Jean LEVINE, On Behalf of Herself and All Others Similarly Situated v. United Healthcare Corporation (DC NJ 01-Cv-04964)
Jean LEVINE, On Behalf of Herself and All Others Similarly Situated v. United Healthcare Corporation (DC NJ 01-Cv-04964)
Jean LEVINE, On Behalf of Herself and All Others Similarly Situated v. United Healthcare Corporation (DC NJ 01-Cv-04964)
3d 156
No. 04-1224.
No. 04-1225.
United States Court of Appeals, Third Circuit.
Argued December 15, 2004.
March 16, 2005.
William F. Hanrahan, (Argued), Edward A. Scallet, Jason H. Ehrenberg,
Groom Law Group Chartered, Washington, DC, for Appellants/Cross
Appellees United Healthcare Corp.
Edward S. Wardell, (Argued), Kelley Wardell & Craig, Haddonfield, NJ,
I.
2
Jean Levine, Noreen Bogurski, and Benjamin Edmondson (the "Insureds") were
injured by third-parties in separate, unrelated events and are the
Appellees/Cross-Appellants in this appeal. Their health insurance providers,
United Healthcare Corporation and Horizon Blue Cross and Blue Shield of New
Jersey,1 are the Appellants/Cross-Appellees (the "Providers"). At the time of
the injuries, the Providers fulfilled their responsibilities to the Insureds under
each health insurance policy by paying at least a portion of the Insureds'
medical expenses.
3
Each Insured then filed suit against the third party responsible for his or her
injury. At that time, a New Jersey Department of Insurance Regulation
permitted health insurance policies to include reimbursement and subrogation
clauses. N.J. ADMIN. CODE tit. 11, 4-42.10 (1993) (repealed August 5,
2002).2 Each of the relevant health insurance policies had such a clause.
Consequently, when the Insureds sued their respective tortfeasors, the Providers
acted within the bounds of both the health insurance policies and the
Department of Insurance regulation by seeking reimbursement from the
Insureds for benefits paid under the health insurance policies. The Insureds
then paid a portion of their tort settlement to the Providers to settle the
reimbursement claims.3
Subsequent to these settlements between the Insureds and the Providers, the
New Jersey Supreme Court announced a decision in Perreira v. Rediger, 169
N.J. 399, 778 A.2d 429 (2001), holding that the Department of Insurance
regulation conflicted with a New Jersey statute, and thus, was invalid.4 As a
result, subrogation and reimbursement provisions are no longer permitted in
New Jersey health insurance policies. Notwithstanding their earlier settlements,
the Insureds sued the Providers in New Jersey state court to recover the
amounts they paid to reimburse the Providers.
II. The District Court Proceedings
After being sued in New Jersey state court, the Providers removed the cases to
federal court claiming complete ERISA preemption under section 502(a)(1)(B)
of ERISA. The District Court denied the Insureds' motion to remand to state
court. Concluding that the question of removal was a "conceptually unclear
area of law," the District Court nonetheless determined that the Insureds sought
to "recoup a benefit due under the plan," and thus, their claim was properly
removed. The Court also denied the Insureds' request to certify the issue for
appeal at that time.
The Providers also filed a motion to dismiss the claims. First, the Providers
claimed that ERISA preempted New Jersey's statute; therefore, the statute did
not apply to ERISA-governed plans. Second, they argued that the Perreira
decision should not be applied retroactively.
The District Court concluded that the New Jersey statute was a statute
"regulating insurance," and thus, was "saved" from ERISA preemption. First, as
directed by the Supreme Court in Pilot Life Insurance Co. v. Dedeaux, 481 U.S.
41, 50, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), the District Court made the
"common sense determination" that the law was specifically directed toward
the insurance industry because it was intended to directly affect and regulate
that industry. Second, the Court tested the results of its common sense
determination by examining the three factors listed in the McCarran-Ferguson
Act5 and found that these factors supported the conclusion that the law
regulated insurance. See Moran, 536 U.S. at 366, 122 S.Ct. 2151. Thus, the
District Court found that the law was "saved" from ERISA preemption.
Following the denial of the motion to dismiss, the District Court certified three
issues for interlocutory appeal pursuant to 28 U.S.C. 1292(b):
10
11
(2) whether Perreira v. Rediger, 169 N.J. 399, 778 A.2d 429 (2001), applies
retroactively to plaintiffs' pre-Perreira health insurance plans; and,
12
(3) whether plaintiffs' unjust enrichment claims for monies taken pursuant to
subrogation and reimbursement provisions in their ERISA health plans are
claims for "benefits due" within the meaning of ERISA section 502(a).7
13
We granted permission for the appeal (issues one and two) and cross-appeal
(issue three) on January 16, 2004 and have jurisdiction pursuant to 28 U.S.C.
1292(b).
16
The Insureds brought their claims in New Jersey state court as state claims for
unjust enrichment. Therefore, they claim, federal jurisdiction is inappropriate
and the cases should be remanded to state court. In general, under the wellpleaded complaint rule, it is true that the federal courts have federal question
jurisdiction only when a federal claim appears in the complaint, and not when a
federal preemption defense may eventually be raised in litigation. Pryzbowski,
245 F.3d at 271. Certain federal laws, however, including ERISA, so
sweepingly occupy a field of regulatory interest that any claim brought within
that field, however stated in the complaint, is in essence a federal claim. In such
cases, the doctrine of complete preemption provides federal jurisdiction and
allows removal to federal court. See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58,
63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). State law claims seeking relief
within the scope of section 502(a) of ERISA are within this select group of
cases where Congress has completely preempted an area of law.8 Metro. Life,
481 U.S. at 62-66, 107 S.Ct. 1542; Pryzbowski, 245 F.3d at 271-72. Thus, if the
claim is one that falls within section 502(a) of ERISA, removal to federal court
is proper. Id.
17
18
18
19
At the time of the District Court's ruling on the removal question, May 28,
2002, no Court of Appeals had considered whether the type of case before us
was preempted under section 502(a) of ERISA. Since the District Court's initial
ruling, however, the Fourth and Fifth Circuits have considered whether similar
cases are subject to preemption under ERISA. Arana, 338 F.3d 433; Singh v.
Prudential Health Care Plan Inc., 335 F.3d 278 (4th Cir.2003). Both Courts of
Appeal held that the federal courts are the proper forums for these disputes. In
Arana, the Fifth Circuit held that federal jurisdiction was proper in a case
strikingly similar to the one here. There, the plaintiff claimed that under
Louisiana law his health insurance company had no right to reimbursement of
health benefits after the plaintiff recovered in a tort action. The Court held that
the plaintiff's claim was properly characterized as a claim for "benefits due" or
to "enforce his rights under the plan," either of which would provide
jurisdiction. Arana, 338 F.3d at 438. It described the situation as follows:
20
21
In Singh, the Fourth Circuit addressed whether claims of unjust enrichment and
negligent misrepresentation relating to subrogation and reimbursement actions
of the insurer were claims for "benefits due." Like the Fifth Circuit, the Fourth
Circuit found that ERISA controlled and removal was appropriate because
subject matter jurisdiction is not affected by "the fortuity of when a plan term
was misapplied to diminish the benefit." Singh, 335 F.3d at 291 (emphasis in
original).
22
Here, the Insureds claim that they were entitled to certain health benefits and
that the Providers wrongly sought the return of those benefits. Even more than
in Arana, the Insureds' claim here is for benefits due. The Insureds have
already paid back a portion of their benefits. Thus, they claim essentially that
they are entitled to have certain health insurance claims paid under their ERISA
plans. It is impossible to determine the merits of the Insureds' claims without
delving into the provisions of their ERISA-governed plans.
23
We agree with the reasoning of the Courts of Appeal for the Fourth and Fifth
Circuits. Where, as here, plaintiffs claim that their ERISA plan wrongfully
sought reimbursement of previously paid health benefits, the claim is for
"benefits due" and federal jurisdiction under section 502(a) of ERISA is
appropriate. Such a rule comports with our earlier jurisprudence because,
although not directly analogous, such claims are more like challenges to the
"administration of benefits" than challenges to the "quality of benefits
received." See Pryzbowski, 245 F.3d at 273.
24
Although the Insureds have attempted to characterize their claim as one looking
only at state law, the essence of the claim concerns an ERISA plan. Therefore,
we conclude that federal subject matter jurisdiction is appropriate.
Next, we turn to the District Court's denial of the Providers' motion to dismiss.
Our review of the District Court's decision is plenary. Pryzbowski, 245 F.3d at
268. We accept all factual allegations in the complaint as true and draw
reasonable inferences from those allegations. Id. The first issue is whether
ERISA preempts the New Jersey statute on which the Insureds' claims rely. If
ERISA preempts the New Jersey statute, then the reimbursement provisions in
the Insureds' health insurance policies stand, and the Insureds' claims must be
dismissed. Because we find that this is indeed the case, this issue is dispositive.
27
New Jersey Statute, section 2A:15-97, essentially reverses the common law
collateral source doctrine by requiring a plaintiff who receives benefits from
any source other than a joint tortfeasor to deduct that amount from his or her
recovery in any civil action.9 Thus, payments made by health care providers are
deducted from a plaintiff's tort recovery under New Jersey law.10
28
30
The Supreme Court recently clarified the appropriate test for determining
whether a state law that relates to employee benefit plans falls within the
savings clause. In a 2003 decision, issued after the District Court had made its
preemption ruling in this case, the Court directed that for a "state law to be
deemed a `law ... which regulates insurance' under 1144(b)(2)(A), it must
satisfy two requirements." Miller, 538 U.S. at 341-42, 123 S.Ct. 1471. First, the
state law must be "specifically directed toward entities engaged in insurance."
Id. Second, the state law must "substantially affect the risk pooling arrangement
between the insurer and the insured." Id.12
31
The Providers argue that the New Jersey statute applies to "any civil action"
and funds from "any other source," and thus, it is not specifically directed
toward insurance. In Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107
S.Ct. 1549, 95 L.Ed.2d 39 (1987), the Supreme Court addressed a similar case
where a state law had its primary effect on insurers but was not limited to
insurers. At issue in Pilot was Mississippi's law of bad faith. Even though the
Mississippi Supreme Court had identified its law of bad faith with the insurance
industry, the Supreme Court found that the law was based in general tort and
contract law, not insurance law. Id. at 49-50, 107 S.Ct. 1549. The law could
apply in any breach of contract case, not merely a breach of an insurance
contract. Id. As a result, the law did not fall within the savings clause. Id.
32
Here, the District Court found, and the Insureds argue, that the New Jersey
Before turning to the effect the statute has on New Jersey insurance law, an
examination of the statute itself indicates that it is more than just an insurance
regulation. New Jersey did not define section 2A:15-97 as an "antisubrogation
law," nor did New Jersey place this statute among the statutes regulating
insurance. Rather, the statute is entitled, "Personal injury or wrongful death
actions; benefits from sources other than joint tortfeasor; disclosure; deduction
from plaintiff's award," and is included in the portion of New Jersey's statutes
dealing with civil actions. The plain language of the statute reveals that this
statute is not limited to regulating either health insurance or liability insurance
providers.
34
Additionally, examination of the driving intent behind the statute shows that
this case parallels the analysis in Pilot. As in Pilot, a state supreme court
described the law as one intended to affect the insurance industry. Perreira, 778
A.2d at 436. Despite this finding, the law here is a general law of civil
procedure. The New Jersey statute governs all civil actions, not merely those
involving insurance entities. Furthermore, even the Perreira Court recognized
that the primary purpose of the law was to disallow double recovery by tort
plaintiffs, not to regulate insurance contracts. Id.
35
the New Jersey statute is merely one that will usually, although not exclusively,
be applied to regulate insurance entities. See Pilot, 481 U.S. at 49-50, 107 S.Ct.
1549. This is not sufficient to avoid preemption under ERISA.
36
The Insureds argue that because the statute is "aimed at" insurance entities, the
requirements under the savings clause are satisfied, even if in some cases the
statute regulates non-insurance entities. They direct us to several cases where
the fact that a statute is "aimed at" the insurance industry or intended to affect
that industry supports the conclusion that it is specifically directed toward the
industry. See, e.g., FMC Corp. v. Holliday, 498 U.S. 52, 61, 111 S.Ct. 403, 112
L.Ed.2d 356 (1990) ("[I]t does not merely have an impact on the insurance
industry; it is aimed at it."). Examination of these cases, however, reveals a key
difference from the case here: they explicitly regulated insurance. Miller, 538
U.S. at 331-32, 123 S.Ct. 1471 ("a health insurer shall not discriminate against
..."); Moran, 536 U.S. at 359, 122 S.Ct. 2151 (involving a section of Illinois's
HMO Act where Congress specifically determined that HMOs were insurance
entities); Holliday, 498 U.S. at 55, n. 2, 111 S.Ct. 403 (defining "coordination
of benefits" as "a policy of insurance"); Medical Mutual of Ohio v. deSoto, 245
F.3d 561, 569 (6th Cir.2001) (examining California's antisubrogation statute
that was limited to cases against a health care provider and contributions paid as
the result of "health, sickness or income-disability insurance, accident
insurance"). Although New Jersey's statute may have been "aimed at" shifting
the burden of tort expenses from the liability insurance industry to the health
insurance industry, the statute explicitly regulates both insurance and noninsurance entities. As in Pilot, we are faced with a state statute that, although
commonly identified with the insurance industry, is not "specifically directed
toward the insurance industry."
37
V.
38
New Jersey's statute, and thus the District Court erred in denying the Providers'
motion to dismiss. We reverse and remand with instructions for the District
Court to dismiss the cause.
Notes:
*
Honorable Louis H. Pollak, District Judge for the United States District Court
for the Eastern District of Pennsylvania, sitting by designation
Horizon Blue Cross and Blue Shield of New Jersey was the health insurance
provider for both Bogurski and Edmonson. With respect to Edmonson, they
were Horizon Healthcare Services, Inc., doing business as, Horizon Blue Cross
and Blue Shield
The relevant regulation that provided for reimbursement and subrogation was
repealed on August 5, 2002 and replaced with a "Prohibition on
subrogation/third party liability provisions." The Regulation, prior to its repeal,
was as follows:
11:4-42.10 Provisions for subrogation and repayment of benefits
(a) Group policies and certificates providing health insurance may contain
subrogation provisions that require the return to the insurer by a covered person
of benefits paid for illness or injury up to the amount a covered person received
from a third party through settlement, a satisfied judgement or other means, as
compensation for the medical costs of such illness or injury, subject to the
following:
Repayment of benefits shall be required only where the amount received for the
third party through settlement, judgment or other means are specifically
identified as amounts paid for health benefits which have been paid by the
insurer under the group policy or certificate
The repayment shall not exceed the amount of benefits paid by the insurer
under the group policy or certificate for the particular illness or injury
The group policy and certificate shall allow the covered person to deduct from
the repayment to the insurer the reasonable pro-rata expenses incurred in
effecting the third party payment
(b) Group policies and certificates providing health insurance may exclude or
reduce the health benefits payable to or on behalf of a covered person to the
extent that the covered person has already received payment from a third party
for past or future health care costs for an illness or injury resulting from the
negligence or intentional act of such third party.
(c) Except as set forth in (b) above, no policy or certificate providing group
health insurance shall limit or exclude health benefits as the result of the
covered person's sustaining a loss attributable to the actions of a third party.
(d) Notwithstanding (a) or (b) above, disability income, long term care and
accidental loss benefits and blanket insurance shall not be subject to
subrogation or repayment of benefits received.
(e) Subrogation shall only be applicable when third party liability benefits may
exist, subject to the restrictions set forth above.
3
The three McCarran-Ferguson factors are (1) whether the practice has the
effect of transferring or spreading a policyholder's risk; (2) whether the practice
is an integral part of the policy relationship between the insurer and the insured;
and, (3) whether the practice is limited to entities within the insurance
industrySee Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 366, 122 S.Ct.
2151, 153 L.Ed.2d 375 (2002). These factors are no longer used in determining
whether a law is saved from ERISA preemption. Kentucky Assoc. of Health
Plans Inc. v. Miller, 538 U.S. 329, 341-42, 123 S.Ct. 1471, 155 L.Ed.2d 468
(2003).
Under New Jersey law, all opinions are applied retroactively unless prospective
application is deemed appropriateSee, e.g., Henderson v. Camden County Mun.
Util. Auth., 176 N.J. 554, 826 A.2d 615, 620 (2003). Thus, absent a specific
finding that the Perreira opinion should be limited to prospective application,
the opinion would be applied retroactively.
Although the District Court cited to the New Jersey Reports, we cite to the
The New Jersey Statute, N.J. STAT. ANN. 2A: 15-97, reads:
In any civil action brought for personal injury or death, except actions brought
pursuant to the provisions of P.L.1972, c.70 (C.39:6A-1 et seq.), if a plaintiff
receives or is entitled to receive benefits for the injuries allegedly incurred from
any other source other than a joint tortfeasor, the benefits, other than workers'
compensation benefits or the proceeds from a life insurance policy, shall be
disclosed to the court and the amount thereof which duplicates any benefit
contained in the award shall be deducted from any award recovered by the
plaintiff, less any premium paid to an insurer directly by the plaintiff, or any
member of the plaintiff's family on behalf of the plaintiff for the policy period
during which the benefits are payable. Any party to the action shall be
permitted to introduce evidence regarding any of the matters described in this
act.
10
The Insureds failed to plead in their complaint whether such amounts were
withheld from their settlements. Because all of the Insureds settled their tort
actions, we assume that such deductions would have been made if they had
proceeded to trial
11
These excluded scenarios are set forth in the "deemer" clause, and exempt
certain self-funded ERISA plans from the reach of state laws otherwise saved
from preemption under the savings clause. The deemer clause is not at issue
hereSee 29 U.S.C. 1154(b)(2)(B).
12
This second factor, of course, marks a departure from the Court's earlier
jurisprudence concerning the three McCarran-Ferguson factors, on which the
District Court's decision was based
39
40
42
43
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 95 L.Ed.2d 39
(1987). Although the express preemption analysis normally requires the
application of the three relevant provisions of 514, the sole issue in this
appeal is whether the District Court erred as to the second step in the analysis
in finding that N.J.S.A. 2A:15-97 is "saved" from preemption as a state statute
that regulates insurance under 514(b)(2)(A).16 Accordingly, I confine my
discussion to that narrow issue.
II.
44
In Kentucky Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 341-42, 123
S.Ct. 1471, 155 L.Ed.2d 468 (2003), the Supreme Court rejected the previous
use of the McCarran-Ferguson factors, and instead enunciated two requirements
for a state law to be deemed a "law ... which regulates insurance" under
514(b)(2)(A). First, the state law must "be specifically directed toward entities
engaged in insurance." Id. at 342, 123 S.Ct. 1471 (citing Pilot Life, 481 U.S. at
50, 107 S.Ct. 1549; UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 368,
119 S.Ct. 1380, 143 L.Ed.2d 462 (1999); Rush Prudential HMO, Inc. v. Moran,
536 U.S. 355, 366, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002)). Second, the state
law must "substantially affect the risk pooling arrangement between the insurer
46
Focusing solely upon the statutory language, the majority concludes that the
New Jersey collateral source statute is not specifically directed to the insurance
industry because its definitions sweep too broadly and thereby encompass
organizations or entities that do not provide insurance. To be sure, the collateral
source statute does not specifically refer to health insurance or to subrogation
and reimbursement clauses. It is contained in Title 2A of the New Jersey
Statutes, which regulates the administration of civil and criminal justice.
Moreover, the statute applies to plaintiffs "in any civil action" who receive
benefits for their injuries from "any other source other than a joint tortfeasor."
N.J.S.A. 2A:15-97. As the majority opinion notes, the term "benefits received"
thus encompasses more than just insurance proceeds.
47
48
While recognizing that "[o]n its face, N.J.S.A. 2A:15-97 ... is silent regarding
any right to subrogation or reimbursement on the part of health insurers," id. at
409, 778 A.2d 429, the Supreme Court in Perreira determined that the statute
had more than one purpose: "To be sure, its primary purpose was to disallow
double recovery to plaintiffs, but a secondary goal was clearly the containment
of spiraling insurance costs." Id. at 410, 778 A.2d 429 (emphasis added). In
enacting N.J.S.A. 2A:15-97, the Court noted that the legislature made a
"separate legislative decision" as to which "segment of the insurance industry"
50
In assigning minimal value to Perreira, the majority opinion states that the
mere fact that the New Jersey statute has an impact on insurance, as settled in
Perreira, is not enough to satisfy the "specifically directed" requirement of the
saving clause. Even if, the majority argues, the New Jersey Supreme Court has
identified N.J.S.A. 2A:15-97 with the insurance industry, that does not change
the actual terms of the statute. See Pilot Life, 481 U.S. at 50, 107 S.Ct. 1549
(holding common law of bad faith not saved from preemption "[e]ven though
the Mississippi Supreme Court has identified its law of bad faith with the
insurance industry"). According to the majority opinion, the collateral source
statute thus resembles the Mississippi law at issue in Pilot Life. This analogy,
however, misses the critical distinction between the two provisions.
51
Under the relevant state law in Pilot Life, punitive damages could be sought for
"bad faith" in denying claims without any reasonably arguable basis for the
refusal to pay. 481 U.S. at 50, 107 S.Ct. 1549. The Supreme Court determined
that although Mississippi had "identified its law of bad faith with the insurance
industry, the roots of this law are firmly planted in the general principles of
Mississippi tort and contract law." Id."Any breach of contract," the Court
observed, "and not merely breach of an insurance contract, may lead to liability
for punitive damages under [the Mississippi common law of bad faith]." Id.
Accordingly, the Court concluded that the Mississippi law did not "regulat[e]
insurance" within the meaning of ERISA's saving clause. Id.
52
The holding in Pilot Life was premised upon the finding that "the roots of [the
common law of bad faith were] firmly planted in the general principles of ... tort
and contract law." Id. at 50. Pilot Life, contrary to the majority's reading, did
not involve a situation where "a state supreme court described the law as one
intended to affect the insurance industry." Majority Op. at 165. The Mississippi
Supreme Court never stated that its common law of bad faith was specifically
directed towards the insurance industry; it merely applied that longstanding law
to the insurance context. Pilot Life, 481 U.S. at 49-50, 107 S.Ct. 1549. Under
these circumstances, the Supreme Court quite properly held that "a commonsense understanding of the phrase `regulates insurance' does not support the
argument that the Mississippi law of bad faith falls under the saving clause." Id.
at 50, 107 S.Ct. 1549.
53
54
55
56
While the Supreme Court has held that "laws of general application that have
some bearing on insurers do not qualify," Miller, 538 U.S. at 334, 123 S.Ct.
1471, the New Jersey collateral source statute presents the inverse propositionit is a law specifically directed towards the insurance industry that has some
bearing on non-insurers. As such, it "homes [sic] in on the insurance industry
and does `not just have an impact on [that] industry'." Ward, 526 U.S. at 368,
119 S.Ct. 1380 (quoting Pilot Life, 481 U.S. at 50, 107 S.Ct. 1549). Because the
New Jersey statute had its genesis in specific legislative action, as opposed to
general principles of tort or contract law, the majority opinion's reliance on
Pilot Life is entirely misplaced.
57
For these reasons, I believe that this case more closely resembles FMC Corp. v.
Holliday, 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990), where the
Supreme Court dealt precisely with the question of whether a state
antisubrogation law 19 was saved from preemption under 514(b)(2)(A). There,
the Court held that:
58
59
60
Likewise, the Sixth and Fourth Circuits reached the same conclusion in
considering whether similar state antisubrogation laws regulated insurance. See
Singh, 335 F.3d at 286 (holding that subrogation prohibition of the Maryland
HMO Act is a state-law regulation of insurance); deSoto, 245 F.3d at 573
(holding that California's antisubrogation statute regulated insurance); see also
Hampton Indus., Inc. v. Sparrow, 981 F.2d 726, 729-30 (4th Cir.1992) (noting
that "limits on subrogation recoveries appear to be aimed at the insurance
industry, and therefore would also appear to come within the scope of the
saving clause").
61
Contrary to the majority, I conclude that our understanding of the New Jersey
collateral source statute must be informed by the New Jersey Supreme Court's
interpretation. In the interpretive light cast by the Supreme Court in Perreira,
the New Jersey collateral source statute is, in all essential respects, similar to
those statutes already held to regulate insurance by the United States Supreme
Court (FMC Corp.) and our two sister courts of appeals (Singh and de Soto).
62
Accordingly, I conclude that the New Jersey collateral source statute is saved
from ERISA preemption.20
63
Because I would affirm the District Court's holding that 514 of ERISA does
not preempt N.J.S.A. 2A:15-97, I respectfully dissent from Part IV of the
majority opinion, and from Part V of the majority opinion, which directs the
District Court to dismiss the Insureds' claims.
Notes:
13
See generally Arana v. Ochsner Health Plan, 338 F.3d 433 (5th Cir.2003);
Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278 (4th Cir.2003).
14
15
Of the three provisions of 514, which are set forth below, the first and third
are not involved in this appeal. It is the second provision, 514(b)(2)(A),
which concerns the regulation of insurance, that this appeal focuses upon
"Except as provided in subsection (b) of this section [the saving clause], the
provisions of this subchapter and subchapter III of this chapter shall supersede
any and all State laws insofar as they may now or hereafter relate to any
employee benefit plan...." 514(a), as set forth in 29 U.S.C. 1144(a) (preemption clause).
"Except as provided in subparagraph (B) [the deemer clause], nothing in this
subchapter shall be construed to exempt or relieve any person from any law of
any State which regulates insurance, banking, or securities." 514(b)(2)(A), as
The two other clauses of 514-the "preemption clause" and the "deemer
clause" are not the subject of the certified questions in this appealSee supra note
3.
17
18
In reviewing the legislative history, the Court placed particular emphasis on the
Passed Bill Memo prepared by Governor's counsel:
This bill attempts to reduce the cost of liability insurance by reducing the
likelihood of a `double recovery' in a liability award for items which were
already compensated by insurance or by other `collateral' sources other than a
tortfeasor.
Id. at 410, 778 A.2d 429 (quoting Passed Bill Memo to Governor Thomas H.
Kean (Dec. 7, 1987)).
19
20
Because I would hold that the New Jersey collateral source statute is saved
from ERISA preemption, I would be obliged to reach the third certified
question for interlocutory appeal. That question concerns whetherPerreira,
which held that the statutory collateral source rule prohibits health insurers
from filing reimbursement or subrogation liens against individual settlements or
recoveries from third-party tortfeasors, applies retroactively to the health
insurance plans at issue in this appeal.
This is a difficult issue, and more than that, the resolution of it could be
outcome determinative in this appeal. As a result, I believe that the proper
course for this Court to take would be to certify the issue of retroactivity to the
New Jersey Supreme Court. Under New Jersey Court Rule 2:12A-1., the New
Jersey Supreme Court may answer such a question if "there is no controlling
appellate decision, constitutional provision or statute in this State." N.J. Ct. R.
2:12A-1. The use of certification "rests in the sound discretion of the federal
courts." Lehman Bros. v. Schein, 416 U.S. 386, 391, 94 S.Ct. 1741, 40 L.Ed.2d
215 (1974). Such discretion, in my judgment, would be warranted here.