In Roche v. Aetna, Inc., 2016 WL 797553, (D.N.J. March 1, 2016) plaintiffs filed a class action suit in New Jersey state court against ERISA insurers and The Rawlings Company, seeking refunds and damages related to ERISA subrogation collections made in violation of New Jersey law which prohibits subrogation. In addition to relying on New Jersey’s anti-subrogation law, Plaintiffs asserted claims under the New Jersey Consumer Fraud Act (NJCFA) and common law (breach of contract, theft, conversion, unjust enrichment). Defendants removed to federal court. This decision sustains a summary judgment for defendants as to the NJCFA and common law claims but recognizes that New Jersey’s anti-subrogation law does in fact apply to ERISA insurers through ERISA’s “saving clause.”
This action is similar to the action brought in Wurtz v. Rawlings Co., LLC, 761 F.3d 232, 243–44 (2d Cir. 2014) wherein the 2nd Circuit upheld the application of the New York anti-subrogation law through ERISA’s “saving clause.” Since New Jersey is in the 3rd Circuit, however, the Defendants sought to avoid the application of Wurtz by (once again) arguing complete preemption. This court rejects the “complete preemption” argument and applies the “saving clause,” stating at *6 at :
[T]he claims under [New Jersey’s anti-subrogation statute] Section 42.10 are conflict preempted by ERISA § 502(a) as claims for benefits due, but Section 42.10 itself is saved from preemption under ERISA § 514(b)(2)(A) as a law regulating insurance, and so provides the relevant rule of decision for determining what benefits are due under a claim properly pleaded under ERISA § 502(a).
Note that, according to Wurtz, the 2nd Circuit view is that a state law anti-subrogation claim is not cognizable under ERISA § 502(a)(1)(B). The 3rd Circuit takes a different approach, as stated at *7 at :
[C]laims for return of subrogation payments or to avoid payment of subrogation liens are claims for “benefits due” under ERISA § 502(a).
As a result, the plaintiffs’ claims are controlled by state law and may proceed under ERISA. The Court stated at *7 at [5,6]:
The subrogation prohibition contained with Section 42.10 therefore “supplies the relevant rule of decision” for any ERISA § 502(a) claim.
Under Wurtz, the 2nd Circuit follows the view that the NY state anti-subrogation law is applicable to ERISA insurers, with a remedy available outside the ERISA remedies. Under the ruling in this case, the NJ state anti-subrogation law provides the “rule of decision” regarding subrogation/reimbursement claims, with a remedy provided under ERISA’s § 502(a).
Thank you Professor Baron for the above commentary