|ERISA UPDATE, AETNA Health Inc. v. Davila, pg. 2|
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The Majority Opinion:
The State Remedy was Within the Scope of an ERISA Benefits Claim:
In addressing whether the state remedy was within the scope of the Section 502(a)(1)(B) benefits claim, the opinion was pure vanilla. The Court noted that THCLA did not require the HMO to provide treatments not covered by the ERISA plan. And if the HMO’s only duty was to provide care pursuant to the terms of the ERISA plan, THCLA’s standard of whether the HMO exercised "ordinary care" depended on the interpretation of the plan:
Thus, interpretation of the terms of respondents’ benefit plans forms an essential part of their THCLA claim, and THCLA liability would exist here only because of petitioners’ administration of ERISA-regulated benefit plans.
Given that plaintiffs’ claims were, in effect, a claim that the HMOs wrongly denied benefits under the plan, they clearly arose under ERISA. Further, the Court explicitly rejected the argument that the state law was not preempted because it sought additional elements beyond benefits:
Congress’ intent to make the ERISA civil enforcement mechanism exclusive would be undermined if state causes of action that supplement the ERISA §502(a) remedies were permitted, even if the elements of the state cause of action did not precisely duplicate the elements of an ERISA claim.
The Saving Clause is Trumped by the Exclusive Enforcement Mechanism:
The Court also addressed the argument that the state law was not preempted, because it was a state law governing insurance, and hence "saved" from preemption. Resolving once and for all the issue of whether the saving clause trumped the exclusive enforcement mechanism (i.e. the preemptive force created by the Congressional intent that ERISA’s remedies be exclusive), the Court held that–when the two were in conflict–the exclusivity of the federal remedies would govern. As such, it is now absolutely clear that a state legislature cannot avoid ERISA preemption of alternative remedies simply by drafting a remedial statute which applies only to insurers.
Benefits Decisions are Always Fiduciary in Nature:
Finally, the Court held that Peagram’s holding that decisions by the HMO were not fiduciary in nature was not applicable here. The decisions in this case were benefits decisions, which the Court held would always be fiduciary in nature, even where they involved mixed questions of eligibility and treatment.