United States Court of Appeals

For the First Circuit

No. 01-2313

MARJORIE HOTZ,

Plaintiff, Appellant,

v.

BLUE CROSS and BLUE SHIELD OF MASSACHUSETTS, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

 Boudin, Chief Judge,

Selya and Lipez, Circuit Judges.

Thomas J. Lynch with whom Lynch Associates, LLC was on brief

for appellant.

Joseph D. Halpern, Blue Cross and Blue Shield of

Massachusetts, Inc., Law Department, with whom Sara A. Walker was

on brief for appellee.

June 11, 2002
1See Hopkins v. Liberty Mut. Ins. Co., 750 N.E.2d 943, 949-50

(Mass. 2001); Van Dyke v. St. Paul Fire & Marine Ins. Co., 448

N.E.2d 357, 360 (Mass. 1983). Chapter 93A is a well-known

Massachusetts statute that permits private actions for multiple

damages and attorney's fees for a broad class of "unfair methods of

competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, §

2(a). Blue Cross asserts that it is not engaged in trade or

commerce but we do not reach that issue.

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BOUDIN, Chief Judge. In March 2001, Marjorie Hotz

brought suit in state court against her health insurer, Blue Cross

and Blue Shield of Massachusetts ("Blue Cross"). Hotz claimed that

Blue Cross violated a state law prohibiting unfair claim settlement

practices by insurance companies, see Mass. Gen. Laws ch. 176D, §

3(9) (2000), when it waited nearly three months before approving

payment for a course of follow-up therapy recommended by her

physician after the removal of her cancerous tonsil. Hotz alleged

that Blue Cross's delay caused her condition to worsen and sued

under Mass. Gen. Laws ch. 93A, § 9(1) (2000), which was amended in

1979 to extend its private remedies provisions to violations of

chapter 176D, § 3(9) (2000).1 

Hotz's insurance coverage with Blue Cross was part of an

employee benefit plan offered and paid for by the law firm where

she worked; the plan is governed by the Employee Retirement Income

Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. (2000). Blue

Cross removed the case to federal district court, claiming federal

question jurisdiction based on ERISA; it then moved to dismiss on

the ground that Hotz's chapter 93A claim fell within ERISA's clause

preempting all state laws that "relate to" employee benefit plans,

id. § 1144(a).
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The district court denied Hotz's motion to remand and

granted Blue Cross's motion to dismiss, and Hotz now appeals. As

required, we assume for this purpose the truth of her factual

allegations. Martin v. Applied Cellular Tech., Inc., 284 F.3d 1,

5-6 (1st Cir. 2002). This is so even though Blue Cross asserts

that, if the case were tried, it would show that no undue delay

occurred because it approved the treatment requested within 48

hours after it received the relevant request. Our review, which is

addressed to questions of law, is de novo. Id.

Hotz presses two points on appeal. First, at the

threshold, she argues that the district court lacked removal

jurisdiction over her state law claim. Second, she argues that her

claim is not preempted because it falls under the so-called "saving

clause" exempting from ERISA's preemption provision any state law

that "regulates insurance." 29 U.S.C. § 1144(b)(2)(A). We address

these issues in the same order and conclude that they are largely

governed by existing case law. 

Normally, federal defenses including preemption do not by

themselves confer federal jurisdiction over a well-pleaded

complaint alleging only violations of state law. Franchise Tax Bd.

of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1,

9-10, 25-27 (1983). But under the doctrine of "complete

preemption," ERISA's civil enforcement provisions, 29 U.S.C. §

1132(a), have been interpreted to establish federal removal

jurisdiction over any state law claims that in substance seek

relief that is otherwise within the scope of those ERISA remedy
2E.g., I.V. Servs. of Am., Inc. v. Inn Dev. & Mgmt., Inc., 182

F.3d 51, 53 (1st Cir. 1999); Bernstein v. Capitalcare, Inc., 70

F.3d 783, 784 (4th Cir. 1995); Farley v. Benefit Trust Life Ins.

Co., 979 F.2d 653, 658 (8th Cir. 1992). 

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provisions. See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-67

(1987). Pertinently, ERISA permits a federal action by a

beneficiary "to recover benefits due . . . under the terms of [the]

plan, to enforce . . . rights under the terms of the plan, or to

clarify . . . rights to future benefits under the terms of the

plan." 29 U.S.C. § 1132(a)(1)(B).

Hotz denies that her claim involves a "benefit" as the

term is used in ERISA; she says that "benefit" means only the

benefit offered directly by the employer to its employees (i.e.,

coverage under the employer's group insurance policy) and not the

benefit provided by the insurance company to the employee (i.e.,

payment for medical services) pursuant to the employer's policy.

Although the distinction is linguistically possible, it would mean

that numerous past ERISA suits brought to secure payment for

medical services from third-party providers under ERISA plans

lacked a legal basis.2 

In any event, Hotz's argument is foreclosed by this

court's previous opinion in Danca v. Private Health Care Systems,

Inc., 185 F.3d 1 (1st Cir. 1999). There, we found removal

jurisdiction over plaintiff's state tort claim alleging that the

defendant insurer was negligent when it approved treatment at a

mental hospital different from the hospital recommended by the

referring physician. Relying on Pilot Life Insurance Co. v.
3UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 367-68

(1999) (citing Pilot Life, 481 U.S. at 48-49, and Metro. Life Ins.

Co. v. Massachusetts, 471 U.S. 724, 740, 743 (1985)).

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Dedeaux, 481 U.S. 41 (1987), we said the claim fell within the

ambit of 29 U.S.C. § 1132(a)(1)(B) because it challenged "the

process used to assess a participant's claim for a benefit payment

under the plan." 185 F.3d at 6. This ruling governs Hotz's claim

against the insurer alleging undue delay in processing her

physician's referral. See also Pryzbowski v. U.S. Healthcare,

Inc., 245 F.3d 266, 273-74 (3d Cir. 2001).

We turn, then, to the question of preemption. Hotz

concedes that if what Blue Cross promises to provide is deemed a

plan benefit, then her state law claim falls at least initially

within 29 U.S.C. § 1144(a). That section broadly preempts any

state law claim that "relate[s] to" an employee benefit plan, and

it has been applied widely to bar state claims seeking damages for

alleged breach of obligations pertaining to an ERISA plan. E.g.,

Pilot Life, 481 U.S. at 47-48. Hotz's answer is that section

1144(b)'s saving clause preserves her claim as one brought under a

state law that "regulates insurance." 29 U.S.C. § 1144(b)(2)(A).

The Supreme Court has used several formulas to delineate

the scope of the saving clause. In a trilogy of cases, it has

asked whether the state law regulates insurance under a "commonsense view" of the term and, separately, whether the practice falls

within the phrase "business of insurance" for purposes of the

McCarran-Ferguson Act based on three more technical factors.3

Finally, in one of the cases, it has separately asked whether
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allowing the state-created rule to govern would interfere with the

uniform remedial scheme established by ERISA itself for securing

plan benefits. Pilot Life, 481 U.S. at 51-57. 

Much of the emphasis in the trilogy is on whether the

claim or rule invoked by the plaintiff is exclusive to insurance

regulation; in UNUM Life, the Court's decision not to find

preemption turned principally on the fact that the state rule

(involving failure to give notice) was unique to insurance cases.

526 U.S. at 370-71; see also Pilot Life, 481 U.S. at 50-51; Metro.

Life, 471 U.S. at 742-43. The underlying notion is that a claim or

rule directed only to insurance is one that "regulates insurance"

while one that regulates insurance along with everything else is

not within the quoted phrase. 

Exclusivity is an ambiguous label in this case. The

substantive prohibition on delay in claim processing in chapter

176D is directed solely at the insurance industry, but the private

action for multiple damages and attorney's fees claim brought by

Hotz is created by chapter 93A, § 9, which applies to unfair

commercial practices in any industry. Yet looking through form to

substance, chapter 176D, § 3, invoked by Hotz, is (by its own

terms) merely a specification of particular "unfair methods of

competition and unfair or deceptive acts or practices"--which are

banned in more general terms, and for all industries, in chapter

93A (see note 1, above). 

On balance, our case seems closer to Pilot Life, where

the Court held to be preempted a punitive damages tort claim for
4Ramirez v. Inter-Cont'l Hotels, 890 F.2d 760, 763-64 (5th

Cir. 1989) (Texas unfair insurance practices statute); Kanne v.

Conn. Gen. Life Ins. Co., 867 F.2d 489, 494 (9th Cir. 1988), cert.

denied, 492 U.S. 906 (1989) (California unfair insurance practices

statute); In re Life Ins. Co. of N. Am., 857 F.2d 1190, 1194-95

(8th Cir. 1988) (Missouri statute prohibiting vexatious refusal to

pay insurance benefits); see also Custer v. Pan Am. Life Ins. Co.,

12 F.3d 410, 420 (4th Cir. 1993) (West Virginia unfair trade

practices statute); Anschultz v. Conn. Gen. Life Ins. Co., 850 F.2d

1467, 1468-69 (11th Cir. 1988) (Florida insurance statute). 

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egregious nonpayment of benefits under an insurance policy. Under

state law, such punitive damages were also available for egregious

violations of contracts unrelated to insurance, just as chapter 93A

is available for non-insurance unfair trade practices. In

addition, the Court in Pilot Life--quite apart from the "commonsense view" and McCarran-Ferguson tests--emphasized that to allow

punitive damages for failure to pay benefits was at odds with

Congress's refusal to allow punitive damages for benefit claims

under ERISA. 481 U.S. at 53-54. 

On this last rationale, other circuits have in a number

of cases held claims under various state statutes similar to

Massachusetts' to be preempted by ERISA despite the saving clause.4

Possibly UNUM Life betokens a shift of emphasis by the Supreme

Court; plainly the law as to the scope of the saving clause is

still evolving. But under current Supreme Court precedent, we feel

bound by the similarity of Pilot Life to our own case and by the

close fit of its final rationale to Hotz's chapter 93A claim. 

Affirmed.