Swenson v. United of Omaha Life Insurance Co.
876 F.3d 809
5th Cir.2017Background
- Katheryn Swenson sued in Louisiana state court seeking life-insurance death benefits after her husband’s death; insurer denied payment asserting he was not a covered employee.
- Swenson pleaded only state-law claims invoking Louisiana conversion statutes for group life policies (La. R.S. 22:942(7), (10)).
- Insurer removed the action to federal court, asserting ERISA complete preemption; after removal Swenson added an ERISA equitable-relief claim.
- The district court held ERISA completely preempted Swenson’s state-law benefit claims and dismissed them with prejudice, construing the complaint as a §502 claim; the §502 claim was dismissed without prejudice for failure to exhaust administrative remedies.
- The district court dismissed Swenson’s ERISA equitable-relief (breach-of-fiduciary-duty) claim with prejudice, concluding §502(a)(1)(B) provides an adequate legal remedy and bars separate equitable relief.
- Swenson appealed only the preemption dismissal and the denial of equitable relief; the Fifth Circuit reviewed both dismissals de novo and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA completely preempts Swenson’s state-law claims seeking plan benefits | Swenson: Louisiana statutes regulating insurance are saved from preemption by ERISA’s savings clause, so her state-law conversion/benefit claims survive | Insurer: ERISA completely preempts state-law claims seeking ERISA-plan benefits; those claims must be pursued under §502 | Held: ERISA completely preempts state-law claims for plan benefits; Swenson’s state claims were properly dismissed and must be brought under §502(a)(1)(B) |
| Whether the savings clause allows a separate state-law cause of action to recover ERISA benefits | Swenson: Savings clause preserves state insurance regulation, so her statutory remedy is not preempted | Insurer: The savings clause does not permit state remedies that provide an alternative vehicle to recover ERISA benefits | Held: Savings clause does not defeat complete preemption; state law cannot supply a separate vehicle to recover ERISA benefits |
| Whether plaintiff’s §502 benefits claim was ripe without exhausting administrative remedies | Swenson: Brought claim after removal; did not exhaust administrative remedies before filing | Insurer: Failure to exhaust makes §502 claim unripe | Held: §502 claim was not ripe; dismissal without prejudice for failure to exhaust was proper |
| Whether equitable relief for breach of fiduciary duty is available when §502 provides a statutory remedy | Swenson: Added an equitable ERISA claim seeking relief for alleged fiduciary misconduct | Insurer: §502 provides an adequate legal remedy; equitable relief is unavailable when Congress provided adequate remedies | Held: Equitable relief was unavailable because §502 provides an adequate remedy; dismissal with prejudice was proper |
Key Cases Cited
- Arana v. Ochsner Health Plan, 338 F.3d 433 (5th Cir.) (en banc) (state-law benefits claims converted to ERISA §502 claims when plan is ERISA-governed)
- Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) (ERISA’s preemption can completely convert state causes of action into federal §502 actions)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (savings clause cannot be read to undermine ERISA’s creation of an exclusive federal remedy)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (equitable relief under ERISA is unavailable when Congress provided an adequate remedy elsewhere in ERISA)
- Tolson v. Avondale Indus., Inc., 141 F.3d 604 (5th Cir. 1998) (equitable ERISA claims barred when statutory remedy suffices)
- Kentucky Assn. of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003) (savings clause can preserve certain state insurance regulations from conflict preemption)
- Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002) (savings clause upheld state enforcement of independent medical review law)
- UNUM Life Ins. Co. v. Ward, 526 U.S. 358 (1999) (savings clause permitted state law limiting insurer’s defenses)
- Prudential Ins. Co. of Am. v. Nat’l Park Med. Ctr., Inc., 413 F.3d 897 (8th Cir.) (state law saved by the savings clause is preempted if it provides an alternative vehicle to recover ERISA benefits)