United States District Court, D. Hawaii
Rudel, Petitioner, represented by Allen K. Williams, Trecker
& Fritz, Michael R. Cruise, Leavitt, Yamane & Soldner, Robert
A. Creps, Leavitt Yamane & Soldner & Woodruff K. Soldner,
Leavitt Yamane & Soldner.
Management Alliance Association, Respondent, represented by
David J. Minkin, McCorriston Miller Mukai MacKinnon & Jordon
Jun Kimura, Department of Corporation Counsel.
ORDER REJECTING THE MAGISTRATE JUDGE'S FINDINGS
AND RECOMMENDATION TO GRANT PLAINTIFF'S MOTION TO REMAND,
DOC. NO. 15
MICHAEL SEABRIGHT, Chief 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. Â§Â§
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,
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.
Aetna 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
Â§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 turn.
First, could Rudel have brought his claim under
ERISA Â§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. Â§ 1132(a). In determining whether Â§
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 Â§ 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 Â§502(a).'" Noetzel,
2016 WL 1698264, at *11 (citing Davila, 542 U.S. at
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 at 438).
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 ...