Prudential Ins. Co. of America v. National Park, 04-1465.

• Decision Date: 29 June 2005
• Docket Number: No. 04-1465.,No. 04-1644.,04-1465.,04-1644.
• Parties: The PRUDENTIAL INSURANCE CO. OF AMERICA; Prudential Health Care Plan, Inc., d/b/a Prudential Health Care Plan of Arkansas, Plaintiffs/Appellees, HMO Partners, Inc., Plaintiff/Appellant, Arkansas AFL-CIO; Tyson Foods, Inc.; United Paperworkers International Union, AFL-CIO, CLC, Plaintiffs, v. NATIONAL PARK MEDICAL CENTER, INC.; Y.Y. King, M.D., Defendants/Appellees, Bryan W. Russell, D.C.; George A. Haas, O.D.; Bryant Ashley, Jr., O.D., Defendants, The State of Arkansas, Intervenor Below/Appellee, American Association of Health Plans, Inc., Movant Below. The Prudential Insurance Co. of America; Prudential Health Care Plan, d/b/a Prudential Health Care Plan of Arkansas, Inc., Plaintiffs/Appellees, HMO Partners, Inc.; Arkansas AFL-CIO, Plaintiffs, Tyson Foods, Inc., Plaintiff/Appellant, United Paperworkers International Union, AFL-CIO, CLC, Plaintiff, v. National Park Medical Center, Inc.; Y.Y. King, M.D., Defendants/Appellees, Bryan W. Russell, D.C.; George A. Haas, O.D.; Bryant Ashley, Jr., O.D., Defendants, State of Arkansas, Intervenor Below/Appellee, American Association of Health Plans, Inc., Movant Below.
• Court: U.S. Court of Appeals — Eighth Circuit

413 F.3d 897

The PRUDENTIAL INSURANCE CO. OF AMERICA; Prudential Health Care Plan, Inc., d/b/a Prudential Health Care Plan of Arkansas, Plaintiffs/Appellees HMO Partners, Inc., Plaintiff/Appellant Arkansas AFL-CIO; Tyson Foods, Inc.; United Paperworkers International Union, AFL-CIO, CLC, Plaintiffs, v. NATIONAL PARK MEDICAL CENTER, INC.; Y.Y. King, M.D., Defendants/Appellees Bryan W. Russell, D.C.; George A. Haas, O.D.; Bryant Ashley, Jr., O.D., Defendants The State of Arkansas, Intervenor Below/Appellee, American Association of Health Plans, Inc., Movant Below.

The Prudential Insurance Co. of America; Prudential Health Care Plan, d/b/a Prudential Health Care Plan of Arkansas, Inc., Plaintiffs/Appellees, HMO Partners, Inc.; Arkansas AFL-CIO, Plaintiffs, Tyson Foods, Inc., Plaintiff/Appellant, United Paperworkers International Union, AFL-CIO, CLC, Plaintiff, v. National Park Medical Center, Inc.; Y.Y. King, M.D., Defendants/Appellees, Bryan W. Russell, D.C.; George A. Haas, O.D.; Bryant Ashley, Jr., O.D., Defendants, State of Arkansas, Intervenor Below/Appellee, American Association of Health Plans, Inc., Movant Below.

No. 04-1465.

No. 04-1644.

United States Court of Appeals, Eighth Circuit.

Submitted: November 17, 2004.

Filed: June 29, 2005.

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Chet Roberts, argued, Little Rock, AR (Gordon S. Rather, Jr., Troy A. Price, and Michelle M. Kaemmerling, on the brief), for Appellant HMO Partners.

Daly D.E. Temchine, argued, Washington, DC (Byron Freeland, on the brief), for Appellant Tyson Foods.

Timothy G. Gauger, argued, Attorney General's Office, Little Rock, AR, for Intervenor/Appellee State of Arkansas.

David L. Ivers, argued, Little Rock, AR (Patricia Van Ausdall Bell, Asst. Atty. General, and Emily Sneddon, on the brief), for Appellees National Park Medical Cencer and Y.Y. King, M.D.

Before RILEY, JOHN R. GIBSON, and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

HMO Partners, Inc. ("HMOP") and Tyson Foods, Inc. ("Tyson") appeal the district court's order dissolving the permanent injunction it imposed following this Court's decision in Prudential Insurance Co. of America v. National Park Medical Center, Inc., 154 F.3d 812 (8th Cir.1998) ("Prudential I"). For the reasons stated below, we affirm in part, reverse in part, and remand to the district court to enter judgment consistent with this opinion.

I. BACKGROUND

HMOP is a health maintenance organization ("HMO") that operates under the insurance laws of the State of Arkansas and offers insured employee health benefit plans to employers. Tyson sponsors a self-funded, or self-insured, health benefit plan (the "Tyson plan") for its employees in which benefits are paid out of Tyson's general assets. The insured employee benefit plans offered by HMOP and Tyson's self-funded plan are governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001—1461.¹

The Tyson plan and the plans offered by HMOP feature closed "provider networks" to control both the cost and quality of health care services. The networks are composed of health care providers, including doctors and hospitals, that agree to various contractual requirements in exchange for membership within the network. The terms and conditions for inclusion in a plan's provider network typically include price controls. Providers agree to those price controls because they anticipate increased business from plan participants who are reimbursed only for services performed by in-network providers or who receive a greater benefit by going to in-network providers as opposed to out-of-network providers.

HMOP creates its own provider networks. In contrast, Tyson maintains various agreements with insurance companies under which the insurance companies may agree not only to perform third-party administrative and claims processing services for the Tyson plan but also to provide the plan access to various provider networks in the geographic areas in which Tyson's employees are located.

The Arkansas Patient Protection Act of 1995 (the "Arkansas PPA"), Ark.Code Ann. §§ 23-99-201—23-99-209, was passed to ensure "that patients ... be given the opportunity to see the health care provider of their choice." Ark.Code Ann. § 23-99-202. To effectuate this goal, the Arkansas PPA, commonly referred to as an "any willing provider" ("AWP") law, provides that: "A health care insurer shall not, directly or indirectly . . . [p]rohibit or limit a health care provider that 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." Ark.Code Ann. § 23-99-204. Typical of AWP laws, the Arkansas PPA requires health care insurers to admit qualified health care providers into the insurer's provider networks if they are willing to meet the terms and conditions of participation.

After Arkansas passed the Arkansas PPA, various doctors and hospitals sought admission into otherwise exclusive provider networks by expressing a willingness to accept the terms and conditions of participation. HMOP and Tyson sought a declaratory judgment that the Arkansas PPA was preempted by ERISA § 514, 29 U.S.C. § 1144, and a permanent injunction against the enforcement of the Arkansas PPA by parties seeking admission into their exclusive provider networks.² The district court granted judgment in favor of both HMOP and Tyson and later amended its order to hold that the Arkansas PPA was preempted by ERISA only insofar at it relates to ERISA plans. Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., 964 F.Supp. 1285 (E.D.Ark.1997).

In Prudential I, this Court reversed the district court's amendment of its judgment and held that the Arkansas PPA was preempted by ERISA "in its entirety," not just as it relates to ERISA plans. 154 F.3d at 831-32. We held that HMOP and Tyson were both entitled to a permanent injunction against enforcement of the Arkansas PPA in its entirety and remanded the case to the district court to enter an injunction (the "Prudential I injunction") in accordance with our decision. Id. at 832. The defendants did not seek a writ of certiorari.

The present appeal began in light of the Supreme Court's opinion in Kentucky Ass'n of Health Plans v. Miller, 538 U.S. 329, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003), which held that ERISA did not preempt two Kentucky AWP statutes. Arguing that Miller changed the applicable law, National Park Medical Center, Inc. and Y.Y. King, M.D, which were defendants in the original suit for injunction, and the State of Arkansas, which participated in the original suit as an intervenor (collectively "the movants"), filed a Motion to Recall Mandate and Lift Permanent Injunction ("Motion to Recall Mandate") with this Court. We summarily denied that motion, stating without further explanation that, "The motion to recall the mandate and lift permanent injunction filed by Appellants National Park Medical Center and Y.Y. King, M.D., and Intervenor State of Arkansas has been considered by this Court and is denied."

The movants then filed a Joint Motion to Dissolve the Permanent Injunction ("Joint Motion") pursuant to Fed.R.Civ.P. 60(b)(5) with the United States District Court for the Eastern District of Arkansas. The district court held that "the significant shift in the law as a result of the Miller decision meets the requirement of an extraordinary circumstance" for the purposes of Rule 60(b)(5) and dissolved the injunction barring the enforcement of the Arkansas PPA. Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., No. 95-514, slip op. at 5 (E.D.Ark. Feb. 12, 2004).

HMOP and Tyson appeal, arguing on several grounds that we should reverse the district court and direct it to reinstate the injunction against the enforcement of the Arkansas PPA by the excluded health care providers and the State of Arkansas, the movants in this case.

II. DISCUSSION

A. District court's authority to rule on the movants' Joint Motion under Rule 60(b)(5)

The movants filed their Joint Motion under Rule 60(b)(5). This Court reviews a district court's ruling on a Rule 60(b)(5) motion for abuse of discretion. Parton v. White, 203 F.3d 552, 555-56 (8th Cir.2000). Both HMOP and Tyson argue that because this case involves only pure issues of law, the standard of review should be de novo. Nothing turns on this argument because a "`district court by definition abuses its discretion when it makes an error of law.'" Computrol, Inc. v. Newtrend, L.P., 203 F.3d 1064, 1070 (8th Cir.2000) (quoting Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996)).

Rule 60(b)(5) states that, "On motion and upon such terms as are just, the court may relieve a party ... from a final judgment ... [if] it is no longer equitable that the judgment should have prospective application." Fed.R.Civ.P. 60(b)(5). "The district court retains authority under Rule 60(b)(5) to modify an injunction when changed circumstances have caused it to be unjust." Keith v. Mullins, 162 F.3d 539, 540-41 (8th Cir.1998). "`Relief under Rule 60(b) is an extraordinary remedy'" and will be justified only under "exceptional circumstances." Watkins v. Lundell, 169 F.3d 540, 544 (8th Cir.1999) (quoting Nucor Corp. v. Nebraska Pub. Power Dist., 999 F.2d 372, 374 (8th Cir.1993)). When prospective relief is at issue, a change in decisional law provides sufficient justification for Rule 60(b)(5) relief. See Ass'n for Retarded Citizens of N.D. v. Sinner, 942 F.2d 1235, 1240 (8th Cir.1991).

HMOP and Tyson argue on a number of grounds that the district court was precluded from entertaining the movants' Joint Motion. Although HMOP and Tyson present a number of distinct arguments, they generally contend that the district court should not have considered the motion because this Court previously denied a motion on the same ground seeking...