Opinion ID: 35610
Heading Depth: 2
Heading Rank: 4

Heading: the plaintiffs' state law claims

Text: 29 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.
30 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. 31 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 32 Pegram carved out a narrow class of state law claims from ERISA conflict preemption. That carve-out was predicated on the defining feature of the HMO scheme as a combination of both insurer and provider of medical services. 27 In the traditional fee-for-service 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 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. 33 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 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: 34 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 35 Davila thus expressly rejects any effort to extend Pegram 's mixed-decision principle to cover traditional indemnity insurers like 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 36 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.
37 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. 38 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 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 39 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 40 We agree with the district court that Dr. Hyman's claims 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. 41 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 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.