Fifth Circuit Affirms ERISA Preemption Ruling in En Banc Rehearing

Following an en banc review, the U.S. Court of Appeals for the Fifth Circuit Oct. 5 reinstated a 2011 decision in which it held that the Employee Retirement Income Security Act does not preempt a third-party medical provider's state law claim for reimbursement against an insurance company that allegedly negligently misrepresented that it would reimburse medical devices bought for plan participants (Access MediQuip LLC v. UnitedHealthCare Insurance Co.,5th Cir., No. 10-20868, 10/5/12).


The court's per curiam decision overruled three of its prior rulings on ERISA preemption of state law misrepresentation claims to the extent those decisions were inconsistent with the court's reasoning in Access MediQuip: Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286, 9 EBC 2473 (5th Cir. 1988) (Hermann I); Hermann Hosp. v. MEBA Medical & Benefits Plan, 959 F.2d 569, 15 EBC 1241 (5th Cir. 1992) (Hermann II); and Cypress Fairbanks Medical Center v. Pan-American Life Insurance Co., 110 F.3d 280, 20 EBC 2834 (5th Cir. 1997).


The Fifth Circuit agreed to rehear its decision upon UnitedHealthcare's petition for review, in which it argued that the court's decision ignored the holdings of Hermann I and Hermann II—which ruled that ERISA preempted a hospital's state law misrepresentation claims—and those cases' stated public policy concerns that non-ERISA parties, such as health care providers, should not be awarded remedies that are not available to ERISA plan participants.


The court's decision to limit the scope of ERISA preemption in this way has the potential to allow parties pursuing state law misrepresentation claims against ERISA entities to seek a wider array of remedies, because they will not be limited by the statutory remedies provided by ERISA. Depending on the state, parties could seek punitive damages and statutory penalties such as treble damages, which are not provided for in ERISA.