Pilot Life Ins. Co. v. Dedeaux
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481 U.S. 41 (1987)
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U.S. Supreme Court
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)
Pilot Life Insurance Co. v. Dedeaux
Argued January 21, 1987
Decided April 6, 1987
481 U.S. 41
The "preemption clause" (§ 514(a)) of the Employee Retirement Income Security Act of 1974 (ERISA) provides that ERISA supersedes all state laws insofar as they "relate to any employee benefit plan," but ERISA's "saving clause" (§ 514(b)(2)(A)) excepts from the preemption clause any state law that "regulates insurance." ERISA's "deemer clause" (§ 514(b)(2)(B)) provides that no employee benefit plan shall be deemed to be an insurance company for purposes of any state law "purporting to regulate insurance." On the basis of a work-related injury occurring in Mississippi in 1975, respondent began receiving permanent disability benefits under his employer's ERISA-regulated welfare benefit plan, under which claims were handled by petitioner, the employer's insurer. However, after two years, petitioner terminated respondent's benefits, and during the following three years his benefits were reinstated and terminated by petitioner several times. Respondent ultimately instituted a diversity action against petitioner in Federal District Court, alleging tort and breach of contract claims under Mississippi common law for petitioner's failure to pay benefits under the insurance policy. The court granted summary judgment for petitioner, finding that respondent's common law claims were preempted by ERISA. The Court of Appeals reversed.
Held: ERISA preempts respondent's suit under state common law for alleged improper processing of his claim for benefits under the ERISA-regulated benefit plan. Pp. 481 U. S. 44-57.
(a) The common law causes of action asserted in respondent's complaint, each based on alleged improper processing of a benefit claim under an employee benefit plan, "relate to" an employee benefit plan, and therefore fall under ERISA's preemption clause. Cf. Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724, 471 U. S. 739; Shaw v. Delta Air Lines, Inc., 463 U. S. 85, 463 U. S. 96-100. The preemption clause is not limited to state laws specifically designed to affect employee benefit plans. Pp. 481 U. S. 47-48.
(b) Under the guidelines set forth in Metropolitan Life, respondent's causes of action under state decisional common law -- particularly the cause, presently asserted, based on the Mississippi law of bad faith -- do not fall under ERISA's saving clause, and thus are not excepted from
preemption. A common-sense understanding of the language of the saving clause excepting from preemption a state law that "regulates insurance" does not support the argument that the Mississippi law of bad faith falls under the clause. To "regulate" insurance, a law must not just have an impact on the insurance industry, but must be specifically directed toward that industry. Mississippi Supreme Court decisions establish that its law of bad faith applies to any breach of contract, not merely a breach of an insurance contract. Neither do the factors for interpreting the phrase "business of insurance" under the McCarran-Ferguson Act (which factors are appropriate for consideration here) support the assertion that the Mississippi law of bad faith "regulates insurance" for purposes of ERISA's saving clause. Pp. 481 U. S. 48-51.
(c) Moreover, interpretation of the saving clause must be informed by the legislative intent concerning ERISA's civil enforcement provisions. The language and structure of those provisions support the conclusion that they were intended to provide exclusive remedies for ERISA-plan participants and beneficiaries asserting improper processing of benefit claims. ERISA's detailed provisions set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. The conclusion that ERISA's civil enforcement provisions were intended to be exclusive is also confirmed by the legislative history of those provisions, particularly the history demonstrating that the preemptive force of ERISA's enforcement provisions was modeled after the powerful preemptive force of § 301 of the Labor Management Relations Act, 1947. Pp. 481 U. S. 51-56.
770 F.2d 1311, reversed.
O'CONNOR, J., delivered the opinion for a unanimous Court.