Guest Article

ERISA's Reach Limited to United States, so Canadian's State Law Claims Against ERISA Plan Stand

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Summary: Because ERISA's preemptive scope did not extend outside of the United States, a federal district court ruled that a Canadian physician who treated an American citizen in Canada could pursue state law misrepresentation claims against a Pennsylvania-based group health plan.

(Oct. 19, 2000) - ERISA has no specific language indicating that its reach extends outside the United States, a federal district court in Pennsylvania determined. Therefore, the court found that ERISA did not apply to state law claims against an ERISA plan which involved disputed claims for surgery performed by a Canadian doctor on an American citizen in Canada. The case is Maurais v. Snyder, 2000 U.S. Dist. LEXIS 13818 (E.D. Penn., Sept. 14, 2000).

Facts of the Case

Canadian doctor Gilles Maurais sued Guardian Life Ins. Co., a group health plan issuer, for Pennsylvania state-law claims of implied contact and negligent misrepresentation. The claims were related to medical care he provided to an American citizen who was in Canada. Maurais alleged that an implied agreement existed that the insurer would pay him for his medical services, and that he reasonably relied to his detriment on Guardian's representation. Guardian argued that Maurais' claims were preempted by ERISA and should be dismissed.

Did ERISA Apply?

The court indicated that the first matter to address was whether ERISA applied at all to the case. Specifically, because a Canadian doctor performed the surgery on an American citizen in Canada, the court had to resolve whether ERISA has extraterritorial application. In doing so, the court looked to the U.S. Supreme Court decision in EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991) for guidance.

In Arabian, the Supreme Court held that Congress did not intend for "Title VII" to apply aboard. (The exact statute was not noted in the opinion, although the court is probably referring to the Civil Rights Act.) The Court determined that while Congress has the general authority to enforce its laws beyond the territorial boundaries of the United States, the question in each case is one of statutory construction. Namely, the issue is whether the language in the law specifically indicates that Congress intended the law to apply to "places over which the United States has sovereignty or has some measure of legislative control." If not, it is presumed that the law is primarily concerned with "domestic conditions."

In analyzing ERISA, the Maurais court concluded that no language exists that "evinces a clearly expressed intent on behalf of Congress to legislate extraterritorially."

Guardian countered that ERISA is a "comprehensive" statute. Therefore, it applied to the case because the Guardian plan is an ERISA employee benefit plan that was established and maintained in the United States by Snyder's employer, which is engaged in commerce.

However, the court noted that the Arabian decision rejected a similar attempt to rely on Title VII's "broad jurisdictional language" to extend its protections anywhere in the world. The Supreme Court stated that the presumption against extraterritorial application controls and without statutory language indicating otherwise, Title VII did not apply extraterritorially.

The Maurais court found more support for this reasoning in McCullough v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10 (1963). In that case, the Supreme Court refused to find a congressional intent to apply the National Labor Relations Act due to the lack of specific statutory language on that point. The Maurais court further pointed out that McCullough involved a damages action by a United States citizen employed on a United States railroad who suffered fatal injuries while in Canada. Similarly, the Maurais case involved an American citizen who suffered severe injuries in Canada while covered by an American insurance plan, according to the court.

Accordingly, the court held that, based upon the Arabian case, ERISA has no specific language indicating that it apply extraterritorially; therefore, it did not apply to the case. The court then denied Guardian's motion to dismiss the case on the ground of ERISA preemption.

Implications

One issue raised by the case but not addressed directly is the distinction between a state-law claim in the United States and a provincial law in Canada. The former claim is being asserted in this case, not the latter. It would seem clearer that preemption would not apply to provincial law. But it is not so clear that ERISA would not preempt a state law claim in the United States when that claim is brought by a Canadian for services provided outside the United States. The claim is still a U.S.-based state law claim.

Excerpted from the December 2000 supplement to Employer's Guide to Self-Insuring Health Benefits, ©Thompson Publishing Group, Inc., 2000. All rights reserved.

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