Couple Sues Health Company, Alleges ERISA Not Applicable

Denver, COA lawsuit recently heard by an appeals court alleges that ERISA does not govern their insurance plan and that, as a result, the plaintiffs should be allowed to sue their insurance company.


According to the 4/07/10 issue of the Durango Herald, Stephen Dobbs worked for the Southern Ute Indian Tribe. His son had a rare skull condition and required treatment from a specialist. Anthem Blue Cross, the tribe's insurance company, required the Dobbses to pay out-of-network rates for their son's treatment, at a cost of $100,000.

The good news for the Dobbs family is that Anthem did repay most of the money the Dobbs family put out. However, Stephen and Naomi Dobbs filed a lawsuit against Anthem in the hopes of preventing the insurance company from treating other people as poorly as they treated the Dobbses.

However, the issue at hand is not actually about whether or not Anthem failed in its fiduciary duty. What is at issue is whether or not ERISA prevents the Dobbs family from filing their lawsuit.

Earlier this month the U.S. 10th Circuit Court of Appeals ruled in favor of the Dobbs family, deciding that they should have the chance to make their case in district court. Now, for the second time, their lawsuit has been sent back to district court.

Anthem argues that ERISA prevents the lawsuit from being filed. The Dobbs family alleges that because Stephen Dobbs worked for the Southern Ute Indian Tribe, which is a sovereign government, ERISA does not apply in his case. The family's lawyer says they plan to show that the Dobbs family's plan is a governmental plan and is therefore not subject to the rules set out by ERISA.

However, in 2006, Congress determined that most employees of an Indian tribe must be doing governmental work—not commercial work—to be excluded from ERISA. Dobbs was working as a geologist for the Southern Ute Indian Tribe's Red Willow Production Co.

In making its decision, the U.S. 10th Circuit Court of Appeals noted the importance of tribal sovereignty in choosing insurance plans for governmental employees.

"Applying ERISA to such plans would prevent tribal governments from purchasing insurance plans for governmental employees in the same manner as other government entities, thus treating tribal governments as a kind of inferior sovereign," the ruling states.

The lawsuit has been sent back to the district court to determine whether the Southern Ute Indian Tribe's plan is a "governmental plan."

The previous time the appeals court sent the lawsuit back to district court, the appeals court also asked the district court to make a factual determination as to whether or not the Southern Ute's plan was governmental. On remand, the district court found that the plan qualified as governmental under the amended definition but, because the Dobbses' claims were made prior to the amended definition, their situation did not qualify retroactively.

The Appeals court found that the amended definition did apply to the Dobbses' claims and reversed the district court's conclusion, once again remanding the case for fact-finding.