Court Opinion

ID: 771344
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:50:07+00
Date Added: 2024-06-11T15:09:10.060628
License: Public Domain

234 F.3d 298 (6th Cir. 2000)
Medical Mutual of Ohio, Plaintiff-Appellee,v.Denise deSoto; Jose deSoto, Defendants-Appellants.
Nos. 99-3988; 00-3571
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
Argued: September 21, 2000Decided and Filed: November 30, 2000

Appeal from the United States District Court for the Northern District of Ohio at Cleveland.  No. 98-01328--Paul R. Matia, Chief District Judge.[Copyrighted Material Omitted]
Stephen F. Gladstone, Michael J. Holleran, FRANTZ WARD LLP, Cleveland, Ohio, for Appellee.
Janice Aitken, Robert Eddy, GALLAGHER, SHARP, FULTON & NORMAN, Cleveland, Ohio, for Appellants.
William F. Gibson, Sharp, Fulton, & Norman, Cleveland, OH, for Defendant-Appellant.
Mary M. Utterback, THELEN, REID & PRIEST,  Washington, D.C., Curtis A. Cole, THELEN, REID & PRIEST, Los Angeles, California, for Amicus Curiae.
Before: MERRITT, KENNEDY, and GILMAN, Circuit Judges.
KENNEDY, J., delivered the opinion of the court, in which MERRITT, J., joined. GILMAN, J. (pp. 310-12), delivered a  separate concurring opinion.
OPINION
KENNEDY, Circuit Judge.

1
This Employee Retirement Insurance and Security Act (ERISA) action comes before the  court on the consolidated appeals of defendants, Denise deSoto and Jose deSoto, from (1) the district court's grant of  summary judgment in favor of Medical Mutual of Ohio (MMO) finding the deSotos liable for unpaid reimbursement funds  due under MMO's welfare benefit plan and (2) its judgment awarding MMO attorneys' fees pursuant to 29 U.S.C. §  1132(g)(1). On appeal, the deSotos assert the district court had no personal jurisdiction over them; MMO was not entitled  to reimbursement for the benefits it provided Mrs. deSoto; and California law, in particular section 3333.1 of the California  Civil Code, applies to any claim that MMO might have for reimbursement and prohibits it from recovering the medical  expenses it paid on Mrs. deSoto's behalf arising from the alleged medical malpractice1.

2
Because we agree that California law governs the contract between Mrs. deSoto and MMO and prohibits MMO from  recovering the medical expenses it paid on behalf of Mrs. deSoto, we reverse the district court's grant of summary judgment  in favor of MMO and remand with instructions to enter summary judgment in favor of the deSotos. We also vacate the  court's judgment awarding attorneys' fees in light of this opinion.

I. FACTS

3
MMO is a mutual insurance company incorporated under the laws of Ohio. As such, it provides group health insurance  plans--governed by ERISA--for member companies of the Greater Cleveland Growth Association's Counsel of Smaller  Enterprises. Under that arrangement, the employees of member companies are eligible to become participants in MMO's  welfare benefit plan. To become a participant, an eligible employee simply signs the Group Subscriber Certificate issued by  MMO. Once signed, the Certificate establishes the rights and responsibilities of the participant and MMO. Denise deSoto, a  California resident and California employee of member company Janik & Dunn, is a participant in MMO's plan, and  therefore entitled to the benefits of the plan.

4
The factual circumstances giving rise to this litigation began on December 13, 1993, when Mrs. deSoto underwent  surgery at the University of California's Irvine Medical Center in connection with injuries she sustained from an automobile  accident. Pursuant to the terms of the Certificate, MMO paid for Mrs. deSotos's medical expenses incurred because of that  accident, including the costs associated with her surgery. As a result of mistakes made during that surgery, Mrs. deSoto was  left in a coma and required additional medical attention, thereby incurring additional medical expenses. MMO paid these medical expenses as well. In total, MMO paid $616,537.53 on behalf of Mrs. deSoto.

5
In an effort to recover some of the damages caused by the mistakes made during surgery, the deSotos filed a law suit  against the Regents of the University of California Medical Center in the Superior Court of the State of California for  Orange County. The court entered a default judgment against the Regents and awarded the deSotos $9,000,000 in damages.  Of that amount, the court designated $1,536,531.00 as past medical expenses.

6
The Regents attacked the judgment, and in particular the award of medical expenses, filing a motion to vacate the defaultjudgment and grant a new trial, and appealing the judgment as excessive. Soon after the Regents filed their appeal,  Mrs. deSoto, through her guardian, Mr. deSoto, negotiated a settlement agreement with the Regents providing for an initial  lump sum payment of $2,100,000 and an additional $15,000.00 per month to increase at 3% per year for Mrs. deSoto's life.  The settlement characterized the payments as "damages on account of personal injury within the meaning of Section  104(a)(2) of the Internal Revenue Code of 1986, as amended." That characterization, the Regents and deSotos believed, had  the effect of excluding from their settlement any award of medical expenses.

7
Believing that the deSotos' recovery entitled it to reimbursement for the medical expenses irrespective of how the  recovery was characterized, MMO contacted the deSotos and requested that they reimburse it $616,537.53. The deSotos  disagreed with MMO's assessment of the situation and refused to pay, arguing that under the terms of the Certificate, MMO  was not entitled to reimbursement. And even if the Certificate entitled MMO to recover the medical expenses, they  protested, California's insurance law prohibited it from obtaining any recovery. Believing it and the deSotos were at an  impasse, MMO filed suit in the District Court for the Northern District of Ohio. Upon completing discovery, both parties  moved for summary judgment. After finding that it had jurisdiction, the district court agreed with MMO's assessment of the  matter. It ruled that ERISA common law entitled MMO to reimbursement; found that Ohio law rather than California law  applied to the plan; held that ERISA common law rather than Ohio law governed the issue; and directed the deSotos to pay  MMO $616,537.532.  The deSotos appeal that judgment.

8
Based on that judgment, MMO moved for attorneys' fees pursuant to 29 U.S.C. § 1132(g)(1). The district court, applying the five part-test set forth in Labor v. King, 775 F.2d 666 (6th Cir. 1985), determined that MMO was entitled to  attorneys' fees and awarded it $57,735.70 in fees and $223.20 in costs. The deSotos appeal that judgment as well.

9
The consolidated appeals are now before this court.

II. DISCUSSION

10
We review a district court's grant of summary judgment de novo. See Duggins v. Steak 'N Shake, Inc., 195 F.3d 828, 832  (6th Cir. 1999). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and  admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the  moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c).

A. Personal Jurisdiction

11
As with every case, we begin with the jurisdictional issues. The district court determined that § 1132(e)(2) of ERISA  provided it with the authority to exercise jurisdiction over the deSotos since the plan was administered in Ohio. Section  1132(e)(2) provides,

12
Where an action under this subchapter is brought in a district court of the United States, it may be brought in the  district court where the plan is administered, where the breach took place, or where a defendant resides or may be  found, and process may be served in anyother district where a defendant resides or may be found.

13
29 U.S.C. § 1132(e)(2). That section, the court ruled, alters the personal jurisdiction calculus established by International  Shoe Co. v. Washington, 326 U.S. 310 (1945). Rather than asking whether the defendant has sufficient minimum contacts  with the forum state for the exercise of jurisdiction to comport with traditional notions of fair play and substantial justice,  as courts do when relying on a state's long-arm statute to establish territorial jurisdiction, a court should ask whether the  defendant has sufficient minimum contacts with the United States. Because the deSotos had sufficient minimum contacts  with the United States, the court concluded its exercise of jurisdiction over them comported with traditional notions of fair  play and substantial justice.

14
According to the deSotos, the court's decision to base the personal jurisdiction inquiry on national contacts rather than  their contacts with the State of Ohio violated their Fifth Amendment due process rights. Citing Peay v. Bellsouth Medical  Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000), and Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119  F.3d 935 (11th Cir. 1997), for support, they urge us to adopt a two-part test when analyzing personal jurisdiction questions  under § 1132(e)(2). Under their test, we would first determine whether the defendant has sufficient contacts with the United  States and then determine whether the defendant has sufficient contacts with the forum state. If the answer to either  question is no, then we would not have personal jurisdiction over the defendant. And because they demonstrated that they  do not have sufficient contacts to the State of Ohio, they maintain, it was inappropriate for the court to exercise jurisdiction  over them. In essence, then, the deSotos urge this court to hold that §1132(e)(2) has no effect on the personal jurisdiction  inquiry in ERISA cases. MMO responds that our previous holdings in United Liberty Life Insurance Co. v. Ryan, 985 F.2d  1320 (6th Cir. 1993), and Haile v. Henderson National Bank, 657 F.2d 816 (6th Cir. 1981), applying a national contacts  test where the statute in question contained a national service of process provision, mandate that we apply such a test here.

15
We agree. In United Liberty, we held that the national service of process provision contained in § 78aa of the Securities  Exchange Act of 1934 "confer[red] personal jurisdiction in any federal district court over any defendant with minimum  contacts to the United States." United Liberty, 985 F.2d at 13303.  We based that holding on our rationale in Haile. In Haile we observed that the minimum contacts with the forum state analysis controls states' extra-territorial exercise of  jurisdiction in order to protect the defendant's due process rights. Because of the national service of process provision, the  district court's exercise of jurisdiction was not "'extra-territorial but rather nationwide," and therefore, the "minimum contacts analysis, as a limitation on state extra-territorial power, [was] simply inapposite." Haile 657 F.2d at 826. Instead,  in such cases we would apply a minimum contacts with the United States analysis. See United Liberty, 985 F.2d at 1330.  Our holdings in Haile and United Liberty, and the rationale supporting them, apply equally to ERISA's national service of  process provision. See NGS American, Inc. v. Jefferson, 218 F.3d 519, 524 n.5 (6th Cir. 2000) (stating that "the weight of  Sixth Circuit precedent supports acceptance of the national contacts approach" and therefore we "would likely have to find  personal jurisdiction in this case if NGS's action trulywere brought under ERISA"). Consequently, we reaffirm our holding  that Congress has the power to confer nationwide personal jurisdiction; and we hold that it conferred such jurisdiction  under § 1132(e)(2) on the district court where the plan is administered.

16
In so holding, we reject the deSotos' assertion that the Supreme Court's language in Insurance Corp. of Ireland v.  Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982), invalidates the rationale for upholding nationwide  jurisdiction provisions. In Insurance Corp. of Ireland, the Court rejected the notion that personal jurisdiction is based on  federalism concerns, stating the "personal jurisdiction requirement recognizes and protects an individual liberty interest. It  represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty." Id. at 702.  Contrary to the deSotos' assertion, our decision in Haile is consistent with the Court's statement in Insurance Corp. of  Ireland. In Haile, we recognized that the personal jurisdiction requirement restricts judicial power as a matter of individual  liberty--the individual's due process right not to be subject to extra-territorial jurisdiction unless he has a sufficient  relationship with the state asserting jurisdiction. When, however, a federal court sitting pursuant to federal question  jurisdiction exercises personal jurisdiction over a US citizen or resident based on a congressionally authorized nationwide  service of process provision, that individual liberty interest is not threatened. In such cases, the individual is not being  subject to extra-territorial jurisdiction, because the individual is within the territory of the sovereign--the United  States--exercising jurisdiction. In other words, when a federal court exercises jurisdiction pursuant to a national service of  process provision, it is exercising jurisdiction for the territory of the United States and the individual liberty concern is  whether the individual over which the court is exercising jurisdiction has sufficient minimum contacts with the United States4.  This reading of the Due Process Clause, in addition to being not inconsistent with the Court's statements in Insurance Corp. of Ireland, is supported by its more recent explanation of the Clause's effect. "The Due Process Clause protectsan individual's liberty interest in not being subject to the binding judgments of a forum with which he has  established no meaningful 'contacts, ties, or relations.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1984).

17
The deSotos do not dispute that they reside within the United States and thus have meaningful ties with the forum  rendering the judgment. Accordingly, the district court's exercise of jurisdiction was proper.

B. The Plan

18
On the merits, the district court, relying on ERISA common law, ruled that once the deSotos settled with the Regents,  they were obligated to reimburse MMO for the medical expenses it paid on Mrs. deSoto's behalf. The deSotos argue that  the district court's analysis is flawed. They read the Certificate as requiring them to reimburse MMO for medical expenses  it pays on Mrs. deSoto's behalf only after they receive an award for those expenses. And, they conclude, because in this  case they received no such award, as the settlement agreement explicitly excluded medical expenses, MMO cannot recover  the medical expenses it paid on Mrs. deSoto's behalf5.

19
The deSotos cannot prevail on this argument because they did not in fact exclude medical expenses from their  settlement. Rather than simply stating that the award does not include medical expenses, the settlement states that the  award constitutes "damages on account of personal injury within the meaning of Section 104(a)(2) of the Internal Revenue  Code." That statement simply does not get the job done. The Supreme Court has stated in dicta that "medical expenses for  injuries arising out of [an] accident clearly constitute damages received 'on account of personal injury,'" as defined by  §104(a)(2). Commissioner v. Schleier, 515 U.S. 323, 329 (1995). Section 104(a)(2) does not explicitly exclude all medical  expenses and the deSotos have not pointed to any authority to support their position.6 Therefore, we cannot say that the  deSotos were not required to reimburse MMO because the settlement excluded medical expenses.

C. California Civil Code Section 3333.1

20
Even if that is the case, the deSotos argue, they are not obligated to reimburse MMO because California law governs the  Certificate and section 3333.1(b) of California's Civil Code prohibits MMO from recovering the medical expenses from the  deSotos7.  The district court disagreedwith the deSotos' first proposition--that California law governs this case--holding  instead that Ohio law applied but because Ohio did not have an antisubrogation statute, ERISA common law governed the  case. Thus, before we can reach the question of the effect of section 3333.1 on MMO's right to recover, we must determine  whether California or Ohio law applies and whether ERISA preempts that law8.

1. Which States' Law Applies

21
In determining which states' law applies, our analysis is governed by the choice of law principles derived from federal  common law. See Brotherhood of Locomotive Eng'rs v. Springfield Terminal Ry. Co., 201 F.3d 18, 25-26 (2d Cir. 2000); see also Bickel v. Korean Air Lines Co., 83 F.3d 127, 130 (6th Cir.), vacated in part by Bickel v. Korean Air Lines Co., 96  F.3d 151 (6th Cir. 1996); Enterprise Group Planning, Inc. v. Falba, No. 94-3827, 1995 WL 764117 at *2 (6th Cir.  1995)9.

22
"In the absence of any established body of federal choice of law rules, we begin with the Restatement (Second) of  Conflicts of Law," Bickel, 83 F.3d at 130, in particular section 188. That section provides,

23
(1) The rights and duties of the parties with respect to an issue in a contract are determined by the local law of the  state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the  principles stated in § 6.

24
(2) In the absence of an effective choice of law by the parties . . . the contacts to be taken into account in applying the  principles of § 6 to determine the applicable law to an issue include:

25
(a) the place of contracting,

26
(b) the place of negotiation of the contract,

27
(c) the place of performance,

28
(d) the location of the subject matter of the contract, and

29
(e) the domicile, residence, nationality, place of incorporation and place of business of the parties.

30
Restatement (Second) of Conflicts of Law § 188 (1971). The principles underlying these factors are set forth in section 6 of  the Restatement. Those principles are:

31
(a) the needs of the interstate and international systems,

32
(b) the relevant policies of the forum,

33
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the  particular issue,

34
(d) the protection of justified expectations,(e) the basic policies underlying the particular field of law,

35
(f) certainty, predictability and uniformity of result, and

36
(g) ease in the determination and application of the law to be applied.

37
Id. at § 6. Based upon the factors enumerated in section 188, the district court determined that Ohio law applied to the plan.  In applying these factors, the district court assumed the relevant contract was between MMO and Janik & Dunn. It is not.  The contract between MMO and Janik & Dunn does not govern the relationship between Mrs. deSoto and MMO. Indeed,  that contract, without more, does not establish any significant legal relationship between Mrs. deSoto and MMO. It is the  Certificate that governs the parties' relationship. Therefore, it is the relevant contract10.

38
Applying the Restatement tests to that Certificate, we conclude that California law applies. The factors in section 188  point toward California law. The place of contracting between the parties was California. The place of contracting is where  the "last act necessary . . . to give the contract binding effect" occurred. Id. at § 188 cmt. e. In this case, that would be Mrs.  deSoto signing the Certificate. There appears to be no dispute that Mrs. deSoto signed the plan in California. Similarly,  were any negotiation to take place between the parties, it would have taken place in California. The place of  performance--where MMO provided benefits to Mrs. deSoto--was California. The subject matter of the contract--Mrs.  deSoto's medical expenses--was incurred in California. And while MMO is an Ohio corporation, Mrs. deSoto is a resident  of California.

39
In addition to these factors, California has a strong policy interest in its law applying. California enacted the Medical  Injury Compensation Reform Act, 1975 Cal. Stat., Second Ex. Sess. 1975-1976, chs. 1, 2, at 3949-4007, codified in part in  Civil Code section 3333.1, in an effort to limit the liability of health care providers, thereby alleviating the burden on their  insurance companies. See Western Steamship Lines, Inc. v. San Pedro Peninsula Hosp., 876 P.2d 1062, 1068 (Cal. 1994).  As the California Supreme Court noted,

40
In the view of the Legislature, 'the rising costs of medical malpractice insurance was imposing serious problems for  the health care system in California, threatening to curtail the availability of medical care in some parts of the state  and creating the very real possibility that many doctors would practice without insurance, leaving patients who might  be injured by such doctors with the prospect of uncollectible judgments.'... The continuing availability of adequate  medical care depends directly on the availability of adequate insurance coverage, which in turn operates as a function  of costs associated with medical malpractice litigation. . . . Accordingly, MICRA includes a variety provisions all of  which are calculated to reduce the cost of insurance by limiting the amount and timing of recovery in cases of  professional negligence.

41
Id. (internal citations omitted). Because the factors enumerated in section 188 of the Restatement point toward applying  California law and because the principles underlying those factors suggest that California should apply, we find that  California law applies to the Certificate.

2. Whether ERISA Preempts Section 3333.1

42
Even if California law applies, MMO argues, § 1144(a) of ERISA preempts CaliforniaCivil Code section 3333.1. The  district court agreed, finding, in a footnote, that the section was potentially preempted by § 1144(a) because it relates to an  employee benefit plan and it was not saved by § 1144(b)'s savings clause because it does not "regulate insurance."

43
We disagree with the district court's conclusion that ERISA preempts section 3333.1. In determining whether ERISA  preempts section 3333.1, we must answer three questions: First, we must determine whether section 3333.1 relates to an  employee benefit plan. If it does, it would be preempted, see 29 U.S.C. § 1144(a), unless we answer the second question in  the affirmative. The second question we must answer is whether the state law "regulates insurance." See id. at  §1144(b)(2)(A). If section 3333.1 regulates insurance, it would be "saved" from preemption. See id. Third, though it would  be saved from preemption, section 3333.1 would not have any effect on the plan if MMO were not deemed an insurance  company. See id. at  § 1144(b)(2)(B); FMC, Corp. v. Holliday, 498 U.S. 52, 61 (1990). Under Supreme Court precedent, a  self-funded plan may not be deemed an insurance company and therefore will be exempt from saved state laws. An insured  plan, on the other hand, is deemed an insurance company and therefore is subject to the requirements of saved state laws. See FMC, 498 U.S. at 61. The parties do not dispute that section 3333.1 relates to employee benefit plans and therefore is  potentially preempted. Nor do they dispute that the benefit plan is an insured plan and therefore not protected from state  law by ERISA's "deemer clause."

44
Thus, the only question we must answer is whether section 3333.1 "regulates insurance." Per Supreme Court guidance, a  state law regulates insurance if a common sense meaning of the language of the statute indicates that it is "specifically  directed toward [the insurance] industry." Pilot Life Ins. Co., v. Dedeavux, 481 U.S. 41, 49 (1987); see also UNUM Life  Ins. of America v. Ward, 526 U.S. 358, 367 (1999). That reading should be "verified" by determining whether or to what  extent the law meets the established criteria for interpreting the phrase "business of insurance" under the  McCarran-Ferguson Act. See Ward, 526 U.S. at 367. We believe section 3333.1 satisfies both tests.

45
Exercising our common sense, we believe a reading of the section indicates that it regulates insurance. Subsection (a)  allows a health care provider being sued for professional negligence to introduce evidence that the plaintiff obtained  collateral benefits from its insurance company. And subsection (b) prohibits the source of those collateral benefits,  insurance companies, from recovering the benefits it provided the plaintiff or subrogating the plaintiff's right to recover. By  preventing any such recovery or subrogation, the terms of section 3333.1 govern the relationship between the insurer and  the insured. As such, it is "specifically directed toward [the insurance] industry." Pilot Life, 481 U.S. at 49. Supreme Court  precedent supports our view. In FMC, the Supreme Court held that a common sense reading of a Pennsylvania  antisubrogation statute, with language similar to that of section 3333.1, indicated that the statute regulated insurance11.  "There is no dispute that the Pennsylvania law falls within ERISA's insurance savingclause . . . . Section 1720 directly  controls the terms of insurance contracts by invalidating any subrogation provisions they contain. . . . It does not merely  have an impact on the insurance industry; it is aimed at it." FMC, 498 U.S. at 61.

46
Our analysis of the McCarran-Ferguson Act criteria verifies our commonsense reading of section 3333.1. To meet the  established criteria for interpreting the phrase "business of insurance" under the McCarran-Ferguson Act, a law must  (1)have the effect of transferring or spreading a policyholder's risk, (2) be an integral part of the policy relationship  between the insurer and the insured, and (3) be limited to entities within the insurance industry. See Metropolitan Life Ins.  Co. v. Massachusetts, 471 U.S. 724, 743 (1985). In the case of the savings clause analysis, however, the requirement is not  as rigid. The Supreme Court in Ward made clear that all three factors need not be present. Ward, 526 U.S. at 373. It did not  make clear, however, just how many need to be present or the relative weight of each.

47
We need not concern ourselves with the answers to those questions here because all the factors are present in this case.  First, section 3333.1 has the effect of transferring or spreading risk. The logical effect of prohibiting medical malpractice  victims from recovering medical expenses paid for by their insurance and preventing the insurance companies from  recovering those costs from the victim, is to decrease the premiums of health care providers' insurance and increase the  premiums of health insurance--i.e., spread risks. This conclusion is supported by California courts' assessment of section  3333.1's effect. According to California courts, one purpose of the statute "is to shift the cost of special damages for  medical treatment from the malpractice insurance carriers to the providers of medical and hospital insurance." California  Physicians' Serv. v. Superior Court, 162 Cal. Rptr. 266, 270 (Cal. Ct. App.1980); accord Brame v. Wood, 689 P.2d 446,  449 (Cal. 1984). Second, it is an integral part of the policy relationship between the insurer and the insured because it, like  the Pennsylvania statute, "prohibits plans from being structured in a manner requiring reimbursement in the event of  recovery from a third party. It requires plan providers to calculate benefit levels ... based on expected liability conditions  that differ from those in States that have not enacted similar antisubrogation legislation." FMC, 498 U.S. at 60. Thus, it  "changes the bargain between insurer and insured." Ward, 526 U.S. at 374. And in doing so, it defines the terms of the  parties' relationship. See Pilot Life, 481 U.S. at 51. Finally, section 3333.1 is limited to the insurance industry because, as  the California Supreme Court noted in Western Steamship Lines, Inc., the law is part of an Act "calculated to reduce the  cost of insurance by limiting the amount and timing of recovery in cases of professional negligence." Western Steamship  Lines, Inc., 876 P.2d at 1068. Therefore, "[i]t does not merely have an impact on the insurance industry; it is aimed at it." FMC, 498 U.S. at 61. Accordingly, section 3333.1 is not preempted by ERISA and governs the disposition of this case.

3. Applying Section 3333.1

48
While on its face section 3333.1 applies only when the parties proceeded to trial, California courts have interpreted the  section as applying to settlements as well. See Graham v. Workers' Compensation Appeals Bd., 258 Cal. Rptr. 376, 382  (Cal. Ct. App. 1989) (applying section 3333.1 in the context of a settlement because of the California Supreme Court's  holding that "the practical effect of 3333.1 is to reduce the plaintiff's recovery in any medical malpractice casewhere the  collateral source benefits are payable, regardless of whether the plaintiff obtains recovery in trial or otherwise"). In applying  section 3333.1(b)'s mandate that "[n]o source of collateral benefits . . . shall recover any amount against the plaintiff," we  conclude that it prohibits MMO from recovering medical expenses it paid on Mrs. deSoto's behalf. The district court erred  in holding otherwise.

III. CONCLUSION

49
For the foregoing reasons, we reverse the district court's judgments and remand with instructions for the district court to  enter summary judgment in favor of the deSotos. Further, we vacate the district court's judgment awarding attorneys' fees in  light of this opinion.

Notes:

1
  While MMO paid other medical expenses as well, for the remainder of this opinion we will refer to the medical  expenses incurred as a result of the alleged medical malpractice as "the medical expenses."

2
  As noted above, the $616,537.53 MMO requested was the total amount of medical expenses MMO paid on behalf of  Mrs. deSoto--that is, the expenses resulting from the automobile accident and from the alleged medical malpractice. It  appears, however, that the deSotos recovery related only to the injuries sustained as a result of the alleged medical  malpractice. The district court and MMO glossed over this point. Unless the deSotos have recovered the medical expenses  related to the automobile accident, MMO is not entitled to reimbursement for those expenses. There is no allegation with  respect to any recovery except for the alleged medical malpractice.

3
  The relevant provision of that statute reads,   Any suit . . . to enforce any liability or duty created by this chapter . . . may be brought in any such district or in the  district wherein the defendant is found or is an inhabitant or transacts business, and process may be served in any  other district of which the defendant is an inhabitant or wherever the defendant may be found.
15 U.S.C. § 78aa.

4
  Our conclusion is not universally adopted among the circuits though the majority of the circuits have held that national  service of process provisions confer nationwide jurisdiction. See Board of Trustees, Sheet Metal Workers' Nat'l Pension  Fund v. Elitre Erectors, Inc., 212 F.3d 1031, 1035 (7th Cir. 2000) (applying a national contacts test based on §1132(e)(2)'s  nationwide service of process provision); In re Fed. Fountain, Inc., 165 F.3d 600, 601 (8th Cir. 1999) (upholding Fed. R.  Bankr. P. 7004(d)'s national service of process provision); Bellaire Gen. Hosp. v. Blue Cross Blue Shield, 97 F.3d 822, 825  (5th Cir. 1996) (holding that § 1132(e)(2) confers national jurisdiction over anyone having sufficient minimum contacts  with the United States); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1056-57 (2d Cir. 1993) (upholding 29  U.S.C. § 1451(d)'s national service of process provision as conferring nationwide jurisdiction).
The Tenth and Eleventh Circuits, however, have recently rejected this view. See Peay, 205 F.3d at 1210 (rejecting the  argument that §1132(e)(2) confers nationwide jurisdiction); BCCI Holdings, 119 F.3d at 943. Both of these cases are based  on the belief that the national contacts test fails to protect the individual liberty interest in question. Even if we were to  agree with the Tenth and Eleventh Circuits, we would find jurisdiction here. The ERISA statute gives notice that suits may  be brought in the district where the ERISA plan is administered. There is nothing fundamentally unfair in permitting the  plan, which is administered like a trust, to bring suits where it is located. While it is inconvenient to the defendants, it is  convenient to the plan, reducing its costs, to the benefit of all plan beneficiaries. Congress has balanced the plan's interest  and permitted suit where the plan is located. This does not seem to us unreasonable or unfair and meets the standards set  forth in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 470-77 (1985) (stating that due process is satisfied when the  "defendant's . . . connection with the forum state ...[is] such that he should reasonably anticipate being haled into court  there") (citations omitted).

5
  MMO argues that the deSotos waived this argument because they did not raise it in the district court. MMO is  mistaken. The deSotos argued in their Supplemental Brief in Support of Summary Judgment that they did not recover any  medical expenses under the settlement and therefore MMO is not entitled to be reimbursed for the medical expenses.  Though the argument is contained in a larger section discussing why the initial default judgment is not relevant to the  outcome of their case, we believe it is sufficient to find that the deSotos raised the issue in the district court.

6
  Section 104(a) in conjunction with § 213(a) would exclude some medical expenses. Section 104(a) excludes from its  definition of amounts of damages received on account of personal injury, amounts "attributable to (and not in excess of)  deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year." 26 U.S.C. §104(a).  Section 213 deductions relate to "expenses paid during the taxable year, not compensated for by insurance or otherwise." Id. at 213(a) (emphasis added). MMO paid Mrs. deSoto's medical expenses; therefore, § 104(a)'s exclusion does not apply  to their medical expenses.

7
  Section 3333.1 provides,   (a) In the event the defendant so elects, in an action for personal injury against a health care provider based upon  professional negligence, he may introduce evidence of any amount payable as a benefit to the plaintiff as a result of  the personal injury pursuant to . . . any health, sickness or income-disability insurance, accident insurance that  provides health benefits or income-disability coverage, and any contract or agreement of any group, organization,  partnership, or corporation to provide, pay for, or reimburse the cost of medical, hospital, dental, or other health care  services. . . .      (b) No source of collateral benefits introduced in subsection (a) shall recover any amount against the plaintiff nor  shall it be subrogated to the rights of the plaintiff against the defendant.
Cal. Civ. Code § 3333.1.

8
  At oral argument there was some discussion concerning the order of the preemption analysis--specifically, whether we  begin by asking what law applies and then undertaking the preemption analysis or by asking if ERISA potentially preempts  state law; then determining which states' law applies; and finally conducting the second and third steps of the preemption  analysis. Antisubrogation laws undoubtedly relate to ERISA plans and therefore any such law would be preempted. Thus, if  both states had such a law, it would make little difference which question we asked first. However, in this case only  California has an antisubrogation law, so we ask first which states' law applies.

9
  The Tenth Circuit has recently applied the forum state's choice of law doctrine in analyzing which states' substantive  law applied in an ERISA action. See Dang v. UNUM Life Ins. Co. of America, 175 F.3d 1186, 1190 (10th Cir. 1999).  Under the Tenth Circuit's rule, we would apply Ohio choice of law doctrine, as Ohio is the forum state. Such an analysis  would reach the same result we reach using federal common law principles because Ohio has adopted the Restatement's  choice of law principles as well. See International Ins. Co. v. Stonewall Ins. Co., 86 F.3d 601, 604 (6th Cir. 1996).

10
  MMO also contends that the relevant contract is between itself and Janik & Dunn. We strongly doubt, however, that if  Mrs. deSoto had elected not to become a participant in the plan, was injured, and brought suit against MMO claiming that  she was entitled to the benefits of the plan because she is an employee of Janik & Dunn and it has a contract with MMO,  MMO would be arguing that the relevant contract in resolving the matter is the agreement between itself and Janik &  Dunn.

11
  The statute provided,
In actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or  reimbursement from a claimant's tort recovery with respect to workers' compensation benefits . . . .
FMC, 498 U.S. at 55 n.1 (quoting Motor Vehicle Financial Responsibility Act, 75 Pa.Cons.Stat. § 1720 (1987)).

50
RONALD LEE GILMAN, Circuit Judge, concurring.

51
I concur in the judgment and in the reasoning of the court on the  merits of the case, but write separately because I disagree with the court's opinion in Part II.A. regarding ERISA's  nationwide service of process provision, 29 U.S.C. §1132(e)(2). The court in effect holds that the statute confers unfettered  personal jurisdiction over defendants such as the deSotos without regard to "traditional notions of fair play and substantial  justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Rather, I believe that the test for personal  jurisdiction adopted by the Tenth and Eleventh Circuits is more compelling and should apply to the case at hand. See Peay  v. BellSouth Medical Assistance Plan, 205 F.3d 1206, 1212 (10th Cir. 2000) (finding that due process requires an inquiry  into the fairness of requiring a defendant in a § 1132(e)(2) ERISA action to submit to a remote forum, rather than simply  asking whether the defendant has minimum contacts with the United States); Republic of Panama v. BCCI Holdings  (Luxembourg) S.A., 119 F.3d 935, 946-48 (11th Cir. 1997) (engaging in a due process analysis regarding the fairness of  requiring the defendant to be tried in a remote forum under a nationwide service of process provision in the Racketeer  Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1965(d)).

52
Section 1132(e)(2) of ERISA provides for service of process in any district where a defendant resides or may be found.  Although this provision acts as a statutory basis for personal jurisdiction, it cannot trump the constitutional limits of due  process to acquire jurisdiction over a particular defendant. See BCCI Holdings, 119 F.3d at 942. The personal jurisdiction  requirement stems from the Due Process Clause of the Fifth Amendment and serves to restrict judicial power in order to  protect an individual's liberty interest. See Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694,  702 (1982). Because the language and policies behind the Due Process Clause of the Fourteenth Amendment are essentially  the same as those behind the Due Process Clause of the Fifth Amendment, the test for fairness in exercising personal  jurisdiction over a defendant should be the same for both. See BCCI Holdings, 119 F.3d at 944.

53
In the seminal case on personal jurisdiction, International Shoe Co., 326 U.S. at 316, the Supreme Court held that due  process requires that "the maintenance of the suit . . . not offend 'traditional notions of fair play and substantial justice.'"  Again in the context of the Fourteenth Amendment, the Court has held that due process acts as the "guarantor against  inconvenient litigation." World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292 (1980).

54
Like the Eleventh Circuit, I "discern no reason why these constitutional notions of 'fairness' and 'reasonableness' ...  should be discarded completely when jurisdiction is asserted under a federal statute rather than a state long-arm statute." BCCI Holdings, 119 F.3d at 945. Under such federal statutes, a defendant should beafforded the opportunity to  demonstrate "'that his liberty interests actually have been infringed' ... [or] that the exercise of jurisdiction in the chosen  forum will 'make litigation so gravely difficult and inconvenient that [he] unfairly is at a severe disadvantage in comparison  to his opponent.'" Peay, 205 F.3d at 1212 (internal citations omitted). Even Footnote 4 in the court's opinion recognizes that  "it is inconvenient to the defendants" to appear in Ohio. Allowing the automatic exercise of personal jurisdiction over  out-of-state defendants based solely on whether they have any contacts with the United States abrogates our duty to inquire  into whether the inconvenience of the forum results in a constitutional deprivation of their rights.

55
I therefore disagree with the court's conclusion that "our previous holdings in United Liberty Life Insurance, Co. v.  Ryan, 985 F.2d 1320 (6th Cir. 1993), and Haile v. Henderson National Bank, 657 F.2d 816 (6th Cir. 1981), applying a  national contacts test where the statute in question contained a national service of process provision, mandate that we apply  such a test here." The jurisdictional statutes involved in both those cases specify a much closer nexus of the defendant to  the forum in question than exists in the present case. See United Liberty, 985 F.2d at 1330 (setting forth the restrictive  service provision in a suit brought against defendants in a securities action); Haile, 657 F.2d at 825-26 (finding jurisdiction  appropriate in one forum over multiple properties in a receivership action.)

56
The courts that have found a national minimum-contacts test insufficient to guarantee due process for personal  jurisdiction have recognized that it is only in rare instances that the defendant will meet his or her burden of proving a  constitutional violation. See BCCI Holdings, 119 F.3d at 947 ("We emphasize that it is only in highly unusual cases that  inconvenience will rise to a level of constitutional concern."); Peay, 205 F.3d at 1212-13. In Peay, the court listed a number  of factors that a court should consider, including the extent of the defendant's contacts with the place where the action was  filed and the inconvenience to the defendant. See Peay, 205 F.3d at 1212. Additional factors that should be considered  when calculating the inconvenience to the defendant are the defendant's access to counsel, the distance from where the  defendant is located to where the action was brought, judicial economy, the probable situs of discovery proceedings, and  the nature of the regulated activity in question. See id.

57
I would hold that this circuit should adopt the due process test of the Tenth and Eleventh Circuits in order to guarantee  that a defendant's rights are not violated when being haled into court under a federal statute that has a nationwide service of  process provision. Turning specifically to the deSotos, however, I would agree that they have failed to establish that  defending their case in Ohio has violated their rights. The indemnity provision in the settlement agreement between the  Board of Regents of the University of California and the deSotos establishes that the real party in interest in this suit is the  Board of Regents rather than Denise and Jose deSoto. Because the Board of Regents is an agent of the State of California  and acts like a corporation, the deSotos have not shown that appearing in Ohio was unduly burdensome or offended  "traditional notions of fair play and substantial justice." In other circumstances, however, I might reach a different result under the due process test for personal jurisdiction.

58
For the reasons stated above, I believe that defendants who are being sued under federal statutes that have a nationwide  service of process provision should have the right to raise a due process defense regarding personal jurisdiction over them.  The court's national-contacts test, in my view, does not sufficiently protect individual liberty interests under circumstances  where the inconvenience of the forum rises to the level of a deprivation of the defendants' constitutional rights. Because Iconclude that we have jurisdiction over the deSotos even under the due process test, however, I join the court in its  judgment on the merits of this case.