                                                                                 United States Court of Appeals
                                                                                          Fifth Circuit
                                                                                          F I L E D
                               REVISED OCTOBER 24, 2006
                                                                                          October 18, 2006
                           UNITED STATES COURT OF APPEALS
                                    FIFTH CIRCUIT
                                                                                       Charles R. Fulbruge III
                                                                                               Clerk
                                           ____________

                                           No. 04-30986
                                           ____________


               BANK OF LOUISIANA,


                                               Plaintiff - Appellant,

               versus


               AETNA US HEALTHCARE INC; AETNA LIFE INSURANCE
               COMPANY,


                                               Defendants - Appellees.



                           Appeal from the United States District Court
                              For the Eastern District of Louisiana



Before REAVLEY, GARZA, and BENAVIDES, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

       In response to the Petition for Rehearing filed by defendants Aetna US Healthcare Inc. and

Aetna Life Insurance Company, and having duly considered the response and the reply, we withdraw

the prior panel opinion, 459 F.3d 610, in its entirety and substitute the following:

       The Bank of Louisiana (“the Bank”) appeals a summary judgment for the defendants Aetna

US Healthcare Inc. and Aetna Life Insurance Company (collectively “Aetna”). The issue on appeal
is whether the Bank’s state law claims of detrimental reliance, breach of contract, and

misrepresentation are preempted bythe Employee Retirement Income Security Act, 29 U.S.C. § 1001

et seq. (“ERISA”).

                                                           I

         In 1995, the Bank entered into two contracts with Aetna. First, the Bank entered into an

administrative services contract (“ASC”) with Aetna to administer the Bank’s self-insured employee

benefit plan (“the Plan”).1 Second, the Bank purchased from Aetna a stop-loss insurance policy for

the Plan.2 The stop-loss policy provided an “individual” or “specific stop-loss amount” of $50,000

and an “aggregate stop-loss amount” of $600,000.3 The stop-loss coverage was scheduled to


         1
          The parties do not dispute that this qualifies as an ERISA plan. See 29 U.S.C. § 1002(1) (defining employee
welfare benefit plans subject to ERISA).

         2
            On appeal, Aetna, for the first time, seeks to distinguish among the various Aetna entities involved in this
dispute. Specifically, Aetna asserts that Aetna Life Insurance Company, which operates under the registered trade
name “Aetna U.S. Healthcare,” is the party whom the Bank contracted to administer the Plan; that Aetna Casualty
Company, now known as Aetna Insurance Company of Connecticut))which is not a party to this suit))is the party
who issued the stop-loss insurance policy for the Plan; and that Aetna U.S. Healthcare, Inc., although named by the
Bank as a defendant in this suit, is a separate foreign corporation that has no connection to the Plan. Therefore, Aetna
argues, at issue in this case are only claims by an ERISA employer against an ERISA plan administrator.
         Aetna did not raise this argument in the district court. To the contrary, Aetna repeatedly represented in its
pleadings that the Bank entered into the ASC with “Aetna” and that “Aetna” issued the Policy to the Bank. (R. 5, 657,
847, 926-27, 944, 1116-17, 1494-95, 1502.) Accordingly, we do not reach Aetna’s new contention that it is not the
stop-loss insurer. See Theriot v. Parish of Jefferson,185 F.3d 477, 491 n.26 (5th Cir. 1999) (“An appellate court . .
. may not consider facts which were not before the district court at the time of the challenged ruling.”).
         3
          The distinction between an individual or specific stop-loss amount and the aggregate stop-loss amount is
described in Troy Paredes, Note, Stop-Loss Insurance, State Regulation, and ERISA: Defining the Scope of Federal
Preemption, 34 HARV. J. LEGIS. 233, 249 (1997), as follows:

                   There are two types of stop-loss insurance. Specific stop-loss insurance covers a plan
         against the risk that a particular participant's claims will exceed some specified level. For example,
         if the insurance kicks in when an individual's claims exceed $20,000 per year and a participant has
         bona fide claims of $30,000, the plan's stop-loss insurer covers $10,000 of the person's claims.
         Alternatively, aggregate stop-loss insurance covers a plan against the risk that the sum of all of its
         participants' claims will exceed some specified level. For example, if the insurance kicks in when
         aggregate claims exceed $2 million per year and claims under the plan total $2.5 million, the stop-
         loss insurer covers $500,000 of the claims.


                                                           2
terminate on December 31, 2000.

        The Bank, however, reached the aggregate stop-loss amount in 2000. Late in that year, the

parties met to form a new contract that would provide fully-insured coverage commencing on January

1, 2001. The Bank also purchased an extension on its stop-loss coverage that would apply to claims

incurred in 2000 and for which benefits would be paid during the first three months of 2001. In a

letter from account representative Stacy McMahon, Aetna stated that the stop-loss extension would

mean that the Bank would “have no additional claim liabilities for 2000 and no additional fund

transfers [would] be requested.” McMahon further stated that Aetna would “start wiring [the

Bank’s] account for claims paid during the runoff period and [the Bank would] be reimbursed at year-

end.” During the three month run-off period, the Bank submitted $271,628.38 in net claims incurred

by plan members in 2000. (R. 177, 181, 218, 243.) Aetna drafted the Bank’s account for these

claims over the course of 2001 and 2002. Five of these drafts occurred during the three-month stop-

loss extension period, totaling $102,720.06. Nevertheless, Aetna declined to reimburse the Bank.

        The Bank filed a complaint alleging that Aetna had negligently or fraudulently misrepresented

that, pursuant to the stop-loss extension, Aetna would reimburse the Bank for the $271,628.38 that

it drafted from the Bank’s account. In particular, the Bank first claimed that Aetna “misrepresented

the value and benefit of its payment” to Aetna for the extension to the stop-loss policy. Second, the

Bank alleged that Aetna misrepresented the scope of the stop-loss extension and that the Bank had

detrimentally relied on these representations. Third, the Bank alleged that Aetna breached “express

and implied contracts,” including a contract to reimburse the Bank for claims that were paid or should


See also Dennis K. Schaeffer, Comment, Insuring the Protection of ERISA Plan Participants: ERISA Preemption and
the Government’s Duty to Regulate Self-Insured Health Plans, 47 BUFF. L. REV. 1085, 1108-09 (1999) (discussing
difference).

                                                      3
have been paid during the three-month extension period. Fourth, the Bank alleged that Aetna

breached its fiduciary duties as plan administrator by administering the Plan “in such a fashion as to

delay the processing of claims” in order to remove them from coverage under the stop-loss extension.

Finally, in an amended complaint, the Bank alleged that Aetna had violated Louisiana Revised

Statutes 22:6584 and 22:1220.5

         Aetna moved for summary judgment on the ground that the Bank’s claims were preempted

by ERISA. In a series of briefs, Aetna argued that ERISA preempted claims between an employer

and a plan administrator. (R. 930.) The Bank responded that its claim of detrimental reliance and

a claim for attorney’s fees under Louisiana Revised Statute 22:657, the latter of which it had not

pled,6 were not preempted because they exclusively involved parties providing services to an ERISA

plan in a non-fiduciary capacity. (R. 635, 882.) The Bank withdrew its breach of fiduciary duty

claim7 and abandoned its claims under Louisiana Revised Statute 22:658 & 22:1220. The district

court held that ERISA preempted all of the Bank’s remaining claims and granted summary judgment




         4
          Louisiana Revised Statute 22:658 requires insurers issuing certain types of policies to pay the amount of
claims due within thirty days of proof of the loss.

         5
             Louisiana Revised Statute 22:1220 imposes upon insurers a duty of good faith and fair dealing.
         6
          Louisiana Revised Statute 22:657 provides that claim arising under the terms of health and accident contracts
must be paid within thirty days of the date that the insurer receives written notice and proof of the claim. Failure to
comply renders the insurer liable for penalties and attorney’s fees. Aetna does not argue that the Bank’s failure to
properly plead this claim warrants affirmance.
         7
           See District Court’s Order and Reasons at 2 n.1 (July 9, 2003) (noting that the Bank had “indicated its
intention to withdraw the breach of fiduciary duty claim”); Bank of Louisiana’s Memorandum Regarding ERISA
Preemption at 3 n.2 (Apr. 23, 2003) (“[W]e concede that BOL’s Count Four, claiming breach of fiduciary duty, may
be preempted by ERISA. Because the Count adds nothing to the gravamen of BOL’s complaint, we will withdraw that
Count without prejudice.”).
         Because the Bank has withdrawn its claim that Aetna delayed paying health care benefits, and a default to
perform the stop-loss policy is not covered by the statute, the Bank’s claim for attorney’s fees under Louisiana Revised
Statute 22:657 fails.

                                                           4
for Aetna.



                                                  II

       In reviewing a summary judgment, we apply the same standard as the district court. Martin

v. Alamo Community Coll. Dist., 353 F.3d 409, 412 (5th Cir. 2003). We affirm only if there is no

genuine issue of material fact and the movant is entitled to judgment as a matter of law. Id. For a

defendant to obtain summary judgment on an affirmative defense, it must establish beyond dispute

all of the defense’s essential elements. Id. We review the district court’s legal determination that

ERISA preempts a state law claim de novo. Bullock v. Equitable Life Assurance Soc’y of the United

States, 259 F.3d 395, 399 (5th Cir. 2001).

       ERISA’s preemption clause, 29 U.S.C. § 1144(a), states that with certain exceptions, ERISA

“shall supersede any and all State laws insofar as they may now or hereafter relate to any employee

benefit plan . . . .” The Supreme Court has “observed repeatedly that this broadly worded provision

is ‘clearly expansive.’ ” Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 146 (2001) (quoting N.Y.

State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655

(1995)). The Court has held that a state law “relates to an ERISA plan ‘if it has a connection with

or reference to such a plan.’ ” Id. at 147 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97

(1983)). Simultaneously, however, the Court recognizes that, given its broadest reading, the phrase

“relate to” would encompass virtually all state law, and that its “connection with” and “reference to”

interpretations are “scarcely more restrictive.” Id. at 146-47. The Court has, therefore, declined to

apply an “uncritical literalism” to the phrase and instead takes the “the objectives of the ERISA

statute as a guide to the scope of the state law that Congress understood would survive, as well as


                                                  5
to the nature of the effect of the state law on ERISA plans.” Id. at 147 (internal quotation marks

omitted).

        Congress’s objectives in enacting ERISA were to

        protect interstate commerce and the interests of participants in employee benefit plans and
        their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries
        of financial and other information with respect thereto, by establishing standards of conduct,
        responsibility, and obligation for fiduciaries of employee benefit plans, and by providing
        appropriate remedies, sanctions, and ready access to the Federal courts.

29 U.S.C. § 1001(b). To this end, ERISA’s preemption provision is intended “to establish a uniform

administrative scheme, which provides a set of standard procedures to guide processing of claims and

disbursement of benefits.” Egelhoff, 532 U.S. at 148 (quoting Fort Halifax Packing Co. v. Coyne,

482 U.S. 1, 9 (1987)). A uniform administrative scheme serves to minimize administrative and

financial burdens by avoiding the need to tailor plans to the peculiarities of the law of each state.

Ingersoll-Rand Co. v. McClendon, 498 U.S 133, 142 (1990).

        In light of these statutory objectives, this court applies a two-prong test to the defense of

ERISA preemption. A defendant pleading preemption must prove that: (1) the claim “addresses an

area of exclusive federal concern, such as the right to receive benefits under the terms of the Plan; and

(2) the claim directly affects the relationship among traditional ERISA entities))the employer, the

plan and its fiduciaries, and the participants and beneficiaries.” Mayeaux v. La. Health Serv. and

Indem. Co., 376 F.3d 420, 432 (5th Cir. 2004). Because ERISA preemption is an affirmative

defense, Aetna bears the burden of proof on both elements. See Metro. Life Ins. Co. v. Taylor, 481

U.S. 58, 63 (1987) (ERISA preemption is a defense); Settles v. Golden Rule Ins. Co., 927 F.2d 505,

508 (10th Cir. 1991) (defendant bears burden of proving ERISA preemption); Kanne v. Conn. Gen.

Life Ins. Co., 867 F.2d 489, 492 n.4 (9th Cir. 1988) (same).


                                                       6
        Aetna argues that the Bank’s claims require inquiry into the administration of the Plan))an

area of exclusive federal concern))because some of the drafts on the Bank’s account were for benefit

claims paid after the stop-loss extension expired. Aetna contends that the Bank intends to prove that

these drafts nonetheless fall within the stop-loss extension because they arise from benefit claims that

Aetna improperly delayed processing. To the extent that the Bank intends to prove its breach of

contract claim through evidence that Aetna improperly delayed processing and paying benefit claims,

Aetna is correct that it would require inquiry into an area of exclusive federal concern. See Hollis

v. Provident Life and Accident Ins. Co., 259 F.3d 410, 414 (5th Cir. 2001) (right to receive benefits

under an ERISA plan is an area of exclusive federal concern); Hubbard v. Blue Cross & Blue Shield

Ass’n, 42 F.3d 942, 946 (5th Cir. 1995) (claim that would require inquiry into how benefit claims

were processed implicates area of federal concern).

        The Bank has asserted, however, several other claims that do not require inquiry into Aetna’s

processing of benefit claims or administration of the Plan. For example, to the extent the Bank’s

breach of contract claim is premised on Aetna’s failure to reimburse it for amounts actually paid

during the three-month extension period, the claim does not depend on proof that Aetna improperly

delayed paying and processing benefit claims. Likewise, the Bank has asserted detrimental reliance

and misrepresentation claims based on Aetna’s conduct in negotiating the stop-loss extension with

the Bank. These claims do not challenge any act or omission by Aetna in processing benefit claims

or administering the Plan; rather, they call into question Aetna’s representations about the scope of

the stop-loss extension. The Bank need not prove that Aetna improperly administered the Plan in




                                                   7
order to prevail on any of these claims.8 Accordingly, Aetna has established the first element of the

defense of preemption as a matter of law only on the Bank’s claim that Aetna breached the stop-loss

extension by failing to reimburse the Bank for amounts the Bank contends should have been, but were

not, paid during the three-month extension period, i.e., by delaying the processing and paying of

claims for benefits.9

         Aetna argues that the second element of its defense is satisfied as a matter of law because the

parties are two traditional ERISA entities))an employer and a plan administrator. The Bank

contends, however, that Aetna was acting in its capacity as a vendor of insurance, not as a fiduciary

of the Plan. For purposes of ERISA preemption the critical distinction is not whether the parties to

a claim are traditional ERISA entities in some capacity, but instead whether the relevant state law

affects an aspect of the relationship that is comprehensively regulated by ERISA. As we have noted,

ERISA may preempt some claims between traditional ERISA entities but not others.10 And a party

may qualify as an ERISA fiduciary with regard to some claims but not others.                        See Pegram v.




         8
            Aetna argues that the Bank cannot prevail on these theories for a variety of reasons, but the Bank’s
likelihood of success on the merits has no bearing on whether the claims are preempted by ERISA, which is the sole
issue before this Court.

         9
           Although the district court concluded that the claims implicate an area of exclusive federal concern because
they “all pertain to the terms of an ERISA-governed plan and will require the examination of the plan terms,” there
is nothing in the summary judgment record to support that conclusion. Neither Aetna nor the district court identified
what portion of the Plan or ASC is in dispute. Cf. Perkins v. Time Ins. Co., 898 F.2d 470, 473 (5th Cir. 1990) (claim
for fraud and misrepresentation in the procurement of an ERISA plan are not preempted).
         10
           See Hobson v. Robinson, 75 Fed.Appx. 949, 955 (5th Cir. 2003) (unpublished) (party may be a fiduciary
with regard to some claims but not others); Smith v. Tex. Children’s Hosp., 84 F.3d 152 (5th Cir. 1996) (fraudulent
inducement claim against employer not preempted while breach of contract claim was preempted); Hook v. Morrison
Milling Co., 38 F.3d 776, 783 (5th Cir. 1994) (ERISA does not preempt all state law claims between an employee and
an employer, merely because the employer administers an ERISA plan to which the employee belongs); Sommers Drug
Stores Co. v. Employee Profit Sharing Trust, 793 F.2d 1456 (5th Cir. 1986) (claim for common law breach of corporate
fiduciary duty was not preempted by ERISA, even though the defendant/corporate director was an ERISA plan
fiduciary and the plaintiffs/employees were plan beneficiaries).

                                                          8
Herdrich, 530 U.S. 211, 225-26 (2000) (ERISA defines party as fiduciary “only ‘to the extent’ that

he acts in such a capacity in relation to a plan”) (quoting 29 U.S.C. § 1002(21)(A)). “[T]he critical

determination [is] whether the claim itself created a relationship between the plaintiff and defendant

that is so intertwined with an ERISA plan that it cannot be separated.” Hobson, 75 Fed.Appx. at

954.

         Aetna argues that it is an ERISA fiduciary because the Bank has delegated to it the

discretionary responsibility to administer the Plan.11 The Bank correctly contends, however, that

Aetna was not acting in a fiduciary capacity when it negotiated the stop-loss extension, represented

to the Bank which claims would be covered by the stop-loss extension, and performed its duties under

the stop-loss extension. Aetna identifies no cases holding that a stop-loss insurer is necessarily a plan

fiduciary.12 The benefits of stop-loss insurance inure solely to the Bank, and Aetna cites no evidence

that the stop-loss policy is a plan asset or was purchased with plan assets. Cf. DEPARTMENT OF

LABOR ADVISORY OPINION 92-02A, available at 1992 WL 15175 (stop-loss policy is not a plan

asset). But cf. Patelco Credit Union v. Sahni, 262 F.3d 897, 908 (9th Cir. 2001) (checks for stop-


         11
            A party acts in a fiduciary capacity when he: 1) exercises discretionary control over plan assets; 2) he
renders investment advice for a fee to the plan; or 3) he has discretionary responsibility with regard to plan
administration. 29 U.S.C. § 1002(21)(A); see also Tri-State Mach., Inc. v. Nationwide Life Ins. Co., 33 F.3d 309, 313-
14 (4th Cir. 1994) (claims by employer against plan administrator and stop-loss insurer for delaying the processing
of claims are preempted); Iron Workers Mid-South Pension Fund v. Terotechnology Corp., 891 F.2d 548, 553 (5th Cir.
1990) (“the state law is preempted by section 514(a) if the conduct sought to be regulated by the state law is ‘part of
the administration of an employee benefit plan’ ” (quoting Martori Bros. Distrib. v. James-Massengale, 781 F.2d 1349,
1358 (9th Cir. 1986))).
         12
            The majority of cases are to the contrary. For example, the Ninth Circuit held in Geweke Ford v. St.
Joseph’s Omni Preferred Care Inc., 130 F.3d 1355 (9th Cir. 1997), that a plan’s relationship to its stop-loss insurer
is like that between any commercial entities and is not regulated by ERISA. See also Seneca Beverage Corp. v.
HealthNow N.Y., Inc., 383 F.Supp.2d 413, 423 (W.D.N.Y. 2005) (stop-loss insurer is not a fiduciary); Northern Kare
Facilities/Kingdom Kare, LLC v. Benefirst LLC, 344 F.Supp.2d 283, 287 (D.Mass. 2004) (same); Deeter v. Greene,
Tween and Co., Inc., CIV. A. 98-1222, 1998 WL 639190 (E.D. Pa. Sept. 18, 1998) (same); Union Health Care, Inc.
v. John Alden Life Ins. Co., 908 F. Supp. 429, 432-36 (S.D. Miss. 1995) (same). The reasoning of these courts is
persuasive and consistent with our own.

                                                          9
loss benefits are plan assets). Nor does Aetna identify any cases holding that a plan administrator

who also brokers or negotiates a stop-loss insurance policy does so in its capacity as a fiduciary. The

only claim to implicate Aetna’s fiduciary relationship with the Bank is the Bank’s claim that Aetna

breached the stop-loss extension by failing to reimburse the Bank for claims that Aetna delayed

processing and paying and, hence, that were not paid during the extension period. Accordingly,

Aetna has established the second element of its preemption defense only as to this latter claim.13

                                                          III

         For the foregoing reasons, we reverse the district court’s grant of summary judgment on the

Bank’s claims of detrimental reliance and misrepresentation, as well as the Bank’s breach of contract

claim based on Aetna’s failure to reimburse the Bank for benefit claims that were actually paid during

the extension period; affirm the grant of summary judgment on the Bank’s breach of contract claim

based on Aetna’s failure to reimburse the Bank for benefit claims that were not paid during the


         13
            Aetna relies on Tri-State Machine, Inc. v. Nationwide Life Insurance Co., 33 F.3d 309 (4th Cir. 1994), but
that case is not to the contrary. Tri-State Machine, an employer, sued Nationwide Life Insurance, the administrator
and stop-loss insurer for its ERISA plan. Tri-State alleged that Nationwide Life “delayed processing claims in years
when the stop-loss limit had been reached in order to deflect them into a new policy year to be charged against Tri-
State under its self-funding obligations.” Id. at 314. The Fourth Circuit held that such an allegation was essentially
a challenge to a plan administrator’s processing of claims and therefore related to the plan. Id. Likewise, the Bank’s
breach of contract claim, to the extent it is premised on Aetna’s alleged delaying the processing of claims, is
preempted. The wrong for which the Bank seeks to recover in its remaining claims, however, is Aetna’s conduct in
negotiating and performing under the stop-loss extension. Such claims do not concern the processing of claims for
benefits and are not preempted.
          The Fourth Circuit’s cases are consistent with our reasoning that the parties are not fiduciaries with respect
to the Bank’s surviving claims. In Phelps v. C.T. Enterprises, Inc., 394 F.3d 213, 219 (4th Cir. 2005), the court
“emphasized that fiduciary duty under ERISA is not an all-or-nothing concept.” See also Cotton v. Mass. Mutual Life
Ins. Co., 402 F.3d 1267, 1277 (11th Cir. 2005) (fiduciary status under ERISA not an “all-or-nothing concept”).
          Broadnax Mills, Inc. v. Blue Cross and Blue Shield of Virginia, 867 F.Supp. 398 (E.D. Va. 1994), is also
distinguishable. The employer in Broadnax Mills sued the plan administrator and stop-loss insurer on the ground that
it negligently failed to advise it to obtain an aggregate stop-loss policy and breached the Plan’s Administrative Service
Agreement. In Broadnax Mills, it was conceded that the stop-loss insurance was purchased by funds contributed by
plan participants and therefore concerned the disposal of plan assets. See id. at 403. Aetna points to no similar
concession in this case. The plaintiff in Broadnax Mills also alleged that the plan administrator breached its duty to
disclose and report the financial status of the plan. Id. at 403-04. The Bank’s claims do not involve similar
allegations.

                                                          10
extension period and the Banks’s Louisiana Revised Statute 22:657 claim; and remand for

proceedings not inconsistent with this opinion.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.




                                                  11
