This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The plaintiffs, independent contractors working as cable splicers, obtained group health insurance through their employer's plan. The husband later developed colon cancer and submitted a claim for medical expenses. The insurer denied the claim, asserting that the wife misrepresented her employment status and her husband's medical history in the application. The insurer also rescinded coverage and attempted to return the premiums (paras 1-3).
Procedural History
- District Court of Santa Fe County: Granted summary judgment in favor of the defendant, finding that the plaintiffs' state law claims were preempted by ERISA and that no negligence claim was properly pleaded (paras 5-6).
Parties' Submissions
- Plaintiffs-Appellants: Argued that their claims were not preempted by ERISA because they were independent contractors and not participants in the plan. They also contended that they had stated a negligence claim, which should not be preempted (paras 7, 9, and 12).
- Defendant-Appellee: Asserted that the plaintiffs' claims for breach of contract and bad faith were preempted by ERISA, as they related directly to the administration of the employee benefit plan. The defendant also argued that no negligence claim was properly raised in the complaint (paras 5-6, 11-12).
Legal Issues
- Were the plaintiffs' state law claims for breach of contract and bad faith preempted by ERISA?
- Did the plaintiffs properly plead a negligence claim, and if so, was it preempted by ERISA?
Disposition
- The Supreme Court of New Mexico affirmed the district court's decision, holding that the plaintiffs' claims were preempted by ERISA and that no negligence claim was properly pleaded (paras 7, 12, and 16).
Reasons
Per Baca J. (Ransom and Montgomery JJ. concurring):
The court held that the plaintiffs' claims for breach of contract and bad faith were preempted by ERISA because they directly related to the administration of the employee benefit plan. The claims sought benefits under the plan and damages for its administration, which fell within the scope of ERISA preemption (paras 8 and 11).
The court rejected the plaintiffs' argument that they were not participants in the plan, noting that their claims were premised on the existence of a contractual relationship under the plan, which they simultaneously denied (paras 9-11).
Regarding the negligence claim, the court found that the plaintiffs did not properly plead such a claim in their complaint. The issue was raised only in response to the summary judgment motion, and the district court did not abuse its discretion in denying a late oral motion to amend the complaint (paras 12-14).
The court declined to address whether a properly pleaded negligence claim would be preempted by ERISA, as it was unnecessary to resolve the case (para 15).