Court Opinion

ID: 9759314
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:11:55.150934+00
Date Added: 2024-06-11T07:29:01.106872
License: Public Domain

DOGGETT, Justice,
concurring.
In one brief writing the court today is forced to eliminate the rights of hundreds of thousands of Texas families to protect themselves from false, misleading, and deceptive practices in the handling of health and disability insurance claims. These are rights that had been secured by consumer protection statutes properly enacted by the Texas Legislature and that remain in effect today for those Texans who obtain their coverage directly from insurers rather than through their employers. Unfortunately, there is little that I or any other member of this court can do about this deplorable de*392mise of state-given rights other than to lament their passage.
Recognizing that Ingersoll-Rand v. McClendon, — U.S. -, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), and Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41,107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), control this case, I must concur with the court’s opinion. By its reading of ERISA’s preemption clause, the United States Supreme Court has restricted the very rights of employees — to avoid the delay or denial of benefits — that Congress sought to protect. Through peculiar federal judicial interpretation, a statutory addition to workers’ rights has been converted into a statutory removal of those rights. The law has been reshaped into a form that achieves the converse of its original purpose. Identical claims are now treated differently depending on whether the claimant is insured individually or through an employer. Those insured through their employers are denied by ERISA preemption the safeguards afforded by Texas to their fellow citizens. I join with the growing number of courts and commentators who express the concern that through continued misconstruction, ERISA has become “quicksand” that “will continue to expand and to preempt everything in its meandering path.” Jordan v. Reliable Ins. Co., 694 F.Supp. 822, 835 (N.D.Ala.1988). For the over 56 million Americans who are enrolled in group health insurance plans like the one in which James Cathey was a member,1 ERISA has become more than mere quicksand; it has become a black hole.
Through ERISA, Congress sought “to assure that individuals who have spent their careers in useful and socially productive work will have adequate incomes to meet their needs when they retire.” H.Rep. No. 807, 93d Cong., 2d Sess. 3, reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 4670. The measure responded to increasing abuses against workers caused by irresponsible management of pension and welfare benefit funds. In its “declaration of policy,” Congress noted:
that despite the enormous growth in such plans many employees with long years of employment are losing anticipated retirement benefits owing to the lack of vesting provisions in such plans; that owing to the inadequacy of current minimum standards, the soundness and stability of plans with respect to adequate funds to pay promised benefits may be endangered; that owing to the termination of plans before requisite funds have been accumulated, employees and their beneficiaries have been deprived of anticipated benefits.
29 U.S.C. § 1001(a) (1974). The primary objective of the legislation was “to increase the rights of employees by imposing strict fiduciary duties on employers and benefit plan administrators and by providing the employees with the civil remedies in section 502(a).” Note, Punitive Damages and ERISA: An Anomalous Effect of ERISA ⅛ Preemption of Common Law Actions, 65 Wash.U.L.Q. 589, 609 (1987).
In view of this laudable goal, several commentators have expressed dismay at the paradox that has arisen since Pilot Life: the workers ERISA was intended to protect lack a remedy for wrongs unaddressed by the statute, while the companies targeted by Congress employ ERISA as an effective shield against responsibility for wrongful processing of claims. The first manifestation of this incongruous result is that workers covered by group benefit plans have been denied state causes of action that had been available prior to the Act’s passage. Id. See also, Note, Blind Faith Conquers Bad Faith: Only Congress Can Save Us After Pilot Life Insurance Co. v. Dedeaux, 21 Loy.L.A.L.Rev. 1343, 1381 n. 303 (1988) (hereinafter Note, Blind Faith) (observing the lack of Congressional intent to preempt state causes of action for breach of a covenant of good faith and fair dealing). Second, persons covered by group benefit plans are limited to ERISA’s remedies, while individual insurance policyholders retain the full range *393of state remedies. Id. at 1347.2 The harm is exacerbated by the reality that employees seldom have a voice in selecting their company’s group insurer. Whether taken separately or together, these developments evince a disturbing disregard for Congress’ overriding intent to protect the participants and beneficiaries of group benefit and pension plans. Their aim is best served by reading ERISA’s remedies as a floor rather than a ceiling, and by respecting the traditional deference given to state insurance regulations as mandated by the McCarran-Ferguson Act, 15 U.S.C. § 1011. Under ERISA, insurers who provide group benefit plans have little incentive to deal promptly and fairly with employee participants.3 Indeed, for ERISA to preempt all state law that may be loosely defined as “relating to" employee benefit plans is “counterproductive to ERISA’s objective of furthering, rather than debilitating, progressive employment law.” Gregory, The Scope of ERISA Preemption of State Law: A Study in Effective Federalism, 48 U.Pitt. L.Rev. 427, 457 (1987).
Moreover, expansive preemption of state common law and statutes regulating the insurance industry upsets the equilibrium between the federal government and the states that Congress intended to preserve by enacting the saving clause, 29 U.S.C. § 1144(b)(2)(A), thereby eviscerating this once-important provision. In Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985), the clause was initially given vitality by acknowledgment of the well-established rule that “[t]he presumption is against preemption, and we are not inclined to read limitations into federal statutes in order to enlarge their pre-emptive scope.” Id. at 741, 105 S.Ct. at 2390. The presumption against preemption is particularly strong with respect to those areas, such as insurance, “traditionally regarded as properly within the scope of state superintendence.” Florida Lime and Avocado Growers v. Paul, 373 U.S. 132, 144, 83 S.Ct. 1210, 1218, 10 L.Ed.2d 248 (1963); Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977).
In Metropolitan Life, while state-mandated policy inclusion of mental health coverage was related to the business of insurance and therefore within the scope of preemption, the saving clause directed that the law not be preempted. 471 U.S. at 739, 746-47, 105 S.Ct. at 2389, 2392-93. In so holding, the Court analyzed the legislative history of ERISA, and noted that the final version of the law included a preemption clause more broadly worded than those in the original versions submitted to the Conference Committee by the two houses of Congress. Rather than halting its analysis at that point, as it did in Pilot Ufe, 481 U.S. at 46, 107 S.Ct. at 1552, the Court proceeded to conclude that this expansion of the preemption clause “gave the insurance clause a much more significant role, as a provision that saved an entire body of law from the sweeping general preemption clause. ” Metropolitan Life, 471 U.S. at 746 n. 23, 105 S.Ct. at 2392 n. 23 (emphasis added). The Court’s holding thus refused to “impose any limitation on *394the saving clause beyond those Congress imposed in the clause itself.” Id. at 746, 105 S.Ct. at 2392.
In contrast to the Metropolitan Life Court’s careful deference to Congress’ intent to balance the preemption and saving clauses, the Pilot Life opinion added a consideration that tips the balance of federalism inexorably away from the states by reducing the saving clause analysis to an empty exercise. The Court interpreted ERISA’s legislative history to support the notion that Congress had intended that the statute’s remedies be exclusive. This holding was drawn from the statements of several members of Congress to the effect that ERISA was meant to “preempt the field.” 481 U.S. at 46, 107 S.Ct. at 1552. Congress’ intent that ERISA provide exclusive remedies, however, was subordinate to its effort to provide greater protections to workers covered by pension and welfare benefit plans. When viewed in this light, the preemption clause should be given no more than equal consideration with the saving clause, which remains to preserve state regulation of insurance that is equally meant to safeguard the interests of workers.4 Instead, as one commentator asserts, “the Pilot Life Court gutted the saving clause of meaning.” Note, Blind Faith, supra, at 1382.
Refusing an interpretation of Pilot Life that would require the preemption of a California statute regulating the bad faith conduct of insurers, one court appropriately concluded that to do so “would rewrite the saving clause to read: ‘Nothing in this subchapter except section 1132 shall be construed to exempt or relieve any person from any law of any State which regulates insurance_’ The Supreme Court strongly indicated in Metropolitan Life that this is not the law.” Graves v. Blue Cross, 688 F.Supp. 1405, 1412 (N.D.Cal.1988) (emphasis in original). Unfortunately, this interpretation has now been rejected by McClendon. Pilot Life and McClendon thus seize from the states the ability to “deter[ ] insurance companies from exploiting insureds when they are most financially vulnerable.” Note, Blind Faith, supra, at 1397.
By affirming Pilot Life’s unfortunate mischaracterization of Congressional intent, the Supreme Court in McClendon takes another step away from the goals of federalism. States are no longer the laboratories of democracy5 when it comes to protecting their consumers. States have been thwarted in their efforts to fill the federal void left in the regulation of insurance companies that provide benefit plans under ERISA. Gregory, supra, at 457. Ironically, this gap was initially created by the Congress in the McCarran-Perguson Act, 15 U.S.C. § 1011, which entrusts to the States the regulation of “the business of insurance.”
This federal court deprivation of state law protections stands in notable juxtaposition with the professed goal of some in Washington to return power to the states. The Texas courts and the Texas legislature are powerless to preserve the rights of workers covered by group benefit plans. Texans have little recourse but to petition their federal legislators to correct what has been an errant jurisprudential path. The time is long past for Congress to reconsider the expanse of ERISA and to resurrect the authority of the states to provide additional protections to their citizens.
MAUZY and GAMMAGE, JJ„ join in this concurring opinion.

. U.S. Census Bureau, 1990 Statistical Abstract 413 (1990).

. The Supreme Court reinforced a third curious distinction — that between self-insured plans and those that obtain insurance from regulated insurance companies — in FMC Corp. v. Holliday, — U.S. -, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990), discussed in the majority opinion, supra, at 388 n. 1. This distinction was introduced by the Court in Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747, 105 S.Ct. 2380, 2393, 85 L.Ed.2d 728 (1985). In his dissent to Holli-day, Justice Stevens describes the distinction as "broad and illogical,” and adds:
Had Congress intended this result, it could have stated simply that 'all State laws are pre-empted insofar as they relate to any self-insured employee plan.’ There would then have been no need for the ‘saving clause’ to exempt state insurance laws from the preemption clause, or the ‘deemer clause,’ which the Court today reads as merely reinjecting into the scope of ERISA’s pre-emption clause those same exempted state laws insofar as they relate to self-insured plans.
Holliday, — U.S. at-, 111 S.Ct. at 411 (Stevens, J., dissenting).

. Under 29 U.S.C. § 1132, ERISA plan participants or beneficiaries harmed by a lengthy delay in, or unreasonable denial of, benefits may bring a time-consuming and expensive action in court to recover no more than the benefits due under the plan. § 1132(a)(1)(B). The award of attorney’s fees is possible, but solely within the discretion of the court. § 1132(g)(1).

. The Court correctly observed in Metropolitan Life: “While Congress occasionally decides to return to the States what it has previously taken away, it does not normally do both at the same time.” 471 U.S. at 740, 105 S.Ct. at 2389. It seems that where ERISA is concerned, the Court has created an exception to this principle.

. See New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371, 386-87, 76 L.Ed. 747 (1932) (Brandeis, J., dissenting).