Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

ANDERSON v. HUMANA

April 26, 1993

VERNITA L. ANDERSON, Individually and on Behalf of and as Class Representative of All Consumers of Michael Reese H.M.O./Humana-Michael Reese H.M.O., Plaintiff,
v.
HUMANA, INC., et al., Defendants. WILLIAM MATTHEWS, Individually and on Behalf of and as Class Representative of All Consumers of Anchor/Rush-Anchor H.M.O., Plaintiff, v. ANCHOR ORGANIZATION FOR HEALTH MAINTENANCE, et al., Defendants.


Andersen


The opinion of the court was delivered by: WAYNE R. ANDERSEN

Before the Court are the motions of the defendants Humana, Inc., Humana Health Plan, Inc., Humana Insurance Company, the Michael Reese Health Plan, Inc., Michael Reese Hospital Foundation, Anchor Organization for Health Maintenance, Rush-Presbyterian-St. Luke's Medical Center, and Rush-Presbyterian-St. Luke's Health Plans, Inc. to dismiss the complaints of the plaintiffs under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted. Also before the Court are the motions of the plaintiffs to stay these proceedings, or, alternatively, to remand the proceedings to the Circuit Court of Cook County on the ground of lack of subject matter jurisdiction. For the following reasons, the motions are granted in part and denied in part.

 Facts

 Plaintiff Vernita L. Anderson ("Anderson") filed suit in the Circuit Court of Cook County against defendants Humana, Inc., Humana Health Plan, Inc., Humana Insurance Company, and Michael Reese Hospital Foundation. Anderson, who has purchased health insurance and health care services from the Humana health maintenance organization ("Humana HMO") since July 1984, purports to represent a class of all consumers of the Humana HMO. Anderson participates in the Humana HMO pursuant to an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA").

 Plaintiff William Matthews ("Matthews") filed a separate suit in the Circuit Court of Cook County against defendant Anchor Organization for Health Maintenance ("Anchor HMO" or "Anchor"). The Anchor HMO is owned and operated by defendants Rush-Presbyterial-St. Luke's Medical Center and Rush-Presbyterian-St. Luke's Health Plans, Inc. Matthews, a purchaser of health insurance and health care services from Anchor since July 1, 1985, purports to represent a class of all consumers of the Anchor HMO. Matthews receives his coverage through his employment with the City of Chicago, a "governmental plan" exempt from ERISA. The Director of Enrollment of the Anchor HMO has stated in an affidavit that approximately 65 to 70 % of the persons entitled to receive medical treatment from the Anchor HMO are enrolled through employee benefit plans within the meaning of ERISA.

 Each complaint contains two counts. Count I of each complaint alleges that the Humana HMO and the Anchor HMO failed to disclose certain facts in their advertisements and representations to consumers. Each HMO allegedly failed to disclose an inherent conflict of interest between its fiduciary role as a health care provider and its role as a health care insurer which incurred direct and immediate expense when health care was provided. Each HMO allegedly failed to disclose that its administrative practices and/or its system of physician compensation provided staff physicians with disincentives to properly treat, refer, or hospitalize HMO members. Each HMO allegedly failed to disclose that each entity's economic interest were actually or potentially in conflict with the interests of the members. Each HMO also allegedly failed to disclose specific and comprehensible policy exclusions concerning the availability of office visits and/or the dispensing of medical care as well as a definition of "medical emergency." These failures to disclose, which allegedly violate certain sections of the Illinois Insurance Regulations concerning HMO's, also allegedly violate the Illinois Consumer Fraud and Deceptive Business Practices Act.

 Count II of each complaint alleges that the same failures to disclose resulted in a lack of informed consent of the plaintiffs to participation in the HMO's and thus violated Illinois common law. Each complaint requests the return of all premiums paid, punitive damages, and attorney's fees.

 These cases were removed from the Circuit Court of Cook County to this Court by the defendants on the basis of the applicability of the preemption provisions of ERISA. Defendants have moved to dismiss the complaints on the grounds of ERISA preemption. Plaintiffs have moved to stay the proceedings on the grounds that the Court lacks subject matter jurisdiction over these causes of action and that potential class members must be given notice and an opportunity to intervene in this case before the Court grits the defendants' motion to dismiss. Plaintiffs, as an alternative to their motion to stay, have moved to remand the proceedings to the Circuit Court of Cook County on the ground that this Court lacks subject matter jurisdiction over the named plaintiffs.

 Discussion

 A complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80,78 S. Ct. 99 (1957). Upon appellate review of a dismissal under Rule 12(b)(6), the well-pleaded factual allegations of the complaint are taken as true. Zinermon v. Burch, 494 U.S. 113, 110 S. Ct. 975, 979, 108 L. Ed. 2d 100 (1990); Rothner v. City of Chicago, 929 F.2d 297, 302 (7th Cir. 1991); Janowsky v. United States, 913 F.2d 393, 395 (7th Cir. 1990). Upon review the appellate court is required to consider only factual allegations and "is not required to accept legal conclusions that may be alleged or that may be drawn from the pleaded facts." Milwaukee v. Saxbe, 546 F.2d 693, 704 (7th Cir. 1976); see also Reichenberger v. Pritchard, 660 F.2d 280, 282 (7th Cir. 1981).

 State laws which "relate to" any employee benefit plan are preempted by ERISA unless the plan is exempt from ERISA. 29 U.S.C. Sec. 1144(a). The Supreme Court has recently stated that a law "relates to" a covered employee benefit plan for purposes of Sec. 1144(a) "if it has a connection with or reference to such a plan." District of Columbia v. Greater Washington Bd. of Trade, 121 L. Ed. 2d 513, 113 S. Ct. 580, 583 (December 14, 1992) (citations omitted). Under Sec. 1144(a), ERISA preempts any state law that refers to or has a connection with a covered employee benefit plan and which is not exempted from ERISA "even if the law is not specifically designed to affect such plans, or the effect is only indirect," and even if the state law is "consistent with ERISA's substantive requirements." Id. (citations omitted). Preemption does not occur if the state law has only a "tenuous, remote, or peripheral" connection with covered employee benefit plans. Id., n.1 (citation omitted).

 The plaintiff Anderson participates in the Humana HMO as part of an employee benefit plan which is subject to ERISA. Under the above standard of ERISA preemption, the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois common law doctrine of informed consent, which Anderson alleges to have been violated by Humana, are clearly preempted by ERISA. These laws relate to the employee benefit plan of the plaintiff Anderson because the laws require the disclosure of specific factual information to Anderson, an employee, under her benefit plan. The laws thus directly impact the employee benefit plan of Anderson, and their connection to the plan is more than "tenuous, remote, or peripheral."

 Plaintiff Anderson has attempted to avoid ERISA preemption by relying upon the saving clause of ERISA. Under this clause, any state law which "regulates insurance" is exempted from ERISA preemption. 29 U.S.C. Sec. 1144(b)(2)(A). The Seventh Circuit has interpreted Supreme Court decisions as requiring two tests for determining whether a state law falls under ERISA's saving clause because the law regulates insurance. Debruyne v. Equitable Life Assurance Soc'y of the United States, 920 F.2d 457, 468 (7th Cir. 1990). First, the Court must take a "common-sense view" of the language of the saving clause itself. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 48, 95 L. Ed. 2d ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.