and Submitted June 12, 2019 Honolulu, Hawai'i
from the United States District Court for the District of
Hawai'i J. Michael Seabright, Chief District Judge,
Presiding No. 1:15-cv-00539-JMS-RLP.
J. Kimura (argued) and David J. Minkin, McCorriston Miller
Mukai MacKinnon LLP, Honolulu, Hawai'i; Clarissa A. Kang
and Angel L. Garrett, Trucker Huss, San Francisco,
California; for Defendant-Appellant/Cross-Appellee.
K. Williams (argued), Trecker Fritz & Williams, Honolulu,
Hawai'i; Woodruff K. Soldner, Michael R. Cruise, and R.
Aaron Creps, Leavitt Yamane & Soldner, Honolulu,
Hawai'i; for Plaintiff-Appellee/Cross-Appellant.
Winter Brookins (argued) and Jasmine M. Fisher, Alston Hunt
Floyd & Ing, Honolulu, Hawai'i, for Amicus Curiae
Hawai'i Medical Service Association.
S. O'Scannlain, Solicitor of Labor; G. William Scott,
Associate Solicitor for Plan Benefits Security; Thomas Tso,
Counsel for Appellate and Special Litigation; Kira Hettinger,
Trial Attorney; United States Department of Labor, Office of
the Solicitor, Plan Benefits Security Division, Washington,
D.C., for Amicus Curiae R. Alexander Acosta, Secretary of
Before: Sidney R. Thomas, Chief Judge, and Consuelo M.
Callahan and Morgan Christen, Circuit Judges.
panel affirmed the district court's judgment holding that
two Hawaii statutes restricting health insurers'
subrogation recovery rights were saved from preemption under
the Employee Retirement Income Security Act and provided the
relevant rule of decision in a federal ERISA action to
determine the validity of an insurer's lien on tort
insurer paid health insurance benefits under an ERISA plan
for plaintiff's medical care after a vehicle accident.
Plaintiff also received a payment in a tort settlement for
general damages. The insurer asserted a right to a portion of
the tort settlement, and placed a lien, under a reimbursement
provision of the ERISA plan.
Hawaii statutes prohibited insurance providers from seeking
reimbursement for general damages from third-party
settlements. They thus contradicted the terms of the ERISA
plan, which provided that the insurer could be reimbursed for
filed suit in state court, and the insurer removed the case
to federal court. The district court denied plaintiff's
motion for a remand and granted partial summary judgment in
favor of plaintiff.
panel held that, under ERISA § 502, asserted remedies
and causes of action that conflict with ERISA's civil
enforcement scheme are deemed preempted. When a claim is
removed from state to federal court, the state law claim is
reconfigured as a federal ERISA cause of action. ERISA §
514 expressly preempts state laws that relate to any employee
benefit plan but saves from preemption any state law that
regulates insurance, banking, or securities. If a case is
properly before a federal court under § 502, then a
state statute that is saved from preemption under § 514
and does not conflict with § 502, can supply the
relevant rule of decision.
panel held that § 502(a) completely preempted the Hawaii
statutes, allowing the case to be removed to federal court.
The panel concluded that plaintiff could have brought his
claim under § 502(a) because, in substance, the claim
was one to recover benefits or to clarify his rights to
benefits pursuant to the ERISA plan. Joining the Third,
Fourth, and Fifth Circuits, the panel held that challenges to
a plan's right to reimbursement are properly
characterized as § 502(a) claims. The panel also
concluded that no other independent legal duties were
implicated by the insurer's actions. Accordingly,
plaintiff's state law claims were completely preempted,
and the district court properly denied his remand motion.
panel held that the Hawaii statutes related to an employee
benefit plan but were saved from express preemption under
§ 514 because they regulated insurance. The panel
concluded that the Hawaii statutes were specifically directed
toward entities engaged in insurance and substantially
affected the risk pooling arrangement between the insurer and
panel held that the Hawaii statutes provided the rule of
decision for the newly reconfigured federal ERISA action
because the statutes did not impermissibly expand the scope
of liability under § 502(a). The panel concluded that
the Hawaii statutes operated to define the scope of a benefit
provided by the ERISA plan and did not create additional
remedies not permitted by ERISA. Thus, the Hawaii statutes
were not conflict preempted and could provide the rule of
THOMAS, CHIEF JUDGE.
case, we consider whether two Hawai'i statutes
restricting health insurers' subrogation recovery rights
are saved from preemption under the Employee Retirement
Income Security Act of 1974 ("ERISA") and, if so,
whether the statutes provide a relevant rule of decision in a
federal ERISA action to determine the validity of the
insurer's lien on tort settlement proceeds.
jurisdiction pursuant to 28 U.S.C. § 1291. We review de
novo the district court's decisions regarding preemption.
Winterrowd v. Am.Gen. Annuity Ins. Co., 321 F.3d
933, 937 (9th Cir. 2003). We affirm the judgment of the
district court, which held that the statutes were saved from
preemption and provided the relevant rule of decision.
riding his motorcycle home from work, Randy Rudel was hit by
a vehicle making an allegedly illegal left turn. As a result
of the accident, Rudel sustained numerous severe injuries,
including partial amputations of his left leg and left
forearm. Rudel had health insurance benefits for his medical
care from the Hawai'i Medical Alliance Association
("HMAA") pursuant to an employee benefit plan
governed by ERISA ("the Plan"). In total, HMAA paid
$400, 779.70 for medical expenses.
addition to the money paid by HMAA, Rudel also received a
payment totaling $1.5 million in a tort settlement with the
driver of the vehicle that struck him. The tort settlement
agreement stipulated that the payment was for "general
damages" including medical expenses and emotional
distress, and did not include special damages such as those
that would "duplicate medical payments, no-fault
payments, wage loss, [or] temporary disability
asserted a right to a portion of the tort settlement proceeds
under the Plan, which provided to HMAA the "right to be
reimbursed for any benefits [it] provide[s], from any
recovery received from . . . any third party or other source
of recovery" including "general damages" from
third-party settlements. As Rudel's settlements was for
such general damages, HMAA placed a lien for $400, 779.70 on
Rudel's tort settlement.
Hawai'i state statutes (collectively, "the
Hawai'i Statutes") posed obstacles to HMAA's
ability to recover: Hawai'i Revised Statutes
("HRS") §§ 431:13-103(a)(10) and 663-10.
Read together, these statutes prohibit insurance providers
from seeking reimbursement for general damages from
third-party settlements. They do, however, permit special
damages to be reimbursed if a state court determines the lien
to be valid, pursuant to the statutory terms. Thus, the
Hawai'i Statutes directly contradict the terms of the
Plan, which provided that the insurer could be reimbursed for
Haw. Rev. Stat. § 431:13-103 is a provision of the
Hawai'i insurance code that defines unfair methods of
competition and unfair or deceptive acts or practices. Haw.
Rev. Stat. § 431:13-103(a). Section 431:13-103(a)(10)
defines one such unfair practice in the business of insurance
Refusing to provide or limiting coverage available to an
individual because the individual may have a third-party
claim for recovery of damages; provided that:
(A) Where damages are recovered by judgment or settlement of
a third-party claim, reimbursement of past benefits paid
shall be allowed pursuant to section 663-10.
663-10(a), which is referenced in § 431:13-103(a)(10),
establishes the procedure for determining if and when
reimbursement can be permitted. Importantly, § 663-10
does not permit reimbursement for general damages-it only
permits reimbursement for special damages. It reads:
In any civil action in tort, the court, before any
judgment or stipulation to dismiss the action is approved,
shall determine the validity of any claim of a lien
against the amount of the judgment or settlement by any
person who files timely notice of the claim to the court or
to the parties in the action. The judgment entered, or
the order subsequent to settlement, shall include a statement
of the amounts, if any, due and owing to any person
determined by the court to be a holder of a valid lien and to
be paid to the lienholder out of the amount of the
corresponding special damages recovered by the
judgment or settlement. . . . As used in this section, lien
means a lien arising out of a claim for payments made or
indemnified from collateral sources, including health
insurance or benefits, for costs and expenses arising out of
the injury which is the subject of the civil action in tort.
If there is a settlement before suit is filed or there is no
civil action pending, then any party may petition a court of
competent jurisdiction for a determination of the validity
and amount of any claim of a lien.
Haw. Rev. Stat. § 663-10(a) (emphasis added).
state court, Rudel filed an action asserting that the
Hawai'i Statutes nullified the inapposite terms of the
Plan so as to prevent HMAA from seeking reimbursement.
Pursuant to the Hawai'i Statutes, he filed a petition for
determination of validity of HMAA's lien in Hawai'i
Circuit Court of the Third Circuit. There, he argued that,
because his third-party settlement paid only general damages
and because the Hawai'i Statutes only permit
reimbursement for special damages, HMAA was not entitled to
reimbursement. HMAA contended that the state statutes were
irrelevant to any claims for reimbursement because the Plan
was governed by ERISA, which preempts the Hawai'i
Statutes and leaves the Plan terms to determine its
then removed the case to the District of Hawai'i. Rudel
moved for remand, arguing that his action implicated only
state law because he sought only "to keep
benefits already provided by HMAA" rather than to
"recover benefits under the terms of the Plan."
district court denied Rudel's remand motion, holding that
Rudel's claim belonged in federal court because, in
substance, he did not possess the benefits free and clear of
HMAA's lien. Thus, for purposes of federal jurisdiction,
the action remained one "to recover benefits due to him
under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future
benefits" under ERISA § 502(a)(1)(B).
then filed a motion for determination of validity of
HMAA's lien pursuant to the Hawai'i Statutes. In
response, HMAA filed a motion for summary judgment, arguing
that Rudel's action was preempted by ERISA ...