Us aIrways v. mccutchen: when Is It appropriate for a Plan to take It all?

Us aIrways v. mccutchen: when Is It appropriate for a Plan to take It all?
us airways v. mccutchen:
                      When Is It Appropriate for a Plan
                               to Take It All?

                                                                               •    Requires plans to provide participants with information about the
                      By Francis G. Murphy                                          plan including important information about plan features and
     A decision by the United States Supreme Court issued April 16, 2013,      • Sets minimum standards for participation, vesting, benefit accrual
US Airways v McCutchen, clarified the extent to which a self-insured                and funding. The law defines how long a person may be required
health insurance plan can recover payments it made on behalf of the                 to work before becoming eligible to participate in a plan, to accu‑
insured when the insured person has received payments based on a                    mulate benefits, and to have a nonforfeitable right to those benefits.
successful liability claim against a third party.                              • Requires accountability of plan fiduciaries. ERISA generally de‑
     McCutchen indicates that unambiguous language in a self-funded                 fines a fiduciary as anyone who exercises discretionary authority
plan, subject to provisions of federal law under ERISA, may well require            or control over a plan’s management or assets, including anyone
full reimbursement of the self-insured plan even if this leaves the                 who provides investment advice to the plan. Fiduciaries who do not
beneficiary with no net recovery from his or her personal injury claim.             follow the principles of conduct may be held responsible for restor‑
However, if the insurance plan language is ambiguous in certain areas,              ing losses to the plan. Plan fiduciaries include, for example, plan
it may be possible for the injured plaintiff to limit the insurer’s recovery        trustees, plan administrators, and members of a plan’s investment
under offsetting protections under state and/or federal law.                        committee.
     This article provides practitioners with guidance on this complex
issue, starting with a primer on ERISA law and how it applies to self-         • Gives participants the right to sue for benefits and breaches of
funded health insurance plans, describes the findings of the McCutchen              fiduciary duty.
ruling, and then explores subrogation and reimbursement under New              • Gives plan fiduciaries the right to sue to seek injunctive or “other
Hampshire law, federal caselaw on similar subrogation questions, and,               equitable relief” to enforce provisions of the statute or the terms of
finally, at some of the ethical questions lawyers may face with regard              the plan.2
to the handling of settlement finds they receive that are subject to                 The U.S. Department of Labor enforces Title I of ERISA, which, in
recovery by an ERISA self-funded plan. An accompanying checklist for           part, establishes participants’ rights and fiduciaries’ duties. However,
practitioners considering such cases provides a pathway for avoiding           certain plans are not covered by the protections of Title I. In general,
traps for the unwary.                                                          ERISA does not cover group health plans established or maintained by
                                                                               governmental entities, churches for their employees, or plans which
I. A Primer on ERISA                                                           are maintained solely to comply with applicable workers compensa‑
      The Employee Retirement Income Security Act of 19741, or ERISA,          tion, unemployment, or disability laws. ERISA also does not cover
is a federal statute that sets out the regulatory framework that governs       plans maintained outside the United States primarily for the benefit of
many private retirement plans and group health plans.                          nonresident aliens or unfunded excess benefit plans.3
      ERISA does not require any employer to establish a pension plan.              A group health plan is an “employee welfare benefit plan”4 estab‑
It only requires that those who establish plans must meet certain mini‑        lished or maintained by an employer or by an employee organization
mum standards. The law generally does not specify the level of benefits        (such as a union), or both, that provides medical care for participants
the plan must provide.                                                         or their dependents directly or through insurance, reimbursement, or
ERISA does the following:                                                      otherwise.

   6                                                       New Hampshire Bar Journal                                       Fall/ 2013/Winter 2014
Most private sector health plans are covered by ERISA. The level         reimbursement.
of benefits available under a plan are generally a matter of agreement               If the medical bills were paid through a plan sponsored by an
between an employer and an employee (or the employee’s representa‑             employer, that plan may be an “employee welfare benefit plan” under
tive).                                                                         ERISA. To qualify for the preferential tax treatments accorded the
      As discussed in more detail infra, ERISA has a “preemption clause,”      benefits available to plan beneficiaries, ERISA requires that the plan be
Section 514, which makes void all state laws to the extent that they           established with a written plan document with mandatory provisions
“relate to” employer-sponsored health plans.5                                  and other provisions at the discretion of the plan sponsor (i.e. typically
      (This clause states that “the provisions of [ERISA] shall supersede      the employer or a union), so long as those provisions do not conflict
any and all State laws insofar as they may now or hereafter relate to          with the federal statute. The plan document, which has been analogized
any employee benefit plan....”6) The Supreme Court has interpreted the         to a trust document, mandates what can and should be done by plan
preemption clause very broadly to carry out the congressional objective        administrators, fiduciaries, participants and beneficiaries, and defines
of national uniformity in rules for employee benefits programs.                its assets and its promised benefits.
      State law claims based on denied benefits, such as for consequen‑              Two of the permissive provisions commonly found in plans are (1)
tial damages caused by a denial of a medical procedure, are clearly            a subrogation provision allowing the plan administrator to step into the
preempted.7                                                                    shoes of the beneficiary whose medical bills were paid by or through the
ERISA’s preemption provisions contain an exception, the so-called “sav‑        plan to pursue a claim against the responsible tortfeasor and recoup
ings clause”8 that allows states to continue to regulate “the business of      the benefits it paid out and (2) a reimbursement provision, allowing
insurance” (authority that Congress gave to the states in the McCarran-        the plan administrator to demand reimbursement from the beneficiary
Ferguson Act of 1945), as well as banking and securities law.9 Courts          of benefits paid out from that recovery. If the plan is established under
have interpreted ERISA’s insurance regulation “savings clause” to allow        ERISA, the plan fiduciary, absent voluntary compliance by the par‑
states to regulate traditional insurance carriers conducting traditional       ticipant or beneficiary, may only take steps to enforce the subrogation
insurance business.10 Under the insurance regulation savings clause,           or reimbursement provision against them through ERISA’s remedial
states can regulate the terms and conditions of health insurance; for          provision, § 502(a)(3)17.
example, the benefits in an insurance policy.11 But through its so-called            This article discusses the limitations that may be put on a claim
“deemer clause,”12 ERISA prohibits states from regulating plans that           for reimbursement by or on behalf of a plan by ERISA§ 502(a)(3) as
“self-insure” by bearing the primary insurance risk, even though by            interpreted by the courts.
bearing risk they may appear to be acting like insurance companies.13
      Plans funding coverage through insurance are subject to state                 B. SECTION 501(a)(3)
insurance regulation (or rather the insurance company providing the                 ERISA§ 502(a)(1) and (3) provide:
benefits remains subject to state regulation), while those that self-insure
are “saved” from state oversight. This creates an important distinction             (a) 	Persons empowered to bring a civil action
between insured and self-insured employer-sponsored health plans. Both         		 A civil action may be brought—
types of plans are still ERISA plans, but only insured plans are subject       		(1) by a participant or beneficiary—
to some types of state oversight.                                              			(A) 	for the relief provided for in subsection (c) of this
                                                                               section, or
II. US Airways v. McCutchen                                                    			(B) 	to recover benefits due to him under the terms of his
	A. What the Ruling Said                                                       plan, to enforce his rights under the terms of the plan, or to clarify his
      On April 16, 2013, the United States Supreme Court handed down           rights to future benefits under the terms of the plan;
its opinion in US Airways v. McCutchen14, giving its latest interpretation     		(2) by a participant, beneficiary, or fiduciary
of ERISA’s remedial provision, § 502(a)(3)15 for persons insured under         			(A) 	to enjoin any act or practice which violates any
an ERISA insurance benefit plan. Its four earlier significant decisions16      provision of this subchapter or the terms of the plan, or
interpreting these remedial provisions raised as many questions as they        			(B) to obtain other appropriate equitable relief
answered. With McCutchen, however, the Court clarified many issues             				(i) to redress such violations or
surrounding a health plan’s efforts to recoup funds it paid for healthcare     				(ii) to enforce any provisions of this subchapter or
incurred as a result of an injury for which a liability claim has been         the terms of the plan.
made against a third party.
      A major consideration for a lawyer seeking compensation for an                The Supreme Court has said that these provisions are part of a
injured client from a responsible party or its insurer is what medical         “civil enforcement scheme” whose “comprehensive” and “carefully
bills have been incurred as a result of the injury. If those bills have been   integrated” character “provide[s] strong evidence that Congress did not
paid by someone other than the client, that payer may seek reimburse‑          intend to authorize other remedies that it simply forgot to incorporate
ment from any recovery obtained from the personal injury claim. Under          expressly.”18 Accordingly, a plan fiduciary is limited by ERISA’s remedial
certain circumstances elaborated below, the plan may be entitled to that       provisions to seek injunctive or other appropriate equitable relief.

Fall/ 2013/Winter 2014                                       New Hampshire Bar Journal                                                            7   
Plans with their reimbursement provisions often seek to limit               the tortfeasor, it is only after the insured has been fully compensated
the effect of common law or statutory “unjust enrichment” doctrines               for all of the loss that the insurer acquires a right to subrogation, or
such as the “common fund doctrine” and the “made whole” doctrine.                 is entitled to enforce its subrogation rights. The rule applies as well
These doctrines discussed below are well established in New Hampshire             to instances in which the insured has recovered from the third party
jurisprudence.                                                                    and the insurer attempts to exercise its subrogation right by way of
      C.	New Hampshire laws on subrogration and 		                                reimbursement against the insured’s recovery.25
		 reimbursement claims
                                                                                    Dimick also integrated the “common fund” doctrine with reference
      By 1983, it was well established that a health insurer could enforce     for the need for the insurer to share in the attorney’s fees and costs of
its subrogation rights established under its policy of insurance.19 		         procurement incurred by the insured.26
                                                                                    Where litigation fees confer a “substantial benefit” to another,
      The Supreme Court in St. Cyr observed:                                   attorney fees may be imposed on the other.27
    When an insurance policy contains a valid subrogation clause, the
    insurer’s subrogation rights are determined by the clause.20                      D. United States Supreme Court decides \
                                                                                      what is “appropriate”
       In Wolters v. American Rep. Ins. Co.21, the health insurer for the
claimant/plaintiff had no subrogation provision in its policy. The plain‑             In McCutchen, the Court directly addressed whether the “made
tiff brought an action for declaratory judgment that the health insurer        whole” doctrine and the “common fund” doctrine were “appropriate”
had no right to subrogation or reimbursement from the proceeds of a            (within the meaning of Section 502(a)(3)) limitations on plan reim‑
tort settlement in the circumstances. The Court refused to recognize an        bursement provisions. The case involved a suit by a plan’s administrator
equitable right to subrogation, in the absence of an express contractual       seeking reimbursement from a third party recovery against a beneficiary.
provision, for a health insurer, holding that there is no equitable right      At the outset of the Court’s opinion, Justice Kagan summarizes the issues:
to subrogation or reimbursement.                                                   We here consider whether in that kind of suit, a plan participant
       The Court in Wolters also outlined the contours of the doctrine of          like McCutchen may raise certain equitable defenses deriving from
subrogation as follows:                                                            principles of unjust enrichment. In particular, we address one equi‑
    The doctrine of subrogation has its origins in equity. A party’s right         table doctrine limiting reimbursement to the amount of an insured’s
    to subrogation can arise either by contract, statute, or common law            “double recovery” and another requiring the party seeking reimburse‑
    or equitable principles. The doctrine of subrogation presupposes the           ment to pay a share of the attorney’s fees incurred in securing funds
    payment of a debt by a party secondarily liable therefor, who thereby          from the third party.28
    acquires an equitable right to be reimbursed by the principal debtor
    and for the purpose of making this right effective is invested with all          Mr. McCutchen was involved in a car crash wherein he suffered
    the rights which the creditor had against him (the principal debtor).      serious and permanently disabling injuries. He was covered under US
    The purpose behind subrogation is to place the responsibility where        Airways self–insured health plan, which paid $66,866 in related medi‑
    it ultimately should rest by compelling payment by the one who in          cal bills. From personal injury claims, McCutchen received $110,000
    good conscience ought to pay it. It also prevents insureds from recoup‑    in settlement. After fees and expenses were deducted, he received less
    ing a windfall . . . . In any subrogation case, the burden of proving      than $66,000. Seeking to enforce its reimbursement provisions, the plan
    entitlement is on the subrogee, which generally includes proof of:         demanded the full $66,866 it had paid out. McCutcheon’s attorneys de‑
    the existence and applicability of equitable principles or contractual     ducted a pro rata share of the attorney’s fees it had charged McCutcheon
    provisions as to subrogation and reimbursement.22                          in pursuing his claim, and placed $41,500 in a trust account while the
                                                                               Plan’s reimbursement claim was litigated.
      The Court in Wolters observed that “subrogation is generally not               U.S. Airways relied on the following statement in its summary plan
allowed where the insured’s total recovery is less than the insured’s actual   description:
loss.”23                                                                          If [US Airways] pays benefits for any claim you incur as the result
      The foregoing is an example of the “made whole” doctrine. As the            of negligence, willful misconduct, or other actions of a third party,
Court held in Dimick v. Lewis,24 where there is a “reduced recovery               ... [y]ou will be required to reimburse [US Airways] for amounts
settlement” in a tort case, the insurer recovers on its subrogation claim         paid for claims out of any monies recovered from [the] third party,
only on a pro-rata basis what it paid out to the insured. A fuller explana‑       including, but not limited to, your own insurance company as the
tion of the principle follows:                                                    result of judgment, settlement, or otherwise.”29
   That in the absence of contrary statutory law or valid contractual obli‑
   gations to the contrary, the general rule under the doctrine of equitable        US Airways, in its capacity as plan administrator, filed suit under
   subrogation is that where an insured is entitled to receive recovery        § 502(a)(3) for “appropriate equitable relief” seeking not only the
   for the same loss from more than one source, e.g., the insurer and          $41,500 in trust but also the remaining $25,366 from McCutcheon
                                                                               personally. It argued that the phrase “appropriate” was limited to what

    8                                                      New Hampshire Bar Journal                                         Fall/ 2013/Winter 2014
was appropriate within the meaning of the plan itself, which in this              consistently” that someone “who recovers a common fund for the
case explicitly required full reimbursement. McCutchen contended                  benefit of persons other than himself” is due “a reasonable attorney’s
that he was entitled to apply the full panoply of traditional equitable           fee from the fund as whole.” … We have understood that rule as
defenses, including the “made whole” doctrine and the “common fund”               “reflect[ing] the traditional practice in courts of equity.” …And
doctrine, which, he argued, appropriately limited the plan’s right of             we have applied it in a wide range of circumstances as part of our
reimbursement. The Supreme Court rejected McCutchen’s argument,                   inherent authority.34
reasoning that the plan’s provisions created a contractual right to full
reimbursement. Thus, the Court reinforced its previous holdings that                 The decision in McCutchen reinforces the point that the precise
plan documents, and plan documents alone, govern the rights and                language used in each plan must be closely examined and construed
obligations of the parties to a plan.30 The Court concluded Section I of       to determine the respective rights and obligations of plan and its benefi‑
its opinion, holding that as a general proposition , a plan beneficiary        ciaries. If there is any ambiguity in the plan’s reimbursement provisions
could not rely on the equitable concept of “double recovery” to limit          that ambiguity may be interpreted against the plan when determining
reimbursement out of settlement proceeds because the US Airways Plan           whether there are any equitable offsets against the plan’s rights to seek
document stated that the plan had a right fully to recover from “any           full reimbursement of assets it had expended in paying injury–related
monies recovered from [the] third party….” Holding that the general            medical bills.
equitable precepts designed to avoid unjust enrichment could not over‑
ride explicit plan language, the Court stated:                                 III. Some ERISA Points Of Law
    Neither general principles of unjust enrichment nor specific doctrines     	A. 	ERISA does not apply to all plans
    reflecting those principles—such as the double-recovery or common-               ERISA governs “any plan, fund, or program which...was established
    fund rules—can override the applicable contract.31                         or is maintained for the purpose of providing for its participants or
                                                                               their beneficiaries, through the purchase of insurance or otherwise, (A)
     However, in Section II, the majority opinion stated that equitable        medical, surgical, or hospital care or benefits, or benefits in the event
principles can “inform” the intent of the parties. The Court pointed out       of sickness, accident, disability, death or unemployment, or vacation
that the “common fund” doctrine had wide spread acceptance in the              benefits, apprenticeship or other training programs, or day care centers,
common law, requiring a beneficiary of a common fund to pay its fair
share of the acquisition costs. The rationale for the doctrine is plain,
wrote Justice Kagan:
   Third-party recoveries do not often come free: To get one, an insured
                                                                                 Looking for Lawyers
   must incur lawyer’s fees and expenses. Without cost sharing, the
   insurer free rides on its beneficiary’s efforts—taking the fruits while
                                                                                 Professional Liability
   contributing nothing to the labor. Odder still, in some cases—in‑
   deed, in this case—the beneficiary is made worse off by pursuing
   a third party.32
      The US Airways insurance plan is silent as to whether or not the
“common fund” doctrine had any application to claims for reimburse‑
ment. However, because of the longstanding existence of the doctrine, a
beneficiary could assume that the common fund doctrine would apply
in the absence of an express repudiation of the doctrine in the plan
document. Although plan sponsors could specifically provide that the
plan’s right to reimbursement is without regard to equitable defenses
such as the “made whole” doctrine and the “common fund” doctrine,
the US Airways plan was silent on the matter. Therefore, the Court con‑
cluded, the doctrine would apply to the reimbursement claim against
McCutchen, and McCutchen could offset the costs of the attorney’s fees
incurred in procuring the settlement funds as the common fund doctrine
is deemed by the Majority as an “appropriate default” informing the                                                            NHBA Insurance Agency, Inc.
interpretation of a provision that is silent on the allocation of attorney’s                                                    Suzanne L. Morand, AIA, CIC
fees to a claim for reimbursement.33                                                     2 Pillsbury Street, Suite 300
Writing for the Majority, Justice Kagan observed:                                         Concord, NH 03301-3502
                                                                                                                                  Direct (866) 642-2292
                                                                                                                                     (603) 715-3204
   No one can doubt that the common-fund rule would govern here                    “Exclusively Serving Association Members”       Fax (603) 225-3285
   in the absence of a contrary agreement. This Court has “recognized

Fall/ 2013/Winter 2014                                       New Hampshire Bar Journal                                                                       9   
scholarship funds, or prepaid legal services, or (B) [pension benefits]...        plan cause of action “relates to” an ERISA plan when the court or fact
“35                                                                               finder must evaluate and interpret the terms of the ERISA-regulated
    As earlier stated, ERISA does not apply to all employee welfare               plan in order to determine liability under the state law.42
benefit plans.36                                                                        As the Supreme Court explained in 2003, when a “federal statute
                                                                                  completely preempts the state-law cause of action, a claim which comes
      B.	ERISA “Liens”                                                            within the scope of that cause of action, even if pleaded in terms of state
      Insurers of plan benefits (or their collection agent) often assert,         law, is in reality based on federal law. ERISA is one of these statutes.”43
including to the insurer against whom the liability claim is pending,
that they have a “lien” on the claim. In response to such an assertion,                 1. ERISA’s “Saving Clause”
the liability insurer may feel the need to put the name of the plan, the                However, the ERISA statute also contains a so-called “savings
health insurer or it collection agent on the settlement check is a co-payee.      clause” that saves from federal preemption state laws that regulate
Is there a basis for such a claimed lien?                                         “insurance, banking or securities.”44 The term “state law” under this
      ERISA does not grant a lien to a plan to protect its subrogation or         provision means “all laws, decisions, rule, regulations, or other state
reimbursement rights. Neither does any other federal or New Hampshire             action having the effect of law.”45
law. The Supreme Court has concluded that a plan has an “equitable                      The savings clause prompts the question whether state laws on
lien by agreement” based on the plan’s subrogation and reimbursement              subrogation and reimbursement are preempted as to an insured plan;
provisions against the beneficiary but only when the beneficiary has              that is, where a plan provides benefits through an insurance policy (e.g.,
actually received the settlement funds.37 Until funds are received, there         an Anthem policy).
is nothing upon which to place a lien.                                                  The Supreme Court has addressed the scope of ERISA’s savings
    In McCutchen, the Court summarized its earlier holding in Serebroff:          clause in a number of decisions.
                                                                                        In UNUM Life Ins. Co. of America v. Ward,46 an employee sought
    We held that Mid Atlantic’s action sought “equitable relief,” as §            long-term disability benefits through an employer-sponsored policy
    502(a)(3) requires. … The “nature of the recovery” requested was eq‑          issued by UNUM. However, his filing was late under the terms of the
    uitable because Mid Atlantic claimed “specifically identifiable funds”        UNUM policy and UNUM denied the claim. The employee-claimant
    within the Sereboffs’ control—that is, a portion of the settlement they       sought relief from the UNUM deadline by recourse to California state
    had gotten. …And the “basis for [the] claim” was equitable too,               law that would have required UNUM to show that it was prejudiced by
    because Mid Atlantic relied on “ ‘the familiar rul[e] of equity that a        the late filing. UNUM claimed that ERISA preempted the application of
    contract to convey a specific object’ ” not yet acquired “ ‘create[s] a       state law. The Supreme Court ruled that the California notice-prejudice
    lien’ ” on that object as soon as “ ‘the contractor ... gets a title to the   rule was a law that regulated insurance and was, therefore, saved from
    thing.’ ” … Mid Atlantic’s claim for reimbursement, we determined,            preemption.
    was the modern-day equivalent of an action in equity to enforce such                The Court in UNUM flatly rejected the insurer’s position that the
    a contract-based lien—called an “equitable lien by agreement.”38              plan language should be enforced, commenting that it “overlooks
                                                                                  controlling [preemption] precedent and makes scant sense” and would
     Accordingly, a plan’s lien only arises after the settlement has resulted     leave the states “powerless to alter the terms of the insurance relation‑
in settlement funds that are in the hands of the plan beneficiary.                ship in ERISA plans.”47 Under the insurance company’s view of things,
                                                                                  said the Court: “insurers could displace any state regulation simply by
     C.	Federal preemption                                                        inserting a contrary term in plan documents.”48 That result, the Court
                                                                                  said, “would virtually ‘rea[d] the saving clause out of ERISA.’”49
     As pointed out by the Court in McCutchen, a self insured plan                      In 2003, the Supreme Court simplified the test to determine
can enforce its reimbursement provisions notwithstanding state law                whether a state law “regulates insurance” within the meaning of the
limitations such as the made whole doctrine because of ERISA’s broad              savings clause. “First, the state law must be specifically directed toward
preemption provision.                                                             entities engaged in insurance . . . . Second, . . . the State law must sub‑
     ERISA is a comprehensive statutory scheme that governs employee              stantially affect the risk pooling arrangement between the insurer and
benefit plans. To this end, ERISA contains an expansive preemption                the insured.”50 Generally, the Court stated that for laws to be deemed
clause, which provides that “the provisions of . . . [ERISA] shall super‑         regulating insurance and therefore not preempted by ERISA, they must
sede any and all State laws insofar as they may now or hereafter relate           be “specifically directed toward” the insurance industry; “laws of general
to any employee benefit plan. . . .”39 This broad definition encompasses          application that have some bearing on insurers do not qualify.” 51
common law causes of action under state law.40 The preemption clause                    The foregoing presumably is the test that would be applied to
contained in section 1144(a) “indicates Congress’s intent to establish            determine whether, for example, a Dimick prescribed reduction of a
the regulation of employee welfare benefit plans as exclusively a federal         subrogation / reimbursement claim should take place in a reduced
concern.”41                                                                       recovery situation where the bills were paid by an insurance company.
     State common law tort and contract claims that relate to an ERISA            To date, no federal court case in the First Circuit has reached the issue.

   10                                                            New Hampshire Bar Journal                                    Fall/ 2013/Winter 2014
The application of the “savings clause” to allow a Dimick approach            In 1985, the Supreme Court upheld a state law that mandated that
to compromising a subrogation/reimbursement claim can only be                 mental health coverage be provided by health insurers.57
considered in insurance funded plans and not self-funded plans.52                  In 1999, the Court upheld the application of California’s “notice-
                                                                              prejudice” rule against a disability insurance carrier.58
     2. Insured plans are subject to state insurance law                           In 2002, the Court upheld a state law that mandated health insur‑
     Recently a federal court in Connecticut, post McCutchen, faced the       ers submit to independent review of their decisions not to cover medical
issue whether Connecticut’s anti-subrogation statute would preclude a         procedures deemed not “medically necessary.”59
reimbursement claim by a plan against a beneficiary who received a                 In 2003, the Court upheld a state law that prohibited HMO’s from
personal injury settlement.53 The court essentially ruled that the question   limiting their network providers, thus expanding the number of providers
turned on whether or not the plan was self-funded:                            from whom an insured may receive health services.60
                                                                                   In 2004, the Court held that ERISA nullifies insurance bad faith
   Defendants claim that Quest’s reimbursement claim is barred by Con‑        laws to the extent ERISA Plan participants rely upon such laws to seek
   necticut’s anti-subrogation statute, … [which] prohibits insurers from     extra-contractual damages from an insured ERISA Plan.61
   pursuing recovery from third-party tort settlements, and Defendants             In 2011, the Court explained in Amara62 that it will sometimes
   are correct that if Mr. Bomani’s health plan was insured—as opposed        be necessary to “look outside the plan’s written language in deciding
   to self-funded—then ERISA’s savings clause would apply and [the            what those terms are, i.e., what the language means.”63 As an example
   statute] could operate to bar the reimbursement sought here. See           the Court cited UNUM, which “permitt[ed] the insurance terms of an
   FMC Corp. v. Holliday, 498 U.S. 52, 61, 111 S. Ct. 403, 112 L.Ed.2d        ERISA-governed plan to be interpreted in light of state insurance rules.”64
   356 (1990) (“An insurance company that insures a plan remains an                In sum, there is a strong basis for concluding that a New Hampshire
   insurer for purposes of state laws ‘purporting to regulate insurance’      beneficiary of an insured plan could resort to the state’s “common fund”
   after application of the deemer clause. The insurance company is           and “made whole” doctrines to limit an insurer’s effort to seek 100
   therefore not relieved from state insurance regulation.”). But the         percent reimbursement for medical care and treatment out of a recovery
   Plan is self-funded, and none of the benefits paid to Plan members,        from a personal injury claim. In other words, in New Hampshire it is
   including Mr. Bomani, were funded by a contract of insurance for           not appropriate for an insurer to take it all.65 Practitioners must be wary,
   which premiums were paid to a health insurer. … And because                however, to ensure they are not dealing with a self-funded plan.
   the Plan is self-funded, [Connecticut state law] is preempted under
   ERISA. As the Supreme Court observed, ERISA’s “deemer clause ...
   exempt [s] self-funded ERISA plans from state laws that ‘regulat[e]                   Would you let your case rest on a
   insurance’ within the meaning of the saving clause.... As a result,                          house of cards...
   self-funded ERISA plans are exempt from state regulation insofar as
   that regulation ‘relate[s] to’ the plans.” FMC Corp., 498 U.S. at 61.54
     The foregoing analysis had been adopted by the Fifth Circuit Court
of Appeals. At issue was a Louisiana state insurance regulation which
provides that:
   any right of recovery from third parties on the part of the insurer,
   whether by subrogation or reimbursement, is subordinate to the
   insured’s right to be fully compensated for his damages; and ... the
   insurer is obligated to share in the legal expenses incurred.55                                       ECONOMISTS
                                                                                                   Examining Economic Damages
     The Court held that the regulation was a state law that regulates                                     Since 1982
insurance and, therefore, was not preempted by ERISA.56                                         Serving Vermont and Jurisdictions
                                                                                             Throughout the Northeastern United States
     3. U. S. Supreme Court interpretations of the
                                                                                                          • Personal Injury •
		 phrase “regulates insurance”                                                                           • Wrongful Death •
     In order for the New Hampshire approach to the “made whole”                                     • Wrongful Termination •
doctrine outlined in Dimick and our “common fund” rule to prevail,                                            • Divorce •
                                                                                                       • Medical Malpractice •
they must be determined to be state laws that regulate insurance within                                 • Commercial Losses •
the meaning of the “savings clause.” Other cases decided by the United
States Supreme Court prior to McCutchen support the conclusion that                              Economic & Policy Resources, Inc.
New Hampshire’s “made whole” and “common fund” doctrines would                            
be deemed doctrines that survive ERISA preemption.

Fall/ 2013/Winter 2014                                      New Hampshire Bar Journal                                                             11   
D. Can the claimant /beneficiary’s lawyer be 		                         the plan never contacted the law firm about its claim before the settle‑
		 sued if reimbursement is not made?                                         ment proceeds were distributed when it clearly knew that the law firm
      In 2003, The United District Court for the District of Maine issued     was pursuing a claim on Mrs. Green’s behalf. The court concluded:
the first of four decisions in Mank v. Green et al. 66 (Karen L. Mank is         Under the circumstances, . . . ERISA does not impose any affirma‑
the Plan Administrator for the Hannaford Health Plan.) The Hannaford             tive duty on attorneys representing Plan Beneficiaries to act, to serve
Plan, which is self-insured, sought to recover $141,335.75 that was paid         the Plan’s interests in opposition to the conflicting interests of the
for accident-related medical expenses incurred by Ellen Green. Ms. Green         attorney’s own client. The absence of any bad faith conduct that was
was represented by the law firm of Berman and Simmons, PA. The law               violative of any duty owed to the Plan, absolves Attorney Simmons
firm collected $300,00, in liability and UIM benefits for Ms. Green. The         and Bereman and Simmons of any equitably derived affirmative
law firm paid itself $160,000.95 in fees and expenses. The firm distributed      duty to contact the Health Plan.71
some of the net proceeds to Mrs. Green and paid outstanding medical
bills with the remainder.                                                          Although the plan appealed the court’s adverse rulings to the First
      The Plan sought reimbursement from Mrs. Green as well as the            Circuit Court of Appeals, that appeal was dropped in September 2005,
law firm.                                                                     after a settlement.
      In the court’s first decision, dated December 21, 2003, the court            Relying on the ERISA statutory scheme, the U.S. District Court for
granted a preliminary injunction against Mrs. Green. The court ruled          the Middle District of Tennessee has held that the lawyer for the injured
that the plan administrator had proved that there were identifiable           person has a legal duty to reimburse the plan the portion of settlement
settlement proceeds in Mrs. Green’s bank accounts.67                          funds owed to the plan under its subrogation clause.72 In this case, the
      In a May 24, 2004 decision, the court held that the plan was entitled   court agreed that a lawyer does not have a fiduciary duty to an ERISA
to summary judgment on her claim for recovery under Section 502(a)            plan, even though the lawyer is aware of the existence of a subrogation
of ERISA, and on her request for a constructive trust on $83,941 then         agreement between the plan and the beneficiary. ERISA, the court con‑
held in three separate bank accounts. The court held that the interests       cluded, “requires that a fiduciary exercise ‘authority or control respecting
of equity were served by imposing a constructive trust in the funds           management or disposition’ of Plan assets.”73 Because the settlement
because the plan contained express language providing a right of re‑          funds received by the lawyer did not become “Plan assets” when he
covery concerning third party recoveries, because Mrs. Green signed two       received them, he did not fall within the definition of a fiduciary.74
requests for information that contained clear disclosures of the plan’s            However, the judge found the lawyer and his firm liable for violating
right-of-recovery provision, and because Mrs. Green agreed, by signing        the plan’s terms, relying on Tennessee state law provision. Tennessee
those forms, to abide by those recovery provisions. The court found that      law provides that a lawyer “will be held civilly liable to a non-client
$83,941.21 of the settlement proceeds distributed to Mrs. Green were          where he knowingly participates in the extinguishment of a subroga‑
identifiable in specific bank accounts. The court ruled that the interest     tion interest of a non-client third party and delivers to his client funds
of equity was served by imposing a constructive trust on those funds, and     that he knows belong to the third party and knows or should know, that
ordered the plaintiffs to pay said amount to the Plan within 30 days.68       he has already placed the funds beyond the reach of the third party.”75
      The court, however, denied the plan’s motion for partial summary        Based on this provision, the court ruled that the plaintiff’s lawyer was
judgment to impose a constructive trust for $57,394.54, on certain as‑        liable for failing to honor his client’s obligation under the ERISA plan
sets in the possession of the law firm and/or Attorney Simmons. The           to pay the subrogation interest.
court concluded the plan’s claim against the law firm was for legal                New Hampshire’s Rules of Professional Responsibility has a provi‑
and not for equitable restitution, and further that the record failed to      sion which probably comes into play when counsel has knowledge of a
demonstrate that there were traceable and identifiable proceeds from          subrogation/reimbursement claim of a plan or its insurer.76
the Green settlement in the possession of the law firm.69
      In addition to bringing its claim under ERISA, the plan brought           C. Is there a professional responsibility
various state and federal common law claims against the defendants.           		 requirement to preserve the settlement funds?
On December 6, 2004, the court dismissed these claims ruling that they
were pre-empted by ERISA.670                                                                   CLIENT-LAWYER RELATIONSHIP
      In a decision dated March 29, 2005, the court denied the plan’s                           Rule 1.15. Safekeeping Property
claim to recover $57,394.54, from the attorney’s fee paid to Mrs. Green’s
lawyer and law firm. The court recited the facts of what Attorney Sim‑             Upon receiving funds or other property in which a client or third
mons knew and when he knew it regarding monies paid by the plan                  person has an interest, a lawyer shall promptly notify the client or
for accident-related injuries. The Plan couched its claim in the terms           third person. Except as stated in this rule or otherwise permitted
of an equitable accounting for profits. The Plan contended that the              by law or by agreement with the client, a lawyer shall promptly
court should order a disgorgement of the profits gained by the attorney’s        deliver to the client or third person any funds or other property that
wrongful conduct in advising his client to violate the terms of the ERISA        the client or third person is entitled to receive and upon request by
Plan. The court seemed to put considerable emphasis on the fact that             the client or third person, shall promptly render a full accounting

   12                                                      New Hampshire Bar Journal                                       Fall/ 2013/Winter 2014
regarding such property.                                                 the lawyer is obligated “to keep the funds separate until the dispute is
                                                                           resolved by agreement or decision.”
    When in the course of representation a lawyer is in possession               If the opinion is read narrowly to be based on a valid statutorily based
  of property in which two or more persons (one of whom may be             lien, e.g., a hospital lien, the opinion does not define the lawyer’s obligations
  the lawyer) claim interests, the property shall be kept separate by      in the not-uncommon situation of a claim by an insurer who provides
  the lawyer until the dispute is resolved. The lawyer shall promptly      benefits under an ERISA plan. These plans have no such liens.
  distribute all portions of the property as to which the interests are          Read more broadly to cover a lien by agreement (as discussed in
  not in dispute.                                                          Sereboff)77, then the lawyer is in breach of his ethical obligations (in
                                                                           the opinion of the Ethics Committee in 1998) if he / she distributes all
    Adopted, Effective Jan. 1, 2008                                        the net settlement proceeds to the client. What if the insurer does not
                                                                           inform either the lawyer or the client of its claimed interest? Is the lawyer
     The predecessor to this provision of the ethics rules was a New       obligated to contact the insurer in the first instance to inquire whether
Hampshire Bar Association Ethics Committee Formal Opinion (#1998-          there is a claim to the settlement proceeds? Probably not. But there are
99/3) posited on a situation where a lawyer is holding settlement funds    many gray areas left in this area where collection agents purportedly
subject to a “recognized valid lien” and a “valid statutory interest in    in a plan’s name claim a right of reimbursement without establishing
the settlement proceeds.” On those facts, where there is a dispute over    their bona fides to do so.
the funds that are claimed by the lien holder, the ethics opinion states         So the answer is yes: there are situations where a personal injury

                                                   An ERISA Claim Checklist
    1. What do you need to negotiate a claim for reimbursement             8. Does the plan specifically assert a right to full recovery, at‑
       made by a plan or its insurer?                                          tempting to negate the “make whole” doctrine?
       Is the plan governed by ERISA?                                      9. If the plan is self-funded and has a unambiguous 100 percent
    2. Get a breakdown of payments behind subrogation / reim‑                  reimbursement provision, contact the Plan Administrator
       bursement claim.                                                        and try to work out an arrangement on reimbursement out
       a. Are any of the bills not accident related?                           of any recovery that makes sense for all concerned. Or don’t
                                                                               take the case.
       b. Are any of the bills which are accident related not on
       breakdown?                                                          10. Did client execute a “Reimbursement agreement?” Did the
       c. As to bills not on the breakdown are they outstanding?
                                                                           11. Does the plan state it does not cover expenses incurred because of the
    3. Get the plan’s documents in effect when payments made.                  negligent or wrongful act of another?
       McCutchen makes clear that knowing the exact wording of
       the subrogation/reimbursement provisions of the Plan is             12. Where are the settlement funds? Are they identifiable / trace‑
       important. Amara made clear that it is the exact plan lan‑              able (as discussed in Sereboff)?
       guage that is important and not that found in a summary             13. Who is seeking reimbursement? The plan? Or, the collection
       plan description.                                                       agency for a plan insurer? Does the plan have the express
    4. Is the Plan self-funded or is there an insurance policy? If             authority in the plan documents to assign its subrogation/
       there is any doubt, check the plan’s Form 5500. Plans file              reimbursement interests to a collection agent?
       annually with the U.S. Department of Labor a Form 5500,             14. Make sure any agreement that is reached is a final settlement
       which identifies whether plan benefits are in whole or in part          of the plan’s claim either from the settlement fund on-hand
       provided by insurance.                                                  or from any and all settlement funds. That is, you do not want
    5. Does the Plan have a reimbursement provision? Does it al‑               client to be left in the situation where the plan or its insurer
       low for any offsets, including attorney’s fees? Does the plan           claims a “holiday” against future payment of medical bills
       specifically preclude offset for attorney’s fees?                       for amounts it claims should have been reimbursed it from
                                                                               a recovery.
    6. Does the plan have a recoupment (contractual self-help)
       provision?                                                          15. Gets client’s informed approval of all decisions regarding
    7. What powers does the plan have to enforce its subrogation /
       reimbursement provisions?

Fall/ 2013/Winter 2014                                      New Hampshire Bar Journal                                                               13   
lawyer in receipt of settlement proceeds who ignores a plan’s request or                           companies. See generally, Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 372 n.6, 122
                                                                                                   S. Ct. 2151, (2002) (discussing the possibility that an HMO may provide only administrative
that of its collection agent, for reimbursement may face a claim that                              services for a self-funded plan and stating that a state law “would not be ‘saved’ as an insur-
he or she owes a plan a duty not to remit the proceeds to the client.                              ance law to the extent it applied to self-funded plans”); Bill Gray Enterprisees v. Gourley, 248
                                                                                                   F. 3d 206 (3d Cir. 2001) (purchase of stop loss insurance by self funded plan does not bring
                                                                                                   plan within savings clause); accord, Hampshire Motor Transp. Ass’n Employee Benefit Trust
Conclusion                                                                                         v. New Hampshire Ins. Guar. Ass’n, 154 N.H. 618, 624, 914 A.2d 812, 818 (2006)
      When is it appropriate for an ERISA plan to insist on full reimburse‑                        13.   US Airways, Inc. v. McCuthen, 133 S. Ct. 1537, 1547 (2013)
ment of payments it made for injury–related medical bills? McCutchen                               14. Pilot Life Ins. Co. v. Dedeaux, 107 S. Ct. 1549 (1987) (internal quotation marks and
                                                                                                   emphasis omitted).
teaches us that unambiguous language in a self-funded plan may well
                                                                                                   15. Mertins v. Hewitt Association, 113 S.Ct. 2063 (1996). Remedies available under § 502(a)
require full reimbursement even if this leaves the beneficiary with no                             (3) are limited to those categories of relief typically available in equity. Provision authorizes
net recovery from his or her personal injury claim. If the plan language                           only the kinds of relief “typically available in equity” in the days of “the divided bench,” before
is ambiguous, whether the plan is self-funded or insured, the fallback                             law and equity merged.
                                                                                                          Great – West Life & Annuity Inc., Co. v. Knudson, 122 S.Ct. 708 (2002). Plan’s health
or default rules of interpretation of the plan language will incorporate                           insurance company sued beneficiary for reimbursement of money the insurer had paid for
New Hampshire’s articulation of the made whole and common fund                                     medical bills incurred by injured participant out of his settlement money. Claim for equitable
doctrines such that there will be equitable offsets limiting the plan’s                            restitution allowed for recovery but only from specifically identified funds stemming from the
                                                                                                   settlement and not from personal assets of the beneficiary.
right to reimbursement. If the plan is insured, such that injury–related
                                                                                                          Sereboff v. Mid-Atlantic Medical Services, 126 S.Ct. 1869 (2006). A Plan Administrator
medical bills were paid not from plan assets but rather from the assets of                         may enforce a reimbursement provision by filing suit under § 502(a)(3) of ERISA. Company
an insurance company, ERISA’s savings clause allows New Hampshire’s                                sued Plan beneficiary to enforce reimbursement provision of the Plan. Plan language created
state law to govern the question of the insurer’s right to reimbursement.                          “an equitable lien by agreement” on settlement proceeds when received by the beneficiary.
                                                                                                   Plan properly sought to impose a constructive trust over specifically identified fund containing
And New Hampshire’s long-established equitable restrictions on insurers’                           settlement money. Company did not seek to impose personal liability on the beneficiary.
claims for subrogation and reimbursement, set out in cases adopting                                       CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011). Plan’s Summary Plan Description
the made whole and common fund doctrines, will not allow the insurer                               (“SPD”) cannot be enforced under § 502(a)(3) as the Plan itself. In dicta, the majority stated
to take it all.                                                                                    that equitable relief is available for a claim of breach of fiduciary duty, including the remedy of
                                                                                                   “surcharge” (i.e. a monetary award) against the Plan Fiduciary.
      The most significant impact McCutchen may have made in the
                                                                                                   16.   29 USC § 1132(a)(3).
on-going struggle over the resolution of health plan reimbursement                                 17. Pilot Life Ins.Co. v. Dedeaux, 481 U.S. 41, 54, 107 S. Ct. 1549 (1987) (internal quotation
claims is to return to center stage the discussion the made whole and                              marks and emphasis omitted).
common fund doctrines.                                                                             18.   Blue Cross/Blue Shield of N.H./VT v. St. Cyr, 123 N.H. 137 (1983)
      What follows is a checklist of information counsel representing a                            20.   Id. at 140.
plan beneficiary should have and consider before making distributions                              21.   Wolters v. American Rep. Ins. Co., 149 N.H. 599 (2003)
from a personal injury recovery where injury related medical bills were                            22.   Id., 149 N.H. 601 (quotations, citations and brackets omitted).
paid by a health plan.                                                                             23. Id. at 603, citing Dimick v. Lewis, 127 NH 141, 144 (1985). See also, Bonte v. American
                                                                                                   Global Ins. Co., 136 N.H. 528, 532 (1992).
                                                                                                   24.   Dimick, 127 at 145. See also Lutkus v. Lutkus, 141 N.H. 552 (1997).
                                                                                                   25. 16 Lee R. Russ, Thomas F. Segalla & Steven Pitt, COUCH ON INSURANCE § 223:134
1.     29 U.S.C. § 1001, et seq
                                                                                                   (3d ed. 2000).
2.     U.S. Department of Labor FAQs,
                                                                                                   26.   See Roy v. Ducnuigeen, 130 N.H. 24, 26 (1987).
3.     29 U.S.C. § 1003(b).
                                                                                                   27.   Silva v. Botsch, 121 N.H. 1041, 1043 (1981).
4.     29 U.S.C. § 1002(1).
                                                                                                   28.   McCutchen, 133 S. Ct. at 1542-43.
5.      29 U.S.C. § 1144(a). A case brought in state court that includes a claim that relates to
                                                                                                   29.   Id., 133 S. Ct. at 1543.
an ERISA plan is subject to removal to federal court. See Kiedaisch v. Nike, Inc., 2004 WL
368320 (D.N.H. Feb. 24, 2004) (“As is typical in many cases that arguably involve claims under     30. “The statutory scheme, we have often noted, ‘is built around reliance on the face of
ERISA, it seems that defendants seek to ‘tow[ ] the case into the federal harbor only to try to    written pan documents’. ‘Every employee benefit plan shall be established and maintained
sink it once it is in port.’”).                                                                    pursuant to a written instrument,’ § 1102(a)(1), and an, administrator must act ‘in accordance
                                                                                                   with the documents and instruments governing the plan’ insofar as they accord with the statute,
6.     29 U.S.C. § 1144(a). See generally, Carpenters Local Union No. 26 v. United States
                                                                                                   § 1104(a)(1)(D). The plan, in short, is at the center of ERISA.” McCutchen, 133 S Ct. at 1548
Fid. & Guar. Co., 215 F.3d 136, 139 (1st Cir. 2000).
                                                                                                   (2013) (citations omitted).
7.     Pilot Life Ins. Co. v. Dedeaux, 107 S. Ct. 1549 (1987). Pharm. Care Mgmt. Ass’n v. Rowe,
                                                                                                   31.   Id., 133 S. Ct. at 1551.
429 F.3d 294, 303 (1st Cir. 2005); Woodcock v. Bristol-Myers Squibb Co., 2005 WL 1521405,
2005 DNH 097 (D.N.H. June 27, 2005) (wrongful termination claim preempted); Trombley v.            32.   Id., 133 S. Ct. at 1550.
New England Tel. & Tel. Co., 89 F. Supp. 2d 158, 168 (D.N.H. 2000) (“Plaintiff cannot secure       33. Id., 133 S. Ct. at 1548 (“We have no doubt that the common-fund doctrine has deep
a result under state law that is unachievable under ERISA.”); In re A & J Beverage Distribution,   roots in equity.”).
Inc., 163 N.H. 228, 237, 37 A.3d 371, 377 (2012) (whistleblower claim preempted).
                                                                                                   34. Id., 133 S. Ct. at 1550 (“The rationale for the common-fund rule reinforces that conclusion.
8.     29 U.S.C. § 1144(b)(2)(A).                                                                  Third-party recoveries do not often come free: To get one, an insured must incur lawyer’s fees
9.     Id.                                                                                         and expenses. Without cost sharing, the insurer free rides on its beneficiary’s efforts—taking
                                                                                                   the fruits while contributing nothing to the labor. Odder still, in some cases—indeed, in this
10.    Metropolitan Life Ins. Co. v. Mass., 105 S. Ct. 2380 (1985).
                                                                                                   case—the beneficiary is made worse off by pursuing a third party.”).
11.    See generally, Express Scripts, Inc v. Wenzel, 262 F.3d 829(8th Cir. 2001).
                                                                                                   35.   29 U.S.C. § 1002(1).
12. 29 U.S.C. §1144(b)(2)(B). The “deemer clause” generally provides that no plan will
                                                                                                   36.   Note 3, supra. 29 U.S.C. § 1003(b).
be deemed an insurance company for purposes of any state law that regulates insurance
                                                                                                   37.   Sereboff v. Mid-Atlantic Medical Services, 126 S.Ct. 1869 (2006).

     14                                                                     New Hampshire Bar Journal                                                         Fall/ 2013/Winter 2014
38.   McCutchen, 133 S. Ct. at 1544-45.                                                              69. Id. ( “the .funds sought by the plaintiff have become so dissipated that Plaintiff cannot be
39.   29 U.S.C. § 1144(a).                                                                           considered to be seeking particular funds that belong in good conscience to the Plan — that
                                                                                                     is proceeds from the Green settlement.”).This conclusion, strictly applying the traceability
40. See cases cited at note 7 supra. However, “benefits-due” claims may be brought in state          requirement set forth in Knudson, supra note 16, may not obtain post McCutchen; that is, a
or federal court. “ERISA preemption in a benefits-due action does not affect the choice of forum,    law firm faced with the same set of facts today may well be forced to pay back a plan.
because ERISA’s jurisdictional provision provides that ‘State courts of competent jurisdiction
and district courts of the United States shall have concurrent jurisdiction of actions,’ 29 U.S.C.   70.   Mank v. Green, 350 F. Supp 2d 154 (D. Me. 2004).
§ 1132(e)(1) (emphasis added), ‘brought by a participant or beneficiary to recover benefits          71.   Mank v. Green, 368 F. Supp. 2d 102, 112 (D. Me. 2005).
due.’ 29 U.S.C. § 1132(a)(1)(B). The plain language of § 1132 tells us that if a plaintiff brought   72.   Greenwood Mills, Inc. v. Burris, 130 F. Supp. 2d 949, 960 (M.D. Tenn. 2001).
a ‘benefits-due’ action in state court and the defendant pleaded ERISA preemption, this would
not deprive the court of jurisdiction over the subject matter; rather, ERISA preemption in that      73.   Id. at 958.
situation would dictate the applicable law.” Urological Surgery Prof’l Ass’n v. William Mann         74.   Ibid.
Co., Inc., 764 F. Supp. 2d 311, 327 (D.N.H. 2011).                                                   75.   Id. at 960.
41. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,               76.   Rule 1.15 of the Rules of Professional Responsibility.
115 S. Ct. 1671, 1677 (1995).
                                                                                                     77.   Sereboff v. Mid-Atlantic Medical Services, 537 US 356 (2006).
42. See UNUM Life Ins. Co. Of America v. Ward, 119 S.Ct. 1380 (1999); Carpenters Local
Union No. 26 v. United States Fid. & Guar. Co., 215 F.3d 136, 139 (1st Cir. 2000).
43.   Beneficial Nat. Bank v. Anderson, 123 S. Ct. 2058, 2063 (2003)                                 About the Author
44.   29 U.S.C. § 1144(b)(2)(A).
                                                                                                                  Francis G. Murphy is a shareholder of the
45. Id. See Pilot Life Ins. Co. v. Dedeaux, 107 S. Ct. 1549, 1553 n.1 (1987) (“Deci-
sional law that ‘regulates insurance’ may fall under the saving clause.”).
                                                                                                                  law firm of Shaheen & Gordon, practicing
46.   See UNUM Life Ins. Co. Of America v. Ward, 119 S.Ct. 1380 (1999).
                                                                                                                  in personal injury, workers compensation
47.   Id. at 1383.
                                                                                                                  and other areas of litigation. He is admitted
48.   Ibid.
                                                                                                                  to practice in New Hampshire, Massachusetts,
49. Ibid. Importantly, the Court also rejected UNUM’s argument concerning the                                     and in a number of appellate forums. Among
meaning of the term “regulate insurance” under ERISA’s saving clause. “Our precedent is                           his activities, he is a former member of the New
more supple than UNUM conceives it to be. We have indicated that the McCarran-Ferguson                            Hampshire Bar News Editorial Board. He has
factors are ‘considerations [to be] weighed’ in determining whether a state law regulates insur-
ance, … and that ‘[n]one of these criteria is necessarily determinative in itself.’” Id. at 1389.                 taught extensively, including as an instructor
50. Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 341-42, 123 S.Ct.                               for the National Institute of Trial Advocacy.
1471 (2003).
51. Id.
52. ERISA’s “deemer clause,” 29 U.S.C. §1144(b)(2)(B), generally provides that no plan will
be deemed an insurance company or subject to insurance regulations that apply to insurance
53.   Quest Diagnostics v. Bomani, 2013 WL 3148651 (D. Conn. June 19, 2013).
54.   Id. at *6
55.   Benefit Recovery, Inc. v. Donelon, 521 F.3d 326, 328 (5th Cir. 2008).
56.   Id. at 331.
57.   Metropolitan Life Ins. Co. v. Massachusetts, 105 S. Ct. 2380 (1985).
58.   UNUM, supra
59.   Rush Prudential HMO, Inc. v. Moran, 122 S. Ct. 2151 (2002)
60. Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 341-42, 123 S.Ct. 1471
                                                                                                                     Check available dates or schedule
(2003).                                                                                                              appointments online directly with
61. Aetna Health, Inc. v. Davila, 124 S. Ct. 2488 (2004) (attorney fee award disallowed).                           the state’s top-rated civil mediators*
Compare La. Health Serv. & Indem. Co. v. Rapides Healthcare Sys., 461 F.3d 529 (5th Cir.
La. 2006) (State insurance law that allowed assignment of health benefits not preempted by                               This service provided at no cost to law firms at
ERISA); and Werdehausen v. Benicorp Ins. Co., 487 F.3d 660 (8th Cir. Mo. 2007) (State law
that forbad insurance companies from denying payment of a pre-authorized procedure not                      
62.   CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011).
63.   Id. at 1877.
64.   Id. (citation omitted).
65. But see, Wurtz v. Rawlings Co., LLC, 933 F. Supp. 2d 480 (E.D. N.Y. 2013) (New York
statute limiting non-statutory reimbursement and subrogation claims in personal injury and
wrongful death actions was not specifically directed at entities engaged in insurance, thus
weighing against finding that statute fell within savings clause; statute contained broad defini-
tion of what constituted “benefit provider” that including various entities beyond just insurers
and regardless of whether benefits at issue constituted insurance. ).
66.   Mank v. Green, 297 F. Supp. 2d 297 (D. Me. 2003).                                                            *As approved by local members of the national plaintiff (AAJ)
67.   Id. at 304.                                                                                                   and defense (DRI) bar assocations. For more information on
68.   Mank v Green, 323 F. Supp 2d 115, 126 (D. Me. 2004).                                                          the National Academy, please visit

Fall/ 2013/Winter 2014                                                         New Hampshire Bar Journal                                                                                   15     
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