154 F.3d 812 (8th Cir. 1998), 97-2221, Prudential Ins. Co. of America v. National Park Medical Center, Inc.

Docket Nº:97-2221, 97-2226, 97-2229.
Citation:154 F.3d 812
Party Name:The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Prudential Health Care Plan, Inc., d/b/a Prudential Health Care Plan of Arkansas, HMO Partners, Inc., Arkansas AFL-CIO, Tyson Foods, Inc., and United Paperworkers International Union AFL-CIO, CLC, Plaintiffs-Appellees, Cross-Appellants, v. NATIONAL PARK MEDICAL CENTER, INC., Y.Y. King, M.D., Bryan W. Rus
Case Date:September 02, 1998
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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154 F.3d 812 (8th Cir. 1998)

The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Prudential

Health Care Plan, Inc., d/b/a Prudential Health Care Plan of

Arkansas, HMO Partners, Inc., Arkansas AFL-CIO, Tyson Foods,

Inc., and United Paperworkers International Union AFL-CIO,

CLC, Plaintiffs-Appellees, Cross-Appellants,

v.

NATIONAL PARK MEDICAL CENTER, INC., Y.Y. King, M.D., Bryan

W. Russell, D.C., George A. Haas, O.D., and Bryant

Ashley, O.D., Defendants-Appellants.

State of Arkansas, Intervenor Defendant-Appellee.

Nos. 97-2221, 97-2226, 97-2229.

United States Court of Appeals, Eighth Circuit

September 2, 1998

Submitted March 10, 1998.

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[Copyrighted Material Omitted]

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David Lawrence Ivers, Little Rock, AR, argued (Harold Simpson, Lynda Johnson, JoAnn Maxey and Tim Gauger, on the brief), for Appellant.

Chet Allen Roberts, Little Rock, AR, argued (Allan W. Horne, Daly D.E. Temchine and Byron Freeland, on the brief), for Appellee.

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Before McMILLIAN and FAGG, Circuit Judges, and BENNETT, [*] District Judge.

BENNETT, District Judge.

This case involves the question of whether the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., preempts Arkansas' so-called "Patient Protection Act," Acts 505 and 1193 passed by the Arkansas General Assembly in 1995 (the Arkansas PPA). The Arkansas General Assembly's goal in passing the PPA was to ensure "that patients ... be given the opportunity to see the health care provider of their choice." ARK.CODE ANN. § 23-99-202. However, various "health care insurers" within the meaning of the Arkansas PPA brought this declaratory judgment action seeking a declaration that the Arkansas PPA is preempted by ERISA.

The precise scope of ERISA preemption of state law has left courts, including the Supreme Court, deeply troubled. As a panel of this court recently explained,

The Supreme Court has decided sixteen ERISA preemption cases since the statute was enacted in 1974. See California Div. of Labor Stds. Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 117 S.Ct. 832, 842-43, 136 L.Ed.2d 791 (1997) (Scalia, J., concurring). Most involved the proper scope of "relate to" preemption under § 1144(a), and the Court has struggled, particularly in its more recent decisions, with the inherent vagueness of that key statutory phrase. Compare New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 652-661, 115 S.Ct. 1671, 1676-80, 131 L.Ed.2d 695 (1995), with Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2388, 85 L.Ed.2d 728 (1985).

Painter v. Golden Rule Ins. Co., 121 F.3d 436, 438-39 (8th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 1516, 140 L.Ed.2d 669 (1998). Since the Supreme Court's decision in Dillingham, the Court has considered the scope of ERISA preemption twice more. See Boggs v. Boggs, 520 U.S. 833, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997); De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997). The very question that has so often and so deeply troubled the Supreme Court is now before this court.

The parties asserting the validity of the Arkansas PPA, appellant healthcare providers, contend that the result of the Supreme Court's struggles with "relate to" preemption in its recent ERISA cases has been a "sea change"--ushered in by the Court's decision in Travelers and clarified in Dillingham and De Buono--that has upended the Court's prior precedent and has established in its place a whole new framework of presumptions and analysis for ERISA preemption cases. The parties asserting preemption of the Arkansas PPA, appellees ERISA plan sponsors, administrators, insurers, and HMO service providers, contend that the Supreme Court's most recent decisions have not worked a revolution in ERISA preemption analysis, but have instead helped clarify line-drawing at the peripheries, while leaving intact, even strengthening, the importance of the core concerns and inquiries of preemption analysis articulated in prior precedent. Whether the Supreme Court's recent opinions constitute a "sea change" or instead command that we "stay the course" in ERISA preemption analysis, this court must strive to sail the course the Supreme Court has set.

I. BACKGROUND

  1. Factual Background

    In 1995, the Arkansas General Assembly passed two acts, Act 505 and Act 1193, that combined to form the so-called "Patient Protection Act," codified at ARK.CODE ANN. CH. 23-99. The Arkansas General Assembly's goal was to ensure

    that patients ... be given the opportunity to see the health care provider of their choice. In order to assure the citizens of the State of Arkansas the right to choose the provider of their choice, it is the intent

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    of the General Assembly to provide the opportunity of providers to participate in health benefit plans.

    ARK.CODE ANN. § 23-99-202. Thus, the centerpiece of the legislation was ARK.CODE ANN. § 23-99-204, which provides as follows:

    (a) A health care insurer shall not, directly or indirectly:

    (1)(A) Impose a monetary advantage or penalty under a health benefit plan that would affect a beneficiary's choice among those health care providers who participate in the health benefit plan according to the terms offered.

    (B) "Monetary advantage or penalty" includes:

    (i) a higher co-payment;

    (ii) a reduction in reimbursement for services; and

    (iii) promotion of one (1) health care provider over another by these methods;

    (2) Impose upon a beneficiary of health care services under a health benefit plan any co-payment, fee, or condition that is not equally imposed upon all beneficiaries in the same benefit category, class, or co-payment level under the health benefit plan when the beneficiary is receiving services from a participating health care provider pursuant to that health benefit plan; or

    (3) Prohibit or limit a health care provider that is qualified under § 23-99-203(d) and is willing to accept the health benefit plan's operating terms and conditions, schedule of fees, covered expenses, and utilization regulations and quality standards, from the opportunity to participate in that plan.

    (b) Nothing in this subchapter shall prevent a health benefit plan from instituting measures designed to maintain quality and to control costs, including, but not limited to, the utilization of a gatekeeper system, as long as such measures are imposed equally on all providers in the same class.

    ARK.CODE ANN. § 23-99-204. This section is known as the "Any Willing Provider" provision of the Arkansas PPA.

    The Arkansas PPA defines many, but not all, of its key terms. "Health care providers" are defined to include twenty-seven categories of licensed or certified providers, including physicians and hospitals. ARK.CODE ANN. § 23-99-203(d). A "health benefit plan" is defined as "any entity or program that provides reimbursement, including capitation, for health care services." ARK.CODE ANN. § 23-99-203(c). "Health care insurer" is defined by the statute to include, but is not limited to, insurance companies, hospital and medical services corporations, health maintenance organizations, preferred provider organizations, physician hospital organizations, third-party administrators, and prescription benefit management companies authorized to administer, offer, or provide health benefit plans. ARK.CODE ANN. § 23-99-203(f).

    The Arkansas PPA also includes a specific exclusion:

    The provisions of the [Arkansas PPA] shall not apply to self-funded or other health benefit plans that are exempt from state regulations by virtue of the federal Employee Retirement Income Security Act of 1974, as amended.

    ARK.CODE ANN. § 23-99-209.

    The plaintiffs below, appellees here, are "health care insurers" within the meaning of the Arkansas PPA. They brought this declaratory judgment action seeking a declaration that the Arkansas PPA is preempted by ERISA and an injunction prohibiting enforcement of the PPA. The defendants below, appellants here, are "health care providers" within the meaning of the Arkansas PPA 1 who sought admission to the plaintiffs' limited preferred provider panels, but were denied admission on the basis of "no need" findings by the plaintiffs. They sought declaratory and injunctive relief to enforce the Arkansas PPA.

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  2. The Decision Below

    The parties appeal from a decision of the United States District Court for the Eastern District of Arkansas, Western Division, 2 as amended, on cross-motions for summary judgment. See Prudential Ins. Co. of Am. v. National Park Medical Ctr., Inc., 964 F.Supp. 1285 (E.D.Ark.1997). In its original decision, filed January 31, 1997, the district court considered whether the Arkansas PPA "relate[s] to" ERISA, such that it is preempted pursuant to ERISA § 514(a), 29 U.S.C. § 1144(a), using the two-prong analysis employed by the Supreme Court in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), and subsequent decisions. The district court concluded, first, that the state law contains a "reference to" ERISA plans by singling out such plans for special treatment, in this case, an exemption from the burdens of the Arkansas PPA. In reaching this conclusion, the district court expressly relied on Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), rather than District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992).

    The district court also concluded that the Arkansas PPA had a "connection with" ERISA plans such that it was also preempted on this ground. In so doing, the court employed the seven factors used by this court in Arkansas Blue Cross &amp...

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