Travitz v. Ne. Dep't Ilgwu Health & Welfare Fund

• Decision Date: 10 January 1994
• Docket Number: Nos. 93–7277,93–7334 and 93–7383.,s. 93–7277
• Citation: 13 F.3d 704,62 USLW 2484
• Parties: Dorothy E. TRAVITZ, Appellant, v. NORTHEAST DEPARTMENT ILGWU HEALTH AND WELFARE FUND; ILGWU Eastern States Health and Welfare Fund.
• Court: U.S. Court of Appeals — Third Circuit

13 F.3d 704

62 USLW 2484

Dorothy E. TRAVITZ, Appellant,

v.NORTHEAST DEPARTMENT ILGWU HEALTH AND WELFARE FUND; ILGWU Eastern States Health and Welfare Fund.

Nos. 93–7277, 93–7334 and 93–7383.

United States Court of Appeals, Third Circuit.

Argued Nov. 8, 1993

Decided Jan. 10, 1994

Employee Retirement Income Security Act (ERISA) plan beneficiary sued plan seeking to recover medical expenses incurred in automobile accident. Plan counterclaimed for reimbursement of payments advanced to beneficiary. The United States District Court for the Middle District of Pennsylvania, Sylvia H. Rambo, Chief Judge, 818 F.Supp. 761, ruled that Pennsylvania statute barring recovery from tort-feasor of medical expenses paid by another program or group contract was preempted by ERISA and found for plan on counterclaim. Beneficiary appealed. The Court of Appeals, Rosenn, Circuit Judge, held that: (1) Pennsylvania statute precluding recovery of benefits from tort-feasor where person is eligible to receive those benefits under another program “related to” employee benefit plans so as to be preempted by ERISA; (2) even if state law was saved because it regulated insurance it had no effect on self-insured ERISA plans by virtue of deemer clause in ERISA; and (3) beneficiary's classification of settlement with tort-feasor as one for pain and suffering, rather than for medical benefits did not entitle beneficiary to recover medical benefits from plan.

Affirmed. David S. Wisneski, (argued), Angino & Rovner, Harrisburg, PA, for appellant.

Charles W. Johnston, Jr., (argued), Handler, Gerber, Johnston & Aronson, Camp Hill, PA, for appellees.

Before: GREENBERG, COWEN, and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

Pennsylvania enacted the Motor Vehicle Financial Responsibility Law (the Act), of which § 1722 precludes a person from recovering damages arising out of the use of a motor vehicle from a culpable tortfeasor if the claimant is otherwise eligible to receive those benefits from any program, group contract, or other arrangement, as defined by the Act. 75 Pa. Cons.Stat.Ann. § 1722 (Supp.1993). The primary issue raised on this appeal is whether the Act is preempted by the Employee Retirement Income Security Act of 1974, (ERISA), 29 U.S.C. § 1001 et seq. The district court, on cross-motions for summary judgment, answering in the affirmative, entered judgment in favor of the defendants, 818 F.Supp. 761. We affirm.¹

I.

Appellees, the Northeast Department, ILGWU Health and Welfare Fund and its successor in interest, the ILGWU Eastern States Health and Welfare Fund (the Fund), operate a multi-state, multi-employer health and welfare plan within the meaning of ERISA, 29 U.S.C. § 1002(1).² The Fund, which is self-insured, is governed by a basic plan and rules of the Northeast Department, ILGWU. In addition, the Fund is also operated and maintained pursuant to rules set forth in a written document, the Summary Plan Description (collectively, the Plan). The Plan provides medical, disability, and preventative health care benefits to employees of contributing union employers and the Fund remains solely responsible for the payment of such benefits. The Plan further provides various exclusions with respect to benefits it offers. Exclusion 5 sets forth that members of the program “can not receive benefits/coverage for a condition if the costs of treating that condition are recoverable through legal action or claim settlement from another party or insurance company.”

Appellant, Dorothy E. Travitz, an employee of BR Apparel, Inc., a member of the International Ladies' Garment Workers' Union (ILGWU), and a participant in the union's health and welfare program, sustained serious injuries in a motor vehicle accident on October 18, 1990. As a result, she incurred medical bills exceeding $65,000. She received $10,000 in first party medical benefits under her motor vehicle insurance policy. After exhausting those benefits, she submitted for payment numerous claims relating to treatment and services for her injuries to the providers of the union's benefit program, the Fund. The Fund, pursuant to its Advance of Benefits Provision,³ paid a total of $2,924.78 of medical benefits to Travitz. In accordance with this provision, the Fund also sought assurances from Travitz that she would eventually repay the amounts received as advances and requested that she sign an assignment of claim form. Travitz refused to provide those assurances and did not execute the form. The Fund, therefore, ceased advancing benefits to Travitz.

Travitz also filed a claim against the tortfeasor alleging negligence in the operation of a motor vehicle. Eventually, the claim was settled. The agreement provided that in exchange for a release from liability, Travitz would receive $125,000 in immediate cash, four guaranteed scheduled payments ranging from $10,000 to $30,000, plus $1,030 per month for life with fifteen years guaranteed.

Subsequently, Travitz initiated suit against the Fund in the United States District Court for the Middle District of Pennsylvania seeking payment by the Fund of the outstanding medical benefits claimed to be due her, costs, and bad faith damages. In her complaint, she alleged that the Fund improperly relied upon coverage Exclusion 5 to deny her these medical benefits in the face of the Act's provision that precluded the recovery of medical expenses from a tortfeasor when they were payable under the medical benefit program she had with the Fund.⁴

In effect, she claimed that the medical benefits were recoverable only from the Fund regardless of the coverage exclusion of the Plan because the Act precluded her from recovering them from the tortfeasor. Section 1722 provides:

In any action for damages against a tortfeasor ... arising out of the maintenance or use of a motor vehicle, a person who is eligible to receive benefits under the coverages set forth in ... any program, group contract or other arrangement for payment of benefits as defined in section 1719 (relating to coordination of benefits) shall be precluded from recovering the amount of benefits paid or payable under ... any program, group contract or other arrangement for payment of benefits as defined in section 1719.

75 Pa. Cons.Stat.Ann. § 1722 (Supp.1993). The Fund argued, however, that Exclusion 5 of their Plan is applicable and therefore its medical benefits were unavailable to Travitz. Accordingly, the Fund contended that her only recourse was to pursue the tortfeasor. In addition, the Fund counterclaimed for reimbursement of payments totaling $2,924.78 advanced to Travitz.

Chief Judge Rambo of the district court, on cross-motions for summary judgment, held that the Fund is a multi-employer health and welfare plan within the meaning of ERISA, and that § 1722 of the Pennsylvania Act is preempted by the self-insured ERISA benefit plan. Consistent with her opinion, the court found for the Fund on its counterclaim and ordered that Travitz reimburse it the $2,924.78 advanced along with prejudgment interest. Travitz appealed.

II.

The issue of preemption is essentially legal and our review of the district court's summary judgment holding is therefore plenary. See Wheeler v. Towanda Area School Dist., 950 F.2d 128, 129 (3d Cir.1991). On appeal we apply the same test the district court should have used in the first instance. See Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). We therefore affirm only if there are no genuine issues of material fact and the relevant law entitles the moving party to judgment.

Travitz's arguments on appeal are legal in nature. She basically argues two principal points which seem to be intertwined. First, although section 1722 “relates to” employee welfare plans, it lacks a “connection with” such plans and falls within the “remote and peripheral” exception to ERISA preemption. Second, that the supposed conflict between Section 1722 and Exclusion 5 of the Plan is essentially an issue of interpretation rather than one of preemption, and should be interpreted in a manner consistent with the Fund's requirements. In effect, she claims that Exclusion 5 cannot be used to deny her medical benefits from the Fund because her recovery from the tortfeasor did not encompass those benefits; rather they were limited to pain and suffering only. Therefore, she argues, the Fund must reimburse her for those presently unrecovered expenses.

We turn first to three ERISA statutory provisions dealing with the question of preemption. These provisions in Section 1144 of ERISA state in relevant part:

Except as provided in subsection (b) of this section [the saving clause], the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan....

29 U.S.C. § 1144(a) (1988) (preemption clause)

Except as provided in subparagraph (B) [the deemer clause], nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities.

Id. § 1144(b)(2)(A) (saving clause)

Neither an employee benefit plan ... nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer, bank, trust company, or investment company or to be engaged in the business of insurance or banking for purposes of any law of any State purporting to regulate insurance companies, insurance contract, banks, trust companies, or investment companies.

Id. § 1144(b)(2)(B) (deemer clause)

As the Supreme Court has explained, the broadly worded preemption clause “establishes as an area of exclusive federal concern the subject of every state law that ‘relate[s] to’ an employee benefit plan governed by ERISA.” FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990). The saving...