Cervantes v. Health Plan of Nev. Inc.

• Decision Date: 27 October 2011
• Docket Number: No. 56166.,56166.
• Citation: 263 P.3d 261,127 Nev. Adv. Op. 70
• Parties: Margerita CERVANTES and Jaime Rodriguez, Appellants,v.HEALTH PLAN OF NEVADA, INC.; Sierra Health Services, Inc.; Sierra Health and Life Insurance Company, Inc.; Sierra Health–Care Options, Inc.; and Prime Health, Respondents.
• Court: Nevada Supreme Court

263 P.3d 261

127 Nev. Adv. Op. 70

Margerita CERVANTES and Jaime Rodriguez, Appellants,

v.HEALTH PLAN OF NEVADA, INC.; Sierra Health Services, Inc.; Sierra Health and Life Insurance Company, Inc.; Sierra Health–Care Options, Inc.; and Prime Health, Respondents.

No. 56166.

Supreme Court of Nevada.

Oct. 27, 2011.

Matthew L. Sharp Ltd. and Matthew L. Sharp, Reno; Friedman Rubin and William S. Cummings, Anchorage, Alaska, for Appellants.Jones Vargas and Constance L. Akridge, Las Vegas; Bryan Cave LLP and J. Alex Grimsley, Lawrence G. Scarborough, and Meridyth M. Andresen, Phoenix, Arizona, for Respondents.Before the Court En Banc.

OPINION

By the Court, DOUGLAS, J.:

Appellant Margerita Cervantes allegedly contracted hepatitis C as a result of treatments she received at the Endoscopy Center of Southern Nevada (ECSN). She obtained treatment at ECSN as part of the health care benefits she received through her union, the Hotel Employees and Restaurant Employees International Union Welfare Fund (Culinary Union). The Culinary Union operated a self-funded Employee Retirement Income Security Act (ERISA) health care plan and retained respondents Health Plan of Nevada, Inc.; Sierra Health Services, Inc.; Sierra Health and Life Insurance Company, Inc.; Sierra Health–Care Options, Inc.; and Prime Health (collectively, HPN) as its agents to assist in establishing a network of the plan's chosen medical providers.

Cervantes filed a lawsuit alleging that HPN is responsible for her injuries because it failed to ensure the quality of care provided by ECSN and referred her to a blatantly unsafe medical provider. In response, HPN argued, among other things, that Cervantes' claims were preempted by ERISA section 514.

The district court, having considered the parties' contentions, concluded that Cervantes' claims were preempted by ERISA section 514(a). In this appeal, we consider whether ERISA section 514 precludes state law claims of negligence and negligence per se against a managed care organization ¹ (MCO) contracted by an ERISA plan to facilitate the development of the ERISA plan's network of health care providers. We conclude that such claims are precluded by ERISA section 514, and therefore, we affirm the district court's grant of summary judgment.²

FACTS AND PROCEDURAL HISTORY

Cervantes received health care benefits through the Culinary Union's self-funded plan, which engaged HPN to assist in establishing a network of the plan's chosen medical providers. Specifically, the Culinary Union contracted with Sierra Health–Care Options to be the network manager for the Plan's provider network. The President of Sierra Health–Care Options explained in an affidavit that the contract provided that the Culinary Union “would select certain outpatient providers with whom it wanted to contract and [HPN] would negotiate contracts with those providers. Thereafter, Prime Health would sign the contract on behalf of the [Culinary Union].”

In 2007, Cervantes received treatment at ECSN and allegedly contracted hepatitis C as a result of her treatment there. After she was diagnosed with hepatitis C, Cervantes commenced an action against HPN, asserting claims for negligence and negligence per se. Her husband, appellant Jaime Rodriguez, asserted a claim for loss of consortium. Cervantes claimed that HPN breached a duty of care to her because it failed to maintain a quality assurance program as required by NRS Chapter 695G and accompanying regulations, and they were negligent in referring her to an unsafe medical provider.³

In its answer, HPN asserted a number of affirmative defenses and subsequently sought summary judgment from the district court, arguing, among other things, that Cervantes' claims were preempted by the relevant provisions of ERISA, specifically, sections 502(a) and 514(a). 29 U.S.C. §§ 1132(a), 1144(a) (2006). Cervantes opposed the motion and sought a continuance to obtain discovery to respond to the motion.

The district court denied Cervantes' request for NRCP 56(f) discovery and granted HPN's motion for summary judgment. In so doing, the district court determined, among other things, that appellants' claims were preempted by ERISA section 514(a). Cervantes and Rodriguez appealed.

DISCUSSION

We review a district court's grant of summary judgment de novo. Wood v. Safeway. Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005). Summary judgment is appropriate when no genuine issues of material fact remain and the moving party is entitled to judgment as a matter of law. Id. Furthermore, whether state law is preempted by a federal statute is a question of law that we also review de novo. Nanopierce Tech. v. Depository Trust, 123 Nev. 362, 370, 168 P.3d 73, 79 (2007).

Cervantes argues that the district court erred in concluding that ERISA section 514(a) preempted her negligence claim ⁴ because her claims are not related to the ERISA plan and NRS Chapter 695G and NAC Chapter 695C only have an incidental effect on the plan. Cervantes cites two federal district court cases, with fact patterns similar to the facts here, in which the federal courts concluded that ERISA section 514(a) preemption did not apply: Insco v. Aetna Health & Life Ins. Co., 673 F.Supp.2d 1180 (D.Nev.2009), and Sadler v. Health Plan of Nevada. Inc., 2:08–cv–00466–RLH–LRL (D. Nev. June 28, 2008). Both Insco and Sadler involved patients who sued an MCO after contracting a blood-borne disease after treatment at ECSN and who alleged that the MCO was negligent in directing them to ECSN for care. ⁵

In resolving this matter, we first consider the scope of ERISA section 514(a)' s preemptive effect. Thereafter, we consider whether section 514(a) preempts the application of NRS Chapter 695G and accompanying regulations.

Preemption under ERISA

The Employee Retirement Income Security Act, codified at 29 U.S.C. §§ 1001–1461, was enacted to “ ‘protect ... the interests of participants in employee benefit plans and their beneficiaries,’ ” by setting out substantive regulatory requirements for employee benefit plans, and to “ ‘provid[e] for appropriate remedies, sanctions, and ready access to Federal courts.’ ” Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (quoting 29 § U.S.C. 1001(b)). As part of its comprehensive pension reform, Congress provided for expansive preemption of otherwise applicable state laws so that regulation of employee benefit plans “is exclusively a federal concern.” Id. (internal quotations omitted).

The preemptive effect of ERISA comes from sections 502 and 514(a) of the Act. Cleghorn v. Blue Shield of California, 408 F.3d 1222, 1225 (9th Cir.2005). Like the district court, we start—and necessarily end—our analysis with section 514(a).

Preemption under ERISA section 514(a)

ERISA section 514(a) preempts all state laws that “relate to” any employee benefit plan; however, laws that regulate insurance, banking, or securities are exempted from this preemption. 29 U.S.C. § 1144 (2006) (exempting laws regulating insurance, banking, or securities from this preemption); Cleghorn, 408 F.3d at 1225. Section 514(a)'s sweeping “relate [d] to” language cannot be read with “uncritical literalism.” New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655–56, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). The United States Supreme Court noted that if the statute's “relate [d] to” language is taken to extend to the furthest reaches imaginable, Congress's words of limitation would hold no meaning. Id. at 655, 115 S.Ct. 1671 (“ ‘[r]eally, universally, relations stop nowhere’ ” (quoting H. James, Roderick Hudson xli (New York ed., World's Classics 1980))). Furthermore, the Court emphasized that the intent of Congress is the touchstone to preemption analysis and that, absent a clear and manifest intent of Congress, there is a presumption that federal laws do not preempt the application of state or local laws regulating matters that fall within the traditional police powers of the state, including health and safety matters.⁶ Id. at 655, 661, 115 S.Ct. 1671; De Buono v. NYSA–ILA Medical and Clinical Services Fund., 520 U.S. 806, 814, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997).

Remarking that it is necessary to turn from the unhelpful text of ERISA when determining the scope of ERISA's preemptive effect, the United States Supreme Court instructed that courts must be guided by the objectives of ERISA. Travelers, 514 U.S. at 656, 115 S.Ct. 1671. In its analysis of ERISA section 514(a), the Court found that the statute was intended

“to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government ... [and to prevent] the potential for conflict in substantive law ... requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.”

Id. at 656–57, 115 S.Ct. 1671 (quoting Ingersoll–Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)). The Court explained that the basic purpose of ERISA section 514(a) was to avoid multiplicity of regulation. Id. at 657, 115 S.Ct. 1671. In Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96–97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), the Supreme Court explained that a law “relate[s] to” a covered employee benefit plan “if it [ (1) ] has a connection with or [ (2) ] reference to such a plan.” California Div. of Labor Standards Enforcement v. Dillingham Constr. N.A., Inc., 519 U.S. 316, 324, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997). Thus, in determining whether a state law would survive section 514(a) preemption, a court must look at the “actual operation of the state statute.” De Buono, 520 U.S. at 815, 117 S.Ct. 1747.

“ Reference to ”

A law references an ERISA plan when it “acts immediately and exclusively upon ERISA plans” or ...