Opinion
Case No.C99-5463 JKA
May 12, 2002
ORDER re: DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT
THIS MATTER comes before the court on the Defendant's Motion for Partial Summary Judgment. The court has reviewed all materials submitted in support of and in response to said motion as well as the files and records herein.
Defendant seeks summary judgment establishing that 1) plaintiffs claims are governed by the Employment Retirement income Security Act of 1 974 (ERISA); 2) plaintiffs state law claims are preempted by ERISA; and 3) plaintiff has no right to ajury trial.
FACTS
It is undisputed that plaintiff was employed by Olympic Peninsula Kidney Center as a registered nurse. Olympic Peninsula Kidney Center procured from and paid the premiums to defendant for a long term disability insurance policy covering its employees (including plaintiff). It is further undisputed that plaintiff was involved in an automobile accident September 10, 1997; that she claimed benefits under the policy alleging that she is no longer able to perform the duties of her occupation — a registered nurse; and that her claim was denied. Plaintiff then filed this lawsuit in federal court seeking jurisdiction based on diversity of citizenship and claiming sums in excess of the requisite jurisdictional limit. Plaintiffs causes of action are all alleged under state common law and statutory law.
APPLICABILITY OF ERISA
ERISA governs employee welfare benefit plans generally defined as those "which are a plan, fund or program, established or maintained by an employer . . . for the purpose of providing . . . disability benefits . . . to the participants . . ." ERISA contains both a "preemption clause" and a "savings clause." 29 U.S.C. § 1144(a) provides that ERISA preempts State laws insofar as they relate to any employee benefit plan, subject to the savings clause set forth at 29 U.S.C. § 1144(b)(2)(A), which provides that:
". . . nothing in this chapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." (emphasis supplied).
Clearly the policy at issue meets the criteria of an employee welfare benefit plan as contemplated under ERISA.
ERISA PREEMPTION
The question to be resolved by this motion is whether or not plaintiffs claims are preempted or saved under 29 U.S.C. § 1144.
Defendant's rely heavily on Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549 (1987), its companion case, Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542 (1987.). and the reaffirming case of Mertens v. Hewia Associates, Inc 508 US. 248, 113 S.Ct. 2063 (1993), all of which address the broad preemptive force of ERISA with regard to state law claims. The narrower issue defining the criteria of what escapes preemption is more thoroughly discussed in Unum Life Insurance Company of America v. Ward, 526 U.S. 358, 119 S.Ct. 1380 (1999), which analyzes whether a state law "regulates insurance within the savings clause. Justice Ginsberg notes that these words must be measured in context, going on to note that precedent requires a common sense determination as to whether the contested prescription regulates insurance. If so, it is necessary to consider the three following factors to determine whether the regulation fits within the "business of insurance" as that phrase is used in the McCarran-Ferguson Act, at 15 U.S.C. § 1011:1) does the practice have the effect of transferring or spreading a policy holder's risk; 2) whether the practice is an integral part of the policy relationship between the insurer and the insured; and 3) whether the practice is limited to entities within the insurance industry. These factors are considerations to be weighed, and no one is necessarily determinative in itself
It is clear that Washington's common law rule of bad faith insofar as it relates to the regulation of the insurance industry has been codified in the good faith requirements of RCW 48.01.030 regulating insurance. "While it is fair to say that their purpose is not to regulate or "spread the risk," they are clearly limited to the insurance industry, and are an integral part of the policy relationship between insurer and insured. Therefore, plaintiffs claim under RCW 48.0 1.030 and her common law bad faith claim are safe from the preemption provision of 29 U.S.C. § 1144.
On the other hand RCW 19.86, the Washington Consumer Protection Act exists for the broader purpose of regulating competition and unfair or deceptive acts or practices in the conduct of trade or commerce in general, and is not specifically directed to the insurance industry. It therefore appears that plaintiffs claim under RCW 19.86 is preempted by 29 U.S.C. § 1944. Furthermore, plaintiffs claims for breach of contract, breach of fiduciary duty, negligence, and fraud are based on legal theories not specifically directed to the insurance industry, and are likewise preempted.
JURY TRIAL
Although no jury demand has been filed, defendant asserts that no jury trial is available because the state law claims have been preempted by ERISA. Based on the courts analysis set forth above defendanfs contention is rejected as to plaintiffs surviving claims.
CONCLUSION
Defendant's Motion for Partial Summary Judgment is granted with regard to plaintiff's claims tinder RCW 19.86, and her claims for breach of contract, breach of fiduciary duty, negligence, and fraud. Defendant's Motion for Partial Summary Judgment is denied with regard to plaintiff's common law claim for bad faith and her good faith claim pursuant to RCW 48.01 et seq.