Haynes v. Prudential Health Care

• Decision Date: 09 December 2002
• Docket Number: No. 01-60801.,01-60801.
• Citation: 313 F.3d 330
• Parties: Geneva C. HAYNES, As Administratrix of the Estate of Charles Haynes, Jr., Deceased, Plaintiff-Appellant, v. PRUDENTIAL HEALTH CARE, Member-Aetna US Healthcare, "PruCare", a Kentucky corporation or association contracting with SLS Incorporated, for the provision of medical insurance and health care services, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

313 F.3d 330

Geneva C. HAYNES, As Administratrix of the Estate of Charles Haynes, Jr., Deceased, Plaintiff-Appellant, v. PRUDENTIAL HEALTH CARE, Member-Aetna US Healthcare, "PruCare", a Kentucky corporation or association contracting with SLS Incorporated, for the provision of medical insurance and health care services, Defendant-Appellee.

No. 01-60801.

United States Court of Appeals, Fifth Circuit.

December 9, 2002.

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George Parker Young (argued), The Law Offices of George Parker Young, Fort Worth, TX, for Plaintiff-Appellant.

John Bruce Shely (argued), Kendall Matthew Gray, Andrews & Kurth Mayor, Day, Caldwell & Keeton, Houston, TX, Robert T. Gordon, Jr., Susan L. Runnels, Heidelberg & Woodliff, Jackson, MS, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Mississippi.

Before DeMOSS, STEWART and DENNIS, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Geneva C. Haynes, Administratrix of the Estate of Charles Haynes, Jr. ("Haynes"), appeals from the district court's FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) dismissal in favor of Prudential Health Care Plan, Inc. ("PruCare"). The issue raised on appeal is whether the district court erred in dismissing Haynes's negligence claims as preempted under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). For the following reasons, we hold that Haynes's negligence claims are expressly preempted under ERISA § 514(a) because PruCare's determination was administrative. See 29 U.S.C. § 1144(a) (hereinafter, citations are to sections of ERISA).

FACTUAL AND PROCEDURAL BACKGROUND

Haynes was an insulin-dependent adult diabetic. Before becoming a member of the PruCare Health Maintenance Organization ("HMO") in January 1999, he had been under long-term care and treatment by Dr. John Norwood for his diabetes and related circulatory conditions. Haynes continued to be treated by Dr. Norwood after joining the plan without protest from PruCare. Indeed, up until October 1999, PruCare allowed Dr. Norwood to administer medical treatment to Haynes as his primary care physician ("PCP") under the program. Haynes explained that this led him to believe that Dr. Norwood was a PruCare PCP under the plan.

In late October 1999, Haynes began to suffer painful swelling in his right foot and lower right leg, and developed an abscess beneath the skin of the underside of his right foot. Haynes visited Dr. Norwood for treatment of the condition on October 27, 1999 and was directed by him to go immediately to the Methodist Hospital Wound Care Center in Memphis ("Wound Care Center"). In response, Dr. Norwood's staff attempted to make an appointment for Haynes at the Wound Care Center but was informed that PruCare would not permit Haynes to receive treatment there. On that same day, PruCare informed Haynes that Dr. Norwood was not a PruCare PCP, and therefore, Haynes was precluded from visiting the Wound Care Center until he could secure a referral from a PruCare PCP.

By the first of November, Haynes's foot and leg continued to swell as infection spread. A member of Dr. Norwood's staff, a representative from PruCare, and Haynes conversed regarding Dr. Norwood's status as a PCP. PruCare maintained that it did not consider Dr. Norwood a PCP and gave Haynes the telephone numbers of three PCPs. Despite Dr. Norwood's recommendations, PruCare continued to refuse to permit Haynes to receive treatment at the Wound Care Center, unless one of the PruCare-approved PCPs made the referral. Between November 1 and November 3, 1999, Haynes alleges that he and Dr. Norwood's staff called the three numbers that PruCare had given them. One of the numbers was disconnected, calls to the second only reached the answering machine, and the third never returned his calls.

By November 3, 1999, Haynes's leg swelled to such an extent that his toes burst open, draining blood, puss, and other fluids. Haynes called 911 and was taken to the emergency room at Baptist Central Hospital in Memphis. Once there, he was assigned to a PruCare PCP, Dr. Robert Kulinski. Though Dr. Kulinski attempted to save his leg by administering antibiotics and other treatment, on November 4, 1999, he recommended an immediate amputation of Haynes's right foot and lower right leg. After Haynes received a second concurring opinion, his leg was amputated on November 12, 1999. Apparently, Dr. Kulinski told Haynes that his leg could have been saved if Haynes had received timely treatment from the Wound Care Center. Haynes was unable to work after the amputation and died in April 2001 from unrelated causes.

Haynes brought suit (prior to his death) in the Northern District of Mississippi based on diversity jurisdiction pursuant to 42 U.S.C. § 1332 and ground his claims on negligence principles and estoppel. He alleged, inter alia, that PruCare created an environment which encouraged and perpetuated negligent conduct; failed to ensure that Haynes received necessary care; failed to provide adequately trained health care providers to treat Haynes's conditions; and failed to properly medically manage Haynes's condition. PruCare moved to dismiss pursuant to FED.R.CIV.P. 12(b)(6) contending that such claims are expressly preempted under ERISA. The district court granted PruCare's motion to dismiss. This appeal followed.

STANDARD OF REVIEW

The district court's dismissal of a claim under FED.R.CIV.P. 12(b)(6) is reviewed de novo. Vulcan Materials Co. v. Tehuacana, 238 F.3d 382, 387 (5th Cir.2001). "The complaint must be liberally construed in favor of the plaintiff, and all the facts pleaded in the complaint must be taken as true" to determine whether the plaintiff has stated a valid claim for relief. Brown v. Nationsbank Corp., 188 F.3d 579, 586 (5th Cir.1999). The dismissal will be upheld only if "it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief." U.S. ex rel. Thompson v. Columbia HCA/Healthcare Corp., 125 F.3d 899, 901 (5th Cir.1997).

DISCUSSION

There are two types of ERISA preemption: complete and express preemption. In general, complete preemption exists when a remedy falls within the scope of or is in direct conflict with ERISA § 502(a), and therefore is within the jurisdiction of federal court. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Whether state law negligence claims are completely preempted by § 502(a) primarily answers questions of jurisdiction. Giles v. NYL-Care Health Plans, Inc., 172 F.3d 332, 336 (5th Cir.1999). As this Circuit has stated section 502(a) "functions as an exception to the well-pleaded complaint rule; `Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.' Section 502, by providing a civil enforcement cause of action, completely preempts any state cause of action seeking the same relief, regardless of how artfully pleaded as a state action." (quoting Metropolitan Life Ins. Co., 481 U.S. at 64-65, 107 S.Ct. 1542). Id. "Unlike the scope of § 502(a)(1)(B), which is jurisdictional and creates a basis for removal to federal court, § 514(a) ... governs the law that will apply to state law claims, regardless of whether the case is brought in state or federal court." Pryzbowski v. U.S. Healthcare Inc., 245 F.3d 266, 277 (3rd Cir.2001) (internal quotations omitted). In this case, diversity confers subject matter jurisdiction therefore, there are no questions of jurisdiction to invoke an analysis of complete preemption on these facts consistent with § 502(a).

Express preemption is applicable to this case. Express preemption exists when a state law or claim "relates to" ERISA plans unless it "regulates insurance" under § 514(a). Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). In pertinent parts, the statute reads:

Except as provided in subsection (b) of this section, the provisions of this title and title IV shall supercede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in § 4(a) and not exempt under § 4(b).

ERISA § 514(a) (emphasis added). This preemption provision contains a savings clause in subsection (b) which states that "nothing in this title shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." ERISA § 514(b)(2)(A) (emphasis added).

In short, this lawsuit "relates to" an employee benefit plan provided to Haynes through his employer under § 514(a) and is a common law tort claim which does not specifically "regulate insurance" so as to save the lawsuit from preemption under § 514(b). The limiting language of the express preemption provision requires that the lawsuit only "relate to" an administrative decision of the HMO to be preempted by ERISA. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 661, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). Under this scheme, if PruCare made a medical necessity decision, for example, Haynes's common law tort claim may not be preempted, and therefore, falls under state law. If PruCare made a purely administrative decision, Haynes's state law tort claim is preempted under § 514(a) and is regulated by ERISA. Id. To determine whether the district court erred in granting PruCare's 12(b)(6) motion to dismiss, we must determine whether the lawsuit relates to an administrative decision. At the core of our analysis is whether PruCare's determination that Dr. Norwood was not a PCP under the plan and therefore did not authorize Dr. Norwood's referral to the Wound Care Center was an administrative or a mixed determination. See Pegram v. Herdrich, 530 U.S. 211, 228, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000).

I. The Law

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