WIENER, Circuit Judge:
Cheryl Mayeaux, her husband Raymond Germain, and her treating physician and his wife, Dr. and Mrs. Edward S. Hyman (collectively the "Plaintiffs") sued Louisiana Health Services and Indemnity Company, d/b/a Blue Cross and Blue Shield of Louisiana ("BCBS"). The Plaintiffs asserted various causes of action alleged to have arisen from BCBS's denial of insurance coverage for the costs of Dr. Hyman's treatment of Mayeaux's illness with high doses of antibiotics. After several years of litigation, the Plaintiffs sought leave to amend and supplement their complaint for a third time in an apparent attempt to defeat federal subject matter jurisdiction. The district court denied the Plaintiffs' motion for leave to amend and subsequently entered summary judgment against the Plaintiffs on all their claims. On appeal, the Plaintiffs contest the district court's denial of their motion for leave to amend and, in the alternative, the district court's grant of summary judgment in favor of BCBS. We affirm.
I. FACTS AND PROCEEDINGS
A. BACKGROUND
In 1982, Mayeaux went to work for Coleman E. Adler & Sons ("Adler"). The following year, she sought medical treatment from Dr. Hyman who diagnosed Mayeaux as having a connective tissue illness that he calls "systemic coccal disease" ("SCD"). Dr. Hyman treated Mayeaux's condition with a so-called "High Dose Antibiotic Treatment" ("HDAT"). In December 1993, BCBS began providing group health insurance coverage for Adler's employees under a comprehensive medical benefit plan (the "Adler Plan"). BCBS denied coverage for Mayeaux's HDAT, stating that it was excluded under the terms of the Adler Plan as experimental or investigational.
The Adler Plan expressly excludes benefits for "[s]ervices or supplies which are Investigational in nature" and defines "Investigational" as "the use of any treatment, procedure, facility, equipment, drug device or supply not accepted, as determined by [BCBS], as standard medical treatment of the condition being tested, or any such items requiring federal or other governmental agency approval not granted at the time services were rendered." BCBS maintains that its decision to deny coverage for HDAT was purely a question of plan coverage and was not based on any determination regarding the medical appropriateness of Dr. Hyman's procedures.
In April 1995, Mayeaux asked BCBS to reconsider its coverage decision, but BCBS
B. COURT PROCEEDINGS
In 1995, the Plaintiffs filed suit in Louisiana state court seeking damages allegedly resulting from BCBS's failure to pay for Mayeaux's HDAT, as well as bad faith and fraud. BCBS removed the case to federal court invoking federal subject matter jurisdiction because Mayeaux was asserting, inter alia, a claim for benefits under an ERISA-governed plan. The district court allowed the Plaintiffs to amend their complaint to seek a declaratory judgment of Mayeaux's right to receive future benefits under the Adler Plan. Protracted discovery ensued.
In 1997, over BCBS's objection, the district court permitted the Plaintiffs to supplement and amend their complaint a second time to add state law causes of action for unfair trade practices, intentional interference with contract, and defamation. Discovery continued until April 1998, when the district court closed the case administratively until we ruled on two appeals that were pending.
BCBS filed three separate summary judgment motions regarding the Plaintiffs' state and federal causes of action. Relying on ERISA preemption, the district court granted summary judgment to BCBS on all the Hymans' claims. The district court also ruled that Mayeaux's denial-of-benefits claim was governed by
II. ANALYSIS
A. STANDARD OF REVIEW
We review the district court's denial of leave to amend a complaint under Federal Rule of Civil Procedure 15 for abuse of discretion.
We review a district court's grant of summary judgment de novo.
B. DENIAL OF THE PLAINTIFFS' THIRD ATTEMPT TO AMEND
In March 2001, the district court entered a preliminary pretrial conference order that gave the parties thirty days in which to file any final amendments. Within the prescribed period, the Plaintiffs filed a motion for leave to supplement and amend their complaint for a third time (the district court had allowed two previous amendments). Because the Plaintiffs' filing was considered to be somewhat incoherent, the magistrate judge ordered the Plaintiffs "to provide opposing counsel with a comprehensive pleading that they propose to file," and offered BCBS an opportunity to submit a supplemental opposition. In response, the Plaintiffs filed what they styled as a "Restated Complaint."
BCBS opposed this third amendment on two principal grounds. First, BCBS asserted that the Plaintiffs' amendment would be unfairly prejudicial because it would radically change the nature of the
In denying the Plaintiffs' motion for leave to amend, the magistrate judge stated that "[t]he state law claims which plaintiff attempts to assert appear to be preempted by ERISA." The magistrate judge further observed that "the claims are not new and should have been brought far earlier than now." The district court affirmed the magistrate judge's ruling, declaring that "[t]he proposed amendment to the complaint is untimely; further, it seeks to add state law claims that are preempted by ERISA."
1. Timeliness
The Plaintiffs' motion for leave to amend was filed well within the time prescribed by the trial court in its pretrial conference order. Neither the district court nor the magistrate judge made any express findings that the Plaintiffs acted in bad faith or with a dilatory motive or that BCBS would be prejudiced by the amendment. "The Supreme Court has explicitly disapproved of denying leave to amend without adequate justification."
When the reason for the denial is "readily apparent,"
2. Fundamental Alteration of the Case
In this context, we must determine whether the proposed amendment (1) was merely proposing alternative legal theories for recovery on the same underlying facts or (2) would fundamentally alter the nature of the case.
The Plaintiffs' so-called "Restated Complaint" — an unabashed attempt to avoid ERISA preemption and defeat federal court jurisdiction — essentially pleaded a fundamentally different case with new causes of action and different parties. As stated by the Eighth Circuit, "when late tendered amendments involve new theories of recovery and impose additional discovery requirements, courts [of appeal] are less likely to find an abuse of discretion due to the prejudice involved."
C. DISMISSAL OF MAYEAUX'S BENEFITS CLAIM
Mayeaux asserts two reasons why the trial court erred in granting summary judgment dismissing her benefits claim. First, Mayeaux insists that the letter from BCBS's general counsel inviting a second opinion was a contractual offer which, when she accepted it by tendering Dr. Deming's report, created a binding obligation on BCBS's part to provide benefits. Second, Mayeaux challenges BCBS's interpretation of the Adler Plan as precluding coverage for Dr. Hyman's prescribed treatment as investigative.
1. Letter Contract
Following BCBS's denial of Mayeaux's pre-authorization request, counsel for the parties exchanged a series of letters discussing the basis for BCBS's decision. In one of these letters to Mayeaux's lawyer, BCBS's general counsel stated:
Ignoring everything but the final sentence quoted, Mayeaux argues that this statement was a legal offer, which she accepted by submitting the concurring medical opinion of Dr. Deming. She contends that the effect of the letter was "that the health insurer [BCBS] gave up its discretionary authority to determine whether the benefits were appropriate (medically necessary)."
In granting summary judgment in BCBS's favor, the district court observed that "even if that claim was not preempted by ERISA, counsel's letter attempting amicable settlement of an issue that was clearly headed towards litigation did not create any contractual relationship between the principles [sic] unless those principles [sic] expressly gave the attorney authority to do so." Relying on Article 2997 of the Louisiana Civil Code, which requires a principal to give authority "expressly" before a mandatary (agent) can "enter into a compromise,"
The district court correctly granted summary judgment against Mayeaux on her claim for breach of contract. When BCBS's general counsel sent the subject letter to Mayeaux's attorney, this dispute was plainly heading toward litigation. BCBS had consistently maintained that its denial was based on the express exclusion
In light of the whole exchange, BCBS's lawyer's statement was nothing more than an invitation for Mayeaux to demonstrate that the HDAT was not investigational — that it was, contrary to BCBS's position, "standard medical treatment" generally accepted by the wider medical community. On summary judgment, Mayeaux adduced no evidence to illustrate an intention by BCBS to relinquish its discretionary authority to determine what constitutes standard medical treatment under the Adler Plan. Mayeaux's attempt to characterize BCBS's letter as an offer inviting her acceptance misses the mark.
2. Plan Administrator's Denial of Benefits
Mayeaux also contends that the Adler Plan's administrator improperly denied coverage for Dr. Hyman's prescribed therapy and that the district court erroneously affirmed that decision. We disagree.
As a preliminary matter, Mayeaux advances that the district court failed to apply the correct standard of review. Mayeaux maintains that the Adler Plan administrator's decision is tainted by a conflict of interest, requiring the district court to employ our Vega case's "sliding scale" standard of review to evaluate whether there was an abuse of discretion.
The essence of Mayeaux's substantive challenge to the Adler Plan administrator's decision is that the plan's wording does not contain an express exclusion for the "investigational use of drugs." Mayeaux's argument is a red herring. As we explained earlier,
Simply put, Mayeaux has failed to identify sufficient record evidence on appeal to support the Plaintiffs' contention that HDAT, as prescribed by Dr. Hyman for the connective tissue malady that he diagnosed in Mayeaux, is "standard medical treatment." Mayeaux, of course, relies on Dr. Deming's medical opinion to make this showing. Even assuming arguendo that Dr. Deming's opinion provided some additional
D. THE PLAINTIFFS' STATE LAW CLAIMS
We turn finally to the Plaintiffs' state law claims. For the reasons stated below, we affirm the district court's grant of summary judgment dismissing these claims.
1. State Law Tort Claims for Damages
Mayeaux and Germain contend that the district court erred in granting summary judgment dismissing their tort claims for pain and suffering, irreparable connective tissue damage, depression, loss of consortium, loss of earning capacity, lost wages, mental anguish, and attorney's fees. We agree with the district court's holding that these claims are preempted by ERISA.
Mayeaux and Germain base their insistence that these state law tort claims have not been preempted on the Supreme Court's decision in Pegram v. Herdrich.
Pegram carved out a narrow class of state law claims from ERISA conflict preemption. That carve-out was predicated on the defining feature of the HMO scheme as a combination of both insurer and provider of medical services.
While this case was pending, the Supreme Court unanimously decided Aetna Health Inc. v. Davila,
Davila thus expressly rejects any effort to extend Pegram's mixed-decision principle to cover traditional indemnity insurers like BCBS:
We, therefore, hold that Mayeaux and Germain's state law tort claims are completely preempted by ERISA and affirm the district court's grant of summary judgment in favor of BCBS.
2. The Remaining State Law Claims
The Plaintiffs also appeal the district court's summary judgment dismissal of the Hymans' state law claims, which were grounded in negligence, unfair trade practices, defamation, and intentional interference with contracts. We affirm the district court's dismissal of these causes of action via a grant of summary judgment, however, because these remaining claims are indisputably preempted by ordinary conflict preemption under § 514 of ERISA.
ERISA preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan."
Relevant statutory objectives include establishing uniform national safeguards "with respect to the establishment, operation, and administration of [employee benefit] plans," and "establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans."
We agree with the district court that "Dr. Hyman's claims relate to an ERISA plan because they challenge [BCBS]'s handling, review, and disposition of a request for coverage. The purpose of these proceedings is to collaterally attack [BCBS's] determination of the actual obligations
Dr. Hyman's state law claims for interference with contract and defamation also fail the conflict preemption test. To allow a medical practitioner to sue for defamation and intentional interference when an ERISA plan administrator decides that the plan does not cover a particular medical treatment for a particular participant or beneficiary would undoubtedly jeopardize the relationships among the traditional ERISA entities, of which the treating physician is not one. These are the sort of claims that go to the very heart of the ERISA administration process. We further agree with the district court that "[e]ven though these claims are labeled by Plaintiffs as state law, the claims arose from the manner in which [BCBS] determined not to cover Hyman's high dosage antibiotic treatments and the subsequent notification to patients that HDAT would not be covered under the Adler Plan."
III. CONCLUSION
The district court's denial of the Plaintiffs' third motion for leave to amend their complaint was not an abuse of discretion. The motion was untimely in the sense of coming so far into the progress of the case and so close to the scheduled commencement of trial. Permitting the amendment would have been unfairly prejudicial to BCBS and Dr. Gengelbach by effecting so profound a shift in the nature of the suit. And, the district court's grant of summary judgment to BCBS on the Plaintiffs' ERISA and state law claims was clearly proper and free of reversible error. The judgments and orders of the district court are, in all respects,
AFFIRMED.
FootNotes
Likewise, in Pick, we ultimately concluded that Dr. Hyman's "inability to objectively demonstrate his method's accuracy," slip op. at 2, 6, supported the exclusion of his medical diagnosis that a patient suffered from SCD. We also affirmed the Daubert exclusion of Dr. Hyman's opinion testimony that the defendant's penile prosthesis could cause SCD. Id. at 2, 7. We further held that the district court could exclude Dr. Deming's opinion that the plaintiff suffered from SCD, because Dr. Deming reached his conclusion by examining medical slides prepared using Dr. Hyman's "scientifically unreliable" method. Id. at 7. See Pick v. Am. Med. Sys., Inc., 958 F.Supp. 1151, 1174-79 (E.D.La.1997).
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