Karen Hansen v. Group Health Cooperative
902 F.3d 1051
9th Cir.2018Background
- Providers Karen Hansen and Bette Joram (Washington psychotherapists) sued Group Health Cooperative (GHC, now Kaiser Foundation Health Plan of Washington) in Washington state court under the Washington Consumer Protection Act (CPA), alleging unfair/deceptive practices tied to GHC’s use and licensing of the Milliman Care Guidelines.
- Providers asserted three central theories: (1) licensing/use of biased treatment guidelines is deceptive, (2) use of guidelines enables violations of Washington’s Mental Health Parity Act, and (3) GHC unfairly competes by steering patients to its own guideline-following therapists.
- GHC removed the case to federal court, asserting complete preemption by ERISA based on benefit-assignment documents from three patients covered by ERISA plans.
- The district court denied remand, dismissed claims insofar as they concerned ERISA-plan administration, and remanded non‑ERISA claims to state court; Providers appealed the denial of remand for the ERISA‑related claims.
- The Ninth Circuit reviewed whether ERISA §502(a)(1)(B) completely preempted the Providers’ CPA claims under the Davila two‑prong test and whether the state-law duties at issue were independent of ERISA plans.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Providers’ CPA claims are completely preempted by ERISA §502(a)(1)(B) | Claims arise from independent state-law duties (CPA, parity statute, unfair competition) and thus are not removable as ERISA claims | Removal proper because benefit assignments mean claims really seek ERISA plan benefits, invoking Davila | Not completely preempted; remand required (removal improper) |
| Whether Washington’s Mental Health Parity Act creates an independent duty separate from ERISA plan terms | Parity statute imposes state-law coverage requirements independent of plan language | Assessment of parity violations depends on interpreting plan term “medically necessary,” thus implicating ERISA | Statutory parity duty is independent of plan terms here; second Davila prong not met for preemption |
| Whether the unfair-competition claim (discouraging patients from outside therapists) is an ERISA claim | Duty to refrain from unfair competition exists under state law regardless of any ERISA plan | Actions relate to plan administration and patient benefits, so ERISA governs | Claim rests on independent state-law duty and could exist absent any ERISA plan; not preempted |
| Whether district court should have exercised jurisdiction and kept any part of case in federal court | Plaintiffs seek state-law remedies; federal court lacks jurisdiction absent complete preemption | Removal statute and complete-preemption doctrine permit federal jurisdiction | Federal jurisdiction improper for these claims; Ninth Circuit reversed and remanded entire case to state court |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (establishes two‑prong test for ERISA §502(a) complete preemption)
- Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) (ERISA §502(a) as ERISA’s primary civil enforcement provision)
- Beneficial Nat. Bank v. Anderson, 539 U.S. 1 (2003) (complete preemption doctrine overview)
- Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557 (1968) (seminal complete preemption/removal precedent)
- Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983) (artful pleading doctrine and limits on state-law pleading to avoid federal forum)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (plaintiff as master of the complaint; federal-question removal limits)
- Louisville & Nashville R.R. v. Mottley, 211 U.S. 149 (1908) (well‑pleaded complaint rule)