Insurance Claim Denial Attorney – ERISA

The Employee Retirement Income Security Act (ERISA) provides various kinds of insurance to employees.  The important thing for insurance lawyers to know about ERISA is that it is governed by Federal law and it preempts State law.  This is illustrated in a 2020, opinion from the Western District of Texas, San Antonio Division.  The opinion is styled, Marco Z. v. UnitedHealthcare Insurance Company, Forma Automotive, LLC.

Marco does not dispute that the health plan at issue is governed by the ERISA.  Further, it is undisputed that at the time of the incident forming the basis of this action Marco was a beneficiary of the subject ERISA health plan established and maintained by Forma Automotive and administered by UnitedHealthcare.

Marco sustained medical problems in Mexico and was forced to seek medical assistance.  Marco  assigned insurance benefits to the Hospital, which is not a network provider under the Plan.  As a non-network provider, it has no express contract with UnitedHealthcare establishing payment for medical services provided to beneficiaries of the Plan.

UnitedHealthcare declined payment of any benefits in an EOB letter, stating as a reason, “we have not received all the requested information needed to process the claim.”

Marco filed this action in this Federal court asserting causes of action for (1) compelled production of the administrative record and award of penalty pursuant to ERISA, 29 U.S.C, Section 1024(B), Section 1132(c)(1) and 29 C.F.R 2575.502c-1; (2) breach of contract as to denial of insurance benefits under the Plan; (3) unjust enrichment; (4) quantum meruit; (5) violation of Texas Insurance Code, Section 1301.0053 for failure to properly compensate a medical provider; (6) violation of Texas Insurance Code, Section 541, the Texas Unfair Compensation and Unfair Practice Act, for refusing to pay a claim without conducting a reasonable investigation; and (7) violation of Texas Insurance Code, Section 542, the Texas Prompt Payment of Claims Act.  Marco attached to the Complaint a copy of the Plan and correspondence between the parties prior to the EOB letter.

Defendants now move under Federal Rule 12(b)(6) to dismiss all state law causes of action (claims(2) –(7)) based upon the complete preemption doctrine, conflict preemption doctrine and failure to state a claim upon which relief may be granted.  Defendants also move under Federal Rule 12(b)(6) to dismiss the federal cause of action asserted under ERISA (claim(1)) as a matter of law based upon Marco’s failure to state a claim upon which relief may be granted.

Congress may enact legislation to preempt a particular field of law, transforming all claims arising in that field to federal in nature.  Within this power, Congress created an exclusive civil enforcement scheme for employee welfare benefit plans, ERISA, 28 USC, Section 502, et seq., to provide a uniform regulatory regime.  To this end, as a safeguard, ERISA contains two separate and procedurally distinct preemption provisions: (1) complete preemption pursuant to 29 U.S.C., Section 1132(a);and (2) conflict preemption pursuant to 29 U.S.C., Section 1144(a).

The scope of complete and conflict preemption under ERISA are very similar but not exactly the same.  Here, it appears the parties conflate the two types of ERISA preemption.  First, the parties ’primary dispute focuses on the issue whether complete preemption applies to support dismissal of the state law claims under Federal Rule 12(b)(6).  Then, Defendants simultaneously argue conflict preemption also applies to support dismissal of the state law claims under Federal Rule 12(b)(6).  Marco does not specifically respond to the conflict-preemption argument, though presumably,the same rebuttal arguments apply.  Because the parties agree ERISA governs the Plan and is the basis of this Court’s original jurisdiction, the Court goes directly into addressing the arguments whether either type of preemption applies.  The Court discusses both at length to provide clarity in their distinctions and the parties’ conflation of the analysis due each separate and distinct type of preemption.

The rest of the opinion spends pages explaining the reasoning for the Court’s decision.  The take away on this case is that ERISA preempts State law causes of action.  The case was dismissed.



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