ERISA-Supreme Court Of Nevada Court Rules That State Law Claim Of Failing To Ensure The Quality Of Healthcare Is Preempted By ERISA

In Cervantes v. Health Plan of Nevada, Inc., 127 Nev. Adv. Op. 70, No. 56166 (Supreme Court of Nevada 2011), the facts were as follows. The plaintiff, Margerita Cervantes (“Cervantes”), allegedly contracted hepatitis C as a result of treatments she received at the Endoscopy Center of Southern Nevada (“ECSN”). She obtained treatment at ECSN as part of the health care benefits she received through her union, the Hotel Employees and Restaurant Employees International (the “Culinary Union”). The Culinary Union operated a self-funded health care plan (which was subject to ERISA) (the “Plan”), and retained defendants Health Plan of Nevada, Inc. and others (collectively, “HPN”) as its agents to assist in establishing a network of the plan’s chosen medical providers. Cervantes filed a lawsuit alleging that HPN, as a managed care organization (an “MCO”), is responsible for her injuries, because it failed to ensure the quality of care provided by ECSN, as required by Nevada state law (NRS Chapter 695G), and referred her to a blatantly unsafe medical provider.

The question for the Supreme Court of Nevada (the “Court”): are Cervantes’ claims preempted by ERISA section 514? The district court had granted summary judgment against Cervantes, on the ground of ERISA preemption.

In analyzing the case, the Court said that ERISA section 514 preempts all state laws that “relate to” any employee benefit plan. This means that when a plaintiff’s claim is predicated on administrative decisions made in the course of administering an ERISA plan, the claim is necessarily preempted. However, when the conduct complained of is not performed in the capacity of the ERISA plan, plan administrator, or plan agent, the claim is not preempted, since the relationship with the ERISA plan is too tangential. Thus, a claim based on NRS Chapter 695GA may be preempted if the MCO acts merely as an administrator or agent of the ERISA plan. Otherwise-no preemption. In this case, the issue comes down to whether HPN merely facilitated the selection of medical providers for the Plan by the Culinary Union Plan (preemption), or if HPN leased out its existing network of medical providers (no preemption). Here, the Culinary Union selected the medical providers for the Plan, such as ECSN; this selection was an administrative decision made while administering an ERISA plan. Therefore, the Court concluded that HPN was a mere facilitator of the selection, so that Cervantes’ claims must be preempted. As such, the Court affirmed the district court’s summary judgment against her.

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