Opinion
CIVIL ACTION No. 02-0590, SECTION: E/5
October 7, 2003
ORDER AND REASONS
Plaintiffs filed this lawsuit in the 24 th Judicial District Court: for the Parish of Jefferson alleging state law claims against defendants. Defendant Aetna U.S. Healthcare, Inc. ("Aetna") removed the action claiming federal question jurisdiction pursuant to 28 U.S.C. § 1331, alleging that all of plaintiffs' state law claims are preempted by ERISA. Aetna then filed this motion for summary judgment. Plaintiffs oppose the motion. The court heard oral argument at an earlier date. For the reasons that follow, the motion is granted in part and denied in part, and the matter is remanded to the 24th Judicial District Court for the Parish of Jefferson.
Actually, Aetna's motion requests "summary judgment pursuant to Federal Rule of Civil Procedure 12(b)(6)". However, its motion and memorandum in support state the Federal Rule of Civil Procedure 56 standard for a motion for summary judgment. The court assumes that Aetna intended to file a motion for summary judgment pursuant to Rule 56.
BACKGROUND
For the purpose of its motion, Aetna assumes that the factual allegations in the Bakers' petition and amended petition are true. The following facts are therefore undisputed. Rhonda Duchesne-Baker; "Duchesne-Baker") was employed at Chateau Living Center, L.L.C. "Chateau"). Aetna was Duchesne-Baker's HMO pursuant to her employer's group health insurance plan ("Group Agreement"). Aetna's memorandum in support: of motion for summary judgment, Exhibit "A". The parties do not dispute that the health plan at issue is an ERISA plan.
Prior to December 31, 2000, Chateau was managed by Mariner Post-Acute Network, Inc.," ("Mariner"). Early in 2001, because of Mariner's bankruptcy, Chateau switched management companies TO Extendicare Health Services, Inc. ("Extendicare"). On February 15, 2001, via an electronic transmission Mariner notified Aetna that due to its bankruptcy it would be terminating all of the employees at Chateau, but that it would be paying all of these employees' insurance premiums for the next three months and that they should be listed in Aetna's system as COBRA beneficiaries under their current policy to be terminated on April 30, 2001. Amended Complaint, ¶ VIII. Aetna subsequently completely discontinued the health insurance for the entire staff of Chateau. Id. at ¶ IX.
Mariner Pest-Acute Network, Inc., was terminated as a defendant on May-23, 2C02, and Living Centers-East, Inc., was substituted as the proper defendant.
Aetna and Duchesne-Baker's employer had ore-approved surgery for her, previously scheduled for February 6, 2001. Duchesne-Baker underwent surgery as scheduled. Follow-up surgery was required due to complications. Several days after her release from the hospital Duchesne-Baker discovered that Aetna had denied coverage based on the termination of her insurance policy. Because of financial difficulties resulting from Aetna's termination of her health insurance, Duchesne-Baker returned to work before her treating physician released her to work. Her employer placed her on regular work duty, which included heavy lifting, etc., in spite of her requests for lighter duty in view of her recent abdominal surgeries. She subsequently suffered a herniation of her surgical incision requiring a third surgery on May 6, 2001. Duchesne-Baker did not return to work after this surgery.
In an affidavit attached to the amended complaint, Norma Gallegos states that after Chateau employees complained regarding problems with their Aetna health coverage, she communicated with Edith Burke of Aetna to have their COBRA coverage reinstated. Rec. Doc. 43, Ex. "A". Gallegos affidavit states: "Edith Burke advised her that when the employees were not entered into the Aetna system correctly, showing COBRA coverage and not group healthcare coverage, the Aetna system would automatically default back to the February 15, 2001, tape feed showing termination of benefits." Id. She affirms that Aetna was not advised to terminate Duchesne-Baker's COBRA coverage until on or about April 26, 2001, when Mariner manually submitted the April 2001 COBRA billing to Aetna. Id. Aetna does not controvert Gallegos' affidavit.
Senior Benefits Specialist: and the COBRA Benefits Administrator for Mariner Healthcare.
In their amended petition the Bakers allege that Aetna was in bad faith by ignoring or refusing to fix the improper denial of coverage, and that had Aetna timely corrected the problem it would have prevented plaintiffs' injuries. Id. at ¶ X. In addition to their bad faith claim, the Bakers allege state law claims against all defendants as follows:
Plaintiffs' Motion for Leave of Court to Amend their complaint to add an additional state law claim of bad faith against Aetna was granted on May 15, 2003. Rec. Doc. No. 40. The Court Order expressly provided that the new the bad faith claim is subject to Aetna's pending motion for summary judgment without further supplementation of the record.
a. Failure to honor obligations to petitioners by virtue of their insurance contract with petitioners;
b. Failure to maintain petitioners medical benefits, while petitioner continued to pay for those benefits;
c. Failure to exercise necessary care, caution and control;
d. Failure to employ competent employees;
e. Failure to adequately train their employees;
prudent and reasonable
g. Operating a business in a careless and reckless manner; and
h. Any other act of negligence shown at the trial.
They claim, damages for past, present and future loss of wages, mental anguish, emotional trauma, loss of enjoyment of life, and pain and suffering. In addition, Duchesne-Baker claims as damages her past, present and future medical, hospital and pharmaceutical expenses, and her husband claims damages for loss of consortium.
Aetna retroactively reinstated Duchesne-Baker's insurance coverage after the April 33, 2001, original expiration date of her COBRA coverage. Aetna claims that it has paid covered claims arising from the surgeries that occurred during the actual coverage period, but refuses to pay any claims for the surgery on May 6, 2001, because that surgery occurred after the actual expiration date of Duchesne-Baker's COBRA coverage. It denies liability for any of the Bakers' consequential damages resulting from its premature termination of her insurance coverage.
ANALYSIS
Aetna's removal of the Bakers' complaint is premised on correlate ERI5A preemption as a basis for federal question jurisdiction. The Bakers do not challenge the district court's removal jurisdiction. A district court, however, has a duty to inquire into its own jurisdiction even if the parties have not. Carnegie-Mellon Univ. v. Cohill, 434 U.S. 343, 351, 108 S.Ct. 614, 618, 36 L.Ed.2d 720 (1988); Copling v. The Container Store. Inc., 174 F.3d 590, 594 (5th Cir. 1999).
"As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim." Arana v. Ochsner Health Plan, Inc., 338 F.3d 433, 437 (5th Cir. 2003), citing Beneficial Nat'l Bank v. Anderson, — U.S. —, 123 S.Ct. 2058, 2062, 156 L.Ed.2d 1 (2003). However, there is an exception to the well-pleaded complaint rule: if Congress "so completely pre-empt[s] a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Arana, 338 F.3d at 437, quoting Metro. Life Ins. Co. V. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).
"ERISA provides two types of preemption: complete preemption under § 502(a) and conflict preemption under § 514." Roark v. Humana. Inc., 307 F.3d 298, 305 (5th Cir. 2002), reh'g and reh'g en banc denied, — F.3d —, 2003 WL 21018397, and Petition for Certiorari filed, 72 C7SLP7 3791 (June 20, 2003) NO. 02-1845; and Petition for Certiorari filed, 72 USLW 3105(July 14, 2003) NO. 03-33; and Petition for Certiorari dismissed, — S.Ct. —, 2003 ML 22171273 (U.S. Sept. 18, 2003) NO. 02-1826; (citing Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (5th Cir. 1999)). Complete preemption under § 502 is in reality a rule of federal jurisdiction; its effect: is to convert a state law claim into a federal cause of action, thus conferring original federal jurisdiction. Roark, at id., citing Metropolitan Life Ins. Co., 481 U.S. at 65-66. On the other hand, state law claims that are preempted by ordinary conflict preemption under § 514 follow the well-pleaded complaint rule and are not a basis for original federal jurisdiction. Id., citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 23-27, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); and Giles. 172 F.3dat 337.
If the Bakers' claims are not subject to the complete preemption of § 502(a) the district court does not have removal jurisdiction because the action could not have originally been brought in federal court. The applicable portion of § 502(a) provides that a civil action may be brought by 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." 29 U.S.C. § 1132(a)(1)(B). That provision "creates a cause of action for breach of contract: When a plan administrator incorrectly interprets a plan to deny benefits, the patient may sue to recover the benefits." Roark, 307 F.3d at 3C9.
At ¶ 8 of their complaint, the Bakers allege that their damages were caused by the combined negligence and breach of contract of the defendants. The complaint further states a claim for "[f]ailure to honor obligations to petitioners by virtue of their insurance contract with petitioners". The Bakers' complaint alleges that Aetna breached its contract to provide insurance to them when it wrongfully terminated their coverage and refused to pay benefits even though they continued to pay the premiums. The Bakers clearly intended to and do state a contract claim against Aetna based on their insurance contract. Because § 502(a) provides for a breach of contract claim against an ERISA plan by a participant or beneficiary, the Bakers' state law contract claim could have been brought pursuant to ERISA, and is therefore completely preempted. Removal was proper and the district court has subject matter jurisdiction.
II.
A motion for summary judgment is properly granted only if there is no genuine issue as to any material fact, and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L. Ed.3d 265 (1986). An issue is material if its resolution could affect the outcome of the action. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 243, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding whether a fact issue has been created, we must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party. See Olabisiomotosho v. City of Houston. 185 E.3d 521, 525 (5th Cir. 1999). However, once a moving party properly supports a motion for summary judgment, the nonmoving party "must go beyond the pleadings and designate specific facts in the record showing that there is a genuine issue for trial." Lawrence v. Univ. of Tex. Med. Branch at Galveston, 163 F.3d 309, 311-12 (5th Cir. 1999), quoting Wallace v. Texas Tech. Univ., 80 F.3d 1042, 1047-48 (5th Cir. 1996). The nonmoving party cannot satisfy its burden with "unsubstantiated assertions" or "conclusory allegations." Id.
Aetna argues that it is entitled to summary judgment because all of the Bakers' state law claims are preempted pursuant to §§ 502 and 514 of ERISA (codified at 29 U.S.C. § 1132 (a) and 1144(a) respectively), and that none of their state law claims is saved by ERISA's "savings clause", 29 U.S.C. § 1144(b)(2)(A). At oral argument and in its supplemental memorandum Aetna asserts that it has paid Duschesne-Baker's covered medical expenses for the period prior to the actual termination of her plan on April 30, 2001. It alleges, however, that whether it has paid any benefits is immaterial because Duchesne-Baker has not made a claim for payment of benefits due pursuant to ERISA, therefore her complaint should be dismissed.
Aetna attached as Exhibit "A" a copy of its Confidential Claims Report for Duchesne-3aker's medical care from 11/21/00 to 5/11/01 which, according to Aetna, shows that it has paid all covered claims for her medical care until her COBRA coverage was properly terminated on April 30, 2001, with the exception of 31,563.00 out of more than $53,000.00 billed. It claims to "stand ready" re satisfy those charges, but that plaintiff has rejected Aetna's offer to "reprocess" the outstanding charges. Because Aetna blacked out on the Report the amounts actually paid, the court cannot determine whether, in fact, the amounts Aetna claims to have paid were actually paid.
The Bakers argue that their state law tort claims for extra-contractual damages do not fall within the scope of § 502 and therefore are not subject to ERISA preemption. They further argue that if their other claims are preempted, then ERISA's "savings clause" saves their bad faith claim brought pursuant to La. R.S. 22:657. Alternatively, they claim that they have stated an ERISA claim against Aetna. Finally, the Bakers argue that whether Aetna has actually paid for any medical benefits due is a disputed issue of fact precluding summary judgment.
See note 5, supra.
Neither party's arguments clearly distinguish between the two types of ERISA preemption. Although the analysis does overlap in some cases, the court will analyze each separately because each has a separate analytical structure and different consequences.
ERISA § 502
Aetna cites Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), in support of its argument that § 502 creates a blanket preemption such that the Bakers' only remedy against Aetna is pursuant to an ERISA action. In Roark the Fifth Circuit explained that the Supreme Court's recent decision in Rush Prudential HMO, Inc., v. Moran, 536 U.S. 355, 122 S.Ct. 2151, 153 L.Ed. 375 (2002), "indicates Pilot Life does not sweep so broadly."
ERISA provides a means of collecting benefits and set forth an exclusive list of remedies; states could not create alternative causes of action for collecting benefits that expanded on ERISA's remedies. Pilot Life, 481 U.S. at 54-55, 107 S.Ct. 1549; Rush Prudential. 122 S.Ct. at 2166.
We glean from Rush Prudential that Pilot Life's rule is a narrow one: States may not duplicate the causes of action listed in ERISA § 502 (a;. This is, essentially, the test employed for "complete preemption."Roark. 307 F.3d at 310-311. The court does not ask "whether the state law conflicts with or frustrates a congressional purpose, but whether a state law duplicates or 'falls within the scope of' an ERISA § 502(a) remedy." Id., citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).
1.
Having already concluded that the Bakers' contract claim is completely preempted by § 502, the court must now determine if it states a claim for relief pursuant to ERISA. The Bakers' complaint is not a model of clarity. In their opposition to Aetna's motion for summary judgment they argue that they have stated an ERISA claim because Aetna's "blanket denial of all medical coverage" is a breach of the insurance contract. Memorandum in opposition, p. 8. They claim as damages the costs associated with Duchesne-Baker's third surgery, which according to the Bakers, was the result of Aetna's denial of coverage during the coverage period. The do not claim benefits due under the terms of the plan in addition to those that Aetna claims to have paid, albeit belatedly.Section 502 of ERISA provides for equitable relief for recovery of benefits, the enforcement of rights, or the clarification of future rights under the terms of the plan. The Bakers' state law contract claim does not demand equitable relief. It claims monetary damages for Aetna's alleged breach of its insurance contract, relief that is not available pursuant to ERISA. Aetna is entitled to summary judgment on that claim.
2.
Aetna argues that the Bakers' state law tort claims are also completely preempted. It characterizes the Bakers' tort claims as an allegation of improper claims processing based on Aetna's alleged failure to pay Duchesne-Baker's benefits timely. Memorandum, p. 10.
In Roark, the Fifth Circuit addressed the state law tort claims of several individual plaintiffs whose lawsuits were removed by the defendants based on complete ERISA. Two of the plaintiffs, Calad and Davila, each filed suit in Texas state court against their respective HMO's pursuant to the Texas Health Care Liability Act ("THCLA") for damages resulting from complications directly attributable to denied or delayed medical treatment. Essentially, their claims were for medical malpractice. Id. at 302-303. The Fifth Circuit held that § 502(a)(1)(B) did not preempt Calad's and Davila's tort claims brought pursuant to the THCLA because that statute does not provide an action for collecting plan benefits, therefore does not duplicate or fall within the scope of § 502(a)(1)(B). Id. at 311.
Aetna argues that Roark is distinguishable because the tort claims the Fifth Circuit reviewed in Roark were for medical malpractice, not for improper claims processing. The Fifth Circuit's analytical reasoning, however, is applicable to any state law tort claim alleging the liability of a plan administrator for acts unrelated to the interpretation or administration of the plan. For example, in Darcanagelo v. Verizon Communications. Inc., 292 F.3d 181 (4th Cir. 2002), the plaintiff claimed that the administrator of her employee disability plan solicited and disseminated her private medical information in order to assist her employer in its efforts to fire her. She asserted claims against her employer and its ERISA plan administrator for invasion of privacy, negligence, and violations of Maryland's medical records confidentiality and unfair and deceptive trade practices statutes. Id., at 186. The defendants argued that Darcangelo's tort claims actually asserted claims of breach of fiduciary duty against the plan administrators and were therefore preempted. The Fourth Circuit disagreed and reversed the district court's dismissal of her tort claims, concluding that the complaint charged the plan administrator with conduct completely unrelated to its duties under the ERISA plan. Id.
In its Answer, Aetna "specifically avers" that defendants Mariners, Extendicare and Chateau are the plan administrators and claim fiduciaries, thereby barring recovery by the plaintiffs against Aetna (rec. doc. 2, p. 2, Fourth Defense). In their joint Answer, Mariners, Extendicare and Chateau allege that co-defendant Aetna was the health insurer and plan administrator for the Bakers, therefore Mariners, Extendicare and Chateau bear no responsibility for Aetna's negligence or wrongful conduct (rec. doc. 4, p. 2, Sixth Defense). But this court need not decide which of the defendants was the plan administrator or claim fiduciary in this case.
Darcangelo also asserted a breach of contract claim against the defendants. The Fourth Circuit affirmed the district court's dismissal of that claim after finding that it was completely preempted.
The Fourth Circuit's analysis blurred the distinction between § 502 and § 514 preemption analysis. It concluded that "because the 'relate to' question in this case [the § 514 analysis] turns on whether Darcangelo's claims are alternative enforcement mechanisms to § 502, the conflict preemption and complete preemption tests are the same here." Darcangelo, 292 F.3d at 191, n. 3.
Aetna next argues that the Bakers' claim for "improper claims processing" is actually a claim for a determination of their rights under the plan. Aetna characterizes its denial of Duchesne-Baker's insurance benefits "a pure determination of enrollment status", that is, a "pure eligibility decision" that is completely preempted. Reply Memorandum, pp. 6, 1 and note 7.
In Pegram v. Herdrich, 503 U.S. 211, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000), the Supreme Court explained that HMO's make three types of decisions — eligibility decisions, treatment decisions, and mixed decisions. Roark, 307 F.3d at 307, citing Peagram, 530 U.S. at 228-29.
Eligibility decisions "turn on the plan's coverage of a particular condition or medical procedure for its treatment." Id. at 228, 120 S.Ct. 2143. Pure eligibility decisions, "simple yes-or-no questions, like whether appendicitis is a covered condition," are likely rare. Id.Id. Aetna concedes that the Bakers "do not allege that Aetna's denial of coverage was based on any medical decision or determination of medical necessity or that any decision made by Aetna was based upon Aetna's decision to cover one procedure rather than another." Aetna's memorandum in support, p. 7. It further acknowledges that the Bakers' allegation is "simply that their health insurance benefits v/ere wrongfully terminated." Id. Accepting the Baker's factual allegations as true, no one at Aetna made an eligibility decision, or for that matter, any decision at all, to terminate Duchesne-Baker's insurance.
The Bakers do not allege that their claims for medical benefits under the plan were improperly processed. The crux of the Bakers' complaint is that an. Aetna employee made a clerical error that resulted in the wrongful termination of their insurance benefits. They seek monetary damages flowing from Aetna's alleged failure to exercise ordinary care when it failed to timely correct the error, failed to employ competent employees, failed to adequately train their employees, and failed to act as a prudent and reasonable manager of its insurance business.
ERISA does not provide a cause of action to participants or beneficiaries for a plan administrator's tortious acts that are unrelated to his duties pursuant to its administration of the ERISA plan. Neither does Louisiana tort law provide an alternative or expanded cause of action to a plan participant or processing under the terms of an ERISA plan. See e.g., Roark at 309 ("For Calad and Davila, the wording of their plans is immaterial: They invoke only an external, statutorily imposed duty of 'ordinary care'.") The Bakers' tort claims do not duplicate or fall within the scope of § 502(a)(1)(B) and are not completely preempted.
Louisiana tort law is succinctly stated in one sentence: "Every act. whatever of man that causes damage to another obliges him by whose fault it happened to repair it." La. C.C. art. 2315A.
ERISA § 514
A claim not subject to § 502 complete preemption may still be subject to ordinary conflict preemption pursuant to § 514 of ERISA.Roark. 307 F.3d at 303, n. 11; Darcangelo, 292 F.3d at 191, n. 3. Section 514(a) preempts "all State laws insofar as they may now or hereafter relate to any employee benefit plan. . . ." 29 U.S.C. § 1144(a). A state law "relates to" a benefit plan "if it has a connection with or reference to such plan." Reliable Home Health Care, Inc., v. Union Central Ins. Co., 295 F.3d 505, 515 (5th Cir. 2002), citing Rozzell v. Security Servs., Inc., 38 F.3d 819, 321 (5th Cir. 1994) (quoting Shaw v. Delta Air Lines, 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1984)).
The determination of ERISA conflict preemption is a two step inquiry: the court must determine (1) whether a state law claim addresses an area of exclusive federal concern such as the right to receive benefits under the policy; and (2) whether the claim directly affects the relationship between the traditional ERISA entities and the employer, the plan, and its fiduciaries, the participants and beneficiaries. Reliable Hone Health Care, Inc., at id. citing Hubbard v. Blue Cross and Blue Shield. 42 F.3d 942, 945 (5th Cir. 1995). "ERISA, as its goals indicate, does nor seek to preempt all state laws that might apply to an ERISA plan administrator, but only those laws that undermine the "nationally uniform administration of employee benefit plans."Darcangelo, 292 F.3d at 191, quoting Travelers. 514 U.S. at 657, 115 S.Ct. 1671 (emphasis added in Darcangelo).
The Ninth Circuit considered the application of the § 514 analysis in a case with circumstances and state law tort claims similar to those in the Darcangelo case. In Dishman v. UNUM Life Insurance Co. of America. 269 F.3d 974 (9th Cir. 2001), the plaintiff alleged state law claim against the defendant for tortious invasion of privacy perpetrated by several investigative firms hired by the defendant in its efforts to terminate his long-term disability plan benefits. The Court quoted the Supreme Court's instruction that "[p]reemption does not occur . . . if the state law has only a tenuous, remote, or peripheral connection with covered plans, as is the case with many laws of general applicability." Id., quoting Travelers, 514 U.S. at 661, 115 S.Ct. 1671. Holding that the state law tort claim was not preempted by ERISA, the Ninth Circuit observed that certainly "the objective of Congress in Grafting Section 1144(a) was not to provide ERISA administrators with blanket immunity from garden variety torts which only peripherally impact daily plan administration." Id. at 984.
Dishman alleged that the investigators elicited information about him by, inter alia, falsely posing as a bank loan officer attempting to verify information he had supplied, representing to neighbors that he had volunteered to coach a basketball team, impersonating him no obtain his personal credit card and travel information, falsely identifying themselves when caught photographing his residence, and repeatedly calling his residence. Dishman at p. 979-80.
Aetna argues that the Bakers' tort claims address an area of exclusive federal concern because in asserting their right to receive benefits under their policy the Bakers' seek damages flowing from Aetna's alleged improper claims processing, and that they directly affect the relationship between traditional ERISA entities. Memorandum at p. 10. In support of its argument Aetna cites Reliable Home Health Care, Inc., v. Union Cent. Ins. Co. 295 F.3d 505 (5th Cir. 2002).
First, the court has already determined that the Bakers' complaint does not assert a right to receive benefits under their policy, nor does it seek damages for improper claims processing. It seeks only money damages for Aetna's wrongful termination of their insurance policy. Second, theReliable Home Health Care case is distinguishable from this case on its facts. The plaintiff in Reliable Home Health Care claimed damages for defendant's fraudulent inducement to pay premiums based on defendant's false statements about the expertise of the insurance company. The Fifth Circuit looked carefully at the factual allegations underlying the plaintiff's claims and concluded that the allegations were based on the creation and content of the plan. Following Christopher v. Mobile Oil Corp., 950 F.2d 1209, 1220, (5th Cir. 1992), the Court reasoned that where the underlying conduct alleged by the plaintiff "cannot be severed from its connection to the Plan", plaintiff's claims are preempted.Reliable Home Health Care, 295 F.3d at 516.
Unlike the plaintiff's claims in Reliable Home Health Care, a determination of the merits of the Baker's tort claims require no reference at all to the contents, the interpretation, or the administration of the ERISA plan at issue, nor do they concern the creation, operation or failure of the plan. The Bakers' claims do not implicate the way Aetna carried out its duties as an ERISA plan administrator and/or fiduciary. Rather, their tort claims implicate the way Aetna handles its insurance business. There is a difference. Aetna acknowledges that no one ever made a decision at all to terminate the Bakers' insurance benefits, much less a decision to terminate their insurance benefits based on an interpretation of the contents of the ERISA plan such as whether Duchesne-Baker's surgery was medically necessary or a covered procedure under the plan. The result of a determination of the merits of the Bakers' claims would be the same whether or not the insurance policy at issue was an ERISA plan.
Neither do the Bakers' tort claims implicate the relationship between the traditional ERISA entities with respect to their performance of their ERISA functions. While it does affect the relationship between the insured and the insurer, a determination of the merits of the Bakers' claims can be completely severed from any connection to the plan. Compare Darcangelo, 292 F.3d at 194 (Darcangelo's claim may in some way affect her relationship with her HMO and her employer, but it does not implicate the relations among the traditional ERISA plan entities with respect to those entities' ERISA functions) with Reliable Home Health Care. 295 E.3d at 516 (Reliable's claims of fraud concern the creation, operation and subsequent failure of the plan, such that "the underlying conduct alleged by Reliable cannot be severed from its connection to the Plan.")
The Bakers' state law tort claims are not preempted by ERISA § 514.
2.
The Bakers also assert a claim for penalties and attorney fees pursuant to La.R.S. 22:657, Louisiana's "bad faith" statute. The statute provides for a penalty of double the benefits due to a beneficiary/claimant, together with attorney's fees, if the insurer fails to pay properly submitted claims for covered losses within 30 days. La.R.S. 22:657. The Fifth Circuit has observed that "[a]lmost all of the cases addressing the issue hold that 22:657 is subject to ordinary preemption under ERISA section 514." Arana v. Ochsner Health Plan. 302 F.3d 462, 473 (citations omitted) (2001;, reversed on other grounds, 338 F.3d 433 (5th Cir. 2003); Bank of Louisiana v. Aetna U.S. Healthcare. Inc., 2003 WL 21634306 *2 (E.D.La. July 9, 2003) (J. Berrigan), citing Anderson v. Business Men's Assurance, Co., 2003 WL 21305535 (E.D.La.) (J. Fallen) and Clancy v. Employer's Health Insurance Co., 101 F. Supp.2d 463 (E.D.La. 2000) (J. Clement).
The Bakers argue that the claim is nevertheless saved from preemption pursuant to ERISA's "savings clause", a limitation on § 514's conflict preemption. The Supreme Court recently restated the test to determine whether a state law otherwise preempted pursuant to § 514 is "saved" from preemption: (1) the state law must be specifically directed toward entities engaging in insurance, and (2) the state law must substantially affect the risk pooling arrangement between the insurer and the insured. Bank of Louisiana, 2.003 WL 21634306 *2, citing Kentucky Ass'n of Health Plans, Inc., v. Miller. ___ U.S. ___, 123 S.Ct 1472, 1479 (2003). La. R.S. 22:657 meets the first prong of the test, but not the second prong. It does not substantially effect the risk pooling arrangement between the insurer and the insured because it simply provides for penalties not available under ERISA, shifting the burden of timely payment of benefits due from the insured to the insurer. It does not spread the risk that the insurer will be required to pay benefits to any one person among the pool of all insureds. See Bank of Louisiana at id. (the statute does not "substantially affect the risk pooling arrangement between the insurer and the insured" because it merely provides additional penalties for late payment). La. R.S. 22:657 is not saved from preemption. Because it creates a judicial remedy not available under ERISA, the Bakers' bad faith claim pursuant to the statute must be dismissed.
The "savings" clause provides that "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." 29 U.S.C. § 1144 (b)(2)(A).
III.
When the only federal claims on which the district court's original subject matter jurisdiction was based are dismissed, the district court may, in its discretion, remand all remaining state law claims based on supplemental jurisdiction for a determination on the merits. 28 U.S.C. § 1367(c)(3) and 1441(c); Roark, 307 F.3d at 313; Rodriquez v. Valteau, 1997 WL 602191, *4 (E.D.La. Sept. 29, 1997) (J. Vance).
As the Supreme Court has made clear, the doctrine of pendent jurisdiction is a "doctrine of flexibility," and the district court has a continuing duty "to consider throughout the litigation whether to exercise its jurisdiction over the case." Carnegie-Mellon Univ., 434 U.S. at 351, 108 S.Ct. at 619. Pendent state claims should be remanded when it would be in the best interest of "judicial economy, convenience, fairness and comity." Id. at 350, 108 S.Ct. at 619.Id.; see also Roark, 307 F.3d at 313.
All of the Bakers' federal claims are dismissed. This court has only supplemental jurisdiction over their pendant state law claims. The underlying legal issue is unusual: whether Aetna is liable for its employee's clerical error that resulted in Aetna's termination of its insured's health insurance. While significant discovery has been done and this case has already been set for trial in the district court, the discovery and trial preparation is applicable to a trial on the merits in state court. There will be no great loss of judicial resources if this case is remanded. The interests of fairness and comity also weigh in favor of remand. The plaintiffs are entitled to litigate their state law claims in their original choice of forum.
CONCLUSION
Considering the complaint, the parties' memoranda, the evidence and the law, and for the reasons assigned, defendant Aetna's motion for summary judgment is GRANTED as to plaintiffs' state law contract claim and bad faith claim pursuant to La. R.S. 22:657 against defendants, and DENIED as to plaintiffs' remaining state law claims against defendants.
Accordingly;
IT IS ORDERED that Rhonda Duchesne-Baker's and Richard Baker's contract claim and bad faith claim pursuant to La. R.S. 22:657 against defendants are DISMISSED WITH PREJUDICE; and,
IT IS FURTHER ORDERED that pursuant to the court's discretion under 28 U.S.C. § 1367 (c)(3) and 1441(c), the case is REMANDED to the 24 — Judicial District Court for the Parish of Jefferson.
The final pre-trial conference and trial dates previously assignee are cancelled .