Fossen v. Blue Cross & Blue Shield of Montana, Inc.
660 F.3d 1102
9th Cir.2011Background
- Fossen family entities sue Blue Cross of Montana alleging premium increases violated state 'little HIPAA' statute and related state unfair insurance practices and contract theories.
- Plaintiffs allege Blue Cross charged higher premiums based on health status-related factors for MEWA/group plans from 2004–2009, with notable increases in 2006 and 2008.
- Coverage during 2004–2009 occurred through Associated Merchandisers Plan and later the Chamber Choices Plan; plaintiffs complained to the Montana insurance commissioner without relief.
- Blue Cross removed to federal court asserting ERISA complete preemption over the Montana HIPAA claim; district court granted summary judgment for Blue Cross, denying remand.
- District court denied leave to amend; the district court and the Ninth Circuit addressed preemption and jurisdiction, with remand limited to non-preempted claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does ERISA § 502(a) completely preempt the Montana HIPAA claim? | Fossen argues Montana HIPAA claim is independent state law. | Blue Cross contends complete preemption by ERISA § 502(a) because claim mirrors ERISA rights. | Yes; claim preempted and removable under ERISA § 502(a). |
| Is the Montana HIPAA provision exempt from ERISA preemption under the insurance savings clause or conflict preemption? | Montana law should escape preemption as insurance regulation, possibly saved by § 514(b)(2)(A). | Montana HIPAA is preempted; it is identical to federal HIPAA and dependent on ERISA plans. | Montana HIPAA is preempted; express savings clause does not save § 33-22-526(2)(a) from § 502(a) preemption. |
| Is the Montana unfair insurance practices claim preempted or independent for purposes of § 502(a)? | The claim is independent and not identical to ERISA, so not preempted. | The claim mirrors HIPAA issues and should be preempted as related to ERISA plans. | Not preempted on the merits; claim is preempted under § 514 but independently viable; remanded for merits. |
| Did the district court abuse its discretion in denying leave to amend? | Plaintiffs should be permitted to amend to state alternative theories. | Delay and theory-shifting preclude amendment. | No abuse; denial upheld. |
Key Cases Cited
- Davila v. Metropolitan Life Insurance Co., 542 U.S. 200 (1981) (complete preemption under ERISA § 502(a))
- Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009) (two-prong test for complete preemption under § 502(a))
- Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1991) (state-law duties duplicative of ERISA rights preempted)
- Cleghorn v. Blue Shield of Cal., 408 F.3d 1222 (9th Cir. 2005) (Davila framework; state claim duplicative of ERISA benefits preempted)
- Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58 (1987) (complete preemption concept under ERISA § 502(a))
- Morrison v. Kentucky Ass'n of Health Plans, 538 U.S. 329 (2003) (Kentucky Ass'n of Health Plans test for ERISA savings clause)
- Standard Insurance Co. v. Morrison, 584 F.3d 837 (9th Cir. 2009) (insurance savings clause application under § 514(b)(2)(A))