In Hansen v. Harper Excavating, Inc., No. 08-4089 (10th Cir. 2011), the plaintiff, Jeffery Hansen (“Hansen”), had worked for the defendant, Harper Excavating, Inc. (“Harper”), for six months beginning in 2003. During this time, he attempted to enroll in Harper’s health insurance plan (the “Plan”). The Plan is subject to ERISA. However, unknown to Hansen, Harper never enrolled him in the Plan, although it did deduct Plan contributions from his paycheck. Shortly after he left the company, Hansen fell ill, and incurred thousands of dollars in medical expenses. The Plan did not pay these expenses, since Hansen was not enrolled in the Plan. Hansen sued Harper in federal court under ERISA, and won a substantial damages award. During discovery related to that suit, Hansen learned of other alleged behavior on the part of Harper that led him to file a lawsuit against Harper based entirely on state law claims (fraud, conversion, breach of contract, etc.). Harper removed that case to federal court. Hansen then made a request to remand the case back to state court. The question for the Tenth Circuit Court: should the request for remand be granted?
The Tenth Circuit Court explained that, under certain Supreme Court decisions, if an individual filing suit in state court could have brought his claim under ERISA § 502(a)(1)(B), and if there is no other independent legal duty that is implicated by the defendant’s actions, then the individual’s case is deemed to be completely pre-empted by ERISA. In the case of complete preemption, the case may be removed from state to federal court (with remand back to state court not available). ERISA § 502(a)(1)(B) generally authorizes a civil action by a “participant” to recover benefits, or to enforce his rights or clarify his rights to future benefits, under a plan.
Is Hansen a participant with standing to bring suit under ERISA § 502(a)(1)(B)? The Court said that this question must be answered at the time Hansen filed his complaint. At that time, he would have needed to fall into one of the following four categories: (1) an employee currently in covered employment; (2) an employee reasonably expected to be in covered employment; (3) a former employee with a reasonable expectation of returning to covered employment; or (4) a former employee with a colorable claim to vested benefits, that is, a former employee with a colorable claim that (a) he will prevail in a suit for benefits, or (b) his eligibility requirements will be fulfilled in the future. Hansen is in none of these categories. In particular, he does not meet category (4)(a) because he already prevailed in a suit for benefits. Therefore, the Court concluded that Hansen is not a participant with standing to bring suit under ERISA § 502(a)(1)(B). This means his claim is not completely preempted by ERISA, and his request for remand to state court must be granted.
Note on preemption: The doctrine of complete preemption, discussed in this case, is separate and apart from ERISA’s preemption of state law found in Section 514(a) of ERISA. The complete preemption creates federal jurisdiction, while Section 514(a) preemption is a defense to a state law claim pertaining to an employee benefit plan.