In Aetna v. Davila, together with CIGNA vs. Calad, the United States Supreme Court reached a unanimous landmark decision that a state law cause of action for wrongful denial of benefits, such as one brought under the Texas Health Care Liability Act (commonly referred to as "S.B.386" passed by the Texas legislature in 1997), is completely pre-empted by ERISA and removable to federal court. The Court's decision reversed the Fifth Circuit's decision that the plaintiff's claims were not preempted by ERISA because the petitioners were being sued for mixed eligibility and treatment decisions that were not fiduciary in nature and because S.B. 386 creates a tort cause of action that is not duplicative of ERISA's breach of contract remedies. The Court held that the claims did not allege any violation of a legal duty independent of ERISA and thus were completely preempted by ERISA. Further, it held that this result was not altered by whether the suit is brought as a contract or tort claim, or whether a coverage decision is "infused with medical judgment." The Court distinguished the 2000 Pegram holding, where the Court held that a "mixed" eligibility and treatment decision made by an HMO acting through a physician owner who was also the plaintiff's treating physician is not a fiduciary act within the meaning of ERISA and therefore not preempted, by emphasizing that the coverage decisions in this case were pure eligibility decisions. Davila and Pegram read together should, therefore, stand for that proposition that whether or not a denial of benefits case will be preempted by ERISA depends in part on who makes the coverage decision.
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