230 F.3d 916 (7th Cir. 2000)
Linda C. Lehmann, Danielle M. Brown,  and Alexis I. Brown, Plaintiffs-Appellants,v.Timothy K. Brown and Teachers Insurance  and Annuity Association / College Retirement  Equities Fund, Defendants-Appellees.
No. 99-3550
In the  United States Court of Appeals  For the Seventh Circuit
Submitted September 29, 2000Decided October 16, 2000

Appeal from the United States District Court  for the Western District of Wisconsin.  No. 98-C-0825-S--John C. Shabaz, Chief Judge.[Copyrighted Material Omitted]
Before Bauer, Easterbrook, and Evans, Circuit Judges.
Easterbrook, Circuit Judge.


1
After Richard Brown  and Linda Lehmann divorced in 1987, Richard  created an inter vivos trust for the benefit of  the couple's children, Danielle and Alexis.  Richard instructed his insurers and financial  intermediaries, including Teachers Insurance and  Annuity Association / College Retirement Equities  Fund (TIAA/CREF), that in the event of his death  they should pay all benefits to this trust, of  which Richard's brother Timothy was trustee.  Richard died in 1994, and TIAA/CREF paid the trust  approximately $68,000, representing Richard's  full entitlement under his TIAA/CREF contracts--  which are defined-contribution retirement plans,  regulated by the Employee Retirement Income  Security Act (ERISA). Alleging that distribution of  the benefits in a lump sum, pursuant to Timothy's  instructions, subjected the trust to  approximately $18,000 in federal taxes that could  have been avoided by periodic distributions,  Lehmann and her children filed suit in Wisconsin  court seeking damages from both Timothy and  TIAA/CREF. The complaint asserted that Timothy  violated his fiduciary duties in this and other  respects; it also sought relief on the theory  that TIAA/CREF violated its duties under Connecticut  law by distributing any benefits before Timothy  "qualified" as trustee of Richard's trust.


2
The claim against TIAA/CREF is hard to understand.  Lehmann and her children are citizens of  Connecticut, but Richard was a citizen of  Minnesota when he died; a claim based on the  relation between the trust and probate courts  would be decided under Minnesota law. Moreover,  plaintiffs' apparent assumption that state courts  are responsible for appointing a trustee is  unfounded; Timothy became trustee under the  declaration of trust and did not need to  "qualify" or be appointed by a state court as if  he were the administrator of Richard's estate.  Inter vivos trusts are designed in large measure  to bypass probate of a decedent's estate,  allowing the decedent's property to be managed  and distributed immediately following his death.  Plaintiffs do not contend that such vehicles for  the control and distribution of wealth are  unlawful in either Minnesota or Connecticut. But  instead of asking the state court to dismiss the  claim as frivolous (which it appears to be) or  contending that any liability under state law is  preempted by sec.514(a) of ERISA, 29 U.S.C.  sec.1144(a) (which it almost certainly would be),  TIAA/CREF removed the proceedings to federal court,  contending that plaintiffs' claim "arises under"  ERISA and therefore may be removed under the  doctrine known as "complete preemption." See  Metropolitan Life Insurance Co. v. Taylor, 481  U.S. 58 (1987); Bartholet v. Reishauer A.G.  (Zurich), 953 F.2d 1073 (7th Cir. 1992). The  district court then dismissed the suit, ruling  that plaintiffs lack "standing" because none is  a beneficiary of Richard's TIAA/CREF contracts, and  hence none has any possible claim under ERISA. Most  claims against Timothy were remanded to state  court once the claim supporting federal  jurisdiction had been resolved.


3
If, as the district judge held at the urging of  TIAA/CREF, plaintiffs are strangers to the ERISA  plan, then their claims cannot possibly have  arisen under ERISA, and removal could not be  supported by federal-question jurisdiction.  Although the parties are of diverse citizenship,  plaintiffs' claim against TIAA/CREF is only $18,000,  well short of the jurisdictional minimum. 28  U.S.C. sec.1332(a). The district judge appears to  have believed that any claim preempted by  sec.514(a) of ERISA, because "related to" a pension  or welfare plan, may be removed to federal court.  This, however, is not so. Following established  precedent, we have distinguished between federal  defenses, such as preemption, which must be  presented to state court, and claims based on  federal law, which are removable. For  applications to ERISA in particular, see Blackburn  v. Sundstrand Corp., 115 F.3d 493 (7th Cir.  1997), and Rice v. Panchal, 65 F.3d 637 (7th Cir.  1995). A claim usually arises under the law that  creates the right of recovery, for only when a  well-pleaded complaint depends on a proposition  of federal law does the claim arise under federal  law. Compare Metropolitan Life, 481 U.S. at 63,  with Caterpillar Inc. v. Williams, 482 U.S. 386,  398-99 (1987). Everyone agrees that ERISA does not  give plaintiffs any right of recovery. They do  not seek to collect benefits under Richard's  pension plan; they contend, instead, that TIAA/CREF  violated state law by distributing those benefits  to a trustee who had not been appointed by a  state court, and in a manner that exposed the  benefits to taxation. That claim sounds in tort  under state law; it has no parallel under ERISA. If  it is preempted then TIAA/CREF has a good defense,  but federal defenses do not permit removal.


4
Cases such as Blackburn, Rice, and Bartholet  observe that the phrase "complete preemption" has  caused confusion--evident in this case--by  implying that preemption sometimes permits  removal. Unfortunately "complete preemption" is  a misnomer, having nothing to do with preemption  and everything to do with federal occupation of  a field. The name misleads because, when federal  law occupies the field (as in labor law), every  claim arises under federal law. See In re Amoco  Petroleum Additives Co., 964 F.2d 706, 709-10  (7th Cir. 1992). Any attempt to present a state-  law theory then is artful pleading to get around  the federal ingredient of the claim; courts look  at substance, see the importance of federal law  to recovery, and permit removal. Franchise Tax  Board of California v. Construction Laborers  Vacation Trust, 463 U.S. 1, 22 (1983). ERISA  occupies much of the field of pension and fringe  benefits; the size and distribution of these  benefits depends on federal law, so Metropolitan  Life holds that a claim to benefits necessarily  "arises under" federal law no matter how it is  pleaded. State law is "completely preempted" in  the sense that it has been replaced by federal  law--but this happens because federal law takes  over all similar claims, not because there is a  preemption defense. See, e.g., Anderson v.  Humana, Inc., 24 F.3d 889 (7th Cir. 1994)  (discussing the provision of information to  beneficiaries, another respect in which federal  law has completely taken over).


5
When the complaint alleges that a welfare-  benefit plan has committed a tort--for example,  when a physician employed by a HMO that has been  offered as a benefit to employees commits medical  malpractice--the claim must arise under state  law, because ERISA does not attempt to specify  standards of medical care. See Pegram v.  Herdrich, 120 S. Ct. 2143 (2000). Claims outside  the scope of ERISA arise independently of federal  law, and the possibility that sec.514(a) preempts  one or another state-law theory is just a federal  defense. This is the line Rice drew; it is  entirely sensible, however hard it may be to  implement when (as here) the complaint does not  present any recognizable theory of liability.  This complaint is on the state-law side of the  line if only for the reasons the district judge  gave none of the plaintiffs is a beneficiary of  the TIAA/CREF plan, and none seeks those benefits  (as opposed to damages for supposedly tortious  conduct in the process of disbursing them to the  trust).


6
This case must be remanded to state court.  TIAA/CREF, which wrongfully removed the suit, must  bear costs under Fed. R. Civ. P. 54(d)(1). But  like the district court we see no non-frivolous  claim available to plaintiffs; they should  consider not only the wastefulness of further  litigation but also the prospect of sanctions if  they persist in state court.


7
Vacated and Remanded  with Instructions to Remand

