Aetna Life Insurance Co. v. Methodist Hospitals of Dallas

Case Updates

The Fifth Circuit held that Chapter 1301 of the Texas Insurance Code does not apply to Aetna Life’s administration of the self-funded ERISA plans. Citing Health Care Service Corp. v. Methodist Hospitals of Dallas, the court reversed the district court’s denial of Aetna Life’s motion for summary judgment and its grant of the Providers’ motion for summary judgment, vacated the judgment of that court, and remanded the case for entry of judgment in favor of Aetna Life.

In its brief to the Fifth Circuit, the US Chamber argues that Texas’ prompt pay statute is preempted by the Employee Retirement Income Security Act of 1974 (ERISA). At issue in this case is whether federal law preempts state law rules governing the processing and paying of health benefits claims by self-funded plans. The Chamber explained how subjecting such plans to state prompt-pay statutes would conflict with ERISA’s core purposes and impose massive new burdens on self-funded plans, since most self-funded plans operate in many states. The Chamber further argued that the Texas statute in question is expressly preempted by Section 514(a) of ERISA because it trespasses upon matters of exclusive federal concern and directly interferes with the relationship between plan fiduciaries and beneficiaries.

Brian D. Netter and Michael B. Kimberly of Mayer Brown LLP represented the US Chamber of Commerce as co-counsel to the US Chamber Litigation Center.