TPA Fails in Effort to Remove Case to Federal Court ( Hornady Manufacturing Co. v. Perico Life Ins. Co., et al., No. 8: 10CV150, in the United States District Court for the District of Nebraska, September 22, 2010)

Comment:  It never ceases to amaze me how the myth that somehow stop loss cases are ERISA cases and thus removable to federal court survives, despite overwhelming authority to the contrary.  This case illustrates another futile attempt by a TPA to land a case in federal court that has no business being there.

The case, originally filed in state court by the plaintiff group, asserts various claims against its TPA, a broker, and a stop loss carrier over what appears to have been a retroactive laser imposed by the stop loss carrier on a certain participant, presumably as the result of some kind of disclosure problem.  The group asserted claims against the stop loss carrier (which, by the way, had not even been served with a summons and complaint by the time the Court wrote the opinion) for bad faith, failure to abide by various unfair insurance claims Nebraska statutes and breach of contract. As against the TPA and broker, the group’s claims were primarily negligence based and for breach of fiduciary duty under state law.

The TPA removed the case to the Nebraska federal court, and the group promptly moved to have the case remanded whence it came.  True ERISA scholars will appreciate the Court’s careful analysis of the ERISA issues presented in the full opinion (linked below), but the core conclusion is expressed nicely here:

“The plaintiff paid benefits under the Plan to the relevant beneficiaries, but now seeks to recover costs pursuant to the parties’ relationship in the context of the stop-loss policy, an agreement separate from the Plan.  Accordingly, the plaintiff’s claims were not brought in its capacity as a fiduciary for Plan beneficiaries, but on its own behalf.  Thus plaintiff’s claims cannot arise under ERISA because the plaintiff is without standing under ERISA [to sue]….”

Read the Court’s Opinion here.