Courtesy of the U.S. Court of Appeals for the Fourth Circuit comes a new ERISA preemption case, Great-West Life & Ann. Ins. Co. v. Information Systems & Networks Corp., ___ F.3d ___, 2008 U.S. App. LEXIS 7769. Information Systems & Networks Corp ("ISN") had a self funded medical benefits plan for its employees and their dependents. ISN contracted for Great-West to provide claims processing services. At the end of the contract period, Great-West had advanced about $94,000 to pay claims owed by the ISN medical benefits plan. It asked for reimbursement and ISN refused to pay.

Great-West sued ISN asserting state law claims for breach of the claims processing services contract and for unjust enrichment. ISN claimed that ERISA preempted both claims. The gist of the defense by ISN was that the state law claims by Great-West "related to" ISN’s ERISA plan in a way that fell within the scope of the statute. As a consequence, ISN argued that the only remedy Great-West had was a claim under ERISA’s remedial scheme.

The district court rejected that argument and ruled that Great-West had a valid claim for breach of contract and unjust enrichment under state law. On appeal the Fourth Circuit affirmed, ruling that ERISA did not preempt Great-West’s state law claims.

Citing earlier Supreme Court and Circuit cases, the decision outlines a number of basic principles of ERISA preemption. The contract claims that Great-West brought had an "affect" on the ERISA plan sponsored by ISN. But their impact was too "tenuous, remote or peripheral" to run afoul of ERISA’s preemption.  Great-West was not a plan fiduciary. The issues between the parties were "run-of-the-mill state law claims alleging failure to pay a creditor . . .."

Interestingly, the three judge panel that decided the case included retired Associate Supreme Court Justice Sandra Day O’Connor. She’s appeared on a number of panels in U.S. Circuit Courts of Appeal across the country since her retirement.

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