Louisiana Health Service v. Rapides Healthcare
| Citation | 461 F.3d 529 |
| Decision Date | 16 August 2006 |
| Docket Number | No. 04-31114.,04-31114. |
| Parties | LOUISIANA HEALTH SERVICE & INDEMNITY CO., d/b/a Blue Cross and Blue Shield of Louisiana, Plaintiff-Intervenor Defendant-Appellant, v. RAPIDES HEALTHCARE SYSTEM; State of Louisiana; Charles R. Foti, Jr., Attorney General for the State of Louisiana, Defendants-Appellees, v. Dauterive Hospital, Intervenor Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Howard Shapiro (argued), Heather G. Magier, Proskauer Rose, New Orleans, LA, V. Thomas Clark, Jr., Leigh F. Groves, Crawford & Lewis, Baton Rouge, LA, for Plaintiff-Intervenor Defendant-Appellant.
James Randall Nelson (argued), DLA Piper Rudnick Gray Cary, Dallas, TX, Amelia Williams Koch, Steven Franklin Griffith, Jr., Baker Donelson Bearman, Caldwell & Berkowitz, New Orleans, LA, for Rapides Healthcare System and Dauterive Hosp.
Thomas More Flanagan (argued), Jennifer L. Thornton, Thomas Patrick Owern, Jr., Stanley, Flanagan & Reuter, New Orleans, LA, for State of LA and Foti.
Mary Ellen Signorille, AARP, Washington, DC, for AARP, Amicus Curiae.
James K. Irvin, Roselyn B. Koretzky, Miling Benson Woodward, New Orleans, LA, for LA Hosp. Ass'n, Amicus Curiae.
Appeal from the United States District Court for the Middle District of Louisiana.
Before HIGGINBOTHAM, DeMOSS and OWEN, Circuit Judges.
Section 40:2010 of the Louisiana Revised Statutes requires insurance companies to honor all assignments of benefit claims made by patients to hospitals. This case asks us to decide whether the Employee Retirement Income Security Act of 1974 preempts the assignment statute to the extent that it applies to fully insured ERISA plans. We hold that Louisiana's assignment statute is not preempted.
The relevant facts in this case are undisputed. Section 40:210 of the Louisiana Revised Statutes (the "assignment statute") provides, in relevant part:
Itemized statement of billed services by hospitals.
. . . No insurance company, employee benefit trust, self-insurance plan, or other entity which is obligated to reimburse the individual or to pay for him or on his behalf the charges for the services rendered by the hospital shall pay those benefits to the individual when the itemized statement submitted to such entity clearly indicates that the individual's rights to those benefits have been assigned to the hospital. When any insurance company, employee benefit trust, self-insurance plan, or other entity has notice of such assignment prior to such payment, any payment to the insured shall not release that entity from liability to the hospital to which the benefits have been assigned, nor shall such payment be a defense to any action by the hospital against the entity to collect the assigned benefits.1
The assignment statute is included in the "State Department of Hospitals" chapter of Louisiana's Public Health and Safety code. As the title indicates, the statute imposes various additional requirements on hospitals regarding itemized statements of billed services to patients. Those requirements are not at issue in this case.
Two hospitals, defendant Rapides Health Care System and intervenor Dauterive Hospital (collectively, "the Hospitals"), complained to the Louisiana Department of Insurance ("DOI") that Louisiana Health Service & Indemnity Co., d/b/a Blue Cross and Blue Shield of Louisiana, failed to comply with the assignment statute after the Hospitals terminated their participating provider agreements with Blue Cross. While the DOI investigated the complaints, ultimately concluding that Blue Cross's policy provisions violated the assignment statute, Blue Cross filed the present case against Rapides, the State of Louisiana, and the Louisiana attorney general, seeking a declaration that the assignment statute is preempted by ERISA to the extent that it applies to ERISA employee welfare benefit plans insured or administered by Blue Cross. Dauterive intervened.
All health insurance plans issued and administered by Blue Cross contain provisions governing the assignment of benefits. The parties agree that all provisions are substantially similar to the following:
Direct Payment to Member
1. All benefits payable by the Company [Blue Cross] under this Benefit Plan and any amendment hereto are personal to the Member and are not assignable in whole or in part by the Member. The Company has the right to make payment to a Hospital, Physician, or other Provider (instead of to the member) for Covered Services which they provided while there is in effect between the Company and any such Hospital, Physician, or other Provider an agreement calling for the Company to make payment directly to them. In the absence of an agreement for direct payment, the Company will pay to the Member and only the Member those Benefits called for herein and the Company will not recognize a member's attempted assignment to, or direction to pay, another, except as required by law.
* * *
3. If the Company has offered a Hospital, Physician, or other Provider an agreement for direct payment by the Company, but there is no such agreement in effect when Covered Services are rendered to a Member by such Hospital, Physician, or other Provider, the Company will not recognize a Member's attempted assignment to, or direction to pay, such Hospital, Physician, or other Provider. The Company will pay to the Member and only the Member those Benefits called for in this Benefit Plan and any amendment thereto.
Blue Cross divides hospitals into "participating providers" and "nonparticipating providers." Blue Cross's agreement with participating providers includes a provision allowing or requiring direct payment to the provider. With nonparticipating providers, there is no agreement, and, pursuant to the above language, Blue Cross will not honor a patient's assignment of benefits to the provider. The burden is then on the nonparticipating provider to collect its fees directly from the patient. Blue Cross does not dispute that its refusal to honor assignments to nonparticipating providers violates the assignment statute.
Blue Cross moved for summary judgment on the ERISA preemption issue in August 2001. Finding only an indirect economic effect on ERISA plans, the district court denied summary judgment, reasoning that the assignment statute "facilitate[d] and promote[d] the goals of ERISA" and that it was a health-care regulation within an area of state law that Congress did not intend to preempt. As such, the district court did not need to consider whether the statute was saved from preemption as a law regulating insurance. In the alternative, the court concluded that the language of Blue Cross's health care plan requires compliance, because the anti-assignment provision says that such assignments will not be honored "except as required by law."2
Over the next two years, Blue Cross and the Hospitals litigated various other claims that were later settled and are not at issue on appeal. In June 2004, both parties filed motions for summary judgment on the preemption issue. Blue Cross argued that the Supreme Court's intervening decision in Aetna Health Inc. v. Davila3 and the Third Circuit's decision in Barber v. UNUM Life Insurance Co.4 required preemption of the assignment statute because it conflicted with the exclusive enforcement provision in ERISA. Adopting its previous ruling and reasoning, the district court denied Blue Cross's motion and granted the motions filed by the State of Louisiana and the Hospitals. The court concluded that because ERISA is silent regarding assignment of health benefits, the assignment statute does not alter an existing ERISA provision and, thus, was not conflict preempted. The court distinguished Davila and Barber as cases involving state statutes that altered existing ERISA provisions. Blue Cross timely appealed. We have jurisdiction under 28 U.S.C. § 1291.
First, we address whether the plain language of Blue Cross's ERISA plans requires compliance with the assignment statute. If so, then we would not need to reach the preemption questions.5 If the ERISA plans at issue do not require compliance with the assignment statute, then we must address Blue Cross's two-prong preemption attack. Blue Cross contends, first, that the assignment statute is preempted because it conflicts with ERISA's exclusive enforcement scheme.6 Second, Blue Cross contends that the assignment statute is preempted as a statute that "relate[s] to" ERISA.7 Finally, should we conclude that the assignment statute is preempted as a statute that relates to ERISA, we must determine whether it is "saved" from preemption as a law regulating insurance.8 Our review is de novo.9
Attempting to displace the preemption issue, the Hospitals contend that there is no conflict between Blue Cross's ERISA plans and the assignment statute because the plan prohibits assignments "except as required by law." The Hospitals contend that this language modifies the express plan terms to require compliance with Louisiana's assignment statute. Blue Cross argues that this provision is trumped by a subsequent provision of the policy, which states that the plan is governed by Louisiana law "except when preempted by federal law." The district court agreed with the Hospitals, concluding that Blue Cross's policy provisions are "automatically amended . . . to conform to the requirements" of the assignment statute.10
We disagree. Neither policy provision displaces the preemption analysis in this case. ERISA plans must always conform to state law, but only state law that is valid and not preempted by ERISA. The presence of the phrase "except as preempted by law" serves no additional purpose, as all state laws are potentially subject to ERISA's preemptive force. The two provisions do not forestall determination of the preemption question. To that, we now turn.
Article VI's Supremacy Clause may entail preemption of state law in any of three...
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