United States Court of Appeals

Fifth Circuit

FILED

July 1, 2004

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________________

No. 02-30188

__________________________

CHERYL MAYEAUX, RAYMOND GERMAIN, 

and DR. AND MRS. EDWARD S. HYMAN,

Plaintiffs-Appellants,

versus

LOUISIANA HEALTH SERVICE AND 

INDEMNITY COMPANY (d/b/a BLUE CROSS 

& BLUE SHIELD OF LOUISIANA),

Defendant-Appellee.

___________________________________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

___________________________________________________

Before DAVIS, WIENER, and STEWART, Circuit Judges.

WIENER, Circuit Judge:

Cheryl Mayeaux, her husband Raymond Germain, and her treating

physician and his wife, Dr. and Mrs. Edward S. Hyman (collectively

the “Plaintiffs”) sued Louisiana Health Services and Indemnity

Company, d/b/a Blue Cross and Blue Shield of Louisiana (“BCBS”).

The Plaintiffs asserted various causes of action alleged to have

arisen from BCBS’s denial of insurance coverage for the costs of

Dr. Hyman’s treatment of Mayeaux’s illness with high doses of

antibiotics. After several years of litigation, the Plaintiffs
1 BCBS’s decision was the result of a utilization review by

BCBS’s Physician Advisory Council, a ten-physician board that

examined Dr. Hyman’s office notes, the claim form submitted by

him, and his description of the prescribed therapy. 

2

sought leave to amend and supplement their complaint for a third

time in an apparent attempt to defeat federal subject matter

jurisdiction. The district court denied the Plaintiffs’ motion for

leave to amend and subsequently entered summary judgment against

the Plaintiffs on all their claims. On appeal, the Plaintiffs

contest the district court’s denial of their motion for leave to

amend and, in the alternative, the district court’s grant of

summary judgment in favor of BCBS. We affirm.

I. FACTS AND PROCEEDINGS

A. BACKGROUND

In 1982, Mayeaux went to work for Coleman E. Adler & Sons

(“Adler”). The following year, she sought medical treatment from

Dr. Hyman who diagnosed Mayeaux as having a connective tissue

illness that he calls “systemic coccal disease” (“SCD”). Dr. Hyman

treated Mayeux’s condition with a so-called “High Dose Antibiotic

Treatment” (“HDAT”). In December 1993, BCBS began providing group

health insurance coverage for Adler’s employees under a

comprehensive medical benefit plan (the “Adler Plan”). BCBS denied

coverage for Mayeaux’s HDAT, stating that it was excluded under the

terms of the Adler Plan as experimental or investigational.1

The Adler Plan expressly excludes benefits for “[s]ervices or

supplies which are Investigational in nature” and defines
3

“Investigational” as “the use of any treatment, procedure,

facility, equipment, drug device or supply not accepted, as

determined by [BCBS], as standard medical treatment of the

condition being tested, or any such items requiring federal or

other governmental agency approval not granted at the time services

were rendered.” BCBS maintains that its decision to deny coverage

for HDAT was purely a question of plan coverage and was not based

on any determination regarding the medical appropriateness of Dr.

Hyman’s procedures.

In April 1995, Mayeaux asked BCBS to reconsider its coverage

decision, but BCBS refused. Counsel for the parties exchanged a

series of letters in which Mayeaux’s lawyer challenged BCBS’s

refusal to cover the HDAT. At one point in that exchange, counsel

for BCBS invited Mayeaux to obtain a second medical opinion in

support of the HDAT therapy. Mayeaux submitted an opinion from Dr.

Quentin Deming that concurred with Dr. Hyman’s prescribed

treatment, but BCBS continued to deny coverage.

B. COURT PROCEEDINGS

In 1995, the Plaintiffs filed suit in Louisiana state court

seeking damages allegedly resulting from BCBS’s failure to pay for

Mayeaux’s HDAT, as well as bad faith and fraud. BCBS removed the

case to federal court invoking federal subject matter jurisdiction

because Mayeaux was asserting, inter alia, a claim for benefits

under an ERISA-governed plan. The district court allowed the

Plaintiffs to amend their complaint to seek a declaratory judgment
2 These cases were Moore v. Ashland Chem., 151 F.3d 269 (5th

Cir. 1998) (en banc) and Pick v. Am. Med. Sys., Inc., 198 F.3d

241 (5th Cir. 1999) (unpublished). In Moore, we effectively

affirmed a district court’s exclusion of a physician’s opinion on

the causal relationship between the plaintiff’s exposure to

industrial chemicals and his pulmonary illness. 151 F.3d at 279.

Likewise, in Pick, we ultimately concluded that Dr. Hyman’s

“inability to objectively demonstrate his method’s accuracy,”

slip op. at 2, 6, supported the exclusion of his medical

diagnosis that a patient suffered from SCD. We also affirmed the

Daubert exclusion of Dr. Hyman’s opinion testimony that the

defendant’s penile prosthesis could cause SCD. Id. at 2, 7. We

further held that the district court could exclude Dr. Deming’s

opinion that the plaintiff suffered from SCD, because Dr. Deming

reached his conclusion by examining medical slides prepared using

Dr. Hyman’s “scientifically unreliable” method. Id. at 7. See

Pick v. Am. Med. Sys., Inc., 958 F. Supp. 1151, 1174-79 (E.D. La.

1997).

4

of Mayeaux’s right to receive future benefits under the Adler Plan.

Protracted discovery ensued.

In 1997, over BCBS’s objection, the district court permitted

the Plaintiffs to supplement and amend their complaint a second

time to add state law causes of action for unfair trade practices,

intentional interference with contract, and defamation. Discovery

continued until April 1998, when the district court closed the case

administratively until we ruled on two appeals that were pending.2

In February 2001, the Plaintiffs filed a motion to reopen this

case, and shortly thereafter moved, for a third time, to supplement

and amend their complaint. This time, the Plaintiffs proposed to

dismiss Mrs. Hyman as a plaintiff and to add BCBS Medical Director,

Dr. James Gengelbach, as a defendant. In the proposed amendment,

the Plaintiffs alleged that Dr. Gengelbach (1) breached his duty of
5

care under Louisiana state law, (2) conspired to retaliate against

Dr. Hyman, (3) committed unethical practices, and (4) intentionally

caused Mayeaux injury. The Plaintiffs further alleged that BCBS

(1) was liable for Dr. Gengelbach’s actions under the theory of

respondeat superior, (2) breached an implied warranty, and (3)

breached its duty of good faith and fair dealing. Importantly, in

their proposed amended complaint, the Plaintiffs specifically

disavowed any claim against BCBS for denial of benefits. The

magistrate judge denied leave to amend; and, on review of the

magistrate judge’s order, the district court affirmed.

BCBS filed three separate summary judgment motions regarding

the Plaintiffs’ state and federal causes of action. Relying on

ERISA preemption, the district court granted summary judgment to

BCBS on all the Hymans’ claims. The district court also ruled that

Mayeaux’s denial-of-benefits claim was governed by ERISA and that

there was no genuine issue of material fact regarding whether BCBS

abused its discretion in denying coverage. The district court

therefore granted summary judgment in favor of BCBS and dismissed

the remainder of Mayeaux’s state law claims as preempted. The

Plaintiffs timely filed their notice of appeal.

II. ANALYSIS

A. STANDARD OF REVIEW

We review the district court’s denial of leave to amend a

complaint under Federal Rule of Civil Procedure 15 for abuse of
3 Lowrey v. Texas A & M Univ. Sys., 117 F.3d 242, 245 (5th

Cir. 1997).

4 Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 872 (5th

Cir. 2000) (internal quotations and citations omitted).

5 This oft-cited list of justifications was pronounced by

the Supreme Court in Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct.

227, 230 (1962).

6 Martin’s Herend Imports, Inc. v. Diamond & Gem Trading

United States of America Co., 195 F.3d 765, 770 (5th Cir. 1999);

Stripling, 234 F.3d at 872.

7 Hodges v. Delta Airlines, Inc., 44 F.3d 334, 335 (5th Cir.

1995) (en banc).

6

discretion.3 Because of the liberal pleading presumption

underlying Rule 15(a), we have acknowledged that the term

“discretion” in this context “may be misleading, because FED. R.

CIV. P. 15(a) evinces a bias in favor of granting leave to amend.”4

As a result, absent a “substantial reason” such as undue delay, bad

faith, dilatory motive, repeated failures to cure deficiencies, or

undue prejudice to the opposing party,5 “the discretion of the

district court is not broad enough to permit denial.”6 Stated

differently, district courts must entertain a presumption in favor

of granting parties leave to amend.

We review a district court’s grant of summary judgment de

novo.

7 Summary judgment is appropriate when, viewing the evidence

and all justifiable inferences in the light most favorable to the

non-moving party, there is no genuine issue of material fact, and
8 Hunt v. Cromartie, 526 U.S. 541, 552, 119 S. Ct. 1545,

1551-52 (1999); FED. R. CIV. P. 56(c).

9 Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.

1994) (en banc).

7

the moving party is entitled to judgment as a matter of law.8 If

the moving party meets its burden, the non-movant must designate

specific facts showing there is a genuine issue for trial.9

B. DENIAL OF THE PLAINTIFFS’ THIRD ATTEMPT TO AMEND

In March 2001, the district court entered a preliminary

pretrial conference order that gave the parties thirty days in

which to file any final amendments. Within the prescribed period,

the Plaintiffs filed a motion for leave to supplement and amend

their complaint for a third time (the district court had allowed

two previous amendments). Because the Plaintiffs’ filing was

considered to be somewhat incoherent, the magistrate judge ordered

the Plaintiffs “to provide opposing counsel with a comprehensive

pleading that they propose to file,” and offered BCBS an

opportunity to submit a supplemental opposition. In response, the

Plaintiffs filed what they styled as a “Restated Complaint.” 

BCBS opposed this third amendment on two principal grounds.

First, BCBS asserted that the Plaintiffs’ amendment would be

unfairly prejudicial because it would radically change the nature

of the litigation after extensive discovery and pretrial activity,

and only five months before the case was scheduled for trial.

Second, BCBS argued that leave to amend should be denied as futile
10 Lowrey, 117 F.3d at 245 (emphasis added) (citing Foman,

371 U.S. at 182, 83 S. Ct. at 230).

11 Rhodes v. Amarillo Hosp. Dist., 654 F.2d 1148, 1153-54

(5th Cir. 1981) (emphasis added).

8

because the new claims proposed by the Plaintiffs were preempted by

ERISA.

In denying the Plaintiffs’ motion for leave to amend, the

magistrate judge stated that “[t]he state law claims which

plaintiff attempts to assert appear to be preempted by ERISA.” The

magistrate judge further observed that “the claims are not new and

should have been brought far earlier than now.” The district court

affirmed the magistrate judge’s ruling, declaring that “[t]he

proposed amendment to the complaint is untimely; further, it seeks

to add state law claims that are preempted by ERISA.”

1. Timeliness 

The Plaintiffs’ motion for leave to amend was filed well

within the time prescribed by the trial court in its pretrial

conference order. Neither the district court nor the magistrate

judge made any express findings that the Plaintiffs acted in bad

faith or with a dilatory motive or that BCBS would be prejudiced by

the amendment. “The Supreme Court has explicitly disapproved of

denying leave to amend without adequate justification.”10 We have

consistently expressed our “strong preference for explicit reasons”

and “indicated the disfavor with which we view district court

denials of amendments without stated reasons.”11 In light of the
12 See, e.g., Howey v. United States, 481 F.2d 1187, 1191-92

(9th Cir. 1973) (holding that a district court’s conclusory

denial of leave to amend was an abuse of discretion); Gootee v.

Colt Indus., Inc., 712 F.2d 1057, 1065 n.7 (6th Cir. 1983)

(remanding the district court’s unexplained denial of leave to

amend with instructions to “either allow the amendment or explain

the basis upon which it refuses to ‘freely’ grant it”); Pittston

Co. v. United States, 199 F.3d 694, 706 (4th Cir. 1999)

(reversing the district court when “in its order denying the

motion for leave to amend, [the court] did not indicate that it

found any bad faith on Pittston’s part and did not identify how

it believed the Government might be prejudiced by the late

amendment”). See also Duggins v. Steak ’N Shake, Inc., 195 F.3d

828, 834 (6th Cir. 1999) (noting the importance of the need for

the district court to give reasons for its decision to deny leave

to amend); Doherty v. Davy Songer, Inc., 195 F.3d 919, 928 (7th

Cir. 1999) (remanding to the district court for findings of

prejudice where the district court failed to articulate its

reasons for denying leave to amend).

13 Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th

Cir. 1981). See also Foman, 371 U.S. at 182, 83 S. Ct. at 230

(recognizing that the reason for denying leave to amend may be

“apparent or declared”).

14 Rhodes, 654 F.2d at 1153-54. Accord Feldman v. Am. Mem’l

Life Ins. Co., 196 F.3d 783, 793 (7th Cir. 1999) (“Although the

district court did not articulate its basis for decision, denial

of a motion to amend pleadings without explanation does not

constitute abuse of discretion if the delay and prejudice that

9

presumption in favor of allowing pleading amendments, courts of

appeals routinely hold that a district court’s failure to provide

an adequate explanation to support its denial of leave to amend

justifies reversal.12

When the reason for the denial is “readily apparent,”13

however, a district court’s failure to explain adequately the basis

for its denial “is unfortunate but not fatal to affirmance” if the

record reflects “ample and obvious grounds for denying leave to

amend.”14 This is such a case. Our examination of the procedural
would result from such amendment was apparent.”).

15 See Dussouy, 660 F.2d at 598 & n.2; Duggins, 195 F.3d at

834; Doherty v. Davy Songer, Inc., 195 F.3d 919, 922, 927 & n.5

(7th Cir. 1999); Bell v. Allstate Life Ins. Co., 160 F.3d 452,

454 (8th Cir. 1998); Moore v. City of Paducah, 790 F.2d 557, 562

(6th Cir. 1986).

10

history of this action leaves us with a definite and firm

conviction that BCBS and Dr. Genegelbach would have suffered undue

prejudice if the district court had allowed the Plaintiffs’

proposed amendments. It is true that the Plaintiffs motion for

leave to amend was not “untimely” in the sense of being filed

outside the deadline prescribed in the preliminary pretrial

conference order. And, we know that delay alone is an insufficient

basis for denial of leave to amend: The delay must be undue, i.e.,

it must prejudice the nonmoving party or impose unwarranted burdens

on the court.15 The Plaintiffs’ motion was certainly “untimely” in

light of the procedural history and posture of the case. The

district court was obviously concerned that the Plaintiffs had

waited until such a late stage in the proceedings before seeking

leave to assert these amended claims, which —— if granted —— would

work a massive change in the nature and direction of the case. 

2. Fundamental Alteration of the Case

In this context, we must determine whether the proposed

amendment (1) was merely proposing alternative legal theories for

recovery on the same underlying facts or (2) would fundamentally
16 See Lowrey, 117 F.3d at 246 n.2.

17 Bell, 160 F.3d at 454. See also Little v. Liquid Air

Corp., 952 F.2d 841, 846 (5th Cir. 1992) (affirming order denying

leave to amend where the amended complaint would have

“established an entirely new factual basis for the plaintiffs’

claims” and thus “radically altered the nature of trial on the

merits”), reinstated in relevant part, 37 F.3d 1069, 1073 & n.8

(5th Cir. 1994) (en banc); Morongo Band of Mission Indians v.

Rose, 893 F.2d 1074, 1079 (9th Cir. 1990) (“The new claims set

forth in the amended complaint would have greatly altered the

nature of the litigation and would have required defendants to

have undertaken, at a late hour, an entirely new course of

defense.”).

11

alter the nature of the case.16 Amendments that fall into the

former category generally should be permitted, as they advance Rule

15(a)’s policy of promoting litigation on the merits rather than on

procedural technicalities. Amendments that fall into the latter

category, however, may be denied if the circumstances warrant.

Here, they clearly do.

The Plaintiffs’ so-called “Restated Complaint” —— an unabashed

attempt to avoid ERISA preemption and defeat federal court

jurisdiction —— essentially pleaded a fundamentally different case

with new causes of action and different parties. As stated by the

Eighth Circuit, “when late tendered amendments involve new theories

of recovery and impose additional discovery requirements, courts

[of appeal] are less likely to find an abuse of discretion due to

the prejudice involved.”17 In their Restated Complaint, the

Plaintiffs were effectively reconstructing the case anew, after it

had been pending in the district court for years and was nearing

the close of extensive discovery. Indeed, the Plaintiffs were
18 Because we affirm the district court’s denial of leave to

amend on grounds of undue prejudice to the opposing party, we

need not analyze the district court’s alternative holding

concerning futility.

12

proposing to abandon Mayeux’s claim for medical benefits under the

ERISA Plan —— the claim that had been at the core of the

Plaintiffs’ case from the outset. We conclude that permitting the

amendment would have unduly prejudiced BCBS and Dr. Genegelbach,

the new defendant whom the Plaintiffs proposed to add to the suit.

The district court, therefore, did not abuse its discretion by

denying the Plaintiffs leave to amend.18

C. DISMISSAL OF MAYEAUX’S BENEFITS CLAIM

Mayeaux asserts two reasons why the trial court erred in

granting summary judgment dismissing her benefits claim. First,

Mayeaux insists that the letter from BCBS’s general counsel

inviting a second opinion was a contractual offer which, when she

accepted it by tendering Dr. Deming’s report, created a binding

obligation on BCBS’s part to provide benefits. Second, Mayeaux

challenges BCBS’s interpretation of the Adler Plan as precluding

coverage for Dr. Hyman’s prescribed treatment as investigative.

1. Letter Contract

Following BCBS’s denial of Mayeaux’s pre-authorization

request, counsel for the parties exchanged a series of letters

discussing the basis for BCBS’s decision. In one of these letters

to Mayeaux’s lawyer, BCBS’s general counsel stated:

Blue Cross and Blue Shield of Louisiana, as an insurer,
19 Emphasis added.

20 LA. CIV. CODE ANN. art. 2997(5) (West 1994 & Supp. 2003).

13

is not obligated to pay for medical treatment which, in

our sole discretion, is not medically appropriate.

Further, we are not obligated to pay for the “trial and

error” practice of medicine. It may be true that Dr.

Hyman’s treatment is “good medicine”; however, the

manufacturer of the medication states otherwise and the

terms of our subscriber contract allow us to deny

benefits for this reason. Finally, I would like to make

it clear that we are not closed-minded regarding this

issue. We have urged our subscriber to seek the advice

of another physician and, if that physician agrees that

Dr. Hyman’s treatment is appropriate, then we will

continue to pay claims.19

Ignoring everything but the final sentence quoted, Mayeaux argues

that this statement was a legal offer, which she accepted by

submitting the concurring medical opinion of Dr. Deming. She

contends that the effect of the letter was “that the health insurer

[BCBS] gave up its discretionary authority to determine whether the

benefits were appropriate (medically necessary).” 

In granting summary judgment in BCBS’s favor, the district

court observed that “even if that claim was not preempted by ERISA,

counsel’s letter attempting amicable settlement of an issue that

was clearly headed towards litigation did not create any

contractual relationship between the principles [sic] unless those

principles [sic] expressly gave the attorney authority to do so.”

Relying on Article 2997 of the Louisiana Civil Code, which requires

a principal to give authority “expressly” before a mandatary

(agent) can “enter into a compromise,”20 the district court
21 LA. CIV. CODE ANN. art. 2050 (West 1994); see Brown v.

Drillers, Inc., 630 So. 2d 741, 748 (La. 1994).

14

concluded that the letter from BCBS’s general counsel could create

no binding contractual agreement between Mayeaux and BCBS,

irrespective of Mayeaux’s proffer of Dr. Deming’s opinion.

The district court correctly granted summary judgment against

Mayeaux on her claim for breach of contract. When BCBS’s general

counsel sent the subject letter to Mayeaux’s attorney, this dispute

was plainly heading toward litigation. BCBS had consistently

maintained that its denial was based on the express exclusion of

investigational treatment from coverage under the Adler Plan.

Mayeaux’s attempt to create a state contractual obligation by

isolating a single sentence out of a single letter from BCBS’s

lawyer to hers —— a letter that was part of an extensive ongoing

dialogue between the parties’ attorneys —— is feckless. Indeed the

“four corners” of what Mayeaux would have us deem to be a binding

agreement between the parties would necessarily encompass the whole

chain of correspondence between their respective counsel; and

Article 2050 of the Louisiana Civil Code requires that “[e]ach

provision in a contract must be interpreted in light of the other

provisions so that each is given the meaning suggested by the

contract as a whole.”21

In light of the whole exchange, BCBS’s lawyer’s statement was

nothing more than an invitation for Mayeaux to demonstrate that the

HDAT was not investigational —— that it was, contrary to BCBS’s
22 Cf. Anthony v. Liberty Mut. Ins. Co., 759 So. 2d 910, 914

(La. App. 3d Cir. 2000).

23 See Vega v. Nat’l Life Ins. Svcs. Inc., 188 F.3d 287, 299

(5th Cir. 1999) (en banc); Gooden v. Provident Life & Accident

Ins. Co., 250 F.3d 329, 333 (5th Cir. 2001). We have made no

independent factual determination concerning whether the Adler

Plan’s administrator was, in fact, tainted by a conflict of

interest.

15

position, “standard medical treatment” generally accepted by the

wider medical community. On summary judgment, Mayeaux adduced no

evidence to illustrate an intention by BCBS to relinquish its

discretionary authority to determine what constitutes standard

medical treatment under the Adler Plan. Mayeaux’s attempt to

characterize BCBS’s letter as an offer inviting her acceptance

misses the mark.22

2. Plan Administrator’s Denial of Benefits

Mayeaux also contends that the Adler Plan’s administrator

improperly denied coverage for Dr. Hyman’s prescribed therapy and

that the district court erroneously affirmed that decision. We

disagree.

As a preliminary matter, Mayeaux advances that the district

court failed to apply the correct standard of review. Mayeaux

maintains that the Adler Plan administrator’s decision is tainted

by a conflict of interest, requiring the district court to employ

our Vega case’s “sliding scale” standard of review to evaluate

whether there was an abuse of discretion.23 Mayeaux’s assertion in

this regard is baseless: The record makes clear that the district
24 See supra Part I.A.

16

court expressly applied Vega and accorded the administrator’s

decision less than full deference.

The essence of Mayeaux’s substantive challenge to the Adler

Plan administrator’s decision is that the plan’s wording does not

contain an express exclusion for the “investigational use of

drugs.” Mayeaux’s argument is a red herring. As we explained

earlier,24 the Adler Plan specifically excludes benefits for

investigational treatments and any procedures that BCBS determines

not to be “standard medical treatment” for that particular

condition.

Simply put, Mayeaux has failed to identify sufficient record

evidence on appeal to support the Plaintiffs’ contention that HDAT,

as prescribed by Dr. Hyman for the connective tissue malady that he

diagnosed in Mayeaux, is “standard medical treatment.” Mayeaux, of

course, relies on Dr. Deming’s medical opinion to make this

showing. Even assuming arguendo that Dr. Deming’s opinion provided

some additional support for the Plaintiffs’ position that HDAT is

not purely investigational, we certainly cannot conclude that the

Adler Plan administrator’s decision was an abuse of discretion.

The administrator could readily have concluded, as he did, that one

concurring medical opinion is inadequate to establish that HDAT is

a “standard medical treatment.” As such, Mayeaux has failed to

show abuse of discretion by the administrator of the Adler Plan, so
25 530 U.S. 211, 120 S. Ct. 2143 (2000).

26 Id. at 231-37, 120 S. Ct. at 2155-58.

17

the district court’s grant of summary judgment on Mayeaux’s denialof-benefits claim was proper.

D. THE PLAINTIFFS’ STATE LAW CLAIMS

We turn finally to the Plaintiffs’ state law claims. For the

reasons stated below, we affirm the district court’s grant of

summary judgment dismissing these claims.

1. State Law Tort Claims for Damages

Mayeaux and Germain contend that the district court erred in

granting summary judgment dismissing their tort claims for pain and

suffering, irreparable connective tissue damage, depression, loss

of consortium, loss of earning capacity, lost wages, mental

anguish, and attorney’s fees. We agree with the district court’s

holding that these claims are preempted by ERISA. 

Mayeaux and Germain base their insistence that these state law

tort claims have not been preempted on the Supreme Court’s decision

in Pegram v. Herdrich.

25 There, the Court held that mixed

eligibility and treatment decisions that were made by an HMO acting

through its physicians were not fiduciary acts under ERISA; and

that, as such, those mixed decisions could not give rise to an

ERISA breach of fiduciary duty claim.26 

Pegram carved out a narrow class of state law claims from

ERISA conflict preemption. That carve-out was predicated on the
27 Id. 530 U.S. at 224, 120 S. Ct. at 2152; Rush Prudential

HMO, Inc. v. Moran, 536 U.S. 355, 367-70, 122 S. Ct. 2151, 2160-

62 (2002).

28 Pegram, 530 U.S. at 228, 120 S. Ct. at 2154.

29 See id. at 219-20, 120 S. Ct. at 2149. See also infra

text accompanying notes 35-37. We are cognizant that not all

HMOs share an identical structure, and we recognize the

possibility that the characteristics which make HMOs unique visà-vis Pegram’s analysis could coalesce in another non-HMO, ERISAgoverned insurance model. There is no dispute, however, that

BCBS is a not an HMO and no allegation that BCBS has the salient

features of a physician-owned-and-operated HMO.

30 Id. at 229, 120 S. Ct. at 2154. See also infra text

accompanying note 37.

18

defining feature of the HMO scheme as a combination of both insurer

and provider of medical services.27 In the traditional fee-forservice context, treatment decisions are made by the patient’s

unconflicted physician based exclusively on his medical judgment

about the appropriate medical response: In contrast, eligibility

decisions are made subsequently by the insurer based on the

policy’s coverage for a particular condition or medical procedure.28

When an HMO makes benefits decisions through its physicians,

though, the structure of that business model allows for some

treatment decisions to converge with eligibility decisions.29 In

that context, such decisions consequently become “mixed” because

the eligibility determination cannot, in practical terms, be

untangled from physicians’ judgments about reasonable medical

treatment.30 As we recognized in Haynes v. Prudential Health Care,

“the [Pegram] Court pushed the door ajar to treat mixed eligibility
31 313 F.3d 330, 335-36 (5th Cir. 2002). To be sure, in

Haynes we concluded simply that the plaintiff’s negligence

claims against his HMO were preempted by ERISA because the HMO

decision at issue was a pure eligibility decision, only

indirectly affecting the medical treatment sought by the

plaintiff. Id. at 337. We expressed no opinion about whether we

read Pegram to carve out all mixed decisions from ERISA

preemption. See id. at 336.

32 Nos. 02-1845, 03-83, 542 U.S. ___, --- S. Ct. ___, Slip

Op. (June 21, 2004).

33 TEX. CIV. PRAC. & REM. CODE ANN. § 88.002(a).

19

and treatment decisions as medical decisions for the purposes of

ERISA, but it did not sanction the blanket application of mixed

eligibility decision in all ERISA preemption cases.”31 Now, by

baldly characterizing BCBS’s interpretation of the Adler Plan as a

“mixed” decision, Mayeaux and Germain attempt to have us broaden

Pegram’s carve-out to cover the denial-of-benefits decision at

issue here. This we cannot do because we now know that the Supreme

Court rejects such an expansive reading of Pegram.

While this case was pending, the Supreme Court unanimously

decided Aetna Health Inc. v. Davila,

32 a consolidated appeal of two

law suits by individuals who sued their HMOs for liability under

the Texas Health Care Liability Act (“THCLA”), a statute that

imposed a duty on health insurance carriers, HMOs, and other

entities managing health care plans “to exercise ordinary care when

making health care treatment decisions.”33 In holding that such

suits were completely preempted by ERISA, the Court’s decision in

Davila confirms the extreme narrowness of the scope of the mixed
34 Davila, 542 U.S. at ___, --- S. Ct. at ___, Slip Op. at

17.

35 Id. at ___; --- S. Ct. at ___, Slip Op. at 16 (citing

Pegram, 530 U.S. at 228).

36 Id. at ___; --- S. Ct. at ___, Slip Op. at 17 (quoting

Pegram, 530 U.S. at 231-232).

20

decision carve-out articulated in Pegram. Davila explains that

“[t]he fact that a benefits determination is infused with medical

judgments” does not necessarily convert the plan administrator’s

decision into a non-fiduciary act.34 Instead, the indispensable

pillar buttressing Pegram’s rationale for excluding mixed decisions

from being treated as fiduciary acts under ERISA was, as Davila

makes clear, the structure of the ERISA plan in question —— that

is, a physician-owned-and-operated HMO in which “[t]he plaintiff’s

treating physician was also the person charged with administering

plaintiff’s benefits.”35 As a result, Pegram has no application

outside the HMO context:

Pegram, in highlighting its conclusion that “mixed

eligibility decisions” were not fiduciary in nature,

contrasted the operation of “[t]raditional trustees

administer[ing] a medical trust” and “physicians through

whom HMOs act.” A traditional medical trust is

administered by “paying out money to buy medical care,

whereas physicians making mixed eligibility decisions

consume the money as well.” And, significantly, the

Court stated that “[p]rivate trustees do not make

treatment judgments.” But a trustee managing a medical

trust undoubtedly must make administrative decisions that

require the exercise of medical judgment.36

Davila thus expressly rejects any effort to extend Pegram’s mixeddecision principle to cover traditional indemnity insurers like
37 Id. at ___; --- S. Ct. at ___, Slip Op. at 19 (internal

quotation marks and citations omitted).

38 29 U.S.C. § 1144(a) (2000). 

21

BCBS:

Since administrators making benefits determinations, even

determinations based extensively on medical judgments,

are ordinarily acting as plan fiduciaries, it was

essential to Pegram’s conclusion that the decisions

challenged there were truly mixed eligibility and

treatment decisions, i.e., medical necessity decisions

made by the plaintiff’s treating physician qua treating

physician and qua benefits administrator. Put another

way, the reasoning of Pegram only makes sense where the

underlying negligence also plausibly constitutes medical

maltreatment by a party who can be deemed to be a

treating physician or such a physician’s employer.37

We, therefore, hold that Mayeaux and Germain’s state law tort

claims are completely preempted by ERISA and affirm the district

court’s grant of summary judgment in favor of BCBS.

2. The Remaining State Law Claims

The Plaintiffs also appeal the district court’s summary

judgment dismissal of the Hymans’ state law claims, which were

grounded in negligence, unfair trade practices, defamation, and

intentional interference with contracts. We affirm the district

court’s dismissal of these causes of action via a grant of summary

judgment, however, because these remaining claims are indisputably

preempted by ordinary conflict preemption under § 514 of ERISA.

ERISA preempts “any and all State laws insofar as they may now

or hereafter relate to any employee benefit plan.”38 Although the

term “relate to” is intended to be broad, “pre-emption does not
39 New York State Conference of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co., 514 U.S. 645, 661, 115 S. Ct. 1671,

1680 (1995).

40 Id. at 656, 115 S. Ct. at 1677.

41 29 U.S.C. § 1001(a), (b) (2000).

42 Smith v. Texas Children’s Hosp., 84 F.3d 152, 155 (5th

Cir. 1996); Hubbard v. Blue Cross & Blue Shield Ass’n, 42 F.3d

942, 945 (5th Cir. 1995).

22

occur...if the state law has only a tenuous, remote, or peripheral

connection with covered plans, as is the case with many laws of

general applicability.”39 If the facts underlying a state law claim

bear some relationship to an employee benefit plan, we evaluate the

nexus between ERISA and state law in the framework of ERISA’s

statutory objectives.40

Relevant statutory objectives include establishing uniform

national safeguards “with respect to the establishment, operation,

and administration of [employee benefit] plans,” and “establishing

standards of conduct, responsibility, and obligation for

fiduciaries of employee benefit plans.”41 Thus, ERISA preempts a

state law claim if a two-prong test is satisfied: (1) The state law

claim addresses an area of exclusive federal concern, such as the

right to receive benefits under the terms of an ERISA plan; and (2)

the claim directly affects the relationships among traditional

ERISA entities —— the employer, the plan and its fiduciaries, and

the participants and beneficiaries.42

We agree with the district court that “Dr. Hyman’s claims
23

relate to an ERISA plan because they challenge [BCBS]’s handling,

review, and disposition of a request for coverage. The purpose of

these proceedings is to collaterally attack [BCBS’s] determination

of the actual obligations under the terms of the insurance policy.”

This reasoning is sound: If a medical practitioner could

collaterally challenge a plan’s decision not to provide benefits,

he would directly affect the relationship between the plan and its

beneficiary, two traditional ERISA entities. That clearly cannot

be allowed, so Dr. Hyman’s negligence and unfair trade practice

claims cannot survive ERISA conflict preemption.

Dr. Hyman’s state law claims for interference with contract

and defamation also fail the conflict preemption test. To allow a

medical practitioner to sue for defamation and intentional

interference when an ERISA plan administrator decides that the plan

does not cover a particular medical treatment for a particular

participant or beneficiary would undoubtedly jeopardize the

relationships among the traditional ERISA entities, of which the

treating physician is not one. These are the sort of claims that

go to the very heart of the ERISA administration process. We

further agree with the district court that “[e]ven though these

claims are labeled by Plaintiffs as state law, the claims arose

from the manner in which [BCBS] determined not to cover Hyman’s

high dosage antibiotic treatments and the subsequent notification
43 See Davila, 542 U.S. at ___; --- S. Ct. at ___, Slip Op.

at 12 (holding that the particular label affixed to a cause of

action does not affect whether the claim is preempted). 

44 Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139-40,

111 S. Ct. 478, 483 (1990). 

24

to patients that HDAT would not be covered under the Adler Plan.”43

Thus, we have no difficulty holding that “the existence of an

[ERISA] plan is a critical factor in establishing liability” for

the state law causes of action asserted by Dr. Hyman.44 We conclude

that, as such, they are conflict preempted.

III. CONCLUSION

The district court’s denial of the Plaintiffs’ third motion

for leave to amend their complaint was not an abuse of discretion.

The motion was untimely in the sense of coming so far into the

progress of the case and so close to the scheduled commencement of

trial. Permitting the amendment would have been unfairly

prejudicial to BCBS and Dr. Gengelbach by effecting so profound a

shift in the nature of the suit. And, the district court’s grant

of summary judgment to BCBS on the Plaintiffs’ ERISA and state law

claims was clearly proper and free of reversible error. The

judgments and orders of the district court are, in all respects, 

AFFIRMED.