Court Opinion

ID: 4437282
Source: CourtListenerOpinion
Date Created: 2019-09-11 17:00:39.742457+00
Date Added: 2024-06-11T14:36:57.483961
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

RANDY RUDEL,                              Nos. 17-17395
                  Plaintiff-Appellee/          17-17460
                   Cross-Appellant,
                                              D.C. No.
                 v.                       1:15-cv-00539-
                                             JMS-RLP
HAWAI‘I MANAGEMENT ALLIANCE
ASSOCIATION,
             Defendant-Appellant/           OPINION
                  Cross-Appellee.

      Appeal from the United States District Court
               for the District of Hawai‘i
  J. Michael Seabright, Chief District Judge, Presiding

         Argued and Submitted June 12, 2019
                 Honolulu, Hawai‘i

               Filed September 11, 2019

Before: Sidney R. Thomas, Chief Judge, and Consuelo M.
     Callahan and Morgan Christen, Circuit Judges.

            Opinion by Chief Judge Thomas
2        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

                            SUMMARY*

                       ERISA / Preemption

    The panel affirmed the district court’s judgment holding
that two Hawaii statutes restricting health insurers’
subrogation recovery rights were saved from preemption
under the Employee Retirement Income Security Act and
provided the relevant rule of decision in a federal ERISA
action to determine the validity of an insurer’s lien on tort
settlement proceeds.

    The insurer paid health insurance benefits under an
ERISA plan for plaintiff’s medical care after a vehicle
accident. Plaintiff also received a payment in a tort
settlement for general damages. The insurer asserted a right
to a portion of the tort settlement, and placed a lien, under a
reimbursement provision of the ERISA plan.

    The Hawaii statutes prohibited insurance providers from
seeking reimbursement for general damages from third-party
settlements. They thus contradicted the terms of the ERISA
plan, which provided that the insurer could be reimbursed for
general damages.

    Plaintiff filed suit in state court, and the insurer removed
the case to federal court. The district court denied plaintiff’s
motion for a remand and granted partial summary judgment
in favor of plaintiff.

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                 3

    The panel held that, under ERISA § 502, asserted
remedies and causes of action that conflict with ERISA’s
civil enforcement scheme are deemed preempted. When a
claim is removed from state to federal court, the state law
claim is reconfigured as a federal ERISA cause of action.
ERISA § 514 expressly preempts state laws that relate to any
employee benefit plan but saves from preemption any state
law that regulates insurance, banking, or securities. If a case
is properly before a federal court under § 502, then a state
statute that is saved from preemption under § 514 and does
not conflict with § 502, can supply the relevant rule of
decision.

    The panel held that § 502(a) completely preempted the
Hawaii statutes, allowing the case to be removed to federal
court. The panel concluded that plaintiff could have brought
his claim under § 502(a) because, in substance, the claim was
one to recover benefits or to clarify his rights to benefits
pursuant to the ERISA plan. Joining the Third, Fourth, and
Fifth Circuits, the panel held that challenges to a plan’s right
to reimbursement are properly characterized as § 502(a)
claims. The panel also concluded that no other independent
legal duties were implicated by the insurer’s actions.
Accordingly, plaintiff’s state law claims were completely
preempted, and the district court properly denied his remand
motion.

    The panel held that the Hawaii statutes related to an
employee benefit plan but were saved from express
preemption under § 514 because they regulated insurance.
The panel concluded that the Hawaii statutes were
specifically directed toward entities engaged in insurance and
substantially affected the risk pooling arrangement between
the insurer and the insured.
4       RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

    The panel held that the Hawaii statutes provided the rule
of decision for the newly reconfigured federal ERISA action
because the statutes did not impermissibly expand the scope
of liability under § 502(a). The panel concluded that the
Hawaii statutes operated to define the scope of a benefit
provided by the ERISA plan and did not create additional
remedies not permitted by ERISA. Thus, the Hawaii statutes
were not conflict preempted and could provide the rule of
decision.

                        COUNSEL

Jordan J. Kimura (argued) and David J. Minkin, McCorriston
Miller Mukai MacKinnon LLP, Honolulu, Hawai‘i; Clarissa
A. Kang and Angel L. Garrett, Trucker Huss, San Francisco,
California; for Defendant-Appellant/Cross-Appellee.

Allen K. Williams (argued), Trecker Fritz & Williams,
Honolulu, Hawai‘i; Woodruff K. Soldner, Michael R. Cruise,
and R. Aaron Creps, Leavitt Yamane & Soldner, Honolulu,
Hawai‘i; for Plaintiff-Appellee/Cross-Appellant.

Dianne Winter Brookins (argued) and Jasmine M. Fisher,
Alston Hunt Floyd & Ing, Honolulu, Hawai‘i, for Amicus
Curiae Hawai‘i Medical Service Association.

Kate S. O’Scannlain, Solicitor of Labor; G. William Scott,
Associate Solicitor for Plan Benefits Security; Thomas Tso,
Counsel for Appellate and Special Litigation; Kira Hettinger,
Trial Attorney; United States Department of Labor, Office of
the Solicitor, Plan Benefits Security Division, Washington,
D.C., for Amicus Curiae R. Alexander Acosta, Secretary of
Labor.
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                    5

                           OPINION

THOMAS, Chief Judge:

    In this case, we consider whether two Hawai‘i statutes
restricting health insurers’ subrogation recovery rights are
saved from preemption under the Employee Retirement
Income Security Act of 1974 (“ERISA”) and, if so, whether
the statutes provide a relevant rule of decision in a federal
ERISA action to determine the validity of the insurer’s lien
on tort settlement proceeds.

    We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review de novo the district court’s decisions regarding
preemption. Winterrowd v. Am.Gen. Annuity Ins. Co.,
321 F.3d 933, 937 (9th Cir. 2003). We affirm the judgment
of the district court, which held that the statutes were saved
from preemption and provided the relevant rule of decision.

                                 I

    While riding his motorcycle home from work, Randy
Rudel was hit by a vehicle making an allegedly illegal left
turn. As a result of the accident, Rudel sustained numerous
severe injuries, including partial amputations of his left leg
and left forearm. Rudel had health insurance benefits for his
medical care from the Hawai‘i Medical Alliance Association
(“HMAA”) pursuant to an employee benefit plan governed by
ERISA (“the Plan”). In total, HMAA paid $400,779.70 for
medical expenses.1

    1
     HMAA paid these benefits as the result of a lawsuit brought by
Rudel, in which he asserted that HMAA refused to pay his expenses
because he declined to sign a “Reimbursement Agreement” that would
6        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

    In addition to the money paid by HMAA, Rudel also
received a payment totaling $1.5 million in a tort settlement
with the driver of the vehicle that struck him. The tort
settlement agreement stipulated that the payment was for
“general damages” including medical expenses and emotional
distress, and did not include special damages such as those
that would “duplicate medical payments, no-fault payments,
wage loss, [or] temporary disability benefits.”

    HMAA asserted a right to a portion of the tort settlement
proceeds under the Plan, which provided to HMAA the “right
to be reimbursed for any benefits [it] provide[s], from any
recovery received from . . . any third party or other source of
recovery” including “general damages” from third-party
settlements. As Rudel’s settlements was for such general
damages, HMAA placed a lien for $400,779.70 on Rudel’s
tort settlement.

    Two Hawai‘i state statutes (collectively, “the Hawai‘i
Statutes”) posed obstacles to HMAA’s ability to recover:
Hawai‘i Revised Statutes (“HRS”) §§ 431:13-103(a)(10) and
663-10. Read together, these statutes prohibit insurance
providers from seeking reimbursement for general damages
from third-party settlements. They do, however, permit
special damages to be reimbursed if a state court determines
the lien to be valid, pursuant to the statutory terms.2 Thus, the

have required him to agree to repay HMAA from any recovery gained
from a third party. HMAA eventually waived this requirement and paid
the benefits, leading to the dismissal of the case.
    2
      Under Hawai‘i law, “[s]pecial damages are often considered to be
synonymous with pecuniary loss and include such items as medical and
hospital expenses, loss of earnings, and diminished capacity to work.”
Dunbar v. Thompson, 901 P.2d 1285, 1294 (Haw. App. 1995).
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N              7

Hawai‘i Statutes directly contradict the terms of the Plan,
which provided that the insurer could be reimbursed for
general damages.

    Specifically, Haw. Rev. Stat. § 431:13-103 is a provision
of the Hawai‘i insurance code that defines unfair methods of
competition and unfair or deceptive acts or practices. Haw.
Rev. Stat. § 431:13-103(a). Section 431:13-103(a)(10)
defines one such unfair practice in the business of insurance
as:

       Refusing to provide or limiting coverage
       available to an individual because the
       individual may have a third-party claim for
       recovery of damages; provided that:

       (A) Where damages are recovered by
       judgment or settlement of a third-party claim,
       reimbursement of past benefits paid shall be
       allowed pursuant to section 663-10.

Id.

   Section 663-10(a), which is referenced in § 431:13-
103(a)(10), establishes the procedure for determining if and
when reimbursement can be permitted. Importantly, § 663-10
does not permit reimbursement for general damages—it only
permits reimbursement for special damages. It reads:

       In any civil action in tort, the court, before
       any judgment or stipulation to dismiss the
       action is approved, shall determine the
       validity of any claim of a lien against the
       amount of the judgment or settlement by any
8       RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

       person who files timely notice of the claim to
       the court or to the parties in the action. The
       judgment entered, or the order subsequent to
       settlement, shall include a statement of the
       amounts, if any, due and owing to any person
       determined by the court to be a holder of a
       valid lien and to be paid to the lienholder out
       of the amount of the corresponding special
       damages recovered by the judgment or
       settlement. . . . As used in this section, lien
       means a lien arising out of a claim for
       payments made or indemnified from collateral
       sources, including health insurance or
       benefits, for costs and expenses arising out of
       the injury which is the subject of the civil
       action in tort. If there is a settlement before
       suit is filed or there is no civil action pending,
       then any party may petition a court of
       competent jurisdiction for a determination of
       the validity and amount of any claim of a lien.

Haw. Rev. Stat. § 663-10(a) (emphasis added).

     In state court, Rudel filed an action asserting that the
Hawai‘i Statutes nullified the inapposite terms of the Plan so
as to prevent HMAA from seeking reimbursement. Pursuant
to the Hawai‘i Statutes, he filed a petition for determination
of validity of HMAA’s lien in Hawai‘i Circuit Court of the
Third Circuit. There, he argued that, because his third-party
settlement paid only general damages and because the
Hawai‘i Statutes only permit reimbursement for special
damages, HMAA was not entitled to reimbursement. HMAA
contended that the state statutes were irrelevant to any claims
for reimbursement because the Plan was governed by ERISA,
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                9

which preempts the Hawai‘i Statutes and leaves the Plan
terms to determine its subrogation rights.

    HMAA then removed the case to the District of Hawai‘i.
Rudel moved for remand, arguing that his action implicated
only state law because he sought only “to keep benefits
already provided by HMAA” rather than to “recover benefits
under the terms of the Plan.”

    The district court denied Rudel’s remand motion, holding
that Rudel’s claim belonged in federal court because, in
substance, he did not possess the benefits free and clear of
HMAA’s lien. Thus, for purposes of federal jurisdiction, the
action remained one “to recover benefits due to him under the
terms of his plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits” under ERISA
§ 502(a)(1)(B).

   Rudel then filed a motion for determination of validity of
HMAA’s lien pursuant to the Hawai‘i Statutes. In response,
HMAA filed a motion for summary judgment, arguing that
Rudel’s action was preempted by ERISA so that the Plan
provisions governed, and its lien was thus valid.

    In a detailed order, the district court denied HMAA’s
motion for summary judgment and granted, in part, Rudel’s
motion. The district court held that the Hawai‘i Statutes were
saved from preemption under ERISA § 514, and that § 514
also provided the relevant rule of decision. The court ordered
that further proceedings were required to determine the
validity and amount of the lien under the Hawai‘i Statutes.
However, the parties stipulated that if the Hawai‘i Statutes
provided the relevant rule of decision, HMAA had no valid
lien claim.
10       RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

   HMAA timely appealed the district court order.3 Rudel
timely cross-appealed on the issue of whether the district
court erred in denying his initial motion for remand.

                                    II

    This appeal turns on the application and interplay of two
ERISA statutes implicating preemption of claims: § 502
(codified at 29 U.S.C. § 1132) and § 514 (codified at
29 U.S.C. § 1144). These “two strands to ERISA’s powerful
preemptive force,” Cleghorn v. Blue Shield of Cal., 408 F.3d
1222, 1225 (9th Cir. 2005) differ in their purpose and
function.

   Section 502 sets forth “a comprehensive scheme of civil
remedies to enforce ERISA’s provisions.” Id. Section 502’s
purpose is to ensure that federal courts remain the sole forum
and the sole vehicle for adjudicating claims for benefits under
ERISA. Marin Gen. Hosp. v. Modesto & Empire Traction
Co., 581 F.3d 941, 945 (9th Cir. 2009). Asserted remedies
and causes of action that conflict with with ERISA’s civil
enforcement scheme are deemed preempted. If, through the
application of § 502(a), a state law claim asserted in state
court is completely preempted, then the state action may be
removed to federal court. Federal jurisdiction exists under
§ 502(a) if: (1) the individual could have brought his claim
under this ERISA provision; and (2) no other independent

     3
      The Hawai‘i Medical Service Association (“HMSA”), a health care
insurer in the State of Hawai‘i, filed an amicus curiae brief in support of
HMAA’s position. The Secretary of Labor filed an amicus curiae brief in
support of neither party and requesting affirmance of the district court’s
denial of Rudel’s motion for remand and of the district court’s denial of
HMAA’s motion for summary judgment.
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N               11

legal duties are implicated by the defendant’s actions. Aetna
Health Inc. v. Davila, 542 U.S. 200, 210 (2004). When a
claim is removed to federal court, the state law claim is
reconfigured as a federal ERISA cause of action under
§ 502(a). Then, an analysis is undertaken to examine whether
the transformed cause of action conflicts with ERISA. If so,
it is preempted. If not, it remains viable as a federal ERISA
cause of action.

    Section 514 contains ERISA’s express preemption
provision. It expressly preempts “any and all State laws
insofar as they may now or hereafter relate to any employee
benefit plan[.]” 29 U.S.C. § 1144(a). However, § 514 saves
from preemption “any law of any State which regulates
insurance, banking, or securities.”              29 U.S.C.
§ 1144(b)(2)(A). The saving clause functions to preserve a
state’s traditional regulatory power over insurance, banking,
and securities. Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct.
936, 943 (2016). Section 514, however, does not confer
federal jurisdiction. Marin Gen. Hosp., 581 F.3d at 945.

    If a case is properly before a federal court under § 502, a
state statute that is saved from preemption under § 514, and
that does not conflict with § 502, can “suppl[y] the relevant
rule of decision.” UNUM Life Ins. Co.of Am. v. Ward,
526 U.S. 358, 377 (1999). Put another way, a statute saved
from express preemption under § 514 can—in some
circumstances—provide the rule of law used by a federal
court to decide a claim for the recovery, enforcement, or
clarification of benefits in an action removed pursuant to
§ 502(a).

   In sum, our task is to ascertain whether: (1) § 502(a)
completely preempted the Hawai‘i Statutes, allowing the case
12      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

to be removed to federal court, (2) the Hawai‘i Statutes are
saved from preemption pursuant to § 514, and (3) the Hawai‘i
Statutes provide the rule of decision for the newly
reconfigured federal ERISA action.

    With those general principles in mind, we turn to a more
detailed analysis of the issues.

                              III

    We first examine whether the district court properly
exercised federal jurisdiction over Rudel’s state law claims
under § 502(a). “Ordinarily, federal question jurisdiction
does not lie where a defendant contends that a state-law claim
is preempted under federal law.” Fossen v. Blue Cross &
Blue Shield of Mont., Inc., 660 F.3d 1102, 1107 (9th Cir.
2011). However, if a federal cause of action completely
preempts a state law claim, then the action “necessarily arises
under federal law.” Beneficial Nat’l. Bank v. Anderson,
539 U.S. 1, 10 (2003). The complete preemption doctrine
applies “where the preemptive force of federal law is so
‘extraordinary’ that it converts state common law claims into
claims arising under federal law for the purposes of
jurisdiction.” K2 Am. Corp. v. Roland Oil & Gas, LLC,
653 F.3d 1024, 1029 (9th Cir. 2011) (quoting Holman v.
Laulo-Rowe Agency, 994 F.2d 666, 668 (9th Cir. 1993)).

    The complete preemption doctrine “prevent[s] a plaintiff
from avoiding a federal forum when Congress has created a
federal cause of action with the intent that it provide the
exclusive remedy for the particular grievance alleged by the
plaintiff.” Hansen v. Grp. Health Coop., 902 F.3d 1051,
1057–58 (9th Cir. 2018) (quoting Arthur R. Miller, Artful
Pleading: A Doctrine in Search of Definition, 76 TEX. L.
          RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                          13

REV. 1781, 1785 (1998)). Therefore, when complete
preemption exists, the state law action may be removed to
federal court. Fossen, 660 F.3d at 1107.

    When complete preemption applies, “a state-law claim
ceases to exist[,]” Hansen, 902 F.3d at 1058, because, upon
removal to federal court, “the state-law claim is simply
‘recharacterized’ as the federal claim that Congress made
exclusive.” Id. (quoting Vaden v. Discover Bank, 556 U.S.
49, 61 (2009)).4

    As we have noted, § 502 “‘set[s] forth a comprehensive
civil enforcement scheme’ that completely preempts state-law
‘causes of action within the scope of th[es]e civil enforcement
provisions.’” Fossen, 660 F.3d at 1107 (alterations in
original) (quoting Davila, 542 U.S. at 208–09)). Thus, § 502
dictates whether a federal court can exercise jurisdiction over
a particular claim for benefits. Marin Gen. Hosp., 581 F.3d
at 945. According to its terms, an action “to recover benefits
due . . . under the terms of [a] plan, to enforce . . . rights
under the terms of the plan, or to clarify . . . rights to future
benefits,” 29 U.S.C. § 1132(a)(1)(B), will be heard in a
federal court.

    Federal jurisdiction exists under § 502(a) if: (1) the
individual could have brought his claim under this ERISA
provision; and (2) no other independent legal duties are
implicated by the defendant’s actions. Davila, 542 U.S. at
210. In determining whether a petitioner could have brought

    4
      Specifically, upon removal, the district court has the option to “treat
the artfully pleaded claim for all purposes as the correct federal claim, or
else dismiss it with leave to formally replead the claim under federal law.”
Hansen, 902 F.3d at 1058.
14      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

his claim under ERISA § 502(a)(1)(B), we examine the
substance of the claim, rather than its form. Id. at 214.

                               A

    Davila’s first requirement asks whether Rudel could have
brought his claims under ERISA § 502(a). We agree with the
Secretary of Labor’s position that the district court correctly
held that he could because, in substance, Rudel’s claim was
one to recover benefits or to clarify his rights to benefits
pursuant to the Plan. See 29 U.S.C. § 1132(a)(1)(B).
HMAA’s lien on Rudel’s tort settlement jeopardized his
ability to retain the benefits HMAA had previously paid;
indeed, had HMAA been successful in its claim for
reimbursement, Rudel would have had to pay back the
$400,779.70 he originally received from HMAA. In this
way, the substance of Rudel’s claim could be restated as
“Rudel has not fully ‘recovered [the benefits] because [he]
has not obtained the benefits free and clear of [HMAA’s]
claims.’” Noetzel v. Hawai‘i Med. Serv. Ass’n, 183 F. Supp.
3d 1094, 1103 (D. Haw. 2016). Thus, his action properly
could be characterized as a § 502(a) action that “seeks to
determine his entitlement to retain the benefits based on the
terms of the plan.” Arana v. Ochsner Health Plan, 338 F.3d
433, 438 (5th Cir. 2003) (en banc).

    In reaching the conclusion that challenges to a plan’s right
to reimbursement are properly characterized as § 502(a)
claims, we join the Third, Fourth, and Fifth Circuits. Id.; see
also Levine v. United Healthcare Corp., 402 F.3d 156, 163
(3d Cir. 2005) (holding that a claim premised on unlawful
reimbursement requirements was preempted by § 502
because it was a “claim for ‘benefits due’” under the terms of
a plan); Singh v. Prudential Health Care Plan, Inc., 335 F.3d
         RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                         15

278, 291 (4th Cir. 2003) (characterizing reimbursement as a
§ 502 claim to ensure that benefits are not “diminished by [a]
payment” to insurers).5

                                    B

    Satisfying Davila’s second requirement requires there be
no legal duty implicated by the defendant’s actions
independent from a duty to provide benefits pursuant to
§ 502. Davila, 542 U.S. at 210. The district court determined
that no independent legal duties were implicated by HMAA’s
actions, and we agree.

    Here, any legal duty HMAA had to provide Rudel with
benefits is dependent on the amount owed and paid pursuant
to the Plan. Without the Plan obligating HMAA to pay
medical expenses, Rudel would be unable to claim that
HMAA was not entitled to reimbursement because Rudel
would not have received any money in the first place. Thus,
Rudel’s assertions that the Hawai‘i Statutes provide an
independent legal duty prove unavailing.

    In addition, § 663-10 permits “any person who files
timely notice of the claim to the court” to have the validity of
an insurer’s lien determined by a court. Haw. Rev. Stat.
§ 663-10. By its own permissive terms, the statute permits,

    5
      The Second Circuit has held to the contrary. Wurtz v. Rawlings Co.,
LLC, 761 F.3d 232, 242 (2d Cir. 2014). It reasoned that because the
claims at issue were saved from preemption under § 514, they could not
be completely preempted under § 502, and federal jurisdiction did not
exist. However, that theory is inconsistent with our precedent holding that
“[p]reemption under ERISA section 502(a) is not affected by [§ 514.]”
Cleghorn, 408 F.3d at 1226 n.6. And we find the reasoning of the other
Circuits persuasive.
16      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

but does not obligate, a claimant to ask a court to determine
the validity of a lien. The Hawai‘i Statutes do not impose any
legal duty upon a plan administrator like HMAA.

    Thus, both Davila’s requirements are satisfied.
Therefore, Rudel’s state law claims were completely
preempted for purposes of jurisdiction by § 502, and the
district court properly denied Rudel’s remand motion.

                             IV

    Given that the district court properly exercised federal
jurisdiction, we must determine whether the Hawai‘i Statutes
are preempted by ERISA, or whether they are saved from
preemption and provide the relevant rule of decision. There
are two types of ERISA preemption: (1) express preemption
under § 514 and (2) preemption due to conflict with ERISA’s
civil remedial scheme under § 502. Fossen, 660 F.3d
at 1107.

                              A

    We first address preemption under § 514, which also
contains ERISA’s “saving clause.” Section 514 expressly
preempts any and all state laws insofar as they may “now or
hereafter relate to any employee benefit plan[.]” 29 U.S.C.
§ 1144(a). However, § 514 saves from preemption “any law
of any State which regulates insurance, banking, or
securities.” 29 U.S.C. § 1144(b)(2)(A).

    There is no doubt that the Hawai‘i Statutes relate to an
employee benefit plan, so the only question is whether they
are saved from preemption under § 514 because they regulate
insurance. To determine that, we ask whether the law: (1) is
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N              17

“specifically directed toward entities engaged in insurance;”
and (2) “substantially affect[s] the risk pooling arrangement
between the insurer and the insured.” Orzechowski v. Boeing
Co. Non-Union Long-Term Disability Plan, Plan No. 625,
856 F.3d 686, 693 (9th Cir. 2017) (quoting Kentucky Ass’n of
Health Plans, Inc. v. Miller, 538 U.S. 329, 342 (2003)).

                              1

    The district court properly held that the Hawai‘i Statutes
are “specifically directed toward entities engaged in
insurance.” See id. Under ERISA, “[a] law is specifically
directed toward entities engaged in insurance if it is
‘grounded in policy concerns specific to the insurance
industry.’” Id. (quoting UNUM Life Ins. Co., 526 U.S. at
372). “It is well-established that a law which regulates what
terms insurance companies can place in their policies
regulates insurance companies.” Standard Ins. Co. v.
Morrison, 584 F.3d 837, 842 (9th Cir. 2009).

    There is no doubt that § 431:13-103 regulates insurance,
given that it is embedded in the insurance code and regulates
the extent to which insurers may limit insurance coverage.

    Section 663-10, however, is a general statute for
determination of civil remedies. Haw. Rev. Stat. § 663-10.
Thus, the question is whether § 663-10 and § 431:13-103
should be read together as laws that regulate insurance, or
whether they are completely independent statutory
provisions.

   Employing the familiar tools of statutory interpretation,
we begin with the plain language of the statute, reading the
words in the context of the overall statutory scheme. Rainero
18      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

v. Archon Corp., 844 F.3d 832, 837 (9th Cir. 2016). Here,
§ 431:13-103 expressly cross-references § 663-10, providing
in relevant part that “[w]here damages ‘are recovered by
judgment or settlement of a third-party claim, reimbursement
of past benefits paid shall be allowed pursuant to section 663-
10.’” Haw. Rev. Stat. § 431:13-103. Thus, the plain
statutory text demonstrates that § 663-10, insofar as it affects
insurance subrogation rights, must be read in conjunction
with § 431:13-103.

    The legislative history buttresses the conclusion that the
two statutes were intended to work in tandem as to insurance
claims. The Hawai‘i legislature enacted § 663-10 in 1986 to
allow health insurers to seek reimbursement for special
damages recovered in a judgment or settlement that
duplicated the amounts already paid, thereby prohibiting
double recovery. See Yukumoto v. Tawarahara, 400 P.3d
486, 497 (Haw. 2017). But in 2000, the Hawai‘i legislature
decided to limit this right to reimbursement and subrogation.
To do so, it passed S.B. No. 2563, “the purpose of which was
to ‘make it an unfair or deceptive act to limit or withhold
coverage under insurance policies because a consumer may
have a third-party claim for damages.’” Id. (quoting H.
Stand. Comm. Rep. No. 1330-00, in Haw. H. J., at 1515
(Haw. 2000)). In order to create a “fair, uniform and
comprehensive procedure” that would govern
reimbursements related to third-party recoveries, the
legislature amended § 663-10 to expressly include “health
insurance or benefits.” Id.

    This amendment, however, brought about the unforeseen
consequence of exempting health insurance providers from
the prohibition of unfair practices outlined in the new statute,
thus permitting them to refuse to provide or to limit coverage
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                19

to insured individuals with a third-party claim. See id. at 498;
see also S. Stand. Comm. Rep. No. 107, in Haw. S. J., at 987
(Haw. 2001). To correct this “oversight,” the legislature
enacted S.B. 940, which clarified that:

        Refusing to provide or limiting health
        coverage to persons who have third-party
        claims for damages is not permitted, except
        for reimbursement under section 663-10
        [HRS]. This measure makes such acts unfair
        insurance practices under [§ 431:13-103] to
        eliminate any doubt that health insurers have
        always been subject to these limitations under
        section 663-10, HRS.

Id. at 499 (quoting Conf. Comm. Rep. No. 67-02, in Haw. H.
J., at 1783 (Haw. 2002)).

    This language, as well as the fact that § 431:13-103
explicitly incorporates § 663-10, leaves no doubt that the
Hawai‘i Statutes must be read together. Indeed, under
Hawai‘i law, “HRS §§ 663-10 and 431-13:103(a)(10)
comprehensively address[] and limit[] a health insurers’ rights
to reimbursement and subrogation.” Id. (emphasis added).

    Because the statutes must be read together, HMAA’s
argument that § 663-10 cannot regulate insurance is not
persuasive. HMAA relies on the Third Circuit’s opinion in
Levine, where the court held that even though a statute’s
“legislative history . . . indicate[d] an intent to lighten the
burden on the liability insurance industry,” the “plain
language of the statute”—which stated that the statute applied
to “any civil action”—controlled. 402 F.3d at 165 (emphasis
omitted).
20      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

    The Hawai‘i Statutes, however, are easily distinguished
from the statute at issue in Levine because, in Levine, there
was only one statute at issue—one that did not regulate
insurance. Id. at 164 & n.9. Here, § 431:13-103
unquestionably regulates insurance, and expressly
incorporates § 663-10’s methodology for determining when
health insurance reimbursements will be permitted. Read
together, the terms of the Hawai‘i Statutes regulate the
insurance industry.

    HMAA still urges us to read § 663-10 in isolation,
however, because there is no private right of action to bring
a claim under § 431:13-103. See also Haw. Rev. Stat.
§ 431:13-107 (noting that all remedies and proceedings in the
insurance code “are to be invoked solely and exclusively by
the commissioner”). It argues that Rudel’s action for a lien
determination was, by default, a private claim under § 663-
10, rendering § 431:13-103 irrelevant to the determination
whether the statutes are specifically directed toward
insurance.

    This argument is unpersuasive for two reasons. First, it
is premised on a belief that Rudel brought his action under
§ 663-10. To the contrary, once the case was removed to
district court pursuant to § 502(a), the court considered
Rudel’s claim as a § 502(a) action for benefits; in effect,
Rudel’s claim was brought under § 502(a), not § 663-10.
Second, HMAA again assumes that the Hawai‘i Statutes can
be read separately. As discussed, this bifurcated view ignores
the comprehensive scheme demanded by Hawai’i law.

    Thus, the district court properly held that §§ 431-
13:103(a) and 663-10 are “specifically directed toward
entities engaged in insurance.”
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N               21

                              2

    The next question is whether the Hawai’i Statutes
substantially affect the risk pooling arrangement between the
insurer and the insured. A state statute substantially affects
the risk pooling arrangement between the insurer and the
insured when it impacts the terms by which insurance
providers must pay plan members. See Morrison, 584 F.3d
at 844–45. This requirement “ensures that [statutes] are
targeted at insurance practices, not merely at insurance
companies.” Id. at 844 (noting that a statute that mandates
the salary of an insurance company employee would not
affect risk pooling because it is not directed at insurance
practices).

     The district court properly concluded that the Hawai’i
Statutes substantially affect risk pooling. Read together,
§§ 431-13:103(a) and 663-10 prohibit an insurer from seeking
certain types of reimbursement, thus impacting the eventual
net value of any payment made to a plan member—in other
words, due to the Hawai’i Statutes, the insurers face more risk
than they would otherwise. See Singh, 335 F.3d at 286
(analyzing a similar antisubrogation scheme and noting that
“it is difficult to imagine an antisubrogation law of this type
as anything other than an insurance regulation, as it addresses
who pays in a given set of circumstances and is therefore
directed at spreading policyholder risk”).

                              3

   In sum, the district court correctly concluded that the
Hawai’i Statutes are saved from express preemption under
§ 514 because they are directed at insurance practices and
impact risk pooling.
22      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

                              B

    Having concluded that the statutes are saved from
preemption under § 514, we must determine whether the
Hawai’i Statutes supply the rule of decision for Rudel’s
reconfigured federal ERISA claim. A state statute may
provide a relevant rule of decision in an ERISA action if:
(1) it is saved from preemption under § 514; and (2) it does
not impermissibly expand the scope of liability outlined in
§ 502(a). Rush Prudential HMO, Inc. v. Moran, 536 U.S.
355, 365–81 (2002); Singh, 335 F.3d at 282–83.

                              1

    Given that the Hawai’i Statutes are saved from
preemption, the only remaining question is whether the
statutes impermissibly expand the scope of liability under
§ 502(a). This requirement is founded squarely in the statute
and in ERISA’s comprehensive civil enforcement scheme.
Under that rubric, Rudel is prohibited from recovering
remedies with his reconfigured federal ERISA claim that
could not be awarded under § 502(a). As the Supreme Court
has observed, “even a state law that can arguably be
characterized as ‘regulating insurance’ will be pre-empted if
it provides a separate vehicle to assert a claim for benefits
outside of, or in addition to, ERISA’s remedial scheme.”
Davila, 542 U.S at 217–28.

    More specifically, to determine whether a state statute is
preempted on the merits under § 502(a) as conflicting with
ERISA’s remedial scheme, we ask whether the statute would
“significantly expand[] the potential scope of ultimate
liability imposed upon [insurance providers].” Id. at 378–79.
This “preemptive effect depends on the nature of the state
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                23

remedy, including the availability of non-ERISA
compensatory and punitive damages.” Elliot v. Fortis
Benefits Ins. Co., 337 F.3d 1138, 1146 (9th Cir. 2003).

    Although we must ensure that state remedies do not
expand the scope of relief available under ERISA, we begin
with a “‘starting presumption that Congress d[id] not intend
to supplant . . . state laws regulating a subject of traditional
state power’ unless that power amounts to ‘a direct regulation
of a fundamental ERISA function.’” Depot, Inc. v. Caring
for Montanans, Inc., 915 F.3d 643, 666 (9th Cir. 2019)
(alterations in original) (quoting Gobeille v. Liberty Mut. Ins.
Co., 136 S. Ct. 936, 943 (2016)), petition for cert. filed, No.
19-77 (Jul. 16, 2019); see also Metro. Life Ins. Co. v.
Massachusetts, 471 U.S. 724, 747 (1985) (noting that the
existence of § 514 evidences “the congressional decision to
‘save’ local insurance regulation”).

    In this case, the district court properly concluded that the
Hawai’i Statutes do not impermissibly expand ERISA’s
remedial scope. On removal, Rudel’s claim was effectively
converted into a § 502(a) claim for benefits. The only
question is the scope of the benefits to be awarded. The
Hawai’i Statutes do not create a method for Rudel to collect
additional benefits, nor do they subject the insurer to any
additional liability. In short, the statutes do not create
additional remedies not permitted by § 502(a). The Hawai’i
Statutes only impact the insurer’s subrogation rights against
a third party tort settlement fund. There are no statutory
provisions of ERISA that address reimbursement limitations.
Thus, no conflict exists between the Hawai’i Statutes and
ERISA.
24      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

    The Supreme Court’s decision in Rush is instructive. In
Rush, the Illinois state statute at issue permitted patients to
seek an independent physician’s opinion regarding the
medical necessity of a procedure. 536 U.S. at 361. If the
independent physician determined that the procedure was
medically necessary, the insurance provider was required to
cover the service. Id. at 383. The insurance provider argued
that the statute expanded the remedies permitted under § 502,
in part because the statute created an alternative dispute
resolution process that would impermissibly expand ERISA’s
remedial scheme. Id. at 383–84.

    However, the Rush majority rejected this argument. It
held the state statute did not provide a scheme that would
“give the independent reviewer a free-ranging power to
construe contract terms” and exceed ERISA’s boundaries. Id.
at 382–83. Instead, the second-opinion procedure merely
permitted an alternative opinion regarding whether benefits
were due—at all times, the action remained one for the
recovery of benefits pursuant to an ERISA plan. Id.
at 382–83. Thus, the second-opinion procedure for dispute
resolution did not enlarge the scope of liability under ERISA.
Id. at 383–85.

    Similarly, in Singh, the Fourth Circuit held that a state
antisubrogation statute that prohibited insurance providers
from seeking reimbursement from a third-party settlement
was saved from preemption. 335 F.3d at 281. The Fourth
Circuit reasoned that the statute “simply mandat[ed] or
prohibit[ed] certain terms of policy coverage” and did not
“force a choice between State regulation of insurance and the
prescribed remedies of § 502(a).” Id. at 287–88. The court
pointed out:
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                25

       While ERISA’s civil enforcement scheme
       contained in § 502(a) creates an exclusive set
       of remedies that even a state regulation of
       insurance may not supplement or supplant,
       ERISA ‘contains almost no federal regulation
       of the terms of benefit plans’ that would
       conflict with a substantive provision such as
       the subrogation prohibition.

Id. at 288 (quoting Metro. Life Ins., 471 U.S. at 732).

      Thus, the state antisubrogation statute merely “operate[d]
. . . to define the scope of a benefit” provided by an ERISA-
governed plan. Id. at 288. It did not create a new remedy.
Id. at 289; see also UNUM Life Ins. Co., 526 U.S. at 376 n.7
(holding that a California statute providing employers be
designated an insurer’s agent for purposes of filing ERISA
claims was not preempted because the petitioner sought only
benefits due pursuant to ERISA, and not separate remedies).

    The situation is identical here. The Hawai’i Statutes
operate to define the scope of a benefit provided by the Plan;
they do not create additional remedies not permitted by
ERISA. Thus, because the statutes do not impermissibly
expand the scope of liability outlined in § 502(a), they are not
conflict preempted and can apply the rule of decision.

                               2

    Elliot does not compel a contrary result, as HMAA
contends. There, we held as preempted on the merits
Montana’s Unfair Trade Practices Act (“UTPA”)—a statute
that, in relevant part, permitted awards of punitive damages.
337 F.3d at 1141, 1147. We held that a petitioner’s claim
26      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

“relie[d] in the first instance on Montana’s UTPA’s civil
enforcement provision” because it “provide[d] damages
above and beyond those provided in ERISA, including
punitive damages.” Id. at 1147. Thus, the statute was
completely preempted under § 502. Id.; see also Ingersoll-
Rand Co. v. McClendon, 498 U.S. 133, 136 (1990) (holding
preempted a Texas cause of action that converted an equitable
claim under ERISA to a claim for damages under state law);
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 50–56 (1987)
(holding preempted Mississippi state common law causes of
action for claims-processing errors that permitted punitive
damages because ERISA’s civil enforcement scheme “would
make little sense if the remedies available to ERISA
participants . . . could be supplemented or supplanted by
varying state laws”); Barber v. UNUM Life Ins. Co., 383 F.3d
134, 141 (3d Cir. 2004) (holding preempted a state remedy
that permitted ERISA-plan participants to recover punitive
damages for bad faith conduct).

    Thus, because the Hawai’i Statutes merely provide the
analytical framework by which the court is to decide the
§ 502(a) action and do not create causes of action that permit
recovery beyond that permitted under ERISA, the Hawai’i
Statutes are distinguishable from the state statutes in Elliot,
Ingersoll-Rand, Pilot Life, and the other cases cited by
HMAA and amicus curiae HMSA. All of those cases
involved state statutes that provided additional damages or
remedies outside the scope of ERISA’s remedial scheme. We
agree with the Secretary of Labor that here is no such
provision here.

    And, as was true in Singh, the Hawai’i Statutes do not
conflict with an ERISA provision because there are no
statutory provisions of ERISA that address reimbursement
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N                 27

limitations. See also Depot, Inc., 915 F.3d at 667 (holding
that state law claims that did not have corresponding,
conflicting provisions in ERISA did not provide an
impermissible alternative enforcement mechanism). The
Hawai’i Statutes merely regulate the terms that an ERISA
plan provider may employ—they do not offer any benefits
that conflict with those provided by ERISA.

                               3

    HMAA argues that permitting a court to decide a petition
for a determination of lien pursuant to §§ 431:13-103 and
663-10 creates a new judicial vehicle for deciding claims
outside the bounds of ERISA’s comprehensive civil
enforcement scheme. Similarly, amicus curiae HMSA
argues, “[T]he Hawai’i statutes at issue provide for an entire
judicial process alternative to § 502, creating precisely the
type of adjudication that falls within Pilot Life’s categorical
bar.” HMAA points out that the state statute in Singh did not
provide a separate procedure to determine the amount and
validity of the lien, but instead prohibited reimbursement
outright. HMAA relies in part on the suggestion in Rush that
a “conventional evidentiary hearing” held during an
arbitration might be preempted. 536 U.S. at 383.

    These arguments are not persuasive. In Rush, the Court’s
primary concern in discussing an alternate form of arbitration
was that such a scheme would undermine “the manifest
congressional purpose to confine adjudication of disputes to
the courts.” Id. at 381–82. Here, because the case was
removed under § 502(a) and effectively became a § 502(a)
action for benefits, there is no question that the federal courts
remain the forum—and ERISA the vehicle—for determining
Rudel’s entitlement to any benefits. See id. at 379–80 (noting
28      RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N

that though the independent review process in that case could
be dispositive of the validity of a claim for benefits, it did not
impermissibly enlarge the scope of liability under § 502(a)).

                                4

    Finally, HMAA suggests that because the state statutes
were completely preempted under § 502(a), they necessarily
must be in conflict with § 502(a) and therefore cannot form
the basis for decision. This argument confuses complete
preemption for jurisdictional purposes with conflict
preemption. As we have discussed, by operation of § 502(a),
Rudel’s state law claims are completely preempted, allowing
the insurer to remove the case to federal court. But, although
his state law claims are extinguished, his federal ERISA
rights under § 502 are not. The Hawai‘i Statutes do not
conflict with§ 502, so conflict preemption does not apply, and
because the Hawai’i Statutes are saved from express
preemption under § 514, they may supply the rule of decision
for Rudel’s federal ERISA action.

                                C

    Thus, the district court correctly concluded that Rudel’s
claims were not ERISA-preempted. Because the Hawai‘i
Statutes regulate insurance and are directed at insurance
practices and impact risk pooling, they are saved from
express preemption under § 514. And because they do not
impermissibly expand the scope of available ERISA
remedies, the Hawai’i Statutes are not preempted by the
merits under § 502(a).
        RUDEL V. HAWAI‘I MGMT. ALLIANCE ASS’N             29

                             V

    In sum, the district court properly exercised federal
jurisdiction and correctly denied Rudel’s remand motion
because his state law claims could have been brought as
ERISA claims. The court also correctly held that the Hawai’i
Statutes were saved from preemption pursuant to § 514, were
not subject to conflict preemption under § 502, and provided
the relevant rule of decision in the removed action. Because
the parties stipulated that HMAA had no valid lien if the
Hawai’i Statutes provided the relevant rule of decision, the
district court also properly entered a final judgment in
Rudel’s favor. We need not—and do not—reach any other
issue urged by the parties. All pending motions are denied as
moot.

   AFFIRMED.