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Keywords

contractbreach of contracttortappealbad faithcommon law
contracttortsummary judgmentcommon lawrespondent

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Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39, 55 USLW 4471, 8 Employee Benefits Cas. 1409

Facts

In March 1975, Everate W. Dedeaux injured his back while working for Entex, Inc., which had a long-term disability employee benefit plan through Pilot Life Insurance Co. After receiving benefits for two years, Pilot Life terminated Dedeaux's benefits, which were subsequently reinstated and terminated multiple times over the next three years. Dedeaux filed a diversity action against Pilot Life in federal court, alleging tort and breach of contract claims for failure to pay benefits under the insurance policy.

In March 1975, in Gulfport, Mississippi, respondent Everate W. Dedeaux injured his back in an accident related to his employment for Entex, Inc. (Entex). Entex had at this time a long term disability employee benefit plan established by purchasing a group insurance policy from petitioner, Pilot Life Insurance Co. (Pilot Life).

Issue

Whether the Employee Retirement Income Security Act of 1974 (ERISA) preempts state common law tort and contract actions asserting improper processing of a claim for benefits under an insured employee benefit plan.

The question whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq., pre-empts state common law tort and contract actions asserting improper processing of a claim for benefits under an insured employee benefit plan.

Rule

ERISA's preemption clause (§ 514(a)) supersedes all state laws that relate to any employee benefit plan, while the saving clause (§ 514(b)(2)(A)) excepts from preemption any state law that regulates insurance. However, the deemer clause (§ 514(b)(2)(B)) clarifies that no employee benefit plan shall be deemed an insurance company for purposes of state laws regulating insurance.

ERISA's preemption clause (§ 514(a)) supersedes all state laws insofar as they ‘relate to any employee benefit plan,’ but ERISA's ‘saving clause’ (§ 514(b)(2)(A)) excepts from the preemption clause any state law that ‘regulates insurance.’

Analysis

The Supreme Court determined that Dedeaux's common law claims related to the processing of a claim for benefits under an employee benefit plan, thus falling under ERISA's preemption clause. The Court found that the Mississippi law of bad faith did not qualify for the saving clause because it was not specifically directed toward the insurance industry and was rooted in general contract law. The Court emphasized that ERISA's civil enforcement provisions were intended to be exclusive, preventing state law claims that could undermine the federal scheme.

The common law causes of action asserted in respondent's complaint, each based on alleged improper processing of a benefit claim under an employee benefit plan, ‘relate to’ an employee benefit plan and therefore fall under ERISA's pre-emption clause.

Conclusion

The Supreme Court reversed the Court of Appeals' decision, holding that Dedeaux's state law claims were preempted by ERISA, affirming the exclusivity of ERISA's civil enforcement provisions.

Held: ERISA pre-empts respondent's suit under state common law for alleged improper processing of his claim for benefits under the ERISA-regulated benefit plan.

Who won?

Pilot Life Insurance Co. prevailed in the case because the Supreme Court ruled that Dedeaux's state law claims were preempted by ERISA, affirming the federal law's exclusive enforcement scheme.

Pilot Life prevailed because the District Court granted Pilot Life summary judgment, finding all Dedeaux's claims pre-empted.

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