United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
August 16, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 04-31114
LOUISIANA HEALTH SERVICE & INDEMNITY Co.,
d/b/a Blue Cross and Blue Shield of Louisiana
Plaintiff-Intervenor Defendant-Appellant,
versus
RAPIDES HEALTHCARE SYSTEM; STATE of LOUISIANA;
CHARLES R. FOTI, JR.,
Attorney General for the State of Louisiana
Defendant-Appellees
versus
DAUTERIVE HOSPITAL
Intervenor Defendant-Appellee
Appeal from the United States District Court
For the Middle District of Louisiana
(Civil Action No. 00-694-D-M2)
Before HIGGINBOTHAM, DeMOSS, and OWEN, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Section 40:2010 of the Louisiana Revised Statutes requires
insurance companies to honor all assignments of benefit claims made
by patients to hospitals. This case asks us to decide whether the
Employee Retirement Income Security Act of 1974 preempts the
assignment statute to the extent that it applies to fully insured
ERISA plans. We hold that Louisiana’s assignment statute is not
preempted.
I
The relevant facts in this case are undisputed. Section
40:210 of the Louisiana Revised Statutes (the “assignment statute”)
provides, in relevant part:
Itemized statement of billed services by hospitals.
. . . No insurance company, employee benefit trust,
self-insurance plan, or other entity which is
obligated to reimburse the individual or to pay for
him or on his behalf the charges for the services
rendered by the hospital shall pay those benefits
to the individual when the itemized statement
submitted to such entity clearly indicates that the
individual’s rights to those benefits have been
assigned to the hospital. When any insurance
company, employee benefit trust, self-insurance
plan, or other entity has notice of such assignment
prior to such payment, any payment to the insured
shall not release that entity from liability to the
hospital to which the benefits have been assigned,
nor shall such payment be a defense to any action
by the hospital against the entity to collect the
assigned benefits.1
The assignment statute is included in the “State Department of
Hospitals” chapter of Louisiana’s Public Health and Safety code.
As the title indicates, the statute imposes various additional
requirements on hospitals regarding itemized statements of billed
services to patients. Those requirements are not at issue in this
case.
Two hospitals, defendant Rapides Health Care System and
intervenor Dauterive Hospital (collectively, “the Hospitals”),
complained to the Louisiana Department of Insurance (“DOI”) that
Louisiana Health Service & Indemnity Co., d/b/a Blue Cross and Blue
1
LA. REV. STAT. ANN. § 40:2010 (2004).
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Shield of Louisiana, failed to comply with the assignment statute
after the Hospitals terminated their participating provider
agreements with Blue Cross. While the DOI investigated the
complaints, ultimately concluding that Blue Cross’s policy
provisions violated the assignment statute, Blue Cross filed the
present case against Rapides, the State of Louisiana, and the
Louisiana attorney general, seeking a declaration that the
assignment statute is preempted by ERISA to the extent that it
applies to ERISA employee welfare benefit plans insured or
administered by Blue Cross. Dauterive intervened.
All health insurance plans issued and administered by Blue
Cross contain provisions governing the assignment of benefits. The
parties agree that all provisions are substantially similar to the
following:
Direct Payment to Member
1. All benefits payable by the Company [Blue
Cross] under this Benefit Plan and any
amendment hereto are personal to the Member
and are not assignable in whole or in part by
the Member. The Company has the right to make
payment to a Hospital, Physician, or other
Provider (instead of to the member) for
Covered Services which they provided while
there is in effect between the Company and any
such Hospital, Physician, or other Provider an
agreement calling for the Company to make
payment directly to them. In the absence of
an agreement for direct payment, the Company
will pay to the Member and only the Member
those Benefits called for herein and the
Company will not recognize a member’s
attempted assignment to, or direction to pay,
another, except as required by law.
-3-
* * *
3. If the Company has offered a Hospital,
Physician, or other Provider an agreement for
direct payment by the Company, but there is no
such agreement in effect when Covered Services
are rendered to a Member by such Hospital,
Physician, or other Provider, the Company will
not recognize a Member’s attempted assignment
to, or direction to pay, such Hospital,
Physician, or other Provider. The Company
will pay to the Member and only the Member
those Benefits called for in this Benefit Plan
and any amendment thereto.
Blue Cross divides hospitals into “participating providers” and
“nonparticipating providers.” Blue Cross’s agreement with
participating providers includes a provision allowing or requiring
direct payment to the provider. With nonparticipating providers,
there is no agreement, and, pursuant to the above language, Blue
Cross will not honor a patient’s assignment of benefits to the
provider. The burden is then on the nonparticipating provider to
collect its fees directly from the patient. Blue Cross does not
dispute that its refusal to honor assignments to nonparticipating
providers violates the assignment statute.
Blue Cross moved for summary judgment on the ERISA preemption
issue in August 2001. Finding only an indirect economic effect on
ERISA plans, the district court denied summary judgment, reasoning
that the assignment statute “facilitate[d] and promote[d] the goals
of ERISA” and that it was a health-care regulation within an area
of state law that Congress did not intend to preempt. As such, the
district court did not need to consider whether the statute was
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saved from preemption as a law regulating insurance. In the
alternative, the court concluded that the language of Blue Cross’s
health care plan requires compliance, because the anti-assignment
provision says that such assignments will not be honored “except as
required by law.”2
Over the next two years, Blue Cross and the Hospitals
litigated various other claims that were later settled and are not
at issue on appeal. In June 2004, both parties filed motions for
summary judgment on the preemption issue. Blue Cross argued that
the Supreme Court’s intervening decision in Aetna Health Inc. v.
Davila3 and the Third Circuit’s decision in Barber v. UNUM Life
Insurance Co.4 required preemption of the assignment statute
because it conflicted with the exclusive enforcement provision in
ERISA. Adopting its previous ruling and reasoning, the district
court denied Blue Cross’s motion and granted the motions filed by
the State of Louisiana and the Hospitals. The court concluded that
because ERISA is silent regarding assignment of health benefits,
the assignment statute does not alter an existing ERISA provision
and, thus, was not conflict preempted. The court distinguished
Davila and Barber as cases involving state statutes that altered
2
La. Health Serv. & Indem. Co. v. Rapides Healthcare Sys., 213 F.Supp.2d
650 (M.D. La. 2002) (Brady, J.).
3
542 U.S. 200 (2004).
4
383 F.3d 134 (3d Cir. 2004).
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existing ERISA provisions. Blue Cross timely appealed. We have
jurisdiction under 28 U.S.C. § 1291.
II
First, we address whether the plain language of Blue Cross’s
ERISA plans requires compliance with the assignment statute. If
so, then we would not need to reach the preemption questions.5 If
the ERISA plans at issue do not require compliance with the
assignment statute, then we must address Blue Cross’s two-prong
preemption attack. Blue Cross contends, first, that the assignment
statute is preempted because it conflicts with ERISA’s exclusive
enforcement scheme.6 Second, Blue Cross contends that the
assignment statute is preempted as a statute that “relate[s] to”
ERISA.7 Finally, should we conclude that the assignment statute is
preempted as a statute that relates to ERISA, we must determine
whether it is “saved” from preemption as a law regulating
insurance.8 Our review is de novo.9
5
See Arana v. Ochsner Health Plan, 352 F.3d 973, 976 (5th Cir. 2003)
(declining to reach preemption question where no conflict existed); see also
Ashwander v. Tenn. Valley Authority, 297 U.S. 288, 347 (1936) (Brandeis, J.,
concurring) (“The Court will not pass upon a constitutional question although
properly presented by the record, if there is also present some other ground upon
which the case may be disposed of.”).
6
Employee Retirement Income Security Act of 1974 § 502(a), 29 U.S.C.
§ 1132(a) (2004).
7
Id. § 514(a), 29 U.S.C. § 1144(a).
8
Id. § 514(b)(1)(A), 29 U.S.C. § 1144(b)(1)(A).
9
Provident Life & Accident Ins. Co. v. Sharpless, 364 F.3d 634, 640 (5th
Cir. 2004); Frank v. Delta Airlines, Inc., 314 F.3d 195, 197 (5th Cir. 2002).
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A
Attempting to displace the preemption issue, the Hospitals
contend that there is no conflict between Blue Cross’s ERISA plans
and the assignment statute because the plan prohibits assignments
“except as required by law.” The Hospitals contend that this
language modifies the express plan terms to require compliance with
Louisiana’s assignment statute. Blue Cross argues that this
provision is trumped by a subsequent provision of the policy, which
states that the plan is governed by Louisiana law “except when
preempted by federal law.” The district court agreed with the
Hospitals, concluding that Blue Cross’s policy provisions are
“automatically amended . . . to conform to the requirements” of the
assignment statute.10
We disagree. Neither policy provision displaces the
preemption analysis in this case. ERISA plans must always conform
to state law, but only state law that is valid and not preempted by
ERISA. The presence of the phrase “except as preempted by law”
serves no additional purpose, as all state laws are potentially
subject to ERISA’s preemptive force. The two provisions do not
forestall determination of the preemption question. To that, we
now turn.
B
10
La. Health Svc. & Indem. Co., 213 F.Supp.2d at 657.
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Article VI’s Supremacy Clause may entail preemption of state
law in any of three ways: by express provision, by implication, or
by a conflict between state and federal law.11 Blue Cross advances
two separate preemption arguments: first, Blue Cross contends that
Louisiana’s assignment statute conflicts with ERISA’s exclusive
enforcement scheme; second, Blue Cross contends that the assignment
statute is expressly preempted as it is a law that “relate[s] to”
employee benefit plans. Neither argument persuades.
1
Under general principles of conflict preemption, a law is
preempted “to the extent that it actually conflicts with federal
law,”12 that is, when it is impossible to comply with both state and
federal law.13 Further, a state law is conflict preempted when it
“stands as an obstacle to the accomplishment and execution of the
full purposes and objectives of Congress.”14
In Aetna Health Inc. v. Davila, the Supreme Court reaffirmed
that “any state-law cause of action that duplicates, supplements,
or supplants the ERISA civil enforcement remedy conflicts with the
clear congressional intent to make the ERISA remedy exclusive and
11
See Pac. Gas & Elec. Co v. State Energy Res. Conservation & Dev. Comm’n,
461 U.S. 190, 203-04 (1983); Rice, 331 U.S. 230.
12
English v. Gen. Elec. Co., 496 U.S. 72, 79 (1990).
13
Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248 (1984); Florida Lime &
Avocado Growers, Inc. V. Paul, 343 U.S. 142-43 (1963).
14
Hines v. Davidowitz, 312 U.S. 52, 67 (1941); Pac. Gas & Elec. Co., 461
U.S. at 203-04.
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is therefore pre-empted.”15 Davila involved a Texas statute that
created a cause of action for any person injured by a plan
administrator’s failure to exercise ordinary care in the handling
of coverage decisions. Recognizing ERISA’s “‘comprehensive
legislative scheme’” and “‘integrated system of procedures for
enforcement,’”16 the Court stated that ERISA’s enforcement
provision, § 502(a), was “essential to accomplish[ing] Congress’
purpose of creating a comprehensive statute for the regulation of
employee benefit plans.”17 As ERISA § 502(a)(1)(B) already provided
a cause of action for a plan participant to recover wrongfully
denied benefits,18 the alleged injuries covered by the Texas statute
were duplicative and, thus, preempted.19
15
542 U.S. 200, 209; see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41,
54-56 (1987); Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143-45 (1990).
16
Davila, 542 U.S. at 208 (quoting Massachusetts Mut. Life Ins. Co. v.
Russell, 473 U.S. 134, 147 (1985) (internal quotation marks and citation
omitted)).
17
Davila, 542 U.S. at 208; 29 U.S.C. § 1132(a).
18
ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (“A civil action may be
brought––(1) by a participant or beneficiary . . . (B) to recover benefits due
to him under the terms of his plan, to enforce his rights under the terms of the
plan, or to clarify his rights to future benefits under the terms of the plan.”).
19
Davila, 542 U.S. at 214. At the district court, Blue Cross also relied
on the Third Circuit’s decision in Barber v. UNUM Life Insurance Co. Of Am.,
which considered a Pennsylvania statute providing punitive damages for the bad
faith denial of insurance claims. 383 F.3d 134, 136 (3d Cir. 2004). That court,
relying on Davila, concluded that the statute created a conflict with ERISA’s
exclusive enforcement scheme. Id. at 141. For the same reasons Davila is not
controlling, Barber is not persuasive. See also Cicio v. John Does 1-8, 385 F.3d
156 (2d Cir. 2004) (finding a state law malpractice claim preempted by ERISA
because it would provide consequential and punitive damages in connection with
a benefits claim); Land v. CIGNA Healthcare of Fla., 381 F.3d 1274 (11th Cir.
2004) (state law medical malpractice claim preempted).
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Blue Cross contends that Davila is controlling because the
assignment statute provides a “separate vehicle” for asserting
benefits claims, creating a remedy that “duplicates, supplements,
or supplants” ERISA’s exclusive enforcement scheme. According to
Blue Cross, the assignment statute gives hospitals, to which
benefits have been assigned in contravention of the plan’s express
terms, a state-law cause of action against the ERISA plan to
collect the assigned benefits. Further, Blue Cross contends the
statute creates a supplemental remedy, as it provides that any
payment to the participant, in accordance with plan terms, does not
release the plan from liability to the hospital. To Blue Cross,
the statute authorizes double recovery against the ERISA plan.
Louisiana’s assignment statute is readily distinguishable from
the Texas law providing a negligence cause of action for the denial
of benefits. First, unlike the enforcement provisions at issue in
Davila, ERISA is silent on the assignability of employee welfare
benefits; it neither prohibits assignments nor mandates recognition
of assignments.20 The Texas statute at issue in Davila was
preempted, in large part, because of the specific enforcement
20
Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289 (5th Cir.
1988) (“Hermann I”) (“ERISA contains no anti-assignment provision with regard to
health care benefits of ERISA-governed medical plans, nor is there any language
in the statute which even remotely suggests that such assignments are proscribed
or ought in any way to be limited.”); cf. ERISA § 206(d)(1), 29 U.S.C. §
1056(d)(1) (providing, with certain exceptions, that “[e]ach pension plan shall
provide that benefits provided under the plan may not be assigned or alienated”).
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provisions provided by Congress.21 Second, the assignment statute
does not create an additional means to enforce payment of benefits
under an ERISA plan. The Texas statute at issue in Davila, in
contrast, imposed a “duty” on any health maintenance organization
“to exercise ordinary care when making health care treatment
decisions” and imposed liability for any damages proximately caused
by a failure to exercise ordinary care.22 The assignment of
benefits from the patient to the hospital results solely in the
transfer of the cause of action provided by § 502(a) from the
patient to the hospital. The assignee takes what the assignor had;
no more, no less.23 The assignment statute merely passes the sole
21
Davila, 542 U.S. at 208-09. As the Court noted in Pilot Life,
[T]he detailed provisions of § 502(a) set forth a comprehensive
civil enforcement scheme that represents a careful balancing of the
need for prompt and fair claims settlement procedures against the
public interest in encouraging the formation of employee benefit
plans. The policy choices reflected in the inclusion of certain
remedies and the exclusion of others under the federal scheme would
be completely undermined if ERISA-plan participants and
beneficiaries were free to obtain remedies under state law that
Congress rejected in ERISA.
Pilot Life Ins., 481 U.S. at 54; see also Russell, 473 U.S. at 146 (“The six
carefully integrated civil enforcement provisions found in § 502(a) . . . provide
strong evidence that Congress did not intend to authorize other remedies that it
simply forgot to incorporate expressly.”).
22
See TEX. CIV. PRAC. & REM. CODE ANN. § 88.002(a) (Vernon 2004) (“A health
insurance carrier, health maintenance organization, or other managed care entity
for a health care plan has the duty to exercise ordinary care when making health
care treatment decisions and is liable for damages for harm to an insured or
enrollee proximately caused by its failure to exercise ordinary care.”). After
Davila, the Texas legislature clarified that § 88.002(a) did not apply to
employee benefit plans regulated by ERISA. See id. § 88.015.
23
Tango Transport v. Healthcare Fin. Servs., 322 F.3d 888, 894 (5th Cir.
2003); Hermann Hosp. v. MEBA Med. and Benefits Plan, 959 F.2d 569, 572 (5th Cir.
1992) (“Hermann II”).
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enforcement mechanism––ERISA § 502––from patient to hospital; it
does not impose any additional obligation on the ERISA plan
administrator, nor does it create additional or separate means of
enforcement.24
In addition, Blue Cross argues that the assignment statute
authorizes a “double recovery” of employee welfare benefits.
According to Blue Cross, it must pay benefits to a patient, in
conformance with the express terms of the plan, but that such
payment will not discharge liability to a provider that has been
assigned the patient’s benefits claim. This argument is similarly
without merit. Blue Cross’s obligation to pay the provider only
arises if Blue Cross has notice of the assignment.25 If Blue Cross
complies with the assignment, then it only pays one time; if Blue
Cross ignores the assignment, then it risks paying a claim twice.
Failure to follow the law cannot create preemption concerns.
Should Blue Cross pay a patient after receiving notice that the
patient assigned her benefits claim to a hospital, Blue Cross can
seek recovery from the person improperly paid (here, the patient),26
and Blue Cross recognizes the availability of this remedy in its
plan terms, as it reserves the right to recover improper payments.
24
See Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379 (2002)
(recognizing that “a state regulatory scheme that provides no new cause of action
under state law and authorizes no new form of ultimate relief” is not preempted).
25
See LA. REV. STAT. ANN. § 40:2010.
26
See Bombardier Aerospace Emp. Wel. Benef. Plan v. Ferrer, Poirot and
Wansbrough, 354 F.3d 348, 356-58 (5th Cir. 2003).
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We conclude that Louisiana’s assignment statute is not in
conflict with the exclusive enforcement mechanism provided by
ERISA. We now turn to Blue Cross’s contention that the statute is
preempted as a law that “relate[s] to” employee benefit plans.
2
Congress expressly provides that ERISA “shall supersede any
and all State laws insofar as they now or hereafter relate to” any
employee benefit plan.27 Our task is to determine whether the
assignment statute “relate[s] to” employee benefit plans. The
“unhelpful text” of ERISA’s preemption provision neither directs,
nor informs, our inquiry;28 rather, we gain insight solely from the
Supreme Court’s application of the provision to particular state
statutes.
The Supreme Court directs that a law “relates to” an employee
benefit plan if “it has a connection with or reference to such a
plan.”29 A state law “refers” to an ERISA plan if it acts
“immediately and exclusively upon ERISA plans”30 or if “the
27
ERISA § 514(a), 29 U.S.C. § 1144(a).
28
New York State Conference of Blue Cross & Blue Shield Plans v. Travelers
Ins. Co., 514 U.S. 645, 654 (1995).
29
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983).
30
Cal. Div. of Labor Enforcement v. Dillingham Constr., 519 U.S. 316, 324-
25 (1997) (referencing Mackey v. Lanier Collection Agency & Svc., Inc., 486 U.S.
825, 828-30 (1988), in which the Court held that ERISA preempted a state statute
that expressly prohibited garnishment of employee welfare plan benefits).
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existence of an ERISA plan is essential to the law’s operation.”31
A law does not refer to an ERISA plan if it applies neutrally to
ERISA plans and other types of plans.32 The “reference to” prong
is inapplicable here, as the assignment statute operates without
regard to the existence of ERISA plans and does not immediately and
exclusively act on such plans: it applies to insurance companies,
employee benefit trusts, self-insurance plans, and other entities
that are obligated to reimburse individuals for the charges
incurred for hospital services.33 Thus, the assignment statute is
preempted only if it has a “connection with” ERISA plans.
We discern no precise formula for calculating whether a state
law has an impermissible connection with an employee benefit plan.
The Supreme Court broadly instructs us to look at the objectives of
ERISA and the nature and effect of the state law on ERISA plans.34
In cases like this one, in which Blue Cross contends that federal
31
Dillingham, 519 U.S. at 324-25 (referencing District of Columbia v.
Greater Wash. Bd. of Trade, 506 U.S. 125, 130 (1992), in which the Court held
that ERISA preempted a state statute that applied only to employers who provided
health insurance coverage, and Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139
(1990), in which the Court held that ERISA preempted a common-law cause of action
premised on the existence of an ERISA plan).
32
Dillingham, 519 U.S. at 325-28 (refusing to hold that a state statute
pertaining to approved apprenticeship programs “referred to” ERISA plans because
not all such programs were ERISA plans); see also Corporation Health Ins. v. Tx.
Dep’t of Ins., 215 F.3d 526, 535 (5th Cir. 2000), op. modified, 314 F.3d 784 (5th
Cir. 2002).
33
See LA. REV. STAT. ANN. § 40:2010; cf. Mackey, 486 U.S. at 829 (holding that
a Georgia garnishment statute that solely applied to ERISA employee benefit plans
was preempted).
34
Dillingham, 519 U.S. at 325 (quoting Travelers, 514 U.S. at 656).
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law bars state action in a field of traditional state regulation,35
we start with the assumption that “the historic police powers of
the States were not to be superseded by [ERISA] unless that was the
clear and manifest purpose of Congress.”36 Preemption will not
occur if a state law has only a “tenuous, remote, or peripheral”
connection with covered employee benefit plans.37
Both parties agree that ERISA is silent on the assignability
of employee welfare benefits. As is often the case, congressional
silence whispers sweet nothings in the ears of both parties. Blue
Cross contends that silence implies that Congress intended to leave
the assignment of employee welfare benefits to the free
negotiations of the contracting parties; the Hospitals, in
contrast, contend that silence speaks and it says that Congress did
not intend to preclude statutes mandating enforcement of
assignments, especially when considered in light of the express
prohibition on the assignment of pension benefits.38 Congressional
35
See, e.g., DeBuono v. NYSA-ILA Med. & Clinical Svcs., 520 U.S. 806, 814
(1997) (noting that “the historic police powers of the State include the
regulation of matters of health and safety” (citing Hillsborough County v.
Automated Med. Laboratories, Inc., 471 U.S. 707, 715 (1985)).
36
Travelers, 514 U.S. at 655; Dillingham, 519 U.S. at 325; Rice, 331 U.S.
at 230.
37
Greater Wash. Bd. of Trade, 506 U.S. at 130.
38
See ERISA § 206(d)(1), 29 U.S.C. § 1056(d)(1); cf. Mackey v. Lanier
Collection Agency & Serv., 486 U.S. 825, 829 (1988) (concluding that a general
state garnishment statute’s application to employee welfare benefits was not
preempted by ERISA because ERISA was silent about enforcement mechanisms for
money judgments whereas ERISA explicitly prohibited assignment of pension
benefits).
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silence cannot dictate our conclusion in this case, but we consider
what Congress did in order to determine what Congress intended to
preclude the states from doing.
Likewise, both parties direct our attention to our prior
precedent concerning assignment of benefits. We have held that an
assignee has derivative standing to enforce claims under ERISA
§ 502, thus permitting assignments when not precluded by the plan
terms.39 We have also held that, absent a statute to the contrary,
an anti-assignment provision in a plan is permissible under ERISA.40
None of this resolves the question in this case––namely, whether
Louisiana’s assignment statute is preempted under ERISA § 514 as a
state law that “relate[s] to” employee welfare benefits.
Blue Cross relies primarily on the Supreme Court’s decision in
Egelhoff v. Egelhoff,41 which concerned a Washington statute that
revoked by operation of law the designation of a spouse as the
beneficiary of all nonprobate assets, including ERISA plan
39
See Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289 &
n.13 (5th Cir. 1988).
40
See LeTourneau Lifelike Orthotics & Prosthetics, Inc., 298 F.3d 348, 352
(5th Cir. 2002) (holding that anti-assignment provisions are not per se invalid
as applied to health care providers); see also Physicians Multispecialty Group
v. The Health Care Plan of Horton Homes, Inc., 371 F.3d 1291, 1295-96 (11th Cir.
2004); City of Hope Nat’l Med. Ctr. v. Healthplus, Inc., 156 F.3d 223, 229 (1st
Cir. 1998); Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1480-81
(9th Cir. 1991).
41
532 U.S. 141 (2001).
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benefits, upon dissolution of marriage.42 The Court found fault
with two aspects of the Washington statute. First, the statute
bound ERISA plan administrators “to a particular choice of rules
for determining beneficiary status.”43 To the Court, the statute
forced administrators to pay benefits to beneficiaries chosen by
state law, rather than those specified in the plan documents. This
conflicted with ERISA’s requirements that fiduciaries administer
plans “in accordance with the documents and instruments governing
the plan”44 and that fiduciaries make payments to beneficiaries
“designated by a participant or by the terms of [the] plan.”45
Second, the Court found the Washington statute interfered with
one of the “primary” goals of ERISA: establishing a uniform
administrative scheme with a set of standard procedures to guide
processing of claims and disbursement of benefits.46 The existence
of the Washington statute required plan administrators to look
beyond the plan documents to the effects of state law before making
payments to beneficiaries. Exacerbated by various choice-of-law
problems, the statute’s burden on plan administrators was not
42
See WASH. REV. CODE § 11.07.010(2)(a) (1994) (“If a marriage is dissolved
or invalidated, a provision made prior to that event that relates to the payment
or transfer at death of the decedent’s interest in a nonprobate asset in favor
of or granting an interest or power to the decedent’s former spouse is
revoked.”).
43
Egelhoff, 532 U.S. at 147.
44
Id. (citing ERISA § 402(b)(4), 29 U.S.C. § 1102(b)(4)).
45
Id. (citing ERISA § 3(8), 29 U.S.C. § 1002(8)).
46
Id.; Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9 (1987).
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militated by provisions protecting administrators from liability
unless they had actual knowledge of the dissolution of marriage and
permitting administrators to refuse payment until resolving who was
a proper beneficiary.47
Blue Cross finds both faults in the assignment statute.
First, Blue Cross contends Egelhoff is controlling because
Louisiana’s assignment statute binds ERISA plans to a set of rules
that govern to whom benefits must be paid in contravention of the
plan documents. We disagree. The Washington statute operated as
a matter of law, invalidating a plan’s designation of beneficiary
upon dissolution of marriage. Louisiana’s assignment statute, in
contrast, requires an affirmative act by the plan participant; it
enforces the free will of the plan participant, which is consistent
with ERISA’s choice of beneficiary. As recognized by the Court in
Egelhoff, ERISA directs that administrators must pay beneficiaries
who are “designated by a participant or by the terms of [the]
plan.”48 The Washington statute imposed a third alternative,
requiring payment to beneficiaries designated “by operation of
law.” Louisiana’s assignment statute, in contrast, is consistent
with the express terms of ERISA––leaving the beneficiary
determination to either the person designated by the participant or
the person designated by the plan.
47
Egelhoff, 532 U.S. at 148-50.
48
Id. at 147 (citing ERISA § 3(8), 29 U.S.C. § 1002(8)).
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We also disagree with Blue Cross’s contention that application
of the assignment statute will impermissibly interfere with
nationally uniform plan administration. To be sure, ERISA was
enacted, in large measure, “to establish a uniform administrative
scheme” with “a set of standard procedures to guide processing
claims and disbursement of benefits.”49 However, a statute’s impact
on nationally uniform plan administration must be evaluated in
light of the particular burden the statute imposes on plan
administration. The greater the impact, the greater the burden.
As the Court recognized in Egelhoff, “all state laws create some
potential for lack of uniformity.”50
Here, the burden on plan administrators is minimal, especially
given that Louisiana requires all insurance claims to be submitted
on a uniform claim form that includes space for indicating whether
benefits have been assigned.51 Further, the assignment statute will
not create any additional paperwork for Blue Cross and, in fact, it
may lesson Blue Cross’s administrative responsibilities. With or
without assignment, Blue Cross will pay benefits only one time, and
49
Fort Halifax Packing Co., 482 U.S. at 9; see also Davila, 542 U.S. at 208
(“The purpose of ERISA is to provide a uniform regulatory regime over employee
benefit plans.”); Ingersoll-Rand, 498 U.S. at 142-45; Metropolitan Life Ins. Co.
V. Taylor, 481 U.S. 58, 64-66 (1987).
50
Egelhoff, 532 U.S. at 150; see also Rush Prudential HMO, Inc. v. Moran,
536 U.S. 355, 365 (recognizing that “it was beyond dispute” that a state statute
that required all insured benefit plans “to submit to an extra layer of review
for certain benefit denials” had a substantial effect on ERISA plans).
51
See LA. REV. STAT. ANN. § 22:213(A)(14) (“Notwithstanding any other law to
the contrary, including Paragraph (4) of this Subsection, all claims shall be
processed in conformity with the uniform claim form issued by the [DOI].”).
-19-
payment is triggered upon submission of a claim form. To Blue
Cross, it should not matter whether that claim form comes from the
plan participant, as provided in the plan documents, or from the
hospital, as assignee of the participant’s benefits claim.
Further, as pointed out by amicus curiae, most hospitals file
claims with insurance companies electronically, which mitigates the
administrative burden. The burden seems greater when many
individuals plan participants must each individually file claims
with Blue Cross, especially given the intricacies of coverages,
deductibles, and retentions of most health care plans. By
consolidating many different individual claims, hospitals can
channel expertise in the benefits process. Tellingly, Blue Cross
concedes that it must honor assignments made under non-ERISA plans,
which suggests that it already has in place some administrative
mechanism for complying with the statute. Taken together, the
burden imposed by the assignment statute, especially given its
consistency with ERISA § 3(8), is minimal, militating concerns over
the statute’s effect on nationally uniform plan administration.
We acknowledge that both the Eighth and Tenth Circuits have
concluded that ERISA preempts similar assignment statutes.52 After
review of those decisions, as well as intervening Supreme Court
52
See Ar. Blue Cross & Blue Shield v. St. Mary’s Hosp., Inc., 947 F.2d 1341
(8th Cir. 1991); St. Francis Reg’l Med. Ctr. v. Blue Cross & Blue Shield of Ks.,
Inc., 49 F.3d 1460 (10th Cir. 1995).
-20-
precedent, we are convinced that Louisiana’s assignment statute
does not have the impermissible connection with ERISA plans.
Both the Eighth and Tenth Circuits interpreted ERISA’s silence
on the assignability of benefits claims as leaving the issue to the
free negotiation and agreement of the parties.53 As we have already
noted, congressional silence points in both directions: either
leaving assignment of employee welfare benefits to the parties or
leaving room for state regulation, should a state desire to
intervene. In Mackey v. Lanier Collection Agency & Service, the
Supreme Court interpreted congressional silence as to the
garnishment of employee welfare benefits not to preempt application
of a general garnishment statute to employee welfare benefits,
especially in light of an express prohibition on the garnishment of
employee pension benefits.54 Likewise, ERISA specifically precludes
assignment of pension plan benefits.55 As such, “there is no
ignoring the fact that, when Congress was adopting ERISA, it had
before it a provision to bar the [assignment of ERISA plan
benefits], and chose to impose that limitation only with respect to
53
St. Mary’s Hosp., 947 F.2d at 1349 (“[I]f Congress intended that ERISA
participants could negotiate plan provisions governing the right to assign
welfare benefits, it is more likely that Congress would say nothing at all about
welfare benefit assignment.”); St. Francis, 49 F.3d at 1464 (“We interpret ERISA
as leaving the assignability of benefits to the free negotiations and agreement
of the contracting parties.”).
54
486 U.S. 825, 836.
55
ERISA § 206(d)(1), 29 U.S.C. § 1056(d)(1).
-21-
ERISA pension benefit plans, and not ERISA welfare benefit plans.”56
Moreover, both the Eighth and Tenth Circuits decided the
preemption question prior to the Supreme Court’s rejection,
starting in Travelers, of an “uncritical literalism” in the
application of ERISA’s “unhelpful text.”57 As we have previously
noted, the Supreme Court has returned “to a traditional analysis of
preemption, asking if a state regulation frustrated the federal
interest in uniformity.”58 Neither the Eighth nor Tenth Circuits
operated with the starting assumption that Congress did not
intended to preempt state law in an area of traditional state
regulation.59
Finally, both parties offer differing accounts of what is
“best” in the public’s interest. The Hospitals, with support from
the State of Louisiana and amicus curiae AARP and the Louisiana
Hospital Association, argue that the assignment statute facilitates
56
Mackey, 486 U.S. at 837.
57
514 U.S. 645, 656 (1995); see also Cal. Div. Of Labor Enforcement v.
Dillingham Constr., 519 U.S. 316 (1997); DeBuono v. NYSA-ILA Med. & Clinical
Servs. Fund, 520 U.S. 806 (1997); Boggs v. Boggs, 520 U.S. 833 (1997) (applying
traditional preemption analysis in concluding state testamentary laws were
preempted as applied to an ERISA pension fund).
58
Corp. Health Ins., Inc. v. Tx. Dep’t of Ins., 215 F.3d 526, 533 (5th Cir.
2000), op. mod. and reinstated, 314 F.3d 784 (5th Cir. 2002). This view is in
accord with that of other circuits. See Wright Elec. v. Mn. State Bd. of Elec.,
322 F.3d 1025, 1029 (8th Cir. 2003) (collecting cases).
59
St. Mary’s Hosp., 947 F.2d at 1350 (“We reject St. Mary’s argument that
preemption is not appropriate because the assignment statute is an exercise of
traditional state power. . . . Although the Supreme Court has not discussed the
relevance of this factor, its failure to consider this criterion when deciding
ERISA preemption cases is telling.” (citing FMC Corp. v. Holliday, 498 U.S. 52
(1990), and Mackey, 486 U.S. 825 (1988)); St. Francis, 49 F.3d at 1464 (relying
largely on the Eighth Circuit’s decision in St. Mary’s Hospital).
-22-
delivery of medical treatment to patients, especially low-income
patients. To Blue Cross, the assignment statute deprives Blue
Cross of a significant carrot––the availability of direct payments.
Although recognizing that consumers benefit when Blue Cross pays
hospitals directly, Blue Cross uses the availability of direct
payments as an important incentive for hospitals to join its
provider networks, which requires reduced rates for medical care.
Neither policy choice is absurd, but the preemption inquiry is
not resolved by or concerned with arguments of policy. We operate
between two conflicting principles: On the one hand, Congress
passed ERISA, a comprehensive statute with a “clearly expansive”
preemption provision.60 On the other hand, the Supreme Court
requires our analysis to start with the assumption that ERISA was
not intended to derogate the historic police powers of the states.61
The second assumption does not eliminate the first, but we walk a
fine line between permissible and impermissible state regulation in
this context. As we conclude that Louisiana’s assignment statute
is not preempted by ERISA, we leave the public policy decision to
Louisiana’s legislative body. They have chosen assignment of
benefit claims over inducing hospitals to enter into Blue Cross’s
60
See Cal. Div. Of Labor Standards Enforcement v. Dillingham Constr., 519
U.S. 316, 324 (1997) (collecting various descriptions of ERISA’s preemption
provision).
61
N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins.
Co., 514 U.S. 645, 654-55 (1995).
-23-
provider networks. Nothing in ERISA requires us to alter that
choice.
C
As we conclude that Louisiana’s assignment statute is not
preempted by ERISA, we need not consider whether the statute is
saved from preemption as a law regulating insurance.62
III
Accordingly, the district court’s judgment is AFFIRMED.
62
ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A) (“Except as provided in
subparagraph (B), 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.”).
-24-
OWEN, Circuit Judge, concurring:
I concur in the judgment. We need not resolve whether section
40:2010 of the Louisiana Revised Statutes “relates to” an employee
benefit plan within the meaning of 29 U.S.C. § 1144(a)1 and the
Supreme Court’s decisions interpreting and applying that provision.
Section 40:2010 is saved from preemption under 29 U.S.C.
§ 1144(b)(2)(A) as a law that “regulates insurance.”2 Section
40:2010’s application to the ERISA benefit plans at issue is
accordingly not preempted.
I
Louisiana Health Service & Indemnity Co., doing business as
Blue Cross and Blue Shield of Louisiana, insures and administers
employee benefit plans that are subject to ERISA. In providing and
administering health care benefits, Blue Cross has contracted with
hospitals, physicians and others, whom it calls Participating
Providers, and agreed to provide direct payment for services
1
That section states:
Except as provided in subsection (b) of this section, 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 described in section
1003(a) of this title and not exempt under section 1003(b) of this
title. This section shall take effect on January 1, 1975.
29 U.S.C. § 1144(a).
Id. § 1144(b)(2)(A) (“Except as provided in subparagraph
2
(B), 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.”).
-25-
rendered to plan beneficiaries. If a plan beneficiary obtains the
services of a non-Participating Provider, Blue Cross will reimburse
the plan beneficiary but will not make direct payment to the non-
Participating Provider. The terms of the ERISA plans that Blue
Cross insures or administers are congruent with Blue Cross’s method
of doing business and provide that assignments by a plan
beneficiary to providers other than Participating Providers will
not be honored.
I agree with the panel majority that the ERISA plans Blue
Cross insures or administers contravene section 40:2010 of the
Louisiana Revised Statutes. Section 40:2010 requires insurers to
pay benefits directly to a hospital when the insurer has notice
that a beneficiary has assigned benefits to that hospital. Section
40:2010 provides:
Not later than ten business days after the date of discharge,
each hospital in the state which is licensed by the Department
of Health and Hospitals shall have available an itemized
statement of billed services for individuals who have received
the services from the hospital. The availability of the
statement shall be made known to each individual who receives
service from the hospital before the individual is discharged
from the hospital, and a duplicate copy of the billed services
statement shall be presented to each patient within the
specified ten day period. No insurance company, employee
benefit trust, self-insurance plan, or other entity which is
obligated to reimburse the individual or to pay for him or on
his behalf the charges for the services rendered by the
hospital shall pay those benefits to the individual when the
itemized statement submitted to such entity clearly indicates
that the individual’s rights to those benefits have been
assigned to the hospital. When any insurance company,
employee benefit trust, self-insurance plan, or other entity
has notice of such assignment prior to such payment, any
payment to the insured shall not release said entity from
liability to the hospital to which the benefits have been
-26-
assigned, nor shall such payment be a defense to any action by
the hospital against that entity to collect the assigned
benefits. However, an interim statement shall be provided
when requested by the patient or his authorized agent.3
Assuming, arguendo, that Blue Cross is correct in contending
that the directives in this statute regarding assignments of
benefits “relate to” an ERISA employee benefit plan, the Louisiana
statute is saved from preemption by the saving clause in 29 U.S.C.
§ 1144(b)(2)(A). That clause says: “Except as provided in
subparagraph (B), 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.”4 The Supreme Court
has held that through this saving clause, state laws may indirectly
regulate employee benefit plans that are insured.5 The Court has
explained, “an insurance company that insures a plan remains an
3
LA. REV. STAT. ANN. § 40:2010 (2001).
4
29 U.S.C. § 1144(b)(2)(A). Subparagraph B, referenced in this subsection,
is the so-called “deemer clause” and provides:
Neither an employee benefit plan described in section 1003(a) of
this title, which is not exempt under section 1003(b) of this title
(other than a plan established primarily for the purpose of
providing death benefits), 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
contracts, banks, trust companies, or investment companies.
Id. § 1144(b)(2)(B).
5
See FMC Corp. v. Holliday, 498 U.S. 52, 61 (1990) (holding “employee
benefit plans that are insured are subject to indirect state insurance
regulation”); Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747 (1985)
(recognizing “a distinction between insured and uninsured plans, leaving the
former open to indirect regulation while the latter are not”).
-27-
insurer for purposes of state laws ‘purporting to regulate
insurance,’” and an “ERISA plan is consequently bound by state
insurance regulations insofar as they apply to the plan’s
insurer.”6 Accordingly, even though the insured employee benefit
plans Blue Cross insures or administers7 may provide that
assignments will not be honored, those provisions must give way to
state law to the extent ERISA’s insurance saving clause applies.8
It is unnecessary to resolve whether the “deemer” clause, contained
in 29 U.S.C. § 1144(b)(2)(B), precludes the application of the
ERISA saving clause to self-funded ERISA benefit plans that Blue
Cross might administer but not insure because the State of
Louisiana concedes that it has not attempted to enforce section
40:2010 with regard to self-funded ERISA plans and Blue Cross does
not contend that it administers any self-funded plans to which the
State of Louisiana has sought to apply section 40:2010.9
6
FMC Corp., 498 U.S. at 61 (quoting 29 U.S.C. § 1144(b)(2)(B)).
7
See Ky. Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 336 n.1
(2003) (stating that administration by noninsuring HMO’s of even a self-insured
plan “suffices to bring them within the activity of insurance for purposes of
§ 1144(b)(2)(A)”).
8
See Unum Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 375-76 (1999)
(rejecting the argument that an ERISA plan’s terms always control, observing
“insurers could displace any state regulation simply by inserting a contrary term
in plan documents” which “would virtually ‘rea[d] the saving clause out of
ERISA’” (quoting Metro. Life, 471 U.S. at 741)).
9
See generally Ky. Ass’n, 538 U.S. at 336 n.1 (discussing the “deemer
clause” and the reach of the saving clause when an insurance company or HMO acts
only as an administrator of a self-insured ERISA plan); Rush Prudential HMO, Inc.
v. Moran, 536 U.S. 355, 372 n.6 (2002) (discussing the possibility that an HMO
may provide only administrative services for a self-funded plan and stating that
a state law “would not be ‘saved’ as an insurance law to the extent it applied
to self-funded plans”).
-28-
Blue Cross does contend, though, that LA. REV. STAT. ANN.
§ 40:2010 does not “regulate[] insurance” within the meaning of
ERISA’s insurance saving clause. The Supreme Court’s decision in
Kentucky Association of Health Plans, Inc. v. Miller10 provides
considerable guidance in resolving this question. The Court
announced it was “mak[ing] a clean break from the [three] McCarran-
Ferguson factors” it had referenced in prior opinions and held
“that for a state law to be deemed a ‘law . . . which regulates
insurance’ under § 1144(b)(2)A), it must satisfy two
requirements.”11 Those are 1) “the state law must be specifically
directed toward entities engaged in insurance” and 2) “the state
law must substantially affect the risk pooling arrangement between
the insurer and the insured.”12
With regard to the first requirement, Kentucky Association
explained that “laws of general application that have some bearing
on insurers do not qualify” as a state law “‘specifically directed
toward’ the insurance industry,”13 and “not all state laws
‘specifically directed toward’ the insurance industry will be
10
538 U.S. 329 (2003).
11
Id. at 341-42.
12
Id. at 342.
13
Id. at 334 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 50
(1987)).
-29-
covered by § 1144(b)(2)(A).”14 “[I]nsurers must be regulated ‘with
respect to their insurance practices.’”15
At issue in Kentucky Association was a state statute that
prohibited health insurers from discriminating against any provider
located within the geographic coverage area of a health benefit
plan and willing to meet the terms and conditions for participation
established by that insurer and a corollary statute that directed
that any chiropractor who agreed to the terms, conditions and rates
of a health care benefit plan must be permitted to serve as a
participating primary chiropractic provider.16 The Supreme Court
held that the ERISA saving clause saved these “any-willing-
provider” statutes from preemption. The Court reasoned that the
statutes “‘regulate[d]’ insurance by imposing conditions on the
right to engage in the business of insurance.”17
With regard to the second requirement for application of the
insurance saving clause, the Court concluded that the statutes at
issue in Kentucky Association “substantially affect[ed] the risk
pooling arrangement between [the] insurer and [the] insured”
because “[b]y expanding the number of providers from whom an
insured may receive health services, [any-willing-provider] laws
14
Id.
15
Id. (quoting Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 366
(2002)).
16
Id. at 331-32.
17
Id. at 338.
-30-
alter the scope of permissible bargains between insurers and
insureds.”18 The Court likened the any-willing-provider laws’
impact to that of “mandated-benefit laws [it] upheld in
Metropolitan Life, the notice-prejudice rule [it] sustained in
Unum, and the independent-review provisions [it] approved in Rush
Prudential.”19
The Louisiana statute before us is directed toward entities
that engage in insurance–“[any] insurance company, employee benefit
trust, self-insurance plan, or other entity which is obligated to
reimburse the individual or to pay for him or on his behalf the
charges for the services rendered by the hospital.”20 The statute’s
inclusion of “self-insured plans” does not preclude it from
qualifying as a law that “regulates insurance.”21 Even benefit
plans that are self-funded “engage in the same sort of risk pooling
arrangements as separate entities that provide insurance to an
employee benefit plan,” and in the absence of § 1144(b)(2)(B) (the
“deemer clause”), self-funded plans could be regulated by states
under the insurance saving clause.22 The Supreme Court has said,
18
Id. at 338-39.
19
Id. at 339 (referring to Metro. Life Ins. Co. v. Massachusetts, 471 U.S.
724 (1985), Unum Life Ins. Co. of Am. v. Ward, 526 U.S. 358 (1999), and Rush
Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002)).
20
LA. REV. STAT. ANN. § 40:2010.
21
See Ky. Ass’n, 538 U.S. at 336 n.1 (discussing the interplay between the
insurance saving clause in 29 U.S.C. § 1144(b)(2)(A) and the deemer clause in 29
U.S.C. § 1144(b)(2)(B)).
22
Id.
-31-
“We do not think [a state law’s] application to self-insured non-
ERISA plans forfeits its status as a ‘law . . . which regulates
insurance’ under 29 U.S.C. § 1144(b)(2)(A).”23 Likewise, nothing
in the text of LA. REV. STAT. ANN. § 40:2010 regarding assignments
indicates that the term “other entity which is obligated to
reimburse the individual or to pay for him or on his behalf the
charges for the services rendered” means anything other than an
entity that is engaging is some sort of risk pool arrangement to
provide benefits.
The fact that the Louisiana law requiring insurers to honor
assignments of benefits to hospitals appears in a statute that also
requires hospitals to provide an itemized bill to patients within
ten days is of no moment. The provisions that are directed at
insurance companies are not directed at hospitals, and mere
inclusion of those provisions with other separable regulations does
not preclude the provisions aimed at insurers from qualifying as
laws “regulat[ing] insurance” under ERISA’s insurance saving
clause. Nor is it of any significance that section 40:2010 is not
within Louisiana’s insurance code. The State of Louisiana has,
through section 40:2010, directly regulated insurance by imposing
23
Id.; see also Rush Prudential, 536 U.S. at 372 (observing that because
the “deemer clause” provides an exception to the saving clause, a state law would
not be saved under 29 U.S.C. § 1144(2)(b)(A) to the extent is applied to self-
funded plans, but nevertheless, “there is no reason to think Congress would have
meant such minimal application to noninsurers to remove a state law entirely from
the category of insurance regulation”).
-32-
conditions on the right to engage in the business of insurance in
that State.24
The Louisiana statute before us satisfies the second
requirement identified in Kentucky Association as well. Section
40:2010 substantially affects the risk pooling arrangement between
the insurer and the insured in much the same way as the state law
at issue in Kentucky Association. With regard to the any-willing-
provider statutes at issue in Kentucky Association, the Supreme
Court held that those statutes altered the scope of permissible
bargains between insurers and insured and observed that Kentucky
insureds could “[n]o longer . . . seek insurance from a closed
network of health-care providers in exchange for a lower premium.”25
Section 40:2010 similarly alters the scope of permissible bargains
between insurers and insureds by prohibiting anti-assignment
agreements. There is evidence in the record before us that some
Louisiana hospitals who were not Participating Providers refused to
accept Blue Cross beneficiaries as patients because Blue Cross
would not honor patients’ assignments of benefits, and Blue Cross
would not pay non-Participating Providers directly. Section
40:2010 expands insureds’ access to hospitals by removing this
24
See Ky. Ass’n, 538 U.S. at 337-38 (concluding that the any-willing-
provider statute at issue regulated insurance and likening the statute to a state
law requiring all licensed attorneys to participate in ten hours of continuing
legal education, which, the Court said, would be a statute regulating the
practice of law).
25
Id. at 339.
-33-
obstacle to treatment. Blue Cross must treat all hospitals equally
with regard to assignments of benefits. Section 40:2010 also has
the effect of requiring insurers like Blue Cross to make allowance
for instances in which they erroneously pay a beneficiary directly
because payment to the beneficiary is not a defense to the
insurer’s obligation to pay the provider.26 Although Blue Cross
might seek to recover an erroneous payment from a beneficiary, some
beneficiaries will not have the means, or will refuse, to repay.
The unrecoverable costs associated with pursuing beneficiaries paid
in error must additionally be taken into account. These
considerations have the effect of increasing premiums and spreading
the risk of erroneous payments among policyholders.
Section 40:2010 of the Louisiana Revised Statutes is also
similar to the statute at issue in FMC Corp. v. Holliday, which
prohibited insurers from exercising subrogation rights against an
insured’s tort recovery.27 The Supreme Court concluded that the
anti-subrogation statute would be saved from preemption to the
extent that it applied to insured ERISA employee benefit plans, but
the statute was preempted to the extent it applied to self-insured
plans.28
26
See LA. REV. STAT. ANN. § 40:2010 (2001).
27
498 U.S. 52, 55 n.1 (1990).
28
Id. at 61 (holding that the state statute “returns the matter of
subrogation to state law . . . [u]nless the statute is excluded from the reach
of the saving clause by virtue of the deemer clause”).
-34-
I would hold that ERISA’s insurance saving clause applies to
LA. REV. STAT. ANN. § 40:2010. The only remaining question is
whether section 40:2010 conflicts with ERISA’s civil enforcement
scheme.
II
Blue Cross contends that section 40:2010 creates a remedy in
addition to those set forth in ERISA. That remedy, Blue Cross
contends, is the right to obtain a “double payment” in instances in
which Blue Cross has notice of an assignment and pays the
beneficiary instead of the hospital to whom the benefits have been
assigned. The Supreme Court held in Aetna Health Inc. v. Davila
that “even a state law that can arguably be characterized as
‘regulating insurance’ will be preempted if it provides a separate
vehicle to assert a claim for benefits outside of, or in addition
to, ERISA’s remedial scheme.”29
ERISA’s remedial scheme is set forth in 29 U.S.C. § 1132.
That section authorizes a participant or beneficiary “to recover
benefits due to him under the terms of his plan, to enforce his
rights under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.”30 This section
29
542 U.S. 200, 217-18 (2004).
30
29 U.S.C. § 1132(a)(1)(B).
-35-
“clearly contemplates” that a money judgment may be obtained
against benefit plans.31
Nothing in ERISA prevents a participant or beneficiary from
assigning his or her rights to welfare benefits, which include
health care benefits. Notably, ERISA affirmatively prohibits
assignment of pension benefits.32 This distinction led the Supreme
Court to conclude that “Congress’ decision to remain silent
concerning the attachment or garnishment of ERISA welfare plan
benefits ‘acknowledged and accepted the practice, rather than
prohibiting it.’”33 This Circuit has held that assignees of welfare
plan benefits have standing to enforce plan benefits under ERISA.34
An assignment of a plan beneficiary’s right to receive welfare
benefits does nothing more than transfer the right to be paid to
the assignee. It does not create new rights outside of ERISA.
Blue Cross argues that barring payment to a beneficiary as a
defense and requiring payment to an assignee even if payment has
been made to the beneficiary creates a new right outside of ERISA’s
31
Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 832-33
& n.7 (1988).
32
29 U.S.C. § 1056(d)(1) (“Each pension plan shall provide that benefits
provided under the plan may not be assigned or alienated.”); see also Mackey, 486
U.S. at 836 (discussing anti-alienation provisions in 29 U.S.C. § 1056(d)(1) and
stating, “Congress did not enact any similar provision applicable to ERISA
welfare benefit plans”).
33
Mackey, 486 U.S. at 837-38 (quoting Alessi v. Raybestos-Manhattan, Inc.,
451 U.S. 504, 516 (1981)).
34
Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 892 (5th Cir.
2003); see also Hermann Hosp. v. MEBA Med. & Benefits Plan, 845 F.2d 1286, 1289-
90 (5th Cir. 1988).
-36-
remedial scheme. This contention has no merit. Suppose a plan
administrator paid benefits to a former spouse rather than the
current spouse of a participant. That mistake would not relieve
the plan administrator of its obligation to pay the correct person.
The Louisiana statute does not enlarge the rights, causes of
action, or remedies of beneficiaries or their assignees. Section
40:2010 simply directs to whom payment must be made once there has
been a valid assignment and the plan has received notice of that
assignment.
* * * * *
For the foregoing reasons, I concur in the judgment.
-37-
LA Hlth Svc & Indem v. Rapides Hlthcare Sys
Court: Court of Appeals for the Fifth Circuit
Date filed: 2006-08-16
Citations: 461 F.3d 529
Copy Citations