In Milby v. MCMC LLC, No. 16-5483, 2016 U.S. App. LEXIS 23112 (6th Cir. Dec. 22, 2016), the Sixth Circuit Court of Appeals held that a negligence per se claim against a medical records reviewer based on a claim of practicing medicine without a license was completely preempted by ERISA.

Samantha Milby worked as a nurse at the University of Louisville Hospital and was covered by a long-term disability insurance policy through that employment. In April 2011, she applied for and received disability benefits through her insurance policy for approximately 17 months based on her claim that she could no longer work for health reasons. During the claim, the plan hired MCMC, a Massachusetts-based third-party reviewer, to review Milby’s medical records and provide an opinion on whether the medical evidence she and her doctors had provided supported her claimed work restrictions. MCMC and its agent, neither of whom were licensed to practice medicine in Kentucky, opined that Milby’s treating physicians had not provided objective findings “which would support her inability to stand and move for more than just a few minutes, as well as repetitively bend, squat, kneel, and crouch.” MCMC’s eventual opinion was that Milby would have the capacity to perform sustained full time work without restrictions as of February 23, 2013, and, based in part on that recommendation, the plan terminated Milby’s benefits effective February 21, 2013.

Milby eventually filed two separate lawsuits regarding the claim denial, one against her disability insurance provider and this one, alleging a state-law claim of negligence per se against MCMC based on her claim that it was practicing medicine in Kentucky without the appropriate licenses. MCMC removed the case to federal court based on complete preemption under ERISA. The trial court denied Milby’s motion to remand the case to state court and granted MCMC’s motion to dismiss under Fed R. Civ. P. 12(b)(6) and Milby appealed.

In its review, the appeals court had to determine whether or not the claims were preempted under ERISA, and did so by applying the test set out by the Supreme Court in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), which held that a claim falls in the category of complete preemption under ERISA section 1132(a) when it  satisfies both prongs of the following test: (1) the plaintiff complains about the denial of benefits to which she is entitled only because of the terms of an ERISA-regulated employee benefit plan; and (2) the plaintiff does not allege the violation of any legal duty (state or federal) independent of ERISA or the plan terms.

As to the first prong, the court opined that a claim “likely falls within the scope of §1132(a) when the only action complained of is a refusal to provide benefits under an ERISA plan and the only relationship between the plaintiff and defendant is based on the plan” and determined that since MCMC’s conduct was indisputably part of the process used to assess Milby’s claim for benefits, the negligence claim was actually an alternative enforcement mechanism to ERISA’s civil enforcement provisions.

As to the second prong, the court looked to Kentucky law to determine whether MCMC owed an independent legal duty to Milby separate from ERISA or the Plan’s terms. Milby argued that the medical reviewers owed her an independent duty under Ky. Rev. Stat. § 311.560, which prohibits the practice of medicine without a license. The statute defined the practice of medicine as “the diagnosis, treatment, or correction of any and all human conditions, ailments, diseases, injuries, or infirmities by any and all means, methods, devices, or instrumentalities.” Based on a previous Sixth Circuit case that had determined that simply reviewing medical files was not the practice of medicine under Kentucky law because, among other things, it did not involve making determinations regarding the medical necessity of any treatment, the court held that MCMC was not practicing medicine within the meaning of the Kentucky licensing law and therefore did not owe an independent duty to Milby under the statute she attempted to invoke. It held instead that the allegations in Milby’s complaint implicitly relied on ERISA to establish the duty required for her negligence claim, thereby satisfying the second prong of the Davila test. As such, the appellate court affirmed the district court’s dismissal because the state-law negligence claim fit in the category of claims that are completely preempted by ERISA.

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