ERISA Preemption Debate Continues in Keystone State

September 20, 2002 ( - The issue of ERISA preemption is still in active debate in courts as judges in the Eastern District of Pennsylvania continue to weigh its impact on the state's bad-faith statute.

A Legal Intelligencer story said it is still unclear whether the US 3rd Circuit Court of Appeals will take up the issue or let it percolate a while — or if the conflict in the Eastern District will simply resolve itself.
The flurry of activity began in July when Senior US District Judge Clarence Newcomer handed down Rosenbaum v. UNUM Life Insurance Co. — a decision that pleased plaintiffs’ lawyers because it held that ERISA does not pre-empt a bad-faith claim.
New Trend?

Newcomer found that two recent decisions from the US Supreme Court had effectively set a “new trend in the federal law” that called for a more liberal application of ERISA’s “savings clause,” which exempts a law from pre-emption if it “regulates insurance.” (see  Federal Judges Disagree on ERISA Pre-Emption
In August fellow jurist US District Ronald Buckwalter handed down Sprecher v. Aetna US Healthcare. There Buckwalter found that even if Pennsylvania’s bad-faith statute qualified for the savings clause, it was nonetheless pre-empted because it adds to ERISA’s carefully limited list of allowable remedies (see  Federal Judges Disagree on ERISA Pre-Emption ).
Earlier this month US District Judge Harvey Bartle III handed down Kirkhuff v. Lincoln Technical Institute, a decision that aligned itself with Buckwalter.  In Kirkhuff, the court found that since Pennsylvania’s bad-faith law allows plaintiffs to pursue punitive damages, it “conflicts with the carefully crafted and exclusive remedial scheme of ERISA and is pre-empted.”
More Support

Now two more Eastern District judges — Jay Waldman and Michael Baylson — have jumped into the middle of this legal fray with opinions essentially adopting Buckwalter’s view.
Baylson, in Bell v. UNUM Provident Corp., found that the bad-faith claim does not qualify for the savings clause.
In the meantime, the plaintiffs’ lawyers in the cases before Buckwalter and Bartle have asked the two jurists to OK an immediate appeal to the 3rd Circuit. A 3rd Circuit decision would settle the issue for future cases in federal courts in the Pennsylvania-New Jersey area and would be considered advisory for federal trial courts in other areas of the country.