Opposition to AHIP Motion - American Medical Association

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					        Case 1:12-cv-02978-WSD Document 18 Filed 10/12/12 Page 1 of 4




                     UNITED STATES DISTRICT COURT
                     NORTHERN DISTRICT OF GEORGIA
                           ATLANTA DIVISION

AMERICA’S HEALTH INSURANCE
PLANS,

              Plaintiff,

       v.

RALPH T. HUDGENS, in his official
capacity as Georgia Insurance and
Safety Fire Commissioner,
                                         Civil Action No. 1:12-cv-02978-WSD
              Defendant,

and

AMERICAN MEDICAL
ASSOCIATION, and MEDICAL
ASSOCIATION OF GEORGIA,

              Proposed Intervenor-
              Defendants.


      PROPOSED INTERVENOR-DEFENDANTS’ NOTICE OF FILING
        PROPOSED MEMORANDUM OF LAW IN OPPOSITION TO
             MOTION FOR PRELIMINARY INJUNCTION

       Proposed Intervenor-Defendants American Medical Association and the

Medical Association of Georgia (“MAG”) hereby give notice of the filing of their

Proposed Memorandum of Law in Opposition to Motion for Preliminary

Injunction.
 Case 1:12-cv-02978-WSD Document 18 Filed 10/12/12 Page 2 of 4




Respectfully submitted this 12th day of October, 2012.

                                  By: /s/ Thomas Gallo
                                   Thomas Gallo
                                   Georgia Bar No. 283048
                                   BARNES & THORNBURG, LLP
                                   Prominence in Buckhead
                                   3475 Piedmont Road, N.E.
                                   Atlanta, Georgia 30305
                                   Telephone: (404) 264-4015
                                   Facsimile: (404) 264-4033
                                   Email: Thomas.Gallo@btlaw.com


                                      Counsel for American Medical
                                      Association and Medical Association of
                                      Georgia




                                  2
        Case 1:12-cv-02978-WSD Document 18 Filed 10/12/12 Page 3 of 4




                   UNITED STATES DISTRICT COURT
                   NORTHERN DISTRICT OF GEORGIA
                         ATLANTA DIVISION

AMERICA’S HEALTH INSURANCE
PLANS,

            Plaintiff,

      v.

RALPH T. HUDGENS, in his official
capacity as Georgia Insurance and
Safety Fire Commissioner,
                                           Civil Action No. 1:12-cv-02978-WSD
            Defendant,

and

AMERICAN MEDICAL
ASSOCIATION, and MEDICAL
ASSOCIATION OF GEORGIA,

            Proposed Intervenor-
            Defendants.


                         CERTIFICATE OF SERVICE

      The undersigned hereby certifies the foregoing has been filed this 12th day

of October, 2012, on the parties identified below by using the CM/ECF system,

which automatically sends e-mail notification to the following attorneys of record:
  Case 1:12-cv-02978-WSD Document 18 Filed 10/12/12 Page 4 of 4




Bruce P. Brown                        James A. Washburn
Bruce P. Brown Law LLC                McKenna Long & Aldridge LLP
309 N. Highland Avenue, Suite A       303 Peachtree Street, Suite 5300
Atlanta, GA 30307                     Atlanta, GA 30308

Attorney for Plaintiff                Attorneys for Plaintiff

Miguel A. Estrada                     Isaac Byrd
Geoffrey Sigler                       Daniel Walsh
Nikesh Jindal                         Robin Cohen
Gibson, Dunn & Crutcher LLP           Alex Sponseller
1050 Connecticut Avenue, N.W.         Georgia Attorney General’s
Washington, D.C. 11101                Office
                                      40 Capitol Square, SW
Attorneys for Plaintiff               Atlanta, GA 30334-1300

                                      Attorneys for Defendant



                                      /s/ Thomas Gallo
                                      Thomas Gallo
                                      Georgia Bar No. 283048


                                      Counsel for American Medical
                                      Association and Medical Association
                                      of Georgia




                                  2
       Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 1 of 36




                   UNITED STATES DISTRICT COURT
                   NORTHERN DISTRICT OF GEORGIA
                         ATLANTA DIVISION

AMERICA’S HEALTH INSURANCE
PLANS,
                                               Civil Action No.
            Plaintiff,
                                               1-12-CV-02978-WSD
       v.
RALPH T. HUDGENS,

            Defendant,

and

AMERICAN MEDICAL
ASSOCIATION, and MEDICAL
ASSOCIATION OF GEORGIA,

            Intervenor-
            Defendants.

      INTERVENORS’ MEMORANDUM OF LAW IN OPPOSITION TO
             MOTION FOR PRELIMINARY INJUNCTION
        Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 2 of 36




                                      TABLE OF CONTENTS

                                                                                                             Page
I.      APPLICABLE BACKGROUND.....................................................................1

II.     PRELIMINARY INJUNCTION STANDARD ...............................................4

III. ARGUMENT....................................................................................................4

        A.       AHIP is not substantially likely to succeed on the merits.....................4

                 1.      General Principles ........................................................................8

                 2.      Section 502(a) “Complete Preemption” ......................................9

                 3.      Section 514 “Defensive” or “Conflict” Preemption ................. 13

                         a.       ERISA’s Savings Clause and “Deemer” Clause ........... 18

        B.       AHIP will not suffer irreparable harm. .............................................. 21

        C.       Harm to the Defendants and Public Interest....................................... 25

IV. CONCLUSION ............................................................................................. 25




                                                        ii
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                           TABLE OF AUTHORITIES

                                  FEDERAL CASES

Aetna Health, Inc. v. Davila,
   542 U.S. 200 (2004) .....................................................................10, 11, 16

American Drug Stores, Inc. v. Harvard Pilgrim Health Care, Inc.,
  973 F. Supp. 60 (D.Mass. 1997)...............................................................15

Bankwest, Inc. v. Baker,
  324 F. Supp. 2d 1333 (N.D. Ga. 2004) ....................................................23

Baker v. Big Star Div. of Grand Union Co.,
  893 F.2d 288, 290 (11th Cir. 1989)........................................................6, 7

Baxter v. C.A. Muer Corp.,
  941 F.2d 451 (6th Cir. 1991)......................................................................6

Baylor University Medical Ctr. v. Arkansas Blue Cross Blue Shield,
  331 F. Supp. 2d 502 (N.D. Tex. 2004).......................................................7

BellSouth Telecommunications, Inc. v. MCIMetro Access
   Transmission Services, LLC,
   425 F.3d 964 (11th Cir. 2005)....................................................................4

Blue Cross of Cal. v. Anesthesia Care Associate Medical Group, Inc.,
   187 F.3d 1045 (9th Cir. 1999)..................................................................12

Borrero v. United Healthcare of New York, Inc.,
  610 F.3d 1296 (11th Cir. 2010)................................................................12

Butero v. Royal Maccabees Life Insurance Co.,
   174 F.3d 1207 (11th Cir. 1999)..........................................................10, 11

California Division of Labor Standards Enforcement v. Dillingham
  Construction,
  519 U.S. 316 (1997) ...................................................................................9

                                               iii
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Central States, Southeast & Southwest Areas Health and Welfare
  Fund v. Pathology Laboratories Of Arkansas,
  71 F.3d 1251 (7th Cir. 1995)......................................................................8

Cicio v. Does,
   321 F.3d 83 (2d Cir. 2003) .......................................................................16

City of Los Angeles v. Lyons,
   461 U.S. 95 (1983) ...................................................................................21

Confer v. Custom Engineering Co.,
  952 F.2d 34 (3d Cir. 1991) .....................................................................6, 7

Connecticut State Dental Association v. Anthem Health Plans, Inc.,
  591 F.3d 1337 (11th Cir. 2009).........................................................passim

Cotton v. Massachusetts Mutual Life Insurance Co.,
  402 F.3d 1267 (11th Cir. 2005).........................................................passim

DeBuono v. NYSA-ILA Medical & Clinical Services Fund,
  520 U.S. 806 (1997) ...................................................................................9

Diamond Crystal Brands, Inc. v. Wallace,
   531 F. Supp. 2d 1366 (N.D. Ga. 2008) ......................................................4

Ellis v. Liberty Life Assur.,
   394 F.3d 262 (5th Cir. 2004)....................................................................16

FMC Corp. v. Holliday,
  498 U.S. 52 (1990) .......................................................................16, 20, 21

Ferree v. Life Insurance Co. of N.A.,
   2006 WL 2025012 (N.D. Ga. 2006).........................................................16

Ga. Latino Alliance for Human Rights v. Deal,
  2012 U.S. App. LEXIS 17514 (11th Cir. Aug. 2012)..............................22


                                               iv
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Howard v. Parisian,
  807 F.2d 1560 (11th Cir. 1987)..................................................................7

In re Managed Care Litigation,
    135 F. Supp. 2d 1253 (S.D. Fla. 2001).....................................................15

In re Managed Care Litigation,
    2011 U.S. Dist. LEXIS 46877 (S.D. Fla. 2011).................................11, 14

Jones v. LMR International, Inc.,
   457 F.3d 1174 (11th Cir. 2006)....................................................16, 17, 18

Kentucky Association of Health Plans, Inc. v. Miller,
  538 U.S. 329 (2003) ...........................................................................18, 19

Klosterman v. Western General Management,
   32 F.3d 1119 (7th Cir. 1994)......................................................................6

Kyle Railways v. Pacific Admin. Services,
   990 F.2d 513 (9th Cir. 1993)......................................................................6

Lone Star OB/GYN Associates v. Aetna Health Inc.,
  579 F.3d 525 (5th Cir. 2009)....................................................................12

Lordmann Enterp., Inc. v. Equicor, Inc.,
   32 F.3d 1529 (11th Cir. 1994)..................................................................14

Memorial Hospital System v. Northbrook Life Insurance Co.,
  904 F.2d 236 (5th Cir. 1990)................................................................7, 12

Morales v. Trans World Airlines, Inc.,
  504 U.S. 374 (1992) ..........................................................................21, 22

Morstein v. National Insurance Services, Inc.,
  93 F.3d 715 (11th Cir. 1996).............................................................passim

National Air Traffic Controllers Association v. Dental Plans, Inc.,
  2005 U.S. Dist. LEXIS 42047 (N.D. Ga. Nov. 9, 2005)..........................16

                                              v
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New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers
  Insurance Co.,
  514 U.S. 645 (1995) .........................................................................8, 9, 14

Northeast Fla. Chpt. of Association of General Contr. v. Jacksonville,
  896 F.2d 1283 (11th Cir. 1990), rev'd and remanded on other
  grounds, 508 U.S. 656 (1993) ........................................................4, 21, 23

Northeast Hospital Authority v. Aetna Health Inc.,
  2007 U.S. Dist. LEXIS 77085 (S.D. Tex. Oct. 17, 2007)........................12

Pascack Valley Hospital, Inc. v. Local 464A UFCW Welfare
  Reimbursement Plan,
  388 F.3d 393 (3d Cir. 2004) .....................................................................12

Pegram v. Herdrich,
  530 U.S. 211 (2000) ...................................................................................8

Pharmaceutical Care Management Association v. Rowe,
  429 F.3d 294 (1st Cir. 2005) ....................................................................14

Pilot Life v. Dedeaux,
   481 U.S. 41 (1987) ...................................................................................16

Schoedinger v. United Healthcare of the Midwest, Inc.,
   557 F.3d 872 (8th Cir. 2009)....................................................................17

Shaw v. Delta Air Lines, Inc.,
   463 U.S. 85 (1983) ...................................................................................14

Siegal v. LePore,
   234 F.3d 1163 (11th Cir. 2000)................................................................22

Terry v. Bayer Corp.,
   145 F.3d 28 (1st Cir. 1998) ....................................................................6, 7



                                               vi
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White v. Baker,
  696 F. Supp. 2d 1289 (N.D. Ga. 2010) ....................................................22

Whitt v. Sherman International Corp.,
  147 F.3d 1325 (11th Cir. 1998)..................................................................8

                                         STATUTES

29 U.S.C. § 1001 et seq ...................................................................................1

29 U.S.C. §1002(3)..........................................................................................5

29 U.S.C. §1002(16)(A) ..............................................................................5, 6

29 U.S.C. §§1002(16)(B) ................................................................................6

29 U.S.C. §1002(21)(A) ..............................................................................5, 6

29 U.S.C. §1003(b)....................................................................................2, 20

29 U.S.C. §1132(a) ..........................................................................................9

29 U.S.C. §1144(a) ....................................................................................9, 13

29 U.S.C. §1144(b)........................................................................................14

29 U.S.C. §1144(b)(2)(A)..............................................................................18

29 U.S.C. §1144(b)(2)(B).......................................................................19, 20

O.C.G.A §33-23-100(a)(1) ..............................................................................2

O.C.G.A §33-24-59.5 .............................................................................passim

O.C.G.A. §33-24-59.14 ...........................................................................15, 16

IDEA §4..................................................................................................passim


                                                vii
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IDEA §5..................................................................................................passim

IDEA §6..................................................................................................passim


                                     REGULATIONS

29 C.F.R. §2509.75-8, D-2 ..............................................................................6

29 C.F.R. §2560-503-1 ............................................................................11, 13




                                                viii
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 9 of 36




      In 1999, Georgia enacted the Prompt Pay Act (“Act”), which required

traditional insurers of employee health benefit plans to promptly pay physicians

and medical providers. See O.C.G.A §33-24-59.5. Faced with an industry-wide

shift from insured plans to self-funded plans administered by third-party

administrators (“TPAs”), in April 2011, the Georgia Legislature overwhelmingly

passed H.B. 167, the Insurance Delivery Enhancement Act (“IDEA”). The bill

expanded the Act to cover TPAs in addition to traditional insurers. IDEA Sections

4, 5, and 6 take effect January 1, 2013.

      Fifteen months after the IDEA’s passage, America’s Health Insurance Plans

(“AHIP”) filed this lawsuit claiming that it is preempted by the Employee

Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”). It

now seeks to preliminarily enjoin the IDEA from taking effect. AHIP has not

shown that the extraordinary relief of a preliminary injunction is warranted here.

                     I.     APPLICABLE BACKGROUND
      AHIP correctly describes some of the basics giving rise to this litigation.

Many people receive health benefits through employer or union-provided benefits

plans. See AHIP Brief [Dkt. No. 4-1] at 5. Others purchase health insurance

individually or through group associations. Employers or unions often subsidize

those benefits through plans that may be regulated by ERISA. Id. Other health
     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 10 of 36




benefit plans, like state and local government employee plans (e.g., the State

Health Benefit Plan), or “church plans” (e.g., the Georgia Baptist Health Care

System), are not governed by ERISA. 29 U.S.C. §1003(b)(1), (2).

      MAG and AMA agree with AHIP’s general description regarding “insured

plans” and “self-insured plans.” See AHIP Brief at 5-6. As AHIP concedes, with a

self-funded plan, the employer or plan sponsor hires one or more TPAs, which are

often the same insurance companies that sell insurance to insured plans, to:

      process claims under the plan (paid for by the plan sponsor) and to
      perform other plan administration services. . . . [T]he administrator
      applies the terms of the plan as developed by the plan sponsor to meet
      its needs and those of its covered employees and dependents. The
      self-funded plan [or actually the sponsor for the self-funded plan]
      retains the financial responsibility to pay claims made under the plan.

Id. As AHIP concedes, its members are both these kinds of TPAs, performing

claims processing functions for self-funded plans, and health insurers. Id. at 3;

Complaint [Dkt. No. 1], ¶11.

      An “administrator” under the Act is any business entity that, directly or

indirectly, collects charges, fees, or premiums, processes claims, provides

underwriting or precertification and preauthorization of hospitalizations or medical

treatments for or on behalf of any insurer. See O.C.G.A. §33-23-100(a)(1).

      The Act required a traditional insurer to either pay a claim, or give notice

why a claim would not be paid, within 15 working days. See O.C.G.A. §33-24-

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59.5(b)(1). By 2011, only about 35% of the health benefits market was governed

by the Act because it did not cover TPAs for self-funded plans, leaving Georgia

with no statutory deadline for TPAs to pay a physician or provide notice that a

claim would not be paid.1 See Exh. B, Palmisano Aff. at ¶ 19 (Exhibit A omitted).

      So, in April 2011, after six years of effort, Georgia enacted the IDEA,

which, among other things, expanded the Act’s requirements to TPAs regarding

prompt payment that already applied to insurers. See IDEA §§4(b)(12), 5,(e), 6(e).

The Act now generally requires “administrators,” both traditional insurers and

TPAs, to either promptly pay a provider’s claim for services rendered or explain

why it would not be paid, unless the nonpayment was caused by a self-insured

plan’s failure to fund the plan. Id., §§4(f), 6(b)(1). If the TPA or insurer does not,

it owes 12% interest to the physician. Id., §5(c), 6(c). In addition, if the TPA or

insurer does not properly adjudicate 95% of its provider claims in a quarter, the

Commissioner may fine the TPA or insurer. Id., §5(d), 6(d). New Section 6

focuses exclusively on insurers and TPAs, not plans, and requires prompt

payments to the provider and potential interest or penalties payable by the insurer

or TPA. Id., §6(b)(1), (c), (d).
1
 This mirrors the national trend. Between 1999 and 2011, the percentage of
covered workers receiving their health benefits through self-funded plans increased
from roughly 44% to 60%. See Kaiser Family Foundation’s Employer Health
Benefits 2012 Annual Survey, Exhibit 10.1 (attached as Exhibit C).

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              II.    PRELIMINARY INJUNCTION STANDARD
      The preliminary injunction standard is well-known. BellSouth Telecomms.,

Inc. v. MCIMetro Access Transmission Servs., LLC, 425 F.3d 964, 968 (11th Cir.

2005) (citing four factors). A preliminary injunction “is an extraordinary remedy”

that should not be issued unless the plaintiff clearly satisfies all four elements.

Diamond Crystal Brands, Inc. v. Wallace, 531 F. Supp. 2d 1366, 1370 (N.D. Ga.

2008). If a state statute is challenged, a preliminary injunction should be “granted

reluctantly” because it “overrules the decision of the elected representatives of the

people” and interferes with democratic government. Ne. Fla. Chpt. of Ass'n of

General Contr. v. Jacksonville, 896 F.2d 1283, 1285 (11th Cir. 1990), rev’d and

remanded on other grounds, 508 U.S. 656 (1993). Such injunctions lack the

“safeguards” that come with a trial and should be granted “only upon a clear

showing” that it is “is definitely demanded by the Constitution and by the other

strict legal and equitable principles that restrain courts.” Id.

                                 III.   ARGUMENT
      A.     AHIP is not substantially likely to succeed on the merits.2

      ERISA preemption has been called a “morass” in which courts have been

“mired in confusion about basic points.” Morstein v. National Ins. Services, Inc.,

2
 As noted by the Commissioner, AHIP’s claims are not ripe. Intervenors adopt
this argument as another reason why AHIP is unlikely to succeed on the merits.

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93 F.3d 715, 718 & n.7 (11th Cir. 1996) (en banc). Two of the murkiest areas of

ERISA preemption are those that AHIP claims are most straightforward: (1) the

nature and scope of Section 502(a) “complete preemption”; and (2) the scope of

Section 514 “conflict preemption.” AHIP’s claims misconstrue both provisions.

Neither Section 502(a) nor Section 514 prevent enforcement of the IDEA.

      To understand how these preemption provisions operate, one must recall that

“the overall intent of ERISA” is “to promote the interests of employees and their

beneficiaries in employee benefit plans.” Morstein, 93 F.3d at 718. The principal

“ERISA entities” it regulates “are the employer, the plan, the plan fiduciaries, and

the beneficiaries under the plan.” Id. at 722. Obviously, an “employee benefit

plan” and any fiduciary with discretionary authority to act on the plan’s behalf are

different. Compare 29 U.S.C. §1002(3) with 29 U.S.C. §1002(16)(A). Plan

fiduciaries are those entities that exercise discretionary authority on behalf of an

ERISA plan. 29 U.S.C. §1002(21)(A); Cotton v. Massachusetts Mutual Life Ins.

Co., 402 F.3d 1267, 1277 (11th Cir. 2005). This includes the plan sponsor, the

entity (often the employer) that funds the plan. 29 U.S.C. §§1002(16)(B). It also

includes the ERISA “plan administrator,” which is the entity, by default the

employer, which exercises discretionary authority over the plan. Id.,

§§1002(16)(A), (21)(A)(iii).


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      An ERISA “plan administrator” is qualitatively different from a TPA for a

self-funded plan. When a plan sponsor “retain[s] the financial risk of coverage” by

creating a “self-funded” plan,” the employer often “contract[s] with a [TPA] solely

to handle aspects of plan administration, such as claims processing.” AHIP Brief

at 5-6. The TPA “applies the terms of the plan as developed by the plan sponsor to

meet its needs and those of its covered employees and dependents.” Id. at 6. The

self-funded plan or the plan sponsor, “retains the financial responsibility to pay

claims made under the plan.” Id. “[A] plan administrator who merely performs

claims processing, investigatory, and record keeping duties is not a fiduciary.”

Baker v. Big Star Div. of Grand Union Co., 893 F.2d 288, 290 (11th Cir. 1989).3

When an employer does “no more than ‘rent’ the claims processing department of

[an insurance company] to review claims and determine the amount payable ‘in

accordance with the terms and conditions of [a benefit plan],” that entity does not

become an ERISA fiduciary. Id. “An insurance company does not become an

ERISA ‘fiduciary’ simply by performing administrative functions and claims


3
 See 29 C.F.R. §2509.75-8, D-2 (non-fiduciary functions); Terry v. Bayer Corp.,
145 F.3d 28, 35 (1st Cir. 1998) (“[A]n entity which merely processes claims ‘is not
a fiduciary because such person does not have discretionary authority or
discretionary control respecting management of the plan.’”); Baxter v. C.A. Muer
Corp., 941 F.2d 451, 455 (6th Cir. 1991); Klosterman v. Western Gen. Mgmt., 32
F.3d 1119, 1124-1125 (7th Cir. 1994); Kyle Rys. v. Pacific Admin. Servs., 990 F.2d
513, 516 (9th Cir. 1993); Confer v. Custom Eng’g Co., 952 F.2d 34 (3d Cir. 1991).

                                          6
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processing within a framework of rules established by an employer.” Id.

      Because TPAs are not “ERISA entities” or fiduciaries, “ERISA does not

regulate the duties of non-fiduciary plan administrators.” Id. at 289; Howard v.

Parisian, 807 F.2d 1560, 1564 (11th Cir. 1987). So, in general, “ERISA does not

authorize actions against nonfiduciaries of an ERISA plan.” Terry, 145 F.3d at 35.

      AHIP represents TPAs in this suit. According to AHIP, it is “an association

whose members include companies that process claims and otherwise administer

the ERISA plans the Prompt Pay Amendment is designed to regulate.” AHIP Brief

at 3; id. (referring to “claims that they process under self-funded ERISA plans.”);

Complaint, ¶11. AHIP’s members, as TPAs, therefore are not fiduciaries of self-

funded plans, ERISA-regulated or not; and AHIP does not contend otherwise.

      Insurance companies who are members of AHIP, wearing one hat as insurer

and another as TPA, contract for services with and promise payment to health care

providers. ERISA also does not regulate those providers. “Health care providers

are not party to the ERISA bargain struck by health benefit plans and their

participants.” Baylor Univ. Med. Ctr. v. Arkansas Blue Cross Blue Shield, 331 F.

Supp. 2d 502, 508 (N.D. Tex. 2004) (citing Memorial Hosp. Sys. v. Northbrook

Life Ins. Co., 904 F.2d 236, 249 (5th Cir. 1990). In fact, “[n]othing in the language

of [ERISA] or the context of its passage indicates that Congress chose to displace


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general health care regulation, which historically has been a matter of local

concern.” New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers

Ins. Co., 514 U.S. 645, 661 (1995) (“Travelers”); Pegram v. Herdrich, 530 U.S.

211, 237 (2000). So, “ERISA does not preempt enforcement of contracts that

specify who pays how much to whom for medical care.” Central States, Southeast

& Southwest Areas Health and Welfare Fund v. Pathology Labs. Of Arkansas, 71

F.3d 1251, 1253, 1254 (7th Cir. 1995); id. (“[§1144(a)] does not annul state laws of

general applicability just because they affect the price of medical care”).

             1.     General Principles
      The “starting presumption” in ERISA preemption cases is “that Congress

[did] not intend to supplant state law.” Travelers, 514 U.S. at 654. Early Supreme

Court cases had a “broad interpretation” of ERISA preemption and whether a state

law "relate[s] to any employee benefit plan." Morstein, 93 F.3d at 720 (citation

omitted). However, in 1995 in Travelers, the Court “turned the tide on the

expansion of the preemption doctrine” and began limiting the scope of ERISA

preemption. Id. at 721; Whitt v. Sherman Int’l Corp., 147 F.3d 1325, 1333 (11th

Cir. 1998) (noting “sea change” begun in Travelers). Now, it is clear that the

“relates to” clause does not “alter [the] ordinary assumption that the historic police

powers of the States were not to be superseded by [ERISA],” California Div. of



                                          8
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Labor Stds. Enforcement v. Dillingham Constr, 519 U.S. 316, 331 (1997), unless

that was the “clear and manifest purpose of Congress.” Travelers, 514 U.S. at 655.

      A court must examine “the objectives of [ERISA]” when deciding if ERISA

preempts state law. Travelers, 514 U.S. at 656. “[C]ost uniformity was almost

certainly not an object of pre-emption.” Id. at 662. So, it is not enough for a law

to have an “indirect economic influence” on ERISA plans. Id. at 661 (law raising

cost to insurers and HMOs which contract with plans not preempted). Any state

law “that increases the cost of providing benefits to covered employees will have

some effect on the administration of ERISA plans, but that simply cannot mean

that every state law with such an effect is pre-empted by the federal statute.”

DeBuono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806, 816 (1997).

      ERISA has two different preemption provisions, “complete preemption”

under Section 502(a), 29 U.S.C. §1132(a), and “conflict preemption” under Section

514(a), 29 U.S.C. §1144(a), which act differently. Cotton, 402 F.3d at 1281.

AHIP says both preempt Sections 4, 5, and 6. On this record, it is clear that neither

do. As this Circuit has correctly concluded, “when a state law claim brought

against a non-ERISA entity does not affect relations among principal ERISA

entities as such,” it is not preempted. Morstein, 93 F.3d at 722.

             2.    Section 502(a) “Complete Preemption”


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      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 18 of 36




      “Complete preemption” is “narrower” than “conflict preemption.” Cotton,

402 F.3d at 1281. Section 502(a) “provides the exclusive cause of action for the

recovery of benefits governed by an ERISA plan. State law claims seeking relief

available under [§ 502(a)] are recharacterized as ERISA claims and therefore 'arise

under' federal law.” Id. (citations omitted). Complete preemption exists only

when plaintiff seeks relief available under § 502(a) and four elements are satisfied:

      [1] there must be a relevant ERISA plan. [2] the plaintiff must have
      standing to sue under that plan. [3] the defendant must be an ERISA
      entity. [4] the complaint must seek compensatory relief akin to that
      available under [§ 502(a)]; often this will be a claim for benefits due
      under a plan.

Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir. 1999)

(internal quotation omitted). “[I]f an individual, at some point in time, could have

brought his claim under [§ 502(a)(1)(B)], and where there is no other independent

legal duty that is implicated by a defendant's actions, then the individual's cause of

action is completely pre-empted by ERISA § 502(a)(1)(B).” Aetna Health, Inc. v.

Davila, 542 U.S. 200, 210 (2004) (internal quotations and citation omitted).4

      AHIP claims that the IDEA is “completely preempted” because it conflicts

with § 502(a)’s “exclusive civil enforcement provision,” and ERISA’s claims-


4
 Davila “refines” the Butero test by adding “the existence of a separate legal duty”
inquiry. Connecticut State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d
1337, 1345 (11th Cir. 2009) (“CSDA”).

                                          10
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 19 of 36




processing regulations, 29 C.F.R. §2560-503-1, “which establish different

timeliness standards for ERISA plans than those that Georgia seeks to impose on

the same plans.” AHIP Brief at 2, 9, 17-18. AHIP asserts that the IDEA

“duplicates, supplements, or supplants the ERISA civil enforcement remedy”

under § 502(a) and so is preempted. Id. at 18 (quoting Davila, 542 U.S. at 209).

      AHIP is incorrect. Under the Butero/Davila test, none of the complete

preemption criteria are satisfied. This analysis is somewhat askew because the

claims in Davila and Butero, unlike any AHIP argues are “completely preempted”

here, were brought by plan participants, not insurers, seeking something like

benefits under a plan, not complaining about traditional state regulation. Here,

whether it is the Commissioner’s penalty or a physician’s claim for payment based

on a provider agreement asserted against a TPA, such a plaintiff does not seek

relief available under §502(a). See CSDA, 591 F.3d at 1346-47; In re Managed

Care Litig., 2011 U.S. Dist. LEXIS 46877, *38-44 (S.D. Fla. 2011).

      No “relevant ERISA plan” exists under which the Commissioner or the

physician can sue. Physicians and the Commissioner also lack standing to sue this

non-existent plan or assert the physician’s contractual rights under Section 502(a). 5



5
 AHIP has not alleged, nor can it argue on this record, that physicians’ claims are
pursuant to assignments of benefits by plan participants. Such an assertion would

                                         11
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 20 of 36




Borrero v. United Healthcare of New York, Inc., 610 F.3d 1296, 1301-02 (11th Cir.

2010) (physician is not "participant” or “beneficiary" who can bring claim).

Moreover, any hypothetical defendant would be a TPA, which is not an ERISA

entity. Finally, there is “[an]other independent legal duty” implicated by the

TPA’s actions that is the basis for any claim – that prescribed in the provider

agreement, including the duty to pay for services rendered.

      That is why many courts have held that a medical provider’s state law

claims, both contract and tort, against a TPA/insurer are not completely preempted.

See, e.g., CSDA, 591 F.3d at 1346-17. Physicians’ claims, “which arise from the

terms of their provider agreements and could not be asserted by their patient-

assignors, are not claims for benefits under the terms of ERISA plans . . ." Blue

Cross of Cal. v. Anesthesia Care Assoc. Med. Group, Inc., 187 F.3d 1045, 1050

(9th Cir. 1999). 6 So, when the statute or claim deals with the “rate” of payment

require factual development. In fact, most physicians submit claims to a TPA or
insurer pursuant to a contract with that entity. See Palmisano Aff. (Exh. B) at ¶29.
6
  See, e.g., Lone Star OB/GYN Associates v. Aetna Health Inc., 579 F.3d 525, 530
(5th Cir. 2009) ("[a] claim that implicates the rate of payment as set out in the
Provider Agreement, rather than the right to payment under the terms of the benefit
plan, does not run afoul of Davila and is not preempted by ERISA."); Pascack
Valley Hospital, Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d
393, 402 (3d Cir. 2004) (“Hospital’s right to recovery, if it exists, depends entirely
on the operation of third-party contracts executed by the Plan that are independent
of the Plan itself”); Memorial Hospital, 904 F.2d at 250; Northeast Hosp. Auth. v.
Aetna Health Inc., 2007 U.S. Dist. LEXIS 77085 (S.D. Tex. Oct. 17, 2007).


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     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 21 of 36




the provider receives, it is not completely preempted. CSDA, 591 F.3d at 1348,

1350. In fact, since the IDEA focuses on the time a TPA takes to forward already

funded payment to a physician, it is even more removed from a benefits claim.

      As for ERISA’s claims-processing regulations, AHIP’s argument fails for

two more reasons. First, those regulations govern “claims for benefits by

participants and beneficiaries,” not physicians pursuant to provider agreements.

See 29 C.F.R. §2560-503-1(a). Second, those regulations instruct an ERISA plan

to process claims for benefits in a particular way, focusing on the denial and appeal

of a participant/beneficiary’s claim for benefits. Id., §2560-503-1(g), (h). Section

5, and even more so Section 6 of IDEA, address the time a TPA has to process a

medical provider’s claim for payment, when there is no dispute about right to

payment and the claim has been funded by the self-funded plan. See IDEA

§§5(b)(1), 6(b)(1). Thus, the IDEA is not “completely preempted.”

             3.    Section 514 “Defensive” or “Conflict” Preemption
      Section 514 “conflict” preemption also does not preempt the IDEA. Cotton,

402 F.3d at 1281. Section 514 preempts state laws “insofar as they may now or

hereafter relate to any [ERISA-governed] employee benefit plan." 29 U.S.C.

§1144(a). On the record before the Court, AHIP cannot show a substantial

likelihood that the IDEA is conflict preempted by ERISA §514 because it “relates



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      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 22 of 36




to” ERISA-regulated plans.

      A state law “relates to” an employee benefit plan “if it has a connection with

or reference to” it. Travelers, 514 U.S. at 656. However, even pre-Travelers, some

state actions affected such plans “in too tenuous, remote, or peripheral a manner to

warrant a finding that the law 'relates to' the plan." Shaw v. Delta Air Lines, Inc.,

463 U.S. 85, 100 (1983). Among those, “state law claims brought by health care

providers against plan insurers too tenuously affect ERISA plans to be preempted

by the Act.” Lordmann Enterp., Inc. v. Equicor, Inc., 32 F.3d 1529, 1533 (11th

Cir. 1994).

      Because the “starting presumption” in interpreting “relates to” is “that

Congress [did] not intend to supplant state law,” the clause should not be read “to

extend to the furthest stretch of indeterminacy.” Travelers, 514 U.S. at 654, 655.

Instead, ERISA’s objectives guide the analysis of what it preempts. Id. at 656.

Neither “cost uniformity,” id. at 662, regulating health care, id. at 661, nor

regulating insurance, 29 U.S.C. §1144(b), were among ERISA’s objectives.

      Therefore, numerous courts have held that state claims against, or laws that

impact, entities performing ministerial tasks for plans do not “relate to” ERISA.

Pharmaceutical Care Mgmt. Ass’n v. Rowe, 429 F.3d 294, 301-05 (1st Cir. 2005);

In re Managed Care Litig., 2011 U.S. Dist. LEXIS 46877, *45-46 (provider’s


                                          14
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 23 of 36




contract law claims against insurer based on provider agreements not preempted);

In re Managed Care Litig., 135 F. Supp. 2d 1253, 1268 (S.D. Fla. 2001) (same);

American Drug Stores, Inc. v. Harvard Pilgrim Health Care, Inc., 973 F.Supp. 60,

69 (D.Mass. 1997) (choosing providers and operating provider networks has "too

tenuous, remote and peripheral" a nexus to plan administration for preemption).

      IDEA Sections 4, 5, and 6 do not “relate to” ERISA or ERISA plans. First,

they do not expressly refer to ERISA or ERISA plans. In fact, they amended the

definition of “administrator” to apply generally without referencing ERISA at all.

IDEA §4(b)(12) (amending O.C.G.A. §33-23-100). “[H]ealth benefit plan” is also

defined generally to apply to insured and self-insured plans, ERISA-regulated or

not. Id., §§5(a)(2), 6(a)(4) (amending §33-24-59.5 and adding §33-24-59.14).

IDEA Sections 5 and 6 also apply generally, when the TPA/insurer is acting for its

insured business or as a TPA. Id., §§5(e), 6(e).

      Nor does the IDEA have a connection with ERISA plans. In fact, the IDEA

specifically focuses on the TPA and the timing of its payments to the physician.

Id., §6(b)(1) (TPA pays provider). Interest or penalties are paid by the insurer,

even when acting as a TPA. Id., §§6(c)-(e). To further excise any connection to

self-funded plans, Section 4(f) provides a safe harbor for the TPA to ensure that

interest and penalties only apply if the self-funded plan has properly funded the


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      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 24 of 36




plan. Id., §4(f). The IDEA is designed to regulate the relationship between TPAs

and physicians – who are not traditional ERISA entities -- and the timing of

payments between them. See Nat'l Air Traffic Controllers Ass'n v. Dental Plans,

Inc., 2005 U.S. Dist. LEXIS 42047, *12-13 (N.D. Ga. Nov. 9, 2005) (this circuit’s

“limitation on ERISA preemption” coincides with other circuits that have held that

“Congress did not intend to preempt state laws of general applicability that do not

affect the relations among traditional ERISA entities.”); CSDA, 591 F.3d at 1347,

n.7 (provider claims against insurer not preempted). So, while the IDEA may

entail interpreting these entities’ provider agreements, it will not impose

obligations on, or require interpretations of, health benefit plans.

      Nor does the IDEA provide plan participants with remedies against a plan or

its fiduciaries, thus impacting the relations between the principal ERISA entities.

This distinction renders many of AHIP’s cases inapposite.7 Those cases almost

exclusively involve state law claims by plan participants against ERISA entities,

which therefore affect those relationships. Here, particularly IDEA §§4 and 6

regulate the relationship between TPAs and medical providers, non-ERISA entities

that have an independent relationship, apart from any employee benefit plan,
7
 Davila, 542 U.S. at 204; FMC Corp. v. Holliday, 498 U.S. 52 (1990); Pilot Life,
481 U.S. 41 (1987); Ellis v. Liberty Life Assur., 394 F.3d 262 (5th Cir. 2004); Jones
v. LMR Int’l, Inc., 457 F.3d 1174 (11th Cir. 2006); Ferree v. Life Ins. Co. of N.A.,
2006 WL 2025012 (N.D. Ga. 2006); Cicio v. Does, 321 F.3d 83 (2d Cir. 2003).

                                          16
     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 25 of 36




through their provider agreements. Contrast Schoedinger v. United Healthcare of

the Midwest, Inc., 557 F.3d 872, 875-76 (8th Cir. 2009) (provider lacked separate

contractual relationship and sued as assignee of plan participants’ claims).

      To avoid this outcome, AHIP contends that, in essence, TPAs should be

treated as plans themselves. See AHIP Brief at 13 (citing Jones, 457 F.3d at 1180).

However, TPAs are not ERISA fiduciaries, let alone plans themselves, and

regulating the TPA does not imply regulating the plan itself. Nor does Jones

support AHIP’s position. In Jones, plan participants sued the sponsor of their

defunct plan to recover plan benefits, asserting various state law theories. They

also asserted a state-law claim against Great West, the TPA, for failing to apprise

them that the sponsor was not funding the plan. However, the participants

conceded that Great West was an ERISA fiduciary, so the claim was between two

ERISA entities. Id. at 1180. Then, in dicta, the court added that, even if the TPA

was not a fiduciary, the claim affected the relationship between the sponsor and the

participants, both ERISA entities, so the claim was conflict preempted. Id.

      Here, none of that applies. The IDEA governs the relationship between

TPAs, whom AHIP concedes are claims processors and so not fiduciaries, and

medical providers. Moreover, if discovery reveals that some AHIP members

occasionally are fiduciaries, any contractual relationship with a TPA would remain


                                         17
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 26 of 36




one that is not “among principal ERISA entities” and therefore not regulated by

ERISA. Id. And even “some overbreadth” does not require preemption. Kentucky

Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 336 n.1 (2003) (“KAHP”).

Finally, IDEA §4(f) also makes clear that it does not impose a funding obligation

on plans by exempting situations if a self-insured plan has not been funded yet.

      Particularly on the record before the Court, AHIP cannot show a substantial

likelihood that IDEA Sections 4 through 6 are conflict preempted by ERISA §514

because their application “relates to” ERISA-regulated plans.

                    a.    ERISA’s Savings Clause and “Deemer” Clause
      However, if the Court concludes that any of the IDEA “relates to” ERISA-

regulated plans, it is “saved” from preemption because they “regulate insurance.”

29 U.S.C. §1144(b)(2)(A). Under the test established in KAHP, a state law

“regulates insurance” if it (1) is “specifically directed toward entities engaged in

insurance,” and (2) “substantially affect[s] the risk pooling arrangement between

the insurer and insured.” Id. at 341-42. AHIP says the IDEA does neither, but it in

fact does both. See AHIP Brief at 15.

      First, the IDEA is specifically directed toward entities engaged in insurance.

AHIP disagrees, saying it is directed at self-funded plans and TPAs. Id. at 16.

Even if this were true, KAHP resolved this issue, concluding that both self-funded



                                          18
     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 27 of 36




plans and those who “provide only administrative services to self-insured plans”

“bring them[selves] within the activity of insurance” for the savings clause.

KAHP, 538 U.S. at 336 n.1.8 The Court expressly concluded that entities like

TPAs were engaged in the “activity of insurance.” Id.

      Second, the IDEA affects the risk pooling arrangement as the statutes in

KAHP did.9 In KAHP, the disputed statutes prevented insureds from obtaining

lower premiums in exchange for a closed provider network. Here, employees

might not pay the same premiums if a TPA can no longer keep the interest float it

earns from holding onto clean payments indefinitely. Requiring TPAs to pay

providers’ claims, rather than hold funds indefinitely that have been disbursed to

the TPA, “alter[s] the scope of permissible bargains” between participants and

TPAs, at least derivatively via the plan sponsor funding the claims. Id. at 338-39.

      Finally, Section 514’s “deemer” clause does not apply. See 29 U.S.C.

§1144(b)(2)(B) (“Neither an employee benefit plan . . . nor any trust established


8
  The Court stated that “self-insured plans engage in the same sort of risk pooling
arrangements as separate entities that provide insurance to an employee benefit
plan.” Id. As for entities, like HMOs, the Court said: “Petitioners maintain that
the application to non-insuring HMOs forfeits the laws' status as “law(s)...which
regulate insurance.” § 1144(b)(2)(A). We disagree. . . . [T]hese non-insuring
HMOs would be administering self-insured plans, which . . . suffices to bring them
within the activity of insurance for purposes of §1144(b)(2)(A)”). Id.
9
  This is an alternative argument only if the Court disagrees with the principal
argument that the IDEA does not “relate to” ERISA plans.

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      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 28 of 36




under such a plan, shall be deemed to be an . . . insurer. . . for purposes of any

[State law] purporting to regulate insurance companies.” AHIP simply relies on

FMC Corp. to argue that, “if the plan is uninsured [i.e., self-funded], the State may

not regulate it.” See AHIP Brief at 15 (quoting FMC Corp., 498 U.S. at 64).

      This argument fails for both self-funded plans and TPAs. AHIP ignores that

many self-funded plans, like government and church plans, are exempt from

ERISA. See 29 U.S.C. §1003(b). So, even under AHIP’s view, the IDEA can

regulate some self-funded plans. Moreover, AHIP does not claim to represent any

self-funded plans, so any argument about the IDEA’s impact on entities AHIP does

not represent can be disregarded as speculative and even lacking standing. Finally,

the IDEA focuses on the relationship between TPAs, the entities AHIP represents,

and medical providers, not self-insured plans themselves. IDEA §§4 and 6, in

particular, impose no substantive requirements on self-insured plans, and §5

simply places all self-insured plans on the same footing as insurers.

      As for TPAs, AHIP does not assert that the “deemer clause” prevents the

IDEA from applying to them. The “deemer clause” only applies to “employee

benefit plans.” 29 U.S.C. §1144(b)(2)(B). It nowhere extends to TPAs performing

administrative services, or even ERISA fiduciaries, acting on behalf of those plans.

FMC Corp. highlights this. The Court explained that a State cannot regulate a plan


                                          20
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 29 of 36




directly, but it can regulate entities, like insurers, that contract with a plan without

running afoul of the “deemer clause.” FMC Corp., 498 U.S. at 61 (“The ERISA

plan is consequently bound by state insurance regulations insofar as they apply to

the plan’s insurer.”); id. (permitting “indirect state insurance regulation”). The

IDEA makes this same distinction. It focuses on TPAs who contract with health

benefit plans, not the plans themselves. Even FMC Corp. upheld this distinction.

      On the record before the Court, AHIP cannot show that the IDEA is conflict

preempted by Section 514 because it “relates to” ERISA-regulated plans.

      B.     AHIP will not suffer irreparable harm.
      Irreparable harm that is actual and imminent, not remote or speculative, is

“the sine qua non of injunctive relief.” City of Jacksonville, 896 F.2d at 1285. In

pre-enforcement challenges, the proper balance between state and federal authority

counsels restraint in issuing injunctions against state officials absent immediate

irreparable injury. City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983).

      AHIP asserts “it is well-established that having to comply with a law that is

preempted… constitutes irreparable harm.” In Morales v. Trans World Airlines,

Inc., cited by AHIP, plaintiffs, after receiving intent to sue notices from an

Attorney General, claimed that federal law preempted certain state guidelines. 504

U.S. 374, 379 (1992). The Court said that this created a “Hobson’s choice”



                                           21
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 30 of 36




because the notices showed that litigation was imminent. Id. at 381. However, it

concluded that the injunction went too far and held that “a conjectural injury

cannot warrant equitable relief” and any other rule “would require federal courts to

determine the constitutionality of state laws in hypothetical situations where it is

not even clear the State itself would consider its law applicable.” Id. Thus, it is

not true that “a violation of constitutional rights always constitutes irreparable

harm.” Siegal v. LePore, 234 F.3d 1163, 1177 (11th Cir. 2000); White v. Baker,

696 F. Supp. 2d 1289, 1312 (N.D. Ga. 2010) (“Constitutional harm is not

necessarily synonymous with the irreparable harm necessary for issuance of a

preliminary injunction.”). Therefore, irreparable harm does not exist simply

because AHIP argues for pre-emption.

      Here, there is no irreparable harm. Unlike Morales, AHIP members have

not been threatened with litigation. The IDEA has not even taken effect yet. In

asserting that its members will be subject to penalties and enforcement by state

regulators, AHIP speculates the Commissioner will violate ERISA and enforce

penalties against ERISA-governed plans. It is “inappropriate…to assume that the

state will disregard” ERISA when “unconstitutional application of the statute could

be challenged in later litigation.” See Ga. Latino Alliance for Human Rights v.

Deal, 2012 U.S. App. LEXIS 17514, *40 n. 12 (11th Cir. Aug. 2012).


                                          22
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      AHIP also generally asserts that its members’ “irreparable harm” includes “a

number of compliance burdens and costs…by requiring them to modify their

claims systems and procedures….” AHIP Brief at 22. If “modifying” its

members’ systems were truly as harmful as AHIP claims, then its members have

harmed themselves by waiting 15 months after the IDEA’s passage to challenge

these provisions on the eve of their effective date. AHIP’s 15-month delay in

filing this lawsuit weighs against its “irreparable harm” claim.

      Furthermore, AHIP generally claims that its members will have to spend

increased employee time in monitoring provider payments. (Doc. No. 4-4 at ¶¶ 8-

12). It does not allege that they are not required to make these payments. They are

simply monitoring when payments are made. However, “[m]ere injuries, however

substantial, in terms of money, time and energy necessarily expended in the

absence of a stay, are not enough.” City of Jacksonville, 896 F.2d at 1285. This

“harm” is not the type of irreparable harm that justifies the drastic relief AHIP

seeks. The affidavit merely talks about increased employee time potentially spent

modifying systems. (Doc. No. 4-4 at ¶¶ 8-12).10 Such complaints are not the kind

of “irreparable harm” needed to enjoin the IDEA.


10
  AHIP’s citation to Bankwest, Inc. v. Baker, 324 F. Supp.2d 1333 (N.D. Ga.
2004) is irrelevant since Ms. Donahue’s affidavit does not state that any AHIP
member is losing revenue or will lose revenue.

                                         23
     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 32 of 36




      AHIP also ignores that many of its members already must comply with

Sections 4 through 6’s conditions and have agreed to those conditions in the past.

The vast majority of national TPAs are also health insurers. When AHIP’s

members wear their “health insurer hat” in Georgia, the Act has required them to

comply with these conditions for thirteen years already. The IDEA simply requires

companies to comply with the same laws regardless of what role, insurer or TPA,

they are acting in. Therefore, the IDEA creates no new additional burdens, but

simply seek uniform payment requirements.

      Additionally, many AHIP members previously agreed to comply with the

timing requirements in the IDEA to settle the Managed Care Litigation. See Exh.

B at ¶¶11-13. From 2003 to 2005, many of AHIP’s largest members entered into

settlement agreements (presumably without consulting with the self-funded plans

with which they contract from time to time) which contained prompt payment

terms that are essentially embodied in the IDEA. Id. Companies agreed to pay

clean electronic claims in 15 days and clean paper claims in 30 days, regardless of

whether they were acting as an insurer or as a TPA. Id. at ¶13. These settlement

agreements lasted four years. Id. at ¶¶15-16. In fact, Aetna agreed to abide by the

prompt payment terms thereafter. Id. at ¶16. So until 2009, and even later, many

AHIP members agreed to comply with the deadlines now codified by the IDEA.


                                        24
     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 33 of 36




      AHIP’s members will not suffer irreparable harm because the IDEA codifies

terms they agreed to comply with previously and because they must comply with

them now when they act as health insurers in Georgia.

      C.     Harm to the Defendants and Public Interest
      Because AHIP cannot prove a substantial likelihood of success on the merits

and irreparable harm, the Court need not address the remaining factors. However,

the IDEA’s overwhelming legislative support, see Exh. B at ¶ 24, and AHIP’s 15-

month delay in filing suit shows that the public interest in allowing the democratic

process to operate outweighs AHIP’s contrary interest. Intervenors defer to the

Commissioner with respect to arguments regarding how a preliminary injunction

would interfere with the Commissioner’s statutory responsibilities.

                              IV.    CONCLUSION
      The Court should deny AHIP’s Motion for Preliminary Injunction.



                                        By:
                                         Thomas Gallo (283048)
                                         BARNES & THORNBURG, LLP
                                         3475 Piedmont Road, N.E.
                                         Atlanta, Georgia 30305
                                         Telephone: (404) 264-4015
                                         Facsimile: (404) 264-4033
                                         Email: thomas.gallo@btlaw.com
                                         Counsel for AMA and MAG



                                         25
     Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 34 of 36




                      CERTIFICATE OF COMPLIANCE
      I hereby certify that the foregoing has been prepared in Times New Roman

14 font and is in compliance with United States District Court, Northern District of

Georgia Local Rule 5.1.



                                              ________________________
                                              Thomas Gallo
                                              Georgia Bar No. 283048




                                         26
      Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 35 of 36




                    UNITED STATES DISTRICT COURT
                    NORTHERN DISTRICT OF GEORGIA
                          ATLANTA DIVISION

AMERICA’S HEALTH INSURANCE
PLANS,
                                                   Civil Action No.
            Plaintiff,
                                                   1-12-CV-02978-WSD
      v.
RALPH T. HUDGENS,
            Defendant,
and

AMERICAN MEDICAL ASSOCIATION,
and MEDICAL ASSOCIATION OF
GEORGIA,

            Intervenor-
            Defendants.


                          CERTIFICATE OF SERVICE

      The undersigned hereby certifies the foregoing has been filed this ___ day of

____________, 2012, on the parties identified below by using the CM/ECF

system, which automatically sends e-mail notification to the following attorneys of

record:
         Case 1:12-cv-02978-WSD Document 18-1 Filed 10/12/12 Page 36 of 36




        Bruce P. Brown                        James A. Washburn
        Bruce P. Brown Law LLC                McKenna Long & Aldridge LLP
        309 N. Highland Avenue, Suite A       303 Peachtree Street, Suite 5300
        Atlanta, GA 30307                     Atlanta, GA 30308

        Attorney for Plaintiff                Attorneys for Plaintiff

        Miguel A. Estrada                     Samuel S. Olens
        Geoffrey Sigler                       Isaac Byrd
        Nikesh Jindal                         Daniel Walsh
        Gibson, Dunn & Crutcher LLP           Robin G. Cohen
        1050 Connecticut Avenue, N.W.         Alex F. Sponseller
        Washington, D.C. 11101                Georgia Attorney General’s
                                              Office
        Attorneys for Plaintiff               40 Capitol Square, SW
                                              Atlanta, GA 30334-1300

                                              Attorneys for Defendant




                                              Thomas Gallo
                                              Georgia Bar No. 283048

                                              Counsel for American Medical
                                              Association and Medical Association
                                              of Georgia




SBDS01 371877v1




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