United States Court of Appeals Fifth Circuit 

## FILED August 4, 2006 Charles R. Fulbruge III Clerk UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

____________ No. 04-30986

____________ BANK OF LOUISIANA,
Pl aint iff - Appellant,
versus
AETNA US HEALTH CARE INC; AETNA LIFE INSURANCE COMPANY, Defendants - Appellees.

Appeal from the United States District Court For the Eastern District of Louisiana
Before REAVLEY, GARZA, and BENAVIDES, Circuit Judges. EMILIO M. GARZA, Circuit Judge: The Bank of Loui siana (“the Bank”) appeals a summary judgment fo r the defendants Aetna US Healthcare and Aetna Life Insurance (collectively “Aetna”). The issue on appeal is whether the Bank’s state law claims of detriment al reliance, breach of contract, and misrepresentation are preempted by the Em

ployee Reti

rement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”).

I In 1995, the Bank contracted to have Aetna administer and provide stop-loss insurance for1 The parties do not dispute that this qualifies as an ERISA plan. S ee 29 U.S.C. § 1002(1) (defining employee

welfare benefit plans subject to ERISA).

2 The distinction between an individual or specific stop-loss amo unt and the aggregate stoplo ss amo unt is described in Troy Paredes, Note, Stop-Loss Insurance, State Regulation, and ERISA: Defining the Scope of Federal Preemption , 34 H ARV . J. LEGIS . 233, 249 (1997), as follows:

There are two ty

pes of stop-loss insurance. Specific stop-loss insurance covers a plan against the ri sk th at a particular participant's claims will exceed som e specified level. For example, if the insurance kicks in when an individual's claims exceed $20,000 per year and a participant has bona fide claims of $30,000, the plan's stop-loss insurer covers $10,000 of the person's claims. Alt ernatively, aggregate stoplo ss insurance covers a plan against the risk that the sum of all of its participant s' claims will exceed some specified level. For example, if the insurance kicks in when aggregate cl aims exceed $2 million per year and claims under the plan total $2.5 millio n, the stop-loss insurer covers $500,000 of the claims. See also Dennis K. Schaeffer, Com ment , Insuring the Protection ofERISA Plan Participants: ERISA Preemption and the Government’s Duty to Regulate Self-Insured Health Plans , 47 B UFF . L. REV . 1085, 1108-09 (1999) (discussing difference). 2 it s self-insured employee benefit plan (“the Pl an”). 1 The stop-loss pol icy provided an “individual” or “specific stop-loss amo unt” of $50,000 and an “aggregate stop-loss amo unt” of $600,000. 2 The stoplo ss coverage was scheduled to terminate on December 31, 2000. The Bank, however, reached the aggregate stop-loss amo unt in 2000. Late in that year, the parties met to fo rm a new contract th at would provide fully-insured coverage com mencing on January 1, 2001. The Bank also purchased an extension on its stop-loss coverage that would apply to claims incurred in 2000 and fo r which benefit s would be paid during the fir st th ree mo nt h s of 2001. In a let ter from account representative Stacy McMahon, Aetna stated th at the stop-loss extension would mean that the Bank would “have no additional claim liabilities for 2000 and no additional fund transfers will be requested.” McMahon further stated that Aetna would “start wiring [the Bank’s] account fo r claims paid during the runoff period and [the Bank would] be reimbursed at year-end.”3 Loui siana Revised Statute 22:658 requires insurers issuing certain types of policies to pay

the amount of claims due within thirty days of proof of the loss.

4 Loui siana Revised Statute 22:1220 impo ses upon insurers a duty of good fait h and fair dealing. 3 During the th

ree mo nt h run-off period, the Bank submit ted $271,628.38 in net claims incurred by plan members in 2000. (R. 177, 181, 218, 243.) Aetna drafted the Bank’s account for these claims over the course of 2001 and 2002. Five of these drafts occurred during the three-month stop-loss extension period, totaling $102,720.06. Nevertheless, Aetna declined to reimburse the Bank. The Bank filed a com

plaint alleging th at Aetna had negligently or fraudulently “misre presented the value and benefit of its payment” to Aetna for the stop-loss policy. In particular, the Bank fir st claimed th at Aetna misrepresented th at, pursuant to the stop-loss pol icy, Aetna would reimburse the Bank fo r the $271,628.38 th at it draf ted from the Bank’s account. Second, the Bank alleged that Aetna had falsely represented th at Aetna would reimburse the Bank fo r the $271,628.38 in charges and th at the Bank had detriment ally relied on this representation. Third, the Bank alleged that Aetna had breached a contract to reimburse it for the $271,628.38 of account drafts. Fourth, the Bank alleged th at Aetna had breached it s fiduciary duties as plan administ rator by delaying the processing of claims to remove them from the stop-loss coverage. Finally, in an amended complaint, the Bank alleged that Aetna had violated Louisiana Revised Statutes 22:658 3 and 22:1220. 4 Aetna mo ved fo r summary judgment on the ground that the Bank’s claims were preempted by ERISA. In a series of briefs, Aetna argued that ERISA preempted claims between an employer and a plan administ rator. (R. 930.) The Bank responded that its claim of detrimental reliance and
a claim fo r attorney ’s fees under Louisiana Revised Statute 22:657, the latter of which it had not5 Loui siana Revised Statute 22:657 provides th at claim arising under the terms of health and

accident contracts must be paid wit hin thirty days of the date th at the insurer receives written notice and proof of the claim. Failure to comply renders the insurer liable for penalties and attorney’s fees. Aetna does not argue that the Bank’s failure to properly plead this claim warrants affirmance.

6 See District Court’s Order and Reasons at 2 n.1 (July 9, 2003) (noting th at the Bank had “indicated i

ts int ention to withdraw the breach of fiduciary duty claim”); Bank of Louisiana’s Memorandum Regarding ERISA Preemption at 3 n.2 (Apr. 23, 2003) (“[W]e concede th at BOL’s Count Four, cl aiming breach of fiduciary duty, may be preempted by ERISA. Because the Count adds nothing to the gravamen of BOL’s com plaint , we will wit hdraw th at Count wit hout prejudice.”). Because the Bank has wit hdrawn it s claim th at Aetna delayed paying health care benefit s, and a default to perform the stop-loss pol icy is not covered by the statute, the Bank’s claim fo r attorney ’s fees under Louisiana Revised Statute 22:657 fails. 4 pled, 5 were not preempted because they exclusively invo lved parties providing services to an ERISA p lan in a non-fiduciary capacity. (R. 635, 882.) The Bank withdrew its breach of fiduciary dut y claim 6 and abandoned it s claims under Loui siana Revised Statute 22:658 & 22:1220. The district court held th at ERISA preempted all of the Bank’s remaining claims and granted summary judgment fo r Aetna. II In reviewing a summary judgment, we apply the same standard as the district court. Martin v. Alamo Community Coll. Dist ., 353 F.3d 409, 412 (5th Cir. 2003). We affirm o nly if t here is no genuine issue of material fact and the movant is entitled to judgment as a matter of law
. Id. For a defendant to ob tain summary judgment on an affirmat ive defense, it must establish beyo nd dispute all o f t he defense’s essential elements. Id. We review the district court’s legal determination that ERISA preempts a state law claim de novo . B ullock v. Equitable Life Assurance Soc’y of the United States , 259 F.3d 395, 399 (5th Cir. 2001). A ERISA’s preemption clause, 29 U.S.C. § 1144(a), states th at wit h certain exceptions, ERISA5

“shall supersede any and all State laws inso far as they may now or hereafter relate to any employee benefit plan
. . . .” The Supreme Court has “observed repeatedly that this broadly worded provision is ‘clearly expansive.’ ” Egelhoff v. Egelhoff ex rel. Breiner , 532 U.S. 141, 146 (2001) (quoting N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. , 514 U.S. 645, 655 (1995)). The Court has held that a state law “relates to an ERISA plan ‘if it has a connection wit h
or reference to such a plan.’ ” I d. at 147 (quot ing Shaw v. Delta Air Lines, Inc ., 463 U.S. 85, 97 (1983)). Simult aneously, however, the Court recognizes that, given its broadest reading, the phrase “relate to” would encompass virtually all state law, and th at it s “connection wit h” and “reference to” int erpretations are “scarcely mo re restrictive.” I d. at 146-47. The Court has, therefore, declined to apply an “uncritical lit eralism” to the phrase and inst ead t akes the “the obj ectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive, as well as to the nature of the effect of the state law on ERISA plans.” Id. at 147 (int ernal quotation marks
om it ted). Congress’s objectives in enacting ERISA were to protect interstate commerce and the interests of participants in employee benefi t plans and their beneficiaries, by requiring the disclosure and re porting to participants and beneficiaries of financial and other information with re spect thereto, by establishing standards of conduct, r esponsibility, and obligation for fiduciaries of employee benefit plans, and by providing appropriate remedies, sanctions, and ready access to the Federal courts. 29 U.S.C. § 1001(b). To thi s end, ERISA’s preemption provision is intended “to establish a uniform administ rative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefit s.” Egelhoff , 532 U.S. at 148 (quoting Fort Halifax Packing Co. v. Coyne , 482 U.S. 1, 9 (1987)). A unifo rm administ rative scheme serves to minimize administrative and financial burdens by avoiding the need to tailo r plans to the peculiarities of th e l aw of each state.6

Ingersoll-Rand Co. v. McClendon, 498 U.S 133, 142 (1990). In light of these statutory objectives, this court applies a two-prong test to the defense of ERISA preemption. A defendant pleading preemption must prove that: (1) the claim “addresses an
area of exclusive federal concern, such as the right to receive benefit s under the terms of the Pl an; and (2) the claim directly affects the relationship among traditional ERISA entities )) the employer, the plan and it s fiduciaries, and the participants and beneficiaries.” Mayeaux v. La. Health Serv. and Indem . Co. , 376 F.3d 420, 432 (5th Cir. 2004). Because ERISA preemption is an affirmative defense, Aetna bears the burden of proof on both elements
. See Metro. Life Ins. Co. v. Taylor , 481 U.S. 58, 63 (1987) (ERISA preemption is a defense); Settles v. Golden Rule Ins. Co. , 927 F.2d 505, 508 (10th Cir. 1991) (defendant bears burden of proving ERISA preemption); Kanne v. Conn. Gen. Life Ins. Co. , 867 F.2d 489, 492 n.4 (9th Cir. 1988) (same). Aetna argues th at the Bank’s claims require inquiry into the administ ration of the Pl an)) an
area of exclusive federal concern)) because som e of the drafts on the Bank’s account were fo r benefit claims paid aft er the stop-loss extension expired. Aetna contends that the Bank intends to prove that these drafts nonetheless fall wit hin the stop-loss extension because they arise from benefit claims th at Aetna improperly delayed processing. To the extent that the Bank intends to prove its claims through evidence that Aetna improperly administered the Plan, Aetna is correct that they would require inquiry int o an area of exclusive federal concern. S ee Hollis v. Provident Life and Accident Ins. Co. , 259 F.3d 410, 414 (5th Cir. 2001) (right to r eceive benef it s under an ERISA plan is an area of exclusive federal concern); Hubbard v. Blue Cross & Blue Shield Ass’n, 42 F.3d 942, 946 (5th Cir. 1995) (claim th at would require inquiry int o how benefit claims were processed implicat es area of federal concern). There is, however, evidence that Aetna drafted the Bank’s account multiple times7 Alt hough the district court concluded th at the claims implicat e an area of exclusive federal

concern because they “all pertain to th e terms of an ERISA-governed plan and will require the examinat io n of the plan terms,” there is nothing in t he summary judgment record to support that conclusion. Neither Aetna nor the district court identified what portion of the agreement between the parties is in dispute. C f. Perkins v. Time Ins. Co. , 898 F.2d 470, 473 (5th Cir. 1990) (claim fo r fraud and misrepresentation in the procurement of an ERISA plan are not preempted).

8 See Hobson v. Robinson , 75 Fed.Appx. 949, 955 (5th Cir. 2003) (unpublished) (party may be a fiduciary with regard to some claims but not others); Smith v. Tex. Children’s Hosp. , 84 F.3d 152 (5th Cir. 1996) (fraudulent inducement claim against employer not preem pted while breach of c o nt ract claim was preempted); Hook v. Morrison Milling Co. , 38 F.3d 776, 783 (5th Cir. 1994) (ERISA does not preempt all state law claims between an employee and an employer, merely because the employer administ ers an ERISA plan to which the employee belo ngs); Sommers Drug Stores Co. v. Employee Profit Sharing Trust , 793 F.2d 1456 (5th Cir. 1986) (claim fo r com mo n law breach of corporate fiduciary duty was not preempted by ERISA, even th ough the defendant/corporate director was an ERISA plan fiduciary and the plaintiffs/employees were plan beneficiaries). 7 during the stop-loss extension. Because those drafts occurred during the stop-loss extension, the Bank need not prove th at Aetna improperly delayed processing these claims to recover. Accordingly, Aetna has established the fir st element of the defense of preemption as a mat ter of law only to the extent th at the Bank’s int ends to rely upon evidence th at Aetna delayed processing claims fo r benefit s. 7 Aetna argues th at the second element of it s defense is sati sfied as a mat ter of law because the parties are two traditional ERISA entities ) ) an employer and a plan administ rator. The Bank contends, however, th at Aetna was acting in it s capacity as a vendor of insurance, not as a fiduciary of the Pl an. For purposes of ERISA preemption the critical distinction is not whether the parties to
a claim are traditional ER ISA entities in some capacity, but instead whether the relevant state law affects an aspect of the relationship th at is com prehensively regulated by ERISA. As we have noted, ERISA may preempt some claims between traditional ERISA entities but not others. 8 And a party may qualify as an ERISA fiduciary wit h regard to some cl aims but not others. S ee Pegram v.9 A party acts in a fiduciary capacity when he: 1) exerci ses discretionary control over plan

assets; 2) he renders invest ment advice fo r a fee to the plan; or 3) he has discretionary responsibility wit h regard to plan administ ration. 29 U.S.C. § 1002(21)(A); s ee also Tri-State Mach., Inc. v. Nationw ide Life Ins. Co., 33 F.3d 309, 313-14 (4th Cir. 1994) (c laims by employer against plan administ rator and stop-loss insurer for del aying t he processing of claims are preempted); Iron Workers Mid-South Pension Fund v . Terotechnology Corp ., 891 F.2d 548, 553 (5th Cir. 1990) (“the state law is preempted by section 514(a) if the conduct sought to be regulated by the state law is ‘part of the administ rat io n of an employee benefit plan’ ” (quoting M artori Bros. Distrib. v. JamesMassengale , 781 F.2d 1349, 1358 (9th Cir. 1986))). 8 Herdrich , 530 U.S. 211, 225-26 (2000) (ERISA defines party as fiduciary “o nly ‘to the extent’ th at he acts in such a capacity in relation to a plan”) (quoting 29 U.S.C. § 1002(21)(A)). “[T]he critical determ inat io n [i s] whether the claim it self created a relationship between the plaint iff and defendant th at is so int ertwined wit h an ERISA plan th at i t cannot be separated.” H obson , 75 Fed.Appx. at 954. Aetna argues th at it is an ERISA fiduciary because the Bank has delegated t o i t the discretionary responsibility to administ er the Pl an. 9 The Bank correctly contends, however, that Aetna was not acting in a fiduciary capacity when it represented to the Bank which claims would be covered by the stop-loss insurance policy extension. The duties th at Aetna has allegedly breached in negoti ating the stop-loss pol icy were owed to the Bank, the benefits of stop-loss insurance inure solely to the Bank, and Aetna cites no evidence that the stop-loss policy is a plan asset or was purchased with plan assets. Cf. D EPARTMENT OF LABOR ADVISORY O PINION 92-02A, available at 1992 WL 15175 (stop-loss pol icy is no t a pl an asset). But cf. Patelco Credit Union v. Sahni , 262 F.3d 897, 908 (9th Cir. 2001) (checks for stop-loss benefits are plan assets). Aetna identifies no cases holding th at a stop-loss insurer is necessarily a plan fiduciary. The majo rity of cases are to the contrary . For example, the Ninth Circuit held in Gew eke Ford v. St. Joseph’s Omni Preferred Care Inc ., 130 F.3d 1355 (9th Cir. 1997), th at a plan’s relationship to it s10 See also Seneca Beverage Corp. v. HealthNow N.Y., Inc ., 383 F.Supp.2d 413, 423 (W.D.N.Y. 2005) (stoploss insurer is not a fiduciary); Northern Kare Facilities/Kingdom Kare, LLC v. Benefirst LLC , 344 F.Supp.2d 283, 287 (D.Mass. 2004) (same); Deeter v. Greene, Tween and Co. , Inc
. , CIV. A. 98-1222, 1998 WL 639190 (E.D. Pa. Sept. 18, 1998) (same); Union Health Care, Inc. v. John Alden Life Ins. Co. , 908 F. Supp. 429, 432-36 (S.D. Miss. 1995) (same).

11 Aetna relies on Tri-State Machine, Inc. v. Nationw ide Life Insurance Co. , 33 F.3d 309 (4th Cir. 1994), but th at case is not to the contrary . Tri -State Machine, an employer, sued Nationwide Life Insurance, the administrator and stop-loss insurer for its ERISA plan. Tri-State alleged that Nationwide Life “del ayed processing cl aims in years when the stop-loss limit had been reached in order to deflect them int o a new policy year to be charged against Tri-State under its self-funding obligations.” I

d. at 314. The Fourth Circuit held that such an allegation was essentially a challenge to a plan administ rator’s processing of claims and therefore related to the plan. I d. In the present case, however, the Bank has abandoned it s claim th at Aetna breached it s fiduciary duties by delaying the processing of claims. The wrong the Bank seeks to recover for in the remaining claims is Aetna’s failure to reimburse it as it represented that it would pursuant to the stop-loss pol icy. Such a claim does not concern the processing of claims for benefits. The Fourth Circuit’s cases are consistent wit h our reasoning th at the parties are not fiduciaries wit h respect to the Bank’s claims. In Phelps v. C.T. Enterprises, Inc ., 394 F.3d 213, 219 (4th Cir. 2005), the court “emphasized th at fiduciary duty under ERISA is not an all-or-nothing concept.” S ee also Cotton v. Mass. Mutual Life Ins
. Co ., 402 F.3d 1267, 1277 (11th Cir. 2005) (fiduciary status under ERISA not an “all-or-nothing concept”). Broadnax Mills, Inc. v. Blue Cross and Blue Shield of Virginia , 867 F.Supp. 398 (E.D. Va. 1994), is also distinguishable. The employer in B roadnax Mills sued the plan administ rator and stoplo ss insurer on the ground th at it negligently failed to advise it to obtain an aggregate stop-loss pol icy and breached the Pl an’s Administ rative Service Agreement. In Broadnax Mills, it was conceded th at the stop-loss insurance was purchased by funds contri buted b y plan participants and therefore concerned the disposal of plan assets. See id. at 403. Aetna points to no similar concession in this case. The plaintiff in B roadnax Mills also alleged th at the plan administ rator breached its duty to disclose and report the financial status of the plan. I d. at 403-04. The Bank’s claims do not involve similar allegat io ns. 9 stop-loss insurer is like th at between any com mercial entities and is not regulated by ERISA. 10 The reasoning of these courts is persuasive and consistent wit h our own. The Bank’s claims implicate Aetna’s responsibilities wit h respect to Pl an administ ration only to the extent they challenge Aetna’s processing of benefit claims. 11 III For the fo regoing reasons, we reverse the district court’s grant of summary judgment on the10

Bank’s claims of detriment al reliance, breach of contract, and misrepresentation; affirm the grant of summary judgm

ent on the Bank’s Louisiana Revised Statute 22:657 claim; and remand for proceedings not inconsistent with this opinion. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.11

REAVLEY, Circuit Judge, specially concurring:

I concur in the judgment because this appeal is by the Bank against Aetna US Healthcare Inc., the issuer of th e stop-loss pol icy. That party is separate from Aetna Life Insurance Co., the plan administ rator with fiduciary responsibility.