Pilot Life Ins. Co. v. Dedeaux - 481 U.S. 41, 107 S. Ct. 1549 (1987)

Rule:

If a state law relates to employee benefit plans, it is pre-empted. Employee Retirement Income Security Act of 1974 § 514(a), 29 U.S.C.S. § 1144(a). The saving clause excepts from the pre-emption clause laws that regulate insurance. Employee Retirement Income Security Act of 1974 § 514(b)(2)(A), 29 U.S.C.S. § 1144(b)(2)(A). The deemer clause makes clear that a state law that purports to regulate insurance cannot deem an employee benefit plan to be an insurance company. Employee Retirement Income Security Act of 1974 § 514(b)(2)(B), 29 U.S.C.S. § 1144(b)(2)(B).

Facts:

Respondent employee, Dedeaux, after sustaining an employment-related injury, sought permanent disability benefits under a policy purchased from petitioner, insurance company. After the insurance company terminated the employee's benefits, then reinstated and terminated the benefits several times during the following 3 years. Respondent instituted a diversity action against petitioner, Pilot Life Ins. Co., the insurance company and alleged Mississippi common-law tort and breach-of-contract claims for damages for the insurance company's failure to provide benefits under the insurance policy. The District Court granted the insurance company's motion for summary judgment and found all the employee's state common-law claims were pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA) (29 USCS 1001 et seq.). The United States Court of Appeals for the Fifth Circuit reversed, holding that the state common-law causes of action were not pre-empted by ERISA (770 F2d 1311).

Issue:

Was respondent’s claim based on petitioner insurer's failure to pay disability insurance benefits pre-empted by ERISA?

Answer:

Yes. The Court reversed US Court of Appeals for the Fifth Circuit decision that respondent’s claim was not pre-empted by ERISA.

Conclusion:

The Court held that respondent's common law causes of action were preempted because they did not fall under the exemption for law that "regulates insurance" set forth in 29 U.S.C.S. § 1144(b)(2)(B). The court reasoned that the state law of good faith was not a law that "regulated insurance" for purposes of the exemption under its common sense meaning, and because it did not define the terms of the relationship between insurer and insured. The Court held further that the language, structure, and legislative history of ERISA required the conclusion that its civil enforcement provisions were meant to establish an exclusive remedy for violations related to employee benefit plans.