Opinion
Civ. No. 02-960 (JNE/JGL)
March 19, 2004
Lavern M. Heaser and Lynn M. Heaser, Pro se, for Plaintiff
Gregory Weyandt, Esq., and Patrick A. Reinken, Esq., Rider Bennett, for Defendant
ORDER
This is a pro se action by Mr. Lavern M. Heaser and Mrs. Lynn M. Heaser (collectively, Plaintiffs) against their former health insurer, Blue Cross and Blue Shield of Minnesota (BCBSM). Plaintiffs' Complaint alleges violations of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001-1416 (2000), and state law. The case is before the Court on BCBSM's motion for summary judgment, and Plaintiffs' motion to dismiss without prejudice.
Also before the Court is Plaintiffs' motion to remand to state court. Because Plaintiffs brought the action in federal court, the Court cannot remand it to state court. See 28 U.S.C. § 1447(c). Accordingly, Plaintiffs' motion to remand is denied.
BCBSM also moves to strike generous portions of Plaintiffs' motion papers. The Court denies this motion. See Papantony v. Hedrick, 215 F.3d 863, 864 (8th Cir. 2000) (noting that pro se plaintiffs should not "unreasonably be subjected to stringent procedural niceties").
For the reasons given below, the Court grants BCBSM's motion and denies Plaintiffs' motion.
I. BACKGROUND
Through Mr. Heaser's former employer, Plaintiffs were enrolled in an employee health insurance benefit plan (the Plan) administered by BCBSM. Plaintiffs submitted claims for insurance benefits to BCBSM for expenses related to the treatment of Mrs. Heaser's "rare medical condition" in 1997 and 1998. BCBSM initially approved the claims but later demanded repayment after it reviewed Mrs. Heaser's medical records and determined that her treatment was investigative and not medically necessary. BCBSM denied a number of Plaintiffs' subsequent claims for the same reason.
In August 2000, Plaintiffs submitted two claims for expenses related to treatment received by Mrs. Heaser in 2000. The following month, they submitted a claim for expenses related to treatment she had received in 1998. All three claims were approved by BCBSM, and the expenses were paid in full. In October 2000, Plaintiffs resubmitted all of the claims that had been denied by BCBSM in 1997 and 1998. BCBSM affirmed its decision to deny the claims on December 2, 2000. Plaintiffs brought the instant action alleging that BCBSM improperly denied the 1997 and 1998 claims.
II. DISCUSSION
A. Subject matter jurisdiction
Plaintiffs' Complaint alleges violations of ERISA, which gives the Court original jurisdiction over the ERISA claims and supplemental jurisdiction over the state law claims. See 28 U.S.C. § 1331, 1367 (2000). Plaintiffs now assert, however, that the Plan at issue is not governed by ERISA and that the Court should dismiss this action without prejudice so that Plaintiffs may bring their claims in state court. For the Court to have subject matter jurisdiction over the instant case, the Plan must be regulated by ERISA. See Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 256 (8th Cir. 1994) ("Where federal subject matter jurisdiction is based on ERISA, but the evidence fails to establish the existence of an ERISA plan, the claim must be dismissed for lack of subject matter jurisdiction."); Jader v. Principal Mut. Life Ins. Co., 925 F.2d 1075, 1076-77 (8th Cir. 1991) ("The existence of an ERISA-governed plan is an essential precursor to federal jurisdiction."). Accordingly, the Court first analyzes whether ERISA governs the Plan.
ERISA defines an "employee welfare benefit plan" as "any plan, fund, or program . . . established or maintained . . . for the purpose of providing for its participants or beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident or disability." ERISA § 3(1), 29 U.S.C. § 1002(1). "An employer's decision to extend benefits does not constitute, in and of itself, the establishment of an ERISA plan." Kuliniski, 21 F.3d at 256. Instead, a court inquires whether the plan requires the establishment of a separate, ongoing administrative scheme to administer the plan's benefits. Id. at 256-57. "To qualify as a plan, fund or program under ERISA, a reasonable person must be able to ascertain the intended benefits, a class of beneficiaries, source of financing and procedures for receiving benefits." Bannister v. Sorenson, 103 F.3d 632, 636 (8th Cir. 1996) (internal quotations omitted).
Here, BCBSM administers the Plan for the purpose of providing participants health benefits. Thus, the Plan falls squarely within the definition of an ERISA plan. See ERISA § 3(1), 29 U.S.C. § 1002(1). Moreover, the parties do not dispute that the Plan has an established, ongoing administrative scheme to administer the benefits. As illustrated by Plaintiffs' own experiences, a reasonable person could ascertain the factors described in Bannister. Indeed, the Plan documents submitted by Plaintiffs delineate the Plan's intended benefits, the beneficiaries (including Plaintiffs), the source of financing (fully insured) and the procedures for receiving benefits. Accordingly, ERISA applies to the Plan, and the Court has original subject matter jurisdiction to decide the ERISA claims. Because the state law claims are so related to the ERISA claims, the Court has supplemental jurisdiction over those claims. See 28 U.S.C. § 1367(a).
B. BCBSM's motion for summary judgment
BCBSM contends that it is entitled to summary judgment because ERISA preempts all of Plaintiffs' state law claims, and consequently, Plaintiffs' remedy is limited to recovery of medical benefits not paid. According to BCBSM, ERISA's civil enforcement provision, ERISA § 502(a), 29 U.S.C. § 1132(a), provides the exclusive remedies for Plaintiffs' claims because they stem from BCBSM's administration of the Plan, specifically BCBSM's denial of claims. As such, BCBSM asserts that Plaintiffs are only entitled to accrued unpaid medicals bills.
BCBSM seeks a determination that ERISA controls Plaintiffs claims and remedies, but it does not concede liability. Thus, BCBSM's motion entitled "Motion for Summary Judgment" is actually one for partial summary judgment.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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). The moving party "bears the initial responsibility of informing the district court of the basis for its motion," and must identify "those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, Rule 56(e) requires the nonmoving party to respond by submitting evidentiary materials that designate "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In determining whether summary judgment is appropriate, a court must look at the record and any inferences to be drawn from it in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
"Consistent with the decision to create a comprehensive, uniform federal scheme for regulation of employee benefit plans, Congress drafted ERISA's preemption clause in broad terms." Kuhl v. Lincoln Nat'l Health Plan of Kansas City, 999 F.2d 298, 301 (8th Cir. 1993); see Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137-38 (1990); FMC Corp. v. Holliday, 498 U.S. 52, 56 (1990) ("The preemption clause is conspicuous for its breadth."). Under ERISA § 514(a), 29 U.S.C. § 1144(a), Congress preempted "all State laws insofar as they may now or hereafter relate to any employee benefit plan." Whether a state law is preempted by ERISA is a question of legislative intent, and the preemption clause is to be construed broadly. See Ingersoll-Rand, 498 U.S. at 138.
In order to be saved from preemption, a state law must be one that "regulates insurance." See ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A). This "savings clause" is qualified by what is commonly referred to as the "deemer clause," whereby an ERISA-regulated plan shall not be "deemed" an insurance company, an insurer, or engaged in the business of insurance for purposes of state laws "purporting to regulate" insurance companies or insurance contracts. See ERISA § 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B). In short, if a state law "relates" to an employee benefit plan, it is preempted; the "savings clause" excepts from preemption state laws that regulate insurance, but the "deemer clause" clarifies "that a state law that purports to regulate insurance cannot deem an employee benefit plan to be an insurance company." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45 (1987).
Plaintiffs' state law claims are not clearly articulated. However, because Plaintiffs are acting pro se, the Court reads their assertions liberally. See Miles v. Ertl Co., 122 F.2d 434, 434 (8th Cir. 1983). According to Plaintiffs, "BCBSM breached their contractual duty to the Heaser's [sic] which constitutes Fraud within the State of MN Statutes 541.05." Minnesota Statutes § 541.05 does not convey any substantive rights; rather, it establishes statutes of limitation for various cases. Because section 541.05 includes the statute of limitations for a common-law breach of contract and Plaintiffs assert BSBSM breached its contractual duty, the Court construes Plaintiffs' allegation to be a common law breach of contract claim.
The Supreme Court has held that ERISA preempts state common law causes of action arising from the alleged improper processing of a claim for benefits under an ERISA-regulated plan. See Pilot Life, 482 U.S. at 48 ("The common law causes of action raised in [plaintiff's] complaint, each based on alleged improper processing of a claim for benefits under an employee benefit plan, undoubtedly meet the criteria for preemption under § 514(a)."). In Pilot Life, the Supreme Court analyzed whether a common law claim for bad faith was preempted under ERISA. The Court held that while the claim "related to" the employee benefit plan, the claim was not a law that "regulated insurance" so as to be saved from preemption. Id. at 48-51. In finding preemption, the Court relied heavily on the exclusive nature of ERISA's civil enforcement provision. See id. at 54 ("The deliberate care with which ERISA's civil enforcement remedies were drafted and the balancing of policies embodied in its choice of remedies argue strongly for the conclusion that ERISA's civil enforcement remedies were intended to be exclusive."). The Court concluded that Congress clearly intended "all suits brought by beneficiaries or participants asserting improper processing of claims under ERISA-regulated plans be treated as federal questions governed by § 502(a)." Pilot Life, 482 U.S. at 56.
Relying on the reasoning in Pilot Life, the Eighth Circuit has held that common law breach of contract claims are preempted under ERISA-regulated plans. See Kuhl, 999 F.2d at 302-05 (holding common law breach of contract claim stemming from plan administrator's denial of benefits preempted under ERISA); Hull v. Fallon, 188 F.3d 939, 943 (8th Cir. 1999) ("Because [Hull's] claims relate to the administration of benefits, they fall squarely within the scope of section 502(a). Therefore, Hull's claims are completely preempted by ERISA."). In theinstant case, Plaintiffs have made it abundantly clear that their complaints stem solely from BCBSM's denial of Mrs. Heaser's claim for benefits in 1997 and 1998. This is a request for denied benefits under ERISA's civil enforcement provision. See ERISA § 502(a), 29 U.S.C. § 1132(a). Following the Supreme Court in Pilot Life and the Eighth Circuit case law, the Court concludes that ERISA preempts Plaintiffs' common law breach of contract claim.
With regard to Plaintiffs' other attempts to delineate relevant state law, the Court is unable to discern any viable allegations. Plaintiffs essentially list three statutes-Minn. Stat. §§ 62C.05 subd. 2, 62C.14 subd. 3, 62M.10 subd. 7 (Supp. 2003)-none of which provide a private cause of action under which Plaintiffs may sue BCBSM. See Jader v. Principal Mut. Life Ins. Co., 975 F.2d 525, 527-28 (8th Cir. 1992). The Court therefore rejects these allegations.
The Court thus concludes that Plaintiffs' state law claims are either preempted by ERISA or fail to provide them with a cause of action against BCBSM, and that Plaintiffs' remedies are limited those provided for in ERISA § 502(a), 29 U.S.C. § 1132(a). Accordingly, the Court grants BCBSM's motion for partial summary judgment.
C. Plaintiffs' motion to dismiss without prejudice
Plaintiffs argue that this Court should dismiss the case without prejudice. Much of Plaintiffs' argument relies on their assertion that ERISA does not control because the Plan is fully insured, not self-insured. According to Plaintiffs, fully-insured plans are never covered by ERISA. They urge the Court to accept that conclusion and dismiss the case without prejudice.
In support, Plaintiffs rely on Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724 (1985). In Metropolitan Life, the Supreme Court held that a distinction between self-insured and fully-insured plans arises under the "deemer clause." Id. at 747. The distinction recognizes that fully-insured plans are subject to indirect state regulation, whereas self-insured plans are not. However, Metropolitan Life did not hold, as Plaintiffs contend, that fully-insured plans are never governed by ERISA. In FMC Corp., the Supreme Court expounded on the distinction identified in Metropolitan Life:
We read the deemer clause to exempt self-funded ERISA plans from state laws that "regulat[e] insurance" within the meaning of the saving clause. By forbidding States to deem employee benefit plans "to be an insurance company or other insurer . . . or to be engaged in the business of insurance," the deemer clause relieves plans from state laws "purporting to regulate insurance." As a result, self-funded ERISA plans are exempt from state regulation insofar as that regulation "relate[s] to" the plans. State laws directed toward the plans are pre-empted because they relate to an employee benefit plan but are not "saved" because they do not regulate insurance. State laws that directly regulate insurance are "saved" but do not reach self-funded employee benefit plans because the plans may not be deemed to be insurance companies, other insurers, or engaged in the business of insurance for purposes of such state laws. On the other hand, employee benefit plans that are insured are subject to indirect state insurance regulation. An insurance company that insures a plan remains an insurer for purposes of state laws "purporting to regulate insurance" after application of the deemer clause.498 U.S. at 61 (emphasis added). The preemption analysis in this case never reaches the "deemer clause." Because Plaintiffs' state law claims are not saved from preemption under the "savings clause," the "deemer clause" is not implicated. Therefore, the distinction between fully insured and self-insured is irrelevant.
A motion to dismiss without prejudice is a matter committed to the discretion of the court, subject only to review for abuse of discretion. See Fed.R.Civ.P. 41; see also Scallen v. Minn. Vikings Football Club, Inc. 574 F. Supp. 278, 280 (D. Minn 1983). Here, Plaintiffs' reliance on the distinction between fully-insured plans and self-insured plans under ERISA is misplaced. Accordingly, the Court denies Plaintiffs' motion to dismiss without prejudice.
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:
1. BCBSM's motion for partial summary judgment [Docket No. 51] is GRANTED.
2. Plaintiffs' motion to remand [Docket No. 56] is DENIED.
3. Plaintiffs' motion to dismiss without prejudice [Docket No. 59] is DENIED.