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Hartford Life Gets Part of Doctor’s Disability Lawsuit Dismissed

A New York court dismissed multiple state law claims filed by a group disability plan participant on the grounds that the federal employee benefits law, ERISA, – not state law – controlled the case.  Dr. Elizabeth Chau collected disability benefits for years from Hartford Life due to autoimmune disease. The disability benefits were paid under an employer sponsored group disability plan she had when she worked as a primary care doctor for West Carver Medical Associates.

Dr. Chau’s benefits began in 2005.  In 2011, an “anonymous tipster” called Hartford to turn in Dr. Chau as a fraud, claiming she was not disabled.  Hartford investigated the tip, and gave that information (along with other file information) to several doctors it hired to review Dr. Chau’s file and one who actually examined her.   On the basis of the tip and the doctors, Hartford’s disability adjuster terminated disability payments.

Dr. Chau sued Hartford Life Insurance Company, as well as several doctors and the “Jane Doe” tipster who was not identified in the lawsuit.  In addition to filing a claim under ERISA for terminating her benefits, the disability lawyer also pleaded several claims under state law.  Those included the claims against Hartford and its hired doctors for the following:

  • negligence and tortious interference;
  • quasi-contractual;
  • fraud; and
  • defamation.

Hartford moved to dismiss these claims, arguing that the only proper claim in the lawsuit was the action under ERISA for the terminated disability benefits.  Hartford based its argument on the preemption doctrine. Preemption is a federal law which holds that when the federal government has passed laws that take over a particular set of circumstances (such as employee benefits under ERISA), then state laws which impact that area are no longer in effect.

The court did not dismiss Dr. Chau’s ERISA claim.  However, the court dismissed all of the state law claims. In doing so, the judge explained how preempted required the state law actions to be dismissed. First, the judge noted that

The Supreme Court has held that Section 502(a) of ERISA “is one of those [federal law] provisions with such ‘extraordinary pre-emptive power’ that it ‘coverts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.’ ” [Aetna Health Inc. v.] Davila, 542 U.S. 200, 208, 209, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004).(citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65–66, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)).

However, this concept of complete preemption applies to the federal court’s jurisdiction.  In Dr. Chau’s case, she filed her lawsuit in federal court and pleaded ERISA jurisdiction.  Her state law claims are actually preempted by a related concept called “express preemption.”

ERISA preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” ERISA § 514(a), 29 U.S.C. § 1144(a). The preemption “provisions of ERISA are deliberately expansive, and designed to ‘establish pension plan regulation as exclusively a federal concern.’ ” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45–46, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (quoting Alessi v. Raybestos–Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981)). ERISA preemption is not limited to state laws that specifically affect employee benefit plans; it extends to state common-law contract and tort actions that relate to benefits as well. See id. at 47–48, 107 S.Ct. 1549.

“The Second Circuit [the appellate court with jurisdiction  over New York federal courts] has held that laws that have been ruled preempted by ERISA “are those that provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to an employee.” Aetna Life Insurance Company v. Borges, 869 F.2d 142, 146 (2d Cir.1989).  On that basis, the New York judge dismissed Dr. Chau’s state law claims, because they were seeking damages over and above the benefits owed to Dr. Chau.

Kudos to Dr. Chau’s attorney for trying to be creative and add new claims on top of the ERISA case. Unfortunately, most courts will follow the express preemption doctrine and dismiss state law claims when a disability plaintiff is seeking additional damages, just like the judge did in this case.

Chau v. Hartford Life Insurance Company, — F.Supp.3d —-2016 WL 844831 (S.D. N.Y. March 1, 2016).


If you would like to discuss your Long Term Disability insurance claim with experienced disability insurance attorney, John V. Tucker, call us at (866) 282-5260.

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