Source: http://openjurist.org/154/f3d/812
Timestamp: 2013-12-04 21:26:59
Document Index: 151334462

Matched Legal Cases: ['§ 514', '§ 1144', '§ 514', '§ 1144', '§ 300', '§ 8901', '§ 1983', '§ 1144', '§ 1144', '§ 1144', '§ 1144', '§ 1144', '§ 514']

154 F3d 812 Prudential Insurance Company of America v. National Park Medical Center Inc | OpenJurist
154 F. 3d 812 - Prudential Insurance Company of America v. National Park Medical Center Inc	Home154 f3d 812 prudential insurance company of america v. national park medical center inc
154 F3d 812 Prudential Insurance Company of America v. National Park Medical Center Inc 154 F.3d 812
22 Employee Benefits Cas. 1785
The PRUDENTIAL INSURANCE COMPANY OF AMERICA, PrudentialHealth Care Plan, Inc., d/b/a Prudential Health Care Plan ofArkansas, HMO Partners, Inc., Arkansas AFL-CIO, Tyson Foods,Inc., and United Paperworkers International Union AFL-CIO,CLC, Plaintiffs-Appellees, Cross-Appellants,v.NATIONAL PARK MEDICAL CENTER, INC., Y.Y. King, M.D., BryanW. Russell, D.C., George A. Haas, O.D., and BryantAshley, O.D., Defendants-Appellants.State of Arkansas, Intervenor Defendant-Appellee.
Submitted March 10, 1998.Decided Sept. 2, 1998.
that patients ... be given the opportunity to see the health care provider of their choice. In order to assure the citizens of the State of Arkansas the right to choose the provider of their choice, it is the intent of the General Assembly to provide the opportunity of providers to participate in health benefit plans.
The plaintiffs below, appellees here, are "health care insurers" within the meaning of the Arkansas PPA. They brought this declaratory judgment action seeking a declaration that the Arkansas PPA is preempted by ERISA and an injunction prohibiting enforcement of the PPA. The defendants below, appellants here, are "health care providers" within the meaning of the Arkansas PPA1 who sought admission to the plaintiffs' limited preferred provider panels, but were denied admission on the basis of "no need" findings by the plaintiffs. They sought declaratory and injunctive relief to enforce the Arkansas PPA.B. The Decision Below
The parties appeal from a decision of the United States District Court for the Eastern District of Arkansas, Western Division,2 as amended, on cross-motions for summary judgment. See Prudential Ins. Co. of Am. v. National Park Medical Ctr., Inc., 964 F.Supp. 1285 (E.D.Ark.1997). In its original decision, filed January 31, 1997, the district court considered whether the Arkansas PPA "relate[s] to" ERISA, such that it is preempted pursuant to ERISA § 514(a), 29 U.S.C. § 1144(a), using the two-prong analysis employed by the Supreme Court in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), and subsequent decisions. The district court concluded, first, that the state law contains a "reference to" ERISA plans by singling out such plans for special treatment, in this case, an exemption from the burdens of the Arkansas PPA. In reaching this conclusion, the district court expressly relied on Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), rather than District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992).
The district court also concluded that the Arkansas PPA had a "connection with" ERISA plans such that it was also preempted on this ground. In so doing, the court employed the seven factors used by this court in Arkansas Blue Cross & Blue Shield v. St. Mary's Hosp., Inc., 947 F.2d 1341 (8th Cir.1991), cert. denied, 504 U.S. 957, 112 S.Ct. 2305, 119 L.Ed.2d 227 (1992). The district court found that the Arkansas PPA negated ERISA plan provisions; had a significant impact on primary ERISA entities; had a significant impact on plan structure; had a significant impact on plan administration; and the state law was inconsistent with ERISA provisions in various respects, although the district court did not find these inconsistencies particularly significant. One factor on which the district court found that the Arkansas PPA had insufficient impact to favor preemption was in direct or acute indirect economic impact. The court also found that the State of Arkansas had a legitimate interest in regulating health care for its citizens, such that consideration of whether the state law was an exercise of traditional state power did not favor preemption.
Considering all of these factors, the district court concluded that the Arkansas PPA "relates to" ERISA plans by virtue of making a reference to and having a connection with ERISA plans, and was therefore preempted. The court concluded further that the Arkansas PPA was not "saved" from preemption by the ERISA "savings" clause, § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), applying another two-prong test employed by the Supreme Court. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). First, the court concluded that, as a matter of "common sense," the Arkansas PPA was not directed specifically at the insurance industry. Furthermore, relying on factors the Supreme Court has drawn from cases considering the meaning of the "business of insurance" under the McCarran-Ferguson Act, the district court concluded that the Arkansas PPA does not regulate the business of insurance by transferring or spreading a policyholder's risk; affects only indirectly the relationship between the insured and the insurer, by affecting the relationship between the insurer and health care providers; and was not limited solely to entities within the insurance industry. Thus, the Arkansas PPA did not fulfill either of the prongs of the ERISA "savings" clause test, and hence was indeed preempted.
The district court also found that the Arkansas PPA was preempted by the Federal Health Maintenance Organization Act, 42 U.S.C. § 300e-10. In light of these conclusions, the court found that the remaining issues--whether the Arkansas PPA was preempted by the Federal Employment Health Benefit Act, 5 U.S.C. § 8901-8914, and the plaintiffs' claims pursuant to 42 U.S.C. § 1983--were moot. The court therefore granted summary judgment in favor of the plaintiffs, permanently enjoined the defendants from enforcing the PPA, and denied the defendants' and intervenors' cross-motions for summary judgment.
In an amended order dated March 14, 1997, and filed on March 17, 1997, the district court held that the Arkansas PPA is preempted by ERISA only " 'insofar as [it] ... relate[s] to any employee benefit plan described in section 1003(a)....' " Amended Order of March 14, 1997 (quoting 29 U.S.C. § 1144(a)). Similarly, the court ordered that the defendants are permanently enjoined from enforcing the Arkansas PPA only " 'insofar as [it] ... relate[s] to any employee benefit plan described in section 1003(a)....' " Id. (quoting 29 U.S.C. § 1144(a)).
The appellant health care providers have appealed the district court's conclusions that the Arkansas PPA is preempted by ERISA and not "saved" from preemption as a law that regulates insurance. Prudential Insurance Company of America cross-appealed the district court's amendment of the original order granting summary judgment.
This court has often stated that it will review the grant or denial of summary judgment de novo, applying the same standards used by the district court. See, e.g., Union Pac. R.R. Co. v. Beckham, 138 F.3d 325, 329 (8th Cir.1998); Kneibert v. Thomson Newspapers, Mich., Inc., 129 F.3d 444, 451 (8th Cir.1997); Snow v. Ridgeview Med. Ctr., 128 F.3d 1201, 1205 (8th Cir.1997). Summary judgment is appropriate only if, after viewing the facts and the inferences to be drawn from them in the light most favorable to the nonmoving party, the record shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Beckham, 138 F.3d at 329; Kneibert, 129 F.3d at 451; Snow, 128 F.3d at 1205. More specifically, " '[w]e review the District Court's decision on ERISA preemption de novo because it is a question of federal law involving statutory interpretation.' " Wilson v. Zoellner, 114 F.3d 713, 715 (8th Cir. 1997) (quoting In Home Health, Inc., v. Prudential Ins. Co., 101 F.3d 600, 604 (8th Cir.1996)).
The court must now attempt to unravel the Gordian knot of the scope of ERISA "relate to" preemption,3 the question that has so troubled the courts of appeals and the Supreme Court. See Painter v. Golden Rule Ins. Co., 121 F.3d 436, 438-39 (8th Cir.1997) (noting the Supreme Court's struggles with the scope of "relate to" preemption under § 1144(a)), cert. denied, --- U.S. ----, 118 S.Ct. 1516, 140 L.Ed.2d 669 (1998).4 Pursuant to the express preemption provision of ERISA, section 514(a), codified at 29 U.S.C. § 1144(a), the Arkansas PPA, like any other state law, is preempted "insofar as [it] may now or hereafter relate to any [ERISA] employee benefit plan."5 But does the Arkansas PPA "relate to" ERISA in a prohibited way?
Congress included the express preemption clause of § 1144(a) in ERISA to provide for " 'the displacement of State action in the field of private employee benefit programs.' " Wilson, 114 F.3d at 716 (quoting Morstein v. National Ins. Servs., Inc., 93 F.3d 715, 719 n. 6 (11th Cir.1996) (en banc), cert. denied, --- U.S. ----, 117 S.Ct. 769, 136 L.Ed.2d 715 (1997), which in turn quotes 120 Cong. Rec. 29,942 (1974) (comments of Senator Javits)). Yet, Congress did not define what it meant by state laws that "relate to" an ERISA benefit plan anywhere in the statute.
As this court noted in Wilson,
In analyzing this clause, the Supreme Court has "long acknowledged that ERISA's pre-emption provision is clearly expansive." California Division of Labor Standards Enforcement v. Dillingham Constr., 519 U.S. 316, 117 S.Ct. 832, 837, 136 L.Ed.2d 791 (1997) (quotations and citations omitted). The Supreme Court has variously described the ERISA preemption clause as having "a broad scope, and an expansive sweep, and [as being] broadly worded, deliberately expansive, and conspicuous for its breadth." Id. (quotations and citations omitted).
Wilson, 114 F.3d at 716. However, the Supreme Court has also made clear, particularly in its most recent decisions, that the ERISA preemption clause cannot be read "to 'extend to the furthest stretch of its indeterminacy.' " De Buono, 520 U.S. at ----, 117 S.Ct. at 1751 (quoting Travelers, 514 U.S. at 655, 115 S.Ct. 1671).
In addition to recognizing these general principles, the Supreme Court has also provided more concrete guidance on the scope of "relate to" preemption by formulating a two-part inquiry to determine whether a state law "relate[s] to" an employee benefit plan covered by ERISA. See Dillingham, 519 U.S. at ----, 117 S.Ct. at 837; Wilson, 114 F.3d at 716.
A "law 'relate[s] to' a covered employee benefit plan for purposes of § 514(a) 'if it has a connection with or reference to such a plan.' " District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 129, 113 S.Ct. 580, 583, 121 L.Ed.2d 513 (1992) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983)).
Dillingham, 519 U.S. at ----, 117 S.Ct. at 837; accord Travelers, 514 U.S. at 656, 115 S.Ct. 1671; Wilson, 114 F.3d at 716. The nature of this two-prong inquiry must be explored in more detail.
1. The effect of Travelers
The critical question put by the parties in this case is the effect of the Supreme Court's decision in New York State Conf. of Blue Cross