Opinion ID: 1744606
Heading Depth: 1
Heading Rank: 1

Heading: The Preemption Claim.

Text: There is a federal statute called the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., which deals with the area of employment benefits. In Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), the Supreme Court recognized a broad preemptive effect of ERISA on similar actions arising out of employment relationships. In Pilot Life, the plaintiff instituted a diversity action against the defendant insurance company in federal court. His complaint contained three counts: tortious breach of contract, breach of fiduciary duties, and fraud in the inducement. The defendant moved for summary judgment on preemption grounds, and the motion was granted. The federal court of appeals reversed, but the United States Supreme Court agreed with the district court that the common-law action was preempted by ERISA. The Court concluded that the causes of action asserted in plaintiff's complaint relate to an employee benefit plan, and therefore fall within ERISA's express preemption clause, § 514(a), as set forth in 29 U.S.C. section 1144(a). [1] In the instant case, it is also clear that the claims in Davis's petition relate to an employee benefit plan and are, apparently, preempted by ERISA. Davis argues that he falls under an exception to ERISA because his case is based on state statutes regulating insurance companies. See Pilot Life, 481 U.S. at 45, 107 S.Ct. at 1552, 95 L.Ed.2d at 46 (The saving clause excepts from the preemption clause laws that `regulate insurance.'). The Iowa regulating statutes on which Davis says his suit was based are Iowa Code chapter 91A, requiring the labor commissioner to collect wages and defining wages to include health insurance benefits, and Iowa Code section 509B.3, which requires all group policies to include conversion privileges. The problem with Davis's exemption argument is that his petition did not mention, or even suggest, that these statutes were involved. He did not identify either statute by Code number or by alleging their substance. Moreover, we do not believe either statute is one regulating insurance. Chapter 91A provides for employees' suits against employers for wages, which Davis argues include health insurance premiums. Pilot Life held that, to be a basis for exemption from ERISA, a law must not just have an impact on the insurance industry, but be specifically directed toward that industry. Id. at 50, 107 S.Ct. at 1554, 95 L.Ed.2d at 49. In determining whether the statute regulates insurance, we must not be guided by a single sentence or segment in the statute but by the provisions of the whole act, including its object and policy. Id. at 51, 107 S.Ct. at 1555, 95 L.Ed.2d at 50. Chapter 91A is not a statute which is excepted from coverage of ERISA. Its title is the Iowa Wage Payment Collection Law, Iowa Code § 91A.1, and it deals exclusively with employer/employee relationships. It does not even purport to regulate insurance. Davis also argues that his case is based on section 509.3, although he does not mention it by number. This section requires conversion privileges in all health insurance policies. Defendants' failure to allow Davis to convert from the group plan to an individual plan violated section 509.3, according to Davis. Section 509.3, however, only requires that group policies include conversion privileges; it does not deal with negligence or breach of contract by persons who allegedly lose those rights for their employees, as claimed here. Furthermore, the policy under which Davis thought he had coverage did include a conversion privilege. We hold that Davis's claims are preempted by ERISA, because they relate to ... [an] employee benefit plan and do not fall within any of the exceptions to preemption contained in the ERISA statute. See Pilot Life, 481 U.S. at 45, 107 S.Ct. at 1552, 95 L.Ed.2d at 46. The question remains whether Davis pleaded his case in such a way as to be under ERISA. The district court held that Davis's petition could not be construed to assert an ERISA claim and that he should not be permitted to amend his petition in order to include such a claim. These rulings provide the bases for the next two issues.