On Appeal from the United States District Court for the District of New Jersey (D.C. Nos. 01-cv-04964, 01-cv-05339, 01-cv-05812) District Judge: Honorable Jerome B. Simandle
Before: Nygaard and Garth, Circuit Judges
and Pollak, District Judge.*fn1
The opinion of the court was delivered by: Nygaard, Circuit Judge
* (Dismissed pursuant to Court's order of 11/17/04)
These interlocutory cross-appeals require us to address two different facets of the preemptive power of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001, et seq., as it applies to the instant dispute over an insurer's claimed right of subrogation from an insured's third-party tort recovery. First, the insured ERISA plan participants, plaintiffs below, argue that the District Court should have remanded their claims to state court for lack of federal subject matter jurisdiction. Second, the insurance providers, defendants below, maintain that the District Court should have dismissed the claims entirely, as they depend on state law that is expressly preempted by ERISA § 514, 29 U.S.C. § 1144. Finally, the insurance providers argue that the District Court should have dismissed the claims because the state law decision on which they rely, Perreira v. Rediger, 778 A.2d 429 (N.J. 2001), should not apply retroactively. All three questions raise issues of first impression in this circuit. We find the insurance providers' arguments more persuasive as to the first two issues, rendering consideration of Perreira 's retroactivity unnecessary. Jurisdiction is proper in the District Court, but the underlying claims are preempted by ERISA and must be dismissed.
Jean Levine, Noreen Bogurski, and Benjamin Edmondson (the "Insureds") were injured by third-parties in separate, unrelated events and are the Appellees/Cross-Appellants in this appeal. Their health insurance providers, United Healthcare Corporation and Horizon Blue Cross and Blue Shield of New Jersey,*fn2 are the Appellants/Cross-Appellees (the "Providers"). At the time of the injuries, the Providers fulfilled their responsibilities to the Insureds under each health insurance policy by paying at least a portion of the Insureds' medical expenses.
Each Insured then filed suit against the third party responsible for his or her injury. At that time, a New Jersey Department of Insurance Regulation permitted health insurance policies to include reimbursement and subrogation clauses. N.J. ADMIN. CODE tit. 11, § 4-42.10 (1993) (repealed August 5, 2002).*fn3
Each of the relevant health insurance policies had such a clause. Consequently, when the Insureds sued their respective tortfeasors, the Providers acted within the bounds of both the health insurance policies and the Department of Insurance regulation by seeking reimbursement from the Insureds for benefits paid under the health insurance policies. The Insureds then paid a portion of their tort settlement to the Providers to settle the reimbursement claims.*fn4
Subsequent to these settlements between the Insureds and the Providers, the New Jersey Supreme Court announced a decision in Perreira v. Rediger, 778 A.2d 429 (N.J. 2001), holding that the Department of Insurance regulation conflicted with a New Jersey statute, and thus, was invalid. *fn5 As a result, subrogation and reimbursement provisions are no longer permitted in New Jersey health insurance policies. Notwithstanding their earlier settlements, the Insureds sued the Providers in New Jersey state court to recover the amounts they paid to reimburse the Providers.
II. The District Court Proceedings
After being sued in New Jersey state court, the Providers removed the cases to federal court claiming complete ERISA preemption under section 502(a)(1)(B) of ERISA. The District Court denied the Insureds' motion to remand to state court. Concluding that the question of removal was a "conceptually unclear area of law," the District Court nonetheless determined that the Insureds sought to "recoup a benefit due under the plan," and thus, their claim was properly removed. The Court also denied the Insureds' request to certify the issue for appeal at that time.
The Providers also filed a motion to dismiss the claims. First, the Providers claimed that ERISA preempted New Jersey's statute; therefore, the statute did not apply to ERISA-governed plans. Second, they argued that the Perreira decision should not be applied retroactively.
The District Court concluded that the New Jersey statute was a statute "regulating insurance," and thus, was "saved" from ERISA preemption. First, as directed by the Supreme Court in Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 50 (1987), the District Court made the "common sense determination" that the law was specifically directed toward the insurance industry because it was intended to directly affect and regulate that industry. Second, the Court tested the results of its common sense determination by examining the three factors listed in the McCarran-Ferguson Act *fn6 and found that these factors supported the conclusion that the law regulated insurance. See Moran, 536 U.S. at 366. Thus, the District Court found that the law was "saved" from ERISA preemption.
Having determined that New Jersey's statute applied to ERISA-governed plans, the District Court turned to the question of whether the Perreira decision should be applied retroactively. The District Court determined that, under New Jersey law, prospective application *fn7 is appropriate only if: "(1) the parties and the community justifiably relied on the prior rule, (2) the purpose of the new rule will not be advanced by retroactive application, and (3) retroactive application of the rule may have an adverse effect on the administration of justice." (App. at 40 (citing Coons v. American Honda Motor Co., 476 A.2d 763, 767 (1984))). Here, the District Court concluded that the Perreira decision reflected New Jersey's existing law and was not new and unanticipated. Consequently, it held that the Perreira decision applied retroactively.
Following the denial of the motion to dismiss, the District Court certified three issues for interlocutory appeal pursuant to 28 U.S.C. § 1292(b):
(1) whether the antisubrogation rule contained in N.J.S.A. 2A:15-97, as interpreted by the New Jersey Supreme Court in Perreira v. Rediger, 169 N.J. 339 (2001), applies to defendant health insurers because it is not conflict preempted under ERISA section 514(a) because it is "saved" as a state law that regulates insurance;
(2) whether Perreira v. Rediger, 169 N.J. 339 (2001), applies retroactively to plaintiffs' pre-Perreira health insurance plans; and,
(3) whether plaintiffs' unjust enrichment claims for monies taken pursuant to subrogation and reimbursement provisions in their ERISA health plans are claims for "benefits due" within the meaning of ERISA section 502(a).*fn8
We granted permission for the appeal (issues one and two) and cross-appeal (issue three) on January 16, 2004 and have jurisdiction ...