Aetna Health Inc. v. Davila

542 U.S. 200 (2004)

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Nature of the Case

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Facts

Davila (P) is a participant, and Calad (P) is a beneficiary, in ERISA-regulated employee benefit plans. Their respective plan sponsors had entered into agreements with Aetna Health Inc. (D). and CIGNA (D) to administer the plans. Under Davila's (P) plan Aetna (D) reviews requests for coverage and pays providers, such as doctors, hospitals, and nursing homes, which perform covered services for members. Under Calad's (P) plan sponsor's agreement, CIGNA (D) is responsible for plan benefits and coverage decisions. Ps suffered injuries arising from Ds’ decisions not to provide coverage for treatment and services recommended by Ps' treating physicians. Davila's (P) treating physician prescribed Vioxx to but Aetna (D) refused to pay. Davila (P) began taking Naprosyn and suffered a severe reaction that required extensive treatment and hospitalization. Calad (P) underwent surgery, and CIGNA (D) refused to approve an extended stay in the hospital. Calad (P) experienced post-surgery complications forcing her to return to the hospital. Ps brought separate suits in Texas state court. Invoking Texas’ THCLA § 88.002(a), Ps argued that Ds' refusal to cover the requested services violated their 'duty to exercise ordinary care when making health care treatment decisions,' and that these refusals 'proximately caused' their injuries. Ds removed the cases to Federal District Courts, arguing preemption by, ERISA § 502(a). The District Courts agreed and declined to remand the cases to state court. Ps refused to amend their complaints to bring explicit ERISA claims, the District Courts dismissed the complaints with prejudice. The Fifth Circuit consolidated their cases. The Court determined that Ps' claims could possibly fall under §502(a)(1)(B), which provides a cause of action for the recovery of wrongfully denied benefits, and §502(a)(2), which allows suit against a plan fiduciary for breaches of fiduciary duty to the plan. Under 502(a)(2) it concluded that under Pegram v. Herdrich the decisions were 'mixed eligibility and treatment decisions' and hence were not fiduciary in nature. Under §502(a)(1)(B)'s it found significant that Ps 'assert tort claims,' while §502(a)(1)(B) 'creates a cause of action for breach of contract,' and also that Ps 'are not seeking reimbursement for benefits denied them,' but rather request 'tort damages' arising from 'an external, statutorily imposed duty of 'ordinary care.'' The Court of Appeals derived the principle that complete pre-emption is limited to situations in which 'States . . . duplicate the causes of action listed in ERISA 502(a),' and concluded that 'because the THCLA does not provide an action for collecting benefits,' it fell outside the scope of §502(a)(1)(B). 307 F.3d at 310-311. Ds appealed.