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SIMAC v. HEALTH ALLIANCE MEDICAL PLANS

April 10, 1997

JANICE K. SIMAC, PLAINTIFF,
v.
HEALTH ALLIANCE MEDICAL PLANS, INC., DEFENDANT.



The opinion of the court was delivered by: Richard Mills, District Judge:

OPINION

An urgent case to determine rights under a health plan.

The plan, however, is a "governmental plan" under ERISA.

Therefore, this Court lacks jurisdiction and the matter must proceed in state court.

I. BACKGROUND

On April 7, 1997 Janice K Simac filed this action seeking declaratory and injunctive relief against Health Alliance Medical Plans, Inc. (Health Alliance). Simac suffers from life threatening breast cancer. Simac's physicians recommend that she receive High-Dose Chemotherapy supported by Peripheral Stem Cell Rescue (HDCT/PSCR).*fn1 According to the Complaint, Health Alliance has refused to preauthorize treatment because the treatment is not medically necessary or is experimental or investigational.

Simac is employed by the University of Illinois at Springfield. Simac receives health coverage from Health Alliance because she is a member of the Health Alliance Health Maintenance Organization (Health Alliance HMO). The Health Alliance HMO is one of several health coverage options available to employees of the State of Illinois pursuant to the State Employees Group Insurance Act of 1971, 5 ILCS §§ 375/1-375/17 (West 1993 & Supp. 1996), which requires the State of Illinois to provide health insurance to its employees. The act authorizes the Director of the Illinois Department of Central Management Services to "contract or otherwise make available group life insurance, health benefits and other employee benefits to eligible members and, where elected, their eligible dependents." 5 ILCS § 375/5 (West 1993). The act also sets detailed requirements for plans providing health coverage to state employees. 5 ILCS §§ 375/6, 375/6.4 (West 1993 & Supp. 1996). Under the act, the State of Illinois pays the cost of basic health coverage for all its employees. 5 ILCS § 375/10(a) (West Supp. 1996).

II. ANALYSIS

Health Alliance moves to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. The sole basis Simac asserts for this Court's jurisdiction is the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 — 1461 (1994). Simac has sued under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).*fn2 ERISA 88 502(e) and (f), 29 U.S.C. § 1132(e) and (f), vest the district courts of the United States with jurisdiction, whatever the amount in controversy or the citizenship of the parties, over all civil actions brought under ERISA § 502(a)(1)(B). The statute also grants concurrent jurisdiction to the state courts.

ERISA applies to all employee benefit plans established and maintained by employers engaged in commerce or industries engaged in commerce. 29 U.S.C. § 1003(a). Under 29 U.S.C. § 1003(b)(1), however, "[t]he provisions of this subchapter shall not apply to any employee benefit plan if — (1) such plan is a governmental plan (as defined in section 1002(32) of this title). . . ."*fn3 29 West Page 218 U.S.C. § 1002(32) defines the term "governmental plan" as "a plan established or maintained by the Government of the United States, by the Government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing."

Health Alliance argues that, at least with respect to Simac, it is a governmental plan. If the Health Alliance HMO is a governmental plan, ERISA does not apply, and if so, the Court lacks subject matter jurisdiction.*fn4

This case raises a seemingly simple question: Is the Health Alliance HMO a "governmental plan"? The plan at issue in this case would unquestionably fall within the governmental plan exception if the State of Illinois actually administered and operated it. But the State does not. Instead, the State has contracted with several private businesses, including Health Alliance, to provide statutorily mandated health coverage. Does that delegation take the health plans outside the scope of the governmental plan exception? The Court finds that it does not.

As in every case involving statutory interpretation and application, the first place to look for the answer is in the text of the statute itself.*fn5 If ERISA covers the Health Alliance HMO, it does so because the HMO is an "employee welfare benefit plan." See 29 U.S.C. § 1002(1). An employee welfare benefit plan is:

  [A]ny plan, fund, or program . . . established or
  maintained by an employer or by an employee
  organization, or by both, to the extent that such
  plan, fund, or program was established or maintained
  for the purpose of providing for its participants or
  their beneficiaries, through the purchase of
  ...

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