No. 06-____

___________________________________________________________________

In the

Supreme Court of the United States.

_____________________

Bank of Louisiana,
Petitioner,

-v-

Aetna US Healthcare, Inc. and Aetna Life Insurance Company,
Respondents.

_____________________

On Petition for Writ of Certiorari to the United States
Court of Appeals for the Fifth Circuit.
_____________________


PETITION FOR WRIT OF CERTIORARI

_____________________

-i-

Questions Presented.

1. Does ERISA preempt the petitioner's state claims for breach of contract against Aetna, its stop-loss insurance carrier, for failing to honor a written promise to reimburse the petitioner for employee claims it paid under its self funded benefit plan during the three-month “run-out” period covered by the stop-loss insurance it purchased from Aetna?

2. Should this Court resolve the split of opinion among the federal courts about whether an employer's state law claims against its stop-loss insurance carrier seeking to enforce the stop-loss insurance agreement are preempted by ERISA?

3. Should this Court construe the provisions of ERISA to allow for an award of compensatory damages to an employer when its stop-loss insurance carrier through malfeasance, negligence or deliberate choice breaches the stop-loss insurance agreement to reimburse the employer for the employee benefit claims it paid during the three-month “run-out” period?

4. Should small and medium-size businesses who purchase stop-loss insurance for their fully self funded employee benefit plans have the right to enforce its provisions by bringing state law claims against the stop-loss insurance carrier?

- ii -

Table of Contents

Questions Presented For Review..................................................................................................... i

Table of Contents............................................................................................................................ii

Table of Authorities.........................................................................................................................iii

Citations of Opinions and Orders.....................................................................................................1

Basis for Jurisdiction in this Court.....................................................................................................

Constitutional and Statutory Provisions Involved...............................................................................

Statement of the Case......................................................................................................................

Argument Supporting Allowance of the Writ....................................................................................

1. There Is A Split of Opinion Among the Federal Courts About
Whether State Law Claims Seeking To Enforce A Stop-Loss
Insurance Agreement For A Self Funded Employee Benefit Plan
Are Preempted Under ERISA And This Court Should Resolve
The Controversy, Find No Preemption Under ERISA And Thereby
Provide Small and Medium-Size Businesses Like the Petitioner
With The Actual Insurance Protection Against Catastrophic Losses
They Purchased For Their Self Funded Plans.....................................................................

2. This Court Should Construe ERISA's Remedies To Include The
Award Of Compensatory Damages As Restitution For An Employer
When Its Stop-Loss Insurer Fails To Live Up To Its Promises Contained
In The Stop-Loss Insurance Agreement.............................................................................

Conclusion.....................................................................................................................................

Appendix................................................................................................................................. post

- iii-

Table of Authorities

Citations of Opinions and Orders.

The published opinion of the Court of Appeals for the Fifth Circuit in Bank of Louisiana v. Aetna US Healthcare, Inc. and Aetna Life Insurance Company, Docket No. 04-30986, reported at 459 F.3d 610 and filed on August 4, 2006, reversing the District Court's entry of summary judgment against the petitioner, is set forth in the Appendix hereto (App. 1-15).

The unpublished Order and Reasons of the United States District Court for the Eastern District of Louisiana, in Bank of Louisiana v. Aetna US Healthcare, Inc. and Aetna Life Insurance Company, Civil Action No. 02-236, dated September 8, 2004, granting the respondent's motion for summary judgment, is set forth in the Appendix hereto (App.16-21).

The unpublished Order and Reasons of the United States District Court for the Eastern District of Louisiana, in Bank of Louisiana v. Aetna US Healthcare, Inc. and Aetna Life Insurance Company, Civil Action No. 02-236, dated July 9, 2003, dismissing the petitioner's state law claims as preempted under ERISA, is set forth in the Appendix hereto (App. 22-29).

The unpublished opinion of the Court of Appeals for the Fifth Circuit in Bank of Louisiana v. Aetna US Healthcare, Inc. and Aetna Life Insurance Company, Docket No. 04-30986, filed on October 18, 2006, in response to the respondent's petition for rehearing, withdrawing the prior panel opinion and substituting a new opinion qualifying its earlier reversal of the District Court's entry of summary judgment against the petitioner, is set forth in the Appendix hereto (App. 30-44).

Basis for Jurisdiction in this Court.

The final opinion of the United States Court of Appeals for the Fifth Circuit reversing in part the District Court's entry of summary judgment against the petitioner was entered on October 18, 2006 (App. 30).

This petition for writ of certiorari by the Petitioners is filed within ninety (90) days of that date. 28 U.S.C. Section 2101(c).

The jurisdiction of this Court is invoked pursuant to the provisions of 28 U.S.C. Section 1254(1).

Constitutional, Statutory and Rule Provisions
Implicated by This Petition.

United States Constitution, Amendment V:

No person shall...be deprived of life, liberty, or property,
without due process of law....

29 U.S.C. Section 1001(b):

(b) Protection of interstate commerce and beneficiaries by requiring disclosure and reporting, setting standards of conduct, etc., for fiduciaries

It is hereby declared to be the policy of this chapter to protect interstate
commerce and the interests of participants in employee benefit plans
and their beneficiaries, by requiring the disclosure and reporting to
participants and beneficiaries of financial and other information with
respect thereto, by establishing standards of conduct, responsibility, and
obligation for fiduciaries of employee benefit plans, and by providing for
appropriate remedies, sanctions, and ready access to the Federal courts.

29 U.S.C. Section 1002(1) and 21(a):

Definitions
For purposes of this subchapter:
(1) The terms “employee welfare benefit plan” and “welfare plan” mean any
plan, fund, or program which was heretofore or is hereafter established or
maintained by an employer or by an employee organization, or by both, to
the extent that such plan, fund, or program was established or is maintained
for the purpose of providing for its participants or their beneficiaries, through
the purchase of insurance or otherwise,
(A) medical, surgical, or hospital care or benefits, or benefits in the event of
sickness, accident, disability, death or unemployment, or vacation benefits,
apprenticeship or other training programs, or day care centers, scholarship funds,
or prepaid legal services, or
(B) any benefit described in section 186 (c) of this title (other than pensions on
retirement or death, and insurance to provide such pensions).
.............
(21)
(A) Except as otherwise provided in subparagraph (B), a person is a fiduciary
with respect to a plan to the extent
(i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting
management or disposition of its assets,
(ii) he renders investment advice for a fee or other compensation, direct or
indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or
(iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under
section 1105 (c)(1)(B) of this title.

29 U.S.C. Section 1132(a)(1)-(5) (Section 502 of ERISA):

(a) Persons empowered to bring a civil action
A civil action may be brought—
(1) by a participant or beneficiary—
(A) for the relief provided for in subsection (c) of this section, or
(B) 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;
(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate
relief under section 1109 of this title;
(3) by a participant, beneficiary, or fiduciary
(A) to enjoin any act or practice which violates any provision of this subchapter
or the terms of the plan, or
(B) to obtain other appropriate equitable relief
(i) to redress such violations or
(ii) to enforce any provisions of this subchapter or the terms of the plan;
(4) by the Secretary, or by a participant, or beneficiary for appropriate relief
in the case of a violation of 1025(c) of this title;
(5) except as otherwise provided in subsection (b) of this section, by the Secretary
(A) to enjoin any act or practice which violates any provision of this subchapter, or
(B) to obtain other appropriate equitable relief
(i) to redress such violation or
(ii) to enforce any provision of this subchapter....

29 U.S.C. Section 1144 (Section 514 of ERISA):

(a) Supersedure; effective date
Except as provided in subsection (b) of this section, the provisions of this
subchapter and subchapter III of this chapter shall supersede any and all State
laws insofar as they may now or hereafter relate to any employee benefit plan
described in section 1003 (a) of this title and not exempt under section 1003 (b)
of this title. This section shall take effect on January 1, 1975.
(b) Construction and application
........
(2)(A) Except as provided in subparagraph (B), nothing in this subchapter
shall be construed to exempt or relieve any person from any law of any State
which regulates insurance, banking, or securities.
(B) Neither an employee benefit plan described in section 1003 (a) of this title,
which is not exempt under section 1003 (b) of this title (other than a plan
established primarily for the purpose of providing death benefits), nor any
trust established under such a plan, shall be deemed to be an insurance
company or other insurer, bank, trust company, or investment company or
to be engaged in the business of insurance or banking for purposes of any law
of any State purporting to regulate insurance companies, insurance contracts,
banks, trust companies, or investment companies.

Louisiana Rev. Stat. 22:657(A):

All claims arising under the terms of health and accident contracts issued in
this state, except [accidental death claims], shall be paid not more than thirty
days from the date upon which written notice and proof of claim, in the form
required by the terms of the policy, are furnished to the insurer unless just and
reasonable grounds, such as would put a reasonable and prudent businessman
on guard, exist....Failure to comply with the provisions of this Section shall
subject the insurer to a penalty payable to the insured of double the amount
of the accident and health benefits due under the terms of the policy or contract
during the period of delay, together with attorney's fees to be determined by the
court....

Louisiana Rev. Stat. 22:658(A)(1) & (B)(1):

A. (1) All insurers issuing any type of contract, other than those specified in
R.S. 22:656, 22:657..., shall pay the amount of any claim due any insured
within thirty days after receipt of satisfactory proofs of loss from the insured
or any party in interest....
....
B. (1) Failure to make such payment within thirty days after receipt of such
satisfactory proofs...shall subject the insurer to a penalty, in addition to the
amount of the loss, of fifty percent damages on the amount found to be due
from the insurer to the insured, or one thousand dollars, whichever is greater, payable to the insured, or to any of said employees, or in the event a partial
payment or tender has been made, fifty percent of the difference between the
amount paid or tendered and the amount found to be due as well as reasonable
attorney's fees and costs....

Statement of the Case.

In 1995, the petitioner Bank of Louisiana (“the petitioner” or “BOL”) fully self funded its employee health insurance plan, either by setting aside funds to satisfy potential claims against the plan or by paying benefits to plan participants out of BOL's general accounts. In order to reduce the risk of substantial financial loss which attends the self-funding of a health insurance plan for its employees, the petitioner purchased from the respondent Aetna Life Insurance Company, later the respondent Aetna US Healthcare, Inc. (“the respondent” or “Aetna”), a form of reinsurance known as stop-loss insurance.

Stop-loss insurance is a way for an employer who self funds a health or other welfare plan for its employees to insure against the risk of excessive payouts and to limit its consequent liability. It also levels out the peaks and valleys of the loss experience and thereby helps to stabilize costs. The stop-loss contract specifies an effective date, a so-called “run-in” period immediately prior to the effective date when claims can be covered and a so-called “run-out” or “run-off”period immediately after the plan period when claims can be covered. Coverage may begin once an individual claim surpasses a high deductible called the individual stop-loss amount; or when year-to-date aggregate claims surpass a pre-negotiated amount, usually 125 percent of actuarially derived expected losses in aggregate for the plan year, called the aggregate stop-loss amount.

When the petitioner purchased stop-loss insurance from Aetna in January of 1995, it agreed to be responsible for the first $50,000 of health-care costs incurred by any individual employee during the calendar year with Aetna being responsible for any claims which exceeded this amount for any individual employee in a calendar year. In addition, BOL was responsible for a sum certain in aggregate claims for the calendar year with Aetna being responsible for any claims beyond this aggregate amount. Finally, it was agreed that Aetna would administer BOL's self-funded employee benefit plan pursuant to an administrative services contract..

In the summer of 2000, Aetna announced that it would no longer provide stop-loss insurance for the petitioner and it encouraged BOL to cease self funding its employee benefit plan and instead purchase a fully insured benefit plan from Aetna for the year 2001, a purchase which BOL decided to make. In the meantime, by November of 2000, BOL had reached its aggregate stop-loss limit in claims and consistent with the stop-loss insurance it had purchased from Aetna, Aetna was responsible for any claims beyond this amount incurred in the year 2000.

Because claims incurred in 2000 but not presented for payment until 2001 were not covered by BOL's stop-loss insurance with Aetna and in order to have Aetna pay those claims even though not presented until 2001, the petitioner on December 1, 2000, paid Aetna a premium of $36,132.78 to purchase a “tail” to its stop-loss policy and thereby obligate Aetna to pay “run-out” claims under the 2000 plan for three months after the 2000 stop-loss insurance expired on December 31, 2000.

On December 28, 2000, Aetna's Account Manager (Ms. Stacy McMahon) then warranted the petitioner in writing that BOL would have no further exposure for claims originating in the year 2000 if it purchased this “tail” coverage from Aetna . In her letter responding to the petitioner's request for written affirmation of the scope of such coverage, she wrote BOL:

[p]er your request, this is confirmation that the Bank of Louisiana
met the Aggregate Stop Loss limit for the 2000 contract year.
According to your contract with us, the bank will have no additional
claim liability for 2000 and no additional fund transfers will be
requested. Beginning January 1, 2001, your runoff [“run-out”]
period will begin, at which time the monthly budgeting feature
will no longer exist. We will start wiring your account for claims
paid during the runoff period and you will be reimbursed at year end.

(emphasis supplied).

As an accommodation by BOL and based upon its understanding that it would be reimbursed for all these monies at the end of 2001 consistent with Ms. McMahon's representations, Aetna was allowed to draft the petitioner's account during 2001 in the amount of $271,628.38 for 2000 claims submitted during the three-month run-out period, some of which were paid by Aetna during the run-out period and some of which were paid by Aetna after the three-month run-out period had expired. For example, one claim drafted by Aetna from the petitioner's account on August 3, 2001, for $162,347.49 was based on costs incurred by BOL employee Roberta Swanson who died on January 6, 2001. Her costs were submitted to Aetna for payment on January 20, 2001, well within the “run-out” period. Yet Aetna delayed drafting BOL's account for this $162,347.49 until August 3, 2001.

At the end of the calendar year 2001, the petitioner requested Aetna to reimburse it for all the claims paid as required by the stop-loss insurance extension coverage or “tail,” as represented in McMahon's letter of December 28, 2000, i.e., in the total amount of $271,628.38. Aetna refused to reimburse the petitioner this sum of $271,628.38 contending in part that this “tail” coverage extended only to claims actually paid during the three-month “run-out” period ending March 31, 2001, and that most of the claims comprising this sum of $271,628.38, including $162,347.49 for Ms. Swanson, were not paid during this run-out period.

In the wake of Aetna's refusal to live up to its obligations under its stop-loss insurance extension agreement to reimburse fully BOL for the $271,628.38 in claims paid, the petitioner brought this civil action based on diversity of citizenship in the federal district court for the Eastern District of Louisiana against Aetna seeking $271,628.38, interest from January 1, 2000, “and for all general and equitable relief.” Besides relying upon the facts described herein, BOL alleged that all of the claims for benefits for which Aetna drafted its account in 2001 were submitted by the health care providers in time to have been paid by Aetna during the three-month run-out period; and that to the extent that the condition of payment during the run-out period was not fulfilled, Aetna caused the nonfulfillment by unduly delaying the payment of claims .

BOL's complaint contained four separate counts and four separate theories of recovery under state law. The first count sought the recovery of damages in the amount of $271,628.38 and alleged that Aetna had misrepresented the scope of coverage under the stop-loss insurance extension or “tail” which it purchased from Aetna for $36,132.78. The second count claimed it was entitled to damages because it detrimentally relied on Aetna's representations about the benefits and rights under the existing stop-loss insurance policy as well as the fully-insured coverage which it purchased from Aetna on January 1, 2001.

A third count sought damages for Aetna's breach of contract when it failed to reimburse the petitioner for all claims which were paid or which should have been paid during the three-month “run-out” period, all as required by McMahon's letter of December 28, 2000. Finally, BOL claimed in a fourth count that it was entitled to recover $271,628.38 in damages because Aetna breached its fiduciary duties in administering BOL's employee benefit plan when it “delay[ed] the processing of claims in a manner which would take the claim outside of the run-off period.”

Following Aetna's answer and discovery, BOL moved for summary judgment contending that as a matter of law Aetna was liable under state law principles of breach of contract, misrepresentation and estoppel for refusing to perform under the stop-loss extension insurance agreement which BOL purchased for $36,132.78 and for refusing to reimburse BOL $271,628.38 at the end of 2001 for claims submitted during the three-month run-out period arising from medical services and costs incurred by BOL's employees during 2000. Aetna argued that all of BOL's state law claims for relief were preempted by the Employee Retirement Income Security Act, 29 U.S.C. Section 1001 et seq. (“ERISA”).

On July 9, 2003, the federal district court, Berrigan, J., issued an order dismissing all of the petitioner's claims against Aetna as preempted by ERISA (App. 22-29). Mistakenly treating this fully self-funded employee benefit plan of BOL as a fully insured employee benefit plan under ERISA and then characterizing the stop-loss insurance coverage which BOL purchased from Aetna as itself a covered “plan” within ERISA, she concluded that all of BOL's state law claims “relate to” a covered employee benefit plan for purposes of ERISA's general preemption clause contained in 29 U.S.C. Section 1144 (Section 514 of ERISA)(App. 24-25).

The district judge erroneously found that all of BOL's claims address an area of exclusive federal concern and directly affect the relationship between traditional ERISA entities, i.e., the employer, the plan and its fiduciaries:

The parties are two traditional ERISA entities: the employer and the
plan provider. The claims all pertain to the terms of the ERISA-governed
plan and will require the examination of plan terms. Such plan interpretation
has been found to be sufficient to warrant ERISA preemption.

(App. 24)(citations omitted). Additionally, the district court did not believe that BOL's new claim under La. Rev. St. Section 22:657 (penalizing an insurer by doubling the amount of benefits due and awarding attorney's fees for its unreasonable delay in paying a claim), could avoid preemption since it creates an alternative remedy that is not authorized under ERISA's civil enforcement scheme (App. 25-27).

The district judge dismissed BOL's state law claims for misrepresentation, detrimental reliance and violation of La. Rev. St. Section 22:657, as preempted by ERISA (App. 27). BOL's other claims for breach of contract, violations of La. Rev. St. Section 22:658, and breach of fiduciary duty were dismissed as abandoned(App. 27). These rulings were postponed for ten days in order to allow BOL to amend its complaint(App. 27-28). BOL did so on July 22, 2003, adding claims against Aetna for breach of ERISA fiduciary duty and seeking in a separate count “equitable relief under ERISA” pursuant to 29 U.S. C. Sections 1109 and 1132(a)(3).

On September 8, 2004, the same district judge denied BOL's motion for declaratory relief and granted Aetna 's motion for summary judgment on BOL's new claims (App. 16-21). Reaffirming its earlier dismissal of all of the petitioner's state law claims because of ERISA preemption, the district court noted BOL's acknowledgment that it was seeking legal relief in this suit, i.e., the award of compensatory damages against Aetna for breaching its contractual obligation to pay money(App. 18;19). However, the district judge ruled that since Section 502 of ERISA (29 U.S.C. Section 1132(a)(3)) provides only equitable— not legal—relief, the petitioner's claims must be dismissed (App. 18-20).

BOL appealed both of these decisions by Judge Berrigan. On August 4, 2006, the court of appeals for the Fifth Circuit reversed the district judge's summary dismissal of BOL's state law claims for misrepresentation, detrimental reliance and breach of contract and remanded the matter to the district court for further proceedings. In so ruling, the court of appeals found that BOL had abandoned any claim that Aetna had breached its fiduciary duty as plan administrator in delaying the payment of health care benefits, a waiver which also caused its claim for attorney's fees under La. Rev. St. Section 22:657 to fail (App. 4;11-12).

The gist of its ruling was that BOL's proof in support of its state law claims will not invade ERISA's exclusive area of federal concern since BOL can recover on these claims by showing simply that Aetna drafted its account during the three-month stop-loss extension period rather than by showing that Aetna delayed processing these claims as a plan administrator, this latter evidentiary showing too invasive of the ERISA relationship to avoid preemption (App. 6-7).

Moreover, the court of appeals determined that Aetna was acting as a vendor of insurance--- not as an ERISA plan fiduciary----when it negotiated with BOL over which claims would be covered by the stop-loss insurance extension (App. 8). In addition,

[t]he duties that Aetna has allegedly breached in negotiating the
stop-loss policy were owed to the Bank, the benefits of stop-loss
insurance inure solely to the Bank, and Aetna cites no evidence that
the stop-loss policy is a plan asset or was purchased with plan assets.

(App. 8). Finally, the court concluded that an insurance company selling stop-loss insurance for an ERISA plan is not necessarily a plan fiduciary and should not be regulated by ERISA (App. 8-9).

Aetna sought rehearing. On October 18, 2006, the court filed a substitute opinion (App.30-44). It ruled that even though Aetna was providing stop-loss insurance to BOL—not a traditional ERISA-type employee benefit, to the extent that BOL had to prove for its breach of contract claim that Aetna in violation of its duty under the stop-loss extension agreement had improperly delayed processing and paying benefit claims under this self funded plan, it was inquiring into an area of exclusive federal concern and was therefore preempted by ERISA (App.35-36). Moreover, it ruled that the only claim of BOL which implicates Aetna's role as an ERISA fiduciary is this one for breach of contract seeking reimbursement for those benefit claims which Aetna delayed processing and paying during the three-month “run-out” period (App. 37-38).

Because Aetna had established an ERISA preemption defense for this breach of contract claim, the panel remanded the case to the district court for trial on BOL's claims of detrimental reliance, misrepresentation and its breach of contract claim based upon Aetna's failure to reimburse BOL for benefit claims which were actually paid during the three-month “run-out” period (App. 38-39).

BOL has now brought to this Court its petition seeking a writ of certiorari to the United States Court of Appeals for the Fifth Circuit.

Argument Supporting Allowance of the Writ.

1. There Is A Split of Opinion Among the Federal Courts About Whether State Law Claims Seeking To Enforce A Stop-Loss Insurance Agreement For A Self Funded Employee Benefit Plan Are Preempted Under ERISA And This Court Should Resolve
The Controversy, Find No Preemption Under ERISA And Thereby Provide Small and Medium-Size Businesses Like The Petitioner With The Actual Insurance Protection Against Catastrophic Losses They Purchased For Their Self Funded Plans.

When Congress enacted ERISA in 1974, it decided to insure uniformity in employee benefit plan regulation and avoid conflicting and overlapping State regulation by providing in 29 U.S.C. Section 1144(a), that “the provisions of this subchapter and subchapter III of this chapter shall supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan....”(emphasis supplied). This language has been broadly interpreted by this Court to displace any State law or State common law causes of action which “relate[] to” a benefit plan within ERISA's ambit. FMC Corp. Holliday, 498 U.S. 52, 58(1990). Shaw v. Delta Airlines, Inc., 463 U.S. 85, 98(1983).

While ERISA's preemptive sweep is expansive, the Savings Clause contained in 29 U.S.C. Section 1144(b)(2)(A)( “...nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance....”), is stated almost as broadly. Yet this Court has construed this language to apply only to state laws regulating core insurance issues, i.e., only those state laws which involve contractual arrangements for protecting against financial loss through spreading a policyholder's risk, affect an integral part of the policy relationship or address only entities within the insurance industry itself. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739-743(1985). Thus only a claim based on state law regulating the core business of insurance as defined in Metropolitan's three-part test is “saved” from preemption by virtue of the Savings Clause of Section 1144(b)(2)(A), even if it “relates to” an employee benefit plan within the meaning of Section 1144(a).

This law favoring broad ERISA preemption has consistently thwarted State attempts to regulate or reform welfare benefit plans; and because ERISA itself brings little substantive regulation to bear upon such plans, it has “left a sizable regulatory void within which employers are virtually free to create and administer their welfare plans as they see fit.” T. Paredes, Stop-loss Insurance, State Regulation, and ERISA: Defining the Scope of Federal Preemption, 34 Harv. Jour. of Leg.233, 239(1997). Coupled with the emergent trend of more and more small to mid-size businesses choosing to self fund their employee benefit plans and then buy stop-loss insurance to minimize any catastrophic losses, the regulatory vacuum attendant to these plans is of growing concern to State regulators, plan sponsors and the public in general.

The present controversy typifies the problem of no oversight and no legal consequences for stop-loss insurance providers of self funded benefit plans. The petitioner paid Aetna $36,132.78 to purchase a “tail” to its stop-loss policy for its fully self funded plan and thereby obligated Aetna to pay “run-out” claims under the 2000 plan for three months after the 2000 stop-loss insurance expired on December 31, 2000. Instead of drafting BOL's account within the “run out” period for the claims, as it should have, Aetna delayed for months and then claimed that no reimbursement to BOL was due since the claims were not paid during the “run-out” period. The decision below determines that BOL's state law breach of contract claim against Aetna is preempted to the extent that it relies on Aetna's delay in processing these claims, the very heart of Aetna 's bad faith breaching conduct, because such proof would touch on a traditional ERISA activity, the payment of claims by the plan administrator.

Yet this is a fully self funded plan by BOL; Aetna's administration of the plan is by contract with BOL, not because Aetna is the plan sponsor. Moreover, the stop-loss insurance arrangement, exemplified by Ms. McMahon's letter, is purely contractual. Neither the “tail” extension of the stop-loss coverage nor the promise to reimburse by Aetna has anything to do with processing claims of beneficiaries to the plan, the fiduciary duties of administrators to beneficiaries or the plan's language, terms or benefits. There were no breaches of fiduciary duty here, just breaches of contract by Aetna .

BOL's proof of Aetna 's breach of contract under state law should be unimpeded by ERISA preemption and the lower court was wrong to rule otherwise.

This Court has yet to rule on what effect the purchase of stop-loss insurance has on the status of a fully self funded employee welfare plan. In the absence of any definitive ruling by this Court, the lower federal courts have come to divergent opinions about whether state law claims seeking to enforce a stop-loss insurance agreement for a self funded employee benefit plan are preempted under ERISA.

Some courts conclude that state law claims against the stop-loss insurance carrier for breach of the insurer's duties under the stop-loss agreement do not implicate any regulation of the ERISA plan, do not involve a plan fiduciary, would leave the employer without a remedy against an entity with no authority to approve or deny employee claims for benefits and therefore are not preempted by ERISA. Geweke Ford v. St. Joseph's Omni Pref. Care, Inc., 130 F.3d 1355, 1359-1360(9 th Cir. 1997). Northern Group Servs., Inc. v. Automobile Owners Ins. Co. , 833 F.2d 85, 91(6th Cir. 1987). Seneca Beverage Corp. v. Healthnow of New York , 383 F. Supp.2d 413, 423(W.D.N.Y.2005). Northern Kare Facilities v. Benefirst, LLC, 344 F. Supp. 2d 283, 286-289(D. Mass. 2004). Workforce Development v. Corporate Ben. Services, 316 F. Supp.2d 854, 858(D. Minn. 2004). Computer Aided Design Systems v. Safeco Life Ins., 235 F. Supp. 2d 1052, 1057(S.D. Iowa 2002). Strategic Outsourcing, Inc. v. Commerce Benefits Group Agency, Inc., 54 F. Supp. 2d 566, 573(W.D.N.C. 1999). Union Health Care, Inc. v. John Alden Life Ins. Co., 908 F. Supp. 429, 431(S.D. Miss. 1995).

Besides the Fifth Circuit Court of Appeals in this case, other federal courts have held that the purchase of stop-loss insurance does not convert a fully self funded employee benefit plan into an “insured” one which would avoid ERISA preemption and therefore all state law claims attending performance of the stop-loss agreement are preempted under ERISA. Bill Gray Enterprises, Inc. Emp. H. & W. v. Gourley, 248 F.3d 206, 213-214(3rd Cir.2001). Tri-State Mach., Inc. v. Nationwide Life Ins. Co., 33 F.3d 309, 315(4th Cir. 1994). Thompson v. Talquin Bldg. Products Co., 928 F.2d 649, 653(4th Cir. 1991).

In order to remedy this confusion among the federal courts about whether claims such as those BOL has made against Aetna here for breach of contract are preempted, this Court should grant the petition and harmonize these disparate decisions, especially given the increasing number of small to mid-size businesses which have chosen to self fund their employee welfare plan and then purchase stop-loss insurance coverage in order to avoid catastrophic losses. A decision rejecting preemption should ensue given the basic principles of insurance and contract law, the substance and function of stop-loss insurance and the fact that employers like BOL who purchase such insurance deserve meaningful remedies under state law when the insurer fails to live up to its promises.

2. This Court Should Construe ERISA's Remedies To Include The Award Of Compensatory Damages As Restitution For An Employer When Its Stop-Loss Insurer Fails To Live Up To Its Promises Contained In The Stop-Loss Insurance Agreement.

In Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210-215(2002), and Mertens v. Hewitt Associates, 508 U.S. 248, 360-261 (1993), this Court decided that the “equitable” remedies expressly provided an ERISA participant or beneficiary do not include the payment of money as restitution. Id.

In a dissenting opinion in Great West Life, 534 U.S. at 224-234, and a concurring opinion in Aetna Health Inc. v. Davila, 542 U.S. 200, 222-224(2004), Justice Ginsburg has suggested that Congress intended that ERISA replicate the core principles of trust remedy law, including the make-whole standard of trust restitution which includes money damages. Id . In addition, Justice Scalia, concurring with Justice Ginsburg in California Div. of Labor Stand. Enf. v. Dillingham Construction, N.A., Inc., 519 U.S. 316 (1997), has indicated a willingness to reassess anew the entire issue of ERISA preemption.

The gaps in ERISA's statutory law are apparent and it is now appropriate for this Court to develop new federal common law in order to allow for an award of compensatory damages to an employer when its stop-loss insurance carrier through malfeasance, negligence or deliberate choice breaches the stop-loss insurance agreement to reimburse the employer for the employee benefit claims it paid during the stop-loss period. See, e.g., Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110(1989); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. at 56.

Conclusion.

For all of the reasons identified herein, a writ of certiorari should issue to the United States Court of Appeals for the Fifth Circuit in order to review its decision and, ultimately, to determine that the resort to stop-loss insurance for self funded employee benefit plans does not invoke ERISA preemption and that even if ERISA relationships are implicated, state law claims arising from the insurer's breach of the stop-loss insurance contract invoke legal remedies including the award of compensatory damages; or to declare that the district court possesses the jurisdiction to determine all of the petitioner's claims under state law as stated in its original complaint; or to provide BOL with such other relief as is fair and just in the circumstances.

Respectfully submitted,