Don’t Get Caught in the Speed Trap of ERISA

Many experienced litigators have gotten caught in the speed trap known as ERISA. As with any other speed trap, ERISA has some unexpected provisions that can catch even the experienced litigator off guard. Just as “Police Jurisdiction” signs can provide some warning when travelling unfamiliar roads, litigators should be on the lookout for ERISA’s unique provisions. The issue of jurisdiction versus venue is just one of these “gotcha” provisions.

Many people may not understand or forget that there is a difference between jurisdiction and venue. And, litigators, despite understanding the difference, may not be familiar with ERISA’s unique provisions on these issues.

Personal jurisdiction generally turns on whether a defendant has enough contacts with a location to defend itself in a lawsuit filed there. Venue, on the other hand, is generally concerned with whether the location of the lawsuit is the most appropriate considering the witnesses, evidence, plaintiff’s preference, and other factors of judicial economy.

In the recent case, Gilmour v. Blue Cross & Blue Shield of Alabama, 2018 WL 1189880 (W.D. Tex. Mar. 6, 2018), the Defendant filed a motion challenging jurisdiction and venue. The ERISA defendant, Blue Cross & Blue Shield, was based in Alabama, so it questioned why it should have to respond to a lawsuit filed in Texas. The court considered the 5th Circuit law on the matter and found that the “personal jurisdiction analysis is governed by ERISA’s national service-of-process provision.” Years ago, the 5th Circuit found that this means anything amounting to minimum contact with the state is enough to support personal jurisdiction. See, Bellaire General Hospital v. Blue Cross Blue Shield, 97 F.3d 822, 825 (5th Cir. 1996). Thus, if Blue Cross had any minimum contact with the state (e.g. a policy covering anyone in the state or paying monies to a Texas medical provider), then jurisdiction is proper.

Next, the court turned to venue–the best place for the lawsuit to be heard. ERISA’s venue provision is found at 29 U.S.C. § 1132(e)(2), authorizing venue in the district:

  • where the plan is administered,
  • where the breach took place, or
  • where a defendant resides or may be found.

Blue Cross had an agency relationship with Blue Cross of Texas, so the court found venue proper there. However, it did not find venue proper in the Western District of Texas. The plaintiff alleged the Texas health provider was in the Northern and Eastern districts of Texas. Thus, the court had a reason to transfer the matter to a different district. However, before doing so, the court cut the plaintiff some slack and allowed time to replead the complaint on that issue.

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