Bank of Louisiana v. Aetna U.S. Healthcare Inc.

• Decision Date: 18 October 2006
• Docket Number: No. 04-30986.,04-30986.
• Citation: 468 F.3d 237
• Parties: BANK OF LOUISIANA, Plaintiff-Appellant, v. AETNA U.S. HEALTHCARE INC.; Aetna Life Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 237

468 F.3d 237

BANK OF LOUISIANA, Plaintiff-Appellant, v. AETNA U.S. HEALTHCARE INC.; Aetna Life Insurance Company, Defendants-Appellees.

No. 04-30986.

United States Court of Appeals, Fifth Circuit.

October 18, 2006.

COPYRIGHT MATERIAL OMITTED

Henry L. Klein (argued), New Orleans, LA, for Plaintiff-Appellant.

Richard Guy Duplantier, Jr., Galloway, Johnson, Tompkins, Burr & Smith, New Orleans, LA, John Bruce Shely (argued), Kendall Matthew Gray, Andrews & Kurth, Houston, TX, for Defendants-Appellees.

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

Before REAVLEY, GARZA, and BENAVIDES, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

In response to the Petition for Rehearing filed by defendants Aetna U.S. Healthcare Inc. and Aetna Life Insurance Company, and having duly considered the response and the reply, we withdraw the prior panel opinion, 459 F.3d 610, in its entirety and substitute the following:

The Bank of Louisiana ("the Bank") appeals a summary judgment for the defendants Aetna U.S. Healthcare Inc. and Aetna Life Insurance Company (collectively "Aetna"). The issue on appeal is whether the Bank's state law claims of detrimental reliance, breach of contract, and misrepresentation are preempted by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA").

I

In 1995, the Bank entered into two contracts with Aetna. First, the Bank entered into an administrative services contract ("ASC") with Aetna to administer the Bank's self-insured employee benefit plan ("the Plan").¹ Second, the Bank purchased from Aetna a stop-loss insurance policy for the Plan.² The stop-loss policy provided an "individual" or "specific stop-loss amount" of $50,000 and an "aggregate stop-loss amount" of $600,000.³ The stop-loss coverage was scheduled to terminate on December 31, 2000.

The Bank, however, reached the aggregate stop-loss amount in 2000. Late in that year, the parties met to form a new contract that would provide fully-insured coverage commencing on January 1, 2001. The Bank also purchased an extension on its stop-loss coverage that would apply to claims incurred in 2000 and for which benefits would be paid during the first three months of 2001. In a letter from account representative Stacy McMahon, Aetna stated that the stop-loss extension would mean that the Bank would "have no additional claim liabilities for 2000 and no additional fund transfers [would] be requested." McMahon further stated that Aetna would "start wiring [the Bank's] account for claims paid during the runoff period and [the Bank would] be reimbursed at year-end." During the three month run-off period, the Bank submitted $271,628.38 in net claims incurred by plan members in 2000. (R. 177, 181, 218, 243.) Aetna drafted the Bank's account for these claims over the course of 2001 and 2002. Five of these drafts occurred during the three-month stop-loss extension period, totaling $102,720.06. Nevertheless, Aetna declined to reimburse the Bank.

The Bank filed a complaint alleging that Aetna had negligently or fraudulently misrepresented that, pursuant to the stop-loss extension, Aetna would reimburse the Bank for the $271,628.38 that it drafted from the Bank's account. In particular, the Bank first claimed that Aetna "misrepresented the value and benefit of its payment" to Aetna for the extension to the stop-loss policy. Second, the Bank alleged that Aetna misrepresented the scope of the stop-loss extension and that the Bank had detrimentally relied on these representations. Third, the Bank alleged that Aetna breached "express and implied contracts," including a contract to reimburse the Bank for claims that were paid or should have been paid during the three-month extension period. Fourth, the Bank alleged that Aetna breached its fiduciary duties as plan administrator by administering the Plan "in such a fashion as to delay the processing of claims" in order to remove them from coverage under the stop-loss extension. Finally, in an amended complaint, the Bank alleged that Aetna had violated Louisiana Revised Statutes 22:658⁴ and 22:1220.⁵

Aetna moved for summary judgment on the ground that the Bank's claims were preempted by ERISA. In a series of briefs, Aetna argued that ERISA preempted claims between an employer and a plan administrator. (R. 930.) The Bank responded that its claim of detrimental reliance and a claim for attorney's fees under Louisiana Revised Statute 22:657, the latter of which it had not pled,⁶ were not preempted because they exclusively involved parties providing services to an ERISA plan in a non-fiduciary capacity. (R. 635, 882.) The Bank withdrew its breach of fiduciary duty claim⁷ and abandoned its claims under Louisiana Revised Statute 22:658 & 22:1220. The district court held that ERISA preempted all of the Bank's remaining claims and granted summary judgment for Aetna.

II

In reviewing a summary judgment, we apply the same standard as the district court. Martin v. Alamo Community Coll. Dist., 353 F.3d 409, 412 (5th Cir.2003). We affirm only if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Id. For a defendant to obtain summary judgment on an affirmative defense, it must establish beyond dispute all of the defense's essential elements. Id. We review the district court's legal determination that ERISA preempts a state law claim de novo. Bullock v. Equitable Life Assurance Soc'y of the United States, 259 F.3d 395, 399 (5th Cir.2001).

ERISA's preemption clause, 29 U.S.C. § 1144(a), states that with certain exceptions, ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . ." The Supreme Court has "observed repeatedly that this broadly worded provision is `clearly expansive.'" Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 146, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001) (quoting N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995)). The Court has held that a state law "relates to an ERISA plan `if it has a connection with or reference to such a plan.'" Id. at 147, 121 S.Ct. 1322 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)). Simultaneously, however, the Court recognizes that, given its broadest reading, the phrase "relate to" would encompass virtually all state law, and that its "connection with" and "reference to" interpretations are "scarcely more restrictive." Id. at 146-47, 121 S.Ct. 1322. The Court has, therefore, declined to apply an "uncritical literalism" to the phrase and instead takes the "the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive, as well as to the nature of the effect of the state law on ERISA plans." Id. at 147, 121 S.Ct. 1322 (internal quotation marks omitted).

Congress's objectives in enacting ERISA were to protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing appropriate remedies, sanctions, and ready access to the Federal courts.

29 U.S.C. § 1001(b). To this end, ERISA's preemption provision is intended "to establish a uniform administrative scheme, which provides a set of standard procedures to guide processing of claims and disbursement of benefits." Egelhoff, 532 U.S. at 148, 121 S.Ct. 1322 (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987)). A uniform administrative scheme serves to minimize administrative and financial burdens by avoiding the need to tailor plans to the peculiarities of the law of each state. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990).

In light of these statutory objectives, this court applies a two-prong test to the defense of ERISA preemption. A defendant pleading preemption must prove that: (1) the claim "addresses an area of exclusive federal concern, such as the right to receive benefits under the terms of the Plan; and (2) the claim directly affects the relationship among traditional ERISA entities—the employer, the plan and its fiduciaries, and the participants and beneficiaries." Mayeaux v. La. Health Serv. and Indem. Co., 376 F.3d 420, 432 (5th Cir. 2004). Because ERISA preemption is an affirmative defense, Aetna bears the burden of proof on both elements. See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (ERISA preemption is a defense); Settles v. Golden Rule Ins. Co., 927 F.2d 505, 508 (10th Cir.1991) (defendant bears burden of proving ERISA preemption); Kanne v. Conn. Gen. Life Ins. Co., 867 F.2d 489, 492 n. 4 (9th Cir.1988) (same).

Aetna argues that the Bank's claims require inquiry into the administration of the Plan—an area of exclusive federal concern—because some of the drafts on the Bank's account were for benefit claims paid after the stop-loss extension expired. Aetna contends that the Bank intends to prove that these drafts nonetheless fall within the stop-loss extension because they arise from benefit claims that Aetna improperly delayed processing. To the extent that the Bank intends to prove its breach of contract claim through evidence that Aetna improperly delayed processing and paying benefit claims, Aetna is correct that it would require inquiry into an area of exclusive federal concern. See Hollis v. Provident Life and Accident Ins. Co., 259 F.3d 410, 414 (5th Cir.2001) (right to receive benefits under an ERISA plan is an area of exclusive federal concern); Hubbard v. Blue Cross & Blue Shield Ass'n, 42 F.3d...