Wirth v. Aetna US Healthcare ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
11-21-2006
Wirth v. Aetna US Healthcare
Precedential or Non-Precedential: Precedential
Docket No. 04-2198
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-2198
JONATHAN WIRTH,
Individually and on behalf of all
others similarly situated,
Appellant
v.
AETNA U.S. HEALTHCARE
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 03-cv-05406)
District Judge: Honorable Harvey Bartle, III
Argued January 24, 2005
Before: SCIRICA, Chief Judge, RENDELL
and FISHER, Circuit Judges.
(Filed November 21, 2006)
Ronald J. Smolow [ARGUED]
Smolow & Landis
204 Two Neshaminy Interplex
Trevose, PA 19053
Counsel for Appellant
Raymond J. Quaglia [ARGUED]
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Counsel for Appellee
Philip A. Ryan
Christina J. Westall
German, Gallagher & Murtagh
200 South Broad Street, 5 th Floor
Philadelphia, PA 19102
Counsel for Amicus Appellant
PA Defenders Inst.
Scott B. Cooper [ARGUED]
Schmidt, Ronca & Kramer
209 State Street
Harrisburg, PA 17101
Counsel for Amicus Appellant
PA Trial Lawyers
OPINION OF THE COURT
2
RENDELL, Circuit Judge.
On appeal, Jonathan Wirth contends that the Employee
Retirement and Income Security Act of 1974 (“ERISA”), 29
U.S.C. § § 1001 et seq., does not preempt his state law claims
against Aetna U.S. Healthcare (“Aetna”) and, therefore, that the
District Court erred in granting removal of his suit from state to
federal court. Wirth also contends that, even if removal was
proper, the District Court erred in holding that Pennsylvania’s
Health Maintenance Organization Act (“HMO Act”) exempts
Aetna from Wirth’s claim under Pennsylvania’s Motor Vehicle
Financial Responsibility Law (“MVFRL”). We have
jurisdiction to review his challenge under 28 U.S.C. § 1291.
We ruled on these issues in a previous non-precedential
Interim Opinion, Wirth v. Aetna U.S. Healthcare, 137 Fed.
Appx. 455 (3d Cir. June 9, 2005), where we opined that Wirth’s
claims were completely preempted by ERISA and, therefore,
properly removed to federal court. However, we certified to the
Pennsylvania Supreme Court the question of whether Aetna is
exempt from the anti-subrogation provision of the MVFRL by
virtue of the HMO Act. Now that we have received the Court’s
opinion on this question, we write finally and precedentially to
incorporate that Court’s holding as well as our own prior
reasoning on the jurisdictional issue. In doing so, we will affirm
the order of the District Court as to both of these issues.1
1
Contemporaneously herewith, we are issuing an order
denying appellant’s Motion for Voluntary Dismissal and
dismissing appellee’s Cross-Motion for Affirmance as
3
I. Factual and Procedural Background
Wirth was injured in a motor vehicle accident caused by
a third party tortfeasor. His treatment for those injuries was
covered under an HMO healthcare agreement issued by Aetna.2
Wirth recovered a settlement from the third party tortfeasor;
subsequently, Aetna, who claimed it was acting within its
contractual rights, asserted a subrogation lien to recover monies
from that settlement.3 Wirth paid Aetna $2,066.90 to release its
lien and then filed a class action suit in state court alleging, inter
alia, unjust enrichment and violation of section 1720 of the
MVFRL, which provides that in “actions arising out of the
maintenance or use of a motor vehicle, there shall be no right of
unnecessary in light of the judgment entered herewith.
2
These benefits were part of an employee benefit plan
sponsored by Wirth’s father’s employer known as a Quality
Point of Service Program (“QPOS”) and in excess of those
already paid by Wirth’s household auto insurance policy.
3
The Certificate of Coverage applicable to Wirth’s QPOS
program contained a provision stating, in part, that where Aetna
provides healthcare benefits for injuries “for which a third party
is or may be responsible, then [it] retains the right to repayment
of the full cost of all benefits provided . . . that are associated
with the injury.” The provision adds that its right of recovery
applies to payments made by third party tortfeasors. Aetna’s
summary plan description for the QPOS program, however,
makes no reference to rights of reimbursement or subrogation.
4
subrogation or reimbursement from a claimant’s tort recovery
with respect to. . .benefits paid or payable by a program, group
contract or other arrangement.” 75 Pa. Cons. Stat. § 1720.
Aetna removed the suit to federal court, contending that
Wirth’s claims were simply to “recover benefits due to him
under the terms of his plan,” 29 U.S.C. § 1132(a)(1)(B), and
therefore fell within the scope of section 502(a)(1)(B) of
ERISA. As such, Aetna argued that Wirth’s claims evoked the
doctrine of “complete preemption,” which holds that certain
federal laws so thoroughly occupy a field of regulatory interest
that any claim brought within the field, however stated in the
complaint, constitutes a federal claim and therefore bestows a
federal court with jurisdiction. See Metro. Life Ins. Co. v.
Taylor, 481 U.S. 58, 63-64 (1987). The District Court agreed,
finding that ERISA was such a thoroughly robust regulatory
regime, and denied Wirth’s motion to remand.
After concluding it had subject matter jurisdiction over
the action, the District Court proceeded to consider the specific
allegations of Wirth’s complaint. There, Wirth averred that, by
laying claim to any portion of his tort recovery, Aetna had
violated the anti-subrogation provision found at section 1720 of
the MVFRL. Aetna countered, contending that section 1720
was inapplicable to an HMO like itself because the HMO Act
provides that HMOs will not be governed by a state law that
regulates insurance “unless such law specifically and in exact
terms applies to such health maintenance organization.” 40 Pa.
Cons. Stat.§ 1560(a). Aetna urged that subrogation was
permissible because section 1720 does not employ the term
“health maintenance organization,” and is therefore not
5
specifically applicable to HMOs. The District Court agreed,
finding that “there is nothing in § 1720 which specifically and
in exact terms applies to HMOs,” and dismissed Wirth’s claims.
On appeal, Wirth challenges both the District Court’s
conclusion that his claims are completely preempted by section
502(a) of ERISA – the basis for the District Court’s jurisdiction
over the action – as well as the Court’s interpretation of sections
1720 of the MVFRL and 1560(a) of the HMO Act.
II. Subject Matter Jurisdiction Claim: Preemption Under
Section 502(a)
Wirth argues that the removal of his lawsuit to federal
court, and the reclassification of his state law claim as an ERISA
action, was error. Because the question is one of jurisdiction,
we exercise plenary review over Wirth’s challenge. Pryzbowski
v. U.S. Healthcare Inc., 245 F.3d 266, 268 (3d Cir. 2001). In
our Interim Opinion, we held that the District Court did not err
in exercising jurisdiction over Wirth’s claim. Wirth, 137 Fed.
Appx. at 457-59. We reiterate that decision, and repeat our
analysis here.4
4
We also take this opportunity to affirm the portion of the
District Court’s opinion rejecting Wirth’s contention that
application of the savings clause of ERISA section 514(b)(2)(a),
which “saves” state laws that regulate insurance from
preemption and allows application of such state insurance laws
in federal court, might function to defeat jurisdiction. We have
little difficulty finding, as the District Court did, that recent
6
Under § 502(a), a participant in an ERISA-covered plan
may bring a civil action 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). Wirth contends that
because his claims are neither for “benefits due” nor to “enforce
rights” under the Aetna plan, ERISA does not provide a civil
enforcement mechanism for Wirth to challenge or defend
against Aetna’s liens and, therefore, that the District Court erred
in granting removal of the case from state to federal court.
In our Interim Opinion, we found this argument
foreclosed by our decision in Levine. The force of Levine’s
reasoning has not diminished. The plaintiffs in Levine were
injured in an auto accident, received medical benefits from their
respective insurers and subsequently recovered damages from
the responsible tortfeasors. Following the plaintiffs’ monetary
recovery, their respective insurers sought reimbursement for the
benefits paid pursuant to then-valid subrogation provisions of
their relevant healthcare plans. The plaintiffs settled with their
insurers by paying over a portion of their tort recovery but then
Supreme Court cases make clear that once ERISA preemption
is found for jurisdictional purposes, jurisdiction will not be
disturbed by any subsequent determination that state insurance
law applies. See UNUM Life Ins. Co. of America v. Ward, 526
U.S. 358, 365-77 (1999); Rush Prudential HMO, Inc. v. Moran,
536 U.S. 355, 363-87 (2002). Our recent opinion in Levine v.
United Healthcare Corp., 402 F.3d 156 (3d Cir. 2005), reflects
this as well.
7
sued the insurance companies for, inter alia, unjust enrichment
in New Jersey state court.5
On appeal in Levine, we considered, inter alia, “whether
plaintiffs’ unjust enrichment claims for monies taken pursuant
to subrogation and reimbursement provisions in their ERISA
health plans are claims for ‘benefits due’ within the meaning of
ERISA section 502(a).” In determining that they were, we noted
that such a holding comported with similar rulings in the Fourth
and Fifth Circuits, see Singh v. Prudential Health Care Plan
Inc., 335 F.3d 278 (4th Cir. 2003); Arana v. Ochsner, 338 F.3d
433, 437 (5th Cir. 2003) (en banc), and would be consistent with
the framework we previously laid out for evaluating complete
preemption in Pryzbowski v. U.S. Healthcare Inc., 245 F.3d 266,
268 (3d Cir. 2001) (designating two categories of ERISA cases:
1) where the claim challenges the administration of, or eligibility
for, benefits, which are preempted, and 2) those challenging the
5
Following the settlements, the New Jersey Supreme Court
decided Perreira v. Rediger, 778 A.2d 429 (N.J. 2001), in which
it held that a New Jersey Department of Insurance regulation
allowing insurers to subrogate in the event of a third party tort
recovery conflicted with N.J. Stat. Ann. § 2A:15-97, a statute
regulating deductions from plaintiffs’ awards in personal injury
and wrongful death actions. Therefore, the regulation was
declared invalid and, as a result, subrogation and reimbursement
provisions are no longer permitted in New Jersey health
insurance policies. Although there is no New Jersey statutory
counterpart to section 1720 of Pennsylvania’s MVFRL, Perreira
effects the same result in that state.
8
quality of medical treatment, which are not preempted). Levine,
402 F.3d at 163. While recognizing that the facts of Levine
neither overlapped perfectly with those in Arana or Singh, nor
fell squarely within either Pryzbowski category, we nonetheless
held that where “plaintiffs claim that their ERISA plan
wrongfully sought reimbursement of previously paid health
benefits, the claim is for ‘benefits due’ and federal jurisdiction
under section 502(a) of ERISA is appropriate. Such a rule
comports with our earlier jurisprudence because, although not
directly analogous, such claims are more like challenges to the
‘administration of benefits’ than challenges to the ‘quality of
benefits received.’” Id. (quoting Pryzbowski, 235 F.3d at 273).
As we noted in our Interim Opinion, our holding in
Levine applies squarely to the present facts and precludes
Wirth’s argument that seeking recovery of the $2,066.90 paid to
extinguish Aetna’s lien is not tantamount to seeking recovery of
“benefits due” to him. Here, as in Levine, the actions
undertaken by the insurer resulted in diminished benefits
provided to the plaintiff insureds. That the bills and coins used
to extinguish Aetna’s lien are not literally the same as those used
to satisfy its obligation to cover Wirth’s injuries is of no import
– “the benefits are under something of a cloud.” Arana, 338
F.3d at 438. For these reasons, we reiterate the holding of our
Interim Opinion: Wirth’s claims against Aetna are completely
preempted by ERISA and there was no error in the District
Court’s conclusion that it had jurisdiction over this matter.
III. Interpretation of Pennsylvania Law
9
Wirth argues that, even if the District Court was correct
in exercising jurisdiction over this claim, it erred in finding that
Pennsylvania’s HMO Act exempted Aetna from complying with
the anti-subrogation provision found in section 1720 of the
MVFRL.6 In interpreting state law, as we must here, “the
decisions of the state’s highest court constitute the authoritative
source” of guiding precedent. Conn. Mutual Life Ins. Co. v.
Wyman, 718 F.2d 63, 65 (3d Cir. 1983). However, when the
question is a novel one “or where applicable state precedent is
ambiguous, absent or incomplete, we must determine or predict
how the highest state court would rule.” Rolick v. Collins Pine
Co., 925 F.2d 661, 664 (3d Cir. 1991).
In our Interim Opinion, we recognized that the
relationship between the Pennsylvania HMO Act and the
MVFRL raised “an unsettled issue of statutory construction and
application” that would be difficult to predict accurately. Wirth,
137 Fed. Appx. at 462. Therefore, to ensure that we would rule
correctly, we petitioned the Pennsylvania Supreme Court to
accept certification of the following question:
Is an HMO exempt, by virtue of
6
This issue is not informed by our opinion in Levine; in that
case, the relevant statutory interpretation issue concerned
whether New Jersey’s anti-subrogation provision regulates
insurance such that it was “saved” under ERISA section
514(b)(2)(a). The Supreme Court has already resolved this issue
with respect to Pennsylvania’s statute. See FMC Corp. v.
Holliday, 498 U.S. 52, 61 (1990).
10
Pennsylvania’s HMO Act, 40 Pa.
Cons. Stat. § 1560(a), from
c o m p l yi n g w i t h t h e a n t i -
subrogation provision found in
section 1720 of the MVFRL?
The Pennsylvania Supreme Court granted our petition and, in an
August 22, 2006 Opinion, answered the question in the
affirmative, reasoning as the District Court did in its ruling.7
7
Under 210 Pa. Code § 63.10, the Pennsylvania Supreme
Court has discretion to “accept certification of a question of
Pennsylvania law only where there are special and important
reasons therefor, including, but not limited to, any of the
following”:
1. The question of law is one of first impression
and is of such substantial public importance as to
require prompt and definitive resolution by this
Court;
2. The question of law is one with respect to
which there are conflicting decisions in other
courts; or
3. The question of law concerns an unsettled issue
of the constitutionality, construction or
application of a statute of this Commonwealth.
4. This Court shall not accept certification unless
11
See Wirth v. Aetna U.S. Healthcare, 904 A.2d 858 (Pa. 2006).8
Though we will not rescribe the full text of the Court’s decision
here, as it is available as a published precedential opinion, we do
summarize its essential points so that we may elucidate our
reasons for affirming the District Court.
The Pennsylvania Supreme Court considered Wirth’s two
primary arguments in support of his position that the MVFRL
“specifically and in exact terms” refers to HMOs: (1) that the
“broad term ‘program, group contract or other arrangement’
[found in the MVFRL] includes HMOs as well as every
conceivable type of healthcare arrangement”; and (2) that “the
phrase ‘program, group contract or other arrangement’ is a
specific and exact term that ‘applies’ to HMO plans.” Wirth,
904 A.2d at 861 (internal quotations omitted).
The Court rejected both of these contentions, finding the
MVFRL’s language to be neither sufficiently specific nor exact
to demonstrate the General Assembly’s intent to bring HMOs
within the ambit of the MVFRL. To reach this conclusion, the
Court first examined a series of Pennsylvania statutes “that on
their face arguably apply to HMOs,” Id. at 862, and found that
all facts material to the question of law to be
determined are undisputed, and the question of
law is one that the petitioning court has not
previously decided.
8
We express our appreciation to the Pennsylvania Supreme
Court for granting our petition.
12
when “the General Assembly wishes to make insurance statutes
applicable to HMOs, it does so by using the terms ‘health
maintenance organization’ or ‘HMO’ or by specifically referring
to the HMO Act. Furthermore, when it intends to include
HMOs within general terms such as ‘insurer’ or ‘managed care
plan,’ it does so ‘specifically and in exact terms.’” Id. at 863-64.
As was clear to the Pennsylvania Supreme Court, as well as to
the District Court, the MVFRL does not include the terms
“health maintenance organization” or “HMO” and, therefore,
does not “specifically and in exact terms” set out to reach such
entities.
Secondly, the Court examined the language of the
MVFRL and found that though “the definition of ‘program,
group contract or other arrangement’ in Section 1719 is not
exclusive, it contains nothing specific or explicit with respect to
HMOs. . .” Id. at 864. Therefore, the Court concluded that the
MVFRL’s failure to specifically mention HMOs clearly
indicated “that Section 1720 does not apply to HMOs.” Id. at
865.
Additionally, the Court considered Wirth’s contention
that “to the extent that the HMO Act and the MVFRL are in
conflict, the anti-subrogation provision of the MVFRL should
control over the earlier adopted HMO Act.” Id. Although the
Court granted that “last-in-time” is an accepted way of
reconciling two conflicting statutes, it nevertheless found that no
conflict existed between the HMO Act and the MVFRL because
the HMO Act’s express language contemplated the application
of future statutes to HMOs and, in doing so, clearly dictated that
HMOs would be exempt from those laws unless they
13
specifically stated otherwise. Id. For these reasons, the Court
found it clear that “in this instance the Legislature intended that
statutes promulgated after [the HMO Act’s enactment in] 1972
would not apply to HMOs unless they so provided in specific
and exact terms.” Id. Notwithstanding this requirement for
specificity in the future, the General Assembly thereafter did not
specifically include HMOs. Id. at 863-65.
Finally, the Court addressed Wirth’s public policy
argument that “prohibiting subrogation furthers the goals of the
MVFRL of reducing the cost of automobile insurance and
providing complete compensation for individuals injured in
motor vehicle accidents.” The Court found it unnecessary to
investigate the General Assembly’s legislative intent because of
the clear and unambiguous language of the HMO Act. Id. at
865-66.
In holding that “an HMO is exempt from complying with
the anti-subrogation provision of the MVFRL,” Id. at 866, the
Pennsylvania Supreme Court clearly and directly answered our
certified question. Because the Court’s opinion on matters of
Pennsylvania state law constitutes precedent that we are bound
to follow, Conn. Mutual Life Ins. Co., 718 F.2d at 65, we will
affirm the District Court’s ruling that Aetna was within its
contractual rights to seek subrogation from Appellant.
IV. Conclusion
For the reasons set forth, we will affirm the order of the
District Court.
14