Aetna Health Inc. v. Davila
The Supreme Court ruled that two Texas patients could not sue their HMOs under a state law requiring health plans to exercise ordinary care in coverage decisions, because their claims were really disputes over benefits owed under employer health plans governed by federal law.
Since those claims fit within the recovery-of-benefits lawsuit that federal law already provides, they had to be treated as federal claims and moved to federal court, where only the more limited remedies allowed by that federal law were available -- not the broader damages Texas law would have permitted.
“Any dispute over the precise terms of the plan is resolved by a court under a de novo review standard, unless the terms of the plan "giv[e] the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan."”
Explaining how courts review disputes over what an employee benefit plan actually covers.
How it got here: State trial courts' cases were removed to federal district courts, which refused to send them back to state court; the Fifth Circuit reversed and the HMOs asked the Supreme Court to step in.
The Case in Depth
What happened
Juan Davila and Ruby Calad each received health coverage through employer benefit plans administered by Aetna and CIGNA. Aetna refused to pay for a drug Davila's doctor prescribed for arthritis; he took a substitute and was hospitalized after a bad reaction. CIGNA's discharge nurse cut short a hospital stay Calad's surgeon had recommended, and she suffered complications afterward. Both sued their HMOs in Texas state court under a state law requiring health plans to exercise ordinary care in coverage decisions.
The question before the Court
Could patients sue their HMOs under a Texas law requiring health plans to use "ordinary care" in coverage decisions, or does federal pension and benefits law take over those lawsuits?
The Court's answer
No — the Court ruled that Davila's and Calad's Texas-law claims against their HMOs were completely displaced by ERISA, the federal law governing employer benefit plans, because their claims were really about benefits owed under those plans. Since the Texas ordinary-care duty depended on what the plan covered and provided no obligation independent of the plan terms, the claims fit within the federal benefits-recovery lawsuit that ERISA already provides.
Because ERISA's remedial scheme is meant to be exclusive, claims that fall within its scope must be treated as federal claims even when filed under state law, letting HMOs move such lawsuits into federal court. That meant the patients were limited to ERISA's remedies, which do not include the broader damages Texas law would have allowed.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Patients covered by employer health plans who are unhappy with a coverage denial generally cannot sue in state court for the kind of damages available under general tort or health-care liability laws. Instead, they are usually limited to the narrower remedies set out in the federal pension and benefits law, which does not allow damages for pain, suffering, or wrongful death caused by a coverage denial.
What changes now
The Fifth Circuit's ruling that the claims belonged in state court is reversed, and the cases go back for further proceedings under this ruling. Because the patients had earlier declined the chance to refile their claims formally under federal law, their lawsuits were properly dismissed with prejudice. The concurrence flags that federal law's limited remedies leave a "regulatory vacuum" for patients in this position, inviting Congress or a future Court to revisit the scope of available relief.
What this does not decide
The Court did not decide whether any form of "make-whole" equitable relief might still be available to people in the patients' position under a different provision of federal law, since the patients here had already given up the chance to pursue such a claim. The ruling also does not address claims against HMOs acting through employed treating physicians making mixed medical judgments.
Concurrences and dissents
Concurrence — Justice Ginsburg
Justice Ginsburg joined the Court's opinion as consistent with existing precedent but wrote separately to criticize the broader legal landscape it reflects. She argued that combining broad preemption of state remedies with a narrow reading of the 'equitable relief' available under federal law creates a 'regulatory vacuum' where injured patients often have no adequate remedy at all. She urged Congress or the Court to revisit whether make-whole relief should be available against a fiduciary who wrongly denies benefits.
How the Court got there
The legal reasoning, step by step
- The Court applied the complete-preemption doctrine, an exception to the usual rule that a lawsuit filed under state law stays in state court: when a federal law's enforcement scheme is so comprehensive that it displaces the state claim entirely, the case counts as federal and can be moved to federal court.
- The Court explained that the federal pension and benefits law, ERISA, sets out a detailed, exclusive system of civil lawsuits and remedies for benefit disputes in § 502(a), designed to balance fair claims handling against not discouraging employers from offering benefit plans at all.
- Applying that framework, the Court asked whether the patients, at some point, could have brought their claims as a suit to recover benefits under the plan, and whether any legal duty independent of the plan or ERISA was violated.
- The Court found that the Texas ordinary-care law's duty depended entirely on interpreting what the health plans actually covered -- the law itself said HMOs owed no duty to provide treatment the plan did not cover -- so the claims were not based on any duty independent of the plans.
- The Court rejected the argument that suing in tort for damages beyond what ERISA allows, or relying on Pegram v. Herdrich's treatment of doctors making mixed medical/eligibility calls, could avoid this result, because the HMOs here were not treating physicians and were making pure coverage-eligibility decisions, which ERISA treats as fiduciary acts.
- Having concluded the claims fell within the scope of the federal benefits-recovery lawsuit, the Court held they were completely preempted and properly treated as federal claims for removal purposes.
Doctrinal impact
Cases affected by this decision
Distinguishes Pegram v. Herdrich (530 U.S. 211)
Held Pegram's treatment of mixed doctor eligibility-and-treatment decisions did not apply because the HMOs here were not treating physicians.
Reaffirms Metropolitan Life Ins. Co. v. Taylor (481 U.S. 58)
Relied on this case's rule that ERISA claims within § 502(a)'s scope are removable to federal court.
Reaffirms Pilot Life Ins. Co. v. Dedeaux (481 U.S. 41)
Reapplied its holding that state remedies duplicating or supplementing ERISA's scheme are preempted.