Noetzel v. Hmsa: Is Hawaii's Anti-subrogation Law Toothless?

• Jurisdiction: Hawaii,United States,Federal
• Citation: Vol. 20 No. 11
• Publication year: 2016

Noetzel v. HMSA: Is Hawaii's Anti-Subrogation Law Toothless?

by Kenji M. Price

Can a car-accident victim who settles a personal injury case in Hawaii use state law to keep her health insurer from reclaiming a portion of the settlement proceeds? In Noetzel v. HMSA, Civ. No. 15-310, 2016 WL 1698264 (D. Haw. Apr. 27, 2016), Judge Susan Oki Mollway dove into the murky waters of ERISA preemption in the wake of the U.S. Supreme Court's decision in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), and decided that such a plaintiff could not, because her state-law claims were preempted by the Employee Retirement Income Security Act of 1974 ("ERISA").

On September 2, 2010, Elizabeth Noetzel suffered injuries to her head, neck, and back from a collision with a large truck. 2016 WL 1698264, at *1. Under the terms of her insurance plan ("Plan"), HMSA—Noetzel's health insurance provider—paid for the cost of her medical treatment. Id. Noetzel sued the driver of the truck who caused her injuries in state court, and the company that employed the driver. Id. The parties settled. Id. After learning about the settlement, HMSA notified Noetzel that it intended to seek reimbursement for the cost of the medical treatment Noetzel received, under the terms of the Plan. Id.

Noetzel responded by suing in state court, asking for a determination that HMSA could not recoup the settlement proceeds. Id. at *2. She claimed that under Hawaii insurance law, HMSA had no right to reimbursement from settlement funds that did not amount to "special damages" recovered during the settlement. Id. HMSA removed the case to federal court, arguing that federal jurisdiction over Noetzel's state-law claims was appropriate because the claims were preempted by ERISA. Id. Noetzel moved to remand the case back to state court. Id. The magistrate judge made findings and recommended that the district court grant the motion. Id.

The District Court's Decision

The District Court rejected the magistrate judge's recommendation, and held that Noetzel's state-law claims were preempted by ERISA §502(a). Id. at *14. Applying the two-step preemption test set forth in Davila,¹ the District Court said that (a) Noetzel could have brought an action to prevent HMSA from obtaining a portion of her settlement proceeds under §502(a), which allows a person in Noetzel's position to bring a lawsuit to "enforce [her] rights under the terms of" an ERISA plan, and (b) HMSA's request for reimbursement did not implicate a legal duty, much less...