:: Beach Erosion On The ERISA Waterfront

These are interesting times for those who contend for clients along the Maginot Line of ERISA’s preemption provisions. Never a particularly easy line to follow, the perimeter has become increasingly uneven on several fronts.

For example:

#1 Provider reimbursement cases – The post-Davila caselaw permitting state law action where providers have not taken assignments, or even where they have, but assert claims based upon “independent legal duties”. These cases are the purest form of diminution of ERISA’s preemptive capacity since they allow for remand to state court and possibly state law remedies.

For a claim to be completely preempted under § 502(a) and subject to removal, the Third Circuit requires two elements: (1) the plaintiff could have brought the claim under § 502(a); and (2) “no other legal duty supports [the] claim.” Pascack Valley Hospital, Inc. v. Local 464A UCFW Welfare Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004) (I just posted a note on ERISAboard.com on the most recent of these decisions, Vaimakis v. United Healthcare/Oxford, 2008 U.S. Dist. LEXIS 60435 (D.N.J. Aug. 8, 2008)

#2 Equitable or promissory estoppel – These cases are something of a hybrid. Errors in quoting benefits have lead to an incorporation of estoppel principles in ERISA cases in several circuits. Whether part of the federal common law of ERISA or based on state law, however, the end result is a broader array of remedies for the ERISA claimant. On this trend, the most recent decision is the far-reaching decision by the Third Circuit, Pell v. E.I Dupont.

And see, :: Assessing The Value Of A Promise – A Primer On ERISA Estoppel Claims

#3 State prohibitions on discretionary clauses – Though not a settled issue, the successful state prohibition of discretionary clauses in group disabiity or health insurance policies suggests a greater incursion of state regulatory power by virtue of the savings clause. :: State Regulation Barring Grants Of Discretion To ERISA Plan Administrators Sustained

#4 State law actions against service providers – From the high tide of service provider immunity in Mertens, we can now see that ERISA preemption does not always preclude state law actions against service providers. See, e.g., :: Employer Malpractice Claims Against Service Providers The key here is whether the action implicates the essential functions of an employee benefit plan, such as funding, benefits, reporting, and administration (as suits by employees frequently will).