United States District Court, D. Hawaii
ORDER REJECTING THE MAGISTRATE JUDGE’S FINDINGS
AND RECOMMENDATION TO GRANT PLAINTIFF’S MOTION TO
REMAND, DOC. NO. 15
Michael Seabright Chief United States District Judge
case arises from Defendant Hawaii Management Alliance
Association’s (“HMAA”) lien for $400,
779.70 of the medical expenses it paid pursuant to Plaintiff
Randy Rudel’s (“Plaintiff” or
“Rudel”) HMAA benefit plan (the
“Plan”) after Rudel was injured in a motorcycle
crash. According to HMAA, the Plan entitles HMAA to
reimbursement in light of Rudel’s $1, 500, 000
third-party tort settlement related to the motorcycle crash.
Rudel initiated a state-court action to determine the
validity of HMAA’s lien (the “Petition”),
and HMAA removed the Petition to this court asserting that
this matter is completely preempted by the Employee
Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. §§ 1001 et seq. Doc. No. 1.
before the court is HMAA’s Objections to Magistrate
Judge Barry M. Kurren’s March 31, 2016 Findings and
Recommendation to Grant Plaintiff’s Motion to Remand
(“F&R”). Doc. No. 18. The parties have
extensively briefed this issue. First, the parties briefed
Plaintiff’s Motion to Remand (the “Motion”)
before Magistrate Judge Kurren. See Doc. Nos. 10,
12, 14. Then, after Magistrate Judge Kurren issued the
F&R, Doc. No. 15, HMAA objected to the F&R in full,
Doc. No. 18, and Plaintiff responded, Doc. No. 20. Meanwhile,
another court in this district decided a substantially
similar case, Noetzel v. Hawaii Medical Service
Association, 2016 WL 1698264 (D. Haw. Apr. 27, 2016),
and the court allowed the parties supplemental briefing to
address Judge Susan Oki Mollway’s ruling in that case.
See Doc. Nos. 22, 23, 24.
court has conducted a careful de novo review of
parties’ briefing, the F&R, and the applicable law.
See Fed. R. Civ. P. 72(b)(3); Local Rule
(“LR”) 74.2. Because the Ninth Circuit has not
yet decided the issue raised by the Motion, the court has
also carefully reviewed both Judge Mollway’s April 27,
2016 Order as well as her July 27, 2016 Order Denying
Reconsideration. See Noetzel v. Hawaii Med. Serv.
Ass’n, 2016 WL 4033099 (D. Haw. July 27, 2016).
The court fully concurs with both of Judge Mollway’s
Noetzel orders and relies heavily upon them in this
to LR 7.2(d), the court determines the Motion without a
hearing. Moreover, because the parties are well-aware of the
factual and procedural history of this case, as well as the
applicable legal issues, the court’s Order directly
focuses on the dispositive issue before the court: Does ERISA
completely preempt the Petition? For the reasons that follow,
the court answers that question in the affirmative, rejects
the F&R, and DENIES the Motion.
Health Inc. v. Davila, 542 U.S. 200 (2004), articulated
a two-prong conjunctive test for deciding whether a state-law
cause of action is completely preempted by ERISA. A state law
claim is preempted if: (1) the plaintiff “could have
brought his claim under ERISA §502(a)(1)(B)”; and
(2) “there is no other independent legal duty that is
implicated by a defendant’s actions.”
Davila, 542 U.S. at 210. See also Fossen v. Blue
Cross & Blue Shield of Montana, Inc., 660 F.3d 1102,
1107-08 (9th Cir. 2011). The court addresses each prong in
could Rudel have brought his claim under ERISA
§502(a)(1)(B)? Section 502(a)(1)(B) provides that a Plan
participant or beneficiary may bring a civil action “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.” 29 U.S.C. § 1132(a). In determining whether
§ 502(a)(1)(B) applies, courts must avoid
“distinguishing between pre-empted and non-preempted
claims based on the particular label affixed to them”
because doing so “would elevate form over substance and
allow parties to evade the pre-emptive scope of ERISA.”
Davila, 542 U.S. at 214 (internal quotations and
citation omitted). Accordingly, the court “examine[s]
the essence of a claim” when evaluating whether a claim
falls within ERISA’s preemptive scope.
Noetzel, 2016 WL 1698264, at *10.
argues that it is “patently clear” his Petition
is brought pursuant to Hawaii state law instead of ERISA.
Doc. No. 10, Mot. at 7. According to Rudel, ERISA §
502(a)(1)(B) does not apply because the Petition does not
seek to recover benefits under the terms of the Plan.
Id. at 14. Rather, Rudel argues, the Petition only
seeks to keep benefits already provided by HMAA.
Id. Rudel misses the point. “Focusing on how a
claim is pled risks missing the critical inquiry as to
whether ‘an individual, at some point in time could
have brought his claim under ERISA
§502(a).’” Noetzel, 2016
WL 1698264, at *11 (citing Davila, 542 U.S. at 210).
HMAA’s lien places Rudel’s benefits
“‘under something of a cloud.’”
Id. at *9 (citing Arana v. Ochsner Health
Plan, 338 F.3d 433, 438 (5th Cir. 2003) (en banc)).
Rudel’s Petition seeks to remove the
“cloud” by obtaining “recovery of the
entire benefit provided by [HMAA], as opposed to the benefit
minus the amount to be reimbursed to [HMAA].”
Id. The essence of the Petition, therefore, is that
“although the benefits have already been paid, [Rudel]
has not fully ‘recovered them because [he] has not
obtained the benefits free and clear of [HMAA’s]
claims.” Id. (quoting Arana, 338 F.3d
fact that HMAA has “already provided the benefits to
[Rudel] as opposed to having denied them in the first
instance, does not change the nature of [his] claim[s],
which, for all intents and purposes, seek to establish
[his] entitlement to ERISA benefits.” Id. That
Congress could not have intended that § 502(a)(1)(B) be
applied differently based solely on the timing of an ERISA
plan provider’s repudiation of a benefit. Interpreting
§ 502(a)(1)(B) as providing no federal remedy when
benefits are initially provided but later canceled or offset
would undermine “the purpose of ERISA to provide a
uniform regulatory regime over employee benefit plans.”
Id. at *10 (citing Davila, 542 U.S. at 208)
(alterations omitted). To hold otherwise would, as
Davila cautions against, elevate form over