Springer v. WAL-MART ASSOCIATES'GROUP HEALTH PLAN, Civ. A. No. 88-AR-5226-NW.

• Decision Date: 06 June 1989
• Docket Number: Civ. A. No. 88-AR-5226-NW.
• Citation: 714 F. Supp. 1168
• Parties: Ethelene SPRINGER, Plaintiff, v. WAL-MART ASSOCIATES' GROUP HEALTH PLAN, Defendant.
• Court: U.S. District Court — Northern District of Alabama

714 F. Supp. 1168

Ethelene SPRINGER, Plaintiff, v. WAL-MART ASSOCIATES' GROUP HEALTH PLAN, Defendant.

Civ. A. No. 88-AR-5226-NW.

United States District Court, N.D. Alabama, Northwestern Division.

June 6, 1989.

Dennis N. Odem, Florence, Ala., for plaintiff.

Barry V. Frederick, Powell Tally & Frederick, Birmingham, Ala., for Health and Welfare Trust.

MEMORANDUM OPINION

ACKER, District Judge.

The above-entitled action was brought by Ethelene Springer against Wal-Mart Associates' Group Health Plan (the Plan) under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. It was tried by the court with an advisory jury whose findings are, of course, not binding on the court. Through the pre-trial conference, defendant was called "Wal-Mart Stores, Inc. Health and Welfare Trust", but the parties have now agreed that the correct name of defendant Plan is "Wal-Mart Associates' Group Health Plan."

Certain Non-Issues

The court granted defendant's motion to strike plaintiff's jury demand, following Whitt v. Goodyear Tire & Rubber Co., 676 F.Supp. 1119 (N.D.Ala.1987), although this court predicts that if and when the issue reaches the Supreme Court, the Supreme Court will follow the reasoning it employed in Tull v. United States, 481 U.S. 412, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987), and will recognize the Seventh Amendment's guarantee of trial by jury in ERISA cases except as to issues purely equitable in nature, inasmuch as Congress chose not expressly to preclude jury trial in ERISA. See Cox v. Keystone Carbon Co., 861 F.2d 390 (3d Cir.1988); Berlo v. McCoy, 710 F.Supp. 873 (D.N.H.1989). There is now a perceptible, if slow, retreat from the doctrinaire denial of jury trials in all ERISA cases without regard to their the subject matter or the remedy sought.

Even after Firestone Tire & Rubber Co. v. Bruch, ___ U.S. ___, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Plan here continued to insist on the standard of review being whether or not it had been "arbitrary and capricious" in not paying Springer's claim. This court reads Bruch differently and will judge this action as it would any action for breach of contract or for breach of fiduciary obligation.

With Amos v. Blue Cross-Blue Shield of Alabama, 868 F.2d 430 (11th

Cir.1989), still ringing in its ears, this court has already acknowledged in a previous order entered in this case that ERISA preempts Springer's pendent state claim based on the Plan's alleged bad faith refusal to pay her medical benefits. Nonetheless, this court would welcome a Congressional or a Supreme Court reconciliation on the important, confusing and depressing subject of preemption, especially in view of the fact that the Sixth Circuit, on April 10, 1989, went in what this court believes is a desirable different direction in Perry v. P*I*E Nationwide, Inc., 872 F.2d 157 (6th Cir.1989). The Sixth Circuit there holds, as this court erroneously did in Amos v. Blue Cross-Blue Shield of Alabama, 676 F.Supp. 1119 (Ala.1988), rev'd, 868 F.2d 430 (11th Cir.1989), that preemption should apply to state law claims only if Congress has provided in ERISA a remedy for any historically legally recognized wrongs asserted. Further, Congress itself, speaking through the House Education and Labor Committee, has overtly quarreled with the prevailing reading of Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), by saying:

The Committee believes that the legislative history of ERISA and subsequent expansions of ERISA support the view that Congress intended for the courts to develop a Federal common law with respect to employee benefits plans, including the development of appropriate remedies, even if they are not specifically enumerated in Section 502 of ERISA. Since the issue of preemption in civil remedies under ERISA is within the exclusive purview of the labor committees of Congress, the Committee has, over the years, considered the option of amending the statute to encompass specifically several additional remedies. In light of the legislative history on this issue, however, the Committee believes such action is unnecessary. The Committee reaffirms the authority of the Federal courts to shape legal and equitable remedies to fit the facts and circumstances of the cases before them, even though those remedies may not be specifically mentioned in ERISA itself. In cases in which, for instance, facts and circumstances show that the processing of legitimate benefit claims has been unreasonably delayed or totally disregarded by an insurer, an employee, a plan administrator, or a plan, the Committee intends the Federal courts to develop a Federal common law of remedies, including (but certainly not limited to) the imposition of punitive damages on the person responsible for the failure to pay claims in a timely manner.

H.R.Rep. No. 801, 100th Cong., 2d Sess., Pt. 2, at 63 (1988) (emphasis supplied).

This expression of legislative intent can hardly be misunderstood. The same lament is found in Fischel & Langbein, ERISA's Fundamental Contradiction: The Exclusive Benefit Rule, 55 U.Chi.L. Rev. 1105 (1988), where Fischel and Langbein, on the very first page of their article, say:

The overbroad preemption provision has wreaked aimless interference upon state regulation of areas such as health insurance that are quite peripheral to pension policy. Neither a substantial string of Supreme Court cases nor occasional Congressional repair has been able to cure the mess.

Id. at 1105-06 (footnotes omitted).

To the same effect is Irish & Cohen, ERISA Preemption: Judicial Flexibility and Statutory Rigidity, 19 Mich. J. of L. & Reform 109 (1985), where these two critics say:

For courts to determine not only that state laws have been preempted but also how and whether to fill in gaps created by preemption, they must develop a common, coherent understanding of why state laws have been preempted. Were the basis for ERISA preemption similar to the broad principles of federalism set out by Justice Frankfurter in the San Diego Bldg. Trades Council v. Garmon case 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed. 2d 775 (1959) then it would be clear that state laws, even if preempted, remain an important source of policy in crafting federal common law to fill the void. If preemption were limited to the subject matters ERISA covers, then it would be reasonable to infer that state laws should be respected only where Congress remains silent in ERISA. When all state laws that have any relation to employee benefits plans are preempted willy nilly, however, regardless of whether their purpose and subject matter are complementary to ERISA, it is hard for courts to craft a reasoned basis on which to revivify appropriate and compatible state policies through the creation of a federal common law of benefit plans. The problem with section 514(a), succinctly stated, is that it drains the preemption doctrine of both rationale and flexibility, implying that any law from a non-federal source is simply not relevant to benefit plans.

Id. at 157 (emphasis in original).

This court further notes a very recent decision by the Ninth Circuit, which, in this court's view, correctly implements Congressional intent by holding that the liquidated damage provision of ERISA does not preempt alternative contractual remedies formerly available under federal common law. Idaho Plumbers & Pipefitters Health & Welfare Fund v. United Mechanical Contractors, Inc., 875 F.2d 212 (9th Cir.1989). See also Graves v. Blue Cross of Cal., 688 F.Supp. 1405, 1413 (N.D. Cal.1988) (ERISA does not preempt claims brought pursuant to California Insurance Code). The Supreme Court itself has very recently punched another hole in the ERISA plan administrator's armour of preemption. Adding a dimension to Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987), the Court in Massachusetts v. Morash, ___ U.S. ___, 109 S.Ct. 1668, 104 L.Ed.2d 98 (1989), found that a Massachusetts criminal action for an employer's failing to pay vacation pay was not preempted by ERISA, even though it was clearly the policy of the employer to pay discharged employees for their unused vacation time and in some sense was therefore part of an "employee benefit plan." The erosion of total preemption continues apace.

In Springer's case, this issue of the alleged preemption of her state claim for bad faith refusal to pay becomes academic because it would have been difficult, if not impossible, for Springer to meet the burden of proving the essential elements of such a claim under Alabama tort law. The Plan's refusal to pay was incorrect, but the issue was legitimately debatable, particularly as to timing and amount.

The non-issues now having been removed from the case, it becomes appropriate for the court to make findings of pertinent fact. Most of the material facts were stipulated to by the parties. Except where the court finds the parties' stipulation to be ambiguous or incomplete, the stipulation will be adopted. The parties did not attempt to stipulate as to some facts which this court finds pertinent. These facts must be determined by a sifting of the evidence and an assessing of credibility.

Findings of Pertinent Fact

Springer was an employee of Wal-Mart Stores, Inc. As such, she was a participant in the Plan sponsored by Wal-Mart for the purpose of providing its employees and their families with health benefits.

On November 7, 1987, Springer, her husband and her minor daughter were seriously injured in an automobile accident entirely caused by a drunken driver, Jerry Leon Thigpen, who was subsequently charged and convicted of driving under the influence of alcohol. Thigpen at that time was uninsured and was, and is, penniless. On the witness stand, he gave the appearance of being an alcoholic derelict.

The Springers' vehicle was insured by State Farm Insurance Company. The insurance policy included both "medical pay" of $5,000.00...