Court Opinion

ID: 8409188
Source: CourtListenerOpinion
Date Created: 2022-11-02 16:53:32.584039+00
Date Added: 2024-06-11T16:47:39.557376
License: Public Domain

THOMAS, Circuit Judge,
with whom PREGERSON, REINHARDT, HAWKINS, McKEOWN, and BERZON, Circuit Judges join,1 dissenting from the denial of rehearing en banc:
I respectfully dissent from the decision of the court not to rehear this case en banc. This decision marks a profound change in ERISA law and a significant deviation from Supreme Court and Ninth Circuit precedent. It is a harsh result that will be felt in human terms by subjecting plan participants to previously preempted lawsuits while denying them the concomitant right to assert their own claims based on the same plan document or insurance policy.
The Supreme Court has observed that “ERISA is a comprehensive and reticulated statute, the product of a decade of congressional study of the Nation’s private employee benefit system.” Great-West Life & Ann. Ins. Co. v. Knudson, 534 U.S. 204, 209, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (internal quotation marks and citations omitted). As part of its expansive regulation of employee benefit plans, ERISA provides for a federal cause of action for civil claims to enforce the provisions of an ERISA plan. In so providing, “Congress’s primary goal was to replace the patch-work quilt of state law with a uniform body of federal law and to provide litigants with access to federal courts to enforce their newly created rights.” Schneider and Freedman, ERISA: A Comprehensive Guide (2d. ed.2002), § 8.01, p. 8-3. Thus, courts have construed extra-statutory remedies available under ERISA quite narrowly. As the Supreme Court has stated, “ERISA’s carefully- crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate directly.” Id. (internal quotation marks and citations omitted) (emphasis in original).
Indeed, “[w]e have repeatedly emphasized that ‘ERISA contains one of the broadest preemption clauses ever enacted by Congress.’ ” Security Life Ins. Co. of America v. Meyling, 146 F.3d 1184, 1188 (9th Cir.1998) (quoting Evans v. Safeco Life Ins. Co., 916 F.2d 1437, 1439 (9th Cir.1990)). ERISA “supersede^] any 'and all State laws insofar as they may now or hereafter relate to any employee benefit plan....” 29 U.S.C. § 1144(a). Thus, in a variety of contexts, we have held that ERISA preempts state statutory and common law actions filed by plan participants against third party insurers of ERISA plans. See Elliot v. Fortis Benefits Ins. *1176Co., 337 F.3d 1138 (9th Cir.2003); Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1008 (9th Cir.1998); Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812, 819 (9th Cir.1992) Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124, 1133 (9th Cir.1992); Kanne v. Conn. Gen. Life Ins. Co., 867 F.2d 489, 493-94 (9th Cir.1988).
On the other hand, we have also held that insurers’ state common law and equitable reimbursement actions against plan participants were also preempted by-ERISA. See Westaff (USA), Inc. v. Arce, 298 F.3d 1164, 1167 (9th Cir.2002); Reynolds Metals Co. v. Ellis, 202 F.3d 1246 (9th Cir.2000); Cement Masons Health and Welfare Trust Fund for Northern California v. Stone, 197 F.3d 1003 (9th Cir.1999); FMC Medical Plan v. Owens, 122 F.3d 1258 (9th Cir.1997).
Thus, until now, our circuit has taken a consistent view of ERISA preemption in the context of common law and equitable actions between ERISA plan participants and third party insurers. If the cause of action involves an ERISA-governed relationship, the parties are confined to the remedies prescribed by ERISA. This case marks a radical departure from our precedent, allowing an ERISA insurer to pursue independent claims for reimbursement from the plan participant. This cannot be reconciled with our precedent, nor with the Supreme Court’s ERISA decisions. Indeed, the Supreme Court’s recent decision in Aetna Health Inc. v. Davila, — U.S. -, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) further bolsters the opposite conclusion.
This holding is also inconsistent with state courts that have applied ERISA preemption to reimbursement claims. See, e.g., Liberty N.W. Ins. Corp. v. Kemp, 192 Or.App. 181, 85 P.3d 871 (Or.Ct.App.2004) (holding that insurer’s action for reimbursement is preempted by ERISA); Jefferson-Pilot Life Ins. Co. v. Krafka, 50 Cal.App.4th 190, 57 Cal.Rptr.2d 723 (Ct.App.1996) (holding that insurer’s action for reimbursement against insured “relates to” an ERISA plan). Thus, we are now faced with the conundrum of federal courts in Oregon and California forced to allow state remedies and state courts in those areas holding those same state remedies federally preempted.
As a practical matter, the decision destroys a level playing field and creates the incongruous consequence that insurers may sue plan participants for reimbursement based on provisions in the insurance contract, but that plan participants cannot file suits or counter-claims, against insurers for breach of contract or bad faith in claim administration under the contract. Thus, insurers are now insulated from tort liability for even the most egregious acts, while permitted to sue covered employees based on the same policy or plan. Such a result is incompatible with the theory and structure of ERISA, as construed by the Supreme Court. The idea of ERISA was to provide uniform federal law and procedure regarding covered employee benefit programs. To single out one party for a special exemption is antithetical to this concept and will produce harsh and anomalous results.
If we were considering ERISA preemption on a blank slate, our course might well have been different. If ERISA had been construed to allow plan participants to enforce their state common law and statutory rights outside the confines of ERISA remedies, the panel decision would be both logical and consistent. There are good arguments as to why the entire scope and nature of ERISA preemption ought to be reexamined. As Justice Ginsburg has observed “a series of the Court’s decisions has yielded a host of situations in which persons adversely affected by ERISA-pro-scribed wrongdoing cannot gain make-*1177whole relief.” Aetna Health Inc., — U.S. at -, 124 S.Ct. at 2502 (Ginsburg, J., concurring).
However, we are not faced with a blank slate and the breadth of ERISA preemption is well-settled. The impact of this decision is to provide a special exemption for one party while handcuffing the other. Our court should have granted rehearing en banc to rectify this error.'

. JUDGE NOONAN, who cannot qualify as a dissenter to the outcome, expresses his agreement with Judge Thomas.