welfare benefit plan falls within the meaning of ERISA.
A. Motion to Dismiss
Plaintiff essentially contends that defendants' termination of his home health care constituted a breach of contract and violated two New York statutes: N.Y. Ins. L. § 2601 and N.Y. Gen. Bus. L. § 349. Section 2601 of the Insurance Law prohibits insurance providers from engaging in "unfair settlement practices" in resolving claim disputes, and General Business Law section 349 generally proscribes "deceptive acts or practices in the conduct of business." Plaintiff contends that defendant violated these statutes and breached his employment contract by discontinuing his coverage for home health care when such coverage was clearly required by the terms of the plan.
1. ERISA preemption
Defendants move to dismiss the complaint on grounds that ERISA preempts the state causes of action asserted by plaintiff and provides the exclusive remedy for any claims that plaintiff might have. ERISA carries an express preemption provision which states, in pertinent part, that the statute "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee health benefit plan." ERISA § 514(a), 29 U.S.C. § 1144(a) (emphasis added). The operative words in that provision are "relate to": only those laws that relate to an employee health benefit plan are preempted. The Supreme Court has construed the "relate to" clause as being "deliberately expansive," Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987), to reflect Congressional intent to prevent states from confusing, diluting, or undermining ERISA's comprehensive scheme. See, e.g., id. at 46-47 & 50; Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 77 L. Ed. 2d 490, 103 S. Ct. 2890 (1983); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 68 L. Ed. 2d 402, 101 S. Ct. 1895 (1981). Indeed, the legislative history shows that Congress included such a vast preemption clause "to displace all state laws that fall within [ERISA's] sphere, even including state laws that are consistent with ERISA's substantive requirements."
Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 85 L. Ed. 2d 728, 105 S. Ct. 2380 (1985) (citation omitted).
In keeping with that intent, the Court has broadly interpreted ERISA's preemption of state laws that "relate to" benefit plans as proscribing any state action that bears on private pensions, even those that relate only indirectly. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S. Ct. 478, 483, 112 L. Ed. 2d 474 (1990); Alessi, 451 U.S. at 525. "The phrase 'relate to' was given its broad common-sense meaning, such that a state law 'relate[s] to' a benefit plan 'in the normal sense of the phrase, if it has a connection with or reference to such a plan.'" Metropolitan Life Ins. Co., 471 U.S. at 739 (quoting Shaw, 463 U.S. 85 at 97); accord, Dumac Forestry Servs., Inc. v. International Bhd. of Elec. Workers, 637 F. Supp. 529, 535 (N.D.N.Y. 1986) (McCurn, J.), aff'd in part, rev'd in part on other grounds, 814 F.2d 79 (2d Cir. 1987). significantly, the "state laws" that may be preempted by ERISA include "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." ERISA § 514 (c)(1); 29 U.S.C. § 1144 (c)(1); see Ingersoll-Rand Co., 111 S. Ct. at 483; Pilot Life Ins., 481 U.S. at 48 n.1.
Considering the broad sweep of ERISA's preemption provision, it would appear on the surface that plaintiff cannot maintain this suit under state law. After all, in drafting ERISA Congress created enforcement remedies so comprehensive that alternative state remedies would be unnecessary-- and improper. Pilot Life Ins. Co., 481 U.S. at 54; see Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985). In fact, numerous courts have expressly ruled that breach of contract claims that are based upon welfare benefit plans "relate to" the plans within the meaning of ERISA, and are thus preempted. See, e.g., Reichelt v. Emhart Corp., 921 F.2d 425, 431-32 (2d Cir. 1990), cert. denied, 115 L. Ed. 2d 1022, 111 S. Ct. 2854 (1991); Gilbert v. Burlington Indus., Inc., 765 F.2d 320, 328 (2d Cir. 1985) (citing cases), aff'd, 477 U.S. 901 (1986).
Several other courts have ruled that insurance protection statutes which, regardless of their purpose, have the effect of regulating benefit plan administration are likewise preempted by ERISA. See Howard, 901 F.2d at 1157 (New York insurance notification statute); Gilbert, 765 F.2d at 327 (New York wage collection statute); see also cases cited infra [slip op.] p. 14. But see Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 147 (2d Cir.) (Connecticut escheat law "is too tenuous, remote, and peripheral to require preemption under § 514(a)), cert. denied, 493 U.S. 811, 107 L. Ed. 2d 25, 110 S. Ct. 57 (1989); Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters, Inc., 793 F.2d 1456, 1470 (5th Cir. 1986). Thus, in the present case, in this court's view the mere fact that all three of plaintiff's state-based causes of action purport to provide him a remedy for defendants' refusal to provide home health-care coverage means that those causes of action "relate to" his benefit plan and consequently fall within the reach of ERISA preemption. See, e.g., In re Life Ins. Co., 857 F.2d 1190, 1194 (8th Cir. 1988); Martori Bros. Distribs. v. James-Massengale, 781 F.2d 1349, 1357 & n.19 (9th Cir.), cert. denied, 479 U.S. 949, 93 L. Ed. 2d 385, 107 S. Ct. 435 (1986).
2. Insurance Saving Clause
If the inquiry were to end there, then defendants would clearly be correct in asserting that plaintiff's state law claims are preempted and that plaintiff has therefore failed to state a claim upon which relief may be granted. The inquiry, however, is not so simple. The presence in ERISA of an "insurance saving clause," a major exception to § 514's general preemption provision, significantly muddles the preemption picture.
ERISA's insurance saving clause excepts from preemption any state law "which regulates insurance, banking, or securities." ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A) (1988). This exception takes some of the bite out of the preemption clause, for it preserves causes of action based upon state laws which purport to regulate insurance, even if they also "relate to" employee benefit plans. The Supreme Court acknowledged the curious interplay between the general preemption provision and the insurance saving clause in Metropolitan Life Ins. Co., observing:
The two preemption sections, while clear enough on their faces, perhaps are not a model of legislative drafting, for while the general preemptive clause broadly preempts state law, the saving clause appears broadly to preserve the States' lawmaking power over much of the same regulation. While Congress occasionally decides to return to the States what it has previously taken away, it does not normally do both at the same time.