Hollaway v. UNUM Life Insurance Co. of America

OK 90 HOLLAWAY, M.D., an Rod

individual, Plaintiff, LIFE COMPANY

UNUM INSURANCE AMERICA, Defendant.

OF 98,120.

No. of Oklahoma. 28, 2003.

Oct.

As Corrected Oct. April

Rehearing Denied

just impact industry”). have an If Oklahoma’s cause of action for the breach implied obligation of the faith and insurance,” dealing “regulates fair it avoids preemption pursuant saving to ERISA’s under clause UNUM and Lewis v. Aetna Healthcare, Inc., F.Supp.2d U.S. (N.D.Okla.1999). If “regulate it does not insurance,” the action longer cause of is no Clark, Jr., Joseph Joseph Bufogle, F. F. in available the ERISA context and Lewis Tulsa, OK, for Plaintiff. longer good is no law. Ryan, Phillip Whaley, Patrick M. G. Joe ¶ Plans, 2 In Ass’n Health of Pierce, Hampton, Amy City, M. J. Oklahoma Miller, Inc. v. OK, for Defendant. (2003), the United States Supreme Court set forth newa and different KAUGER, J.: determining test for a law regulates when certified, originally question As cer- 1144(b)(2)1 § insurance under 29 U.S.C. to provides: tified preemption. avoid federal Because the Mil- Does Oklahoma’s cause of action for opinion in previous- ler alters the test causes implied good breach of the of covenant ly by considered the Tenth Circuit and be- dealing allowing recovery faith and fair for 1602,2 § pursuant cause to 20 O.S.2001 this (when consequential of appropriate) and any Court has to question answer punitive damages, adopted as may in Christian which be determinative of an issue in cause, v. American single question, Home Assurance 1977 the we answer a as 899, apply reformulated:3 only to con- tracts of such that it be can said whether Oklahoma’s cause of action for “regulate to of implied insurance” as that term is breach covenant good of that used in U.S. (1987) Ward, and Unum Pilot “regulate [107 S.Ct. Life ^[526] Life insurance” a 462] U.S. 358 Ins. Co. America Co. v. (1999) (requiring 95 L.Ed.2d 39] Dedeaux, [119 S.Ct. regulation Plans, faith and fair lates insurance” within S.Ct. defined 1471, 155 Inc. v. by Kentucky 1144(b)(2)(A) dealing Miller, is and as that term is Ass’n the mean of 29 “law which (2003)? Health regu must, sense, as a matter common “home Miller, 3 Pursuant a law which sub- in on industry stantially [ ] the insurance [ ] and not affects pooling arrange- the risk provides pertinent in of law certified to it a court of the part: States, United or an court of an- state, federally recognized or of a other "(a) Indian Supersedure; effective date Canada, government, tribal or Canadian (1) (b) Except provided as in subsection this Mexico, province territory, or or a section, Mexican provisions subchapter of this and state, may if the answer be determinative of an subchapter chapter supersede III this shall pending litigation issue in the any they and all State laws insofar as now controlling court there is no any decision of employee or hereafter relate to benefit Court or Court of plan 1003(a) Ap- Criminal described section of this title peals, provision, 1003(b) constitutional exempt statute of not under section of this this state." January title. This section shall take effect on 1, 1975. (b) certification, application 3.Following Construction and the United States Su- (2)(A) Except provided preme promulgated subparagraph its decision in Ken- (B), Plans, Miller, nothing subchapter tucky Ass’n this shall con- exempt any person (2003) strued to or relieve from U.S. any any regulates regulation law of State which insur- which established a new for the test ” ance, banking parties or securities.... insurance in the ERISA context. Both impact have addressed the of Miller on the certi- provides: 2. Title 20 O.S.2001 filings fied fore, with this Court. There- "Power to Answer. Court and pursu- has been reformulated Appeals may Court of Criminal answer a ant to 20 O.S.2001 1602.1. Company insured Insurance America the insurer ment between (UNUM/insurer), Hollaway’s former em- toward the specifically directed and which is Hollaway a claim ployer. also asserted for industry general rule avoids the implied bad faith breach covenant of Retirement Employee seeking fair dealing faith and conse- (ERISA).4 Act Be Security of 1974 Income quential punitive damages. Subsequent- for bad cause of action cause Oklahoma’s ly, the cause was removed to federal court. of an insurance contract faith breach risk-pooling ar substantially affect the undisputed 5 It is the insurance insureds,5 it insurers and rangement between arise out related to benefits of and are in Ken meet the test established does not governed employee plan welfare benefit ex- tucky Ass’n clusively by agreed ERISA. It is also 329, 123 1471, 155 L.Ed.2d 468 preempted claim for benefits (2003) regulates a law which as governed by ERISA and is federal law. 1144(b)(2).6 § Nevertheless, under 29 U.S.C. Hollaway that claims Okla-

homa’s common law of action for cause bad FACTS an faith breach of insurance contract is ex- empted as a preemption from ERISA state ¶ Hollaway, M.D. plaintiff, 4 The Rod “regulates under law insurance” . in the District (Hollaway/insured), filed suit 1144(b)(2).7. § U.S.C. funded Tulsa to recover benefits Court of ¶ long disability Recognizing insur- through group a term that state law is determi- defendant, by preemption native of the on the policy issued the UNUM issue bad ance scenarios, ERISA, range provisions 4. the the Federal Rail- the federal court with a if like any, against Safety recently in would Act of considered that militate in favor road City Railway recovery.” Hightower v. Kansas Southern express contains an The difference between Delk situation provision attempt provide any governing preemption law is that we to of state here make no savings provision relating certifying what a to some advice to the court on scenarios claims and note, ability Hightower, supra, might recoup to we render an the state laws. In this insured Rather, regulations relating against pure to ex- we answer a state law an insurer. determined law, warnings question applying law to speed tort did not Oklahoma the cessive claims See, savings by 29 U.S.C. United States under the clause. standards enunciated the Su- survive preme Kentucky § Court in Ass'n note 3, supra, see to note determine regulates charges majority this State's is one which 5. has failed whether law The dissent that the 1144(b)(2). § garner passing See a mark in Federalism 101.—at hypothecate conceding provid- supra. We on answer note do not wheth- the same time that the the question the law bad faith meets second [V certified is correct. 1 of er Oklahoma's ed to the part: dissenting opinion provides pertinent prong the test in reso- in established —a might though considered extra- dispute I do the soundness lution of which well be "... Even not legal judicial the has made it tribu- in that Court the court's counsel to the nal, prongs today’s into clear that both must be satisfied avoid countenance incursion I cannot compe- preemption. exclusive forensic the orbit of federal Furthermore, minority writing the ”] tence ... 1144(b)(2), supra. opinion can be noth- 29 U.S.C. see indicates that the rendered advisory. allegation significantly differs from McDermott v. ing The stems The cause other than Inc., argument Sentry OK CIV APP that have moved from an we somehow (2001) providing which the to the feder- 15 P.3d 508 Court into the realm of "advice” determined, opinion charge interesting light Appeals of an Civil released al court. court, by non-partici- recently publi- publication a opinion by released Court for that that the for pant challenging of an who was conduct insurer cation. relationship implicate did not the traditional Co., 2003 v. Market American Insurance In Delk preemp- implicating the thus ERISA entities not WL Here, provisions of law. the the federal tion a of law to answer certified were asked (cid:127) policy. Opin- plaintiff is an insured under Delk de- the United States District Court. from publication order for ions released occupies insured who termined that an cotenant only, Appeals, persuasive Civil Court of property who has home and the insured her 1.200, Supreme precedential effect. Rule lack may property for value recov- insured the its full Rules, O.S.2001, App. Ch. Court greater value of a insurance benefits than the er legal property. In so interest fractional majority provide doing, task to 7. Title found it "our preemption question of action and that this Court has issue. It certified the faith cause presented, objections precise over the of the insurer. UNUM not addressed issue urges answering court certified the this us to refrain from the certi- the federal pursuant question. opposed to the Uniform fied The insurer Certification certifica- Act, Questions grounds of Law 20 O.S.2001 1601 tion in the federal court on August briefing a seq. 2002. We set federal case law. was of the et determinative cycle completed was issue and that on October resolution we might provide dispute to the not would determinative of a material issue 28th, 2003, February -25th re 7 On Although the cause. answer to the Hollaway spectively, and UNUM filed no cause, not resolve the we an- response to recent follow tice and no on a swer because Oklahoma law exists ing Tenth in Conover v. Circuit’s decision applied issue determinative and because tests Care, Aetna the Tenth Circuit have been altered Cir.2003). (10th Conover, the federal recent Court decision. court held Oklahoma’s bad faith did 1602,9 “regulate insurance” within the to 20 this Pursuant O.S.2001 savings power of ERISA’s clause and was thus Court has to answer certified preempted courts, both because it related to an questions from employment plan states, benefit and be ERISA federally recognized courts of other tribes, cause it conflicted with the federal statute’s governmental Indian and entities of 2, 2003, April civil scheme. On Questions enforcement Mexico. bemay Canada and an- Supreme the United States decided Court response may swered if our be determinative Plans, Kentucky Ass’n Health Inc. v. Mil pending litigation of an issue in the there and ler, 329, 123 S.Ct. controlling precedent is no established (2003),in which it a new established test through judicial opinion, provi- constitutional determining “regu for whether a state law legislative sion or enactment. insurance” and lates whether it is removed ¶ objected on to certification UNUM general preemption from the rule of ERISA grounds under Supreme that the de Court’s clause; savings the under 29 U.S.C. HMO, cision in Rush Prudential Mor 1144(b)(2).8 Hollaway § ad UNUM an, opinion filings April dressed the Miller in (2002), a L.E.2d 375 decision this 14th, 2003, April respectively. 10th and preemption on the issue would not be determinative of a material issue in the

I. Rush, cause. In the Court deter ¶ THE pleas TEST FOR ERISA PREEMP mined that state-law based dam for ages provided ALTERED THE for

TION WITH SU ERISA the preempted. argued PREME COURT’S IN scheme were DECISION UNUM that, Ass’n of Health even if we were to hold that Oklahoma’s for MAKING ANY PREVI cause of action bad faith of the breach good TENTH faith regu OUSLY PROMULGATED covenant of and fair dealing LITTLE within meaning CIRCUIT DECISIONS OF lated insurance the of 29 1144(b)(2)(A),10 § ultimately ASSISTANCE. UNDER THE AU U.S.C. ERISA § THORITY OF possibility 20 O.S.2001 would foreclose the an award QUESTION punitive consequential WE ANSWER A damages WHICH reme BE MAY ANOF dies foreclosed the federal reme DETERMINATIVE statute’s dy provision.11 IN THE ISSUE CAUSE. 9 The federal recognized court federal court was unconvinced govern

Oklahoma law would dispositive that Rush was of the issue certi- Id. penalties delay payment 11. Various for are provided 1132(a), § in 29 U.S.C. none of which . 9. Title 20 O.S.2001 punitive damages. include the award of 10. See, 1144(b)(2)(A), certification, faith of bad decided before Halli- Oklahoma’s law

fied—whether Moffett Serv., Inc., Energy 291 F.3d and fair burton faith of the covenant breach (10th Cir.2002), court the federal deter- “regulates insurance” within dealing Wyoming’s mined that tort of insurance bad dismissing UNUM’s of ERISA. mean “regulate faith did not insurance” within the specific point, this it cited to argument on meaning savings preemp- clause ERISA’s providing: language from UNUM provision. tion The decision Conover v. yet have encounter “Although we Care, Inc., 320 F.3d Aetna U.S. congressional between the forced choice (10th Cir.2003) promulgated was after exclusively remedies policies of federal certification reaffirmed the insur- of the business of the ‘reservation Gaylor holding court’s earlier v. John States,’ anticipat- ... to the we have ance Mutual Hancock conflict, with the state ed such (10th Cir.1997) 465-66 that Oklahoma’s bad par- losing plan out regulation if it allows regulate faith law did not insurance within ... that Con- ticipants ‘to obtain remedies pre- savings clause ERISA’s ’” rejected [Citations ERISA gress emption provision.14 authority omitted.] ¶ 15 trial court Although the here court Apparently, normally might consider itself bound insured although was convinced pronouncement in Conover Tenth Circuit’s ultimately prevail, it remained might not concerning the bad of Oklahoma’s faith state relating to a on state law need of direction action,15 cause of we are not so constrained. law of issue—whether Oklahoma’s material Clause, of the we By Supremacy virtue regulates within faith bad by the of the governed decisions United 1144(b)(2)(A).12 meaning of 29 U.S.C. respect Court with 1602,13 not foreclose O.S.2001 law, and federal constitution and federal this simply to a because answer pronounce law that conform to must rules of dispositive of response Court’s Supreme jurisprudence.16 Court Nev extant to requires All the for us cause. statute the ertheless, suprema nothing concept in the to a is proffer an answer certified requires cy principle or in other of law response be of a sin that the determinative the state courts to inferior subordination controlling gle in the cause that no issue Subject to courts.17 decisions the federal state law exist. Court, Supreme are free States United ¶ occa- Tenth has on three Circuit judicial in grounded our promulgate decisions the whether state- sions addressed issue of interpretation law.18 of federal Where own regulating exists, claims laws law bad faith were Supreme no Court directive guid avoiding preemption merely providing thus un- insurance and instructive law 1144(b)(2)(A). questions.19 law In a case on state ance der U.S.C. Care, See, Inc., Cray significantly Conover v. Aetna U.S. Health cause differs from 15. 12. This Sells, & 925 P.2d Deloitte Haskins 1996 OK note a certified which we declined to answer Cray the question. The Court refused consider CapRock Corp., Bogart v. Communications because certified certified the 266; V Akin Missouri 2003 OK 69 P.3d by by ruling the answered on the issue was Railroad Pacific Here, has not court. the federal court 1040; Fed. S. & L. Ass'n United States v. Home judgment on the issue. entered Tulsa, 18, 418 P.2d 319. 1966 OK V supra. 13. Title 20 O.S.2001 Bogart CapRock Communications see Care, Inc., 320 v. Aetna U.S.Health In Conover 16, supra; Akin Railroad v. Missouri note Co., Pacific (10th Cir.2003), Cir- the Tenth F.3d see spe- cuit affirmed a federal district court cifically rejected position the taken its sister 18. Id. Healthcare, Inc., Aetna in Lewis v. court (N.D.Okla.1999), holding F.Supp.2d See, Hathaway ex rel. Medical Re- 19., v. State applicable Oklahoma's law bad faith was Auth., 2002 OK search & Technical only the and thus met in the insurance context 8,¶ 740; Dewitt, Payne v. avoiding P.3d requirement regulating 1088; Hickey Dodge, Lynn McDaneld v. preemption. ERISA Farther, Supreme with the Supreme pronounce- Court’s It is with the Court’s pronouncement Kentucky ment in recent Ass’n mind we have reformulated the Plans, Miller, question. answering ques- In Inc. v. the tion, 1471, 155 apply we will the test mandated the high court in Miller. regulation for the

established a new test ERISA, insurance determination under it is H. questionable trial' court whether here would determine that it must follow Conover ¶ 18 OKLAHOMA’S CAUSE OF ACTION 'Conover, controlling precedent. FOR THE BAD FAITH BREACH OF applied Tenth a test Circuit determine THE IMPLIED COVENANT OF whether Oklahoma's faith cause of action bad FAITH AND GOOD FAIR DEALING regulating awas insurance within the DOES NOT THE AFFECT RISK savings of ERISA’s clause devel POOLING ARRANGEMENT BE oped McCarran-Ferguson out of Act re TWEEN AND INSURERS IN 1) quiring the of three consideration factors: SUREDS SO AS TO AVOID ERISA practice whether the has the effect of trans PREEMPTION PURSUANT TO 29 2) ferring risk; spreading policyholder’s 1144(b)(2) AND THE SU practice whether integral part is an PREME COURT’S PRONOUNCE policy relationship between the insurer Kentucky MENT IN Ass’n of Health 3) insured; practice Plans, and whether the Inc. v. Miller. is limited to entities within the insurance Hollaway argues that Okla industry. homa’s cause of action for bad faith breach of

¶ 17 good The United dealing covenant faith and fair two-part decided meets Ass’n Miller test and is ex 1471, empted from preemption. ERISA He as (2003) specifically serts that actions based on rejecting a breach of the covenant dealing the test faith and fair applied the Tenth Circuit affect pooling arrangement the risk Conover. The between insur Court stated Mil- n ers and their they ler: insureds and that specifically directed towards the insurance “... We believe that our use of the industry. disagrees UNUM with both these McCarran-Ferguson case law in. contentions. attention, ERISA context has misdirected provide guidance failed to clear to lower ¶ 20 Kentucky Under Ass’n Health courts, and, as this case demon- Plans, Miller, Inc. v. strates, analy- added little to the relevant (2003), a state law sis.... prongs20 must meet both of a two-step test Today, a make clean break from to avoid federal under ERISA the McCarran-Ferguson factors and hold to savings provision, and fall within the 29 that for a state to law be deemed a ‘law 1144(b)(2).21 The state law must: ... which regulates 1) insurance’ under substantially pooling affect the risk ar 1144(b)(2)(A), satisfy it must two re- rangement between the insurer and in quirements. First, the state law must sured; 2) be specifically and directed toward specifically directed toward entities en- Miller, industry. the insurance the Su gaged Second, in insurance.... as ex- preme Court Kentucky’s determined that above, plained the state law must substan- statutory provisions act, of its health care tially affect pooling arrangement the risk willing providers, were directed at all between the insurer and the insured....” met the test and preemp were saved from [Citations omitted.] tion. The laws met the first test of risk 30, ¶7, 252; Gaylord 1999 OK 979 Enter- Ass’n Health 30, 21, supra, quotation Thompson, opinion see note tainment Co. v. and from the 958 ¶ 17, supra. P.2d 128. Title 29 U.S.C. see note

1029 pro- policy premium will bargains ular insurance altering permissible pooling for the insurer. Premiums duce a return and the sec- and insureds insurers between forecasts on the basis of actuarial established only poten- to application through their ond policies by all a predict a net return on providers. care tial health group of particular insurer or insurers.27 meaning within 21 “Risk” ¶23 previously Supreme Court has The to the industry as it relates although faith actions bad determined involves the relationship insurer-insured relationship policy concern the between the insurance for which happening event insured, they not a do effect the insurer to reim specifically contracted company has policyholder risk.28 Research spreading of risk transferred actual its insured —the burse applied which have reveals nine eases29 It is the to the insurer.22 from the insured to bad faith breach of con new Miller test compa injury for which the risk of All nine of these decisions tract actions. compensate contractually agrees ny bad faith claims are provide that state law insured.23 preempted and do not fall within ERISA’s ¶22 essential pooling is an Risk the nine courts savings provision.30 Two of industry.24 It the insurance characteristic of action for specifically found that causes that re form of diversification as a serves provide for extra-contractu faith —which bad volatility of losses.25 dispersion or substantially duces the not affect the damages al —do pooling those practice of pooling is the arrangement Risk the insur pooling risk between together risks greater and lesser with and the insured within er unpredict minimize the that state law account and Miller31 The determination better everyone.26 pooling re of action do not effect Risk bad faith causes risk for able pooling loss for risk in the risk sense spreading of risk of spreading the costs sults in predating Miller span conforms with the cases pay must across an insurer the risk allocation that which courts addressed theory pooling is of risk insureds. partic- issue.32 predict whether possible it is Co., Co., 337 F.3d Fortis Ins. 29. Elliot v. Ins. v. Association

22. Cramer Benefits Life (9th Cir.2003); Chapman v. Pruden- 1146 infra. America, F.Supp.2d 267 tial Ins. Co. Life Pireno, 458 U.S. Ins. Co. v. (E.D.La.2003); 23. Union Labor Metropolitan Revells v. 580 Life Life (1982); Co., (M.D.Ala.2003); 73 L.Ed.2d F.Supp.2d Ins. Partners, Community Inc. v. Common McGuigan Ins. v. Reliance Standard Life Kentucky, F.Supp.2d (E.D.Pa.2003); wealth v. Blue F.Supp.2d Leuthner Cir.2000), (6th aff'd, (W.D.Ky.1998), 230 F.3d 1357 Pennsylva- Northeastern & Blue Shield Cross denied, 960, 123 S.Ct. nia, (M.D.Pa.2003); rt. F.Supp.2d Bank ce (2003). Healthcare, v. Aetna United Louisiana (E.D.La.2003, slip opinion); 2003 WL Exchange Part & Comm’n 24. Securities Life Co., 2003 Business Men's Assurance Anderson v. ners, Inc., U.S.App.D.C. 536- (E.D.La.2003, slip opinion); Sun- WL 21305335 denied, U.S.App.D.C. rehearing Ranch, Inc. v. lohn Alden down Holdings, F.3d 587 Delta (N.D.Tex.2003, slip opinion); 2003 WL 21281642 F.2d & Chemical National Distillers Coventry Health Care & Ercole v. Conectiv Delaware, Inc., denied, (2nd Cir.1991), 503 U.S. cert. 1226 (D.Del.2003, 2003 WL 21104926 (1992). 1671, 118 L.Ed.2d 390 S.Ct. 112 see, Credit slip opinion). Marks v. Newcourt But (6th Cir.2003) Inc., [Breach Group, 342 F.3d 444 Holdings, Distillers & Inc. v. National 25. Delta for consideration claims remanded of contract Corp., note Chemical see plan.]. insurance unrelated to the allow claims Department Labor & Enterprises, Inc. v. WR 26. 504, 213, 1, Industries, 1144(b)(2), supra. Wash.2d 510 147 see note 30. Title 29 U.S.C. (2002). Co., McGuigan Ins. v. Reliance Standard Life Ins., Superintendent 600 Co. v. 27. AIU Ins. 29, Coventry & supra; Ercole v. Conectiv see note denied, 1115, (Me.1991), U.S. cert. 504 1117 A.2d 29, Delaware, Inc., supra. see note Care 2967, 986, L.Ed.2d 587 112 S.Ct. 119 9, 1238, denied, S.Ct. 120 rehearing U.S. 113 505 Co., see note Ins. Cramer v. Association Life (1992). Co., 36, infra; Highmark see Ins. v. Morris Life Choice, 36, infra; 41, Dedeaux, see Erwin v. Texas Health 107 note Ins. Co. v. 28. Pilot Life infra; 36, Corp., 1554, (1987). v. UNUMProvident 1549, Little 95 L.Ed.2d 39 1030

¶ 24 faith placed The tort of bad breach of an extent that it has an additional burden insurers to act in faith to avoid is not a insurance contract risk identified awards, increased the insured has not dem- policies within as a risk of loss the onstrated that it is a “risk of loss” included agrees insurer to bear on behalf of in- pooling risk formulas used insurers to sured.33 The fact that the existence of the premiums determine for losses insured may compel companies tort in- against. vestigate thorough- an insured’s claims more align 25 jurisdic- We ourselves with the ly does not result in increased costs which tions applied which have the Miller test de- may automatically passed on to in- termining that state-law based bad faith sured.34 There is no indication that the law claims preempted under ERISA. Fur- of bad faith was intended to result in the ther, overwhelming majority we note that the sharing of risk as to form of medical pre-Miller considering decisions the bad Although care.35 the tort of bad faith faith issue also determine the claims are well subject have affected insurance rates to preemption.36 to ERISA We hold 33, infra; Co., see note Co., Brandner v. F.Supp.2d Unum Ins. Fortis Ins. 254 792 Life Benefits 36, infra; Pomeroy Hopkins (S.D.Ohio 2003); see note v. Johns Metropolitan Alloco v. Ins. Life Servs., Inc., 36, infra; Medical Co., see note Camire v. (D.Az.2003); F.Supp.2d 256 1023 Mortis v. Co., Inc., 36, infra; Ferry Aetna Ins. see note Co., Highmark (D.R.I. F.Supp.2d Life Ins. 255 16 Life Co., 36, v. Mutual Ins. see note infra. 2003); Life Geisinger Snook v. Penn State Plan, (M.D.Penn.2003); F.Supp.2d 241 485 Pa Corp., F.Supp.2d 33. Little v. UNUMProvident 196 Corp., chuta F.Supp.2d v. 242 UnumProvident 659, (S.D.Ohio 2002). 668 752, (D.Haw.2002); 761 Bell v. UNUMProvident Corp., F.Supp.2d (E.D.Penn.2002); 222 692 Co., 36, 34. Brandner v. Unum Ins. see note Life Co., 796, F.Supp.2d Adams v. Unum Ins. 200 Life infra. (N.D.Ohio 2002); 802 Erwin v. Texas Health Co., 36, Choice, 661, Highmark (N.D.Tex.2002); F.Supp.2d Morris v. Ins. see note 187 666 Life Co., infra. Cencula v. John Alden Ins. 174 Life F.Supp.2d (N.D.Ill.2001); Majka 794 v. Pruden 1, 36. Title 29 U.S.C. see note America, 410, F.Supp.2d tial Ins. Co. 171 413 See, Dedeaux, 28, Pilot Co. v. Ins. see note Life (D.N.J.2001); Chamblin v. Reliance Standard Life Iowa, supra; Coventry Howard v. Health Care of Co., (N.D.Cal.2001); F.Supp.2d Ins. 168 1168 Inc., (8th Cir.2002); 293 F.3d 442 Walker v. Inc., California, Jabour v. CIGNA Healthcare of Serv., Inc., 1289, (11th Southern Co. 279 F.3d 1119, F.Supp.2d (C.D.Cal.2001); 162 1127 An- Cir.2002), denied, rehearing en banc 34 Fed. Inc., Technologies, drews-Clarke v. Lucent 157 - - 393, (11th Appx. Cir.2002), F.3d cert. 93, F.Supp.2d (D.Mass.2001); 105 Brandner v. denied, 824, 111, Co., 1219, F.Supp.2d Unum Ins. 152 1226 Life (2002); Care, 34 Conover v. Aetna U.S. Health (D.Nev.2001); v. Ins. Co. N. Amer- Chiroff Life 14, supra; v. Halliburton Moffett ica, (S.D.Fla.2000); F.Supp.2d 142 Hardy 1360 Serv., Inc., 1227, Energy (10th 291 F.3d 1235 Welch, F.Supp.2d (M.D.Ala.2000); v. 135 1171 Cir.); Bank, v. Smith Provident 170 F.3d 613 Foster v. Blue Michigan, Cross & Blue Shield of (6th Cir.1999); Co., v. Bast Prudential Ins. 150 F.Supp. (E.D.Mich.1997); 969 1024 Cir.1998), (9th denied, F.3d 1007 rt. 528 ce F.Supp. v. FHP Int’l 947 Schwartz 1354 (D.Ariz.1996); v. SMC Dials Coal & Terminal Co., v. Custer Pan American Ins. 12 F.3d Life Co., F.Supp. (E.D.Ky.1995), aff'd, 891 375 (4th 1993); Greany Cir. v. Western Bu- Farm (6th Cir.1996); Ferry 89 F.3d 833 v. Mutual Co., Life (9th reau Ins. 973 F.2d Cir. Life Co., F.Supp. (W.D.Penn.1994); Ins. 1992); Swerhun v. Guardian Ins. Co. Life Servs., Inc., Pomeroy Hopkins v. Johns Medical America, (11th Cir.1992); Hogan 979 F.2d 195 v. F.Supp. (D.Md.1994); Washington Foods, (5th Cir.1992); 969 F.2d Kraft Hendricks, Nat'l F.Supp. Ins. Co. v. United, v. Smith Blue Cross & Blue Shield (W.D.Wis.1994); Hemphill Unisys Corp., (7th Cir.1992); Tingey F.2d Pixley- (D.Utah 1994); F.Supp. Suggs West, Inc., Pan (9th Richards Co., American F.Supp. Ins. Cir.1992); Resources, International Life v. New (S.D.Miss.1994); Ludwig v. NYNEX Serv. (6th Cir.1992), York 950 F.2d 294 (S.D.N.Y.1993); F.Supp. denied, 838 791 973, 2941, Camire v. cert. 504 U.S. 112 S.Ct. 119 Co., Inc., 846, (1992); F.Supp. Aetna Ins. 822 Co., 850 L.Ed.2d 565 Perkins v. Time Ins. 898 Life 470, (5th (D.N.Hamp.1993); Cir.1990); Fischman v. F.2d Blue Cross & Bishop 473 v. Provident Connecticut, Co., 176, Blue Casualty F.Supp. Shield F.Supp. & 755 Ins. 749 528 178 of Life (D.Conn.1990); (E.D.Tenn.1990); Sears, Pate, Co., Kelley F.Supp. Martin v. v. 749 242 Roebuck & (10th (S.D.Ala.1990), Cir.1989); (11th aff'd, 882 F.2d 453 934 F.2d In re Ins. Co. 1265 Cir. Life America, 1190, 1991); (8th N. 857 F.2d 1193 McManus v. Cir. Travelers Health Network 1988); Texas, Equitable 377, (W.D.Tex.1990); v. F.Supp. 742 Assurance Soci 381 Shiffler Life ety, (3rd Cir.1988); 838 F.2d Co., 78 Ackerman v. Garred v. General American Ins. 723 Life

1031 be determina- any question swer action for breach cause of that Oklahoma’s pursuant to 20 in a cause tive of an issue fair good faith and covenant implied § 1602.39 O.S.2001 ar- pooling risk dealing not affect may seem harsh. 27 The result here and insureds. insurers between rangement However, a consequence it is Therefore, the Miller-test not meet it does contains one of broadest statute which 29 regulates a law ever enacted Con- preemption clauses 1144(b)(2).37 U.S.C. any provisions supersede gress.40 ERISA they now or laws insofar as and all state CONCLUSION any employee benefit relate hereafter expressed an exclusive Congress has plan.41 answer a will not Although this Court 26 regulating employee bene- federal interest guise in the preemp- breadth of ERISA’s plans.42 fit altered review,38 preemption has test for plan beneficiaries tion clause often results recent decision Supreme Court’s with the being meaning- participants left without Plans, v. Mil Kentucky Ass’n Health Nevertheless, remedy.43 ful 1471, 155 ler, 329, 123 538 U.S. Ass’n made clear Court (2003) promulgat making previously 329, 468 538 U.S. (2003), 1471, of little assistance. decisions Tenth Circuit 123 S.Ct. ed to fall within avoid an- that —to Therefore, exercise our we ERISA, (Nov.1990); denied, Bishop & (W.D.Ark.1989), Ill.B.J. 550 appeal der 78 902 F.Supp. 1325 Buehler, ERISA, Cir.1990); Goodbye (8th Bad Faith: Denny, Ltd. v. Home "Hello 1576 F.2d (N.D.Ill.1989); Code, Co., DTPA, F.Supp. 1554 Pre-emption 722 Insurance Ins. Federal Life Co., F.Supp. Claims,” Ins. 693 Indiana Baylor Denette v. 41 Law Bad Faith & Common Life of 959(D.Colo.1988); Employers Ins. v. Stedman, Tucker Clerin, (1989); Life Rosen & 267 L.Rev. Co., (N.D.Ala.1988); F.Supp. Morales 1073 689 Impact Dramatic "Pilot Life's —The 1297, Co., F.Supp. 718 Ins. v. Pan American Law,” Life Bad Faith Revolutionizes Insurance (5th (E.D.La.1989), aff'd, Cir. F.2d 83 914 1300 1990); Nevertheless, Law, (Oct.1989). p. 37 L.A. Ins. Co. v. Insurance General Connecticut generally, faith claims have where bad note 425, 455, (2002), Comm'r, A.2d 427 810 371 Md. general con arise out of deemed to either been 1964, 1027, dismissed, 123 S.Ct. 538 U.S. cert. they been found or where have tract or tort law (2003); Security Midwest L.Ed.2d 876 155 Life causes, the courts applicable in non-insurance 163, (Ind. 167 Stroup, 730 N.E.2d Co. v. Ins. determining that bad almost unanimous Co., 2000); 663 Ins. Weems Life Jefferson-Pilot savings ERISA's not fall within faith claims do 1995); (Ala. v. Provident Mutu Duncan 905 So.2d may lie of action such causes clause because 465, Co., 427 S.E.2d 657 310 S.C. al Ins. Life relationship. outside the insurance Co., (1993); Metropolitan 805 Cathey Ins. Life denied, Healthcare, Inc., (Tex.1991), see, 501 U.S. note cert. 387 Lewisv. Aetna S.W.2d But 2855, (1991); 1232, Serv., 14, 1023 Planning 115 L.Ed.2d W.Va. supra; 111 S.Ct. 187 Ball v. Life Co., Ariz. 223, 163 Elgin (1992); Assurance 682, v. Great-West Graves v. Blue 227 421 S.E.2d Life (1990); 176, Cramer v. Association (N.D.Ca 1027 F.Supp. California, 1405 Cross of ) Co., (La.1990), cert. de 569 So.2d Ins. Life l.1988 1391, nied, (1991); Young Men's supra. v. Ottumwa Davis see note 37. Title 29 1989); Ass'n, (Iowa 438 N.W.2d Christian County Employers’ & Lake Sells, WelfareBenefit note Cray & see v. Deloitte Haskins Trust, App.3d 630 N.E.2d & 90 Ohio Plan supra. (1993); Ins. Co. v. Commercial Life Court, Cal.Rptr. Superior 47 Cal.3d supra. see note 20 O.S.2001 39. Title denied, cert. P.2d 1059 Ins. Greany Western Farm Bureau Life Inc., Healthcare, Yardley v. United Group v. Western supra; Ins. 543, PM see note aff'd, (Sup.Ct.Del.1996), 693 A.2d A.2d 979 Trust, (9th 953 F.2d Assur. Growers Damon, (Del.1996); Matter Estate Cir.1992). 'd, (Ct.App.Colo.1995), 915 P.2d 1301 350 (Colo.1996); Co., aff Equitable Curry v. Cincinnati 41. Title also, (Ct.App.Ky.1992). See 834 S.W.2d 701 Preemption for ERISA Test Announced "New note su- Ludwig see v. NYNEX Serv. Clause,” Legal Ins. 1 Savings (June savings provision, above that a United exercis- States court ERISA’s jurisdiction 1) ing original very over ease 1144(b)(2)44 the state law must: sub- —a legal which certified arisen. the issue has stantially arrangement pooling affect the risk I though dispute Even do not soundness 2) insured; and the insurer and the between legal of the court’s counsel to the specifically directed toward the tribunal, today’s I cannot incur- countenance law of bad industry. Because Oklahoma’s sion orbit of foren- into the exclusive federal substantially the risk faith affect does competence. I sic hence recede from what arrangement pooling between insurer appears nothing more than a tender insured, it cannot meet the two- recipient tribunal solicited advice Therefore, test of Miller. we deter- prong utterly ignore pure is free to exercise —an “regulate it does not insurance” mine that Advisory supererogation.1 opinions —those 1144(b)(2).45 29 U.S.C. under binding impact no con- have on a live troversy' strongly disapproved by an —are uninterrupted jurispru- line Oklahoma WATT, C.J., LAVENDER, HARGRAVE, dence.2 SUMMERS, BOUDREAU, JJ. concur. ¶2 today court addresses itself to a question. pure Preemption federal-law OPALA, V.C.J., HODGES, and law, by subject state law dealt WINCHESTER, JJ., dissent. today’s response pack- with in appears aged disguised a as an answer to state- OPALA, V.C.J., dissenting today’s from query, presents pure ques- law a federal-law compliance request with a to answer tion.3 question from a certified federal court. ¶3 a While state court case properly it decide before federal-law issues (or claims) disposi- even that are needed for I lawsuit,4 tion of a the same court 1 The flunks Federalism 101 not obtain when a state court answers boosting expertise its own in federal a federal court.5 1, Cogeneration Mgmt., Corporation Smith Inc. v. Comm'n, 147, ¶21, 1227, 1993 OK 863 P.2d 45. Id. "supererogation” 1. The term "the act or means teaches, jurisprudence 4. As U.S. process performing or an instance of more than authority, "state courts have inherent by duty required obligation is more [or] presumptively competent, adjudicate thus necessary complete undertaking.” than is arising issues] claims [and laws of the Dictionary at Webstbr's Third New International Freight System, United States.” Yellow Beall, 92, (1961). See Patterson v. 2000 OK 820, 823, 1566, Donnelly, 494 U.S. 110 S.Ct. 3, 839, J„ (Opala, dissenting). 112n. 19 P.3d 1568, (1990) (quoting 108 L.Ed.2d from Taff Levitt, 455, 458-60, 792, lin v. 795, 493 U.S. 110 S.Ct. Benson, 40, 1088, ¶ 7, Dank 2000 OK 5 P.3d (1990)); 107 L.Ed.2d see also Lewis v. Overstreet, 1091; Bros. Co. v. Loffland Housing Sac Tribe and Fox Oklahoma Authori ¶28, 813, 819; 758 P.2d Underside v. La ty, 1994 OK 896 P.2d 509-10. ¶ 9, 517; City throp, 1982 OK 4,¶11, Taylor, Shawnee v. 5. We function as volunteers when an officious 950, 952. (under swering the Revised Uniform Certification Act, Questions of Law 20 O.S.2001 1600 et Supremacy 3. The Clause of VI of the Article seq.) question. a federal-law into Our intrusion provides Congress United States Constitution process the federal-court would not a bind offer power preempt with the law. state Allis- ing of an resolution unsettled issue but rather Lueck, 202, 208-09, Corp. v. Chalmers 471 U.S. hand, gratuitous advice. On the other when 1909-10, (1985) 105 S.Ct. question, response answer a state-law our be (9 Wheat.) (citing Ogden, Gibbons v. 22 U.S. binding applica on the (1824)). comes federal court for preempt- L.Ed. 23 Whether state law deciding process tion in the the case for which ed federal law is a federal law. 208-09, was submitted. Erie R.R. Co. v. Corp., supra, Allis-Chalmers at 471 U.S. 64, 78, 1909-10; Tompkins, 304 U.S. 58 S.Ct. at 105 S.Ct. Malone v. White Motor (1938); Industries, 497, 504, 1185, 1190, L.Ed. 1188 v. Rad Texas 98 S.Ct. Materials, (1978) (quoting Clerks Int’l U.S. Retail cliff Schermerhorn, Regina Ass’n v. 68 L.Ed.2d 500 Salve Russell, (1963)). 225, 226-27, 231-34, See also

1033 jurisdiction6 into a role of intrusive and officious but east itself it is not latter situation pure impertinent for an invasion of authority volunteer judicial that would rather judicial decisionmaking process. I federal lacking. This is hence clearly and is absent inquiry orig- return the certified to the would Certifica- the Revised Uniform so because explanation with an of our inating tribunal Law authorizes Questions [Act]7 tion of request for unau- inability upon to act its an questions of state law.8 solely us to answer advisory opinion on an unmixed thorized (or improvident) certification An overbroad law. question of federal Act-con- enlarge this court’s request cannot range per- its and extend ferred II beyond tightly circum- missible answers law.9 perimeter of state scribed THE COURT’S RESPONSE TO CRITIQUE THE OF expression of feder- 4 The Act is a clear DISSENT teachings.10 respects It present-day alism’s autonomy own law— to declare its the state’s 5 The court errs as a matter of law when constitutional, statutory and unwritten11— inconsistency pronounce- its it finds between ment in Delk v. Market American Insurance litiga- pending in a federal-court for its use There, authorize this court to Co.12 and this dissent. the United But it does not tion. 1221-23, 1217, 1218-19, questions from authorized to consider certified 113 L.Ed.2d solely questions (1991). other courts that relate law, "gratu it will not offer its Massachusetts introduce are those who volunteers Officious opine questions of Federal itous services to law.”); do not concern into matters which themselves Mardirossian v. Paul Revere something they are neither them and do 60, 640, (2003) (a question 376 Md. 831 A.2d ethically is not legally bound to do or which nor Maryland Certi reformulated under the Uniform affording protection pursuance to another's 87, Questions of Law Act "must still be fication of Macfarline, 2000 OK interest. In re Estate of Barnett, Maryland properly dispose ¶25, 551, 561; and must one of v. 14 P.3d Barnett 7; 60, ¶7, 7, question, Act not Gray the certified 917 P.2d 473 n. OK n. 7, 776, Holman, 118, 6, questions Court to resolve ... 909 P.2d authorize the 1995 OK n. Medical, law”, (1995). citing v. 75th Street Piselli 779 n. 6 188, 508, (2002)); Ramos 371 Md. 808 A.2d jurisdic- explicit grant no 6. "This court needs Vernon, 799, 705, 254 Conn. 761 A.2d v. Town of questions [state-law] to answer certified tion (2000) (the Uniform Certifica Connecticut court; power such comes from from a federal designed Questions Act "is not tion of of Law grant of state the United States Constitution's Supreme provide with the [the Court] ... sovereignty.” Bonner v. Oklahoma Rock being questions ability that are to review federal 3, 1176, ¶2 n. 3. n. lfora”); litigated appropriate federa in the R.C.T., 497, 822 P.2d 312 Or. A.K.H. seq. 20 O.S.2001 1601 et (1991) (the authority to consider court’s questions statutorily to those of state is confined pertinent terms of 20 O.S.2001 8. The Question, federal) law); (not In re Certified provide: (1984) (the court 359 N.W.2d Mich. Supreme Court Power to Answer. The ques “the certified declined to answer because may law certified to it answer a employed procedure been to ob tion [had] States ... if the answer a court of the United Michigan expression [but] law ... ... of tain pending be determinative of an issue ruling of First ... on to obtain litigation is no in the court and there law”). constitutional Amendment federal controlling of the Court ... decision provision, statute of this constitutional Clark, Ascertaining Laws R. 10. Bradford state. and Judicial Feder- added). the Several States: Positivism (emphasis Erie, Pa. L.Rev. 145 U. that a alism that it is "clear One treatise maintains After (1997) ("Certification perhaps uniquely suited compel a state court to federal court cannot judicial proce- principles questions a state federalism answer in the absence of to further Cooper, Wright, underlying A. E. Court's decision dure.” 17A C. (2d Erie.”). at 160 Federal Practice and Procedure ed.1988). Parenthood Ass'n See also Planned Ashcroft, 493 n. law" see of "unwritten 11. For (1983). v. Oklahoma Pub. McCormack 7,¶ See, e.g., v. Belle Mut. Cas. Co. Lumbermens Industries, Inc., 555 N.E.2d 407 Mass. ville (1990) (the 2003 WL 22390053. OK 81 P.3d it is 12. 2003 court states that while an- court received several state-law 2003 OK 114 multiple alternative scenarios swers to meet Boston, Melba C. BOSTON Glen C. inquiry might upon unfold its into the Plaintiffs/Appellants, All relationship among eotenants. v. represent applica- Delk court’s answers in and efficacious state law tendered for ble BUCHANAN, M.D., Robert T. and Chester pending certifying court’s use in a Beam, Individuals; M.D. W. Plastic federal-court case. Institute; Reconstructive and Saint An thony Hospital, City, Oklahoma Okla critique ig- 6 The court's of the dissent homa, Defendants/Appellees. directly nores and hence fails address 96,470. No. point point dispute. critical This is that judicial testing of state Supreme Court of Oklahoma. presents standards for resolu- tion a of federal law.13 Dec.

Rehearing April Denied WINCHESTER, J., OPALA, with whom HODGES, join, dissenting.

V.C.J. and J. opinion.

I dissent from the Court’s I question.

would decline to answer the O.S.2001, § 1602 allows this Court to an questions

swer that are “determina certified pending litigation.1

tive” of an issue us the in before involves statute,

terpretation of a federal 1144(b)(2)(A),and, state’question. is not a

Kentucky Ass’n Health Inc. v. Mil ler, S.Ct. Ins. Co. America UNUM Life Ward, 526 U.S. S.Ct. L.Ed.2d 462 Palmore Unum, (Ala.2002).

First 841 So.2d binding

Our decision is not on a federal Levitt, 455, 465,

court. Tafflin 792, 798, (1990). Corp., supra may Appeals 13. Allis-Chalmers Criminal answer a of law 208-09, sitting at 105 S.Ct. at 1909-10. When States, certified to it a court the United or original jurisdiction the exercise of United States state, court of another or of a possess competence courts exclusive over feder federally recognized government, Indian tribal or questions. al-law See in this connection Clark v. Canada, province territory, of Mexico, a Canadian ¶3, Motor Mazda state, or a Mexican if the answer V.C.J., (Opala, concurring); City pending litigation determinative of an issue in Tahlequah Region Co-op., v. Lake Elec. controlling court and there is no OK V 47 P.3d decision of the Court or Court of Crimi- O.S.2001, Appeals, provision, provides: nal constitutional or statute 1. 20 "Power to An- swer. The Court and the Court of of this state.” Notes 11 No. pra. 2003); Preemption: Sav- ERISA "ERISA Claim, Bad Faith ings Rescue Clause Doesn't Biodyne, v. American 43. Tolton Holds," Em- No. 22 Andrews Ct. Del. Fed. Cir.1995); (6th Cross & Blue v. Blue 2003); Foster (June Rep. Chemers Litig. ployment Michigan, Franco, see Shield Preemption Claims Un- of State & "The

Case Details

Case Name: Hollaway v. UNUM Life Insurance Co. of America

Court Name: Supreme Court of Oklahoma

Date Published: Oct 31, 2003

Citation: 89 P.3d 1022

Docket Number: 98,120

Court Abbreviation: Okla.