) and one of the named defendants, removed the 

action to federal court, stating the state law claims are 

preempted by the Employee Income Retirement Security Act of 1974 

(ERISA), 29 U.S.C. § 1144(a). The district court concluded that 

ERISA preempts only one of plaintiff's three claims. The court 

dismissed the preempted claim and remanded the other two claims to 

state court, pursuant to 28 U.S.C. § 1367(c) (3) .1 

Pacificare seeks a writ of mandamus directing the district 

court judge to rescind his order remanding the two claims to state 

court and to decide that those claims are preempted by ERISA. 

Pacificare argues mandamus should issue because mandamus may be 

the only method by which this court will be able to review these 

important issues of ERISA preemption. The remanded claims allege 

that Pacificare is (1) vicariously liable for the medical 

malpractice of Dr. Goen, a Pacificare primary care physician and 

alleged agent of Pacificare, and (2) vicariously and directly 

1 Section 1367(c) (3) states: "The district courts may 

to exercise supplemental jurisdiction over a claim . . . 

the district court has dismissed all claims over which 

original jurisdiction .... " 

2 

decline 

if . it has 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 3 
liable for loss of consortium for the wrongful death that resulted 

from Dr. Goen's malpractice. 

The district court's remand order is reviewable. Although 

remand orders under 28 U.S.C. § 1447(c), (d), are not generally 

reviewable, the district court did not remand pursuant to these 

sections. The district court had federal question jurisdiction 

over the claim it found preempted by ERISA and had supplem~ntal 

jurisdiction over the remaining claims, pursuant to 28 U.S.C. 

§ 1367(a). The district court made a discretionary decision under 

§ 1367(c) (3) not to exercise supplemental jurisdiction over the 

remaining claims. "A remand based on a district court's perceived 

discretion is not" treated as a remand under § 1447(c). 

Albertson's. Inc. v. Carrigan, 982 F.2d 1478, 1480 (lOth Cir. 

1993). Therefore, this court has authority to review the remand 

order. Id. 

Review by mandamus also is appropriate. "[B]ecause an order 

remanding a removed action does not represent a final judgment 

reviewable by appeal, '[t]he remedy in such a case is by mandamus 

to compel action, and not by writ of error to review what has been 

done.'" Id. (quoting Thermtron Prods .. Inc. v. Hermansdorfer, 423 

U.S. 336, 352-53 (1976)) (further quotation and citation 

omitted) (alterations in original) . 

Mandamus may be used "to compel a district court to exercise 

its jurisdiction when it has a duty to do so." Id. Mandamus 

"will issue only in those exceptional cases where the inferior 

court has acted wholly without jurisdiction or so clearly abused 

its discretion as to constitute a judicial usurpation of power." 

3 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 4 
Kaiser Steel Corp. v. Frates (In re Kaiser Steel Co£g.), 911 F.2d 

380, 387 (lOth Cir. 1990). The party seeking the writ must show 

that the right to the writ is "clear and indisputable." Id. 

(citation omitted) . This court looks to the following 

nonconclusive guidelines to determine whether to grant the writ: 

"First, the party seeking the writ has no other adequate 

means to secure the relief desired. Second, the 

petitioning party will be damaged or prejudiced in a way 

not correctable on appeal. Third, the district court's 

order constitutes an abuse of discretion. . . . Fourth, 

the district court's order represents an often repeated 

error and manifests a persistent disregard of federal 

rules. Fifth, the district court's order raises new and 

important problems or issues of law of the first 

impression." 

Id. (quoting Dalton v. United States (In re Dalton), 733 F.2d 710, 

717 (lOth Cir. 19 84) 1 cert. dismissed, 469 u.s. 1185 

(1985)) (alteration in original). 

Malpractice Claim 

There is no question that the district court's order raises 

an issue of first impression. No circuit has decided whether 

ERISA preempts a claim that an HMO is vicariously liable for 

alleged malpractice of one of its physicians, and the district 

courts are divided on the issue.2 As one district court observed, 

2 See Pomeroy v. Johns Hopkins Medical Servs .. Inc., 868 

F. Supp. 110, 113-14 (D. Md. 1994) (holding ERISA preempts medical 

malpractice claim against HMO based on vicarious liability); 

Visconti ex rel. Visconti v. U.S. Health Care, 857 F. Supp. 1097, 

1102-05 (E.D. Pa. 1994) (same); Dukes v. U.S. Health Care Sys. of 

Pa .. Inc., 848 F. Supp. 39, 42-43 (E.D. Pa. 1994) (same); Nealy v. 

U.S. Healthcare HMO, 844 F. $upp. 966, 972-73 (S.D.N.Y. 

1994) (same); Ricci v. Gooberman, 840 F. Supp. 316, 317 (D.N.J. 

1993) (same). But see Jackson v. Roseman, 878 F. Supp. 820, 826 

(D. Md. 1995) (holding ERISA does not preempt medical malpractice 

claim against an HMO based on a vicarious liability or ostensible 

agency theory); Haas v. Group Health Plan. Inc., 875 F. Supp. 544, 

(continued on next page) 

4 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 5 
"the split among courts exemplifies the difficulty [of] this 

preemption issue." Haas v. Group Health Plan. Inc., 875 F. Supp. 

544, 547 (S.D. Ill. 1994); see also Kearney v. U.S. Healthcare. 

Inc., 859 F. Supp. 182, 185 (E.D. Pa. 1994) (stating it is evident 

that "reasonable and capable people may differ" over this question 

of preemption) . We conclude that the district court correctly 

decided that ERISA does not preempt the medical malpractice claim. 

This court reviews de novo the district court's determination 

that ERISA preempts a state law claim. Airparts Co. v. Custom 

Benefit Servs. of Austin. Inc., 28 F.3d 1062, 1064 (lOth Cir. 

1994). ERISA preempts state laws that "relate to" employee 

benefit plans. 29 U.S.C. § 1144(a). There is no dispute here 

that the medical malpractice claim is based on state law and that 

Pacificare's plan is an employee benefit plan. The issue is 

whether the medical malpractice claim "relates to" the Pacificare 

plan. 

"A law 'relates to' an employee benefit plan, in the normal 

sense of the phrase, if it has a connection with or reference to 

such a plan." Shaw v. Delta Air Lines. Inc., 463 U.S. 85, 96-97 

(1983). "'There is no simple test for determining when a law 

"relates to" a plan.'" Airparts Co., 28 F.3d at 1064 (quoting 

(continued from previous page) 

548 (S.D. Ill. 1994) (same); Dearmas v. Av-Med. Inc., 865 F. Supp. 

816, 818 (S.D. Fla. 1994) (same); Kearney v. U.S. Healthcare. Inc., 

859 F. Supp. 182, 186-88 (E.D. Pa. 1994) (same); Burke v. 

Smithkline Bio-Science Labs., 858 F. Supp. 1181, 1184 (M.D. Fla. 

1994) (same); Paterno v. Albuerne, 855 F. Supp. 1263, 1263-64 (S.D. 

Fla. 1994) (same); Smith v. HMO Great Lakes, 852 F. Supp. 669, 

671-72 (N.D. Ill. 1994) (same); Elsesser v. Hospital of 

Philadelphia College of Osteopathic Medicine, 802 F. Supp. 1286, 

1290 (E.D. Pa. 1992) (same); Independence HMO. Inc. v. Smith, 733 

F. Supp. 983, 988 (E.D. Pa. 1990) (same). 

5 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 6 
National Elevator Indus .. Inc. v. Calhoon, 957 F.2d 1555, 1558 

(lOth Cir.), cert. denied, 113 S. Ct. 406 (1992)). This court has 

identified the following four categories of laws which relate to 

an employee benefit plan: 

"First, laws that regulate the type of benefits or terms 

of ERISA plans. Second, laws that create reporting, 

disclosure, funding, or vesting requirements for ERISA 

plans. Third, laws that provide rules for the 

calculation of the amount of benefits to be paid under 

ERISA plans. Fourth, laws and common-law rules that 

provide remedies for misconduct growing out of the 

administration of the ERISA plan." 

at 1064-65 (quoting National Elevator, 957 F.2d at 

1558-59) (further quotation omitted). 

Plaintiff, who was asked to respond to the mandamus petition 

as the real party in interest, argues that the malpractice claim 

is not preempted because it is a law of general application which 

does not affect the structure, administration, or benefits 

provided by the plan. The effect a state law has on a plan may be 

"too tenuous, remote, or peripheral" to conclude that the law 

relates to the plan. Shaw, 463 U.S. at 100 n.21. ERISA does not 

preempt "'laws of general application--not specifically targeting 

ERISA plans--that involve traditional areas of state regulation 

and do not affect relations among the principal ERISA entities.'" 

Airparts Co., 28 F.3d at 1065 (quoting National Elevator, 957 F.2d 

at 1559) (further quotation and citation omitted). "As long as a 

state law does not affect the structure, the administration, or 

the type of benefits provided by an ERISA plan, the mere fact that 

the [law] has some economic impact on the plan does not require 

that the [law] be invalidated." Id. (quotation and citation 

6 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 7 
omitted) (alteration in original). "Ultimately, if there is no 

effect on the relations among the principal ERISA entities--the 

employer, the plan, the plan fiduciaries, and the beneficiaries--

there is no preemption." Id. That a plan is potentially liable 

for a judgment "is not enough to relate the action to the plan." 

Id. 

Following what appears to be the majority view, the district 

court concluded that the medical malpractice claim against the HMO 

does not sufficiently relate to the plan so as to warrant 

preemption. The district court reasoned that the issue of the 

doctor's negligence can be resolved without reference to the plan. 

Instead, that issue "'require[s] . evidence of what transpired 

between the patient and physician and an assessment of whether in 

providing admittedly covered treatment or giving professional 

advice the physician possessed and utilized the knowledge, skill 

and care usually had and exercised by physicians in his community 

or medical specialty.'" Schachter v. Pacificare of Okla .. Inc., 

No. CIV-94-C-203, slip op. at 6 (N.D. Okla. Mar. 16, 1995) (quoting 

Kearney, 859 F. Supp. at 186). As for whether Pacificare held Dr. 

Goen out as its agent, the district court reasoned that any 

reference to the plan to resolve that issue does not implicate the 

concerns of ERISA preemption. According to the district court, 

the malpractice action "does not involve a claim for benefits, a 

claim to enforce rights under the benefit plan or a claim 

challenging administration of the benefit plan." Id. The action 

"simply involves a claim that the deceased received allegedly 

negligent treatment from a doctor who was 'held out' by the health 

7 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 8 
maintenance organization as its agent." Id. The effect of the 

malpractice action on the plan, the court concluded, is "'too 

tenuous, remote, or peripheral . to warrant a finding that the 

law "relates to" the plan.'" Id. (quoting Shaw, 463 u.s. at 100 

n.21). 

Courts reaching the opposite conclusion, generally, have 

reasoned that a vicarious liability malpractice claim concerns the 

delivery of benefits under the plan and the claim requires 

examination of the plan to determine obligations owed under the 

plan and the relationship between the plan and plan doctors. See 

~' Pomeroy, 868 F. Supp. at 113-14 (summarizing cases). As one 

court put it: 

[A] medical malpractice claim against an HMO, whether 

couched in direct or vicarious liability terms relates 

to the benefit plan. One who enrolls in an HMO is 

assured of medical services of a given extent and 

quality. A malpractice claim asserts the services 

provided did not measure up to the benefit plan's 

promised quality. The question is one of relating planperformance to plan-promise, and is therefore pre-empted 

by ERISA. 

Dukes, 848 F. Supp. at 42 (footnote omitted). 

As the district court observed, the present claim does not 

involve the administration of benefits or the level or quality of 

benefits promised by the plan; the claim alleges negligent care by 

the doctor and an agency relationship between the doctor and the 

HMO. See Jackson 878 F. Supp. at 826; Haas, 875 F. Supp. at 548. 

Just as ERISA does not preempt the malpractice claim against the 

doctor, it should not preempt the vicarious liability claim 

against the HMO if the HMO has held out the doctor as its agent. 

See Haas, 875 F. Supp. at 548 ("[W]hen an HMO plan elects to 

8 

Appellate Case: 95-5064 Document: 01019277231 Date Filed: 07/11/1995 Page: 9 
directly provide medical services or leads a participant to 

reasonably believe that it has, rather than simply arranging and 

paying for treatment, a vicarious liability medical practice claim 

based on substandard treatment by an agent of the HMO is not 

preempted."). We agree with the district court that reference to 

the plan to resolve the agency issue does not implicate the 

concerns of ERISA preemption. See id. at 548-49. Therefore, the 

district court did not abuse its discretion in remanding the claim 

to state court. 

Loss of Consortium Claim 

Plaintiff's loss of consortium claim incorporates the other 

two claims from her complaint that Pacificare is vicariously 

liable for Dr. Goen's malpractice and is directly liable for its 

negligent and fraudulent administration of the plan. A loss of 

consortium claim against an HMO alleging negligent or fraudulent 

administration of the plan is preempted by ERISA. See Nealy v. 

U.S. Healthcare HMO, 844 F. Supp. 966, 974 (S.D.N.Y. 1994); 

Dearmas v. Av-Med. Inc., 814 F. Supp. 1103, 1107 (S.D. Fla. 1993). 

However, to the extent plaintiff's loss of consortium claim is 

based on her allegation that Pacificare is vicariously liable for 

the wrongful death of her mother, that claim is not preempted by 

ERISA for the reasons stated above. Therefore, the district court 

acted within its discretion in remanding the loss of consortium 

claim to state court. 

The petition for writ of mandamus is DENIED. 

9 

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