Health Plan Participant's Emotional Distress Charge Preempted by ERISA

June 17, 2009 (PLANSPONSOR.com) - The U.S. District Court for the District of New Hampshire has dismissed an employee's charge that her employer negligently inflicted emotional distress on her by long delays and not responding to her inquiries when processing her medical claims.

The court pointed out that both parties agreed that Louise Polley's Harvard Pilgrim Health Care Inc. medical benefits were provided under an Employee Retirement Income Security Act (ERISA) plan. "ERISA preempts all state laws that 'relate to' employee welfare benefit plans," Chief Judge Steven J. McAuliffe wrote in the court opinion. He rejected Polley's argument that she was not claiming a loss of benefits, but was asserting that Harvard Pilgrim knew or should have known she was emotionally vulnerable and its handling of her claims would make her condition worse.

According to the opinion, Polley sued Harvard Pilgrim in state court for negligent infliction of emotional distress. After Harvard Pilgrim removed the case to the federal court and moved for judgment on the pleadings, Polley filed an amended complaint in which she re-asserted her claim for negligent infliction of emotional distress and made a second claim, asserting an ERISA violation. However, McAuliffe noted that because Harvard Pilgrim's motion for judgment on the pleadings was filed before Polley's amended complaint, it addresses only the emotional distress claim.

The district court also dismissed Polley's claims that Harvard Pilgrim negligently inflicted emotional distress by committing a "series of egregious acts" in its handling of the circumstances surrounding her separation from employment, and the payment she was due under the settlement of her workers' compensation claim, saying they are barred by the exclusive-remedy provision of the Workers' Compensation Law. "Because Polley's workers' compensation claim, as characterized in the settlement agreement, sought recovery for injuries resulting from her discharge, she is barred from seeking such damages in this action," McAuliffe wrote.

Polley worked for Harvard Pilgrim until July of 2005, when she suffered a nervous breakdown due to work-related stress and took a medical leave of absence. During her leave of absence, which ended with her discharge in December of 2005, Polley applied for short-term disability benefits through Harvard Pilgrim's employee-benefit program. The program administrator told her to apply for workers' compensation benefits, but her claim was denied.

After the Workers' Compensation Division of the New Hampshire Department of Labor also denied her claim, Polley filed an appeal. Harvard Pilgrim and its workers' compensation insurer agreed to pay her $52,000 to settle her claim. Polley claimed that the three-month delay in receiving her settlement as well as delays in her attempts to access medical and prescription benefits provided by Harvard Pilgrim "caused her financial worry, further shame, distrust, a worsening of her medical condition, and other damages."

The case is Polley v. Harvard Pilgrim Health Care, D.N.H., No. 08-cv-392-SM.

Rebecca Moore
editors@plansponsor.com