Wurtz v. Rawlings Co.

13‐1695‐cv
Wurtz v. Rawlings Co.
In the
United States Court of Appeals
For the Second Circuit
________
A UGUST TERM , 2013
A RGUED: O CTOBER 30, 2013
D ECIDED: JULY 31, 2014
No. 13‐1695‐cv
MEGHAN WURTZ , MINDY B URNOVSKI , individually and on behalf of
all others similarly situated,
Plaintiffs‐Appellants,
v.
T HE R AWLINGS C OMPANY , LLC, O XFORD H EALTH PLANS (NY), INC.,
U NITEDH EALTH G ROUP INCORPORATED,
Defendants‐Appellees.
________
Before: WALKER , C ABRANES , and PARKER , Circuit Judges.
________
Plaintiffs initially filed the complaint in this case in New York
state court, seeking, among other things, to enjoin defendant
insurers under N.Y. Gen. Oblig. Law § 5‐335 from obtaining
reimbursement of medical benefits from plaintiffs’ tort settlements.
Defendants removed this action to the Eastern District of New York
(Joseph F. Bianco, District Judge), where the district court granted
defendants’ motion to dismiss under Rule 12(b)(6) for failure to state

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2 No. 13‐1695‐cv
a claim on the basis that plaintiffs’ claims were subject to both
“complete” and “express” preemption under the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001
et seq.
We hold that plaintiffs’ claims do not satisfy the Supreme
Court’s test for being subject to complete ERISA preemption, which
would have conferred federal subject‐matter jurisdiction. See Aetna
Health Inc. v. Davila, 542 U.S. 200, 210 (2004). Such jurisdiction exists,
however, under the Class Action Fairness Act (“CAFA”), 28 U.S.C.
§ 1332(d). We thus reach the merits of the express preemption
defense and conclude that N.Y. Gen. Oblig. Law § 5‐335 is saved
from express preemption under ERISA § 514, 29 U.S.C. § 1144, as a
law that “regulates insurance.” Accordingly, we VACATE the
district court’s judgment and REMAND for further proceedings on
plaintiffs’ claims.
________
F RANKLIN P. S OLOMON, Solomon Law Firm, LLC,
Cherry Hill, NJ, and S TEVEN J. H ARFENIST,
Friedman, Harfenist, Kraut & Perlstein LLP, Lake
Success, NY (Frank R. Schirripa, Hach Rose
Schirripa & Cheverie LLP, New York, NY, on the
brief), for Plaintiffs‐Appellants.
R ICHARD W. C OHEN, Lowey Dannenberg Cohen
& Hart, P.C., White Plains, NY, and A NTON
METLITSKY , O’Melveny & Myers LLP, New York,
NY (Uriel Rabinovitz, Lowey Dannenberg Cohen
& Hart, P.C., White Plains, NY; Gerald Lawrence,
Lowey Dannenberg Cohen & Hart, P.C., West
Conshohocken, PA; Brian D. Boyle, Theresa S.
Gee, David K. Roberts, O’Melveney & Myers
LLP, Washington, DC; Charles E. Bachman,
O’Melveny & Myers LLP, New York, NY, on the
brief), for Defendants‐Appellees.

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3 No. 13‐1695‐cv
David S. Preminger, Keller Rohrback LLP, New
York, NY, and Benjamin Gould, Keller Rohrback
LLP, Seattle, WA, for Amicus Curiae New York
State Trial Lawyers Association.
________
JOHN M. WALKER , JR ., Circuit Judge:
Plaintiffs initially filed the complaint in this case in New York
state court, seeking, among other things, to enjoin defendant
insurers under N.Y. Gen. Oblig. Law § 5‐335 from obtaining
reimbursement of medical benefits from plaintiffs’ tort settlements.
Defendants removed this action to the Eastern District of New York
(Joseph F. Bianco, District Judge), where the district court granted
defendants’ motion to dismiss under Rule 12(b)(6) for failure to state
a claim on the basis that plaintiffs’ claims were subject to both
“complete” and “express” preemption under the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001
et seq.
We hold that plaintiffs’ claims do not satisfy the Supreme
Court’s test for being subject to complete ERISA preemption, which
would have conferred federal subject‐matter jurisdiction. See Aetna
Health Inc. v. Davila, 542 U.S. 200, 210 (2004). Such jurisdiction exists,
however, under the Class Action Fairness Act (“CAFA”), 28 U.S.C.
§ 1332(d). We thus reach the merits of the express preemption
defense and conclude that N.Y. Gen. Oblig. Law § 5‐335 is saved
from express preemption under ERISA § 514, 29 U.S.C. § 1144, as a
law that “regulates insurance.” Accordingly, we VACATE the
district court’s judgment and REMAND for further proceedings on
plaintiffs’ claims.

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4 No. 13‐1695‐cv
BACKGROUND
The New York statute at issue in this appeal, N.Y. Gen. Oblig.
Law § 5‐335,1 states that a personal injury settlement presumptively
“does not include any compensation for the cost of health care
services” or other losses that “are obligated to be paid or reimbursed
by a benefit provider” (such as an insurer), and that benefit
providers have no “right of subrogation or reimbursement against
any such settling party.”2 When section 5‐335 was enacted in 2009, it
eliminated an asymmetry between jury verdicts and settlements that
tended to discourage the settlement of personal injury lawsuits. 3
1 For purposes of this appeal, we will refer to the version of section 5‐
335 that was in effect at the time of this action and relied upon by the
District Court in reaching its decision as well as the parties in their
briefing here. We note, however, that the statute has since been amended
on November 13, 2013, primarily by replacing references to “a benefit
provider” with “an insurer,” and the amendment applies retroactively to
claims brought on or after November 12, 2009. See 2013 N.Y. Sess. Laws
Ch. 516 (codified at N.Y. Gen. Oblig. Law § 5‐335). The changes enacted by
the New York legislature do not affect our analysis.
2 “[S]ubrogation is the principle by which an insurer, having paid
losses of its insured, is placed in the position of its insured so that it may
recover from the third party legally responsible for the loss.” Teichman ex
rel. Teichman v. Cmty. Hosp. of W. Suffolk, 663 N.E.2d 628, 631 (N.Y. 1996)
(internal quotation marks omitted). While the equitable doctrine of
subrogation is distinct from the contractual right of reimbursement, see id.
at 631‐32; 16 Steven Plitt et al., Couch on Insurance 3d § 222:82, the
distinction is not relevant to this appeal.
3 See 2009 N.Y. Sess. Laws 1265 (Ch. 494) (enacting section 5‐335). In
New York, jury awards in personal injury actions may not include
medical expenses for which an insurer has paid. N.Y. C.P.L.R. § 4545(a).
However, in 1996 (thirteen years prior to the enactment of section 5‐335),
the New York Court of Appeals held that after a personal injury
settlement, insurers may “seek a refund of any medical expense payments
included in the settlement.” Teichman, 663 N.E.2d at 632. And in 2009, the
year of section 5‐335’s enactment, the New York Court of Appeals held
that settlements may not eliminate an insurer’s subrogation right, but
suggested that “the Legislature may wish to reexamine” this issue. Fasso v.

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5 No. 13‐1695‐cv
In February 2012, plaintiffs Meghan Wurtz and Mindy
Burnovski filed a class action complaint in New York state court,
alleging section 5‐335 violations by the three defendants, which are
related companies in the insurance business: The Rawlings
Company, LLC; Oxford Health Plans (NY), Inc.; and UnitedHealth
Group, Inc.4 According to the complaint, both named plaintiffs had
received medical benefit payments from defendants for personal
injuries. Wurtz also settled her personal injury lawsuit, thereby
recovering from the tortfeasor. Defendants had asserted liens under
plaintiffs’ insurance plans to recover medical expenses that they had
paid to plaintiffs, and Wurtz paid a reimbursement sum of $1,316.87
to The Rawlings Company, LLC. In filing their action, plaintiffs
sought a declaration that (based on section 5‐335) defendants did not
have a right to seek reimbursement or subrogation of medical
benefits against plaintiffs’ tort settlements, and they also sought
damages for unjust enrichment and deceptive business practices
under N.Y. Gen. Bus. Law § 349.
Defendants removed this action to the Eastern District of New
York and then moved to dismiss under Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim based on ERISA
preemption. The district court granted defendants’ motion to
dismiss, holding that plaintiffs’ claims “are superseded under two
parallel and independent principles of preemption: (1) complete
preemption under ERISA § 502(a), and (2) express preemption
under ERISA § 514.” Wurtz v. Rawlings Co., LLC, 933 F. Supp. 2d 480,
489 (E.D.N.Y. 2013). The complete preemption holding permitted
Doerr, 903 N.E.2d 1167, 1171‐73 (N.Y. 2009). Thus, tortfeasors would be
unlikely to include medical expenses in settlement offers (as these would
not be included in awards at trial), and yet insurers could use subrogation
to extract from tort settlements medical expenses that they had covered.
See generally Brief of Amicus Curiae New York State Trial Lawyers
Association at 5‐6.
4 The Rawlings Company collects subrogation claims on behalf of
insurer Oxford Health (NY), which is a wholly owned subsidiary of
insurer UnitedHealth Group.

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6 No. 13‐1695‐cv
plaintiffs’ claims to be recast as claims under ERISA, but the district
court concluded that the claims could not successfully proceed
under ERISA because plaintiffs had not exhausted their
administrative remedies and because the terms of their plans allow
reimbursement. Id. at 507‐09. The district court also held that
plaintiffs’ claims for damages were “simply a reassertion of their
declaratory judgment claim” and were thus “also expressly
preempted.” Id. at 507 n.10. Plaintiffs timely appealed.
DISCUSSION
“We review a district court’s ERISA preemption ruling and
12(b)(6) dismissal for failure to state a claim de novo.” Arditi v.
Lighthouse Int’l, 676 F.3d 294, 298 (2d Cir. 2012). “The purpose of
ERISA is to provide a uniform regulatory regime over employee
benefit plans.” Davila, 542 U.S. at 208. However, “because the States
are independent sovereigns in our federal system, we have long
presumed that Congress does not cavalierly pre‐empt state‐law
causes of action.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996).
Thus, “analysis of ERISA preemption must start with the
presumption that ‘Congress does not intend to supplant state law.’”
Stevenson v. Bank of N.Y. Co., 609 F.3d 56, 59 (2d Cir. 2010) (quoting
Gerosa v. Savasta & Co., 329 F.3d 317, 323 (2d Cir. 2003)).
I. Federal Subject‐Matter Jurisdiction
We begin by addressing our “special obligation to satisfy
[ourselves] . . . of [our] own jurisdiction.” Arnold v. Lucks, 392 F.3d
512, 517 (2d Cir. 2004) (internal quotation mark omitted) (quoting
Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)). The
district court held that plaintiffs’ claims were subject to both
“complete” preemption and “express” preemption. As explained
below, complete preemption can be the basis for federal subject‐
matter jurisdiction, but express preemption cannot. Because we hold
below that the district court erred in finding N.Y. Gen. Oblig. Law
§ 5‐335 to be completely preempted by ERISA, we normally would
decline to reach the merits of the express preemption defense. In this

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7 No. 13‐1695‐cv
case, however, there is another basis for federal subject‐matter
jurisdiction under CAFA, 28 U.S.C. § 1332(d).
A. Preemption and Federal Jurisdiction
Express preemption is one of the “three familiar forms” of
ordinary defensive preemption (along with conflict and field
preemption). Sullivan v. Am. Airlines, Inc., 424 F.3d 267, 273 (2d Cir.
2005). It occurs when “Congress . . . withdraw[s] specified powers
from the States by enacting a statute containing an express
preemption provision.” Arizona v. United States, 132 S. Ct. 2492, 2500‐
01 (2012). As an ordinary defensive preemption claim, express
preemption cannot support federal jurisdiction because it would not
appear on the face of a well‐pleaded complaint. See Metro. Life Ins.
Co. v. Taylor, 481 U.S. 58, 63 (1987); Sullivan, 424 F.3d at 272 (“The
well‐pleaded complaint rule mandates that in assessing subject‐
matter jurisdiction, a federal court must disregard allegations that a
well‐pleaded complaint would not include—e.g., allegations about
anticipated defenses.”).
In contrast, under the “so‐called ‘complete preemption
doctrine,’” which is distinct from the three forms of defensive
preemption, “a plaintiff’s ‘state cause of action [may be recast] as a
federal claim for relief, making [its] removal [by the defendant]
proper on the basis of federal question jurisdiction.’” Vaden v.
Discover Bank, 556 U.S. 49, 61 (2009) (alterations in original) (quoting
Wright & Miller, 14B Fed. Prac. & Proc. Juris. § 3722.2); see also Metro.
Life, 481 U.S. at 63‐67 (extending complete preemption doctrine to
the ERISA context and stating that complete preemption, unlike
ordinary defensive preemption, supports federal subject‐matter
jurisdiction). “In concluding that a claim is completely preempted, a
federal court finds that Congress desired not just to provide a
federal defense to a state law claim but also to replace the state law
claim with a federal law claim and thereby give the defendant the
ability to seek adjudication of the claim in federal court.” 14B Fed.
Prac. & Proc. Juris. § 3722.2. This does not mean simply that Congress
intended the federal court to adjudicate a state law claim; rather,
when a claim is completely preempted, “the law governing the

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8 No. 13‐1695‐cv
complaint is exclusively federal.” Vaden, 556 U.S. at 61; see also Arditi,
676 F.3d at 298.
Thus, in a case such as this, complete preemption may be
“crucial to the existence of federal subject‐matter jurisdiction.”
Sullivan, 424 F.3d at 274. Below, we hold that plaintiffs’ claims were
not completely preempted. Thus, in the absence of an alternative
basis for subject‐matter jurisdiction, it would be inappropriate to
reach the merits of the ordinary express preemption defense. See id.
at 277 (“Because it follows from our holding [of no complete
preemption] that the district court lacked subject‐matter jurisdiction
over this case, we have no occasion to consider the merits of
[defendant’s] argument that the plaintiffs’ . . . claims . . . are subject
to ordinary preemption.”).
B. Class Action Fairness Act
In this case, defendants have asserted an alternative basis to
justify removal to federal court. Under CAFA, federal courts have
jurisdiction over a class action filed under Fed. R. Civ. P. 23 or a
“similar State statute or rule of judicial procedure authorizing an
action to be brought by 1 or more representative persons as a class
action” if “the matter in controversy exceeds the sum or value of
$5,000,000, exclusive of interest and costs” and the parties are
minimally diverse. 28 U.S.C. § 1332(d)(1)‐(2). CAFA does not apply
when “the number of members of all proposed plaintiff classes in
the aggregate is less than 100.” Id. § 1332(d)(5)(B).
“We generally evaluate jurisdictional facts, such as the
amount in controversy, on the basis of the pleadings, viewed at the
time when defendant files the notice of removal. With this in mind, a
court must assess the three prerequisites for CAFA jurisdiction: no
fewer than 100 members of the plaintiff class, minimal diversity, and
$5 million in controversy.” Blockbuster, Inc. v. Galeno, 472 F.3d 53, 56‐
57 (2d Cir. 2006) (internal citation omitted). “[The] defendant bears
the burden of establishing federal subject matter jurisdiction” by
showing that there is a “reasonable probability” that each of the
jurisdictional prerequisites is satisfied. Id. at 58 (internal quotation
marks omitted).

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9 No. 13‐1695‐cv
Defendants have satisfied this burden. Plaintiffs filed this
action as a class action under Article 9 of the New York Civil
Practice Law and Rules. With regard to the number of class
members, the complaint states that “[p]laintiffs reasonably believe[]
that there are hundreds of members in the proposed Class.” With
regard to minimal diversity, the complaint states that the named
plaintiffs are residents of Arkansas and New York but makes no
declaration as to citizenship. As defendants state in their notice of
removal, however, “[e]ven if both were citizens of New York,
minimal diversity exists since UnitedHealth is both incorporated
and has its principal place of business in Minnesota.” See Blockbuster,
472 F.3d at 59 (“[I]t seems plain to us that [defendant] is able to meet
its burden of showing there is a reasonable probability that at least
one of these class members is a citizen of New York and thus is ‘a
citizen of a State different from . . . defendant.’” (quoting 28 U.S.C.
§ 1332(d)(2)(A))). Finally, with regard to the requirement of $5
million in controversy, the complaint states that defendants have
“collect[ed] hundreds of millions of dollars in fully insured health
insurance liens that they were not entitled to enforce or collect
following the enactment of NY GOL 5‐335.” In their notice of
removal, defendants confirm that “[d]efendant Rawlings has
handled subrogation and reimbursement claims totaling more than
$5 million with respect to New York insureds covered by fully
insured plans since the adoption of NY GOL § 5‐335.”
CAFA also contains express exceptions to jurisdiction. For
example, federal jurisdiction would not exist here if (1) over two‐
thirds of the proposed plaintiffs were citizens of New York; (2) at
least one defendant from whom “significant relief is sought” was a
citizen of New York; (3) “principal injuries resulting from the
alleged conduct . . . were incurred in” New York; and (4) “during
the 3‐year period preceding the filing of that class action, no other
class action has been filed asserting the same or similar factual
allegations against any of the defendants on behalf of the same or
other persons.” 28 U.S.C. § 1332(d)(4). The Second Circuit has
declined to reach the issue of who bears the burden with regard to
CAFA exceptions. See Blockbuster, 472 F.3d at 58. Here, plaintiffs

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10 No. 13‐1695‐cv
have not claimed that any CAFA exceptions apply (or contested
CAFA jurisdiction at all), so as in Blockbuster, these “exceptions are
not before us, and therefore we need not comment” further. Id.
Because CAFA supplies a basis for federal subject‐matter
jurisdiction, we reach defendants’ express preemption defense in
addition to their complete preemption argument. We discuss both
forms of preemption below.
II. Express Preemption
ERISA expressly preempts any state law that “relate[s] to any
employee benefit plan,” but not if that law “regulates insurance.”
ERISA § 514(a)‐(b), 29 U.S.C. § 1144(a)‐(b). It is undisputed that N.Y.
Gen. Oblig. Law § 5‐335 “relate[s] to” ERISA plans, but we conclude
that it is “saved” from express preemption as a law that “regulates
insurance.” A law “regulates insurance” under this savings clause if
it (1) is “specifically directed toward entities engaged in insurance,”
and (2) “substantially affect[s] the risk pooling arrangement between
the insurer and the insured.” Kentucky Ass’n of Health Plans, Inc. v.
Miller, 538 U.S. 329, 342 (2003).
The district court’s holding that N.Y. Gen. Oblig. Law § 5‐335
does not fall within this savings clause is contrary to the Supreme
Court’s decision in FMC Corp. v. Holliday, 498 U.S. 52 (1990). FMC
concerned a Pennsylvania antisubrogation statute similar in relevant
respects to the one at issue here, and the Supreme Court stated that
“[t]here is no dispute that the Pennsylvania law falls within ERISA’s
insurance saving clause” and that such laws “are ‘saved’” from
express preemption. Id. at 60‐61 (emphasis added).
Here, the district court concluded that section 5‐335 is not
“specifically directed” at insurance because it regulates not only
insurers but also all other “benefit provider[s],” “including self‐
funded employer plans.”5 Wurtz, 933 F. Supp. 2d at 503. But the
5 Under N.Y. Gen. Oblig. Law § 5‐101, “‘benefit provider’ means any
insurer, health maintenance organization, health benefit plan, preferred
provider organization, employee benefit plan or other entity which

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11 No. 13‐1695‐cv
antisubrogation statute at issue in FMC was also broadly addressed
to “[a]ny program, group contract or other arrangement” for benefit
payments, not just insurance companies. 498 U.S. at 55. Indeed, the
specific issue in FMC related to the law’s application to a self‐funded
plan.6 Nonetheless, the Supreme Court recognized that the law
“does not merely have an impact on the insurance industry; it is
aimed at it.” Id. at 61.
The district court also concluded that section 5‐335 does not
“substantially affect the risk pooling arrangement between the
insurer and the insured” because the law “only applies to a subset of
benefit providers, specifically, those without a statutory right of
reimbursement and who do not intervene in underlying third party
actions in which the third party settles.” Wurtz, 933 F. Supp. 2d at
505. But the test is not whether the law substantially affects the
whole insurance market—the test is whether the law substantially
affects how risk is shared when it applies. For example, even though
only a subset of insureds suffer from mental illness, the Supreme
Court has held that a law requiring minimum mental health care
benefits regulates insurance and is thus saved from preemption.
Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 743 (1985). Section
5‐335 requires that insurers bear the risk of medical expenses
whether or not the insured settles or goes to trial, and it thus
substantially affects risk pooling between insurers and insureds.
provides for payment or reimbursement of health care expenses, health
care services, disability payments, lost wage payments or any other
benefits under a policy of insurance or contract with an individual or
group.”
6 The issue in FMC was the effect of the so‐called “deemer clause” of
ERISA § 514(b)(2)(B), which exempts self‐funded plans from the savings
clause. The Supreme Court held that the deemer clause did not cause
preemption of the entire statute in all cases, but only as applied to self‐
funded plans. 498 U.S. at 61. Under FMC, the applicability of N.Y. Gen.
Oblig. Law § 5‐335 to self‐funded plans would only mean that the law is
preempted as applied to those plans (which is not the case here because
the plans at issue are insured), not that the law is not “specifically
directed” at insurance.

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12 No. 13‐1695‐cv
Because N.Y. Gen. Oblig. Law § 5‐335 is specifically directed
toward insurers and substantially affects risk pooling between
insurers and insureds, we conclude that it is saved from express
preemption under ERISA § 514 as a law that regulates insurance.
III. Complete Preemption
The district court held that plaintiffs’ claims are completely
preempted under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B),
which allows an ERISA participant to bring an action to receive or to
clarify his plan benefits. In Davila, 542 U.S. at 210, the Supreme
Court established a two‐part test for determining whether a claim is
completely preempted by § 502(a)(1)(B). As we have explained,
[under Davila], claims are completely preempted by ERISA if
they are brought (i) by “an individual [who] at some point in
time, could have brought his claim under ERISA
§ 502(a)(1)(B),” and (ii) under circumstances in which “there is
no other independent legal duty that is implicated by a
defendant’s actions.”
Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 328 (2d Cir.
2011) (footnote omitted) (quoting Davila, 542 U.S. at 210). State law
claims are completely preempted only if both parts of this test are
satisfied. Id. In this case, plaintiffs’ claims under N.Y. Gen. Oblig.
Law § 5‐335 satisfy neither part of the Davila test.
A. Davila Part One
In Montefiore, we “expressly disaggregate[ed] the first prong
of Davila”: “First, we consider whether the plaintiff is the type of
party that can bring a claim pursuant to § 502(a)(1)(B); and second,
we consider whether the actual claim that the plaintiff asserts can be
construed as a colorable claim for benefits pursuant to
§ 502(a)(1)(B).” Montefiore, 642 F.3d at 328. In this case, it is
undisputed that the plaintiffs are the type of party that can bring a
claim pursuant to § 502(a)(1)(B). The only issue under the first part
of the Davila test is thus whether plaintiffs’ claims—to prevent
defendants from asserting subrogation claims against plaintiffs’ tort

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13 No. 13‐1695‐cv
recoveries in settlement—can be construed as colorable claims for
benefits under § 502(a)(1)(B). We conclude that they cannot.
ERISA § 502(a)(1)(B) allows a plaintiff “to recover benefits due
to him under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits under the
terms of the plan.” The claims in plaintiffs’ complaint seek to do
none of these things. Plaintiffs do not contend that they have a right
to keep their tort settlements “under the terms of [their] plan[s]”—
rather, they contend that they have a right to keep their tort
settlements under N.Y. Gen. Oblig. Law § 5‐335. They also do not
seek to “enforce” or “clarify” their rights “under the terms of [their]
plan[s]” because the state right they seek to enforce—to be free from
subrogation—is not provided by their plans. Indeed, the terms of
plaintiffs’ ERISA plans are irrelevant to their claims. Plaintiffs’
claims are thus unlike the claims for benefits that were held
completely preempted in Davila, for which “the wording of the
plans [was] certainly material to [the] state causes of action.” 542
U.S. at 215.7 As plaintiffs explain, they “have already received all the
benefits they were due in the form of medical expense coverage, and
make no claim for any more.” Pls.’ Reply Br. 6.
The district court held that plaintiffs’ claims can be construed
as claims for benefits under ERISA § 502(a)(1)(B) because they
“effectively seek to cut off defendants’ reimbursement rights under
the Plans.” Wurtz, 933 F. Supp. 2d at 493. The district court reasoned
that the claims are “really about [plaintiffs’] right to keep the
7 The Davila plaintiffs “complain[ed] only about denials of coverage
promised under the terms of ERISA‐regulated employee benefit plans,”
arguing that they were entitled to additional benefits under a state law
that imposed a duty to “exercise ordinary care when making health
treatment decisions.” 542 U.S. at 211‐12. However, the state law made
clear that “a managed care entity could not be subject to liability under the
[state law] if it denied coverage for any treatment not covered by the
health care plan that it was administering,” so “interpretation of the terms
of [plaintiffs’] benefit plans form[ed] an essential part of their [state law]
claim.” Id. at 213.

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14 No. 13‐1695‐cv
monetary benefits received from defendants under their ERISA‐
governed plans; this triggers issues concerning their rights and
ability to recover (and/or retain) benefits under the Plans, and
accordingly, brings ERISA § 502(a)(1)(B) directly into play.” Id. at
495.
This expansive interpretation of complete preemption ignores
the fact that plaintiffs’ claims are based on a state law that regulates
insurance and are not based on the terms of their plans. As a result,
state law does not impermissibly expand the exclusive remedies
provided by ERISA § 502(a). Under ERISA § 514(a)‐(b), state laws
that “relate to” ERISA plans are expressly preempted, but not if they
“regulate[] insurance.” 29 U.S.C. § 1144(a)‐(b). Based on this
“insurance saving clause,” the Supreme Court has held that state
statutes regulating insurance that nonetheless affect ERISA benefits
are not expressly preempted, with no hint that claims under these
statutes might still be completely preempted and thus unable to be
adjudicated under those state laws when they do not expand the
remedies available for beneficiaries for claims based on the terms of
their plans. See Rush Prudential HMO Inc. v. Moran, 536 U.S. 355, 377‐
79 (2002); UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 366‐67
(1999).
B. Davila Part 2
Plaintiffs’ claims under N.Y. Gen. Oblig. Law § 5‐335 also do
not satisfy the second part of the Davila test—that there be “no other
independent legal duty that is implicated by [the] defendant[s’]
actions.” Davila, 542 U.S. at 210. The district court held that
plaintiffs’ claims implicate no independent legal duty because their
claims are “inextricably intertwined with the interpretation of Plan
coverage and benefits.” Wurtz, 933 F. Supp. 2d at 498 (quoting
Montefiore, 642 F.3d at 332) (internal quotation marks omitted). But
the independent legal duty arises from section 5‐335, which
prohibits defendants from seeking subrogation or reimbursement
from settling parties. The duty is independent because it is unrelated
to whatever plaintiffs’ ERISA plans provide about reimbursement.

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15 No. 13‐1695‐cv
In Stevenson, 609 F.3d at 60‐61, this court held that the
plaintiff’s state law contract and unjust enrichment claims that
“reference[d] various benefit plans” were not completely preempted
because they arose from a “separate promise” that did “not require a
court to review the propriety of an administrator’s or employer’s
determination of benefits.” Similarly here, while defendants’
reimbursement claims relate to plaintiffs’ plans, this is not the test
for complete preemption. Plaintiffs’ claims do not derive from their
plans or require investigation into the terms of their plans; rather,
they derive from N.Y. Gen. Oblig. Law § 5‐335.
The district court also stated that section 5‐335 could not be
the basis of an independent legal duty because it does not apply
“where there is a statutory right of reimbursement,” N.Y. Gen.
Oblig. Law § 5‐335(a), and plaintiffs’ plans contain a right of
reimbursement that “is enforced by means of ERISA.” Wurtz, 933 F.
Supp. 2d at 499‐500. However, “ERISA says nothing about
subrogation provisions. ERISA neither requires a welfare plan to
contain a subrogation clause nor does it bar such clauses or
otherwise regulate their content.” Member Servs. Life Ins. Co. v. Am.
Nat’l Bank & Trust Co. of Sapulpa, 130 F.3d 950, 958 (10th Cir. 1997)
(quoting Ryan ex rel. Capria‐Ryan v. Fed. Express Corp., 78 F.3d 123,
127 (3d Cir. 1996)) (internal quotation marks omitted). Under the
district court’s reasoning, all contract language enforced by statute
would become “statutory” language.
“The [Davila] test is conjunctive; a state‐law cause of action is
[completely] preempted only if both prongs of the test are satisfied.”
Montefiore, 642 F.3d at 328. Because plaintiffs’ claims do not satisfy
either part of the Davila test, we hold that they are not completely
preempted by ERISA.
C. Other Circuits
We recognize that this result is in some tension with holdings
of the Third, Fourth, and Fifth Circuits in similar antisubrogation
cases, albeit decided before Davila. See Arana v. Ochsner Health Plan,
338 F.3d 433, 438 (5th Cir. 2003) (en banc) (holding that a claim
under a Louisiana antisubrogation statute could be characterized as

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a claim under ERISA § 502(a)(1)(B) because the plaintiff’s “benefits
are under something of a cloud, for [the insurer] is asserting a right
to be reimbursed for the benefits it has paid to his account”); Singh v.
Prudential Health Care Plan, Inc., 335 F.3d 278, 291‐92 (4th Cir. 2003)
(holding a claim under a Maryland antisubrogation statute to be
completely preempted)8 ; see also Levine v. United Healthcare Corp., 402
F.3d 156, 163 (3d Cir. 2005) (following Arana and Singh).
As we have explained, however, the logic of Arana, Singh, and
Levine would expand complete preemption to encompass state laws
that regulate insurance and that do not impermissibly expand the
exclusive remedies provided by ERISA § 502(a).
We are more persuaded by the reasoning of the Ninth Circuit
in Marin General Hospital v. Modesto & Empire Traction Co., 581 F.3d
941 (9th Cir. 2009), which was decided after Davila. In that case, a
hospital sued an ERISA plan administrator in state court based on
breach of an oral contract to cover 90% of an ERISA participant’s
expenses, and the administrator removed to federal court, arguing
that the claims were completely preempted. Id. at 944. The Ninth
Circuit disagreed. The claims failed the first part of the Davila test:
“The Hospital does not contend that it is owed this additional
amount because it is owed under the patient’s ERISA plan. Quite the
opposite. The Hospital is claiming this amount precisely because it is
not owed under the patient’s ERISA plan.” Id. at 947. And the claims
additionally failed the second part of the Davila test in that they
implicated the independent legal duty of state contract law. Id. at
950. The Ninth Circuit directed that the case be remanded to state
court for lack of federal jurisdiction. Id. at 951.
Other circuits have similarly declined to expand complete
preemption doctrine to allow removal of state law claims into
8 The Singh Court did, however, conclude that the antisubrogation
statute was not expressly preempted, noting that “[i]n FMC Corp. v.
Holliday, the Supreme Court dealt precisely with the question of whether a
State antisubrogation law was saved from preemption under
§ 514(b)(2)(A), and held that it was.” 335 F.3d at 286. As explained above,
we agree.

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17 No. 13‐1695‐cv
federal court simply because they implicate ERISA benefits. See, e.g.,
Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609, 614 (6th Cir.
2013) (concluding that a state law claim for tortious interference
with an ERISA plan is not completely preempted because “[n]obody
needs to interpret the plan to determine whether th[e] duty [to not
interfere] exists”); Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579
F.3d 525, 531‐32 (5th Cir. 2009) (concluding that claims implicating
the rate of payment under the Texas Pay Prompt Act are not
completely preempted because they do not duplicate ERISA claims);
Franciscan Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health &
Welfare Trust Fund, 538 F.3d 594, 597 (7th Cir. 2008) (concluding that
claims by an ERISA beneficiary’s assignee to recover plan benefits
are not completely preempted because they “arise not from the plan
or its terms, but from the alleged oral representations made by” the
plan provider).
In the same vein, in this case plaintiffs are not claiming that
they have a right to enjoin defendants from seeking reimbursement
because of the terms of their ERISA plans. Rather, they claim that
they have this right under N.Y. Gen. Oblig. Law § 5‐335, which
imposes an independent legal duty on defendants not to seek
reimbursement of medical expenses from plaintiffs’ tort settlements,
regardless of what plaintiffs’ ERISA plans say about reimbursement.
Allowing plaintiffs’ state‐law claims under section 5‐335 to
proceed will not disturb ERISA’s goal of providing national
uniformity. ERISA has strong preemptive provisions, the purpose of
which are “to provide a uniform regulatory regime over employee
benefit plans.” Davila, 542 U.S. at 208. But “ERISA says nothing
about subrogation provisions. ERISA neither requires a welfare plan
to contain a subrogation clause nor does it bar such clauses or
otherwise regulate their content.” Member Servs. Life Ins. Co., 130
F.3d at 958 (internal quotation marks omitted). Cf. La. Health Serv. &
Indem. Co. v. Rapides Healthcare Sys., 461 F.3d 529, 535 (5th Cir. 2006)
(concluding, in the face of ERISA’s “silen[ce] on the assignability of
employee welfare benefits,” that a Louisiana assignment statute—
which gave hospitals a cause of action against insurers that did not
honor benefit assignments made by patients to hospitals—was not

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18 No. 13‐1695‐cv
preempted by ERISA § 502(a)(1)(B)). Because ERISA is silent on
subrogation, our decision does nothing to disturb ERISA’s goal of
national uniformity in employee benefit plan regulation.
CONCLUSION
For the reasons stated above, we conclude that CAFA supplies
a basis for federal subject‐matter jurisdiction and that plaintiffs’
claims are neither expressly nor completely preempted by ERISA.
We VACATE the district court’s judgment and REMAND for further
proceedings on plaintiffs’ claims.

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