More that five years after the U.S. Supreme Court decided Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), the Eleventh Circuit officially adopted the Court’s ERISA complete preemption test. Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 2009 U.S. App. LEXIS 28773 (11th Cir. Fla. Dec. 30, 2009). The court determined that some of the plaintiff’s state law claims were properly removed pursuant to § 502(a)(1)(B), ERISA’s civil enforcement provision, 29 USCS § 1132(a)(1)(B). Id. at *2.
Dentists Rutt and Egan and Connecticut State Dental Association brought state law claims against Anthem for improper “‘downcoding’ and ‘improper bundling,’ as a means of underpaying participating dentists for services they performed.” Id. at *3. Anthem removed the case to federal court on the basis that the claims are completely preempted by ERISA. Id. at *4. Plaintiffs moved to remand but before the court ruled on the motions, the Joint Judicial Panel on Multi-District Litigation transferred it to a federal court in Florida. Id. The Florida federal district court eventually denied the motions to remand. Id.
On appeal, the Eleventh Circuit explained that “[t]he test ordinarily applied for determining whether a claim arises under federal law is whether a federal question appears on the face of the plaintiff’s well-pleaded complaint.” Id. at 6. Complete preemption in the ERISA context, also called “super preemption, is a judicially-recognized exception to the well-pleaded complaint rule.” and, therefore, provides a basis for removal to federal court. Id at *8, 9. Complete preemption is narrower than conflict or defensive preemption and differs “because it is jurisdictional in nature rather than an affirmative defense.” Id at *8-9. Complete preemption derives from ERISA’s civil enforcement provision, § 502(a), which “converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” Id. at 9.
For ten years, the Eleventh Circuit had been applying “the four-part test for ERISA complete preemption set forth in Butero v. Royal Maccabees Life Insurance Co., 174 F.3d 1207 (11th Cir. 1999)[.]” Id. at 10. The four Butero factors were:
(1) “there must be a relevant ERISA plan,” (2) “the plaintiff must have standing to sue under that plan,” (3) “the defendant must be an ERISA entity,” and (4) “the complaint must seek compensatory relief akin to that available under § [502(a)]; often this will be a claim for benefits due under a plan.”
Id. (quoting Butero, 174 F.3d at 1212). But in 2004, the Supreme Court decided Davila, in which the Court stated:
[I]f an individual brings suit complaining of a denial of coverage for medical care, where the individual is entitled to such coverage only because of the terms of an ERISA-regulated employee benefit plan, and where no legal duty (state or federal) independent of ERISA or the plan terms is violated, then the suit falls within the scope of ERISA § 502(a)(1)(B). In other words, if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant’s actions, then the individual’s cause of action is completely pre-empted by ERISA § 502(a)(1)(B).
Id. at *10-*11 (quoting Davila, 542 U.S. at 210). “The Davila test thus requires two inquiries: (1) whether the plaintiff could have brought its claim under § 502(a); and (2) whether no other legal duty supports the plaintiff’s claim.” Id. at *11.
The Eleventh Circuit stated that “Davila refines Butero by inquiring about the existence of a separate legal duty, which is not a consideration under Butero. Moreover, a number of other circuits have recognized Davila’s two-part test as the proper test for complete preemption under ERISA.” Id. (citations omitted).
In applying Davila, the court explained that the inquiry into whether the plaintiff could have brought its claim under § 502(a) is satisfied if “(1) the plaintiff’s claim must fall within the scope of ERISA; and (2) the plaintiff must have standing to sue under ERISA.” Id. at *27. The court stated that the dentists have a “hybrid claim,” “part of which is within § 502(a) and part of which is beyond the scope of ERISA” but because they “complain, at least in part, about denial of benefits and other ERISA violations, their breach of contract claim implicates ERISA.” Id. at *30. The court further determined that “Rutt and Egan received valid assignments from their ERISA patients” and, therefore, had standing to sue. Id. at *36.
On the second inquiry, whether the plaintiffs’ claims are independent of ERISA, the court found that some of the claims “arise solely under ERISA or ERISA plans.” Id. at *37. The “claims stray from the boundaries of their Provider Agreements into ERISA territory by asserting improper denials of medically necessary claims and violations of ERISA procedural requirements.” Id.