Opinion ID: 3065104
Heading Depth: 3
Heading Rank: 1

Heading: Complete Preemption under ERISA

Text: The parties in this case have not clearly understood the difference between complete preemption under ERISA § 502(a), 29 U.S.C. § 1132(a), and conflict preemption under ERISA § 514(a), 29 U.S.C. § 1144(a). We take this opportunity to make clear the difference between the two kinds of preemption, and to make clear the different jurisdictional consequences that result from these two kinds of preemption. [2] Complete preemption under § 502(a) is “really a jurisdictional rather than a preemption doctrine, [as it] confers exclusive federal jurisdiction in certain instances where Congress intended the scope of a federal law to be so broad as to entirely replace any state-law claim.” Franciscan Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 538 F.3d 594, 596 (7th Cir. 2008). The Supreme Court first articulated, indeed created, the doctrine of complete preemption under § 502(a) of ERISA as a basis for federal question removal jurisdiction under 28 U.S.C. § 1441(a) in Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58 (1987). The Court held that § 502(a) reflected Congress’s intent to “so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.” Id. at 63 64. The Court explained that while “[f]ederal pre-emption is ordinarily a federal defense to the plaintiff ’s suit,” id. at 63, Congress had “clearly manifested an intent to make causes of action within the scope of the civil enforcement provisions of § 502(a) removable to federal court.” Id. at 66. MARIN GENERAL v. MODESTO & EMPIRE TRACTION 13177 Complete preemption removal is an exception to the otherwise applicable rule that a “plaintiff is ordinarily entitled to remain in state court so long as its complaint does not, on its face, affirmatively allege a federal claim.” Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 398 (3d Cir. 2004). The general rule is that a defense of federal preemption of a state-law claim, even conflict preemption under § 514(a) of ERISA, is an insufficient basis for original federal question jurisdiction under § 1331(a) and removal jurisdiction under § 1441(a). A provision of state law may “relate to” an ERISA benefit plan, and may therefore be preempted under § 514(a). See 29 U.S.C. § 1144(a) (the relevant provisions of ERISA “shall supersede any and all State laws insofar as they may . . . relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b)” (emphasis added)). But a defense of conflict preemption under § 514(a) does not confer federal question jurisdiction on a federal district court. [3] A party seeking removal based on federal question jurisdiction must show either that the state-law causes of action are completely preempted by § 502(a) of ERISA, or that some other basis exists for federal question jurisdiction. If a complaint alleges only state-law claims, and if these claims are entirely encompassed by § 502(a), that complaint is converted from “an ordinary state common law complaint into one stating a federal claim for purposes of the wellpleaded complaint rule.” Metro. Life, 481 U.S. at 65 66. But “if the doctrine of complete preemption does not apply, even if the defendant has a defense of ‘conflict preemption’ within the meaning of [§ 514(a)] because the plaintiff ’s claims ‘relate to’ an ERISA plan, the district court [is] without subject matter jurisdiction[.]” Toumajian, 135 F.3d at 655. We may have been partially responsible for the parties’ confusion between complete preemption under § 502(a), which provides a basis for federal question removal jurisdiction, and conflict preemption under § 514(a), which does not. 13178 MARIN GENERAL v. MODESTO & EMPIRE TRACTION Some of our prior opinions dealing with complete preemption under § 502(a) have used the terminology “relate to” even though that terminology is relevant to conflict preemption under § 514(a) rather than complete preemption under § 502(a). See, e.g., The Meadows v. Employers Health Ins., 47 F.3d 1006, 1009 (9th Cir. 1995) (“We hold that the district court correctly concluded that the independent state law claims . . . lie outside the bounds of the ERISA ‘relates to standard’ . . . .”). However, some of our more recent decisions have made clear the distinction between complete preemption and conflict preemption. See, e.g., Cleghorn v. Blue Shield of Cal., 408 F.3d 1222, 1225-27 (9th Cir. 2005) (observing that a court need not consider whether a state statute “relates to” ERISA under § 514(a) when considering § 502(a) complete preemption); Toumajian, 135 F.3d at 654 (contrasting § 514(a) and § 502(a)). The Supreme Court’s recent opinion in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), is instructive. In Davila, a participant in and a beneficiary of ERISA-regulated employee benefit plans (collectively, “plaintiffs”) brought separate state-law suits in state court arising out of injuries sustained as a consequence of their plans’ denials of coverage. Id. at 204-05. Plaintiffs alleged that their plans’ “refusal to cover the requested services violated their duty to exercise ordinary care when making health care treatment decisions, and that these refusals ‘proximately caused’ their injuries.” Id. at 205 (quotations omitted). The plans removed plaintiffs’ suits to federal district courts, contending that their claims “fit within the scope of, and were therefore completely pre-empted by, ERISA § 502(a).” Id. The Court began its analysis in Davila by quoting § 502(a)(1)(B). That section provides: A civil action may be brought—(1) by a participant or beneficiary— . . . (B) to recover benefits due to him under the terms of his plan, to enforce his rights MARIN GENERAL v. MODESTO & EMPIRE TRACTION 13179 under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. The Court wrote, “If a participant or beneficiary believes that benefits promised to him under the terms of the plan are not provided, he can bring suit seeking provision of those benefits.” 542 U.S. at 210. Under § 502(a)(1)(B), a “participant or beneficiary can also bring suit generically to ‘enforce his rights’ under the plan, or to clarify any of his rights to future benefits.” Id. [4] If state-law causes of action come within the scope of § 502(a)(1)(B), those causes of action are completely preempted, and the only possible cause of action is under § 502(a)(1)(B). In that event, a federal district court has federal question jurisdiction, either original jurisdiction under § 1331(a) or removal jurisdiction under § 1441(a), to decide whether the plaintiff has stated a cause of action under § 502(a)(1)(B). In order to determine whether an asserted state-law cause of action comes within the scope of § 502(a)(1)(B), the Court formulated a two-prong test. Under Davila, a state-law cause of action is completely preempted if (1) “an individual, at some point in time, could have brought [the] claim under ERISA § 502(a)(1)(B),” and (2) “where there is no other independent legal duty that is implicated by a defendant’s actions.” Id. The Court in Davila concluded that the plaintiffs’ state-law causes of action were completely preempted and that removal to federal court under § 1441(a) was therefore proper. The Court noted, under the first prong of its test, that the plaintiffs’ only legal claims were “about denials of coverage promised under the terms of ERISA-regulated employee benefit plans.” Id. at 211. “Upon the denial of benefits, [plaintiffs] could have paid for the treatment themselves and then sought reimbursement through a § 502(a)(1)(B) action, or sought a preliminary injunction.” Id. (citation omitted). Therefore, 13180 MARIN GENERAL v. MODESTO & EMPIRE TRACTION according to the Court, plaintiffs could have brought suit under § 502(a)(1)(B). Under the second prong, plaintiffs argued that an independent state statute constituted “an independent legal duty,” and that their state-law claims under the statute were therefore not preempted. Id. at 212. The Supreme Court disagreed, concluding that the duties imposed by the state statute “do not arise independently of ERISA or the plan terms.” Id. This was so because the standards set forth in the state statute at issue “ ‘create no obligation on the part of the health insurance carrier . . . to provide to an insured or enrollee treatment which is not covered by the health care plan of the entity.’ ” Id. at 213 (quoting Tex. Civ. Prac. & Rem. Code Ann. § 88.002(d)). There was thus no independent liability under the state statute because the plan denied coverage for treatment not covered by the plan. The plaintiffs’ action was therefore “only to rectify a wrongful denial of benefits promised under [an] ERISA-regulated plan[ ], and [did] not attempt to remedy any violation of a legal duty independent of ERISA.” Id. at 214.