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Keywords

jurisdiction

tortjurisdictiondamagesappealpunitive damages

Related Cases

Hotz v. Blue Cross and Blue Shield of Mass., Inc., 292 F.3d 57, 28 Employee Benefits Cas. 1001, Pens. Plan Guide (CCH) P 23979Z

Facts

In March 2001, Marjorie Hotz brought suit against Blue Cross for allegedly violating state law by delaying payment for therapy recommended by her physician after cancer surgery. Hotz claimed that this delay caused her condition to worsen. Her insurance was part of an employee benefit plan governed by ERISA, which led Blue Cross to remove the case to federal court and seek dismissal based on ERISA preemption.

Hotz's insurance coverage with Blue Cross was part of an employee benefit plan offered and paid for by the law firm where she worked; the plan is governed by the Employee Retirement Income Security Act ('ERISA'), 29 U.S.C. § 1001 et seq. (2000).

Issue

The main legal issues were whether the federal district court had removal jurisdiction over Hotz's state law claim and whether her claim was preempted by ERISA.

Hotz presses two points on appeal. First, at the threshold, she argues that the district court lacked removal jurisdiction over her state law claim. Second, she argues that her claim is not preempted because it falls under the so-called 'saving clause' exempting from ERISA's preemption provision any state law that 'regulates insurance.'

Rule

The court applied the doctrine of 'complete preemption' under ERISA, which allows federal jurisdiction over state law claims that seek relief within the scope of ERISA's civil enforcement provisions.

But under the doctrine of 'complete preemption,' ERISA's civil enforcement provisions, 29 U.S.C. § 1132 (a), have been interpreted to establish federal removal jurisdiction over any state law claims that in substance seek relief that is otherwise within the scope of those ERISA remedy provisions.

Analysis

The court found that Hotz's claim related to the processing of benefits under an ERISA plan, thus falling under ERISA's preemption clause. The court noted that while Hotz argued her claim was exempt under the 'saving clause' for state laws regulating insurance, the claim was ultimately found to be preempted as it did not exclusively regulate insurance and was more aligned with general unfair trade practices.

On balance, our case seems closer to Pilot Life, where the Court held to be preempted a punitive damages tort claim for egregious nonpayment of benefits under an insurance policy.

Conclusion

The court affirmed the dismissal of Hotz's claim, concluding that it was preempted by ERISA and that federal removal jurisdiction was appropriate.

Affirmed.

Who won?

Blue Cross prevailed in the case because the court determined that Hotz's claim was preempted by ERISA, which provided the basis for federal jurisdiction and dismissal.

Blue Cross prevailed in the case because the court determined that Hotz's claim was preempted by ERISA.

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