82 F.3d 642 (5th Cir. 1996), 95-30481, CIGNA Healthplan of Louisiana, Inc. v. State of La. ex rel. Ieyoub

Docket Nº:95-30481.
Citation:82 F.3d 642
Party Name:CIGNA HEALTHPLAN OF LOUISIANA, INC.; Connecticut General Life Insurance Co., Plaintiffs-Appellees, v. STATE OF LOUISIANA, ex rel. Richard P. IEYOUB, Attorney General, Defendant-Appellant.
Case Date:April 30, 1996
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 642

82 F.3d 642 (5th Cir. 1996)

CIGNA HEALTHPLAN OF LOUISIANA, INC.; Connecticut General

Life Insurance Co., Plaintiffs-Appellees,

v.

STATE OF LOUISIANA, ex rel. Richard P. IEYOUB, Attorney

General, Defendant-Appellant.

No. 95-30481.

United States Court of Appeals, Fifth Circuit

April 30, 1996

Rehearing Denied June 4, 1996.

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Robert N. Eccles, Donald T. Bliss, Karen M. Wahle, O'Melveny & Myers, Washington, DC, Harry S. Hardin, III, Raymond J. Salassi, Jr., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for plaintiffs-appellees.

Jane Bishop Johnson, Louisiana Department of Justice, Baton Rouge, LA, for defendant and defendant-appellant.

Gregory David Frost, Baton Rouge, LA, Larry M. Roedel, Roedel, Parsons, Hill & Koch, Baton Rouge, LA, for amicus curiae,

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Louisiana State Medical Society and La. Dental Assoc.

Robert J. Conrad, Jr., Patrick D. Seiter, Adams & Reese, New Orleans, LA, for La. State Med. Soc., amicus curiae.

Jan S. Amundson, National Association of Manufacturers, Washington, DC, Thomas Harry Kiggans, Phelps Dunbar, Baton Rouge, LA, Mark Snyderman, Paul Blankenstein, William J. Kilberg, Gibson, Dunn & Crutcher, Washington, DC, Seth Jacobs, Vienna, VA, Stephen Ostrach, Boston, MA, for Nat'l Ass'n of Mfrs., LA Health Care Alliance, Aetna Life Ins. Co. and Metrahealth, amicus curiae.

David W. O'Brien, Joel L. Michaels, Thomas Anthony Guidoboni, Kathryn Wilber, Washington, DC, Michaels, Wishner & Bonner, Washington, DC, Alphonso O'Neil-White, Washington, DC, for Group Health Ass'n of America, Inc., amicus curiae.

James Michael Cutshaw, Phelps Dunbar, Baton Rouge, LA, for Louisiana Managed Healthcare Association, amicus curiae.

Appeal from the United States District Court for the Middle District of Louisiana.

Before REYNALDO G. GARZA, WIENER and STEWART, Circuit Judges.

WIENER, Circuit Judge:

Plaintiffs-Appellees CIGNA Healthplan of Louisiana (CIGNA) and Connecticut General Life Insurance Company (CGLIC) filed suit against Defendant-Appellant the State of Louisiana, ex rel. Richard P. Ieyoub, Attorney General 1 (Ieyoub), seeking inter alia (1) a declaratory judgment holding that Louisiana's Any Willing Provider statute 2 is preempted by the Employee Retirement Income Security Act (ERISA) 3; and (2) an injunction prohibiting the commencement of any action against them for alleged violations of the Any Willing Provider statute. 4 The district court granted summary judgment declaring that ERISA preempts the Any Willing Provider statute insofar as it applies to third party administrators and health care

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plans that provide services to ERISA-qualified benefit plans, and issued an injunction barring enforcement of the statute against CIGNA and CGLIC. Concluding that the Any Willing Provider statute relates to employee benefit plans within the meaning of ERISA's preemption clause, 5 and that the statute is not exempted from preemption by ERISA's insurance savings clause, 6 we affirm.

I.

FACTS AND PROCEEDINGS

  1. FACTS

    1. The Any Willing Provider Statute

    In 1984, in an attempt to reduce health care costs without jeopardizing the quality of care received by patients, 7 the Louisiana legislature enacted the Health Care Cost Control Act (the Act). 8 The Act specifically authorizes the formation of preferred provider organizations (PPOs), which are defined as "contractual ... agreements between a provider or providers and a group purchaser or purchasers to provide for alternative rates of payment...." 9 The definitional section of the Act contains a definition of "group purchaser," then follows the definition with an illustrative list of some of the types of entities that may be included in that category. 10 According to the Act, "group purchasers" may include "[e]ntities which contract for the benefit of their insured, employees, or members" 11; and "[e]ntities which serve as brokers for the formation of [contracts with providers], including health care financiers, third party administrators, ... or other intermediaries." 12

    The Any Willing Provider statute, which is incorporated as § 2202(5)(c) of the Act, mandates that "[n]o licensed provider ... who agrees to the terms and conditions of the preferred provider contract shall be denied the right to become a preferred provider." 13 According to an advisory opinion issued by the Louisiana Attorney General's office in February 1993, the arbitrary exclusion from a PPO of a licensed physician who is "willing and able to accede to the terms and conditions of the preferred provider contract" constitutes both a violation of the Any Willing Provider statute and an unfair trade practice under Louisiana law. 14

    2. The Parties

    Both CIGNA and CGLIC constitute "group purchasers" under the terms of the Act. CIGNA is a licensed health maintenance organization (HMO) that provides prepaid health care coverage to enrolled subscribers--including the sponsors of ERISA-qualified employee benefit plans--by contracting with selected physicians, hospitals, and other health care suppliers (collectively, providers). The chosen providers agree to comply with CIGNA's quality control requirements and to offer health care services to CIGNA's subscribers at a discounted rate.

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    In Louisiana, CIGNA's provider network is marketed by CGLIC, a licensed health insurer. CGLIC also contracts with CIGNA for the right to use the provider network in conjunction with the insured and self-funded health benefit plans that CGLIC offers to, and administers for, its clients. Like CIGNA's subscribers, CGLIC's clients include the sponsors of ERISA-qualified employee welfare benefit plans.

    3. Impact of the Any Willing Provider Statute

    In 1994, CIGNA notified one of the physicians on its provider network, Dr. Ronald Sylvest, that his contract was being terminated. Dr. Sylvest sued CIGNA, alleging that his termination violated the Any Willing Provider statute. After a temporary restraining order was issued against CIGNA, the parties reached a settlement; and the suit was dismissed.

    Since the dismissal of the Sylvest suit, CIGNA has received statutory notice from the Attorney General's office that a formal complaint has been filed by a doctor charging that CIGNA violated the Any Willing Provider statute by rejecting his application to its provider panel. Moreover, CIGNA has received, and would like to reject, applications from a number of physicians seeking inclusion in its network of providers.

  2. PROCEEDINGS

    In an effort to free themselves from the threat of suit for the violation of the Any Willing Provider statute, CIGNA and CGLIC brought this action against Ieyoub in federal district court, seeking inter alia (1) a declaratory judgment holding that the Any Willing Provider statute is preempted by ERISA; and (2) an injunction prohibiting the commencement of any action against them for alleged violations of the Any Willing Provider statute. The district court granted summary judgment declaring that ERISA preempts the Any Willing Provider Statute insofar as it relates to third party administrators and health care plans that provide services to ERISA-qualified benefit plans, and issued an injunction barring Ieyoub from enforcing the statute against CIGNA and CGLIC. Ieyoub timely appealed.

    II.

    ANALYSIS

  3. STANDARD OF REVIEW

    When reviewing a grant of summary judgment, we view the facts and inferences in the light most favorable to the non-moving party 15; and we apply the same standards as those governing the trial court in its determination. 16 Summary judgment must be granted if a court determines "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." 17

  4. ERISA PREEMPTION 18

    1. Preemption Doctrine

    The first question we must address is whether the Any Willing Provider statute is preempted pursuant to § 514(a) of ERISA. Section 514(a) states that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" that is covered by the federal statute. 19 Courts have interpreted this preemption clause broadly, observing that its deliberatively expansive language

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    was designed "to establish ... plan regulation as exclusively a federal concern." 20

    The Supreme Court has given the phrase "relate to" a "broad common-sense meaning." 21 A state law relates to an ERISA plan "in the normal sense of the phrase if it has connection with or reference to such a plan." 22 A state law can relate to an ERISA plan even if that law was not specifically designed to affect such plans, and even if its effect is only indirect. 23 If a state law does not expressly concern employee benefit plans, it will still be preempted insofar as it applies to benefit plans in particular cases. 24 Of particular significance to our analysis today is the fact that the Supreme Court has repeatedly held that ERISA preempts "state laws that mandat[e] employee benefit structures or their administration." 25

    Nevertheless, ERISA preemption is not without limits. The Supreme Court has cautioned that "[s]ome state actions may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law 'relates to' the plan." 26 A unanimous Supreme Court has recently held in this regard that ERISA does not preempt state laws that have "only an indirect economic effect on the relative costs of various health insurance packages" available to ERISA-qualified plans. 27

    ERISA itself contains provisions which limit the scope of preemption. 28 For the purposes of the instant appeal, it is relevant that under § 514(b)(2)(A) of...

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