AETNA HEALTH INC., FKA AETNA U. S. HEALTHCARE INC., ET AL. v. DAVILA
No. 02-1845
Supreme Court of the United States
Argued March 23, 2004—Decided June 21, 2004
542 U.S. 200
*Tоgether with No. 03-83, CIGNA HealthCare of Texas, Inc., dba CIGNA Corp. v. Calad et al., also on certiorari to the same court.
James A. Feldman argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Acting Solicitor General Clement, Deputy Solicitor General Kneedler, Howard M. Radzely, Allen H. Feldman, Nathaniel I. Spiller, and Edward D. Sieger.
David Mattax, Assistant Attorney General of Texas, argued the cause for the State of Texas et al. as amici curiae urging affirmance. With him on the brief were Greg Abbott,
George Parker Young argued the cause for respondents in both cases. With him on the brief was Eric Schnapper.†
In these consolidated cases, two individuals sued their respective hеalth maintenance organizations (HMOs) for alleged failures to exercise ordinary care in the handling of coverage decisions, in violation of a duty imposed by the Texas Health Care Liability Act (THCLA),
I
A
Respondent Juan Davila is a participant, and respondent Ruby Calad is a beneficiary, in ERISA-regulated employee benefit plans. Their respective plan sponsors had entered into agreements with petitioners, Aetna Health Inc. and CIGNA HealthCare of Texas, Inc., to administer the plans. Under Davila‘s plan, for instance, Aetna reviews requests for coverage and pays providers, such as doctors, hospitals, and nursing homes, which perform covered services for members; under Calad‘s plan sponsor‘s agreement, CIGNA is responsible for plan benefits and coverage decisions.
Respondents both suffered injuries allegedly arising from Aetna‘s and CIGNA‘s deсisions not to provide coverage for
Respondents brought separate suits in Texas state court against petitioners. Invoking
B
Both Davila and Calad appealed the refusals to remand to state court. The United States Court of Appeals for the Fifth Circuit consolidated their cases with several others raising similar issues. The Court of Appeals recognized
Analyzing § 502(a)(2) first, the Court of Appeals concluded that, under Pegram v. Herdrich, 530 U. S. 211 (2000), the decisions for which petitioners were being sued were “mixed eligibility and treatment decisions” and hence were not fiduciary in nature. 307 F. 3d, at 307-308.1 The Court of Appeals next determined that respondents’ claims did not fall within § 502(a)(1)(B)‘s scope. It found significant that respondents “assert tort claims,” while § 502(a)(1)(B) “creates a cause of action for breach of contract,” id., at 309, and also that respondents “are not seeking reimbursement for benefits denied them,” but rather request “tort damages” arising from “an external, statutorily imposed duty of ‘ordinary care,‘” ibid. From Rush Prudential HMO, Inc. v. Moran, 536 U. S. 355 (2002), the Court of Appeals derived the principle that complete pre-emption is limited to situations in which “States . . . duplicate the causes of action listed in ERISA § 502(a),” and concluded that “[b]ecause the THCLA does not provide an action for collecting benefits,” it fell outside the scope of § 502(a)(1)(B). 307 F. 3d, at 310-311.
A
Under the removal statute, “any civil actiоn brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant” to federal court.
Ordinarily, determining whether a particular case arises under federal law turns on the “well-pleaded complaint” rule. Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U. S. 1, 9-10 (1983). The Court has explained that
“whether a case is one arising under the Constitution or a law or treaty of the United Statеs, in the sense of the jurisdictional statute[,] . . . must be determined from what necessarily appears in the plaintiff‘s statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.” Taylor v. Anderson, 234 U. S. 74, 75–76 (1914).
In particular, the existence of a federal defense normally does not create statutory “arising under” jurisdiction, Louisville & Nashville R. Co. v. Mottley, 211 U. S. 149 (1908), and “a defendant may not [generally] remove a case to federal court unless the plaintiff‘s complaint establishes that the case ‘arises under’ federal law,” Franchise Tax Bd., supra, at 10. There is an exception, however, to the well-pleaded complaint rule. “[W]hen a federal statute wholly displaces the state-law cause of action through complete pre-emption,” the state claim can be removed. Beneficial Nat. Bank v. Anderson, 539 U. S. 1, 8 (2003). This is so because “[w]hen
B
Congress enacted ERISA to “protect . . . the interests of participants in employee benefit plans and their beneficiaries” by setting out substantive regulatory requirements for employee benefit plans and to “provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.”
ERISA‘s “comprehensive legislative scheme” includes “an integrated system of procedures for enforcement.” Russell, 473 U. S., at 147 (internal quotation marks omitted). This integrated enforcement mechanism,
“[T]he detailed provisions of § 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan
participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. ‘The six carefully integrated civil enforcement provisions found in § 502(a) of the statute as finally enacted . . . provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.‘” Id., at 54 (quoting Russell, supra, at 146).
Therefore, any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted. See 481 U. S., at 54-56; see also Ingersoll-Rand Co. v. McClendon, 498 U. S. 133, 143-145 (1990).
The pre-emptive force of
A
“A civil action may be brought—(1) by a participant or beneficiary— . . . (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”
29 U. S. C. § 1132(a)(1)(B) .
This provision is relatively straightforward. If a participant or beneficiary believes that benefits promised to him under the terms of the plan are not provided, he can bring suit seeking provision of those benefits. A participant or beneficiary can also bring suit generically to “enforce his rights” under the plan, or to clarify any of his rights to future benefits. Any dispute over the precise terms of the plan is resolved by a court under a de novo review standard, unless the terms of the plan “giv[e] the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, 115 (1989).
It follows that if an individual brings suit complaining of a denial of coverage for medicаl care, where the individual is entitled to such coverage only because of the terms of an ERISA-regulated employee benefit plan, and where no legal duty (state or federal) independent of ERISA or the plan terms is violated, then the suit falls “within the scope of”
Similarly, Calad alleges that she receives, as her husband‘s beneficiary under an ERISA-regulated benefit plan, health coverage from CIGNA. Id., at JA-184, ¶ 17. She alleges that she was informed by CIGNA, upon admittance into a hospital for major surgery, that she would be authorized to stay for only one day. Id., at JA-184, ¶ 18. She also alleges that CIGNA, acting through a discharge nurse, refused to authorize more than a single day despite the advice and recommendation of her treating physician. Id., at JA-185, ¶¶ 20, 21. Calad contests only CIGNA‘s decision to refuse coverage for her hospital stay. Id., at JA-185, ¶ 20. And, as in Davila‘s case, the only connection between Calad and CIGNA is CIGNA‘s administration of portions of Calad‘s ERISA-regulated benefit plan. Id., at JA-219 to JA-221.
It is clear, then, that respondents complain only about denials of coverage promised under the terms of ERISA-regulated employee benefit plans. Upon the denial of benefits, rеspondents could have paid for the treatment themselves and then sought reimbursement through a
Respondents contend, however, that the complained-of actions violate legal duties that arise independently of ERISA or the terms of the employee benefit plans at issue in these cases. Both respondents brought suit specifically under the THCLA, alleging that petitioners “controlled, influenced, participated in and made decisions which affected the quality of the diagnosis, care, and treatment provided” in a manner that violated “the duty of ordinary care set forth in §§ 88.001 and 88.002.” App. H to Pet. for Cert. in No. 02-1845, at 69a, ¶ 18; see alsо App. JA-187, ¶ 28. Respondents contend that this duty of ordinary care is an independent legal duty. They analogize to this Court‘s decisions interpreting
The duties imposed by the THCLA in the context of these cases, however, do not arise independently of ERISA or the plan terms. The THCLA does impose а duty on managed care entities to “exercise ordinary care when making health care treatment decisions,” and makes them liable for damages proximately caused by failures to abide by that duty.
Thus, interpretation of the terms of respondents’ benefit plans forms an essential part of their THCLA claim, and THCLA liability would exist here only because of petitioners’ administration of ERISA-regulated benefit plans. Petitioners’ potential liability under the THCLA in these cases, then, derivеs entirely from the particular rights and obligations established by the benefit plans. So, unlike the state-law claims in Caterpillar, supra, respondents’ THCLA causes of action are not entirely independent of the federally regulated contract itself. Cf. Allis-Chalmers Corp. v. Lueck, 471 U. S. 202, 217 (1985) (state-law tort of bad-faith handling of insurance claim pre-empted by
Hence, respondents bring suit only to rectify a wrongful denial of benefits promisеd under ERISA-regulated plans, and do not attempt to remedy any violation of a legal duty independent of ERISA. We hold that respondents’ state causes of action fall “within the scope of”
B
The Court of Appeals came to a contrary conclusion for several reasons, all of them erroneous. First, the Court of Appeals found significant that respondents “assert a tort claim for tort damages” rather than “a contract claim for contract damages,” and that respondents “are not seeking reimbursement for benefits denied them.” 307 F. 3d, at 309. But, distinguishing between pre-empted and non-pre-empted claims based on the particular label affixed to them would “elevate form over substance аnd allow parties to evade” the pre-emptive scope of ERISA simply “by relabeling their contract claims as claims for tortious breach of contract.” Allis-Chalmers, supra, at 211. Nor can the mere fact that the state cause of action attempts to authorize remedies beyond those authorized by
Second, the Court of Appeals believed that “the wording of [respondents‘] plans is immaterial” to their claims, as “they invoke an external, statutorily imposed duty of ‘ordinary care.‘” 307 F. 3d, at 309. But as we have already discussed, the wording of the plans is certainly material to their state causes of action, and the duty of “ordinary care” that the THCLA creates is not external to their rights under their respective рlans.
Ultimately, the Court of Appeals rested its decision on one line from Rush Prudential. There, we described our holding in Ingersoll-Rand as follows: “[W]hile state law duplicated the elements of a claim available under ERISA, it converted the remedy from an equitable one under
Nor would it be consistent with our precedent to conclude that only strictly duplicativе state causes of action are pre-empted. Frequently, in order to receive exemplary damages on a state claim, a plaintiff must prove facts beyond the bare minimum necessary to establish entitlement to an award. Cf. Allis-Chalmers, 471 U. S., at 217 (bad-faith refusal to honor a claim needed to be proved in order to recover exemplary damages). In order to recover for mental anguish, for instance, the plaintiffs in Ingersoll-Rand and Metropolitan Life would presumably have had to prove the existence of mental anguish; there is no such element in an ordinary suit brought under
C
Respondents also argue—for the first time in their brief to this Court—that the THCLA is a law that regulates insurance, and hence that
As this Court stated in Pilot Life, “our understanding of [
“the common-sense understanding of the saving clause, the McCarran-Ferguson Act factors defining the business of insurance, and, most importantly, the clear expression of congressional intent that ERISA‘s civil enforcement scheme be exclusive, . . . that [the plaintiff‘s] statе law suit asserting improper processing of a claim for benefits under an ERISA-regulated plan is not saved by
§ 514(b)(2)(A) .” Id., at 57 (emphasis added).
Pilot Life‘s reasoning applies here with full force. Allowing respondents to proceed with their state-law suits would “pose an obstacle to the purposes and objectives of Congress.” Id., at 52. As this Court has recognized in both Rush Prudential and Pilot Life,
IV
Respondents, their amici, and some Courts of Appeals have relied heavily upon Pegram v. Herdrich, 530 U. S. 211 (2000), in arguing that ERISA does nоt pre-empt or completely pre-empt state suits such as respondents‘. They contend that Pegram makes it clear that causes of action such as respondents’ do not “relate to [an] employee benefit plan,”
Pegram cannot be read so broadly. In Pegram, the plaintiff sued her physician-owned-and-operated HMO (which provided medical coverage through plaintiff‘s employer pursuant to an ERISA-regulated benefit plan) and her treating physician, both for medical malpractice and for a breach of an ERISA fiduciary duty. See 530 U. S., at 215-216. The plaintiff‘s treating physician was also the person charged with administering plaintiff‘s benefits; it was she who decided whether certain treatments were covered. See id., at 228. We reasoned that the physician‘s “eligibility decision and the treatment decision were inextricably mixed.” Id., at 229. We concluded that “Congress did not intend [the defendant HMO] or any other HMO to be treated as a fiduciary to the extent that it makes mixed eligibility decisions acting through its physicians.” Id., at 231.
A benefit determination under ERISA, though, is generally a fiduciary act. See Bruch, 489 U. S., at 111-113. “At common law, fiduciary duties characteristically attach to decisions about managing assets and distributing property to beneficiaries.” Pegram, supra, at 231; cf. 2A A. Scott & W. Fratcher, Law of Trusts §§ 182, 183 (4th ed. 1987);
Pegram itself recognized this principle. Pegram, in highlighting its conclusion that “mixed eligibility decisions” were not fiduciary in nature, contrasted the operation of “[t]raditional trustees administer[ing] a medical trust” and “physicians through whom HMOs act.” 530 U. S., at 231-232. A traditional medical trust is administered by “paying out money to buy medical care, whereas physicians making mixed eligibility decisions consume the money as well.” Ibid. And, significantly, the Court stated that “[p]rivate trustees do not make treatment judgments.” Id., at 232. But a trustee managing a medical trust undoubtedly must make administrative decisions that require the exеrcise of medical judgment. Petitioners are not the employers of respondents’ treating physicians and are therefore in a somewhat analogous position to that of a trustee for a traditional medical trust.6
Since administrators making benefits determinations, even determinations based extensively on medical judgments, are ordinarily acting as plan fiduciaries, it was essential to Pe-
V
We hold that respondents’ causes of action, brought to remedy only the denial of benefits under ERISA-regulated benefit plans, fall within the scope of, and are completely pre-empted by,
It is so ordered.
The Court today holds that the claims respondents asserted under Texas law are totally preempted by
Because the Court has coupled an encompassing interpretation of ERISA’s preemptive force with a cramped construction of the “equitable relief” allowable under
A series of the Court’s decisions has yielded a host of situations in which persons adversely affected by ERISA proscribed wrongdoing cannot gain make-whole relief. First, in Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134 (1985), the Court stated, in dicta: “[T]here is a stark absence—in [ERISA] itself and in its legislative history—of any reference to an intention to authorize the recovery of extracontractual damages” for consequential injuries. Id., at 148. Then, in Mertens v. Hewitt Associates, 508 U. S. 248 (1993), the Court held that
As the array of lower court cases and opinions documents, see, e. g., DiFelice; Cicio v. Does, 321 F. 3d 83 (CA2 2003), cert. pending sub nom. Vytra Healthcare v. Cicio, No. 03-69 [REPORTER‘S NOTE: See post, p. 933], fresh consideration of the availability of consequential damages under
The Government notes a potential amelioration. Recognizing that “this Court has construed Section 502(a)(3) not to authorize an award of money damages against a nonfiduciary,” the Government suggests that the Act, as currently written and interpreted, may “allo[w] at least some forms of ‘make-whole’ relief against a breaching fiduciary in light of the general availability of such relief in equity at the time of the divided bench.” Brief for United States as Amicus Curiae 27-28, n. 13 (emphases added); cf. ante, at 220 (“entity with discretionary authority over benefits determinations” is a “plan fiduciary“); Tr. of Oral Arg. 13 (“Aetna is [a fiduciary]—and CIGNA is for purposes of claims processing.“). As the Court points out, respondents here de-
“Congress . . . intended ERISA to replicate the core principles of trust remedy law, including the make-whole standard of relief.” Langbein 1319. I anticipate that Congress, or this Court, will one day so confirm.