ERISA-Mississippi Supreme Court Affirms Ruling That State Law Which Requires Chancery Court Approval Of A Minor’s Settlement Claims Is Not Preempted By ERISA

In the case of In the Matter of the Guardianship of O. D., No. 2014-CA-00322-SCT (Miss. Supreme Court 2015), O.D., a minor child, filed a petition in Pontotoc County Chancery Court for approval of a settlement her parents had negotiated with car insurance companies for injuries she had suffered in a car accident. On the day of the hearing, Ashley Healthcare Plan, O.D.’s health insurance coverage provider, which had a subrogation lien against the proceeds of O.D.’s claim, removed the case to federal court, arguing that the Mississippi law which required the Chancery Court’s approval of O.D.’s settlement claims, Mississippi Code Section 93-13-59, was preempted by ERISA.

The United States District Court for the Northern District of Mississippi held that ERISA did not preempt the state law and remanded the case to the Chancery Court without awarding attorney’s fees to O.D. On motion from O.D.’s parents, the Pontotoc County Chancery Court awarded O.D. attorney’s fees, holding that Ashley Healthcare Plan’s removal to federal court was contrary to clearly established law and that it was done for the purpose of delaying litigation. Although O.D. could have sought recovery of attorney’s fees under Rule 54 of the Federal Rules of Civil Procedure, frivolous removals to federal court also are subject to the Mississippi Litigation Accountability Act. Miss. Code Ann. §§ 11-55-1 to 11-51-15 (Rev. 2012). Furthermore, according to the Chancery Court, Ashley Healthcare Plan’s removal to federal court was contrary to two decades of case law which uniformly held that Mississippi’s law requiring Chancery Court approval of minors’ settlements is not preempted by ERISA and that Ashley Healthcare Plan was seeking a remedy in federal court that was unavailable to it under the ERISA Civil Enforcement Clause.

The Mississippi Supreme Court affirmed the judgment of the Chancery

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