Friday, December 19, 2008

W.Va. Supreme Court holds ERISA subrogation claims belong in federal court

In a rare opinion on an ERISA matter, the West Virginia Supreme Court of Appeals ruled on Monday that state courts do not have jurisdiction to determine whether ERISA plan fiduciaries or administrators can assert subrogation rights against plan participants and beneficiaries. Turner v. Turner, No. 33892 (Dec. 15, 2008).

The suit began as an ordinary infant settlement proceeding brought on behalf of the Turner children pursuant to W.Va. Code § 44-10-14 (2002), for approval of proposed minor settlements reached with the defendants. The children were injured in an auto accident. The children's mother worked for City Hospital, Inc., and the minors were all covered under City Hospital's ERISA health insurance plan. City Hospital intervened in the case to assert subrogation rights to the settlement proceeds. The circuit court ruled that it had no jurisdiction under ERISA to decide City Hospital's subrogation rights under the proposed settlement. The West Virginia Supreme Court of Appeals affirmed.

In a new syllabus point, the Court held:
3. An action by a fiduciary or administrator of a plan under the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., to obtain appropriate equitable relief to enforce the terms of the ERISA plan pursuant to 29 U.S.C. § 1132(a)(3), must be brought in the federal district courts of the United States as provided for in 29 U.S.C. § 1132(e)(1).
In the final footnote, the court noted that "[w]e wish to emphasize that even though we find any action by City Hospital to enforce its subrogation rights to be completely preempted, the Circuit Court of Berkeley County clearly retains jurisdiction to approve or disapprove the proposed infant settlements set forth in the petitions for approval of minor settlements." But City Hospital will need to file suit in federal court to have its ERISA rights determined.