United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS December 8, 2003
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
_______________________ Clerk
NO. 01-30922
_______________________
JULIO C. ARANA,
Plaintiff-Appellee,
versus
OCHSNER HEALTH PLAN,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
________________________________________________________________
Before JONES, EMILIO M. GARZA, Circuit Judges, and ELLISON,
District Judge.*
EDITH H. JONES, Circuit Judge:
This case was remanded to “the panel” pursuant to a
decision of the en banc court that we have federal jurisdiction.
See Arana v. Ochsner Health Plan, Inc., 302 F.3d 462, 470-74
(5th Cir. 2002), rev’d en banc, 338 F.3d 433 (5th Cir. 2003). We
now hold that because Arana’s claim against Ochsner Health Plan
(“OHP”) fails as a matter of Louisiana law, no question of conflict
with federal ERISA law exists.
*
District Judge of the Southern District of Texas, sitting by designation.
I. BACKGROUND
On July 5, 1998, Julio Arana (“Arana”) suffered serious
injuries when the 1995 Nissan Pathfinder he was driving was struck
by a 1996 Ford Crown Victoria. At the time of the accident, and
all other relevant times, Arana was a dependent beneficiary of an
employee benefit plan established by his mother’s employer, LeCler
Printing Company. Ochsner Health Plan, Inc. (“OHP”) provided
health benefits as an HMO under the LeCler benefit plan. Following
the accident, OHP paid approximately $180,000 in health benefits
for treatment of Arana’s accident-related injuries. A variety of
other insurance policies also provided coverage for the accident,
including a State Farm liability policy covering the Crown
Victoria, an Allstate liability policy carried by the non-owner
operator of the Crown Victoria, a Fireman’s Fund uninsured motorist
policy issued on the Pathfinder and an excess uninsured motorist
policy underwritten by United Fire. Each of these policies paid
out substantial benefits to Arana. State Farm and Allstate paid a
total of $150,000 under the terms of their respective policies. In
addition, Fireman’s Fund and United Fire paid a total of $962,500
under settlement agreements reached after Arana filed a federal
tort action in the Eastern District of Louisiana. Of the amount
paid by United Fire, $150,000 is held in a trust account maintained
by Arana’s lawyer pursuant to the settlement agreement.
2
On November 2, 1999, while the federal tort action was
pending, OHP wrote to Arana’s mother and United Fire notifying both
that OHP claimed a contractual right to recover the health benefits
it had paid on Arana’s behalf. Arana sued in state court for a
declaratory judgment that Louisiana law barred OHP’s claim for
subrogation to his insurance benefits. OHP removed Arana’s lawsuit
to the Eastern District of Louisiana on the grounds that the
Employee Retirement Income Security Act (“ERISA”) preempted Arana’s
state law claims. The district court granted summary judgment for
Arana holding that federal subject matter jurisdiction existed
because Arana’s claim was brought pursuant to ERISA, that Louisiana
state law provided the rule of decision for the case under ERISA’s
savings clause, and that Louisiana state law barred OHP’s claim for
subrogation. See Arana v. Ochsner Health Plan, Inc., 134 F. Supp.
2d 783, 787-89 (E.D. La. 2001). On appeal, a panel of this court
held that ERISA did not preempt Louisiana state law and therefore
the federal courts had no subject matter jurisdiction over Arana’s
state law claims. Following rehearing en banc, we held that
Arana’s claim falls within federal jurisdiction pursuant to ERISA
§ 502. See Arana v. Ochsner Health Plan, Inc., 338 F.3d 433,
437-39 (5th Cir. 2003) (en banc). The en banc court remanded the
case to this panel for consideration of the merits of Arana’s
claim. Id. at 440.
3
II. DISCUSSION
A. Standard of Review
We review a district court’s grant of summary judgment de
novo. See Price v. Fed. Express Corp., 283 F.3d 715, 719 (5th Cir.
2002). Summary judgment is appropriate if “the pleadings, deposi-
tions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to
summary judgment as a matter of law.” FED. R. CIV. P. 56(c). When
a district court applies state law in ruling on a summary judgment
motion, we review the district court’s application of state law de
novo. See Swearingen v. Owens-Corning Fiberglas Corp., 968 F.2d
559, 561 (5th Cir. 1992).
The only issue we consider is the viability of Arana’s
claim under Louisiana law. Only if Arana had stated a cognizable
state law claim would it be necessary to determine whether ERISA
preempts state law.
B. Subrogation of Insurance Benefits Under Louisiana Law
Arana contends that Louisiana law prohibits OHP from
subrogating to the settlement proceeds that Arana received from
other insurers. His claim depends on the proper application of
LA. REV. STAT. § 22:663,1 which states:
1
Arana has filed a motion requesting that this court certify the
question of the proper application of § 22:663 to the Louisiana Supreme Court.
This request, which follows briefing and argument to the original Fifth Circuit
panel, the en banc court, and this panel, is denied as untimely.
4
Notwithstanding any other provisions in this title to the
contrary, no group policy of accident, health or
hospitalization insurance, or of any group combination of
these coverages, shall be issued by any insurer doing
business in this state which by the terms of such policy
group contract excludes or reduces the payment of
benefits to or on behalf of an insured by reason of the
fact that benefits have been paid under any other
individually underwritten contract or plan of insurance
for the same claim determination period. Any group
policy provision in violation of this section shall be
invalid.
LA. REV. STAT. § 22:663 (West 1995 and Supp. 2003).
1. Ochsner’s Status as a Health Maintenance Organization
To gain the benefit of § 22:663, Arana must first demon-
strate that it covers OHP and the health benefits OHP provides to
HMO plan beneficiaries like Arana. The statute regulates group
accident, health and hospitalization insurance policies that are
issued by “any insurer doing business in this state.” LA. REV. STAT.
§ 22:663. According to the Louisiana Insurance Code, an “insurer”
includes “every person engaged in the business of making contracts
of insurance, other than a fraternal benefit society.” LA. REV.
STAT. § 22:5(10). OHP is a health maintenance organization,
however, not an insurer, and Louisiana law has carefully identified
the Insurance Code provisions that apply to HMOs. Thus, “[a]
health maintenance organization is an insurer but only for the
purposes enumerated in R.S. 22:2002(7).” Id. (emphasis added).
Section 22:2002(7) of the Insurance Code, in turn, deems
[a] health maintenance organization . . . to be an
insurer for the purposes of R.S. 22:213.6 and 213.7, Part
XVI, comprised of R.S. 22:731 through 774, Part XXI-A,
5
comprised of R.S. 22:1001 through 1015, and Part XXVI-B,
comprised of R.S. 22:1241 through 1247.1, of Chapter 1 of
this title,
and states that “[a] health maintenance organization shall not be
considered an insurer for any other purpose.” LA. REV. STAT.
22:2002(7) (emphasis added). Because this list of provisions omits
Part XIV, which encompasses § 22:663, OHP is not an insurer subject
to the provisions of § 22:663. This conclusion comports with prior
decisions of the Louisiana state courts which have found that the
Louisiana legislature intended to treat HMOs as insurers “only for
selective and limited purposes.” Tucker v. Ochsner Health Plan,
674, So. 2d 1052, 1055 (La. App. 2 Cir. 5/8/96) (holding that an
HMO is not an insurance company for purposes of a statute granting
special venue provisions for insurance claims); Crawford v. Blue
Cross and Blue Shield of Louisiana, 814 So.2d 574, 580 (La. App. 4
Cir. 2001) (declining to follow Tucker on the grounds that Blue
Cross was an insurer rather than an HMO).2
2
Arana argues that OHP is subject to § 22:663 by virtue of LA. REV.
STAT. § 22:2006(7), enacted in 1986, which allows HMOs to “coordinate benefits,
subrogate to third party funds, and engage in the assignment of claims to the
extent that insurers are permitted to do so by the laws of this state.” LA. REV.
STAT. § 22:2006(7). This argument is unavailing for two reasons. First, the
Louisiana Insurance Code is very specific in indicating that HMOs are not to be
considered insurers except for the limited purposes enumerated in § 22:2002(7).
See LA. REV. STAT. § 22:5(10); LA. REV. STAT. § 22:2002(7). In the absence of
specific language adding § 22:663 to the list of limited purposes, Arana must
present a compelling reason why some combination of § 22:2006(7) and § 22:663
should serve as an exception to this general rule. No such compelling argument
has been presented and the lack of any Louisiana decision holding HMOs to be
insurers for § 22:663 purposes argues against such an innovation by this court.
Second, even if § 22:2206(7) and § 22:663 were to combine in the manner Arana
suggests, because we find, infra, that § 22:663 addresses only certain instances
of the coordination of benefits and not subrogation to third party funds, such
an approach does not affect OHP’s ability to subrogate pursuant to its insurance
contract and Louisiana law.
6
Arana nonetheless argues that OHP is subject to § 22:663
because § 22:232(13) defines “health and accident insurance” to
include “coverages provided by health maintenance organizations”
and therefore this provision functions as an additional exception
to the general bar on treating HMOs as insurers under Louisiana
law, thus making § 22:663 applicable to OHP. The problem with
Arana’s argument is that the scope of the definition he cites is
limited by a parallel provision within the same code section.
Section 22:232(19) makes clear that HMOs are insurers within that
code section, but only “for the purposes of this Part.” See LA.
REV. STAT. § 22:232(13); LA. REV. STAT. § 22:232(19) (emphasis added).
The “Part” referred to in § 22:232 is Part VI-A, which specifically
applies only to the state-backed Louisiana Health Plan. Thus,
while Arana is correct that the combination of § 22:232(13) and
§ 22:232(19) functions as an additional exception to the general
bar against treating HMOs as insurers under Louisiana law, it does
not allow HMOs to be treated as insurers under § 22:663, which is
contained in Part XIV - a separate section of the Louisiana
Insurance Code which is unaffected by the definitions contained in
§ 22:232.
2. Subrogation Versus Coordination of Benefits
But even if the OHP coverage were subject to the restric-
tions embodied in § 22:663, Arana would not prevail for a very
simple reason. While this statute restricts the coordination of
7
benefits, it does not affect subrogation to the insurance benefits
paid to Arana under the settlement agreements. Section 22:663, as
noted, forbids group health insurance policies to “exclude[] or
reduce[] the payment of benefits to or on behalf of an insured by
reason of the fact that benefits have been paid under any other
individually underwritten contract or plan of insurance.” LA. REV.
STAT. § 22:663. On the other hand, the Louisiana Insurance Code
expressly allows HMOs to “coordinate benefits, subrogate to third
party funds, and engage in the assignment of claims to the extent
that insurers are permitted to do so by the laws of this state.”
LA. REV. STAT. § 22:2006(7) (emphasis added). These two terms —
coordination and subrogation — are legally and functionally
distinct.
First, the Louisiana state legislature evidently under-
stood coordination of benefits and subrogation to be separate and
distinct concepts. Any other reading of the Insurance Code would
have to presume, contrary to the canon of construction, that the
legislature was redundant in defining the powers of HMOs in
§ 22:2006(7). See United States v. Reeves, 752 F.3d 995, 999 (5th
Cir. 1985) (“A statute should be read to avoid rendering its
language redundant if reasonably possible.”); ABL Mgmt., Inc. v.
Bd. of Supervisors, 773 So. 2d 131, 135 (La. 2000) (“[I]t will not
be presumed that the Legislature inserted idle, meaningless or
superfluous language in the statute or that it intended for any
8
part or provision of the statute to be meaningless, redundant or
useless.”).
In addition, Louisiana Department of Insurance regula-
tions treat subrogation to third party funds and the coordination
of benefits as different concepts. See LA. ADMIN. CODE 37:XIII.313
(“COB [Coordination Of Benefits] Differs from Subrogation.
Provisions for one may be included in health care benefits
contracts without compelling the inclusion or exclusion of the
other.”).3 The regulations go on to define coordination of
benefits as “establishing an order in which plans pay their claims,
and permitting secondary plans to reduce their benefits so that the
combined benefits of all plans do not exceed total allowable
expenses.” LA. ADMIN. CODE 37:XIII.303. The reduction in benefits
described as coordination of benefits parallels the language used
in § 22:663 prohibiting policy provisions that “exclude[] or
reduce[] the payment of benefits to or on behalf of an insured.”
LA. REV. STAT. § 22:663. Coordination of benefits occurs where a
reduction of benefits takes place up front as an insurance company
limits the benefits it pays on the basis of an insured’s additional
or third-party coverage. In contrast, the Louisiana Civil Code
defines subrogation as “the substitution of one person to the
3
Arana correctly argues that the distinction drawn by the Department
of Insurance between subrogation and coordination of benefits in this regulation
is not directly applicable to § 22:663 because the regulation relates only to the
relationship between group plans and not the relationship between group and
individual plans, which is the focus of § 22:663. However, the regulation does
demonstrate that the primary regulator of insurance in Louisiana distinguishes
between subrogation and the coordination of benefits.
9
rights of another.” LA. CIV. CODE, Art. 1825 (emphasis added).
Subrogation generally takes place after insurance proceeds have
been paid out and the insurance company, substituting itself in
place of the insured, seeks reimbursement from a third-party. See
Lee R. Russ, Couch on Insurance § 222:5 (3d ed. 2000) (defining
subrogation generally).
That § 22:663 limits coordination of benefits and not
subrogation comports with the interpretation of this statute by
Louisiana courts. See Peters v. Prudential Ins. Co. of America,
511 So. 2d 37, 39 (La. App. 3 Cir. 1987) (“The legislature was
quite clear in its intent to prohibit the coordination of benefits
[in § 22:663] where a group policy and an individually underwritten
policy cover the same insured.”). This Court has also referred to
§ 22:663 as a “coordination of benefits limitation.” Nolan v.
Golden Rule Ins. Co., 191 F.3d 990, 993 (5th Cir. 1999). In
addition, even though § 22:663 was enacted in 1972, the Louisiana
state courts have consistently held that health plans may subrogate
to third-party funds. See, e.g., Barreca v. Cobb, 668 So.2d 1129,
1131-32 (La. 1996); Brister v. Blue Cross and Blue Shield of
Florida, Inc., 562 So.2d 1040, 1041-46 (La. App. 3 Cir. 1990). It
strains credulity to suggest that § 22:663 was designed to allow
insured parties to receive the substantial windfall that could
result from a bar against subrogation, but that not one reported
decision supports this proposition in the more than 30 years that
this statute has been on the books.
10
In this case, the subrogation provision contained in the
OHP policy allows OHP to succeed to Arana’s right to the insurance
proceeds paid by other insurance companies. Subrogation does not
reduce the benefits OHP furnished to Arana - Arana has collected
the full amount he was entitled to under the OHP policy. Should
the Louisiana legislature wish to prohibit subrogation as between
group and individually underwritten policies, in the same manner
that it has prohibited the coordination of benefits, it is free to
do so, but the plain language of § 22:663 does not allow this Court
to expand the reach of the statute.
CONCLUSION
For the reasons stated above, OHP is not an “insurer”
subject to § 22:663, and § 22:663 does not in any event prevent
subrogation. Arana has no claim under Louisiana law.
The judgment of the district court is REVERSED.
11