Court Opinion

ID: 6934546
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:23:58.015508+00
Date Added: 2024-06-11T16:07:23.232409
License: Public Domain

DAVID A. NELSON, Circuit Judge,
concurring in part and dissenting in part.
I concur in most of what the court has said, and I agree that the district court’s remand order is not reviewable here. I cannot agree, however, that in seeking to recover damages for the alleged breach of his settlement agreement with Blue Cross, Dr. Zuniga “seek[s] to recover benefits from an employee benefit plan” — and although the question is a close one, I do not believe that the doctor’s breach of contract claim is preempted by ERISA.
Dr. Zuniga, as the majority opinion notes, is not a “participant” in any ERISA plan maintained by Chrysler or Ford, and neither is he a “beneficiary” of any such plan. See the definitions of those terms at 29 U.S.C. §§ 1002(7) and 1002(8). “Only ‘participants’ and ‘beneficiaries,’ as those terms are defined in ERISA, have standing to pursue claims for benefits,” Teagardener v. Republic-Franklin Inc. Pension Plan, 909 F.2d 947, 951 (6th Cir.1990), cert. denied, 498 U.S. 1027, 111 S.Ct. 678, 112 L.Ed.2d 670 (1991), and I do not understand Dr. Zuniga to be asking for something due him under an employee benefit. plan.1 He is certainly not *1403pursuing a claim for plan benefits on his own account, and — unlike the health care provider in Cromwell v. Equicor-Equitable H.C.A. Corp., 944 F.2d 1272 (6th Cir.1991), cert. dismissed, — U.S. -, 113 S.Ct. 2, 120 L.Ed.2d 931 (1992) — he does not seem to be pursuing a claim for benefits as the assignee of a plan participant or beneficiary. The doctor is simply pursuing a common law claim based on the alleged failure of Blue Cross to honor the contractual commitment it gave him in settling the lawsuit he filed against Blue Cross in 1979, almost a decade before Blue Cross began its present involvement with the Chrysler and Ford ERISA plans.
Although Chrysler and Ford, as sponsors of the plans now administered by Blue Cross, might experience slightly higher costs if Dr. Zuniga were to prevail in his contract claim against Blue Cross, the existence of an economic impact on the plans is not dispositive where the state law has general application and “does not affect the structure, the administration, or the type of benefits provided by an ERISA plan....” Rebaldo v. Cuomo, 749 F.2d 133, 139 (2d Cir.1984), cert. denied, 472 U.S. 1008, 105 S.Ct. 2702, 86 L.Ed.2d 718 (1985) (holding that a state statute regulating hospital rates was not preempted). (The Second Circuit abandoned Rebaldo in Travelers Ins. Co. v. Cuomo, 14 F.3d 708, 719 (2d Cir.1993), but a unanimous Supreme Court recently reversed Travelers in a decision affirming that preemption is not triggered by “common state action” merely because such action has “indirect economic effects on a plan’s costs.... ” New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., — U.S. -, -, 115 S.Ct. 1671, 1679, 131 L.Ed.2d 695 (1995).) See also American Telephone and Telegraph Co. v. Merry, 592 F.2d 118, 121 (2d Cir.1979), where the garnishment of spousal income under an ERISA plan to enforce alimony and support orders was likewise held not to be preempted.
The United States Supreme Court cited Merry in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n. 21, 103 S.Ct. 2890, 2901 n. 21, 77 L.Ed.2d 490 (1983), for the proposition that “[s]ome state actions may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’ the plan.” It seems to me that this proposition, which was reiterated in Morales v. Trans World Airlines, Inc., 504 U.S. 374, 389-91, 112 S.Ct. 2031, 2040, 119 L.Ed.2d 157 (1992), and Travelers, — U.S. at -, 115 S.Ct. at 1679-80, governs the instant case; any effect that enforcement of Dr. Zuniga’s contract claim against Blue Cross might have on the Chrysler and Ford ERISA plans would be “too tenuous, remote, or peripheral” to warrant preemption.
It is true that ERISA’s preemption clause, which provides that the federal statute “shall supersede any and all State laws insofar as they may ... relate to any employee benefit plan described in [29 U.S.C. § 1003(a) and not exempt under § 1003(b) ],” has a broad reach. See, e.g., Shaw v. Delta Air Lines, 463 U.S. at 96, 103 S.Ct. at 2899-2900. The clause is not limited to state laws “specifically designed to affect employee benefit plans,” id. at 98, 103 S.Ct. at 2900, and it extends to state common law, including the law of contract. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48, 107 S.Ct. 1549, 1552-53, 95 L.Ed.2d 39 (1987). See 29 U.S.C. § 1144(c)(1) (“The term ‘State lav/ includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State.”)2
Some common law claims preempted by ERISA are federalized, so to speak, by the civil enforcement provisions of the statute. Among other things, the enforcement provisions allow a participant or beneficiary to *1404bring a federal action “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 right to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (holding that a state common law action preempted by ERISA and coming within one of its civil enforcement provisions is removable to federal court under 28 U.S.C. § 1441(b)). But where a common law claim not covered by ERISA’s civil enforcement provisions is preempted, preemption means the death of the claim. The particular claim with which we are concerned here, of course, is neither a claim by an ERISA plan participant or beneficiary to recover benefits due him under the terms of his plan nor a claim by such a person to enforce or clarify his rights thereunder. The claim is not covered by 29 U.S.C. § 1132(a)(1)(B) or any of the other civil enforcement' provisions of ERISA, so if the preemption clause of ERISA be deemed to apply to it, the claim is necessarily extinguished.
In Perry v. P*I*E Nationwide, Inc., 872 F.2d 157, 162 (6th Cir.1989), cert. denied, 493 U.S. 1093, 110 S.Ct. 1166, 107 L.Ed.2d 1068 (1990), this court expressed itself as “disposed” toward the reasoning “that preemption should apply to a state law claim only if Congress has provided a remedy for the wrong or wrongs asserted.” Although I.was a member of the Perry panel and did not take issue with the quoted language at the time, I find on reflection that I cannot reconcile this statement with the language of the statute itself. Nonetheless, I fully concur with the suggestion made in Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, Inc., 944 F.2d 752, 755 (10th Cir.1991), that the lack of alternate remedies in the event of preemption is a factor “deserving of consideration” where the applicability of ERISA’s preemption clause is a borderline question.
Three other factors deserving of consideration in this connection have been identified in Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550 (6th Cir.1987), where ERISA was held not to preempt a municipal income tax in its application to contributions that ERISA plan participants made to such plans. I shall examine the applicability of each factor in turn.
The first factor is “whether the state law represents a traditional exercise of state authority.” Id. at 555. This factor obviously cuts in favor of Dr. Zuniga; it is hard to think of a more traditional exercise of state authority than the enforcement of contracts under state common law. And the “starting presumption,” when courts address preemption claims, is that “Congress does not intend to supplant state law.” Travelers, — U.S. at-, 115 S.Ct. at 1676.
The second factor is that “courts are more likely to find that a state law relates to a benefit plan if it affects relations among the principal ERISA entities — the employer, the plan, the plan fiduciaries, and the beneficiaries — than if it affects relations between one of these entities and an outside party, or between two outside parties with only an incidental effect on the plan.” Neusser at 556, quoting Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1467 (5th Cir.1986), cert. denied, 479 U.S. 1034, 107 S.Ct. 884, 93 L.Ed.2d 837 (1987). This factor favors Dr. Zuniga too; he is obviously an “outside party,” and only his contractual relationship with Blue Cross, the plan administrator, is at issue.
The third factor “concerns the incidental nature of any possible effect of the state law on an ERISA plan.” Neusser, id. To the extent that it does not simply beg the question that is to be answered, it seems to me that this factor too favors Dr. Zuniga. Holding Blue Cross to its contract with Dr. Zuni-ga would not have more than an incidental effect on the Chrysler and Ford plans.
In this respect, I believe, the case at bar bears more than a passing resemblance to Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988). There the question was whether ERISA’s preemption clause precluded judgment creditors of participants in employee welfare plans from invoking general state garnishment laws to collect judgments against the plan participants. Notwithstand*1405ing that plan trustees necessarily became parties to the garnishment proceedings and had to deposit with the court funds that would otherwise have been paid to the plan beneficiaries, and notwithstanding a contention that “benefit plans subjected to garnishment will incur substantial administrative burdens and costs,” id. at 831, 108 S.Ct. at 2186, the Supreme Court held that “ERISA does not forbid garnishment of an ERISA welfare benefit plan, even where the purpose is to collect judgments against plan participants.” Id. at 841, 108 S.Ct. at 2191.
The Supreme Court did not repudiate this holding in Ingersoll-Rand v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), where ERISA was held to preempt a wrongful discharge action premised on a claim that the employee had been fired in order to prevent him from obtaining benefits under an ERISA plan sponsored by the employer. The Ingersoll-Rand Court - cited Mackey with evident approval, noting that “[t]he fact that collection might burden the administration of a plan did not, by itself, compel pre-emption.” Id. at 139, 111 S.Ct. at 483. And the Court followed Mackey in Travelers, — U.S. at-, 115 S.Ct. at 1680-81.
The dispositive consideration in Ingersollr-Rand was that “the existence of a pension plan [was] a critical factor in establishing liability under the State’s wrongful discharge law.” Id. at 139-40, 111 S.Ct. at 483. Because the employer was alleged to have discharged the plaintiff precisely on account, of a desire to avoid contributing to, or paying benefits under, the ERISA plan, “there simply is no cause of action if there is no plan.” Id. at 140, 111 S.Ct. at 484.
In the instant ease, by contrast, the agreement that Dr. Zuniga seeks to enforce settled a lawsuit commenced long before Blue Cross became involved with the Chrysler and Ford plans. Dr. Zuniga’s cause of action against Blue Cross would exist even if the doctor’s patients purchased coverage from Blue Cross directly and were not participants in any ERISA plan. The existence of the ERISA plans is incidental here, as it was not in Ingersoll-Rand.
At bottom, Ingersollr-Rand teaches, “the question whether a certain state action is pre-empted by federal law is one of Congressional intent. The purpose of Congress is the ultimate touchstone.” Id. at 137-38,-111 S.Ct. at 482, internal quotes apd citations omitted. Congress intended to preempt the regulation of employee benefit plans, see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. at 46, 107 S.Ct. at 1552, recognizing that “[a] patchwork scheme of regulation would introduce considerable inefficiencies in benefit program operation, which might lead those employers with existing plans to reduce benefits, and those without such plans to refrain from adopting them.” Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 11, 107 S.Ct. 2211, 2217, 96 L.Ed.2d 1 (1987). ERISA itself describes the purpose of the act as being
“to protect ... the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.” 29 U.S.C. § 1001(b).
The text of ERISA’s preemption clause is “clearly expansive,” Travelers,-U.S. at -, 115 S-Ct. at 1677, but the clause is not to be applied in such a way as to “read the presumption against pre-emption out of the law....” Id. “[I]nfinite relations cannot be the measure of pre-emption,” the Supreme Court has now told us, and “[w]e simply must go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive.” Id.
As we have seen, and as Travelers confirms, “[t]he basic thrust of the pre-emption clause ... was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans.” — U.S. at-, 115 S.Ct. at 1677-78. Enforcement of Dr. Zuniga’s settlement agreement with Blue Cross would not, *1406in my view, subject ERISA plans to a multiplicity of regulation,” and I am not persuaded that Congress intended to preempt state contract law in its application to this agreement. Insofar as my colleagues on the panel have reached a different conclusion, I respectfully dissent.

. The doctor alleges that he was a "participating physician” with Blue Cross under one of the "Participation Agreements” that Blue Cross has signed with physicians throughout the State of Michigan; that Blue Cross "unjustly ‘departici-pated' him” some years ago; that on July 28, 1988, after lengthy litigation, he “was allowed to resume his capacity as a participating physician” pursuant to a settlement agreement which provided that he “would be treated on the same basis as any other participating, psychiatrist .... and would not be discriminated against in any fashion”; that he was advised in December of 1988 that "he was not placed on the approved list of providers who would be allowed to provide health care services to Chrysler employees in return for payment from [Blue Cross]”; that the reason given was the same one given in the litigation that had been settled in July, namely “overutilization” or the performance of unnecessary work; and that by “resurrecting the previous allegation that Dr. Zuniga overutilized certain health care procedures as a reason for denial for his application to be an authorized provider for the Chrysler Health-Line program,” Blue Cross "breached its agreement with Dr. Zuniga that he would be treated on the same basis as any other physician and would not be discriminated against in any fashion.” The wrong allegedly committed by Blue Cross in rejecting the doctor’s application to be an authorized provider is thus claimed to arise from a breach of the July settlement agreement, not from a breach of any ERISA plan. The doctor is not asking to be paid under the terms of an ERISA plan, as I understand it, but under the terms of a participation *1403agreement to be entered into between him and Blue Cross on the same basis that Blue Cross has entered into such contracts with physicians throughout the State of Michigan.

. Arguably, however, the terms and conditions of the settlement agreement that Blue Cross voluntarily entered into with Dr. Zuniga, being "privately ordered obligations,” should not be regarded as requirements imposed under state law. See American Airlines, Inc. v. Wolens, - U.S. -, -, 115 S.Ct. 817, 824, 130 L.Ed.2d 715 (1995), citing Cipollone v. Liggett Group, Inc., U.S. -, -, 112 S.Ct. 2608, 2612, 120 L.Ed.2d 407 (1992) (plurality opinion).