Shea v. Esensten, NON-PROFIT

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore Bowman, Lay, and Hansen; Hansen
Citation208 F.3d 712,2000 WL 336674
Decision Date18 November 1999
Docket NumberNo. 99-1388,NON-PROFIT
Parties(8th Cir. 2000) DIANNE L. SHEA, APPELLANT, v. SIDNEY ESENSTEN; JEFFREY A. ARENSON; FAMILY MEDICAL CLINIC, P.A., A MINNESOTACORP., FAMILY MEDICAL CLINIC; FAIRVIEW, A MINNESOTACORP.; MEDICA, A MINNESOTACORP.; UNITED HEALTHCARE, UNITED HEALTHCARE CORP., A MINNESOTACORP.; SECRETARY OF LABOR; ALLINA HEALTH SYSTEM CORP., APPELLEES. SECRETARY OF LABOR, AMICUS ON BEHALF OF APPELLANT. Submitted:

Page 712

208 F.3d 712 (8th Cir. 2000)
DIANNE L. SHEA, APPELLANT,
v.
SIDNEY ESENSTEN; JEFFREY A. ARENSON; FAMILY MEDICAL CLINIC, P.A., A MINNESOTA NON-PROFIT CORP., FAMILY MEDICAL CLINIC; FAIRVIEW, A MINNESOTA NON-PROFIT CORP.; MEDICA, A MINNESOTA NON-PROFIT CORP.; UNITED HEALTHCARE, UNITED HEALTHCARE CORP., A MINNESOTA NON-PROFIT CORP.; SECRETARY OF LABOR; ALLINA HEALTH SYSTEM CORP., APPELLEES.
SECRETARY OF LABOR, AMICUS ON BEHALF OF APPELLANT.
No. 99-1388
UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
Submitted: November 18, 1999
Filed: March 31, 2000

Appeal from the United States District Court for the District of Minnesota.

Page 713

Copyrighted Material Omitted

Page 714

Before Bowman, Lay, and Hansen, Circuit Judges.

Hansen, Circuit Judge.

Dianne L. Shea brought this wrongful death suit in state court after her husband's

Page 715

death due to heart failure, and the case now has been twice removed to federal court. In this latest removal proceeding, the district court dismissed the tort claim of count III (alleging negligent misrepresentation for the failure of Mr. Shea's physicians to disclose a conflict of interest) as preempted by ERISA.1 The district court also dismissed a corporate party (Fairview) on statute of limitations grounds. Mrs. Shea appeals the preemption issue, joined by the Secretary of Labor as amicus curiae,2 and the defendants move to dismiss the appeal as moot. We affirm in part, reverse in part, and deny the motion to dismiss the appeal.

I.

Patrick Shea died of a heart attack at the age of 40 after being assured by his family doctors that a referral to a cardiologist was unnecessary given his age and symptoms. Although Mr. Shea offered to pay for the referral himself when his symptoms did not seem to be improving, his physicians persuaded him to trust their judgment that neither his age nor his symptoms justified a visit to a cardiologist. Following her husband's death due to heart failure, Mrs. Shea initially brought a wrongful death action in state court against two physicians (Sidney Esensten and Jeffrey Arenson); the Family Medical Clinic, now known as Fairview Clinics (the Clinic); and Medica (her husband's health maintenance organization (HMO), with whom his employer contracted to provide employee health care). Dianne Shea alleged in her suit that certain financial incentives built into Medica's contract with Mr. Shea's physicians were designed to minimize referrals to specialists. She further alleged that if her husband had known of these incentives, he would not have trusted his physicians' medical advice so completely but would have sought out the life-saving opinion of a specialist at his own expense.

Medica initially removed the case to federal court, contending that Mrs. Shea's tort claims were preempted by ERISA, 29 U.S.C. § 1144. Mrs. Shea then amended her claim to state that Medica breached its fiduciary duties under ERISA by not disclosing to plan participants the financial incentives designed to reduce referrals that it included in its physician contracts. The district court dismissed Medica, concluding that Mrs. Shea's state tort claims against Medica as the plan administrator were preempted by ERISA and that the amended complaint asserting a breach of fiduciary duty failed to state a claim, see Fed. R. Civ. P. 12(b)(6). The district court remanded to state court the remaining state law claims.

Mrs. Shea appealed to this court. We reversed the district court's Rule 12(b)(6) dismissal of Medica, concluding that Mrs. Shea's amended complaint adequately stated a claim of breach of fiduciary duty against Medica. See Shea v. Esensten, 107 F.3d 625 (8th Cir.) (Shea I), cert. denied, 522 U.S. 914 (1997). Specifically, we held that a plan administrator has a fiduciary duty to disclose all material facts affecting a plan participant's health care interests, including financial incentives that might discourage a treating physician from providing essential referrals for covered conditions. See id. at 629. Medica ultimately settled the claim against it.

Meanwhile, the remanded state tort action proceeded against the doctors and the Clinic in state court. Mrs. Shea moved to amend her complaint to add as a defendant Fairview, a Minnesota non-profit corporation that owns and operates the Clinic. The second amended complaint included count I, alleging medical negligence; count

Page 716

II, alleging breach of contract; count III, alleging fraud and negligent misrepresentation based on the doctors' failure to disclose the conflict of interest created by their contractual incentives; count IV, alleging the joint and several liability of Fairview for damages awarded in counts I through III; and count V, seeking punitive damages against all defendants.

Before the state court ruled on the motion to amend, Fairview removed the second amended complaint to federal court. The doctors and the Clinic then moved the federal district court for a partial dismissal. The district court dismissed count II, the breach of contract claim, without resistance by Mrs. Shea, and it is not at issue in this appeal. The district court dismissed count III, the fraud and negligent misrepresentation claim, as preempted by ERISA after concluding that the claim relates to the ERISA plan because it involves an administrative denial of benefits, not a medical decision. Fairview moved for and received a complete dismissal on statute of limitations grounds. The district court then remanded to state court the remaining negligence claim against the doctors and the Clinic as stated in count I. A state court jury ruled in favor of the doctors and the Clinic on that medical negligence claim.

Mrs. Shea now appeals the district court's conclusions on ERISA preemption and the statute of limitations. The defendants move to dismiss the appeal as moot.

II.

A. Motion to Dismiss

We begin by addressing the pending motion to dismiss. After this appeal was filed, Mrs. Shea's medical negligence claim of count I was brought to trial in state court where a jury resolved the claim in favor of the defendants, specifically finding that the doctors did not provide Mr. Shea with negligent care or treatment. The doctors and the Clinic then moved to dismiss the present appeal as moot, asserting that after the jury verdict, Mrs. Shea would not be able to prove that her husband was denied appropriate care, which they assert is an essential element of Mrs. Shea's remaining claim of fraud and negligent misrepresentation. Mrs. Shea resists the motion, asserting the appeal is not moot because the state jury verdict has yet to be tested by post trial motions and state appellate procedures. She further contends that even if the jury verdict withstands post trial and appellate scrutiny, her negligent misrepresentation claim does not automatically fail in light of the jury's determination that the physicians provided adequate care because the negligent misrepresentation claim carries its own, independent injury.

"Under Article III of the Constitution, federal courts may adjudicate only actual, ongoing cases or controversies. It is of no consequence that the controversy was live at earlier stages in this case; it must be live when we decide the issues." Doe v. Lafleur, 179 F.3d 613, 615 (8th Cir. 1999) (internal quotations omitted). If this case is indeed moot, we must dismiss the appeal to avoid rendering a merely advisory opinion. See id. However, we agree with Mrs. Shea's assertion that the appeal is not moot. The state court judgment is not yet final. Also, in spite of the jury's conclusion in favor of the doctors on the negligent treatment claim, we believe that a jury could nevertheless consistently conclude that the defendants are liable on the independent negligent misrepresentation claim of count III.

Count III asserts a claim of negligent misrepresentation based on the physicians' failure to disclose a financial incentive to minimize referrals to specialists, which she asserts amounts to a conflict of interest. In Minnesota, the tort of negligent misrepresentation occurs when a person making a representation "ha[s] not discovered or communicated certain information that the ordinary person in his or her position would have discovered or communicated." Safeco Inc. Co. of America v.

Page 717

Dain Bosworth Inc., 531 N.W.2d 867, 870 (Minn. Ct. App. 1995). State professional ethics standards for physicians mandate disclosure of conflicts of interest, and the Minnesota courts have noted that "a physician's advice about treatment options should be free from self-serving financial considerations." D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. Ct. App. 1997). "It is well accepted that patients deserve medical opinions about treatment plans and referrals unsullied by conflicting motives." Id. at 170. Minnesota law indicates that the breach of a...

To continue reading

Request your trial
52 practice notes
  • Flanagan Lieberman Hoffman v. Transamerica Life, Case No. C-3-98-255.
    • United States
    • U.S. District Court — Southern District of Ohio
    • August 26, 2002
    ...under an ERISA plan to minimize referrals to specialists, the Eighth Circuit held that the claim was not preempted. Shea v. Esenten, 208 F.3d 712, 717-18 (8th Cir. 2000). "The express reference to the ERISA plan that will arise in this tort suit is necessary to demonstrate the origin of the......
  • Lacedra v. Donald W. Wyatt Detention Facility, C.A. No. 99-458L.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • September 13, 2004
    ...whether or not an amended pleading relates back to the date of the original is left to the discretion of the trial court. Shea v. Esenten, 208 F.3d 712, 720 (8th Cir.2000) (citations omitted). See also, Williams v. United States, 405 F.2d at 237(noting that Rule 15(c) is permissive). A tria......
  • The Filling Station, Inc. v. Vilsack, No. 4-00-CV-90271.
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • April 16, 2001
    ...does not supersede the historic police powers of the states unless that was the clear and manifest purpose of Congress); Shea v. Esensten, 208 F.3d 712, 719 (8th Cir.2000) (same). Plaintiffs nevertheless argue that the presumption should not apply in light of the Court's more recent languag......
  • Pharmaceutical Care Mgnt. v. District of Columbia, Civil Action No. 04-1082 (RMU).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 19, 2009
    ...law is consistent with other ERISA provisions, and [7] whether the state law is an exercise of traditional state power. Shea v. Esensten, 208 F.3d 712, 718 (8th Cir.2000) (quoting Wilson v. Zoellner, 114 F.3d 713, 717 (8th 2. ERISA's Broad Preemptive Sweep Covers the Access Rx Act The defen......
  • Request a trial to view additional results
51 cases
  • Flanagan Lieberman Hoffman v. Transamerica Life, Case No. C-3-98-255.
    • United States
    • U.S. District Court — Southern District of Ohio
    • August 26, 2002
    ...under an ERISA plan to minimize referrals to specialists, the Eighth Circuit held that the claim was not preempted. Shea v. Esenten, 208 F.3d 712, 717-18 (8th Cir. 2000). "The express reference to the ERISA plan that will arise in this tort suit is necessary to demonstrate the origin of the......
  • Lacedra v. Donald W. Wyatt Detention Facility, C.A. No. 99-458L.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Rhode Island
    • September 13, 2004
    ...whether or not an amended pleading relates back to the date of the original is left to the discretion of the trial court. Shea v. Esenten, 208 F.3d 712, 720 (8th Cir.2000) (citations omitted). See also, Williams v. United States, 405 F.2d at 237(noting that Rule 15(c) is permissive). A tria......
  • The Filling Station, Inc. v. Vilsack, No. 4-00-CV-90271.
    • United States
    • United States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
    • April 16, 2001
    ...does not supersede the historic police powers of the states unless that was the clear and manifest purpose of Congress); Shea v. Esensten, 208 F.3d 712, 719 (8th Cir.2000) (same). Plaintiffs nevertheless argue that the presumption should not apply in light of the Court's more recent languag......
  • Pharmaceutical Care Mgnt. v. District of Columbia, Civil Action No. 04-1082 (RMU).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 19, 2009
    ...law is consistent with other ERISA provisions, and [7] whether the state law is an exercise of traditional state power. Shea v. Esensten, 208 F.3d 712, 718 (8th Cir.2000) (quoting Wilson v. Zoellner, 114 F.3d 713, 717 (8th 2. ERISA's Broad Preemptive Sweep Covers the Access Rx Act The defen......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT