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A Louisiana anti-subrogation statute is completely preempted by the federal Employee Retirement Income Security Act, the Fifth U.S. Circuit Court of Appeals has ruled.

And if a state-law claim is completely preempted under ERISA Section 502(a), it can be removed to federal court, Chief Judge Carolyn Dineen King wrote for the full 15-member court in Arana v. Ochsner Health Plan (01-30922).

After Julio C. Arana was injured in a car crash, his mother's employer-sponsored health plan, Ochsner Health Plan, paid some $180,000 in benefits.

He didn't notify OHP he settled tort claims with three other insurance companies, although the plan required him to do so.

OHP claimed a right of subrogation to $150,000 of the settlement proceeds being held in his attorney's trust fund account, and Arana sued in state court seeking a declaratory judgment that Louisiana law protected the settlement.

The statute says "no group policy of accident, health or hospitalization insurance . . . shall be issued by any insurer doing business in this state which . . . excludes or reduces the payment of benefits to or on behalf of an insured by reason of the fact that benefits have been paid" under any other contract covering the same period.

OHP got the case removed to federal court, where a judge ruled ERISA gave it jurisdiction.

Arana appealed, arguing his claims were not completely preempted by ERISA, and a three-judge panel of the Fifth Circuit agreed.

But OHP successfully petitioned for the case to be reheard by a full Fifth Circuit, which reversed the ruling and remanded Arana's case to the federal district court to address the merits of his claims.
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Publication:Liability & Insurance Week
Date:Aug 25, 2003

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