UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT. MEGHAN WURTZ, MINDY BURNOVSKI, individually and on behalf of all other similarly situated,

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1 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT MEGHAN WURTZ, MINDY BURNOVSKI, individually and on behalf of all other similarly situated, v. Plaintiffs-Appellants, THE RAWLINGS COMPANY, LLC, OXFORD HEALTH PLANS (NY), INC., UNITEDHEALTH GROUP INCORPORATED, Defendants-Appellees. On Appeal from the United States District Court for the Eastern District of New York (No. 2:12-CV-1182 (JFB) (ETB)) BRIEF OF AMICUS CURIAE NEW YORK STATE TRIAL LAWYERS ASSOCIATION IN SUPPORT OF APPELLANTS AND REVERSAL OF THE DISTRICT COURT David S. Preminger KELLER ROHRBACK LLP 770 Broadway, 2nd Floor New York, NY Tel.: (646) Benjamin Gould KELLER ROHRBACK LLP rd Avenue, Suite 3200 Seattle, WA Tel.: (206)

2 CORPORATE DISCLOSURE STATEMENT In accordance with Federal Rules of Appellate Procedure 29(c)(1) and 26.1, Amicus New York State Trial Lawyers Association states that it is a nonprofit corporation with no stockholders and no parent corporation. i

3 TABLE OF CONTENTS CORPORATE DISCLOSURE STATEMENT... I I. STATEMENT OF INTEREST... 1 II. ARGUMENT... 2 A. The New York State Legislature Enacted Section to Eliminate an Anomaly in New York s Treatment of Personal Injury Settlements What subrogation is and how it affected injured New Yorkers before Section was enacted How Section fixes the subrogation anomaly in New York B. Because Plaintiffs Are Not Asserting Colorable Claims for Benefits, and Because Those Claims Implicate Duties That Are Independent of ERISA, the Claims Are Not Subject to Complete Preemption by ERISA Plaintiffs do not assert colorable claims under ERISA section 502(a)(1)(B) Plaintiffs claims implicate duties independent of ERISA Because ERISA does not completely preempt Plaintiffs claims, this Court should reverse the district court with instructions to dismiss the case without prejudice C. Section Is Exempted from ERISA Conflict Preemption Because It Is a Law That Regulates Insurance III. CONCLUSION...21 CERTIFICATE OF COMPLIANCE...22 CERTIFICATE OF SERVICE...23 ii

4 TABLE OF AUTHORITIES Cases Aetna Health Inc. v. Davila, 542 U.S. 200 (2004)...9, 15, 17 Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995)...9 Fasso v. Doerr, 903 N.E.2d 1167 (N.Y. 2009)...5 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989)...10 FMC Corp. v. Holliday, 498 U.S. 52 (1990)...20 Franklin Corp. v. Prahler, 932 N.Y.S.2d 610 (App. Div. 2011)...6 Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609 (6th Cir. 2013)...16 Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999)...10 Kentucky Ass n of Health Plans, Inc. v. Miller, 538 U.S. 329 (2003)...19 Law v. Griffith, 930 N.E.2d 126 (Mass. 2010)...3 Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525 (5th Cir. 2009)...16 Marin General Hospital v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009)...12, 13, 15 Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985)...12 iii

5 Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985)...21 Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011)...10, 14 N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995)...2 Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm n, 461 U.S. 190 (1983)...2 Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)...8 Stevenson v. Bank of New York Co., 609 F.3d 56 (2d Cir. 2010)...15, 16 Teichman ex rel. Teichman v. Cmty. Hosp. of W. Suffolk, 663 N.E.2d 628 (N.Y. 1996)...4 Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781 (2d Cir. 1994)...17 US Airways, Inc. v. McCutchen, 133 S. Ct (2013)...17 Wurtz v. Rawlings Co., --- F. Supp. 2d ----, 2013 WL (E.D.N.Y. Mar. 28, 2013)...passim Statutes Employee Retirement Income Security Act of ERISA 3(1), 29 U.S.C. 1002(1)...8 ERISA 502(a), 29 U.S.C. 1132(a)...9 ERISA 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B)...passim ERISA 514(a), 29 U.S.C. 1144(a)...15 iv

6 ERISA 514(b)(2)(A), 29 U.S.C. 1144(b)(2)(A)...18 ERISA 514(b)(2)(B), 29 U.S.C. 1144(b)(2)(B)...19 N.Y. C.P.L.R. 4545(a)...4 N.Y. Gen. Oblig. Law passim N.Y. Gen. Oblig. Law 5-335(a)...7, 19 Rules Fed. R. App. P. 29(c)(5)...1 Local Rule Other Authorities 16 Lee R. Russ & Thomas F. Segalla, Couch on Insurance (3d ed. 2012)...3 Webster s Third New International Dictionary (1986)...12 v

7 I. STATEMENT OF INTEREST 1 The New York State Trial Lawyers Association (NYSTLA) is a statewide organization of attorneys, most of whom practice in the personal injury field. Its purpose is to promote reforms in the law, facilitate the administration of justice, and elevate the standard of integrity, honor and courtesy in the legal profession. Most of all, NYSTLA exists to advance and protect the rights of persons who are tortiously injured. The NYSTLA is committed to the principle that the injured should have full and fair access to civil justice, that victims of wrongdoing should be made whole, and that wrongdoers and those who create unreasonable risks should be held accountable for the harm they cause. This appeal centers on New York General Obligations Law section ( Section ). The NYSTLA believes that Section advances the interests that the NYSTLA exists to protect. Section ensures that the injured are made whole, and prevents an insurance company, under the guise of recovering medical expenses, from lessening an injured person s just compensation. The nature, intent, and practical effect of Section are central to understanding why contrary to the district court s judgment federal law does 1 In accordance with Federal Rule of Appellate Procedure 29(c)(5) and Local Rule 29.1, Amicus states that Amicus and its counsel authored this brief in whole; that no counsel for a party authored this brief in any respect; and that no person or entity other than Amicus, its members, and its counsel made a monetary contribution to the preparation or submission of this brief. 1

8 not preempt Section NYSTLA, with its expertise in New York personal injury law, is well situated to explain what Section is supposed to do and how it is supposed to do it. Both Plaintiffs and Defendants have consented to the filing of this amicus brief. II. ARGUMENT A. The New York State Legislature Enacted Section to Eliminate an Anomaly in New York s Treatment of Personal Injury Settlements. This case is about whether the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), preempts Section of the New York General Obligations Law. The answer to that question depends on the nature, intent, and effect of Section See N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 658 (1995) (in determining whether ERISA preempted a New York law, examining [b]oth the purpose and the effects of the law); Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm n, 461 U.S. 190, (1983) (examining intent of state law as part of preemption analysis). What follows is a brief explanation of why Section was enacted and what it does. 2

9 1. What subrogation is and how it affected injured New Yorkers before Section was enacted. Section regulates subrogation, an umbrella term that refers to two different rights that can arise when a wrongdoer injures an insured party and an insurer incurs expenses as a result of the injury. First, subrogation can refer to an insurer s right to sue a tortfeasor directly to recover the expenses it has paid on the insured s behalf. See 16 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 222:2 (3d ed. 2012). Second, when the insured has pursued relief from a tortfeasor and has recovered compensation, subrogation can refer to an insurer s right to seek reimbursement from the insured for expenses it has paid on the insured s behalf. See id. This second kind of subrogation is what has happened to Plaintiffs here: after the injured Plaintiffs recovered compensation from their wrongdoers, Defendants asserted a right of reimbursement against that compensation. In many states, subrogation comes into play when an injured plaintiff sues a wrongdoer and recovers for medical expenses. Under the collateral source rule, many states allow an injured plaintiff to recover medical expenses from the tortfeasor even though the plaintiff s insurance, and not the plaintiff, paid for those expenses. See, e.g., Law v. Griffith, 930 N.E.2d 126, (Mass. 2010). If a jury s award includes medical expenses for the insured plaintiff, the plaintiff s 3

10 insurer will then seek to compel its insured to hand over a portion of that award i.e., will exercise its right of subrogation. In New York, however, statutory law prohibits a jury from compensating an injured plaintiff for medical expenses for which an insurer paid. See N.Y. C.P.L.R. 4545(a). This rule affects subrogation: when injured plaintiffs in New York go to trial and prevail, their medical insurer cannot come after them for the medical expenses it paid, because under New York law the plaintiffs are forbidden from recovering those medical expenses from the wrongdoer. An insurance company cannot force an injured plaintiff to pay what the plaintiff was never awarded in the first place. While that is what happens when an injured New Yorker prevails at trial, settlements of personal injury claims in New York were a different story before Section was enacted. In 1996, New York s highest court held that an insurer could sue a plaintiff who has settled a personal injury action to seek a refund of any medical expense payments included in the settlement. Teichman ex rel. Teichman v. Cmty. Hosp. of W. Suffolk, 663 N.E.2d 628, 632 (N.Y. 1996). The court observed that no New York law bars a settlement from including compensation for medical expenses. Id. Where there was a possibility that a settlement included medical expenses, an insurer could seek reimbursement from injured plaintiff. Id. In 2009, the court went further, holding that a wrongdoer and 4

11 an injured plaintiff could not enter into a settlement that eliminated the right of an insurer to seek reimbursement for medical expenses even if the settlement had not fully compensated the plaintiff for her injuries. Fasso v. Doerr, 903 N.E.2d 1167, 1171 (N.Y. 2009). These decisions created an anomaly. A tortfeasor in New York knows that any award at trial will exclude the injured plaintiff s medical expenses. As a result, no tortfeasor would ever include medical expenses in a settlement payment: tortfeasors have no reason to pay money that they would never have to pay even if they went to trial and lost. And yet, under the law as it existed before Section 5-335, an insurer could use subrogation to force an injured New Yorker to pay medical benefits out of a tort settlement, even though the tort settlement could not possibly have included a payment for medical benefits. Thus the law created a windfall for insurers and patent unfairness for injured New Yorkers. Insureds pay an insurer to bear the risk of incurring medical expenses. Before Section 5-335, however, New York law effectively forced the insured to bear that risk, because the insured was forced to pay the insurer for medical expenses using settlement money that had not included compensation for those expenses. In effect, the insured was paying insurance premiums and not receiving insurance benefits. Worst of all, one of the basic purposes of tort law was defeated, because, after the insurance company had taken a portion of a 5

12 settlement, injured New Yorkers were left less than whole. See Franklin Corp. v. Prahler, 932 N.Y.S.2d 610, 614 (App. Div. 2011) ( It is well settled that the purpose of awarding damages in a tort action is to make the plaintiff whole. (citation omitted)). The law before Section also discouraged the amicable pretrial settlement of disputes. Only by going to trial could an injured New Yorker avoid an insurer s attempt to take a share of the recovery. Litigation that otherwise would have ended was prolonged unnecessarily. Moreover, by forbidding a settlement between an injured plaintiff and a tortfeasor from eliminating an insurer s right to reimbursement, the law discouraged tortfeasors from settling. To settle, tortfeasors typically demand a general release one that releases the tortfeasor from all claims, including claims for medical expenses. By putting such a release out of reach, the law encouraged the parties to fight on a bad result in any era, but an especially harmful one in this age of crowded dockets and shrinking budgets. 2. How Section fixes the subrogation anomaly in New York. In 2009, New York enacted Section 5-335, the state statute at issue here. Intended to fix New York law s anomalous treatment of personal injury settlements, Section creates a conclusive presumption that a personal injury settlement does not include any compensation for the cost of health care services, 6

13 loss of earnings or other economic loss to the extent those losses or expenses have been or are obligated to be paid or reimbursed by a benefit provider. N.Y. Gen. Oblig. Law 5-335(a). And it provides that injured parties and wrongdoers who enter into a settlement with each other are not subject to a subrogation claim or claim for reimbursement by a benefit provider[,] and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party. Id. The effect of this provision is to overturn previous law. The provision bars an insurer from claiming that a personal injury settlement includes compensation for medical expenses and from suing for those expenses. The effect of Section 5-335, in other words, is to equalize the treatment of jury awards and settlements under New York law, so that an insurer can no longer recover medical expenses from a settlement that never included such expenses in the first place. To put it differently, Section provides that insurers, and not the injured insured, must bear the risk of medical expenses. After Section 5-335, an insurer can no longer insist that an injured New Yorker pay for medical expenses just because the New Yorker received a settlement that compensated him for things other than medical expenses. The insurer must pay for the medical expenses, because that is what the insured paid the insurer to do: bear the risk that the insured might incur medical expenses. 7

14 Because Section equalizes the treatment of jury awards and settlements, it means that injured New Yorkers will no longer be forced to litigate their claims to the bitter end to a jury verdict or beyond just to make sure that their insurer will not try to take part of the recovery. As the City of New York, a common defendant in personal injury actions, observed in its endorsement of Section 5-335, encouraging the settlement of disputes will save millions of dollars in litigation costs for New York government entities. Letter from Hon. Michael R. Bloomberg, Mayor of the City of New York, to Hon. David Paterson, Governor of the State of New York, Nov. 13, 2009, at 2 3. B. Because Plaintiffs Are Not Asserting Colorable Claims for Benefits, and Because Those Claims Implicate Duties That Are Independent of ERISA, the Claims Are Not Subject to Complete Preemption by ERISA. ERISA is a federal law that governs pension plans, as well as what are called employee welfare benefit plans. These employee welfare benefit plans include plans that provide medical benefits. ERISA 3(1), 29 U.S.C. 1002(1). For employee welfare benefit plans, ERISA sets certain uniform standards about reporting, disclosure, and fiduciary responsibility but it does not mandate that employers provide any particular benefits. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91 (1983). Indeed, generally speaking, ERISA does not regulate the 8

15 substantive terms of welfare benefit plans at all. See Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995). 2 ERISA does provide a civil remedy scheme, however. The Supreme Court has stated that one of the provisions of that scheme, section 502(a), 29 U.S.C. 1132(a), completely preempts certain state-law causes of action i.e., it wholly displaces the state-law cause of action, preventing the plaintiff from asserting it. Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004) (quotation marks and citation omitted). The provision that Defendants say preempts Plaintiffs claims is ERISA section 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B). That provision allows a civil action to be brought by a participant or beneficiary in an ERISA-regulated plan 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 the terms of the plan. Id. For short, this Brief will call that provision ERISA s Benefits Due Provision, because the provision allows a plan participant or beneficiary to seek benefits due, or to enforce or clarify rights owed, under a welfare benefit plan. 2 Plaintiffs argue that the subrogation provisions at issue are found in insurance policies, not in ERISA plans. Amicus takes no position on this argument, and for purposes of this brief assumes that ERISA plans are implicated and that Defendants function as fiduciaries of those plans. 9

16 In this circuit, the Supreme Court s Davila decision, as interpreted in Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011), provides the test used to determine whether ERISA s Benefits Due Provision completely preempts a state-law claim. The test has two parts. First, the Court asks whether the claims are asserted by an individual [who] at some point in time, could have brought his claim under ERISA 502(a)(1)(B), the Benefits Due Provision. Id. at 328 (alteration in original; quotation marks and citation omitted). Second, the Court asks whether the claim is brought under circumstances in which there is no other independent legal duty that is implicated by a defendant s actions. Id. (quotation marks and citation omitted). Only if both questions are answered in the affirmative is the state-law claim completely preempted. 1. Plaintiffs do not assert colorable claims under ERISA section 502(a)(1)(B). Here, the claims that Plaintiffs are asserting cannot be construed as colorable claim[s] under ERISA section 502(a)(1)(B), the Benefits Due Provision. Id. (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, (1989)). The first prong of the Davila test is thus not met. To see why Plaintiffs could not bring a claim under the Benefits Due Provision, one need go no further than the plain language of the statute itself. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999) ( [O]ur analysis begins with the language of the statute. And where the statutory language provides a clear 10

17 answer, it ends there as well. (quotation marks and citations omitted)). To review, the Benefits Due Provision states that a participant or beneficiary of a plan may bring a civil action (1) to recover benefits due to him under the terms of his plan ; (2) to enforce his rights under the terms of the plan ; or (3) to clarify his rights to future benefits under the terms of the plan. ERISA 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B). Plaintiffs claims are not doing any of these three things. First, the claims do not seek to recover benefits due under the plans. Id. When Plaintiffs were injured, they received medical benefits due under their welfare benefit plans. Plaintiffs have already received, and the plans have already provided, the benefits. No one disputes that when the benefits were paid, Plaintiffs qualified for the benefits under the terms of the plans. Nor do Plaintiffs seek to obtain more benefits through this action. Rather, invoking Section 5-335, they seek to void the subrogation liens that Defendants have asserted against Plaintiffs settlements and to bar Defendants from seeking to collect on those liens. The district court, however, reasoned that plaintiffs were seeking benefits due because they effectively seek to cut off defendants reimbursement rights under the Plans, and to retain benefits that otherwise would be subject to reimbursement. Wurtz v. Rawlings Co., --- F. Supp. 2d ----, 2013 WL , at *8 (E.D.N.Y. Mar. 28, 2013) (emphasis added). This reasoning, however, does not faithfully apply the statutory language. Plaintiffs are not seeking to recover 11

18 benefits due, ERISA 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B) (emphasis added), since they have already received the benefits. One cannot recover or gain what one already has. See Webster s Third New International Dictionary 1898 (1986) ( recover:... to gain by legal process ). Because the district court s interpretation replaces the word recover with retain, it impermissibly expands ERISA s remedies. See Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985) (in enacting ERISA, Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly ). What is more, Plaintiffs are not seeking benefits due... under the terms of [their] plan[s]. ERISA 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B) (emphasis added). Plaintiffs do not contend that they have a right to keep their settlement money under their ERISA plans. Indeed, Plaintiffs do not appear to contest that under the terms of the plans themselves Defendants would be within their rights to assert liens against their settlements. Rather, Plaintiffs are contending that they have a right to keep the settlements because Section provides that Defendants cannot come after it. In other words, Plaintiffs seek relief in derogation of the terms of their plans. In that way, this case is analogous to Marin General Hospital v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009). There, an ERISA plan administrator orally assured a hospital that 90% of the patient s expenses were covered by the plan, but it turned out that that assurance was wrong. The hospital 12

19 provided services, and then tried to collect from the plan administrator, who only reimbursed a fraction of the expenses. The hospital alleged a breach of contract and related claims, and the court held that those claims were not preempted. The court reasoned that the claim could not have been brought under the Benefits Due Provision precisely because the benefits the hospital sought were not due under the plan. Id. at 947. Instead, the benefits were claimed to be due under an oral contract. Here, similarly, Plaintiffs are not seeking to keep settlement money because they are entitled to do so under their plans; they are bringing their claims precisely because they are not entitled to do so under their plans. Plaintiffs are simply contending that they can keep their settlement money because Section entitles them to keep it. Nor are Plaintiffs claims seeking either to enforce [their] rights under the terms of the plan, or to clarify [their] rights to future benefits under the terms of the plan, the other two actions authorized by the Benefits Due Provision. ERISA 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B). They are not enforcing their rights under the terms of their plans because the right they are seeking to enforce the right to be free from subrogation is one that their plans do not provide. That right arises from Section Similarly, they are not seeking to clarify their rights to future benefits because, first, their action relates to benefits they have 13

20 already received, and second, what they seek does not arise under the terms of their plans. The Benefits Due Provision is not implicated here. 2. Plaintiffs claims implicate duties independent of ERISA. The second prong of the Davila test for complete preemption is also not met, because Defendants actions implicate another legal duty, independent of ERISA. See Montefiore, 642 F.3d at 332. That duty arises from Section 5-335, which forbids Defendants from seeking reimbursement for medical expenses from the Plaintiffs settlements. That duty comes from outside of ERISA and is independent because it is irrelevant what the Plaintiffs plans provide about reimbursement. The district court believed that because Defendants would not be seeking reimbursement absent a provision in the plans, their conduct was not sufficiently independent of the ERISA-governed plans to implicate duties independent of ERISA. Wurtz, 2013 WL , at *13. The district court apparently concluded that when an entity engages in conduct that causally depends on the existence of an ERISA-governed plan, that conduct cannot be independent of ERISA and hence any legal challenge to that conduct must be completely preempted. There are two problems with this approach. First, by asking whether the conduct that Plaintiffs challenge is causally related to an ERISA-governed plan, the district court s approach essentially treats a 14

21 claim as completely preempted if it is related to a plan. That approach, however, confuses the conflict-preemption inquiry under ERISA section 514(a), 29 U.S.C. 1144(a), which does preempt state laws that relate to ERISA-governed plans, with the complete-preemption inquiry. The two inquiries are different and must be kept distinct. For while complete preemption wholly displaces a state-law claim, Davila, 542 U.S. at 207 (quotation marks and citation omitted), conflict preemption merely provides an affirmative defense to a state-law claim. The insurers cannot rely on that defense to establish complete preemption. Marin Gen. Hosp., 581 F.3d at 949. The second problem with the district court s approach is that it conflicts with precedent. Just because an ERISA-governed plan causes an entity to perform an act does not mean that a legal challenge to that act is completely preempted. Thus, for example, in Stevenson v. Bank of New York Co., 609 F.3d 56 (2d Cir. 2010), the Bank, Stevenson s employer, asked him to accept a new position in Switzerland. In exchange, the Bank promised him that he would maintain his status as a participant in the Bank s ERISA-governed plans. The Bank reneged on that promise, and Stevenson sued for breach of contract. This Court held that Stevenson s state-law claim was not completely preempted, even though the Bank would never have made or broken its promise if it had not maintained ERISAgoverned plans in the first place. Even if the contractual duty that Stevenson 15

22 sought to enforce reference[d] various benefit plans, that duty was nonetheless a separate promise. Id. at The promise arose not from the terms of the plans, but from a separate duty undertaken by the Bank. Id. at 61. The fact that the Bank s conduct bore a causal relationship to an ERISA-governed plan did not matter to the complete preemption inquiry. What mattered and what saved Stevenson s claim from preemption was that the source of the Bank s duty lay outside an ERISA-governed plan. Id. at The result should be the same here. While Defendants actions bear a causal relationship to ERISA-governed plans, the fact that they cannot be reimbursed for medical expenses derives not from the terms of the plans, but from Section No questions of coverage under or interpretation of the plans are implicated because Defendants have no right to reimbursement no matter what the plans say. There is no complete preemption. See Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609, 614 (6th Cir. 2013) ( Defendants duty is not derived from, or conditioned upon, the terms of the [plan]. Nobody needs to interpret the plan to determine whether that duty exists. Thus, Plaintiffs claim is based upon a duty that is independent of ERISA and the plan terms. (quotation marks, citation, and alterations omitted)); Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 530 (5th Cir. 2009) ( It is clear that [the contract between the parties] and the ERISA plans cross-reference each other.... However, determination of the rate 16

23 that Aetna owes Lone Star under the [contract] does not require any kind of benefit determination under the ERISA plan. ). 3. Because ERISA does not completely preempt Plaintiffs claims, this Court should reverse the district court with instructions to dismiss the case without prejudice. The well-pleaded complaint rule holds that federal courts only have federalquestion jurisdiction when that jurisdiction appears on the face of the plaintiff s claim, without reference to any affirmative defenses. Davila, 542 U.S. at 207. Without complete preemption, the well-pleaded complaint rule means that the federal courts have no subject-matter jurisdiction over this action. Lack of subjectmatter jurisdiction cannot be waived, and requires dismissal of an action without prejudice. See, e.g., Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781, 786 (2d Cir. 1994). Lack of subject-matter jurisdiction also prevents this Court from reaching the merits of this case, including affirmative defenses. So, if this Court concludes that Plaintiffs claims are not completely preempted, it need go no further. It should simply remand the appeal to the district court with directions to dismiss the case without prejudice. 3 3 The district court also erred in concluding that Section does not apply at all because this case involves a statutory right of reimbursement that is, a right of reimbursement under ERISA that is exempted from the strictures of Section Wurtz, 2013 WL , at *14. Amicus agrees with Plaintiffs that no provision of ERISA addresses reimbursement or subrogation in an ERISAgoverned plan, a point further confirmed by the Supreme Court s recent decision in US Airways, Inc. v. McCutchen, 133 S. Ct (2013), where the Court held 17

24 C. Section Is Exempted from ERISA Conflict Preemption Because It Is a Law That Regulates Insurance. Complete preemption is not the only kind of preemption under ERISA. There is also conflict preemption. Whereas complete preemption focuses on a plaintiff s remedy, conflict preemption focuses on a state law. Specifically, conflict preemption asks whether a state law falls under section 514(a) of ERISA, which preempts state laws that relate to any employee benefit plan regulated by ERISA. ERISA 514(a), 29 U.S.C. 1144(a). ERISA provides an exception for certain laws that would otherwise be preempted under section 514(a), however. Even if a state law relates to employee benefit plans, and hence would be preempted under section 514(a), it can be saved from preemption if it regulates insurance. ERISA 514(b)(2)(A), 29 U.S.C. 1144(b)(2)(A). Assuming that Section relates to employee benefit plans, the question is then whether it can be saved from preemption because it regulates insurance. The answer to that question must be yes. As Plaintiffs explain in their brief, the inquiry is fairly straightforward. Under Kentucky Ass n of Health Plans, Inc. v. Miller, a law regulates insurance, and hence is saved from preemption, if it (1) is specifically directed toward the that, under ERISA, subrogation is a matter controlled by the terms of the plan, not the requirements of ERISA. The district court s ruling is puzzling in another way, too: if Section did not apply here at all, then the court s preemption ruling was unnecessary. 18