Opinion
Civil Action No, SA-03-CA-1152 RF (NN).
March 2, 2005
MEMORANDUM AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
TO: Hon. W. Royal Furgeson United States District Judge
I. Introduction
The matters before the court are plaintiff's Motion for Reconsideration of the Order Denying Remand of RASA's Claim Under Texas Insurance Code Article 21.21 § 4(5)(a) (docket entry 21) and Defendant AETNA Health, Inc.'s Motion to Reconsider Partial Order of Remand (docket entry 36), as well as the pleadings in support of, and opposition to, the same. I have jurisdiction to enter this Memorandum and Recommendation under 28 U.S.C. § 636(b) and the District Court's Order referring all pretrial matters in this proceeding to me for disposition by order, or to aid in their disposition by recommendation where my authority as a Magistrate Judge is statutorily constrained.This case was removed from the 407th Judicial District Court of Bexar County, Texas on October 10, 2003. Defendant AETNA Health, Inc. ("AETNA" or "defendant") asserted that removal was proper because plaintiff's action was preempted by ERISA. On that basis, defendant AETNA further argued that this court properly had federal question jurisdiction over this action in its entirety.
Docket Entry 1.
Docket Entry 1.
Shortly after removal, plaintiff, Radiology Associates of San Antonio, P.A. ("RASA" or "plaintiff"), filed a motion to remand asserting that the action was improvidently removed and this court had no jurisdiction over any of the claims contained in plaintiff's Original Petition. Plaintiff's Original Petition sought relief for the following causes of action against defendant AETNA: (1) violation of the Texas Insurance Code and unfair methods of competition; (2) fraud and intentional misrepresentation; (3) negligent misrepresentation; (4) quantum meruit; (5) violations of the Texas statutory claims payment requirements and the Texas Prompt Pay Act; (6) violations of Texas Insurance Code Article 21.55; (7) breach of contract; and (8) suit on a sworn account. The Petition also sought recovery against defendant MedSolutions of Texas, Inc. for tortious interference.
Docket Entry 4.
Plaintiff's Original Petition, filed as an exhibit to Defendant's Notice of Removal, Docket Entry 1.
After all parties responded in opposition to, or support of, plaintiff's motion to remand, and a hearing was held on the motion, Honorable Judge W. Royal Furgeson issued an order granting, in part, and denying, in part, plaintiff's motion to remand. Judge Furgeson granted the motion to remand only as to the breach of contract claim, finding that said claim:
See Docket Entries 9, 10, 11, 15, 17.
See Docket Entry 19.
Docket Entry 20.
is governed by and the claim brought to enforce the terms of the Physician Group Agreement, and any indirect effect on ERISA plans which Defendants have demonstrated is too tenuous to support federal subject matter jurisdiction. Thus, the Court will remand Plaintiff's breach of contract claims.
Docket Entry 20, at 7 (internal citations omitted).
As to all the other claims in plaintiff's petition, however, Judge Furgeson denied the motion to remand:
On the breach of contract claim, where interpretation requires interpretation and enforcement of the Physician Group Agreement, then a contract separate from ERISA benefit plans exists and defeats complete preemption. On the other hand, as to Plaintiffs' bad faith claims — unfair settlement, filing of false financial statements, and misrepresentation — Defendant has carried its burden to demonstrate that at least some of the services were provided under employee benefit plans. Plaintiff's own characterization of the claim as an effort to recover benefits and its failure to allege or argue that it is not an assignee of the patients' claims, indicates that the claims arising under the Texas Insurance Code are primarily claims for the recovery of benefits assigned to RASA by patients and claims processing disputes. Therefore, the Court will deny the motion to remand the bad faith claims.
Docket Entry 20, at 8 (internal citations omitted).
On March 12, 2004, plaintiff brought a motion for reconsideration of the portion of Judge Furgeson's order denying remand of plaintiff's claim under Texas Insurance Code Article 21.21 § 4(5)(a). In addition to opposing plaintiff's motion for reconsideration, defendant AETNA brought its own motion to reconsider. In its motion to reconsider, defendant AETNA asks the court to reconsider the portion of its order remanding plaintiff's breach of contract cause of action. Notably, both parties have submitted some arguments and evidence concerning the viability of plaintiff's causes of action. This court cannot address the same without first establishing the parameters of its jurisdiction. For these reasons, any arguments concerning the viability of plaintiff's claims are not considered in this memorandum and recommendation.
Docket Entry 21.
Docket Entry 25.
Docket Entry 36.
Docket Entry 36.
II. Issues Presented
1. Whether either party has presented sufficient grounds for the court to reconsider its previous rulings?
2. Whether plaintiff's claim for breach of contract should remain in state court?
3. Whether plaintiff's claim for violations for Texas Insurance Code Article 21.21 § 4(5)(a) should be remanded?
III. Applicable Legal Standards
A. Motions to ReconsiderThe motion to reconsider "is found nowhere in the Federal Rules of Civil Procedure." Most courts allow motions to reconsider under the umbrella of Federal Rule of Civil Procedure 8(f) which requires all pleadings to be construed "as to do substantial justice." However,
State of Louisiana v. Sprint Communications Co., 899 F.Supp. 282, 284 (M.D. La. 1995).
Id.
to conserve limited judicial resources, rulings should only be reconsidered where the moving party has presented substantial reasons for reconsideration.B. Standards for Removal and Remand
Id.
1. Removal
An overriding principle in the area of removal is that federal courts have no inherent subject matter jurisdiction. They are courts of limited jurisdiction by origin and design. As a result, there is an initial presumption that federal courts lack subject matter jurisdiction to resolve a particular suit. It is also well established that the party removing the case (the defendant) has the burden to present facts showing that federal subject matter jurisdiction exists. Whether a case may be removed is a question of federal law to be decided by federal courts. The removal statute is strictly construed. Any doubt about the propriety of removal is construed against removal. The removal jurisdiction of the court is determined by examining the record as it stands at the time the notice of removal is filed without consideration of subsequent pleadings.
Marathon Oil Co. v. Ruhrgas, 145 F.3d 211, 215 ("Federal courts, as opposed to state trial courts of general jurisdiction, are courts of limited jurisdiction marked out by Congress."); Oliver v. Trunkline Gas Co., 789 F.2d 341, 343 (5th Cir. 1986).
Kokkonen v. Guardian Life Ins. Co., 114 S.Ct. 1673, 1675 (1994); In re Hunter, 66 F.3d 1002, 1005 (9th Cir. 1995); Celli v. Shoell, 40 F.3d 324, 327 (10th Cir. 1994).
Allen v. R H Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995).
Kansas Pub. Employees Retirement Sys. v. Reimer Koger Assoc. Inc., 4 F.3d 614, 618 (8th Cir. 1993), cert. denied, 511 U.S. 1126 (1994).
Shamrock Oil Gas Corporation v. Sheets, 313 U.S. 100, 108-09 (1941); Healy v. Ratta, 292 U.S. 263, 270 (1934).
Owens Equip. Erection Co. v. Kroger, 437 U.S. 365, 377 (1978); Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996), cert. denied, 117 S.Ct. 1349 (1997).
2. Federal Question Jurisdiction and Preemption — Generally
The existence of federal question jurisdiction — such that removal to federal court is appropriate — is governed by the "well-pleaded complaint rule." The well-pleaded complaint rule provides that federal question jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. The well-pleaded complaint rule makes the plaintiff "master of his claim," allowing the plaintiff to avoid federal jurisdiction by exclusively relying on state law in forming his bases for relief.
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987).
Id.
Generally, a defendant raises federal preemption as a defense to one or more of the allegations contained in the plaintiff's complaint. When preemption is raised as a defense, the case
Id.
may not be removed to federal court . . . even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue.
Id, at 363 (emphasis in original).
Preemption raised as an affirmative defense is also known as "ordinary preemption."
Heimann v. National Elevator Industry Pension Fund, 187 F.3d 493, 500 (5th Cir. 1999).
However, there are instances in which federal preemption is not a defense.
One corollary of the well-pleaded complaint rule developed in case law . . . is that Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in nature.
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987).
When preemption arises in a manner which is not defensive in nature, but is, rather, jurisdictional, it is known as "complete" preemption.
Heimann, 187 F.3d, at 500.
3. Federal Question Jurisdiction and Preemption — ERISA
The various provisions of ERISA establish both ordinary preemption and complete preemption. For instance, Section 514 provides ordinary "conflict" preemption to the extent that state laws conflict with, or potentially conflict with, ERISA. The Act mandates
Roark v. Humana, Inc., 307 F.3d 298, 305 (5th Cir. 2002).
the provisions of this subchapter and subchapter III of this chapter shall supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . .
In interpreting this statutory language, the Supreme Court has held that a
law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983).
Furthermore, a law may "relate to" a benefit plan "even if the law is not specifically designed to affect such plans, or the effect is only indirect," or if the law "is consistent with ERISA's substantive requirements."
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990).
Hook v. Morrison Milling Co., 38 F.3d 776, 781 (5th Cir. 1994).
In addition to the ordinary conflict preemption established in Section 514, the enforcement provisions of ERISA completely preempt certain claims. Section 502, the enforcement section of ERISA, authorizes a participant in, or beneficiary of, an ERISA plan to bring a civil action,
Roark., 307 F.3d, at 305.
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 . . .
When the action is brought under Section 502, the claims are completely preempted and the exercise of federal jurisdiction is mandated.
Roark., 307 F.3d, at 305.
The breadth of ERISA's preemptions was intentionally created to serve an important public policy. Congress specifically wanted to develop a unified federal system regarding the enforcement of, and remedies available under, ERISA. To that end, it is necessary that any claim under an ERISA plan be construed as an exclusively federal issue.
'[T]he 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.'
Metropolitan Life Ins. Co., 481 U.S. 58, 64-65 (internal citations omitted).
Thus, when "the existence of a pension plan is a critical factor in establishing liability," the "action relates not merely to pension benefits, but to the essence of the pension plan itself" and will be removed to federal court. Stated another way:
Ingersoll-Rand Co., 498 U.S., at 139-140.
The purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans. To this end, ERISA includes expansive pre-emption provisions, see ERISA § 514, 29 U.S.C. § 1144, which are intended to ensure that employee benefit plan regulation would be 'exclusively a federal concern.'
AETNA Health Inc. v. Davila, 124 S.Ct. 2488, 2495 (2004), citing Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981).
Although ERISA preemption is broad, it is not without limits. For example, when the claim at issue
fundamentally affects [the] employee-employer relations . . . and only incidentally affects [the] beneficiary-administrator relationship with the plan . . . the connection between [the] claim and [the] ERISA-qualified plan is too remote and tenuous to warrant preemption.
Rokohl v. Texaco, Inc., 77 F.3d 126, 130 (5th Cir. 1996).
IV. Analysis
A. Should the court reconsider any of the rulings contained in its motion to remand?The threshold issue before the court is whether either party has presented a sufficient basis for the court to reconsider its previous holdings on the motion to remand. In the pleadings in support of, and opposition to, their respective motions to reconsider, the parties debate the applicability of myriad recent decisions from the Supreme Court, the Fifth Circuit and another district court. Given the bevy of new case law, it is appropriate to reconsider the district court's previous order.
See Docket Entries 21, 25, 36, 38, 39, 42, 44, 46, citing AETNA Health Inc. v. Davila, 124 S.Ct. 2488 (2004), Mayeaux v. Louisiana Health Service and Indemnity Co., 376 F.3d 420 (5th Cir. 2004), Peninsula Regional Medical Center v. Mid Atlantic Medical Services, LLC, 327 F.Supp. 2d 572 (D. Md. 2004), and Johns Hopkins Hospital v. Carefirst of Maryland, Inc., 327 F.Supp. 2d 577 (D. Md. 2004).
B. Should plaintiff's breach of contract claim remain in state court?
Plaintiff brought its motion for reconsideration first, urging the court to reconsider its refusal to remand plaintiff's claim under Texas Insurance Code Article 21.21 § 4(5)(a). Thereafter, defendant brought its own motion to remand, arguing that the court improperly remanded plaintiff's breach of contract claim to state court. Due to the nature of the case law on these issues, however, it is prudent to address defendant's motion to reconsider first.
Docket Entry 21.
Docket Entry 36.
In its motion for reconsideration, defendant requests that the court reconsider its decision remanding plaintiff's breach of contract cause of action. Defendant argues that the Supreme Court's recent decision in AETNA Health Inc. v. Davila, as well as the Fifth Circuit's decision interpreting Davila ( Mayeaux v. Louisiana Health Service and Indemnity Co. ), make it clear that plaintiff's breach of contract claim is completely preempted. In opposition, plaintiff argues that the test set forth in Davila reinforces the propriety of remanding the breach of contract claim. Plaintiff further asserts that its interpretation of Davila is supported by two recent Maryland district court cases: Peninsula Regional Medical Center v. Mid Atlantic Medical Services, LLC and Johns Hopkins Hospital v. Carefirst of Maryland, Inc.
Docket Entry 36.
AETNA Health Inc. v. Davila, 124 S.Ct. 2488 (2004).
Mayeaux v. Louisiana Health Service and Indemnity Co., 376 F.3d 420 (5th Cir. 2004).
See Docket Entries 36, 39, 42, 46.
Docket Entry 44.
Peninsula Regional Medical Center v. Mid Atlantic Medical Services, LLC, 327 F. Supp. 2d 572 (D. Md. 2004).
Johns Hopkins Hospital v. Carefirst of Maryland, Inc., 327 F.Supp. 2d 577 (D. Md. 2004).
In Davila, two individuals — one a participant and the other a beneficiary in ERISA-regulated employee benefit plans — sued their health maintenance organizations for failing to exercise ordinary care with respect to certain coverage decisions, in violation of the Texas Health Care Liability Act (THCLA). The Davila plaintiffs contended that said defendants' "refusal to cover the requested services violated their 'duty to exercise ordinary care when making health care treatment decisions,' and that these refusals 'proximately caused' their injuries." The Fifth Circuit concluded that the Davila plaintiffs' THCLA claims were not duplicative of any ERISA cause of action and, therefore, that plaintiffs' claims were not preempted.
Davila, 124 S.Ct., at 2492, 2493.
Davila, 124 S.Ct., at 2493.
Davila, 124 S.Ct., at 2494.
In reversing the Fifth Circuit, the Supreme Court noted that Section 502(a) of ERISA constituted an "integrated enforcement mechanism" which was "essential to accomplish Congress' purpose of creating a comprehensive statute for the regulation of employee benefit plans." The Court further explained:
Davila, 124 S.Ct., at 2495.
any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore preempted. For these reasons,
if 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.
Davila, 124 S.Ct., at 2496.
In concluding that the Davila plaintiffs' claims were pre-empted by ERISA, the Court found that the duties imposed by the THCLA — i.e. the duties pursuant to which plaintiffs were suing — did not "arise independently of ERISA or the plan terms." Similarly,
Davila, 124 S.Ct., at 2497.
interpretation of the terms of respondents' benefits plans forms an essential part of their THCLA claim, and THCLA liability would exist here only because of petitioners' administration of ERISA-regulated benefit plans. Petitioners' potential liability under the THCLA in these cases, then, derives entirely from the particular rights and obligations established by the benefit plans. So . . . respondents' THCLA causes of action are not entirely independent of the federally regulated contract itself.
Id. , at 2498.
Central to the Court's decision was the fact that the plaintiffs were only attempting to rectify the "wrongful denial of benefits promised under ERISA-regulated plans, and do not attempt to remedy any violation of a legal duty independent of ERISA."
Id. , at 2498. The Court also noted that distinguishing between the labels affixed to particular claims was irrelevant to the preemption analysis, as that would "'elevate form over substance and allow parties to evade' the preemptive scope of ERISA simply 'by relabeling their contract claims as claims for tortious breach of contract (internal citations omitted).'" Id. , at 2498-2499.
Less than two weeks after the Davila decision was issued, the Fifth Circuit issued its decision in Mayeaux v. Louisiana Health Service and Indemnity Co. In Mayeaux, a patient, her husband, her treating physician and his wife brought suit against the patient's group health insurer for its denial of coverage for a particular antibiotic treatment. Concluding that the claims of physician Hyman and his wife for negligence, unfair business practices, defamation and intentional interference with contracts were preempted by ERISA, the Court found that said causes of action went "to the very heart of the ERISA administration process." Specifically, the Fifth Circuit noted that the claims "'arose from the manner in which [BCBS] determined not to cover" the patient-plaintiff's treatment and, therefore, "'the existence of an [ERISA] plan [wa]s a critical factor in establishing liability.'" Thus, both Davila and Mayeaux addressed situations in which individuals sued an insurance provider for its coverage determinations pursuant to an ERISA-regulated plan. The foundation of the parties' relationships in those cases was the ERISA-regulated plan.
Mayeaux, 376 F.3d 420.
Id.
Id., at 433.
Id. (internal citations omitted).
In contrast, the Johns Hopkins and Peninsula decisions were concerned with breach of contract actions brought by hospitals against health insurers. The hospital-plaintiffs alleged that the defendant-insurance companies breached the contracts by which the hospitals agreed to provide medical services to the defendants' subscribers. The Johns Hopkins and Peninsula decisions stated that the threshold inquiry under the Davila decision was "whether the plaintiff bringing the state-law action has standing to sue under ERISA's civil enforcement provision." Noting that a third party provider only has standing to sue under § 502(a) when it has been assigned the beneficiary's rights under the ERISA plan and that no such assignments had been received, the Johns Hopkins and Peninsula courts concluded that those actions were "based entirely upon agreements between Plaintiffs and [defendant] that [we]re fully independent of the subscriber agreements governed by ERISA." Because those plaintiffs were not "participants, beneficiaries, fiduciaries, or assignees," they lacked standing to sue under ERISA. The claims, therefore, were not preempted by ERISA and the courts concluded that they lacked removal jurisdiction. Thus, both Johns Hopkins and Peninsula addressed situations in which hospitals sued insurance companies for their failures to perform under the hospital (provider)-insurance contracts. The foundation of the parties' relationships in those cases was their own, non-ERISA regulated contracts. Essential to those decisions was the absence of assignments from the insured to the hospital/healthcare provider.
See Johns Hopkins Hopital, 327 F.Supp.2d. 577; Peninsula Regional Medical Center, 327 F.Supp.2d 572.
Peninsula, 327 F.Supp. 2d, at 575; Johns Hopkins, 327 F.Supp.2d, at 581, "The plaintiff's standing to sue under the statute is therefore an essential requirement in determining whether claims are preempted."
Peninsula, 327 F.Supp. 2d, at 576; Johns Hopkins, 327 F.Supp. 2d, at 581.
Johns Hopkins, 327 F.Supp. 2d, at 581. See also Peninsula, 327 F.Supp. 2d, at 576.
Id.
Id.
In this case, defendant argues that it is not the existence of the contract that determines the preemption/remove-ability of the claim. Rather, it is the fact that the parties' contract is inextricably linked to the ERISA-regulated plan such that interpretation of the plan is necessary for adjudication of the claim. For these reasons, defendant contends that plaintiff's breach of contract claim is "at bottom" a claim for enforcement of ERISA and is, therefore, preempted. Defendant further contends that plaintiff is suing as an assignee. Because plaintiff has standing (as an assignee) to sue under ERISA, defendant argues that plaintiff's claims are preempted by ERISA.
Plaintiff, on the other hand, vehemently contends that it is not suing as an assignee:
RASA is not suing as an assignee, and there is no evidence in the record that RASA is an assignee of plan beneficiaries. RASA's claims arise solely from the independent contractual duties imposed upon Aetna under the parties' agreement and the independent financial reporting duties imposed upon Aetna by Texas law.
Docket Entry 44, ¶ 6, at 3.
Plaintiff, therefore, is arguing that the critical element at issue is the existence of the contract between the parties — i.e. an independent legal duty — that takes this action outside the scope of ERISA.
In its final reply brief, defendant further asserts that it
tendered sworn proof in the record that RASA is an assignee of plan beneficiaries along with authenticated copies of assignments to RASA. Indeed, it is RASA who lacks evidence that it departs from the practice of medical providers everywhere. No patient makes it past any waiting room to receive medical care without signing an assignment or benefits.
Docket Entry 46, ¶ 6, at 3, citing Docket Entry 10, Exhibit 1, ¶ 5, Exhibit A-1, Exhibit B-1, Exhibit 2, ¶ 10.
This case appears to dance the middle line between the Davila decision, on the one hand, and the Johns Hopkins and Peninsula decisions, on the other. Although there is another, established legal duty in this matter — a contract-based obligation between the parties, i.e. privity — there is also some evidence in the record of assignments from defendant's insureds to plaintiff.
The presence or absence of assignments, however, is not the critical factor in establishing ERISA preemption, nor is the mere existence of some other legal duty between the parties. The determinative element is the dependence or independence of the contract and/or the legal duty on the ERISA-regulated plan. Here, the parties' contract is not independent of the ERISA-regulated plan. Rather, the rights and obligations of the parties are defined by reference to the ERISA-regulated plan. Because the entire scope of the parties' agreement is determined by the ERISA-regulated plan, the parties' agreement is tethered to the ERISA-regulated plan. The contract, therefore, is not "independent" and does not establish the kind of "independent legal duty" contemplated by Davila. Thus, the parties' contract does not "arise independently of ERISA or the plan terms."
See Docket Entry 18, Exhibit C, Physician Group Agreement.
See Id. , at 1: "Company contracts with health care providers to render services to individuals entitled to receive health care services from or through a Plan;" Id. , at ¶ 1.1, at 1, "Group shall provide to Members . . . those Covered Services . . ." See also Id. , ¶ 12.4, at 14 defining "covered services" as "Those Medically Necessary Services which a Member is entitled to receive under the terms and conditions of a Plan;" and ¶ 12.13, at 15, defining "plan" as "Any health benefit product or plan issued, administered, or serviced by Company or one of its Affiliates, including, but not limited to, HMO, preferred provider organization, indemnity, Medicaid, Medicare and Workers' Compensation."
Davila, 124 S.Ct., at 2497.
In light of Davila its progeny, discussed above, plaintiff's breach of contract claim is completely preempted by ERISA. It is my recommendation that defendant's motion to reconsider be GRANTED and the motion to remand be VACATED as to plaintiff's breach of contract cause of action.
C. Should plaintiff's cause of action for violations of the Texas Insurance Code remain in federal court?
The last issue before the court is plaintiff's motion for reconsideration. Plaintiff asserts that the court's previous ruling should be reconsidered and the cause of action for violations of Texas Insurance Code Article 21.21 § 4(5)(a) should be remanded. Plaintiff avers, in pertinent part:
Docket Entry 21.
RASA's claim against Aetna for violation of Article 21.21 § 4(5)(a) does not touch upon or affect ERISA entities or benefits. The relationship between the patient and the Aetna ( sic) is completely unaffected by Aetna's filing of false financial statements. However, when Aetna filed false financial statements understating its liabilities to health care providers, Aetna acted in direct violation of Article 21.21 § 4(5)(a), causing RASA to sustain damages.
Docket Entry 21, ¶ 20, at 8.
Plaintiff can only have standing to sue under Article 21.21 § 4(5)(a) by virtue of its contract with defendant AETNA which is inextricably linked to an ERISA-regulated plan. Plaintiff has alleged that it suffered damages as a proximate cause of defendant's false filings in violation of Article 21.21 § 4(5)(a). As explained by plaintiff, the damages arose when it extended credit to AETNA — by providing services to AETNA insureds — based on AETNA's misstatements of its financial condition. Thus, plaintiff's Article 21.21 claim is akin to a statutory version of a fraudulent inducement cause of action. Because plaintiff's Article 21.21 cause of action seeks damages based on plaintiff's performance under both the parties' contract and defendant's misrepresentations inducing the same, the Article 21.21 claim supplements the breach of contract cause of action which, in turn, attempts to supplement, supplant or duplicate plaintiff's remedies under ERISA. In Davila, the Supreme Court made it clear that
See Docket Entry 21, ¶ 13, at 5.
any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore preempted.
Id.
For these reasons, it is my conclusion that plaintiff's cause of action under Texas Insurance Code § 21.21 (4)(5)(a) is preempted by ERISA. The district court properly retained jurisdiction over the same. Consequently, I recommend that plaintiff's motion for reconsideration (docket entry 21) be DENIED.
V. Recommendation
Based on the foregoing, it is my recommendation that defendant's motion for reconsideration (docket entry 36) be GRANTED and the district court's previous order be VACATED only insofar as it granted remand of plaintiff's breach of contract cause of action. I further recommend that plaintiff's motion for reconsideration (docket entry 21) be DENIED in all respects.VI. Instructions for Service and Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this Report and Recommendation on each and every party either (1) by certified mail, return receipt requested, or (2) by facsimile if authorization to do so is on file with the Clerk. According to 28 U.S.C. § 636(b)(1) and FED. R. CIV. P. 72(b), any party who desires to object to this report must serve and file written objections to the Report and Recommendation within ten (10) days after being served with a copy unless this time period is modified by the District Court. A party filing objections must specifically identify those findings. conclusions, or recommendations to which objections are being made and the basis for such objections; the District Court need not consider frivolous, conclusive, or general objections. Such party shall file the objections with the Clerk of the Court, and serve the objections on all other parties and the Magistrate Judge. A party's failure to file written objections to the proposed findings, conclusions, and recommendations contained in this report shall bar the party from a de novo determination by the District Court. Additionally, any failure to file written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation within ten (10) days after being served with a copy shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the District Court.
See Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuña v. Brown Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000), cert. denied, 530 U.S. 1229 (2000).
Douglass v. United Servs. Auto. Ass'n., 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).