United States Court of Appeals Fifth Circuit F I L E D REVISED OCTOBER 31, 2002 September 17, 2002 IN THE UNITED STATES COURT OF APPEALS Charles R. Fulbruge III Clerk FOR THE FIFTH CIRCUIT
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m 01-10831 _______________
ROBERT ROARK; ROBERT ROARK, ON BEHALF OF THE ESTATE OF GWEN ROARK,
Plaintiffs-Appellants,
VERSUS
HUMANA, INC.; HUMANA HEALTH PLAN OF TEXAS, INC., DOING BUSINESS AS HUMANA HEALTH PLAN OF TEXAS (DALLAS), DOING BUSINESS AS HUMANA HEALTH PLAN OF TEXAS (SAN ANTONIO), DOING BUSINESS AS HUMANA HEALTH PLAN OF TEXAS (CORPUS CHRISTI); HUMANA HMO TEXAS, INC.,
Defendants-Appellees.
*************** _______________
m 01-10891 _______________
RUBY R. CALAD,
Plaintiff-Appellant- Cross-Appellee,
WALTER PATRICK THORN,
Plaintiff-Cross-Appellee,
CIGNA HEALTHCARE OF TEXAS, INCORPORATED, DOING BUSINESS AS HEALTHSOURCE, DOING BUSINESS AS CIGNA CORPORATION,
Defendant-Appellee,
AETNA U.S. HEALTHCARE; AETNA U.S. HEALTHCARE OF NORTH TEXAS, INC.,
Defendants-Appellees- Cross-Appellants.
m 01-10905 _______________
JUAN DAVILA,
Plaintiff-Appellant,
AETNA U.S. HEALTHCARE, INC.; AETNA U.S. HEALTHCARE OF NORTH TEXAS, INC.,
_________________________
Appeals from the United States District Court for the Northern District of Texas
Before SMITH, BENAVIDES, and PARKER, federal court, arguing that because each plain- Circuit Judges. tiff received HMO coverage through his em- ployer’s ERISA plan, the claims arose under JERRY E. SMITH, Circuit Judge: ERISA. The plaintiffs moved to remand.
This suit consolidates multiple district court The respective district courts denied Calad, actions and appeals for consideration of com- Davila, and Roark’s remand motions and dis- mon issues. Ruby Calad, Walter Thorn, Juan missed their claims under FED. R. CIV. P. Davila, and Gwen Roark sued their respective 12(b)(6), citing ERISA preemption. The dis- health maintenance organizations (“HMO’s”) trict court granted Thorn’s remand motion. for negligence under Texas state law: They Roark, Calad, and Davila appeal the refusal to alleged that although their doctors recom- remand and, in the alternative, the dismissal. mended treatment, the HMO’s negligently Thorn’s HMO appeals the remand. We affirm refused to cover it. The HMO’s removed to the judgments in Roark’s and Thorn’s cases
3 and reverse with respect to Calad and Davila. surgery in two to three days, or he would lose his hand. An Aetna-designated specialist I. scheduled the surgery for the next day. A. Ruby Calad Through her husband’s employer, Calad be- A few hours before the scheduled surgery, came a member of CIGNA HealthCare of Tex- Aetna refused to authorize its surgeon to op- as, Inc. (“CIGNA”), a Texas HMO. Calad erate. While Aetna reviewed the case, it sent underwent a hysterectomy with rectal, bladder, a physical therapist to help exercise Thorn’s and vaginal repair. The surgery was per- hand, so it would not deteriorate while Thorn formed by a CIGNA physician. Although that waited for surgery. Aetna eventually approved doctor recommended a longer stay, CIGNA’s the surgery, but Thorn contends that Aetna’s hospital discharge nurse decided that the stan- delay caused scarring that has diminished his dard, one day hospital stay would be sufficient. manual mobility. Calad suffered complications that returned her to the emergency room a few days later; she Thorn sued jointly with Calad. Initially, attributes these complications to her early Calad and Thorn alleged that CIGNA and Aet- release. na were jointly and severally liable. They later withdrew this allegation, explaining it was a Calad sued in state court under the Texas pleading error. Thus, Calad’s claims run only Health Care Liability Act (“THCLA”),1 alleg- against CIGNA, and Thorn’s runs only against ing CIGNA had failed to use ordinary care in Aetna. CIGNA removed to federal court making its medical necessity decisions, (with Aetna’s consent), citing ERISA pre- CIGNA’s system made substandard care more emption. Thorn moved to remand, arguing likely, and CIGNA acted negligently when it that ERISA excludes government plans such made its medical necessity decisions. CIGNA as his from preemption. The district court removed to federal court based on ERISA remanded Thorn’s claim. preemption. Calad moved to remand, but the court denied the motion. The court noted C. Juan Davila “that Calad has repeatedly made clear that, Davila is a post-polio patient who suffers should the Court deny her motion to remand, from diabetes and arthritis. He received Aetna she will not amend her pleading to bring an HMO coverage through his employer’s health ERISA claim and therefore requests that her plan. His primary care physician prescribed claims be dismissed.” Accordingly, the court Vioxx for Davila’s arthritis pain. Studies have dismissed under rule 12(b)(6). shown that Vioxx has a lower rate of gas- trointestinal toxicity (e.g., bleeding, ulceration, B. Walter Thorn perforation of the stomach) than do the other Thorn received Aetna U.S. Healthcare in- drugs on Aetna’s formulary. Before filling the surance through his employer. He injured his prescription, Aetna required Davila to enter its hand in a car accident, and doctors amputated “step program”: Davila first would have to try his ring finger. The doctors said he needed two different medications; only if he suffered a detrimental reaction to the medications or failed to improve would Aetna evaluate him 1 TEX. CIV. P RAC. & REM. CODE §§ 88.001- for Vioxx use. 88.003.
4 As part of the step program, Davila first the VAC for the other twenty-two hours of the was given naprosyn (a cheaper pain reliever). day. After three weeks, he was rushed to the emer- gency room. The doctors reported he suffered Later that year, Humana Health Plan of from bleeding ulcers, which caused a near Texas (“Humana”) became the Roarks’ HMO. heart attack and internal bleeding. The doc- Roark’s primary care physician recommended tors gave Davila seven units of blood and kept she continue using the VAC and authorized him in critical care for five days. Now he can- treatment. In 1998, Humana delayed the VAC not take any pain medication that is absorbed treatments and home nursing several times; up- through the stomach. on each delay, Roark filed an immediate appeal or grievance. The primary care physician told Davila sued in state court under the Humana that without the VAC and home THCLA, alleging Aetna had failed to use or- nursing case, Roark could lose her leg. Huma- dinary care in making medical necessity deci- na eventually approved the VAC for ninety sions, Aetna’s systems made substandard care days. Humana periodically delayed VAC and more likely, and Aetna acted negligently in home nursing treatment until December 1998, making its medical necessity decisions. Aetna when it cancelled home nursing altogether. removed to federal court, citing ERISA pre- Humana agreed to pay only for visits to a local emption. hospital’s wound center.
Davila moved to remand. The court con- In February 1999, Roark developed a seri- cluded that some of Davila’s claims were com- ous infection that required the doctors to am- pletely preempted under ERISA § 502(a) and putate her leg that March. While Roark was thus denied remand. The court noted that convalescing, Humana again denied her VAC normally it would dismiss Davila’s state law treatment that may have helped heal the ampu- claims and grant him leave to file an amended tation wound. In January 2000, the doctors complaint under ERISA. But, because Davila performed an additional amputation treatment had informed the court he would not pursue an on her leg. ERISA claim, it instead dismissed with preju- dice under rule 12(b)(6). Roark and her husband Robert sued in state court under the THCLA, the Texas Deceptive D. Gwen Roark Trade Practices Act (“DTPA”),2 the Texas In- In 1990, Roark was bitten by what was be- surance Code,3 and common law breach of lieved to be a brown recluse spider. The bite good faith, fair dealing, and contract. Humana damaged the skin, muscle, and bone of her left removed to federal court, citing ERISA pre- leg, requiring antibiotics, three skin graft op- emption. The Roarks moved to remand. The erations, and two surgeries to create “free court found that the Roarks’ DTPA and insur- flaps” over her wound. In 1997, Roark began using a vacuum-assisted closure device (“VAC”) to circulate blood to the skin’s sur- 2 TEX. BUS. & COM. CODE § 17.46(a), (b)(5), face and quicken healing. Each day, a nurse (b)(12). came to Roark’s home and spent two hours scraping the wound with a scalpel; Roark wore 3 TEX. INS. CODE art. 21.21 §§ 4(1), (2), (11)(a), (11)(c).
5 ance claims were completely preempted under federal courts’ original jurisdiction to those ERISA § 502(a) and thus denied the motion. cases in which the plaintiff’s complaint states a cause of action arising under federal law; a The Roarks then amended their complaint federal defense will not do. Franchise Tax Bd. to allege only violations of the THCLASSthat v. Constr. Laborers Vacation Trust, 463 U.S. Humana had failed to use ordinary care when 1, 9-10 (1983) (citing Louisville & Nashville it made its medical necessity decisions, Huma- R.R. v. Mottley, 211 U.S. 149 (1908)). na’s system made substandard care more like- “[S]ince 1887 it has been settled law that a ly, and Humana was negligent in making its case may not be removed to federal court on medical necessity decisionsSSand filed a sec- the basis of a federal defense, including the de- ond remand motion. The court held that fense of preemption, even if the defense is ERISA § 502(a) preempts the THCLA claim anticipated in the plaintiff’s complaint, and as well, denied the Roarks’ motion to remand, even if both part ies admit that the defense is and dismissed under rule 12(b)(6). the only question truly at issue in the case.” Franchise Tax Bd., 463 U.S. at 13-14. The court gave the Roarks thirty days to re- plead under ERISA § 502(a), failing which Calad and Davila advance only state law their case would be dismissed with prejudice causes of action; a straightforward application under rule 12(b)(6). The Roarks declined and of the well-pleaded complaint rule would de- filed this appeal challenging the second remand prive the federal courts of original and removal order. The district court never entered the jurisdiction over their claims. But, we rec- final order dismissing the case with prejudice ognize an exception to the well-pleaded com- under rule 12(b)(6), but it did list the case plaint rule for those few statutes whose “pre- closed for statistical purposes. The Roarks’ emptive force . . . is so powerful as to displace notice of appeal also states that they will not entirely any state causes of action.” Id. at 23. replead under ERISA. Where “a federal cause of action completely preempts a state cause of action, any com- II. plaint that comes within the scope of the fed- A. Calad’s and Davila’s remand motions eral cause of action necessarily ‘arises under’ With exceptions not relevant here, “any civ- federal law.” Id. at 24. Such actions are ex- il action brought in a State court of which the cepted from the well-pleaded complaint rule district courts of the United States have origi- and confer original and removal jurisdiction. nal jurisdiction, may be removed by the defen- Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, dant or the defendants, to the district court of 65-66 (1987); Giles v. NYLCare Health Plans, the United States for the district and division Inc., 172 F.3d 332, 336 (5th Cir. 1999). The embracing the place where such action is pend- Supreme Court first recognized this exception ing.” 28 U.S.C. § 1441(a). If, before final for § 301 of the Labor-Management Relations judgment, it appears the case was not properly Act (“LMRA”)4 and has extended the rule to removed because it was not within the federal courts’ original jurisdiction, the district court must remand. 28 U.S.C. 1447(c). 4 Avco Corp. v. Aero Lodge No. 735, 390 U.S. The “well-pleaded complaint rule” limits 557 (1968); see also Franchise Tax Bd., 463 U.S. at 23.
6 some, but not all, cases under ERISA.5 We review the district court’s preemption analysis, which formed the basis for its subject ERISA provides two types of preemption: matter jurisdiction, de novo. McClelland v. complete preemption under § 502(a) and con- Gronwaldt, 155 F.3d 507, 511 (5th Cir. 1998). flict preemption under § 514. Giles, 172 F.3d Because we conclude that § 502(a) does not at 336; McClelland v. Gronwaldt, 155 F.3d displace Calad’s or Davila’s claims, the district 507, 515-17 (5th Cir. 1998). “Section 502, by court should have remanded. providing a civil enforcement cause of action, completely preempts any state cause of action The enforcement provisions listed in seeking the same relief.” Id. at 337. ERISA § 502(a)(5)-(9) do not provide a cause of action for participants and beneficiaries; be- Section 502(a) complete preemption is a cause Davila is an ERISA participant7 and Cal- slight misnomer, for it does not involve tradi- ad is an ERISA beneficiary,8 neither could tional preemption analysis. McClelland, 155 have asserted a claim that falls within these F.3d at 516 (“Co mplete preemption is less a subsections.9 Subsections 502(a)(1)(A) and principle of substantive preemption than it is a (4) deal with plan administrators’ duties to rule of federal jurisdiction.”). We do not ask supply information; they too are irrelevant. whether the state law conflicts with or frus- Section 502(a)(3) indicates equitable remedies trates a congressional purpose, but whether are generally available under ERISA; it in- the state law duplicates or “falls within the cludes only “those categories of relief that scope of” an ERISA § 502(a) remedy. Taylor, were typically available in equity,” Great-West 481 U.S. at 64; McClelland, 155 F.3d at 518. Life & Annuity Ins. Co. v. Knudson, 122 S. Ct. If Calad and Davila could have brought their 708, 712 (2002), not the damages claims Cal- claims under ERISA § 502(a), the claims ad and Davila bring, id. at 713. This leaves would be completely preempted, and the dis- only two enforcement provisions of trict court would have been correct to exercise § 502(a)10SS§ 502(a)(2) and (a)(1)(b)SS jurisdiction.
Section 514, in contrast, provides for ordi- 7 See 29 U.S.C. § 1002(7) (“The term ‘partici- nary conflict preemption.6 State law claims pant’ means any employee or former employee of that fall outside § 502(a), even though pre- an employer, or any member or former member of empted by § 514, follow the well-pleaded an employee organization, who is or may become complaint rule and do not confer original or eligible to receive a benefit of any type from an em- removal jurisdiction. Franchise Tax Bd., 463 ployee benefit plan which covers employees of such U.S. at 23-27; Giles, 172 F.3d at 337. employer or members of such organization”). 8 See 29 U.S.C. § 1002(8) (“The term ‘benefi- ciary’ means a person designated by a participant, 5 Metropolitan Life, 481 U.S. at 64-65. or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder”). 6 ERISA § 514(a) preempts “all State laws in- 9 sofar as they may now or hereafter relate to any Cf. McClelland, 155 F.3d at 518. employee benefit plan described in section 1003(a) 10 of this title and not exempt under section 1003(b) In its entirety, § 502(a) reads, of this title.” 29 U.S.C. § 1144(a). (continued...)
7 neither of which preempts Calad’s or Davila’s claims. 10 (...continued) (a) Persons empowered to bring a civil 1. § 502(a)(2) action Calad and Davila argue that their HMO’s were not acting as plan fiduciaries when de- A civil action may be broughtSS nying them medical treatment, so § 502(a)(2) cannot cover (or completely preempt) their (1) by a participant or beneficiarySS
(A) for the relief provided for in sub- 10 section (c) of this section, or (...continued) subsection (c) of this section or under sub- (B) to recover benefits due to him un- section (i) or (l) of this section; der the terms of his plan, to enforce his rights under the terms of the plan, or to (7) by a State to enforce compliance with a clarify his rights to future benefits un- qualified medical child support order (as de- der the terms of the plan; fined in section 1169(a)(2)(A) of this title);
(2) by the Secretary, or by a participant, (8) by the Secretary, or by an employer or beneficiary or fiduciary for appropriate re- other person referred to in section 1021- lief under section 1109 of this title; (f)(1) of this title, (A) to enjoin any act or practice which violates subsection (f) of sec- (3) by a participant, beneficiary, or fiduci- tion 1021 of this title, or (B) to obtain ary (A) to enjoin any act or practice which appropriate equitable relief (i) to redress violates any provision of this subchapter or such violation or (ii) to enforce such subsec- the terms of the plan, or (B) to obtain other tion; or appropriate equitable relief (i) to redress such violations or (ii) to enforce any provi- (9) in the event that the purchase of an in- sions of this subchapter or the terms of the surance contract or insurance annuity in plan; connection with termination of an individ- ual's status as a participant covered under a (4) by the Secretary, or by a participant, or pension plan with respect to all or any por- beneficiary for appropriate relief in the case tion of the participant’s pension benefit un- of a violation of 1025(c) of this title; der such plan constitutes a violation of part 4 of this title or the terms of the plan, (5) except as otherwise provided in subsec- by the Secretary, by any individual who was tion (b) of this section, by the Secretary a participant or beneficiary at the time of the (A) to enjoin any act or practice which vio- alleged violation, or by a fiduciary, to obtain lates any provision of this subchapter, or appropriate relief, including the posting of (B) to obtain other appropriate equitable re- security if necessary, to assure receipt by lief (i) to redress such violation or (ii) to the participant or beneficiary of the amounts enforce any provision of this subchapter; provided or to be provided by such insur- ance contract or annuity, plus reasonable (6) by the Secretary to collect any civil pen- prejudgment interest on such amounts. alty under paragraph (2), (4), (5), or (6) of (continued...) 29 U.S.C. 1132(a).
8 THCLA claims. We agree. which it “reward[ed] its physician owners for limiting medical care, entailed an inherent Section 502(a)(2) allows a plan participant breach of an ERISA fiduciary duty, because or beneficiary to sue “for appropriate relief un- these terms created an incentive to make der section 1109 of this title.” 29 U.S.C. decisions in the physicians’ self-interest rather § 1132(a)(2). Section 1109(a) in turn pro- than in the exclusive interest of the plan partici- vides: pants.” Pegram, 530 U.S. at 216.
Any person who is a fiduciary with re- The Court unanimously ruled that Herdrich spect to a plan who breaches any of the did not state a cause of action under § 502(a). responsibilities, obligations, or duties The Court first categorized Herdrich’s claim. imposed upon fiduciaries by this sub- HMO’s, it explained, made three types of deci- chapter shall be personally liable to sions—eligibility decisions, treatment deci- make good to such plan any losses to sions, and mixed eligibility and treatment de- the plan resulting from each such breach cisions. Id. at 228-29. Eligibility decisions .... “turn on the plan’s coverage of a particular condition or medical procedure for its treat- 29 U.S.C. § 1109(a). ment.” Id. at 228.
In Pegram v. Herdrich, 530 U.S. 211 Pure eligibility decisions, “simple yes-or-no (2000), the Court decided that under § 502- questions, like whether appendicitis is a cov- (a)(2), a patient cannot hold his HMO vicari- ered condition,” are likely rare. Id. Treatment ously liable for its physician’s medical malprac- decisions, “by contrast, are choices about how tice. Although Pegram did not decide the to go about diagnosing and treating a patient’s precise question before us—whether, under condition.” Id. Herdrich’s case, the Court § 502(a)(2), a patient can hold his HMO di- concluded, involved “the more common” rectly liable for its own medical malprac- mixed decision, such as “whether one treat- tice—its holding is broad enough to apply ment option is so superior . . . and needed so here. promptly, that a decision to proceed would meet the medical necessity requirement.” Id. In Herdrich, the plaintiff became a patient at 228-29. Claims regarding such “mixed eli- of Pegram’s through her HMO. When Pegram gibility and treatment decisions,” the Court discovered an inflamed mass in Herdrich’s ab- held, do not fall within § 502(a)(2). Id. at domen, she did not order an immediate ultra- 231-32. sound; instead, she decided Herdrich would have to wait eight days to be examined at a It seems beyond dispute that Calad’s and center fifty miles away; in the meantime, Herd- Davila’s claims involve such mixed decisions. rich’s appendix ruptured. CIGNA agrees its plan covers hospital stays after a hysterectomy, and Aetna agrees its plan Herdrich sued Pegram for medical malprac- includes a range of arthritis drugs, so we are tice and sued both Pegram and her HMO not presented with simple yes-or-no coverage under ERISA §§ 502(a)(2) and 1109, alleging questions. Instead, we are presented with the that the HMO’s medical rationing scheme, by type of “when and how” medical necessity
9 questionsSSwhether Calad was provided Plans v. Travelers Ins. Co., 514 U.S. 645, enough treatment (enough days in the hospital) 654-55 (1995)), and it was unimaginable that and whether Davila was prescribed the correct Congress intended ERISA to create a federal treatment (naprosyn instead of Vioxx)SSthat common law of medical malpractice. Id. fall within Pegram’s rule. Id. at 228-29. These factors apply with equal force to a Pegram is distinguishable in one regard: claim that an HMO breached its fiduciary duty Herdrich claimed her doctor made the errone- in denying care. Such a claim demands that ous medical decision; Calad and Davila claim the HMO forego its core purpose—rationing their HMO’s did. But Pegram’s reasoning in- care—and act only in the patient’s interest. dicates this distinction is immaterial to the And, such a claim would create a federal body § 502(a)(2) analysis. of malpractice law applicable against HMO’s. Because Pegram is indistinguishable, § 502- The Pegram Court expressed doubt that (a)(2) does not completely preempt Calad’s “that Congress would ever have thought of a and Davila’s THCLA claims. mixed eligibility decision as fiduciary in na- ture.” Id. at 231. It contrasted fiduciaries, 2. § 502(a)(1)(B) who must “act solely in the interest of the The Supreme Court has declined to decide patient without possibility of conflict,” id. at whether § 502(a)(1)(B) displaces a medical 233, with HMO’s, whose entire purpose is to malpractice claim involving “mixed decisions,” balance costs against patient welfare, id. at Pegram, 530 U.S. at 229 n.9, and this circuit 231-32. “Since inducement to ration care goes has not yet confronted the question.11 We to the very point of any HMO scheme,” id. at 221, treating HMO’s as ERISA fiduciaries would entail “nothing less than the elimination 11 In Corcoran v. United Healthcare, Inc., 965 of the for-profit HMO,” id. at 233. F.2d 1321 (5th Cir. 1992), we held that § 514 pre- empted a patient’s claim that her HMO was med- The Pegram Court went on to note the ically negligent for refusing to hospitalize her. potential “mischief” the alternative holding Section 502(a) preemption is a subset of § 514 would entail. Id. at 236. Such a rule would preemption. Although any claim that falls within create a federal body of malpractice law appli- § 502(a) necessarily falls within § 514, claims that cable against HMO’s and physicians. Id. at fall under § 514 do not necessarily fall under 235-36. And, because ERISA § 502(a) pre- § 502(a). McClelland, 155 F.3d at 517. Thus, empts any overlapping state law, this would Corcoran does not decide our question. create “a puzzling issue of preemption”; it “would seem to be a prescription for preemp- In Corporate Health Ins., Inc. v. Tex. Dep’t of Ins., 215 F.3d 526, 535 (5th Cir. 2000), vacated tion of state malpractice law.” Id. at 236. on other grounds by Montemayor v. Corporate This could not be so, the Court explained, for Health Ins., 122 S. Ct. 2617 (2002), we ruled that “in the field of health care, a subject of tradi- § 514 (and thus § 502(a)(1)(B)) does not preempt tional state regulation, there is no ERISA pre- a THCLA suit holding an HMO vicariously liable emption without clear manifestation of con- for its doctor’s negligence. But we cannot auto- gressional purpose,” id. at 237 (citing N.Y. matically extend Corporate Health’s holding to State Conference of Blue Cross & Blue Shield suits directly against an HMO. The Corporate (continued...)
10 now conclude that § 502(a)(1)(B) does not complications from breast implants. The in- preempt Calad’s and Davila’s THCLA claims. surance policy limited coverage to only “medi- cally necessary” treatments, and the plan ad- Section 502(a)(1)(B) allows a plan partici- ministrator concluded that Dowden’s treat- pant or beneficiary to bring a civil action “to ment did not fit the plan’s definition. Id. at recover benefits due him under the terms of his 644. Dowden sued under § 502(a)(1)(B), plan, to enforce his rights under the terms of claiming “the plan administrator abused its the plan, or to clarify his rights to future ben- discretion in interpreting the term ‘medically efits under the terms of the plan.” 29 U.S.C. necessary’ as expressly defined in the insur- § 1132(a)(1)(B). Calad’s and Davila’s claims ance contract,” and wrongfully withheld ben- of HMO medical malpractice differ fundamen- efits owed to her. Id. at 643. tally from the § 502(a)(1)(B) claims we have recognized. Section 502(a)(1)(B), we have Superficially, this claim resembles Calad’s held, creates a cause of action for breach of and Davila’s: Like Calad and Davila, Dowden contract: When a plan administrator incor- claimed she was wrongfully denied medically rectly interprets the plan to deny benefits, the necessary treatment. But, Dowden asserted a patient may sue to recover the benefits.12 By contract claim for contract damages; Calad contrast, Calad and Davila assert tort claims; and Davila assert a tort claim for tort damages. they have not sued their ERISA plan adminis- Calad and Davila are not seeking reimburse- trator, nor do they challenge his interpretation ment for benefits denied them: Calad is not re- of the plan. questing the value of an extra night at the hos- pital, and Davila is not requesting reimburse- Dowden v. Blue Cross & Blue Shield, Inc., ment for the more expensive drug the HMO 126 F.3d 641 (5th Cir. 1997) (per curiam), is denied. on point. The plaintiff’s health insurer refused to cover the expenses she incurred treating In deciding Dowden’s claim, we were lim- ited to the plan and its definition of “medically necessary.” For Calad and Davila, the word- 11 (...continued) ing of their plans is immaterial; they invoke an Health court held that when a doctor denies treat- external, statutorily imposed duty of “ordinary ment, he makes a quality-of-care decision, which care.” escapes ERISA preemption. By contrast, when an HMO denies treatment, it makes a coverage deci- Furthermore, this court has treated as given sion, and claims over such a decision are pre- that ERISA provides no cause of action for empted by ERISA. Id. at 534-35 & n.24. But cf. Pegram, 530 U.S. at 228-30 (indicating courts medical malpractice claims against an HMO. should look to the substance of the decision, not the In Corcoran we noted the troubling result of identity of the decisionmaker, in determining our holding that ERISA § 514 bars states from whether ERISA applies). providing such remedies: “The result ERISA compels us to reach means that the [plaintiffs] 12 See, e.g., Gosselink v. Am. Tel. & Tele- have no remedy, state or federal, for what graph, Inc., 272 F.3d 722, 726-28 (5th Cir. 2001); Wildbur v. ARCO Chem. Co., 974 F2d 631, 636 (5th Cir.), modified, 979 F.2d 1013 (5th Cir. 1992).
11 might have been a serious mistake.”13 Nor (alterations in original). Although the court have we ever recognized a claim of HMO held that ERISA § 502(a)(1)(B) completely medical negligence under § 502(a)(1)(B). preempted this claim, it grounded its holding in its finding that the claim involved “core admin- The Third Circuit has reached the same istrative function,” the type of “pure eligibility conclusion. In Dukes v. U.S. Healthcare, Inc., decision” as defined by Pegram, not the type 57 F.3d 350, 352 (3d Cir. 1995), the court of treatment decision involved in Dukes. Id. at held that claims that an HMO had failed to 274. exercise reasonable care in providing medical treatment are not completely preempted by CIGNA and Aetna cite Pilot Life Ins. Co. § 502(a)(1)(B). The plaintiff complained that v. Dedeaux, 481 U.S. 41 (1987), for the prop- her hospital provider had acted negligently in osition that Congress intended § 502(a)(1)- delaying her husband’s blood test. This delay (B)’s contract action to be the sole remedy led to a late diagnosis of his condition and, she available. They argue that patients must pay argued, his untimely death. Id. Her HMO, for services ahead of time and, if the plan ad- she asserted, was vicariously liable for the ministrator denies benefits, sue for reimburse- hospital’s malpractice and directly liable for ment under § 502(a)(1)(B). Although Pilot negligence in selecting its medical service Life includes some expansive language that providers. arguably supports CIGNA and Aetna’s read- ing,14 the Supreme Court’s most recent word Such a claim, the court explained, was not on the matter, Rush Prudential HMO, Inc. v. completely preempted, because it “merely at- Moran, 122 S. Ct. 2151 (2002), indicates Pilot tacked the quality of benefits received.” Id. at Life does not sweep so broadly. 356. “Nothing in the complaints indicates that the plaintiffs are complaining about their In Pilot Life, an ERISA participant who ERISA welfare plans’ failure to provide bene- was denied benefits sued in state court, assert- fits due under the plan. Dukes does not allege, ing common law contract claims. The Court for example, that the Germantown Hospital re- held § 502(a)(1)(B) preempted the claim. fused to perform blood studies on [her hus- ERISA provides a means of collecting benefits band] because the ERISA plan refused to pay and set forth an exclusive list of remedies; for the studies.” Id. at 357. states could not create alternative causes of action for collecting benefits that expanded up- The Third Circuit’s more recent decision in Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266 (3d Cir. 2001), reaffirms this conclusion. 14 The plaintiff claimed, inter alia, that her HMO See, e.g., Pilot Life, 481 U.S. at 54 (“[Con- gress’s] inclusion of certain remedies and exclusion “‘negligently and carelessly delayed in giving of others . . . would be completely undermined if its approval for the necessary surgery which ERISA-plan participants and beneficiaries were the plaintiff . . . urgently needed.’” Id. at 270 free to obtain remedies under state law that Con- gress rejected in ERISA . . . . ‘Congress did not intend to authorize other remedies that it simply 13 Corcoran, 965 F.2d at 1338; accord id. at forgot to incorporate expressly’” (quoting Mass. 1333; Note, Recent Cases, 114 HARV. L. REV. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146 1406, 1409 (2001). (1985)).
12 on ERISA’s remedies. Pilot Life, 481 U.S. at remand to the district court for proceedings 54-55; Rush Prudential, 122 S. Ct. at 2166. consistent with this decision.
Since Pilot Life, the Supreme Court has B. Thorn’s motion to remand “found only one other state law to ‘conflict’ Aetna cross-appeals the decision to remand with [§ 502(a)] in providing a prohibited Thorn’s claims to state court. Except for alternative remedy.” Rush Prudential, id. In those cases removed pursuant to 28 U.S.C. Ingersoll-Rand Co. v. McClendon, 498 U.S. § 1443, “[a]n order remanding a case to the 133 (1990), the Court held that “Texas’s tort State court from which it was removed is not of wrongful discharge, turning on an employ- reviewable on appeal or otherwise.” 28 er’s motivation to avoid paying pension bene- U.S.C. § 1447(d). On its face, this statute fits, conflicted with ERISA enforcement.” seems to deprive us of jurisdiction over Aet- Rush Prudential, 122 S. Ct. at 2166. The na’s cross-appeal. But we read § 1447(d) in Rush Prudential Court explained its holding in conjunction with § 1447(c)’s command that Ingersoll-Rand: “[The] state law duplicated “[i]f at any time before final judgment it ap- the elements of a claim available under ERISA, pears that the district court lacks subject mat- it converted the remedy from an equitable one ter jurisdiction, the case shall be remanded.” under § 1132(a)(3) (available exclusively in 28 U.S.C. § 1367(c). Accordingly, § 1447(d) federal district courts) into a legal one for applies only where a district court remands for money damages (available in a state tribunal).” lack of subject matter jurisdiction; we may re- Rush Prudential, id. view remands based on other grounds. Things Remembered v. Petrarca, 516 U.S. 124, 127- We glean from Rush Prudential that Pilot 28 (1995); Giles, 172 F.3d at 336. Life’s rule is a narrow one: States may not duplicate the causes of action listed in ERISA Reviewable remand orders are a narrow § 502(a). This is, essentially, the test em- class of cases, meaning we review a remand ployed for “complete preemption.” Because order only if the district court ‘clearly and af- the THCLA does not provide an action for firmatively’ relies on a non-§ 1447(c) basis.” collecting benefits, it is not preempted by Giles, 172 F.3d at 336. The district court ex- § 502(a)(1)(B) under Pilot Life. plained that it had supplemental jurisdiction over Thorn’s claim, but it was exercising its Any doubts we might have are eliminated discretion under 28 U.S.C. § 1441(c) to re- by Pegram’s admonition that ERISA should mand. As in Giles, “the court affirmatively not be interpreted to preempt state malpractice gave a non-§ 1447(c) reason for remanding laws or to create a federal common law of and gave no indication that it believed it lacked medical malpractice. See Pegram, 530 U.S. at subject matter jurisdiction.” Id. Accordingly, 236-37. We decline, two years after the Court “we review the district court’s exercise of its expressed disbelief that Congress would fed- discretion to remand supplemental . . . state eralize medical malpractice law under § 502- law claims.” Id. (a)(2), to hold that Congress has done so un- der § 502(a)(1)(B). Having concluded that The district court held that even though § 502(a) does not completely preempt Calad’s Thorn stated only state law causes of action, it and Davila’s THCLA claims, we vacate and had supplemental jurisdiction over his claims,
13 because they were joined to Calad’s claims. 28 U.S.C. § 1441(c)17; Giles, 172 F.3d at 337- Thus, the court’s jurisdiction over Thorn’s 38.18 Although the Roarks do not appeal the claims depended on its removal power over initial holding that § 502(a) completely pre- Calad’s claims. 15 But, as we have explained, empts some of their original claims, we must the district court never had removal jurisdic- examine it on our own initiative, because this tion over Calad’s claims. Consequently, it question determines whether the district court never had subject matter over Thorn’s claims, had subject matter jurisdiction. McClelland, so remand was mandatory, not discretionary.16 155 F.3d at 511, 518 n.39. We review this preemption question de novo, id. at 511, and C. The Roarks’ motion to remand conclude the district court did have jurisdic- The Roarks’ original complaint, filed in tion. state court , stated claims under the THCLA, the DTPA, the Texas Insurance Code, and common law breach of good faith, fair dealing, 17 Section 1447(c) provides, and contract. Humana removed, citing ERISA preemption, and the Roarks moved to remand. Whenever a separate and independent Only after the district court affirmed the re- claim or cause of action within the jurisdic- moval, concluding ERISA § 502(a) completely tion conferred by section 1331 of this title is preempted the Roarks’ DTPA and insurance joined with one or more otherwise non-re- claims, did the Roarks amend their complaint movable claims or causes of action, the en- to state only THCLA claims. The Roarks tire case may be removed and the district made a second motion to remand, which the court may determine all issues therein, or, in district court again denied; the Roarks appeal its discretion, may remand all matters in which State law predominates. only the second denial. 28 U.S.C. § 1447(c). If, at the time of removal, the complaint stated at least one cause of action completely 18 In Giles we explained, preempted by § 502(a), the district court could have asserted jurisdiction over the entire case, Hence, when a complaint raises state including and claims only conflict-preempted causes of action that are completely pre- by ERISA § 514 and any state law claims. See empted, the district court may exercise re- moval jurisdiction. When a complaint con- tains only state causes of action that the de- fendant argues are merely conflict-preempt- 15 See 28 U.S.C. § 1441(c) (hinging removal of ed, the court must remand for want of sub- supplemental claims on the existence of “a separate ject matter jurisdiction. When a complaint and independent claim or cause of action within the raises both completely-preempted claims jurisdiction conferred by section 1331”). and arguably conflict-preempted claims, the court may exercise removal jurisdiction over 16 Avitts v. Amoco Prod. Co., 53 F.3d 690, 693 the completely-preempted claims and sup- (5th Cir. 1995) (explaining that if district court plemental jurisdiction (formerly known as never had original jurisdiction over any federal “pendant jurisdiction”) over the remaining claim, it could not have exercised supplemental claims. jurisdiction over the joined state claims and was required to remand). Giles, 172 F.3d at 337-38.
14 Count six of the Roarks’ original complaint of discretion.” McClelland, 155 F.3d at 519; alleges breach of contract: “By virtue of the see also § 1367. policies provided to the Plaintiffs, Defendants assumed obligations, as outlined in the Mem- Section 1367(3) allows a district court to ber Materials and other documents provided to “decline to exercise supplemental jurisdiction policy enrollees like the Roarks, to provide over a claim . . . if . . . the district court has medically necessary treatment . . . . Defen- dismissed all claims over which it has original dants breached this promise to Mrs. Roark, jurisdiction.” 28 U.S.C. § 1367(3). The dis- causing her to suffer direct and serious dam- trict court should evaluate whether remand age.” The Roarks assert that the plan’s term furthers “the values of economy, convenience, “medically necessary treatment” includes VAC fairness, and comity.” Carnegie-Mellon Univ. treatments. v. Cohill, 484 U.S. 343, 351 (1988); accord Brown v. Southwestern Bell Tel. Co., 901 F.2d The answer turns on interpreting the plan’s 1250, 1254-55 (5th Cir. 1990). language, not on applying an external, statuto- rily imposed standard of ordinary care. Be- III. Dismissal of the Roarks’ claims cause this is precisely the type of contract The district court dismissed the Roarks’ claim we recognize under § 502(a)(1)(B), see THCLA claims under rule 12(b)(6), citing supra part II.A.2, this claim is completely ERISA § 514 preempt ion. We review a rule preempted under ERISA. 12(b)(6) dismissal de novo. E.g., Oliver v. Scott, 276 F.3d 736, 740 (5th Cir. 2002). This establishes that the district court had the power to entertain the Roarks’ suit; it does ERISA § 514 preempts “all State laws in- not necessarily mean the court acted properly sofar as they may now or hereafter relate to in doing so. The Roarks amended their com- any employee benefit plan described in section plaint to state only THCLA claims, then filed 1003(a) of this title and not exempt under sec- a second remand motion, arguing that because tion 1003(b) of this title.” 29 U.S.C. § 1144- all federal claims had been dismissed, 28 (a). We have spilled much ink over the past U.S.C. § 1367 required the court to remand few decades trying to interpret this statute. By the remaining supplemental state law claims. contrast, our answer today is short and direct: The district court ruled that the THCLA Our decision in Corcoran v. United Health- claims also were completely preempted under care, Inc., 965 F.2d 1321 (5th Cir. 1992), is ERISA, so it had original jurisdiction over on point. Although the Supreme Court has them and retained the case. since cast doubt on Corcoran’s validity, we do not write on a clean slate. Our rule of orderli- Because ERISA does not completely pre- ness prevents one panel from overturning the empt the Roarks’ THCLA claims, see supra decision of a prior panel, so any relief for the part II, the district court had only supplemen- Roarks must come from an en banc panel of tal, not original, jurisdiction over the Roarks’ this court or the Supreme Court. Teague v. THCLA claims. “We review a district court’s City of Flower Mound, 179 F.3d 377, 383 (5th decision to retain jurisdiction over pendant Cir. 1999). [i.e, supplemental] state law claims for abuse
15 Corcoran is factually indistinguishable from thority.”19 And, based on the broad language the Roarks’ case. There, the HMO ignored its of Pilot Life, Ingersoll-Rand, and Shaw v. doctor’s recommendation to hospitalize Mrs. Delta Air Lines, Inc., 463 U.S. 85 (1983), we Corcoran or monitor her pregnancy around the concluded that even attenuated and indirect ef- clock; instead it provided the less expensive fects on an ERISA plan are enough to bring a treatment of ten hours a day of home nursing. statute within § 514 preemption. Corcoran, Corcoran, 965 F.2d at 1324. While no nurse 965 F.2d at 1328-29, 1338 n.20. was on duty, Corcoran miscarried. Id. She sued her HMO, alleging its negligence caused Since then, the Supreme Court has curtailed her baby’s wrongful death. Id. the scope of § 514 preemption, most notably in a “trilogy” of cases between 1995 and 1997. We rejected both the HMO’s “position that The first case, N.Y. State Conference of Blue no part of its actions involve[d] medical deci- Cross & Blue Shield Plans v. Travelers Ins. sions” and Corcoran’s position “that no part of Co., 514 U.S. 645 (1995), involved a New [her HMO’s] actions involve[d] benefit deter- York statute requiring hospitals to collect sur- minations.” Id. at 1332. In actuality, we ex- charges from patients insured by a commercial plained, the HMO “makes benefit determina- carrier but exempting HMO’s that provided tions as part and parcel of its mandate to de- open enrollment coverage. The Second cide what benefits are available under the Circuit had held that such surcharges “related [ERISA] plan.” Id. “[F]rom this perspective, to” ERISA plans: Many of these HMO’s it becomes apparent that the Corcorans are contracted with ERISA plans, and the attempting to recover for a tort allegedly com- surcharge, by affecting these HMO’s’ mitted in the course of handling a benefit deter- economic incentives, had an impact on plan mination.” Id. structures.
Such a claim, we reluctantly concluded, The Court reversed in a unanimous opinion. was preempted under § 514. We recognized The state statute’s “indirect economic in- the possible harm our ruling created: ERISA fluence,” the Court explained, “does not bind provided no cause of action for medical mal- plan administrators to any particular choice.” practice; if ERISA also preempted all state Id. at 659. It only alters “the relative costs of medical malpractice claims, patients such as competing insurance to provide them,” id. at the Corcorans would be left with no remedy 660, and this does not run afoul of ERISA for potentially serious mistakes. Id. at 1338. preemption. But, we were bound by Supreme Court prece- dent, which at that time articulated an expan- Two years later, a unanimous Court handed sive view of ERISA preemption. down Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., For example, we cited Ingersoll-Rand for Inc., 519 U.S. 316 (1997). California had the proposition that § 514’s broad “relates to” language negated the normal rules of preemp- tion. We would not assume that preemption 19 Corcoran, 965 F.2d at 1334; see also was less likely in areas of “traditional state au- Somers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., Inc., 793 F.2d 1456, 1468 (5th Cir. 1986).
16 enacted a law that required payment of The trilogy undermines Corcoran in two prevailing wages to employees in important ways. First, the Court established apprenticeship non-state approved programs that traditional preemption rules apply under but allowed lower wages for apprentices ERISA. Thus, courts should presume ERISA participating in state approved programs. The does not preempt areas such as “general health Court held that because the law was indifferent care regulation, which historically has been a to ERISA coverage (state-approved programs matter of local concern.” Travelers, 514 U.S. did not have to be ERISA programs), the law at 661. Second, the Court held that a state did not make “reference to” such plans. Id. at law’s economic impact (direct or indirect) on 325. plan structures is not enough to trigger § 514 preemption. The fact that “most state-approved appren- ticeship programs . . . appear to be ERISA The Court’s dictum in Pegram gives further programs” was immaterial. Id. at 327 n.5. reason to doubt that ERISA preempts medical Nor did California’s law have a “connection malpractice claims such as the Roarks’. In with” ERISA plans. It did not bind plans, holding that the plaintiff did not state a claim legally or practically, to a given result; it only under § 502(a)(2), the Court, 530 U.S. at 236- provided economic incentives to alter their 37, expressed disbelief that ERISA preempts structure. Id. at 329. Most notably, the Court such claims: explicitly returned to a traditional preemption analysis: ERISA’s “relates to” language did To be sure [Travelers] throws some not “alter [the] ordinary assumption that the cold water on the preemption theory; historic police powers of the States were not there, we held that, in the field of health to be superseded by the Federal Act.” Id. at care, a subject of traditional state 331 (internal quotation marks omitted).20 regulation, there is no ERISA The last of the trilogy, De Buono v. NYSA- preemption without clear manifestation ILA Med. & Clinical Servs. Fund, 520 U.S. of congressional purpose. But in that 806 (1997), held that ERISA did not preempt case the convergence of state and New York’s tax on gross receipts for patient federal law was not so clear as in the services at health care facilities. The Court ac- situation we are positing; the state-law knowledged that the tax had a direct effect on standard had not been subsumed by the ERISA plans (in fact, it eschewed any dis- standard to be applied under ERISA. tinction between direct and indirect effects), but still upheld the statute. Pegram, 530 U.S. at 236-37.
Furthermore, after Pegram, Corcoran’s 20 rule creates perverse incentives for HMO’s. If Justice Scalia, in a concurrence in which Justice Ginsburg joined, urged the Court to “ac- a doctor fails to recommend treatment, the pa- knowledge[] that our first take on this statute was tient may sue the doctor and HMO under state wrong; that the ‘relate to’ clause . . . is meant, not law. Id. at. If the doctor recommends to set forth a test for pre-emption, but rather to treatment, and the HMO denies coverage, the identify the field in which ordinary field pre- patient has no remedy. Corcoran, 965 F.2d at emption applies.” Id. at 336 (Scalia, J., 1338. In this circuit, HMO’s can escape all concurring).
17 liability if they instruct their doctors to recommend every possible treatment and leave the real decision to HMO administrators. It is difficult to believe that one of Congress’s goals in passing ERISA was to shift medical judgments from doctors to plan administrators.
If we were writing on a clean slate, or de- ciding this en banc, the Roarks would have a strong case against ERISA preemption. But, as a panel we are bound by Corcoran. Accordingly, we affirm with respect to the Roarks.
In summary, the judgment in No. 01-10831, regarding the Roarks, is AFFIRMED. The judgment in No. 01-10891 is REVERSED in regard to Calad and AFFIRMED in regard to Thorn. The judgment in No. 01-10905 is REVERSED in regard to Davila. All these matters are REMANDED to the respective district courts for further proceedings, if any, that may be called for by this opinion.