Daley v. Marriott Intern., Inc.

• Decision Date: 25 July 2005
• Docket Number: No. 04-2651.,No. 04-2643.,04-2643.,04-2651.
• Citation: 415 F.3d 889
• Parties: Tracey DALEY, and other similarly situated persons, Appellant, v. MARRIOTT INTERNATIONAL, INC., Appellee. Tracey Daley, Appellant, v. Marriott Health Plan; Empire Blue Cross/Blue Shield, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

415 F.3d 889

Tracey DALEY, and other similarly situated persons, Appellant, v. MARRIOTT INTERNATIONAL, INC., Appellee.

Tracey Daley, Appellant, v. Marriott Health Plan; Empire Blue Cross/Blue Shield, Appellees.

No. 04-2643.

No. 04-2651.

United States Court of Appeals, Eighth Circuit.

Submitted: February 17, 2005.

Filed: July 25, 2005.

Michael B. Kratville, argued, Omaha, NE, for appellant.

Rachel K. Alexander, argued, Omaha, NE (Christopher E. Hoyme, Omaha, NE, on the brief), for appellee.

Before MORRIS SHEPPARD ARNOLD, BOWMAN, and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

Tracey Daley ("Daley") filed a complaint against the Marriott Health Plan (the "Plan")¹ and Empire Blue Cross/Blue Shield ("Empire") for breach of contract under state law and breach of fiduciary duty under the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 ("ERISA"). Daley alleged that the Plan failed to provide mental-health coverage in accordance with Nebraska's mental-health parity law. The Plan and Empire filed a motion for summary judgment. The district court² granted the motion because it concluded that the Nebraska mental-health parity law is preempted by ERISA as to self-funded ERISA plans.

In a separate action, Daley filed a similar complaint against Marriott International, Inc. ("Marriott"), in its capacity as administrator of the Plan. Marriott moved to dismiss the complaint based on the doctrine of res judicata. The district court³ granted the motion and alternatively held that the Nebraska mental-health parity law is preempted by ERISA as to Marriott's self-funded ERISA plan.

Daley appeals both judgments. For the reasons discussed below, we affirm both judgments.

I. BACKGROUND

Daley is an employee of Marriott Corporation, Inc., a subsidiary of Marriott. Daley is a participant in the Plan, which is self-funded and sponsored by Marriott and governed by ERISA.⁴ Marriott is the administrator of the Plan, and as such, under the Plan it has the "sole and absolute final discretion to determine eligibility for plan benefits, to construe the terms of the plan, and to resolve any factual issues relevant to benefit eligibility or benefit enrollment." Pursuant to an agreement with Marriott, Empire performs third-party administrative and claims-processing services for the Plan.

Under the terms of the Plan, in-network outpatient mental-health visits are fully covered, subject to a co-payment. Such coverage, however, is subject to a plan-year maximum of thirty visits and a lifetime maximum of 200 visits.

In 2000, Daley began receiving outpatient treatment for an unspecified mental-health condition. In 2000 and 2001, she incurred claims exceeding the plan-year maximum of thirty visits. Empire denied those claims and Daley's appeals of those claims on the basis that Daley's visits exceeded the plan-year maximum. Daley argued that Nebraska's mental-health parity law, Neb.Rev.Stat. §§ 44-791 to 795 (2000), prohibited the Plan from imposing any limits on mental-health coverage.⁵ The Plan, through Empire, took the position that the Nebraska mental-health parity law does not apply to the Plan because the law is preempted by ERISA.

Daley decided not to pursue an optional appeal of her denied claims to Marriott. Instead, on January 20, 2003, Daley filed a complaint against the Plan and Empire for breach of contract under state law and breach of fiduciary duty under ERISA § 409, 29 U.S.C. § 1109, based on the Plan's failure to provide mental-health coverage in accordance with the Nebraska mental-health parity law.

Daley made three attempts to amend her complaint to add Marriott as a defendant. First, on August 29, 2003, Daley filed a motion to add Marriott as a defendant. The magistrate judge⁶ denied the motion, citing Daley's failure to comply with Rule 15.1 of the Local Rules of the United States District Court for the District of Nebraska, which requires the moving party to attach a proposed amended pleading to the motion.⁷ Then, on December 26, 2003, Daley filed another motion to amend her complaint seeking to add Marriott as a defendant, to expand the time-frame of denied claims to 2003, and to add an allegation of untimely notices of those additional claim denials. The magistrate judge denied this motion because the proposed amended complaint attached to the motion failed to reference Marriott, the party Daley intended to add as a defendant.⁸ Finally, on January 23, 2004, Daley filed a motion to reconsider the denial of her motion to amend and attached a corrected proposed amended complaint which substituted Marriott as a defendant in place of the Plan, expanded the time-frame of denied claims, and added an allegation of untimely claim denials. The magistrate judge construed the motion as a renewed motion for leave to amend and denied it.⁹

The Plan and Empire moved for summary judgment, arguing that ERISA preempts the Nebraska mental-health parity law. On June 1, 2004, the district court granted the motion, concluding that Daley's claims were based on a state law that, as applied to self-funded ERISA plans, is preempted by ERISA. See Daley v. Marriott Health Plan, No. 8:03CV26 (D. Neb. June 1, 2004) ("Daley I").

Meanwhile, on February 19, 2004, Daley filed a lawsuit against Marriott in its capacity as Plan administrator ("Daley II"). The complaint in Daley II is the same as the complaint filed in Daley I, except in the following respects: (1) Marriott, as opposed to the Plan and Empire, is the named defendant in Daley II; (2) the Daley II complaint contains an allegation of additional claim denials based on the plan-year limit since the filing of Daley I; and (3) the Daley II complaint contains an allegation of untimely notices of those additional claim denials. Marriott moved to dismiss Daley II based on the doctrine of res judicata. On June 18, 2004, the district court granted the motion on res judicata grounds and alternatively held, like the district court in Daley I, that Daley failed to state a claim because her claim relied on a state law that, as applied to self-funded ERISA plans, is preempted by ERISA.

Daley now appeals the district court's adverse grant of summary judgment in Daley I. She also appeals the district court's dismissal of Daley II.

II. DISCUSSION

A. Daley I

Daley argues that the district court erred in holding that the Nebraska mental-health parity law is preempted by ERISA.¹⁰ "Because ERISA preemption is a question of federal law involving statutory interpretation, we review the district court's decision de novo." Ark. Blue Cross & Blue Shield v. St. Mary's Hosp., Inc., 947 F.2d 1341, 1344 (8th Cir.1991).

Before addressing Daley's argument that ERISA does not preempt the Nebraska mental-health parity law, we must explain the analytical framework of ERISA preemption. "ERISA comprehensively regulates employee pension and welfare plans." Baxter v. Lynn, 886 F.2d 182, 184 (8th Cir.1989). "To meet the goals of a comprehensive and pervasive Federal interest and the interests of uniformity with respect to interstate plans, Congress included an express preemption clause in ERISA for the displacement of State action in the field of private employee benefit programs." Wilson v. Zoellner, 114 F.3d 713, 715-16 (8th Cir.1997) (internal quotations omitted). Accordingly, ERISA broadly preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" governed by ERISA. 29 U.S.C. § 1144(a).

However, ERISA contains an exception to the general rule of preemption, which is referred to as the "savings clause." Under the savings clause, a state law that regulates insurance is "saved" from ERISA preemption. 29 U.S.C. § 1144(b)(2)(A).¹¹ ERISA's "deemer clause," in turn, "exempt[s] self-funded ERISA plans from state laws that `regulat[e] insurance' within the meaning of the savings clause." FMC Corp. v. Holliday, 498 U.S. 52, 61, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990). The effect of the deemer clause is that "self-funded ERISA plans are exempt from state regulation insofar as that regulation `relate[s] to' the plans." Id.¹²

Daley cites three cases in support of her argument against ERISA preemption of the Nebraska mental-health parity law: Express Scripts, Inc. v. Wenzel, 262 F.3d 829 (8th Cir.2001) (holding that Missouri statutes regulating some aspects of how Missouri HMOs provide prescription drugs through network pharmacies regulate insurance and, therefore, fall within ERISA's savings clause); Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002) (holding that Illinois statute requiring HMOs to provide independent medical review of certain claim denials is saved from preemption because the statute regulates insurance within the meaning of ERISA's savings clause); and Miller, 538 U.S. 329, 123 S.Ct. 1471, 155 L.Ed.2d 468 (holding that two Kentucky any-willing-provider laws are saved from preemption because they regulate insurance within the meaning of ERISA's savings clause). Relying on these cases, Daley argues that the Nebraska mental-health parity law is "saved" from ERISA preemption. Ultimately, Daley's argument is fatally flawed because it ignores the significance of the deemer clause in cases where self-funded ERISA plans are concerned. See Prudential Ins. Co., 413 F.3d at ___, slip op. at 23 ("The movants' argument here fails because it ignores the Application of the deemer clause to self-funded ERISA plans, a non-issue in Miller, but the controlling issue in this case with regard to the [plaintiff's self-funded ERISA] plan.").

Whether the Nebraska mental-health parity law is saved from preemption is not the determinative issue. Because the law "relates to" an ERISA employee benefit plan, ERISA's deemer clause exempts Marriott's self-funded Plan from application of Nebraska's mental-health parity law. See FMC Corp., 498 U.S. at 61, 111 S.Ct. 403. In addition, because of the deemer clause, the Nebraska...