Samantha Milby v. MCMC
2016 U.S. App. LEXIS 23112
| 6th Cir. | 2016Background
- Samantha Milby, a nurse, received long-term disability (LTD) benefits under her employer’s ERISA-governed plan after becoming unable to work in April 2011.
- During an eligibility review the plan retained MCMC, a third-party medical record reviewer based in Massachusetts, which reviewed Milby’s records and opined she could work; neither MCMC nor its reviewer was licensed to practice medicine in Kentucky.
- The plan terminated Milby’s LTD benefits effective February 21, 2013, in part based on MCMC’s opinion.
- Milby sued MCMC in Kentucky state court for negligence per se (practicing medicine without a Kentucky license); MCMC removed the suit to federal court, invoking complete preemption under ERISA § 1132(a).
- The district court denied remand and dismissed Milby’s complaint under Rule 12(b)(6) because MCMC was not a proper ERISA defendant; Milby appealed.
- The Sixth Circuit affirmed: Milby’s state-law claim is completely preempted by ERISA and dismissal was appropriate because the plan administrator is the proper ERISA defendant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Milby’s state-law negligence-per-se claim is completely preempted by ERISA | Milby: claim rests on state licensing law and does not require interpretation of ERISA plan terms; therefore it’s independent and not preempted | MCMC: claim concerns denial of ERISA benefits and is therefore preempted under Davila | Held: Preempted. The claim is essentially about denial of ERISA benefits and thus meets Davila prongs. |
| Whether the alleged duty arises independently of ERISA (Davila prong 2) | Milby: Kentucky licensing statute creates an independent duty; no plan interpretation required | MCMC: duty derives from the ERISA plan relationship; Kentucky law does not impose an independent duty here | Held: No independent duty. Reviewing records without making medical-necessity determinations is not practicing medicine under Ky. Rev. Stat. § 311.560; duty rests on ERISA framework. |
| Whether a third-party reviewer like MCMC is a proper defendant in an ERISA action | Milby: MCMC’s unlicensed practice exposes it to state tort liability regardless of ERISA | MCMC: even if preempted, it is not the proper ERISA defendant; relief belongs against plan administrator | Held: MCMC is not the proper ERISA defendant; dismissal without prejudice as ERISA remedy lies against the plan/administrator. |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (Sup. Ct.) (establishes two-prong test for ERISA § 1132(a) complete preemption)
- Hogan v. Jacobson, 823 F.3d 872 (6th Cir.) (applies Davila to negligence-per-se claims for unlicensed reviewers and finds preemption)
- Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609 (6th Cir.) (discusses when state duties are independent of ERISA)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (Sup. Ct.) (ERISA’s integrated civil enforcement scheme and preemption principles)
- Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1282 (7th Cir.) (third-party review can be part of denial process subject to ERISA analysis)
- Erlandson v. Liberty Life Assur. Co. of Boston, 320 F. Supp. 2d 501 (N.D. Tex.) (distinguishes claims based on separate contracts/independent duties from ERISA preemption)