The "pre-emption clause" ( 514(a)) of the Employee Retirement Income Security Act of 1974 (ERISA) provides that ERISA supersedes all state laws insofar as they "relate to any employee benefit plan," but ERISA's "saving clause" ( 514(b)(2)(A)) excepts from the pre-emption clause any state law that "regulates insurance." ERISA's "deemer clause" ( 514(b)(2)(B)) provides that no employee benefit plan shall be deemed to be an insurance company for purposes of any state law "purporting to regulate insurance." On the basis of a work-related injury occurring in Mississippi in 1975, respondent began receiving permanent disability benefits under his employer's ERISA-regulated welfare benefit plan, under which claims were handled by petitioner, the employer's insurer. However, after two years petitioner terminated respondent's benefits, and during the following three years his benefits were reinstated and terminated by petitioner several times. Respondent ultimately instituted a diversity action against petitioner in Federal District Court, alleging tort and breach of contract claims under Mississippi common law for petitioner's failure to pay benefits under the insurance policy. The court granted summary judgment for petitioner, finding that respondent's common law claims were pre-empted by ERISA. The Court of Appeals reversed.
ERISA pre-empts respondent's suit under state common law for alleged improper processing of his claim for benefits under the ERISA-regulated benefit plan. Pp. 44-57.
O'CONNOR, J., delivered the opinion for a unanimous Court.
John E. Nolan, Jr., argued the cause for petitioner. With him on the briefs were Paul J. Ondrasik, Jr., Antonia B. Ianniello, George F. Woodliff III, and David L. Bacon.
William C. Walker, Jr., argued the cause for respondent. With him on the brief was William L. Denton. *
[ Footnote * ] Erwin N. Griswold, Jack H. Blaine, Phillip E. Stano, and John P. Dineen filed a brief for the American Council of Life Insurance et al. as amici curiae urging reversal.
Solicitor General Fried, Deputy Solicitor General Kuhl, Christopher J. Wright, George R. Salem, and Allen H. Feldman filed a brief for the United States as amicus curiae. [481 U.S. 41, 43]
JUSTICE O'CONNOR delivered the opinion of the Court.
This case presents the question whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. 1001 et seq., pre-empts state common law tort and contract actions asserting improper processing of a claim for benefits under an insured employee benefit plan.
In March 1975, in Gulfport, Mississippi, respondent Everate W. Dedeaux injured his back in an accident related to his employment for Entex, Inc. (Entex). Entex had at this time a long term disability employee benefit plan established by purchasing a group insurance policy from petitioner, Pilot Life Insurance Co. (Pilot Life). Entex collected and matched its employees' contributions to the plan and forwarded those funds to Pilot Life; the employer also provided forms to its employees for processing disability claims, and forwarded completed forms to Pilot Life. Pilot Life bore the responsibility of determining who would receive disability benefits. Although Dedeaux sought permanent disability benefits following the 1975 accident, Pilot Life terminated his benefits after two years. During the following three years Dedeaux's benefits were reinstated and terminated by Pilot Life several times.
In 1980, Dedeaux instituted a diversity action against Pilot Life in the United States District Court for the Southern District of Mississippi. Dedeaux's complaint contained three counts: "Tortious Breach of Contract"; "Breach of Fiduciary Duties"; and "Fraud in the Inducement." App. 18-23. Dedeaux sought "[d]amages for failure to provide benefits under the insurance policy in a sum to be determined at the time of trial," "[g]eneral damages for mental and emotional distress and other incidental damages in the sum of $250,000.00," and "[p]unitive and exemplary damages in the [481 U.S. 41, 44] sum of $500,000.00." Id., at 23-24. Dedeaux did not assert any of the several causes of action available to him under ERISA, see infra, at 53.
At the close of discovery, Pilot Life moved for summary judgment, arguing that ERISA pre-empted Dedeaux's common law claim for failure to pay benefits on the group insurance policy. The District Court granted Pilot Life summary judgment, finding all Dedeaux's claims pre-empted. App. to Pet. Cert. 16a.
The Court of Appeals for the Fifth Circuit reversed, primarily on the basis of this Court's decision in Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985). See 770 F.2d 1311 (1985). We granted certiorari, 478 U.S. 1004 (1986), and now reverse.
In ERISA, Congress set out to
Congress capped off the massive undertaking of ERISA with three provisions relating to the pre-emptive effect of the federal legislation:
In Metropolitan Life, this Court, noting that the preemption and saving clauses "perhaps are not a model of legislative drafting," 471 U.S., at 739 , interpreted these clauses in relation to a Massachusetts statute that required minimum [481 U.S. 41, 47] mental health care benefits to be provided Massachusetts residents covered by general health insurance policies. The appellants in Metropolitan Life argued that the state statute, as applied to insurance policies purchased by employee health care plans regulated by ERISA, was pre-empted.
The Court concluded, first, that the Massachusetts statute did "relate to . . . employee benefit plan[s]," thus placing the state statute within the broad sweep of the pre-emption clause, 514(a). Metropolitan Life, supra, at 739. However, the Court held that, because the state statute was one that "regulate[d] insurance," the saving clause prevented the state law from being pre-empted. In determining whether the Massachusetts statute regulated insurance, the Court was guided by case law interpreting the phrase "business of insurance" in the McCarran-Ferguson Act, 59 Stat. 33, as amended, 15 U.S.C. 1011 et seq.
Given the "statutory complexity" of ERISA's three pre-emption provisions, Metropolitan Life, supra, at 740, as well as the wide variety of state statutory and decisional law arguably affected by the federal pre-emption provisions, it is not surprising that we are again called on to interpret these provisions.
There is no dispute that the common law causes of action asserted in Dedeaux's complaint "relate to" an employee benefit plan and therefore fall under ERISA's express pre-emption clause, 514(a). In both Metropolitan Life, supra, and Shaw v. Delta Air Lines, Inc., supra, at 96-100, we noted the expansive sweep of the pre-emption clause. In both cases "[t]he phrase `relate to' was given its broad common-sense meaning, such that a state law `relate[s] to' a benefit plan `in the normal sense of the phrase, if it has a connection with or reference to such a plan.'" Metropolitan Life, supra, at 739, quoting Shaw v. Delta Air Lines, supra, at 97. In particular we have emphasized that the pre-emption clause is not limited to "state laws specifically designed [481 U.S. 41, 48] to affect employee benefit plans." Shaw v. Delta Air Lines, supra, at 98. The common law causes of action raised in Dedeaux's complaint, each based on alleged improper processing of a claim for benefits under an employee benefit plan, undoubtedly meet the criteria for pre-emption under 514(a).
Unless these common law causes of action fall under an exception to 514(a), therefore, they are expressly pre-empted. Although Dedeaux's complaint pleaded several state common law causes of action, before this Court Dedeaux has described only one of the three counts - called "tortious breach of contract" in the complaint, and "the Mississippi law of bad faith" in respondent's brief - as protected from the pre-emptive effect of 514(a). The Mississippi law of bad faith, Dedeaux argues, is a law "which regulates insurance," and thus is saved from pre-emption by 514(b)(2)(A). 1
In Metropolitan Life, we were guided by several considerations in determining whether a state law falls under the saving clause. First, we took what guidance was available from a "common-sense view" of the language of the saving clause itself. 471 U.S., at 740 . Second, we made use of the case law interpreting the phrase "business of insurance" under the McCarran-Ferguson Act, 15 U.S.C. 1011 et seq., in interpreting the saving clause. 2 Three criteria have been used to determine whether a practice falls under the "business of insurance" for purposes of the McCarran-Ferguson Act:
As early as 1915 the Mississippi Supreme Court had recognized that punitive damages were available in a contract case when "the act or omission constituting the breach of the contract amounts also to the commission of a tort." See Hood v. Moffett, 109 Miss. 757, 767, 69 So. 664, 666 (1915) (involving a physician's breach of a contract to attend to a woman at her approaching "accouchement"). In American Railway Express Co. v. Bailey, 142 Miss. 622, 631, 107 So. 761, 763 (1926), a case involving a failure of a finance company to deliver to the plaintiff the correct amount of money cabled to the plaintiff through the finance company's offices, the Mississippi Supreme Court explained that punitive damages could be available when the breach of contract was "attended by some intentional wrong, insult, abuse, or gross negligence, which amounts to an independent tort." In Standard Life Insurance Co. v. Veal, 354 So.2d 239 (1977), the Mississippi Supreme Court, citing D. L. Fair Lumber Co. v. Weems, 196 Miss. 201, 16 So.2d 770 (1944) (breach of contract was accompanied by "the breaking down and destruction of another's fence"), American Railway Express Co. v. Bailey, supra, and Hood v. Moffett, supra, upheld an award of punitive damages against a defendant insurance company for failure to pay on a credit life policy. Since Veal, the Mississippi Supreme Court has considered a large number of cases in which plaintiffs have sought punitive damages from insurance companies for failure to pay a claim under an insurance contract, and in a great many of these cases the court has used the identical formulation, first stated in Bailey, of what must "attend" the breach of contract in order for punitive [481 U.S. 41, 50] damages to be recoverable. See, e. g., Employers Mutual Casualty Co. v. Tompkins, 490 So.2d 897, 902 (1986); State Farm Fire & Casualty Co. v. Simpson, 477 So.2d 242, 248 (1985); Consolidated American Life Ins. Co. v. Toche, 410 So.2d 1303, 1304 (1982); Gulf Guaranty Life Ins. Co. v. Kelley, 389 So.2d 920, 922 (1980); State Farm Mutual Automobile Ins. Co. v. Roberts, 379 So.2d 321, 322 (1980); New Hampshire Ins. Co. v. Smith, 357 So.2d 119, 121 (1978); Lincoln National Life Ins. Co. v. Crews, 341 So.2d 1321, 1322 (1977). Recently the Mississippi Supreme Court stated that "[w]e have come to term an insurance carrier which refuses to pay a claim when there is no reasonably arguable basis to deny it as acting in `bad faith,' and a lawsuit based upon such an arbitrary refusal as a `bad faith' cause of action." Blue Cross & Blue Shield of Mississippi, Inc. v. Campbell, 466 So.2d 833, 842 (1984).
Certainly a common-sense understanding of the phrase "regulates insurance" does not support the argument that the Mississippi law of bad faith falls under the saving clause. A common-sense view of the word "regulates" would lead to the conclusion that in order to regulate insurance, a law must not just have an impact on the insurance industry, but must be specifically directed toward that industry. Even though the Mississippi Supreme Court has identified its law of bad faith with the insurance industry, the roots of this law are firmly planted in the general principles of Mississippi tort and contract law. Any breach of contract, and not merely breach of an insurance contract, may lead to liability for punitive damages under Mississippi law.
Neither do the McCarran-Ferguson Act factors support the assertion that the Mississippi law of bad faith "regulates insurance." Unlike the mandated-benefits law at issue in Metropolitan Life, the Mississippi common law of bad faith does not effect a spreading of policyholder risk. The state common law of bad faith may be said to concern "the policy relationship between the insurer and the insured." The connection [481 U.S. 41, 51] to the insurer-insured relationship is attenuated at best, however. In contrast to the mandated-benefits law in Metropolitan Life, the common law of bad faith does not define the terms of the relationship between the insurer and the insured; it declares only that, whatever terms have been agreed upon in the insurance contract, a breach of that contract may in certain circumstances allow the policyholder to obtain punitive damages. The state common law of bad faith is therefore no more "integral" to the insurer-insured relationship than any State's general contract law is integral to a contract made in that State. Finally, as we have just noted, Mississippi's law of bad faith, even if associated with the insurance industry, has developed from general principles of tort and contract law available in any Mississippi breach of contract case. Cf. Hart v. Orion Ins. Co., 453 F.2d 1358 (CA10 1971) (general state arbitration statutes do not regulate the business of insurance under the McCarran-Ferguson Act); Hamilton Life Ins. Co. v. Republic National Life Ins. Co., 408 F.2d 606 (CA2 1969) (same). Accordingly, the Mississippi common law of bad faith at most meets one of the three criteria used to identify the "business of insurance" under the McCarran-Ferguson Act, and used in Metropolitan Life to identify laws that "regulat[e] insurance" under the saving clause.
In the present case, moreover, we are obliged in interpreting the saving clause to consider not only the factors by which we were guided in Metropolitan Life, but also the role of the saving clause in ERISA as a whole. On numerous occasions we have noted that "`"`[i]n expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy.'"'" Kelly v. Robinson, 479 U.S. 36, 43 (1986), quoting Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 221 (1986) (quoting Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 285 (1956) (in turn quoting United States v. Heirs of Boisdore, 8 How. 113, 122 (1849))). Because in this case, [481 U.S. 41, 52] the state cause of action seeks remedies for the improper processing of a claim for benefits under an ERISA-regulated plan, our understanding of the saving clause must be informed by the legislative intent concerning the civil enforcement provisions provided by ERISA 502(a), 29 U.S.C. 1132(a).
The Solicitor General, for the United States as amicus curiae, argues that Congress clearly expressed an intent that the civil enforcement provisions of ERISA 502(a) be the exclusive vehicle for actions by ERISA-plan participants and beneficiaries asserting improper processing of a claim for benefits, and that varying state causes of action for claims within the scope of 502(a) would pose an obstacle to the purposes and objectives of Congress. Brief for United States as Amicus Curiae 18-19. We agree. The conclusion that 502(a) was intended to be exclusive is supported, first, by the language and structure of the civil enforcement provisions, and second, by legislative history in which Congress declared that the pre-emptive force of 502(a) was modeled on the exclusive remedy provided by 301 of the Labor Management Relations Act, 1947 (LMRA), 61 Stat. 156, 29 U.S.C. 185.
The civil enforcement scheme of 502(a) is one of the essential tools for accomplishing the stated purposes of ERISA. 3 The civil enforcement scheme is sandwiched between [481 U.S. 41, 53] two other ERISA provisions relevant to enforcement of ERISA and to the processing of a claim for benefits under an employee benefit plan. Section 501, 29 U.S.C. 1131, authorizes criminal penalties for violations of the reporting and disclosure provisions of ERISA. Section 503, 29 U.S.C. 1133, requires every employee benefit plan to comply with Department of Labor regulations on giving notice to any participant or beneficiary whose claim for benefits has been denied, and affording a reasonable opportunity for review of the decision denying the claim. Under the civil enforcement provisions of 502(a), a plan participant or beneficiary may sue to recover benefits due under the plan, to enforce the participant's rights under the plan, or to clarify rights to future benefits. Relief may take the form of accrued benefits due, a declaratory judgment on entitlement to benefits, or an injunction against a plan administrator's improper refusal to pay benefits. A participant or beneficiary may also bring a cause of action for breach of fiduciary duty, and under this cause of action may seek removal of the fiduciary. 502(a)(2), 409. In an action under these civil enforcement provisions, the court in its discretion may allow an award of attorney's fees to either party. 502(g). See Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985). In Russell, we concluded that ERISA's breach of fiduciary duty provision, 409(a), 29 U.S.C. 1109 [481 U.S. 41, 54] (a), provided no express authority for an award of punitive damages to a beneficiary. Moreover, we declined to find an implied cause of action for punitive damages in that section, noting that "`[t]he presumption that a remedy was deliberately omitted from a statute is strongest when Congress has enacted a comprehensive legislative scheme including an integrated system of procedures for enforcement.'" Russell, supra, at 147, quoting Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 97 (1981). Our examination of these provisions made us "reluctant to tamper with an enforcement scheme crafted with such evident care as the one in ERISA." Russell, supra, at 147.
In sum, the detailed provisions of 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. "The six carefully integrated civil enforcement provisions found in 502(a) of the statute as finally enacted . . . provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly." Russell, supra, at 146 (emphasis in original).
The deliberate care with which ERISA's civil enforcement remedies were drafted and the balancing of policies embodied in its choice of remedies argue strongly for the conclusion that ERISA's civil enforcement remedies were intended to be exclusive. This conclusion is fully confirmed by the legislative history of the civil enforcement provision. The legislative history demonstrates that the pre-emptive force of 502(a) was modeled after 301 of the LMRA. [481 U.S. 41, 55]
The Conference Report on ERISA describing the civil enforcement provisions of 502(a) says:
Congress' specific reference to 301 of the LMRA to describe the civil enforcement scheme of ERISA makes clear its intention that all suits brought by beneficiaries or participants asserting improper processing of claims under ERISA-regulated plans be treated as federal questions governed by 502(a). See also H. R. Rep. No. 93-533, p. 12 (1973), reprinted in 2 Senate Committee on Labor and Public Welfare, Legislative History of ERISA, 94th Cong., 2d Sess., 2359 (Comm. Print 1976) ("The uniformity of decision which the Act is designed to foster will help administrators, fiduciaries and participants to predict the legality of proposed actions without the necessity of reference to varying state laws"); 120 Cong. Rec. 29933 (1974) (remarks of Sen. Williams) (suits involving claims for benefits "will be regarded as arising under the laws of the United States, in similar fashion to those brought under section 301 of the Labor Management Relations Act"); id., at 29942 (remarks of Sen. Javits) ("[i]t is also intended that a body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans"). The expectations that a federal common law of rights and obligations under ERISA-regulated plans would develop, indeed, the entire comparison of ERISA's 502(a) to 301 of the LMRA, would make little sense if the remedies available to ERISA participants and beneficiaries under 502(a) could be supplemented or supplanted by varying state laws.
In Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S., at 746 , this Court rejected an interpretation of the saving clause of ERISA's express pre-emption provisions, 514(b) (2)(A), 29 U.S.C. 1144(b)(2)(A), that saved from pre-emption [481 U.S. 41, 57] "only state regulations unrelated to the substantive provisions of ERISA," finding that "[n]othing in the language, structure, or legislative history of the Act" supported this reading of the saving clause. Metropolitan Life, however, did not involve a state law that conflicted with a substantive provision of ERISA. Therefore the Court's general observation - that state laws related to ERISA may also fall under the saving clause - was not focused on any particular relationship or conflict between a substantive provision of ERISA and a state law. In particular, the Court had no occasion to consider in Metropolitan Life the question raised in the present case: whether Congress might clearly express, through the structure and legislative history of a particular substantive provision of ERISA, an intention that the federal remedy provided by that provision displace state causes of action. Our resolution of this different question does not conflict with the Court's earlier general observations in Metropolitan Life.
Considering the common-sense understanding of the saving clause, the McCarran-Ferguson Act factors defining the business of insurance, and, most importantly, the clear expression of congressional intent that ERISA's civil enforcement scheme be exclusive, we conclude that Dedeaux's state law suit asserting improper processing of a claim for benefits under an ERISA-regulated plan is not saved by 514(b)(2)(A), and therefore is pre-empted by 514(a). 4 Accordingly, the judgment of the Court of Appeals is
[ Footnote 2 ] The McCarran-Ferguson Act provides, in relevant part: "The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business." 15 U.S.C. 1012(a).
[ Footnote 3 ] Section 502(a), as set forth in 29 U.S.C. 1132(a), provides:
[ Footnote 4 ] Because we conclude that Dedeaux's state common law claims fall under the ERISA pre-emption clause and are not rescued by the saving clause, we need not reach petitioner's argument that when an insurance company is engaged in the processing and review of claims for benefits under an employee benefit plan, it is acting in place of the plan's trustees and should be protected from direct state regulation by the deemer clause. [481 U.S. 41, 58]