Munda v. Summerlin Life & Health Insurance
127 Nev. 918
| Nev. | 2011Background
- Munda plaintiffs sue Summerlin, an insurer/MCO in Nevada, over quality-assurance duties to its insureds under Nevada law NRS chapter 695G.180.
- Summerlin contracted with the Clinic (Endoscopy Center of Southern Nevada) to provide care to its insureds and operated a QA program as required by NRS 695G.180.
- Plaintiffs allege unsafe practices at the Clinic from 2004–2008; Health District and CDC findings led to Summerlin terminating the Clinic.”
- Janise Munda was insured under an ERISA-governed employer plan and treated at the Clinic in 2007, later diagnosed with hepatitis C linked to the Clinic.
- Plaintiffs asserted negligence, negligence per se, breach of implied covenant of good faith and fair dealing, and loss of consortium, arguing Summerlin failed to evaluate/audit/monitor/supervise the Clinic.
- District court dismissed on ERISA preemption grounds; appellate court reverses, holding preemption does not apply under the facts alleged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA §514(a) preempts the state claims | Munda claims not tied to ERISA plan administration; ERISA does not preempt. | Summerlin claims are preempted because action relates to ERISA plan administration. | No preemption under §514(a) given independent MCO conduct. |
| Whether Summerlin acted as ERISA plan administrator or independently as an MCO | Summerlin’s actions were independent from ERISA plan administration. | Actions were as plan administrator or closely tied to plan. | Questions of fact; not precluded as ERISA administrator-only conduct. |
| Whether NRS 695G.180 claims are preempted by ERISA given the MCO’s role | NRS 695G.180 applies to all MCOs regardless of ERISA status; not a reference to ERISA plan. | NRS 695G.180 is preempted when acting as ERISA plan administrator. | Not preempted on the facts; statute applies to MCOs independently of ERISA. |
| Whether the loss-of-consortium claim and implied covenant claim survive | Loss of consortium derivatively tied to negligence; restated as bad-faith claim. | Bad-faith claim requires showing intent to deprive contract fruits. | Loss of consortium remanded; implied covenant claim affirmed only as restatement of negligence. |
Key Cases Cited
- Cervantes v. Health Plan of Nevada, 127 Nev. 789, 263 P.3d 261 (2011) (Nev. 2011) (holds MCO actions not preempted if not purely administrative or ERISA plan administrator activity)
- Insco v. Aetna Health & Life Ins. Co., 673 F. Supp. 2d 1180 (D. Nev. 2009) (D. Nev. 2009) (distinguishes MCO independent of ERISA plan for preemption analysis)
- Bui v. American Telephone & Telegraph Co. Inc., 310 F.3d 1143 (9th Cir. 2002) (9th Cir. 2002) (administrative decision on provider selection can be preempted if tied to plan administration)
- California Div. of Labor Standards Enforcement v. Dillingham Constr. N.A. Inc., 519 U.S. 316 (1997) (Supreme Court 1997) (test for ERISA preemption—reference/connection to plan)
- New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) (Supreme Court 1995) (health regulation generally retained; ERISA preemption limited by traditional police powers)
- Golden Gate Restaurant v. City and County of S.F., 512 F.3d 1112 (9th Cir. 2008) (9th Cir. 2008) (presumption against ERISA preemption of traditional health/safety regulation)