Amos v. Blue Cross-Blue Shield of Alabama

• Decision Date: 22 March 1988
• Docket Number: Civ. A. No. 87-AR-1644-M.
• Citation: 681 F. Supp. 1515
• Parties: Harley AMOS, et al., Plaintiffs, v. BLUE CROSS-BLUE SHIELD OF ALABAMA, et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

681 F. Supp. 1515

Harley AMOS, et al., Plaintiffs, v. BLUE CROSS-BLUE SHIELD OF ALABAMA, et al., Defendants.

Civ. A. No. 87-AR-1644-M.

United States District Court, N.D. Alabama, M.D.

March 22, 1988.

Daniel B. King, Robert H. King, Sr., King & King, Gadsden, Ala., for plaintiffs.

Lawrence B. Clark, Sally S. Reilly, Lange, Simpson, Robinson & Somerville, Birmingham, Ala., for defendants.

MEMORANDUM OPINION

ACKER, District Judge.

Defendants, Blue Cross-Blue Shield of Alabama and Jan Cullighan (Blue Cross), have moved for a reconsideration of this court's ruling of December 30, 1987, which held that the pendent state law claims of plaintiffs, Harley Amos and Gail Amos, continue as viable ERISA claims, by absorption, as a consequence of the Eleventh Circuit's opinion in Belasco v. W.K.P. Wilson and Sons, Inc., 833 F.2d 277 (11th Cir.1987), decided on December 2, 1987, by a panel consisting of Judges Hill, Hatchett and Thomas. Blue Cross now cites, with understandable relish, Bishop v. Osborn Transportation, Inc., 838 F.2d 1173 (11th Cir.1988), decided on March 1, 1988. In Bishop, this very court was affirmed by an Eleventh Circuit panel consisting of Judges Hill, Fay and Hatchett, who there deduced, despite the deliberately equivocal opinion of the Supreme Court in Massachusetts Mutual Ins. Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), that punitive and other extracontractual damages cannot be recovered under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a) (ERISA), thus apparently solving the problem, as far as the Eleventh Circuit is concerned, which had been reserved in Howard v. Parisian, Inc., 807 F.2d 1560, 1565 (11th Cir.1987).

In its motion for reconsideration, Blue Cross makes very clear its position that "plaintiff is not entitled to damages beyond the benefits to which he may be entitled under the employee welfare benefit plan of which he is a participant." In its brief Blue Cross also makes clear its further position that a trustee or plan administrator cannot even be held liable for benefits unless his decision to turn down a claim is "arbitrary and capricious," i.e., totally irrational or in bad faith.

The question to be revisited here concerns the extent to which the national public policy enacted in ERISA narrows the exposure of the trustees of welfare benefits funds and plan administrators. Does it close the door against all meritorious torttype claims by plan beneficiaries? If the recognized purpose of ERISA was to protect beneficiaries, will this "new dispensation," by judicial construction, take away all of the effective traditional remedies of the beneficiaries? Would Blue Cross carry its argument so far as to suggest that ERISA wipes out a plan beneficiary's state tort claim arising out of his administrator's running over him with a truck in his driveway while attempting to deliver a benefit check? This activity would be directly related to the administration of the plan. It very arguably comes within the "supersedure" of 29 U.S.C. § 1144(a). Where is the line to be drawn?

It is provocative to note that there is now a petition on this subject pending in the Supreme Court for certiorari to the Third Circuit in Continental Group, Inc. v. McLendon, No. 87-911 (3rd Cir.1987), decided by the Third Circuit on November 11, 1987. In Continental Group, the Third Circuit dealt with the serious problem of preserving a party's constitutional right to jury trial in an action which combines legal and equitable claims, certain of them admittedly being ERISA claims. The law as to the breadth of ERISA preemption and as to the right to jury trial in ERISA or ERISA-related claims remains highly volatile, conflicting and undefined. For instance, in Schlenz v. United Airlines, 678 F.Supp. 230 (N.D.Cal.1988), decided as recently as January 19, 1988, Judge Henderson found that a former employee's pendent state law claims for wrongful discharge and breach of contract against his employer are not preempted by ERISA. See also Hickman v. Tosco Corp., 840 F.2d 564, (8th Cir.1988). These decisions square with this court's reading of Belasco, although the rationale is different. In Schultz v. National Coalition of Hispanic Mental Health & Human Services, 678 F.Supp. 936, (D.D.C.1988), decided on February 11, 1988, Judge Richey held that a former employee's action for fringe benefits lost when plaintiff allegedly was illegally terminated, does not create a ground for ERISA preemption of the employee's state law discrimination claim. Again, Schultz can be reconciled with Belasco by recognizing that the two courts arrived at the same result by using different semantic routes. Both routes leave the court door ajar for remedies beyond mere plan benefits.

The fact that all other remedial doors are not closed by ERISA is again illustrated by Fort Halifax Packing Co. v. Coyne, ___ U.S. ___, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987), in which a divided Supreme Court decided that the enforcement of a particular law of Maine, although it directly involved employment benefits in the context of severance pay, is not preempted by ERISA, because it does not "relate to any employee benefit plan." 29 U.S.C. § 1144(a). The majority expanded this rationale by articulating several reasons why Maine's cause of action is not precluded by ERISA. Without here repeating these reasons, several of them could well be used to characterize the state law claims which were originally presented by Mr. and Mrs. Amos and are now "converted."

If ERISA was congressionally designed to eliminate any and all causes of action against pension trustees and plan administrators not expressly found within the four corners of ERISA, not only are overlapping state claims precluded but a federal cause of action under the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621-634, even though arising out of many of the same operative facts, if "related to any employee benefit plan," would be precluded. How exclusive did Congress intend for ERISA to be?

Blue Cross likes the sound of Rasmussen v. Metropolitan Life Ins., 676 F.Supp. 1360 (W.D.La.1988), decided on January 21, 1988, in which Judge Stagg stated the extreme belief that not only does ERISA preempt (in the sense of "eliminate") all state law claims but that a plan beneficiary cannot even go to court to invoke ERISA by claiming that the administrator was "arbitrary and capricious" until he has exhausted all administrative remedies provided by his plan. Other courts have held the same thing. The looming possibility of having to submit to the binding arbitration of an already tightly circumscribed ERISA claim (limited, if Blue Cross is correct, to a bare claim for benefits), is again suggested by Printing Specialty Local 680 v. Nabisco Brands, 833 F.2d 102 (7th Cir.1987). Printing Specialty necessarily implies that if a pension plan contains a provision requiring binding arbitration, resort to court is forever precluded unless there is some way to attack the arbitrator's finding. In other words, if Blue Cross can take the step of "preempting" all state law claims in the sense of "eliminating them entirely," as contrasted with the Belasco sense of "converting them into ERISA claims," then Blue Cross would no doubt want to take the next logical step and introduce into its various plans a binding arbitration provision. It would be ironic, indeed, for a beneficiary who becomes the victim of monumental fraud or of classically abusive behavior by a plan administrator not only to be limited to a recovery of benefits clearly due under the terms of his contract (with all ambiguities to be resolved in favor of the administrator), but if the plan requires it, to submit the issue of whether or not the administrator was "arbitrary and capricious" to binding arbitration, thus, as a practical matter, eliminating entirely the beneficiary's access to court. From the point of view of reducing this court's case load, this scenario would produce a highly desirable result. It would be the reverse bootstrap working at its best.

A puzzle is presented by the fact that Bishop, decided on March 1, 1988, makes no mention of Belasco, decided on December 2, 1987. Therefore, Bishop does not attempt to distinguish Belasco or to reconcile the two expressions on the same subject only three months apart. If the two panels had not contained two of the same judges, this court might reason that the Bishop court was unaware of the Belasco decision, but the fact that two of the same judges participated in both decisions makes this reasoning impossible. The matter is further complicated by the fact that on February 24, 1988, Judges Tjoflat and Edmondson, in the instant case, denied Blue Cross' application for an interlocutory appeal from this court's order of December 30, 1987, which recited this court's interpretation of Belasco, as follows:

This court finds it impossible to read this language Belasco, p. 281-82 spoken less than a month ago by the Eleventh Circuit for anything except what it literally means, namely that while ERISA does preempt state tort claims it effects that preemption not by eliminating the state tort claims but by absorbing them and allowing them to proceed as federal claims, either as matters of federal common law or as matters within the contemplation of the ERISA statutory language. Belasco answers the question reserved in Howard v. Parisian, Inc., 807 F.2d 1560, 1565 (11th Cir.1987).

By denying the interlocutory appeal, were Judges Tjoflat and Edmondson postponing the Eleventh Circuit's addressing of the meaning of Belasco, or were they suggesting agreement with this court's reading of Belasco? At the time this court spoke on December 30, 1987, Bishop had not been decided. Bishop was still around the corner. The question is: Does Bishop call upon this court to alter its interpretation of Belasco?

If there is a logical way for a lower court to reconcile...