The Rawlings Company, LLC, et al. v. Wurtz et al.

Case Updates

This case presents the issue of whether ERISA § 502(a) completely preempts state law claims by ERISA plan participants invoking state anti-subrogation laws to invalidate plan provisions that require reimbursement of medical benefits. The Third, Fourth, and Fifth Circuits have answered that question in the affirmative, reasoning that such suits seek to recover or retain plan benefits, and thus are completely preempted by § 502(a)(1)(B). But in this case, the Second Circuit rejected this reasoning, holding that the state law claims are “independent” of plan terms and therefore are not completely preempted. As a result the Second Circuit allowed respondents to pursue their state law claims seeking a declaratory judgment, compensatory and punitive damages, restitution, and attorney fees.

In the coalition brief, the Chamber urged the Court to grant certiorari because as a result of the decision below, ERISA plans that exercise their rights under plan reimbursement provisions now face differing remedial schemes— including the prospect of punitive damages and other remedies precluded under ERISA depending on where they are sued. This loss of uniformity is antithetical to ERISA’s structure and purpose. The damage to Congress’s uniform remedial system would be bad enough if it were limited to the context of reimbursement provisions, which are key to plan affordability and solvency. But the Second Circuit’s reasoning sweeps more broadly, allowing plaintiffs to pursue state law claims to mandate, alter, or invalidate any ERISA plan term, by passing ERISA’s carefully crafted remedial restrictions, so long as the claim is predicated on a purportedly “independent” state insurance regulation.

Furthermore, the decision below is fundamentally inconsistent with the Supreme Court’s ERISA jurisprudence. Specifically, in UNUMLife Ins. Co. of Am. v. Ward, 526 U.S. 358 (1999), and Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002), establish that claims seeking to modify or invalidate plan terms on the basis of a state insurance regulation are properly raised under § 502(a). And US Airways, Inc. V. McCutchen, 133 S. Ct. 1537 (2013) and Sereboff v. MidAtl Med. Servs., 547 U.S. 356 (2006), hold that ERISA plans may bring suit under § 502(a) to enforce their plan reimbursement rights as plaintiffs, with no suggestion that a different remedial scheme would apply to a suit brought by plan participants resisting enforcement of those same rights.

The Chamber filed the brief jointly with America’s Health Insurance Plans.

Robert A. Long and Daniel E. Matro of Covington & Burling LLP represented the U.S. Chamber of Commerce as co-counsel to the U.S. Chamber Litigation Center in this case.