DocketNumber: No. CV93-0704032 S
Citation Numbers: 1995 Conn. Super. Ct. 13787
Judges: CORRADINO, JUDGE.
Filed Date: 12/12/1995
Status: Non-Precedential
Modified Date: 4/18/2021
Connecticare is engaged in providing health care coverage to groups of employees through benefit plans sponsored by employees. It contracts with employers to provide health care. The plaintiffs formerly were providers of chiropractic services in the defendant's health provider network. In 1990 the defendant began to consider the formation of an independent practice association (IPA) as an alternative to the existing individual contractural relationships with chiropractors — chiropractic treatment of subscribers would be limited to a single chiropractic group. One of the plaintiffs, Dr. Curry, was elected vice chairman and the committee was organized to determine standards of membership in the prospective chiropractic group.
The defendant corresponded with providers who at the time where chiropractic providers; information was requested from these individuals.
The committee decided to set up an IPA and to that end organized and incorporated Connecticut Chiropractic care, P.C. (C.C.C.). Credentials and standards were adopted by CCC. Certain chiropractors were chosen initially and future membership determinations were to be based on agreed upon credential standards. The plaintiffs were not selected by CCC for membership and this can longer participate in the defendant's restructured provider network.
The plaintiffs maintain, and support their position by CT Page 13788 affidavit, that the defendant Connecticare did play a role in the decision as to who would participate in the determination as to who would participate in the IPA. The plaintiffs assert by way of affidavit that a document generated by the defendant showed "high utilizers" — utilization refers to the cost per patient per visit and the number of visits per year. Dr. Curry was informed that high utilizers wouldn't be accepted in the I.P.A. Some of those accepted had higher utilization rates than those of the plaintiffs. At a meeting of prospective IPA member chiropractors a map of the state was displayed showing pins placed on certain cites. Later the defendant and CCC informed the plaintiff Santiago she would not be offered an IPA contract based on a review of geographical need and participation criteria. Dr. Santiago's practice is located in the same town as Dr. Owens who was a member of the CCC board of directors and who was thus in the IPA. As noted the plaintiffs assert the defendant did participate in determining who would be allowed in the IPA.
The defendant by affidavit asserts it only provided logistical and administrative support to CCC pursuant to a contract but denies participating in selecting the chiropractors who would be let into the IPA and did not require CCC that include or exclude certain individuals from membership.
The rules to be applied in summary judgment matters are well-known. Such a motion must not be granted if there is a genuine issue of material fact.
The motion for summary judgment claims that the second, third and fourth counts brought against Connecticare are barred by the federal act known as ERISA and also that as a matter of state law the causes of action in the three counts cannot be maintained and no genuine issue of material fact bars the granting of summary judgment on these counts.
The ERISA preemption claim appears to be based on an analysis the allegations of the complaint and the relief sought. This issue appears to be resolvable as an issue of law and, at least to the court, it does not appear that the plaintiffs claim an issue of material fact prevents the granting of the motion — they argue, as a matter of law there is no ERISA preemption. The plaintiffs do maintain the three counts should not be dismissed on state law grounds because there exist genuine issues of material fact. CT Page 13789
(1)
ERISA PREEMPTION
The first issue that must be discussed by the court is whether the Employment Retirement Income Security Act (ERISA),
The reach of federal preemption under § 1144(a) has been described in broad language. In Shaw v. Delta Airlines Inc.
"to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government . . ., [and to prevent] the potential for conflict in substantive law .. requiring the tailoring of CT Page 13790 plans and employer conduct to the peculiarities of the law of each jurisdiction." Ingersoll-Rand,
498 U.S. at 142 ,112 L.Ed.2d 474 ,111 S.Ct. 478 .
This echoes the statement of a Senator quoted in Pilot LifeIns. Co. v. Dedeaux,
In deed as Justice Souter notes at page 706 of New York BlueCross v. Travelers Ins.: "The basic thrust of the preemption clause, then, was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans."
The question really becomes what type of litigation based on state statute or common law should be held to interfere with the administration of an employee benefit plan? For preemption to be found then two issues must be addressed: (1) what does the "administration" of such a plan mean and (2) assuming we establish a definition for that term what type and/or degree of state interference is permissible without a finding of preemption.
There are scores of Federal cases that struggle with the issue of preemption and the analysis is confused because of the broad range of employee benefit plans covered by ERISA. They range from pension to health plans. Often then it is not helpful to cull out language in one case or another that might be said to define what the administration of a plan means in one context and apply it to a different factual setting.
In a triumph of understatement the court in Arkansas BlueCross Blue Shield v. St. Mary's Hospital,
"have relied on a variety of factors when determining whether a state statute of general application `relates to' ERISA plans. These factors include whether the state law negates an ERISA plan provision, Baxter v. Lynn,
886 F.2d 182 ,185 (8th Cir. 1989), whether the state law affects relations between primary ERISA entities, Firestone Tire Rubber Co. v. Neusser,810 F.2d 550 ,556 (6th Cir. 1987); Sommers Drug Stores v. Corrigan Enters,793 F.2d 1456 ,1467 (5th Cir. 1986), whether the state law impacts the structure of ERISA plans, United Food Commercial Workers v. Pacyga,801 F.2d 1157 ,1160 (9th Cir. 1986), whether the state law impacts the administration of ERISA plans, Fort Halifax Packing Co. v. Coyne,482 U.S. 1 ,9-10 ,107 S.Ct. 2211 ,2216-17 ,96 L.Ed.2d 1 (1987), whether the state law has an economic impact on ERISA plans, Aetna Life Ins. Co. v. Borges,869 F.2d 142 ,147-48 (2d Cir. 1989), whether preemption of the state law is consistent with other ERISA provisions, Mackey v. Lanier Collections Agency Serv.,486 U.S. 825 ,832-40 ,108 S.Ct. 2182 ,2186-90 ,100 L.Ed.2d 836 (1988), and whether the state law is an exercise of traditional state power, Aetna Life Ins. Co., 869, F.2d at 148; Firestone Tire Rubber Co.,810 F.2d at 555 .This court agrees that all these factors can be relevant to an ERISA preemption analysis. Like any list of factors, however, they only serve to focus and clarify the court's analysis. The court must still look to the totality of the state statute's impact on the plan — both how many of the factors favor preemption and how heavily each individual factor favors preemption are relevant.
We do not believe that any one factor, by itself, is determinative of the ERISA preemption issue before the court today."
Id. at pp. 1344-1345. CT Page 13792
No one factor is controlling. Merely because a state law or cause of action represents a traditional exercise of state power won't dictate a finding that there is no ERISA preemption. Likewise just because a particular law does not affect relations between primary ERISA plan entitles should not be controlling.
But as a 10th Circuit case has put it a primary concern must be whether the state law or state common law or statutory action affects the "structure, the administration or the type of benefits provided by an ERISA plan", Airparts Co. v. CustomBenefit Services of Austin Inc.,
To ascertain whether a particular state law or suit would affect the structure, administration or the type of benefits of an ERISA plan one must not merely look at which entity — here Connecticare — the litigation is aimed at but at the relief being sought. Here the plaintiffs seek inclusion in the provider network that certain of their patients' employee benefit plans utilize. As the defendant notes the provider network "is an integral part of, and established pursuant to the employee benefits plans of the plaintiffs' patients."
The recent case of Hollis et al v. Agna,
In that case a group of participants in a CIGNA health plan CT Page 13793 sued the defendant on a variety of state statutory claims. The basis of the claims was that the defendant had wrongfully excluded a physician from its list of participating physicians whose fees would be reimbursed under a private medical plan. The court at page 400 said:
"This is in essence a complaint about plan administration. This is a core ERISA concern.
A moment's reflection will confirm why this is so. The preemption clause "was intended to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government." Ingersoll-Rand Co. v. McClendon, supra,
498 U.S. at 142 . Allowing state law actions like the one here would subject plans and plan sponsors to burdens not unlike those that the preemption clause seeks to foreclose. It is entirely foreseeable that different state courts, construing a wide array of state statutory provisions and common-law principles, might develop different substantive standards governing the circumstances under which health plans could remove physicians from their lists. This would, in the language of Ingersoll-Rand, require "the tailoring of plans . . . to the peculiarities of the law of each jurisdiction. Such an outcome is fundamentally at odds with the goal of uniformity that Congress sought to implement." Id.
As in Hollis the relief sought here would permit an intervention into the very provider network the defendant administers.
From that perspective cases like Aetna Life Insurance v.Borges,
In other words the cases seem to say if a state law or cause of action does not affect the structure of an ERISA plan or administration or type of benefits mere economic impact does not require a finding of preemption; thus see Aetna Life InsuranceCo. v. Borges, supra, Mackey v. Lanier Collections Agency Services Inc.,
Similarly as noted in the Arkansas Blue Cross, Blue Shield
case some courts have found that preemption is dictated when a state law affects relations between primary ERISA entities,Sommers Drug Stores v. Corrigan Enterprises, Inc.,
Also while it is true that an important consideration must be whether the state law giving rise to the cause of action focuses specifically on ERISA benefit plans. cf Aetna Life Ins. Co. v.Borges,
The plaintiffs also argue that a finding of preemption here would create an insulated legal world in which Connecticut's laws of general applicability wouldn't apply to the defendant. They cite DiPietro-Kay v. Interactive Benefits Corp., supra which quoted Rebaldo v. Cuomo, supra to the effect that ERISA can't be held to invalidate every state action that may increase the costs of operating these plans because otherwise the plans would be permitted to lead a "charmed existence that was never contemplated by Congress."
Also the fact that the plaintiffs are forestalled in asserting general remedies provided by state law won't defeat a finding of preemption when even a law of general application must be preempted because of its impact on an ERISA plan.
The point is that if preemption is found then the only remedy provided is a federal one and the point of the federal remedy is that it is provided to plan participants and beneficiaries,
Their exclusion would only become a concern of the Federal act if it could be shown that their exclusion somehow violated the fiduciary obligations of the plan administrators to the plain beneficiaries. If apart from that such exclusion is claimed to have been improper or illegal and no state or federal remedy is available due to preemption, perhaps a due process claim would be presented. But that is not before me.
In any event I find that the action brought in this case is preempted by ERISA. No genuine issue of material fact is presented since the allegations of the complaint and the relief sought properly raise the issue of preemption
(2)
NON ERISA CLAIMS FOR SUMMARY JUDGMENT
(a)
In the third count the plaintiffs allege the defendant violated an implied covenant of good faith and fair dealing owed to plan beneficiaries by failing to inform beneficiaries that it entered into a contract with a group of chiropractic physicians which they must use but with whom the defendant agreed to pay a lump sum each month for chiropractic services. Every contract carries an implied covenant of good faith and fair dealing but it is difficult to understand how this theory can be relied upon here since there does not appear to be an underlying between the CT Page 13797 plaintiffs and Connecticare. Apart therefore from the court's ruling on ERISA preemption there is an independent ground to grant the defendant's motion for summary judgment on the third count. It should be noted, however, that the very allegations set forth in this count and in the second count, asserting CUTPA violations, underline the reasons why ERISA preemption must be found. Both counts base much of their factual allegations giving rise to their respective legal claims on the perceived effect that the actions of the defendant and a certain group of chiropractic physicians will have on plan beneficiaries. The plan administrators and the beneficiaries are certainly primary entities of the ERISA plan.
The defendant also raises a non-ERISA standing objection to the plaintiff's CUTPA claim in the second count. The plaintiffs do point out that the CUTPA claim does allege Connecticare breached obligations owed to prospective I.P.A. members — the plaintiffs themselves. On the state of the record before me I'm not prepared to say that summary judgment should be granted on the non-ERISA preemption claim of lack of standing as to the CUTPA count.
(b)
The fourth count of the complaint alleges that the defendant violated the state anti-trust act. The court has ruled that the claim is precluded by ERISA and will discuss whether apart from the ERISA grounds the defendant should prevail on its motion for summary judgment as to this count.
The plaintiffs allege the defendant conspired with chiropractic physician competitors of the plaintiffs to persuade or induce third parties — plan beneficiaries to utilize the services of other doctors than the plaintiffs. Their exclusion from membership in CCC would according to the plaintiff's allegations be a secondary boycott.
Our anti-trust statute is set forth in §
A major contention of the defendant is that an essential CT Page 13798 element of an antitrust violation is the allegation that the concerted action imposes an unreasonable restrain on trade, see subsection (a) of the statute, State v. Hossan-Maxwell, Inc.
In determining whether a challenged activity constitutes an unreasonable restraint on trade the courts use a per se analysis or a rule of reason analysis.
A per se analysis is used only in a limited class of cases a court must conclude that a defendant's actions are so plainly harmful to competition and so obviously lacking in any redeeming pro-competitive values that they're conclusively presumed illegal without the need for further examination, Broadcase Music Inc. v.CBS,
"Most cases fall outside these narrow categories held to be illegal per se. In the general run of cases a plaintiff must prove an antitrust injury under the rule of reason. Under this test the plaintiff bears the initial burden of showing that the challenged action has had an actual adverse effect on competition as a whole in the relevant market; to prove it has been harmed as an individual competitor will not suffice."
As the court noted the Supreme Court has cautioned against applying the per se rule to professional associations "because the economic impact of professional activities is difficult to track", id at page 543.
Cases cited by the plaintiffs on other points raised in their brief support the application of a rule of reason test here, cfKruezer v. American Academy of Periodontology,
My problem here is that the plaintiffs have not offered any evidence to meet their initial burden of showing an adverse impact on price, quality, or output of chiropractic services offered to consumers in the relevant market — i.e. the plan beneficiaries.2 On this basis alone I conclude there is a non-ERISA basis for granting the defendant's summary judgment motion as to the fourth count.
In any event based on the ERISA analysis the court grants the defendant's motion for summary judgment as to all counts and also grants the motion as to the third and fourth counts on non-ERISA grounds.
Thomas Corradino, Judge
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State v. Hossan-Maxwell, Inc. , 181 Conn. 655 ( 1980 )
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MacKey v. Lanier Collection Agency & Service, Inc. , 108 S. Ct. 2182 ( 1988 )