Cleghorn v. Blue Shield of California , 408 F.3d 1222 ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DOUGLAS D. CLEGHORN, 
individually, on behalf of other
similarly-situated persons and on
No. 03-55528
behalf of the public,
Plaintiff-Appellant,
 D.C. No.
CV-02-00852-DOC
v.
OPINION
BLUE SHIELD OF CALIFORNIA, dba
CareAmerica,
Defendant-Appellee.

Appeal from the United States District Court
for the Central District of California
David O. Carter, District Judge, Presiding
Argued and Submitted
February 10, 2005—Pasadena, California
Filed May 23, 2005
Before: Harry Pregerson, William C. Canby, Jr., and
Richard C. Tallman, Circuit Judges.
Opinion by Judge Canby
5603
5606 CLEGHORN v. BLUE SHIELD OF CALIFORNIA
COUNSEL
Sharon J. Arkin, Robinson, Calcagnie & Robinson, Newport
Beach, California, for the plaintiff-appellant.
Gregory N. Pimstone, Terri D. Keville, Manatt, Phelps &
Phillips, LLP, Los Angeles, California, for the defen-
dant-appellee.
OPINION
CANBY, Circuit Judge:
We are presented once again with a question concerning
the degree to which the federal Employee Retirement Income
Security Act (“ERISA”) preempts state law. Douglas D. Cleg-
horn is a participant in his employer’s ERISA health plan
offered by Blue Shield of California (doing business as Care-
America) (“Blue Shield”). On one occasion he sought and
received emergency medical services and Blue Shield denied
reimbursement. Cleghorn sued Blue Shield in California state
court, asserting state-law causes of action and alleging that
Blue Shield had violated an emergency care provision in sec-
tion 1371.4(c) of the California Health and Safety Code.
Blue Shield removed the case to federal court and the dis-
trict court held that Cleghorn’s claims were preempted by
ERISA. When Cleghorn declined to amend his complaint to
allege an ERISA claim, the district court dismissed his com-
plaint for failure to state a claim. We affirm the judgment of
the district court.
CLEGHORN v. BLUE SHIELD OF CALIFORNIA 5607
I. Background
Through his employer, Cleghorn became a member of a
Blue Shield health plan.1 He subsequently sought and
received emergency medical care for an episode of dizziness,
imminent loss of consciousness, weakness, muscle fatigue,
and nausea. Cleghorn submitted a reimbursement claim to
Blue Shield for the emergency care he received.
Blue Shield denied Cleghorn’s claim on two grounds based
on the terms of the plan: (1) Cleghorn’s condition did not
meet the criteria for emergency care;2 and (2) the emergency
treatment was not approved by Cleghorn’s primary care phy-
sician or by the health plan.3 Cleghorn filed state law claims
in Orange County Superior Court on behalf of himself, all
others similarly situated, and the general public. The claims
were brought under the Unfair Competition Law (“UCL”),
CAL. BUS. & PROF. CODE § 17200, et seq., and the Consumer
Legal Remedies Act (“CLRA”), CAL. CIV. CODE § 1750, et
seq. Cleghorn requested general damages, injunctive relief,
disgorgement of illegally-gained profits, and punitive dam-
ages.
All of the claims were based on Cleghorn’s allegation that
Blue Shield’s emergency care policy violated section
1371.4(c) of the California Health and Safety Code:
1
In reviewing the district court’s dismissal of the complaint pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure, we accept for pur-
poses of appeal the facts as alleged in Cleghorn’s complaint. See Johnson
v. California, 207 F.3d 650, 653 (9th Cir. 2000).
2
Blue Shield’s coverage plan provides that: “Emergency services . . . are
covered only in a medical emergency . . . If emergency room or urgent
care services are used for a condition which is not an emergency, the ser-
vices are not covered and you will be liable for all charges.”
3
Blue Shield’s plan provides that emergency care is covered “only if
approved in advance by a [Blue Shield] physician.”
5608 CLEGHORN v. BLUE SHIELD OF CALIFORNIA
[A] health care service plan may deny reimburse-
ment to a provider for a medical screening examina-
tion in cases when the plan enrollee did not require
emergency services and care and the enrollee reason-
ably should have known that an emergency did not
exist. A health care service plan may require prior
authorization as a prerequisite for payment for nec-
essary medical care following stabilization of an
emergency medical condition.
Cleghorn asserted that this statute required Blue Shield to
cover emergency treatment whenever the insured “reasonably
believes that an emergency exists” and that a requirement of
pre-authorization in such cases is forbidden.4
Blue Shield removed the action to federal court on the
ground that Cleghorn’s state-law causes of action were com-
pletely preempted by ERISA. See Aetna Health Inc. v. Davila,
124 S. Ct. 2488, 2494-96 (2004) (upholding ERISA preemp-
tion as a ground for removal). Cleghorn then amended his
complaint to delete his individual claims for damages under
CLRA and filed a motion to remand. The district court denied
Cleghorn’s motion to remand, concluding that Cleghorn’s
claims were preempted. Cleghorn declined the opportunity to
amend his complaint to include claims under ERISA’s civil
enforcement scheme. The district court thereupon dismissed
the complaint pursuant to Rule 12(b)(6) of the Federal Rules
of Civil Procedure for failure to state a cognizable cause of
action.
II. Standard of Review
We review de novo a dismissal pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. Madison v. Graham,
4
Blue Shield contests Cleghorn’s interpretation of section 1371.4(c), but
our disposition of the preemption issue makes it unnecessary for us to
resolve that dispute.
CLEGHORN v. BLUE SHIELD OF CALIFORNIA 5609
316 F.3d 867, 869 (9th Cir. 2002). We also determine de novo
whether ERISA preempts state law causes of action. Winter-
rowd v. Am. Gen. Annuity Ins. Co., 321 F.3d 933, 937 (9th
Cir. 2003).
III. Discussion
[1] There are two strands to ERISA’s powerful preemptive
force. First, ERISA section 514(a) expressly preempts all state
laws “insofar as they may now or hereafter relate to any
employee benefit plan[,]” 29 U.S.C. § 1144(a), but state
“law[s] . . . which regulat[e] insurance, banking, or securities”
are saved from this preemption. 29 U.S.C. § 1144(b)(2)(A).
[2] Second, ERISA section 502(a) contains a comprehen-
sive scheme of civil remedies to enforce ERISA’s provisions.
See 29 U.S.C. § 1132(a). A state cause of action that would
fall within the scope of this scheme of remedies is preempted
as conflicting with the intended exclusivity of the ERISA
remedial scheme, even if those causes of action would not
necessarily be preempted by section 514(a). See Davila, 124
S. Ct. at 2498 n.4. It is this second strand of ERISA’s preemp-
tive force that precludes Cleghorn’s action.
[3] Section 502(a) of ERISA provides, among other things,
that “[a] civil action may be brought . . . by a participant or
beneficiary . . . to recover benefits due to him under the terms
of his plan. . . .” 29 U.S.C. § 1132(a). When Cleghorn sought
benefits under the plan and did not receive them, he did not
pursue his ERISA remedy but instead brought the present
state-law claims. These are precisely the kind of claims that
the Supreme Court in Davila held to be preempted. In Davila,
the plaintiffs were denied coverage or reimbursement for cer-
tain medical services by their ERISA plan administrators.
They similarly declined to pursue their ERISA remedies and
instead brought state tort claims to enforce duties of care
imposed by state statutes. See Davila, 124 S. Ct. at 2499. The
Supreme Court held that the state causes of action were pre-
5610 CLEGHORN v. BLUE SHIELD OF CALIFORNIA
empted even though: (1) they were tort claims (unlike ERISA
claims), (2) they were based on an external state statutory
duty, and (3) they did not duplicate ERISA remedies. See id.
at 2498-99. As the Court summarized: “Congress’ intent to
make the ERISA civil enforcement mechanism exclusive
would be undermined if state causes of action that supplement
the ERISA § 502(a) remedies were permitted, even if the ele-
ments of the state cause of action did not precisely duplicate
the elements of an ERISA claim.” Id. at 2499-2500; see also
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987) (noting
that the “policy choices reflected in the inclusion of certain
remedies and the exclusion of others under the federal scheme
would be completely undermined if ERISA-plan participants
and beneficiaries were free to obtain remedies under state law
that Congress rejected in ERISA.”); Elliot v. Fortis Benefits
Ins. Co., 337 F.3d 1138, 1147 (9th Cir. 2003) (holding that an
action “which seeks non-ERISA damages for what are essen-
tially claim processing causes of action[ ] clearly falls under
the § 1132 preemption exemplified by Pilot Life.”); Dishman
v. UNUM Life Ins. Co., 269 F.3d 974, 983 (9th Cir. 2001)
(ruling that “[c]laimants simply cannot obtain relief by dress-
ing up an ERISA benefits claim in the garb of a state law
tort.”).
[4] Cleghorn argues that his claims no longer implicate
ERISA because he amended his complaint to delete his indi-
vidual claim. Artful pleading does not alter the potential for
this suit to frustrate the objectives of ERISA. The only factual
basis for relief pleaded in Cleghorn’s complaint is the refusal
of Blue Shield to reimburse him for the emergency medical
care he received. Any duty or liability that Blue Shield had to
reimburse him “would exist here only because of [Blue
Shield’s] administration of ERISA-regulated benefit plans.”
Davila, 124 S. Ct. at 2498. Even the class claim does not aid
Cleghorn, for he is a participant in an ERISA plan and brings
his action on behalf of others similarly situated. Cleghorn’s
claim therefore cannot be regarded as independent of ERISA.
CLEGHORN v. BLUE SHIELD OF CALIFORNIA 5611
The argument most forcefully urged by Cleghorn on appeal
is that his suit is, at least in part, a pure citizen’s action to
enforce section 1371.4(c) of the California Health and Safety
Code, which may apply across the board to all health provid-
ers, not just ERISA plans. Cleghorn contends that such a
claim is not subject to preemption under our decision in
Washington Physicians Service Ass’n v. Gregoire, 147 F.3d
1039 (9th Cir. 1998). We reject both the argument and the
applicability of Washington Physicians Service.
[5] We have to deal with the complaint as it was when the
district court dismissed it, not as it may be affected by conces-
sions presented on appeal. As we have said, the factual basis
of the complaint, even for the public claims, was the denial
of reimbursement of plan benefits to Cleghorn. The relief
sought on the claims most strongly argued to survive preemp-
tion included restitutionary relief, disgorgement of profits,
injunctive and other equitable relief, and attorneys’ fees.5 On
this record, the district court did not err in concluding that
applying these remedies to Blue Shield conflicted with
ERISA’s exclusive enforcement scheme and that the state-law
claims were therefore preempted.
Washington Physicians Service was a very different case
from this one. There we dealt with a statute that required
every health carrier to provide, in any plans it delivered or
renewed, that services covered by the plan could be provided
by every category of health care providers within their areas
of competence (thus permitting coverage for services of “al-
ternative” medical providers). See id. at 1042. A group of
health maintenance organizations and health care service con-
tractors sued to prevent application of the statute on the
ground that it was preempted under the explicit preemption
provision of ERISA, section 514(a). We held that the statute
did not “operate directly on” ERISA plans, but merely regu-
lated “one of many products that an employee benefit plan
5
A third claim sought punitive damages.
5612 CLEGHORN v. BLUE SHIELD OF CALIFORNIA
might choose to buy.” Id. at 1044-45. We therefore concluded
that the statute did not “relate to” an ERISA plan within the
meaning of section 514(a). Id. at 1045.
[6] We need not address whether California’s different stat-
ute, as applicable to ERISA plans, operates directly on such
plans and therefore “relates to” them, because we are not rely-
ing for our decision on preemption under section 514(a).6
Whether or not section 1371.4(c) of the California Health and
Safety Code may be applicable to ERISA plans, it may not be
enforced against an ERISA plan by way of this lawsuit assert-
ing state-law causes of action against Blue Shield because of
its denial of ERISA plan benefits. Congress’s exclusive and
comprehensive civil enforcement scheme of section 502 pre-
empts any such state-law causes of action. Washington Physi-
cians Service does not affect this conclusion, because it did
not involve an attempt to enforce state-law causes of action
against ERISA plans or their administrators or fiduciaries.
Washington Physicians Service accordingly did not deal with
section 502(a) preemption at all.
IV. Conclusion
[7] Cleghorn’s state-law causes of action against Blue
Shield, arising from Blue Shield’s denial of benefits under an
ERISA plan, conflict with the exclusive civil enforcement
scheme established by Congress in section 502(a) of ERISA.
The state law claims are preempted for that reason. We
6
For the same reason, we need not decide whether California’s section
1371.4(c) is excepted from preemption under section 514(b)(2)(A) as a
state regulation of insurance. See Ky. Ass’n of Health Plans, Inc. v. Miller,
538 U.S. 329, 334 (2003). Preemption under ERISA section 502(a) is not
affected by that exception. “Under ordinary principles of conflict pre-
emption . . . even a state law that can arguably be characterized as ‘regu-
lating insurance’ will be pre-empted if it provides a separate vehicle to
assert a claim for benefits outside of, or in addition to, ERISA’s remedial
scheme.” Davila, 124 S. Ct. at 2500.
CLEGHORN v. BLUE SHIELD OF CALIFORNIA 5613
accordingly affirm the judgment of the district court dismiss-
ing Cleghorn’s complaint.
AFFIRMED.