Kuhl v. Lincoln Nat. Health Plan of Kansas City, Inc.

• Decision Date: 13 August 1993
• Docket Number: 92-2607,Nos. 92-2604,s. 92-2604
• Citation: 999 F.2d 298
• Parties: , 16 Employee Benefits Cas. 2745, Pens. Plan Guide P 23880W Mary KUHL; Buddy Kuhl, Jr.; Marnie K. Kuhl, Appellants, v. LINCOLN NATIONAL HEALTH PLAN OF KANSAS CITY, INC., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 298

999 F.2d 298

62 USLW 2099, 16 Employee Benefits Cas. 2745,

Pens. Plan Guide P 23880W

Mary KUHL; Buddy Kuhl, Jr.; Marnie K. Kuhl, Appellants, v. LINCOLN NATIONAL HEALTH PLAN OF KANSAS CITY, INC., Appellee.

Nos. 92-2604, 92-2607.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 14, 1993.

Decided July 7, 1993.

Rehearing and Suggestion for Rehearing

En Banc Denied Aug. 13, 1993.

Clarence W. Crumpecker, Jr., Kansas City, MO, argued (Linda J. Salfrank and James A. Durbin, on the brief), for appellants.

Mark E. Johnson, Kansas City, MO, argued (Terry L. Tyrrell, R. Christopher Abele and William E. Hanna, on the brief), for appellee.

Before WOLLMAN and BEAM, Circuit Judges, and BOGUE, ^* Senior District Judge.

BEAM, Circuit Judge.

This consolidated appeal arises from the district court's ¹ orders resolving two actions brought against Lincoln National Health Plan of Kansas City, Inc. (Lincoln National) as a result of the death of its insured, Buddy Kuhl. The district court held that the plaintiffs' state law claims against Lincoln National were preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, and that ERISA did not authorize the recovery of monetary damages for Lincoln National's alleged misconduct. We affirm both orders of the district court.

I. BACKGROUND

Lincoln National is an "independent physician" HMO, which means that it pays independent physicians, hospitals, and other health care providers to render medical services for its members. Pursuant to a contract between Lincoln National and Belger Cartage Services, Inc. (Belger), Lincoln National pays for medical services provided to Belger employees under Belger's Group Health Plan. Belger's Group Health Plan is an "employee welfare benefit plan" regulated under ERISA. 29 U.S.C. § 1002(1). Under the Belger Plan, Lincoln National is not contractually obligated to pay for medical services rendered outside the "Service Area" of the Lincoln National network or for medical services rendered by personnel not participating in the Lincoln National network. All decisions concerning the payment of claims under the Belger Plan are the responsibility of Lincoln National. Lincoln National makes advance decisions regarding payment for medical services rendered outside of its service area through "precertification review," a process by which it determines whether a particular procedure or hospitalization is covered by the Belger Plan.

Buddy Kuhl was an employee of Belger, and had opted to receive medical benefits under the Belger Plan administered by Lincoln National as of March 1, 1989. On April 29, 1989, Buddy Kuhl suffered a heart attack. Dr. Grimes, Buddy Kuhl's designated primary care physician, placed Buddy Kuhl in the care of Dr. Levi, a heart specialist at Menorah Medical Center. Dr. Levi concluded that heart surgery was necessary, including open heart LV aneurysmectomy and a coronary by-pass. Lincoln National arranged for a second opinion by Dr. Ahuja. In a letter dated May 23, 1989, Dr. Ahuja confirmed that surgery was necessary, stating that Buddy Kuhl was "at high risk of sudden death" and needed the recommended surgery "in the next few weeks." App. 300-01.

Buddy Kuhl underwent extensive tests at Menorah between June 13, 1989, and June 16, 1989, to determine the extent of his heart damage and the proper course of treatment. On June 20, 1989, Dr. Levi determined that Buddy Kuhl had inducible ventricular tachycardia and would need formal electrophysiologically guided left ventricular aneurysm resection and subendocardial resection, as well as his bypass surgery. Because the Kansas City area hospitals did not have the equipment to perform the necessary surgery, Dr. Levi concluded that Buddy Kuhl would have the best chance of survival if the surgery were performed at Barnes Hospital in St. Louis, Missouri. Dr. Levi also noted that the surgeons at Barnes Hospital had more experience and success with this type of surgery than any doctor in Kansas City. Dr. Hannah, a cardiac surgeon at Menorah and a participating provider under the Belger Plan, concurred in Dr. Levi's conclusions. Therefore, arrangements were made for Dr. Cox, a heart surgeon specializing in computerized cardiac mapping and bypass surgery, to perform the surgery at Barnes Hospital on July 6, 1989.

On June 20, 1989, Dianne Long, a utilization review coordinator for Lincoln National, received a call from Barnes Hospital requesting precertification for the surgery. On June 23, 1989, Lincoln National refused to precertify payment for the surgery because Barnes Hospital is outside the Lincoln National service area. The surgery scheduled for July 6, 1989, was cancelled. Lincoln National then scheduled an appointment for Buddy Kuhl to see Dr. Brodine at Research Medical Center in Kansas City on July 6, 1989, to determine whether the surgery could be performed in Kansas City rather than in St. Louis. After examining Buddy Kuhl, Dr. Brodine immediately informed Lincoln National that he agreed with the recommendations of Dr. Levi and Dr. Hannah that the surgery should be performed at Barnes Hospital.

Two weeks later, on July 20, 1989, Lincoln National informed Buddy Kuhl that it would authorize the surgery at Barnes Hospital. Buddy Kuhl immediately attempted to schedule the surgery, but was informed that the surgery team was unavailable until September 1989. On September 2, 1989, Dr. Cox examined Buddy Kuhl in anticipation of surgery and found that his heart had deteriorated to such an extent that the proposed surgery was no longer a viable option. Dr. Cox recommended that Buddy Kuhl be evaluated for cardiac transplantation and asked that he be placed on a heart transplant waiting list at Barnes Hospital. Lincoln National refused to precertify payment of these medical costs. However, Buddy Kuhl was placed on a heart transplant waiting list at Kansas University Medical Center.

Buddy Kuhl died as a result of ventricular tachycardia on December 28, 1989, while waiting for a heart transplant.

On March 15, 1991, Mary Kuhl, Buddy Kuhl, Jr., and Marnie K. Kuhl (the Kuhls) filed a petition in the Circuit Court of Jackson County, Missouri, asserting four claims against Lincoln National: medical malpractice, emotional distress, tortious interference with Buddy Kuhl's right to contract for medical care, and breach of a contract through Buddy Kuhl as a third-party beneficiary. Lincoln National filed a Notice of Removal pursuant to 28 U.S.C. § 1441(b), asserting that ERISA provides federal question jurisdiction over each of the Kuhls' claims. The Kuhls sought remand, arguing that ERISA did not apply. Lincoln National opposed the motion to remand and filed a motion for summary judgment on the grounds of ERISA preemption. The district court determined that the Kuhls' state law claims arise from the administration of the Belger Plan and therefore are preempted as claims that "relate to" an ERISA plan. The court also examined the possible remedies under ERISA, and concluded that the Kuhls could not state a claim under ERISA. Accordingly, the district court denied the Kuhls' motion to remand and granted summary judgment in favor of Lincoln National.

The Kuhls then moved to amend the judgment, moved to amend their complaint to include a cause of action under ERISA, and filed a second suit in the district court alleging that Lincoln National breached its fiduciary duty under ERISA. Lincoln National opposed the Kuhls' motions and filed a motion to dismiss the second complaint. The district court denied the Kuhls' motion to amend the original complaint because the action had been dismissed and the Kuhls' proffered no reason why the amendments were not made before the action was dismissed. Additionally, the court concluded that the Kuhls' state law claims could not be recharacterized as ERISA claims and thus, reaffirmed its grant of summary judgment in favor of Lincoln National. Finally, the court granted Lincoln National's motion to dismiss the second complaint on three grounds: (1) the court's grant of summary judgment in favor of Lincoln National was res judicata as to the allegations in the second complaint; (2) under the reasoning in the court's order granting summary judgment, the Kuhls could not state a cause of action under ERISA for breach of a fiduciary duty; and (3) the "other equitable relief" clause in 29 U.S.C. § 1132(a)(3)(B)(i) does not include monetary damages.

On appeal, the Kuhls argue that the district court erred in granting Lincoln National's motion for summary judgment and in denying the Kuhls' motion to remand because their state law claims are not preempted by ERISA. In the alternative, the Kuhls contend that the district court erred in not recharacterizing their state law claims under ERISA, in denying their motion to amend the original complaint to include a cause of action under ERISA, and in dismissing their second complaint.

II. DISCUSSION

A. ERISA Preemption

ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries by regulating the creation and administration of employee benefit plans. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 1551, 95 L.Ed.2d 39 (1987). "The statute imposes participation, funding, and vesting requirements on pension plans. It also sets various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility, for both pension and welfare plans." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983) (citations omitted). Consistent with the decision to create a comprehensive, uniform federal scheme for regulation of employee benefit plans, Congress drafted ERISA's preemption clause in broad terms. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137, 111 S.Ct. 478, 481, 112 L.Ed.2d 474 (1990).

Under section 514(a) of ERISA, as set forth in 29 U.S.C. § 1144(a), Cong...