The percentage of all health care in the United States provided through managed care plans has steadily risen in the past decade. See Samuelson, R.J., “Managed Care Revolution,” Washington Post, Oct. 25, 1995, at A19 (noting that the percentage of workers in managed care programs rose from 29 percent in 1988 to 70 percent in 1995). Managed care is defined broadly as a system that integrates the financing and delivery of health care services to covered individuals through arrangements with selected providers; both providers and subscribers are subject to significant financial incentives designed to reduce utilization and to hold down costs. See Health Insurance Association of America, Source Book of Health Insurance Data (New York: Health Insurance Institute, 1991). For a description of common organizational arrangements used by managed care plans, see Jordan, K.A., “Managed Competition and Limited Choice of Providers: Countering Negative Perceptions Through a Responsibility to Select Quality Network Physicians,” Arizona State Law Journal, 27 (1995): 875–952.Google Scholar

For example, in an effort to control costs, managed care plans generally utilize preauthorization requirements, second surgical opinions, length of stay limitations, choice of provider restrictions, and capitation and other provider risk-sharing mechanisms.Google Scholar

See Conrad, R.J. and Seiter, P.D., “Health Plan Liability in the Age of Managed Care,” Defense Counsel Journal, 62 (1995): 191–200. See also “When HMOs Say No to Health Coverage, More Patients Taking Them to Court,” Wall Street Journal, May 17, 1996, at B1.Google Scholar

For example, Darling v. Charleston Community Memorial Hospital, 211 N.E.2d 253 (Ill. 1965), cert. denied, 383 U.S. 946 (1966), established the concept of “institutional negligence,” by holding that hospitals have a duty to choose their physicians with care and to review the medical care provided by the physicians. This duty has been expanded to impose a number of tort duties on hospitals. See, for example, Johnson v. Misericordia Community Hospital, 301 N.W.2d 156 (Wis. 1981) (imposing a duty to investigate a physician's credentials); Copithorne v. Framingham Union Hospital, 520 N.E.2d 139 (Mass. 1988) (imposing a duty to select and retain only competent physicians); Thompson v. Nasom Hospital, 591 A.2d 703 (Pa. 1991) (imposing a duty to use reasonable care in the maintenance of safe and adequate facilities and equipment); and Karibjanian v. Thomas Jefferson University Hospital, 717 F. Supp. 1081 (E.D. Pa. 1989) (imposing a duty to formulate, adopt, and enforce adequate rules and policies to ensure the provision of quality care to patients).Google Scholar

See, for example, Harrell v. Total Health Care, Inc., No. 71610, 1989 WL 153066 (Mo. Ct. App. Apr. 25, 1989), aff'd, 781 S.W.2d 58 (Mo. 1989). The court in Harrell extended the doctrine of institutional liability from hospitals to the defendant health maintenance organization (HMO) because the HMO had assumed the traditional role of a hospital—that is, it was a comprehensive health center with responsibilities for arranging and coordinating the total health care of patients. Specifically, the court held that there was an unreasonable risk of harm to subscribers if the physicians used by the HMO included physicians who were unqualified or incompetent Id. at *4–5. See also McClellan v. Health Maintenance Organization of Pennsylvania, 604 A.2d 1053 (Pa. 1992) (imposing on the defendant HMO a tort duty to use reasonable care in the selection and retention of physicians).Google Scholar

See, for example, Rice v. Panchal, 65 F.3d 637 (7th Cir. 1995); Pacificare of Oklahoma, Inc. v. Burrage, 59 F.3d 151 (10th Cir. 1995); and Prihoda v. Shpritz, 914 F. Supp. 113 (D. Md. 1996).Google Scholar

See, for example, Kuhl v. Lincoln National Health Plan of Kansas City, 999 F.2d 298 (8th Cir. 1993) (involving claims based on the HMO's alleged misconduct in delaying necessary treatment); and Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th Cir. 1992) (involving a claim based on the HMO's allegedly negligent utilization review process, which resulted in a denial of coverage for hospitalization).Google Scholar

See, for example, Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d Cir.), cert. denied, 116 S. Ct. 564 (1995).Google Scholar

Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 829 (codified as amended at 29 U.S.C. §§ 1001-461 (1988 & Supp. V 1993). ERISA was enacted to help ensure that employee benefit plans are established on financially sound principles, and to ease the burdens that could arise from plans serving employees in more that one state. Congress therefore sought to place all benefit plans—pension plans, health plans, and other benefit plans—under a uniform set of federal rules.Google Scholar

ERISA does not govern certain plans, including government plans, church plans, excess benefit plans, plans maintained solely for purposes of workmen's compensation, unemployment compensation or disability insurance laws, and plans maintained outside of the United States primarily for the benefit of persons who are nonresident aliens. See 29 U.S.C. § 1003(b)(1)–(5) (1988).Google Scholar

See id. at § 1144(a) (ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan….”). ERISA plans include plans established or maintained by an employer for the purpose of providing medical, surgical, or hospital care benefits. Id. at § 1002(1).Google Scholar

See, for example, Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41 (1987) (holding that ERISA preempted tort and contract claims based on allegedly improper processing of a claim for benefits under an insured plan); and Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990) (holding that ERISA preempted a common law claim for wrongful discharge).Google Scholar

See 29 U.S.C. § 1132(a). The types of suits and remedies available are discussed in greater depth infra notes 88–89 and accompanying text.Google Scholar

Kuhl, 999 F.2d 298.Google Scholar

See id. at 303.Google Scholar

See “Managed Care: Bill Would Lift ERISA Preemption, Allow Participants to Sue Plans,” Health Care Daily (BNA), May 23, 1997.Google Scholar

New York Conference of Blue Cross & Blue Shield v. Travelers Insurance Co., 115 S. Ct. 1671 (1995).Google Scholar

See Dukes, 57 F.3d 350 (3d. Cir.), cert. denied, 116 S. Ct. 564; and Rice, 65 F.3d 637 (addressing whether a claim falls within the scope of section 502(a) of ERISA). See also Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997) (imposing a duty of loyalty on an HMO through ERISA's fiduciary provisions).Google Scholar

See 29 U.S.C. § 1001(b) (1988).Google Scholar

Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 9–11 (1987).Google Scholar

See 29 U.S.C. § 1144(a).Google Scholar

ERISA's savings clause exempts from preemption any law that regulates insurance, banking, or securities. 29 U.S.C. § 1144(b)(2)(A). ERISA's deemer clause modifies the savings clause by prescribing that employee benefit plans may not be characterized as an insurance company and regulated by the state through insurance laws. 29 U.S.C. § 1144(b)(2)(B). Because of the savings clause, states can regulate health care coverage to some extent through insurance reform. However, the deemer clause limits the reach of such reforms by precluding application of insurance laws to self-insured plans. For a discussion of how the saving clause could be applied to permit greater regulation of health care coverage concerns, see generally Jordan, K.A., “ERISA Pre-Emption: Integrating Fabe into the Savings Clause Analysis,” Rutgers Law Journal, 27 (1996): 273–342.Google Scholar

FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990); and Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96–97 (1983). See generally Engel, D.A., “ERISA: Where's the Preemption Now?,” Tort & Insurance Law Journal, 27 (1992): 523–54.Google Scholar

498 U.S. at 58–59 (limiting the preemption clause to state laws imposing reporting, disclosure and fiduciary duties would be incompatible with Congress's rejection of both House and Senate bills that contained such a limitation).Google Scholar

Ingersoll-Rand, 498 U.S. at 139 (citing Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 739 (1985)); and Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 829 (1988) (ERISA preempted state garnishment statute even though it was enacted to help effectuate ERISA's underlying purposes).Google Scholar

See, for example, Pilot Life, 481 U.S. 41 (holding that ERISA preempted tort and contract claims based on allegedly improper processing of a claim for benefits under an insured plan); and 498 U.S. 133 (holding that ERISA preempted a common law claim for wrongful discharge).Google Scholar

See generally Carr, W.K. and Liebross, R.L., “Wrong Without Rights: The Need for a Strong Federal Common Law of ERISA,” Stanford Law & Policy Review, 4 (1992–93): 221–29; and Stein, N., “ERISA and the Limits of Equity,” Law & Contemporary Problems, 56 (1993): 71–110.Google Scholar

See Shaw, 463 U.S. at 100 n.21.Google Scholar

Only two Supreme Court cases prior to Travelers involved state laws that the Court held did not “relate to” ERISA plans. See Mackey, 486 U.S. 825 (holding that ERISA does not bar a state garnishment proceeding against the plan, even though the proceeding would inflict substantial burdens on the plan administrator, because ERISA prescribes that plans may sue and be sued, but does not prescribe a method for execution of judgments); and Fort Halifax, 482 U.S. 1 (holding that ERISA did not preempt a state law requiring employers to provide a onetime severance payment to employees because, although the law related to benefits, it did not relate to a “benefit plan”).Google Scholar

Various rationales have been used by lower courts in finding that ERISA preempted state law claims: For example, (1) the claim is really a claim for benefits or a claim for improper processing of the claim (see, for example, Corcoran, 965 F.2d 1321); (2) the claim affects plans by causing pass-through costs that will result in the plan having to choose between higher costs or a reduction in benefits (see, for example, Ricci v. Gooberman, 840 F. Supp. 316 (D.N.J. 1993)); (3) the claim regulates the administration of the plan (see, for example, Dearmas v. Av-Med, Inc., 865 F. Supp. 816 (S.D. Fla. 1994)); (4) the claim arises from the provision of benefits pursuant to an ERISA plan (see, for example, Dukes v. United States Health Care System of Pa., Inc., 848 F. Supp. 39 (E.D. Pa. 1994), rev'd on other grounds, 57 F.3d 350 (3d Cir. 1995)); or (5) the claim requires an examination of plan documents (see, for example, Nealy v. H.S. Healthcare HMO, 844 F. Supp. 966 (S.D.N.Y. 1994)). In cases involving contract or tort claims, courts often use several of these rationales. See, for example, 844 F. Supp. 966.Google Scholar

See, for example, 840 F. Supp. 316 (finding preemption because the trickle-down economic effect of the law might cause employers to reduce benefits or to refrain from creating plans).Google Scholar

Compare Visconti v. U.S. Health Care, 857 F. Supp. 1097 (E.D. Pa. 1994), rev'd on other grounds, 57 F.3d 350 (3d Cir. 1995), with Kearney v. U.S. Healthcare, 859 F. Supp. 182 (E.D. Pa. 1994). See also Pacificare, 59 F.3d at 153 n.2 (collecting cases).Google Scholar

Travelers, 115 S. Ct. 1671.Google Scholar

New York's rate-setting system establishes the rates that hospitals may charge various payers. Payers are categorized into three groups. The first group, including the state as payer for Medicaid, Blue Cross and Blue Shield plans, and HMOs, can be charged only a base diagnostic-related rate (the DRG rate). The second group, including some self-insured plans and commercial insurers, can be charged the DRG rate plus a 13 percent surcharge. The third group, consisting of all other payers, can be charged actual hospital charges up to a statutory limit of 120 percent of the rate charged payers in group two. See NY. Public Health Law § 2807-c (McKinney 1994 & Supp. 1995).Google Scholar

115 S. Ct. at 1679.Google Scholar

For a more detailed discussion of a broad interpretation of the Court's opinion in Travelers, see Jordan, K.A., “Travelers Insurance: New Support for the Argument to Restrain ERISA Pre-Emption,” Yale Journal on Regulation, 13 (1996): 255–336. For other perspectives of the Travelers decision, see generally Fisk, C.L., “The Last Article About the Language of ERISA Preemption? A Case Study of the Failure of Textualism,” Harvard Journal on Legislation, 33 (1996): 35–103; and Ondrasik, P.J., “New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.—‘Back to the Future’?,” ERISA Litigation Reporter, 4, no. 3 (1995): 4–13.Google Scholar

The Court did not elaborate on the “reference to” prong of the test because it found that New York's rate-setting legislation did not reference ERISA plans. 115 S. Ct. at 1677. But see District of Columbia v. Greater Washington Board of Trade, 113 S. Ct. 580 (1992).Google Scholar

115 S. Ct. at 1677.Google Scholar

See, for example, Shaw, 463 U.S. 85.Google Scholar

See, for example, Pilot Life, 481 U.S. 41; and Ingersoll-Rand, 498 U.S. 133.Google Scholar

For example, lower court decisions are beginning to address when a law is preempted due to a reference to ERISA plans. See, for example, Thiokol Corp., Morton International, Inc. v. Roberts, 76 F.3d 751 (6th Cir. 1996); and NYS Health Maintenance Organization Conference v. Curiale, 64 F.3d 794 (2d Cir. 1995) (analyzing whether the state law's “reference to” ERISA plans warranted preemption). However, the Thiokol decision must be read in light of California Division of Labor Standards Enforcement v. Dillingham Construction, N.A., 117 S. Ct. 832 (1997) (refining the “reference to” test).Google Scholar

115 S. Ct. at 1678.Google Scholar

See, for example, Ricci, 840 F. Supp. 316 (holding vicarious liability claims against HMOs preempted because of the “trickle-down” cost to plan beneficiaries).Google Scholar

Additionally, the Court rejected the various formulations that had evolved at the federal appellate level for evaluating an effect on ERISA plans. For example, the Eighth Circuit has established that a series of factors should be considered in deciding whether a state statute of general applicability is preempted by ERISA. Those factors are whether the state law: Negates a provision of an ERISA plan; affects relations between primary ERISA entities; affects the structure of ERISA plans; affects the administration of the plan; impacts economically ERISA plans; is an exercise of traditional state power; and whether preemption of the state law is consistent with other ERISA provisions. See Arkansas Blue Cross & Blue Shield v. St. Mary's Hospital, 947 F.2d 1341, 1350 (8th Cir. 1991).Google Scholar

When a state law conflicts with an ERISA provision, the conflict alone is sufficient to warrant preemption. See, for example, Boggs v. Boggs, 117 S. Ct. 1754 (U.S. 1997). This would be true under traditional preemption doctrine even absent ERISA's specific preemption provisions.Google Scholar

Dillingham, 117 S. Ct. 832.Google Scholar

See id. at 841.Google Scholar

See id. at 842. See also Debuono v. NYSL-ILA Medical and Clinical Services Fund, 117 S. Ct. 1747 (U.S. 1997) (holding that New York's provider tax is not preempted because, although its effect on plans which own and operate medical centers is more direct, the law merely causes an increase in costs that influences choices made by employers or plan administrators).Google Scholar

Characteristically, lower court decisions since Travelers have not interpreted the decision uniformly. Compare NYS Health Maintenance Organization Conference, 64 F.3d 794 (upholding a state law requiring HMOs to engage in open enrollment and community rating by applying Travelers's restrictive standard), with Boyle v. Anderson, 68 F.3d 1093 (8th Cir. 1995) (upholding a 2 percent provider tax, but applying Travelers very narrowly).Google Scholar

See 29 U.S.C. § 1132 (a).Google Scholar

Namely, the recovery of benefits (either the care itself or monetary reimbursement for care covered by the plan); or an order requiring the plan to comply with some other contractual terms. See 29 U.S.C. § 1132(a). See also Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985) (extra-contractual and punitive damages are not available in a claim under § 502(a)(1)(B) enforcing a violation of section 409(a) of ERISA). But see Corcoran, 965 F.2d 1321 (5th Cir.), cert. denied, 113 S. Ct. 812 (holding a wrongful death claim against a utilization review entity to be preempted because the claim arose from an allegedly negligent denial of benefits). The situation in Corcoran may be the exception. The Corcorans’ claim could be characterized as a claim for benefits and thus within the scope of section 502(a) of ERISA. However, the remedy sought was not compensation of the denied benefits, but damages for wrongful death. That remedy is unavailable under section 502(a). Thus, Corcoran presents a situation where the claim is perhaps preempted because it is within the scope of section 502(a), but nonetheless may be dismissed for failure to state a claim for which relief may be granted.Google Scholar

See 29 U.S.C. §§ 1021–86.Google Scholar

See id. §§ 1101–14.Google Scholar

Codified at 29 U.S.C. § 1132.Google Scholar

See 29 U.S.C. § 1132(a)(1)(B).Google Scholar

See id. § 1132(a)(2). Specifically, this provision prescribes who may bring a civil action enforcing 29 U.S.C. § 1109.Google Scholar

See id. § 1132(a)(3)(A)–(B).Google Scholar

Dukes, 57 F.3d 350 (3d Cir.), cert. denied, 116 S. Ct 564.Google Scholar

Rice, 65 F.3d 637.Google Scholar

See, for example, “ERISA: Federal Benefits Law Does Not Preempt Vicarious Liability Claim Against HMO,” Health Care Daily (BNA) (Feb. 14, 1996) (citing Dukes and Rice for the proposition that ERISA does not preempt a vicarious liability claim against managed care organizations); and “ERISA: Federal Law Does Not Preempt Claim of PPO Sponsor's Malpractice Liability,” Health Care Daily (BNA) (Sept. 19, 1995) (reporting that the court in Rice concluded that ERISA did not preempt the plaintiff's vicarious liability claim).Google Scholar

Removal to federal court is authorized if, on the face of the complaint, it appears that a plaintiff could have filed the action in federal court. See 28 U.S.C. § 1441. See Louisville & Nashville R.R. v. Mottley, 211 U.S. 149 (1908) (establishing the parameters of the well-pleaded complaint rule).Google Scholar

See 65 F.3d at 640 (“In this case, we must determine whether Rice's efforts to hold Prudential liable for the medical malpractice of [Dr.] Sotillo under state common law principles of respondeat superior is ‘within the scope of § 502(a)’…, and therefore completely preempted under ERISA.”). The Supreme Court recognized the doctrine of complete preemption in ERISA cases in Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58 (1987).Google Scholar

Yet a state law claim that is not within the scope of ERISA § 502(a) may be preempted because of its effect on an ERISA plan. In such a case, the generally recognized practice is to remand the action to state court for determination of ERISA preemption on a basis other than section 502(a). Prior to the Rice and Dukes decisions, case law revealed considerable confusion between the concepts of preemption and complete preemption in the ERISA context. See, for example, Chaghervand v. Carefirst, 909 F. Supp. 304 (D. Md. 1995); Prihoda, 914 F. Supp. 113 (decided after Rice and Dukes, yet the court failed to understand whether removal the actions was proper). The decisions in Rice and Dukes should go a long way toward clarifying the distinction between preemption and the doctrine of complete preemption and whether an action involving a state tort claim against a managed care plan is removable. However, they also highlight the inefficiencies associated with removal because the ERISA preemption analysis becomes split between federal and state courts. See generally Jordan, K.A., “The Complete Preemption Dilemma: A Legal Process Perspective,” Wake Forest Law Review, 31 (1996): 927–99.Google Scholar

See 29 U.S.C. § 1132(a) (1988).Google Scholar

Dukes, 57 F.3d at 356.Google Scholar

See id.Google Scholar

Rice, 65 F.3d at 642.Google Scholar

57 F.3d at 356–57.Google Scholar

See id. at 357.Google Scholar

65 F.3d at 642. Rice did not involve an HMO. Rather, plaintiff Rice had coverage through a group insurance contract issued and administered by Prudential Insurance Company of America. Thus, the court noted that the “benefits” were the payments of the costs of medical services, not the medical services themselves. Id. at 642. This is distinguishable from the situation in Dukes where the court assumed, without deciding, that the medical care provided constituted the plan benefit 57 F.3d at 356.Google Scholar

The court in Dukes noted, however, that an exception might exist. For example, if the quality of the medical care rendered is so low that the treatment does not qualify as health care, then the distinction between the “quantity” of benefits due and the “quality” of benefits becomes a distinction without a difference. 57 F.3d at 358. In such a case, a suit challenging the quality of care could be characterized as a suit for benefits.Google Scholar

57 F.3d at 360 (distinguishing Corcoran, 965 F.2d 1321 (5th Or.), cert. denied, 113 S. Ct. 812).Google Scholar

See id. at 360–61.Google Scholar

See id. at 358.Google Scholar

See id. It is not clear that the court was referring to both the direct and vicarious claims because a claim for negligent credentialing is generally not considered a malpractice claim. But it is a reasonable conclusion because, throughout the opinion, the court essentially treated the claims as one.Google Scholar

Rice, 65 F.3d at 642.Google Scholar

The Labor Management Relations Act (LMRA), codified in scattered section of 29 U.S.C, is an amendment to the National Labor Relations Act (NLRA). NLRA was the first federal law recognizing the right of workers to unionize; LMRA was intended to limit the power of organized labor.Google Scholar

Section 301 is codified at 29 U.S.C. § 185(a) (1994).Google Scholar

65 F.3d at 643 (citing Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399 (1988); Livadas v. Bradshaw, 114 S. Ct. 2068 (1994); and Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985)).Google Scholar

65 F.3d at 644.Google Scholar

Interestingly, the Dukes and Rice approaches to what claims can be characterized as claims to enforce the terms of an ERISA plan can be harmonized. One view of when the section 301 standard is met is whether the state law claim is “independent”—in that it does not depend on the existence of a collective bargaining agreement See Adams, M.L., “Struggling Through the Thicket: Section 301 and the Washington Supreme Court,” Berkeley Journal of Employment & Labor Law, 15 (1994): 106–40 (citing Marcus, S.R., Note, “The Need for a New Approach to Federal Preemption of Union Members’ State Law Claims,” Yale Law Journal, 99 (1989–90): 209–30). This is in essence the test articulated by the court in Dukes. However, the case law articulating the scope of preemption under LMRA § 301 is itself the subject of considerable dispute. Id. Thus, the Seventh Circuit's approach to the ERISA preemption analysis is bound to muddy the waters considerably more than the Third Circuit's more straightforward approach.Google Scholar

Analogizing to section 301 case law, the court in Rice found that the plaintiff's vicarious liability claim did not rest on the terms of the ERISA plan and could be resolved without interpreting the plan. 65 F.3d at 646.Google Scholar

See id. at 645.Google Scholar

See id.Google Scholar

See, for example, Nealy, 844 F. Supp. 966 (holding a state tort claim preempted in part because resolution would require scrutiny of plan documents).Google Scholar

See, for example, Lazorko v. Pennsylvania Hospital, 1997 WL 158144 (E.D. Pa. Mar. 5, 1997) (unpublished opinion) (following Dukes by assuming that the benefit due to the plaintiff under her ERISA plan was medical care).Google Scholar

29 U.S.C. § 1132(a)(2) (1988). Specifically, this provision prescribes who may bring a civil action enforcing 29 U.S.C. § 1109. The section also authorizes a suit by the secretary of Department of Labor or a plan fiduciary.Google Scholar

Id. § 1132(a)(3)(A)–(B).Google Scholar

Shea, 107 F.3d 625.Google Scholar

See id. at 628 (citing Varity Corp. v. Howe, 116 S. Ct 1065, 1074–75 (1996)).Google Scholar

See id. Notably, although the Supreme Court in Varity recognized a fiduciary's duty of loyalty and held that the duty is violated when a fiduciary knowingly deceives plan beneficiaries, the Court did not go so far as to recognize a duty to disclose truthful information. See 116 S. Ct. at 1074–75.Google Scholar

See 107 F.3d at 629.Google Scholar

A few other courts have recognized a fiduciary duty of disclosure. See, for example, Rosen v. Hotel & Restaurant Employees & Bartenders Union, 637 F.2d 592, 600 n.11 (3d Cir.), cert. denied, 454 U.S. 898 (1981); Eddy v. Colonial Life Insurance Co. of Am., 919 F.2d 747, 750–51 (D.C. Cir. 1990) (quoting Globe Woolen Co. v. Atocia Gas & Electric Co., 121 N.E. 378, 380 (N.Y. 1918)). See also Howe v. Varity Corp., 36 F.3d 746, 754 (8th Cir. 1994), aff'd, 116 S. Ct. 1065 (1996) (but not reaching the issue of an affirmative duty of disclosure).Google Scholar

See 29 U.S.C. § 1132(a)(2)–(3) (1988); and 29 U.S.C. § 1109 (1988). See also Varity, 116 S. Ct. 1065; and Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985).Google Scholar

See, for example, Dykema v. King, 959 F. Supp. 736 (D.S.C. 1997) (holding that a vicarious liability claim against an HMO that administered an ERISA plan was not within the scope of section 502(a)); Lancaster v. Kaiser Foundation Health Plan of Mid-Atlantic States, Inc., 958 F. Supp. 1137 (E.D. Va. 1997) (addressing vicarious liability claims against both the plaintiff's HMO and the medical group with which the HMO contracted); Santitoro v. Evans, 935 F. Supp. 733 (E.D.N.C. 1996); Fritts v. Khoury, 933 F. Supp. 668 (E.D. Mich. 1996); Prihoda, 914 F. Supp. 113; and Morrison v. Seafarers Int'l Union of N. Am., AFL-CIO, 954 F. Supp. 55 (E.D.N.Y. 1996).Google Scholar

See, for example, 935 F. Supp. at 736; 958 F. Supp. at 1145–46; 954 F. Supp. at 57; and 933 F. Supp. at 671.Google Scholar

914 F. Supp. at 115–16.Google Scholar

See id. See also 959 F. Supp. at 736–38.Google Scholar

See 935 F. Supp. at 736; 958 F. Supp. at 1145–46; and 959 F. Supp. at 741.Google Scholar

Joss v. Prudential Health Care Plan, Inc., 88 F.3d 1482 (7th Cir. 1996).Google Scholar

See id. at 1488. However, the court also held that such claims are preempted by ERISA. See discussion infra notes 115–17 and accompanying text.Google Scholar

See id. at 1489, 1491. See also Schmid v. Kaiser Foundation Health Plan of the Northwest, 963 F. Supp. 942 (D. Or. 1997) (in an unclear opinion, holding a vicarious claim against Kaiser, arising from a physician's failure to perform tests, to authorize visits to a different physician, and to heed the opinion of an outside specialist, to be within the scope of section 502(a) because it more closely resembled a claim for benefits).Google Scholar

See 29 U.S.C. § 1132(a)(1)(B) (1988). A participant or beneficiary may also obtain an injunction or other appropriate equitable relief for any act or practice that violates any specific ERISA provision or the contractual terms of the plan. See id. § 1132(a)(3).Google Scholar

See Massachusetts Mutual Life, 473 U.S. 134 (holding that extra-contractual and punitive damages were not available in a claim under ERISA § 502(a)(1)(B) enforcing a violation of ERISA § 409(a); rather, the plaintiff was limited to the remedies set forth in section 502(a)).Google Scholar

See, for example, Chaghervand, 909 F. Supp. 304; and Pappas v. Asbel, 675 A.2d 711 (Pa. Super. Ct. 1996). See also Lancaster, 958 F. Supp. 1137.Google Scholar

909 F. Supp. at 311.Google Scholar

958 F. Supp. 1137. It is not as clear that the Lancaster court reached its result by applying Travelers, because the court also relied on the pre-Travelers cases discussed infra.Google Scholar

See, for example, Pacificare, 59 F.3d at 154; and Schachter v. Pacificare of Oklahoma, 923 F. Supp. 1448, 1452 (N.D. Okla. 1995). See also Tufino v. New York Hotel and Motel Trades Council and Hotel Ass'ns, 646 N.Y.S.2d 799, 802 (N.Y.S. App. Div. 1996).Google Scholar

59 F.3d at 155.Google Scholar

See id. Recent cases have followed Pacificare. See, for example, Dykema, 959 F. Supp. 736; Prihoda, 914 F. Supp. 113; and Prudential Health Care Plan v. Lewis, 1996 WL 77018 (10th Cir. 1996) (unpublished opinion).Google Scholar

Kearney, 859 F. Supp. 182. See, for example, 923 F. Supp. 1448, 1452.Google Scholar

859 F. Supp. at 186. The cases that do not rely on Travelers generally recognize the distinction between claims arising from negligent treatment and negligent benefit determinations. See 923 F. Supp. at 1452; and 646 N.Y.S.2d at 802. This recognition that vicarious claims arising from benefit determinations may be preempted is consistent with the decisions in Rice and Dukes that such claims are preempted because they are suits to recover benefits.Google Scholar

859 F. Supp. at 186.Google Scholar

Jass, 88 F.3d 1482, 1493. The action at issue in Jass was whether removal from the state court was proper. As explained, this generally limits the analysis to whether the claims fall within the scope of section 502(a). However, the court was able to address the second prong of the preemption analysis because one of Jass's claims fell within section 502(a)—the vicarious claim against PruCare arising from Margulis's allegedly negligent determination that the therapy was not necessary. The claims that were not within the scope of section 502(a) were found to be within the federal court's supplemental jurisdiction. Thus, the court was in a position to decide whether the vicarious liability claim against PruCare based on the physician's negligence, although not preempted by virtue of falling within section 502(a), was preempted because of its effect on ERISA plans.Google Scholar

88 F.3d at 1492–94.Google Scholar

The court's decision is far from clear, however. One reason offered for preemption of a vicarious claim arising from a failure to provide care due to a benefit denial was that resolution of the claim would require an examination of plan documents beyond the issue of agency. 88 F.3d at 1494. But, according to the Seventh Circuit's prior decision in Rice, if this means that resolution may require interpretation of the plan, then the claim falls within the scope of section 502(a). Yet the court in Jass found that the vicarious claims against the physician did not constitute a suit to enforce terms of the plan.Google Scholar

See 88 F.3d at 1485–86. See also Corcoran, 965 F.2d 1321 (plaintiffs sought compensation for the wrongful death of their unborn child after a utilization review entity determined that inpatient hospital care was not necessary for the mother).Google Scholar

Saah v. Contel Corp., 780 F. Supp. 311, 312–13 (D. Md. 1991) (the dispute arose because the plan determined the applicability of a $100,000 limitation on psychiatric or substance abuse care by focusing on the nature of the treatment to be received, not the condition of the recipient).Google Scholar

Heasley v. Belden & Blake Corp., 2 F.3d 1249 (3d Cir. 1993).Google Scholar

Pilot Life, 481 U.S. 41 (holding preempted common law claims based on allegedly improper processing of claims).Google Scholar

See id. at 48.Google Scholar

Corcoran, 965 F.2d 1321.Google Scholar

See id. at 1332.Google Scholar

Tolton v. American Biodyne, Inc., 48 F.3d 937 (6th Cir. 1995).Google Scholar

See id. at 941–43.Google Scholar

Jass, 88 F.3d at 1488–89. The court also held that the negligence claim against Margulis could not be resolved without interpreting the benefits contract, and thus constituted a suit to enforce terms of the contract. See id. at 1489–90, 1491. This is questionable as to denials based on determinations of medical necessity because policies rarely attempt to define necessity in contractual language. However, the reasoning logically encompasses other utilization review determinations, such as those based on whether the treatment is covered, whether coverage limitations apply, or whether the recommended treatment is experimental.Google Scholar

See, for example, Lazorko, 1997 WL 158144 (following Dukes and Rice and holding that a direct negligence claim against an HMO was within the scope of section 502(a)).Google Scholar

Santitoro, 935 F. Supp. at 735–36. See also Dykema, 959 F. Supp. 736; and Fritts, 933 F. Supp. 668.Google Scholar

Rice, 65 F.3d at 644.Google Scholar

See 933 F. Supp. at 672 n.9 (explaining that the holding in Rice does not support the statement).Google Scholar

Pacificare, 59 F.3d 151.Google Scholar

See id. at 155.Google Scholar

Dalton v. Peninsula Hospital Center, 626 N.Y.S.2d 362 (N.Y. App. Div. 1995).Google Scholar

See id. at 364.Google Scholar

See id. at 365.Google Scholar

See id. at 366.Google Scholar

See Dykema, 959 F.Supp. 736 (recognizing the relevancy of Travelers and holding that a direct claim for negligent credentialing was not within the scope of section 502(a), but using language suggesting the court also believed the claim was not preempted).Google Scholar

See, for example, Chaghervand, 909 F. Supp. 304; and Pappas, 675 A.2d 711.Google Scholar

See Jordan, , supra note 36, at 324–23 (exploring various interpretations of the phrase “administration of the plan”).Google Scholar

Ouellette v. Christ Hospital, 942 F. Supp. 1160 (S.D. Ohio 1996).Google Scholar

See id. at 1162.Google Scholar

See id. at 1163–64.Google Scholar

See id. at 1164.Google Scholar

See id.Google Scholar

See id. at 1165.Google Scholar

Lancaster, 958 F. Supp. 1137.Google Scholar

See id. at 1147.Google Scholar

See id. at 1147–48.Google Scholar

Roessert v. Health Net, 929 F. Supp. 343 (N.D. Cal. 1996).Google Scholar

See id. at 346–47.Google Scholar

See id. at 350.Google Scholar

See id. at 350–51.Google Scholar

See id. at 351 (explaining that in one of the consolidated cases before the court in Dukes, the hospital had refused to perform blood tests a physician had ordered; and, in the other, a physician ignored symptoms of preeclampsia in a pregnant woman).Google Scholar

See id.Google Scholar

See id.Google Scholar

See, for example, Nealy, 844 F. Supp. 966.Google Scholar

Pappas, 675 A.2d 711.Google Scholar

The action was filed against a hospital for negligence in causing an inordinate delay in transferring the plaintiff to facility better equipped to handle her emergency situation; the hospital filed a third-party complaint against the HMO to which the plaintiff subscribed for its refusal to preauthorize the transfer. See id. at 713–14.Google Scholar

See id. at 715.Google Scholar

See id. at 715 (quoting Travelers, 115 S. Ct. at 1680).Google Scholar

See id. at 716 (“To find that such claims are preempted because they may interfere with what is in essence a business decision made in the financial interests of a commercial entity is inconsistent with the intention of ERISA and should not ‘suffice to trigger preemption.’”).Google Scholar

See id. The court in Pappas also found that the claim had no connection to the benefit scheme that Congress sought to protect because the plaintiffs did not seek to recover benefits. That is, the claim was not that the HMO did not perform its duties; rather, the plaintiffs argued that the HMO performed its duties in a negligent manner given the exigent nature of the emergency. See id. at 717. Thus, not only did the court hold that the claim was not preempted because of its effect on ERISA plans, but it also held that the claim was not preempted by virtue of falling within the scope of section 502(a).Google Scholar

Nealy, 844 F. Supp. 966.Google Scholar

See id. at 972. See also Kuhl, 999 F.2d 298 (holding that a claim arising from an HMO's delay in certifying cardiac surgery was preempted because it related directly to the HMO's administration of benefits).Google Scholar

Chaghervand, 909 F. Supp. 304.Google Scholar

See id. at 312 (citing Kearney, 859 F. Supp. 182). See also Wiesenberg v. Paul Revere Life Insurance Co., 887 F. Supp. 1529 (S.D. Fla. 1995); and Cornett v. Aetna Life Insurance Co., 933 F. Supp. 641 (S.D. Tex. 1995).Google Scholar

Lancaster, 958 F. Supp. at 1150.Google Scholar

See id. at 1148–49, n.38.Google Scholar

See id. at 1148–49, 1150.Google Scholar

See id. at 1150.Google Scholar

Travelers, 115 S. Ct. at 1679.Google Scholar