Colonial Life & Acc. Ins. Co. v. Medley
| Decision Date | 30 September 2008 |
| Docket Number | Civil Action No. 08-40010-FDS. |
| Citation | 584 F.Supp.2d 368 |
| Parties | COLONIAL LIFE & ACCIDENT INSURANCE COMPANY and UMass Memorial Health Care, Inc., Plaintiffs, v. Malcolm S. MEDLEY, Martin S. Ebel, and Sunila Thomas-George, in their official capacities as Commissioners of the Massachusetts Commission Against Discrimination; Commonwealth of Massachusetts; and Carolyn Calderon, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Richard C. Van Nostrand, Jessica H. Munyon, Mirick, O'Connell, Demallie & Lougee, LLP, Worcester, MA, for Plaintiffs.
Kenneth W. Salinger, Massachusetts Attorney General's Office, Susan D. Fendell, Mental Health Legal Advisors Committee, Boston, MA, for Defendants.
MEMORANDUM AND ORDER ON PLAINTIFFS' MOTION FOR JUDGMENT ON THE PLEADINGS OR MOTION FOR PRELIMINARY INJUNCTION AND DEFENDANTS' CROSS-MOTIONS TO DISMISS
This is an action to enjoin an investigation of discrimination by a state agency on the grounds of ERISA preemption. Plaintiff Colonial Life & Accident Insurance Company issued a short-term disability plan for employees of plaintiff UMass Memorial Health Care, Inc., as part of the latter's employee benefit package. Defendant Carolyn Calderon is a UMass Memorial employee who purchased a Colonial short-term disability plan. Defendants Malcolm S. Medley, Martin S. Ebel, and Sunila Thomas-George are Commissioners of the Massachusetts Commission Against Discrimination ("MCAD").
In 2007, Calderon submitted a claim for benefits based on short-term mental disability and was denied on the ground that the policy did not cover disability due to psychological or psychiatric conditions. She filed a discrimination claim with the MCAD in November 2006, contending that the denial of short-term disability benefits to individuals with mental disabilities is unlawful under state and federal law. The MCAD has begun an investigation of that discrimination charge.
Plaintiffs seek to enjoin the MCAD investigation on the grounds that it is preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"). Defendants contend that the Court should abstain from exercising jurisdiction over plaintiffs' claim pursuant to Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and should defer to the ongoing MCAD proceeding and any resulting appeal, where plaintiffs may raise ERISA preemption as a defense. For the reasons set forth below, the Court will grant plaintiffs' motion for preliminary injunction, deny plaintiffs' motion for judgment on the pleadings, and deny defendants' cross-motions to dismiss.
Defendant UMass Memorial has established and maintains an employee benefit plan for the purpose of providing certain employees with various benefits, including short-term disability coverage. UMass Memorial employees may apply for and receive short-term disability insurance issued by Colonial as part of the employee benefit package. The policy issued by Colonial specifically excludes coverage for disability caused by psychiatric and psychological conditions.
Carolyn Calderon is a UMass Memorial employee who purchased short-term disability coverage from Colonial on January 1, 2007. On May 15, 2007, Calderon submitted a claim for benefits under the policy for the period from May 8, 2007 through August 1, 2007, during which she was unable to work due to disability. The cause of Calderon's disability was major depression, grief reaction, and panic disorder. By letter dated May 20, 2007, Colonial informed Calderon that it had denied her claim for benefits pursuant to the policy exclusion for psychiatric or psychological conditions.
On November 26, 2007, Calderon filed a charge of discrimination with the MCAD against both UMass Memorial and Colonial. In her complaint, Calderon claimed that, by refusing to provide short-term disability coverage for psychiatric or psychological disabilities, plaintiffs had violated Massachusetts' anti-discrimination laws, Mass. Gen. Laws ch. 151B, § 4 and ch. 272, §§ 92A, 98, and 98A, as well as the federal Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12101 et seq. and 42 U.S.C. § 12182(b)(1)(A)(iii). On November 30, 2007, the MCAD began an investigation of Calderon's charge. That investigation remains pending.
On January 23, 2008, plaintiffs filed a complaint in this Court seeking declaratory judgment and injunctive relief. They simultaneously moved for judgment on the pleadings and for a preliminary injunction, contending that the MCAD's investigation into state law violations is preempted by ERISA. On April 1, 2008, the MCAD defendants opposed plaintiffs' motions and cross-moved to dismiss the complaint based on the Younger doctrine. Likewise, on April 2, defendant Calderon cross-moved to dismiss plaintiffs' complaint, arguing that ERISA preemption is inapplicable in this matter and urging the Court to abstain from assuming jurisdiction over the case pursuant to Younger.
Plaintiffs request that the Court (1) enjoin the MCAD from continuing its investigation of Calderon's discrimination claims and (2) declare that the applicable Massachusetts anti-discrimination laws are preempted by ERISA and, accordingly, that the MCAD does not have jurisdiction to address those claims. It is well-settled that state agencies lack jurisdiction to enforce state laws against benefit plans if the law they seek to enforce is preempted by ERISA. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 102-04, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). ERISA preempts state law causes of action "insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). Accordingly, if the plan at issue is a plan covered by ERISA and the claim asserted relates to that plan, preemption applies and the state action may not proceed. McMahon v. Digital Equip. Corp., 162 F.3d 28, 36 (1st Cir.1998).
Defendants counter that under the Younger doctrine, the Court should abstain from adjudicating this action and should instead permit the MCAD to address plaintiffs' preemption arguments. See Younger v. Harris, 401 U.S. 37, 43, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). Furthermore, defendants contend that ERISA does not preempt federal anti-discrimination laws, and that, to the extent that Massachusetts' anti-discrimination laws prohibit practices that are also prohibited under federal law, state law is not preempted. See 29 U.S.C. § 1144(d); Shaw, 463 U.S. at 103, 103 S.Ct. 2890.
Because the Younger abstention issue is dispositive here, the Court will address that issue first. See Local Union No. 12004, United Steelworkers of Am. v. Massachusetts, 377 F.3d 64, 76 n. 11 (1st Cir. 2004) ().
Under the principles established in Younger v. Harris, federal courts should not generally enjoin or otherwise interfere with certain ongoing state proceedings. 401 U.S. at 41, 91 S.Ct. 746 (); see also Ohio Civil Rights Comm'n v. Dayton Christian Sch., Inc., 477 U.S. 619, 629, 106 S.Ct. 2718, 91 L.Ed.2d 512 (1986). Younger abstention arises from policies of comity and federalism that "counsel against the exercise of jurisdiction where particular kinds of state proceedings have already commenced." Id. at 626, 106 S.Ct. 2718; see also Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 10, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987). The doctrine applies not only where there are ongoing proceedings in state court, but also where there are "state administrative proceedings that are quasi-judicial in character and implicate important state interests." Maymo-Melendez v. Alvarez-Ramirez, 364 F.3d 27, 31 (1st Cir.2004) (citing Dayton, 477 U.S. at 627 n. 2, 106 S.Ct. 2718). Where a federal court finds Younger abstention applicable, the plaintiffs cause of action should be dismissed, and the plaintiff must raise its federal claims and defenses in the administrative proceedings or "in state-court judicial review of the administrative proceeding." Dayton, 477 U.S. at 629, 106 S.Ct. 2718; see also Huffman v. Pursue, Ltd., 420 U.S. 592, 605, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975) (); Casa Marie, Inc. v. Superior Ct. of Puerto Rico, 988 F.2d 252, 263 n. 10 (1st Cir.1993) ().
Pursuant to the Younger doctrine, a federal court should abstain from exercising jurisdiction over ongoing state proceedings where three conditions are satisfied: "(1) the proceedings are judicial (as opposed to legislative) in nature; (2) they implicate important state interests; and (3) they provide an adequate opportunity to raise federal constitutional challenges." Bettencourt v. Board of Registration in Med., 904 F.2d 772, 777 (1st Cir.1990). The parties here do not dispute that the first and third conditions for Younger abstention have been met. There is no dispute that the MCAD proceedings at issue are judicial in nature. See Brotherhood of Locomotive Eng'rs v. MCAD, 695 F.Supp. 1321, 1322 (D.Mass.1988). Likewise, the parties do not dispute that the MCAD proceedings provide an adequate opportunity to raise federal constitutional challenges. Id. at 1323. See Dayton, 477 U.S. at 629, 106 S.Ct. 2718. The parties, however, vigorously dispute the second condition—namely, whether the state proceedings implicate important state interests.
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...such a claim to proceed), and Iwata v. Intel Corp., 349 F.Supp.2d 135, 149 (D.Mass.2004) (same), with Colonial Life & Accident Ins. Co. v. Medley, 584 F.Supp.2d 368, 380 (D.Mass.2008) (reaching opposite conclusion), and Witham v. Brigham & Women's Hosp., Inc., No. 00–268, 2001 WL 586717, at......