13 F.

3d 704
62 USLW 2484, 17 Employee Benefits Cas. 1923

Dorothy E. TRAVITZ, Appellant,

v.
NORTHEAST DEPARTMENT ILGWU HEALTH AND
WELFARE FUND; ILGWU
Eastern States Health and Welfare Fund.
Nos. 93-7277, 93-7334 and 93-7383.

United States Court of Appeals,

Third Circuit.
Argued Nov. 8, 1993.
Decided Jan. 10, 1994.

David S. Wisneski, (argued), Angino & Rovner, Harrisburg, PA, for

appellant.
Charles W. Johnston, Jr., (argued), Handler, Gerber, Johnston & Aronson,
Camp Hill, PA, for appellees.
Before: GREENBERG, COWEN, and ROSENN, Circuit
Judges.OPINION OF THE COURT
ROSENN, Circuit Judge.

Pennsylvania enacted the Motor Vehicle Financial Responsibility Law (the

Act), of which Sec. 1722 precludes a person from recovering damages arising
out of the use of a motor vehicle from a culpable tortfeasor if the claimant is
otherwise eligible to receive those benefits from any program, group contract,
or other arrangement, as defined by the Act. 75 Pa. Cons.Stat.Ann. Sec. 1722
(Supp.1993). The primary issue raised on this appeal is whether the Act is
preempted by the Employee Retirement Income Security Act of 1974,
(ERISA), 29 U.S.C. Sec. 1001 et seq. The district court, on cross-motions for
summary judgment, answering in the affirmative, entered judgment in favor of
the defendants, 818 F.Supp. 761. We affirm.1

I.
2

Appellees, the Northeast Department, ILGWU Health and Welfare Fund and its
successor in interest, the ILGWU Eastern States Health and Welfare Fund (the
Fund), operate a multi-state, multi-employer health and welfare plan within the
meaning of ERISA, 29 U.S.C. Sec. 1002(1).2 The Fund, which is self-insured,
is governed by a basic plan and rules of the Northeast Department, ILGWU. In
addition, the Fund is also operated and maintained pursuant to rules set forth in
a written document, the Summary Plan Description (collectively, the Plan). The
Plan provides medical, disability, and preventative health care benefits to
employees of contributing union employers and the Fund remains solely
responsible for the payment of such benefits. The Plan further provides various
exclusions with respect to benefits it offers. Exclusion 5 sets forth that members
of the program "can not receive benefits/coverage for a condition if the costs of
treating that condition are recoverable through legal action or claim settlement
from another party or insurance company."

Appellant, Dorothy E. Travitz, an employee of BR Apparel, Inc., a member of

the International Ladies' Garment Workers' Union (ILGWU), and a participant
in the union's health and welfare program, sustained serious injuries in a motor
vehicle accident on October 18, 1990. As a result, she incurred medical bills
exceeding $65,000. She received $10,000 in first party medical benefits under
her motor vehicle insurance policy. After exhausting those benefits, she
submitted for payment numerous claims relating to treatment and services for
her injuries to the providers of the union's benefit program, the Fund. The Fund,
pursuant to its Advance of Benefits Provision,3 paid a total of $2,924.78 of
medical benefits to Travitz. In accordance with this provision, the Fund also
sought assurances from Travitz that she would eventually repay the amounts
received as advances and requested that she sign an assignment of claim form.
Travitz refused to provide those assurances and did not execute the form. The
Fund, therefore, ceased advancing benefits to Travitz.

Travitz also filed a claim against the tortfeasor alleging negligence in the
operation of a motor vehicle. Eventually, the claim was settled. The agreement
provided that in exchange for a release from liability, Travitz would receive
$125,000 in immediate cash, four guaranteed scheduled payments ranging from
$10,000 to $30,000, plus $1,030 per month for life with fifteen years
guaranteed.

Subsequently, Travitz initiated suit against the Fund in the United States
District Court for the Middle District of Pennsylvania seeking payment by the
Fund of the outstanding medical benefits claimed to be due her, costs, and bad

faith damages. In her complaint, she alleged that the Fund improperly relied
upon coverage Exclusion 5 to deny her these medical benefits in the face of the
Act's provision that precluded the recovery of medical expenses from a
tortfeasor when they were payable under the medical benefit program she had
with the Fund.4
6

In effect, she claimed that the medical benefits were recoverable only from the
Fund regardless of the coverage exclusion of the Plan because the Act
precluded her from recovering them from the tortfeasor. Section 1722 provides:

7 any action for damages against a tortfeasor ... arising out of the maintenance or
In
use of a motor vehicle, a person who is eligible to receive benefits under the
coverages set forth in ... any program, group contract or other arrangement for
payment of benefits as defined in section 1719 (relating to coordination of benefits)
shall be precluded from recovering the amount of benefits paid or payable under ...
any program, group contract or other arrangement for payment of benefits as defined
in section 1719.
8

75 Pa. Cons.Stat.Ann. Sec. 1722 (Supp.1993). The Fund argued, however, that
Exclusion 5 of their Plan is applicable and therefore its medical benefits were
unavailable to Travitz. Accordingly, the Fund contended that her only recourse
was to pursue the tortfeasor. In addition, the Fund counterclaimed for
reimbursement of payments totaling $2,924.78 advanced to Travitz.

Chief Judge Rambo of the district court, on cross-motions for summary

judgment, held that the Fund is a multi-employer health and welfare plan
within the meaning of ERISA, and that Sec. 1722 of the Pennsylvania Act is
preempted by the self-insured ERISA benefit plan. Consistent with her opinion,
the court found for the Fund on its counterclaim and ordered that Travitz
reimburse it the $2,924.78 advanced along with prejudgment interest. Travitz
appealed.

II.
10

The issue of preemption is essentially legal and our review of the district court's
summary judgment holding is therefore plenary. See Wheeler v. Towanda Area
School Dist., 950 F.2d 128, 129 (3d Cir.1991). On appeal we apply the same
test the district court should have used in the first instance. See Goodman v.
Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S.
1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). We therefore affirm only if there
are no genuine issues of material fact and the relevant law entitles the moving
party to judgment.

11

Travitz's arguments on appeal are legal in nature. She basically argues two
principal points which seem to be intertwined. First, although section 1722
"relates to" employee welfare plans, it lacks a "connection with" such plans and
falls within the "remote and peripheral" exception to ERISA preemption.
Second, that the supposed conflict between Section 1722 and Exclusion 5 of
the Plan is essentially an issue of interpretation rather than one of preemption,
and should be interpreted in a manner consistent with the Fund's requirements.
In effect, she claims that Exclusion 5 cannot be used to deny her medical
benefits from the Fund because her recovery from the tortfeasor did not
encompass those benefits; rather they were limited to pain and suffering only.
Therefore, she argues, the Fund must reimburse her for those presently
unrecovered expenses.

12

We turn first to three ERISA statutory provisions dealing with the question of
preemption. These provisions in Section 1144 of ERISA state in relevant
part:Except as provided in subsection (b) of this section [the saving clause], the
provisions of this subchapter and subchapter III of this chapter shall supersede
any and all State laws insofar as they may now or hereafter relate to any
employee benefit plan....

13

29 U.S.C. Sec. 1144(a) (1988) (preemption clause)

14
Except
as provided in subparagraph (B) [the deemer clause], nothing in this
subchapter shall be construed to exempt or relieve any person from any law of any
State which regulates insurance, banking, or securities.
Id. Sec. 1144(b)(2)(A) (saving clause)
15
Neither
an employee benefit plan ... nor any trust established under such a plan, shall
be deemed to be an insurance company or other insurer, bank, trust company, or
investment company or to be engaged in the business of insurance or banking for
purposes of any law of any State purporting to regulate insurance companies,
insurance contract, banks, trust companies, or investment companies.
Id. Sec. 1144(b)(2)(B) (deemer clause)
16

As the Supreme Court has explained, the broadly worded preemption clause
"establishes as an area of exclusive federal concern the subject of every state
law that 'relate[s] to' an employee benefit plan governed by ERISA." FMC
Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356
(1990). The saving clause expressly reserves to the states the power to regulate
insurance; the deemer clause, however, precludes a state from regulating an

employee benefit plan governed by ERISA in the guise of regulating insurance

companies. See id.
17

Our first inquiry, under these provisions, is whether Section 1722 "relate[s] to"
an employee benefit plan. A law relates to an employee welfare plan if it has "a
connection with or reference to such a plan." Shaw v. Delta Air Lines Inc., 463
U.S. 85, 97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). Section 1722, which
precludes the recovery of benefits from a tortfeasor where a person is eligible to
receive those benefits under another program, group contract or arrangement, as
defined in Section 1719, has "reference" to benefit plans governed by ERISA.
See FMC, 498 U.S. at 59, 111 S.Ct. at 408. Section 1719(b) of the Act states
that "the term 'program, group contract or other arrangement' includes, but is
not limited to, benefits payable by a hospital plan corporation or a professional
health service corporation." 75 Pa. Cons.Stat.Ann. Sec. 1719(b) (Supp.1993).

18

In addition, Section 1722 has a "connection" to ERISA benefit plans. The Court
has held that state laws have a "connection" to an ERISA plan when the laws
risk subjecting plan administrators to conflicting state regulations. See FMC,
498 U.S. at 59, 111 S.Ct. at 408. Section 1722 has that very effect. In states
with a provision like Section 1722, the Fund, rather than a tortfeasor, would be
primarily liable. Therefore, in structuring its program, a health and welfare
benefit plan would have to consider its ultimate liability and adjust the level of
benefits accordingly. Thus, plan administrators would be unable "to calculate
uniform benefit levels nationwide." Id. at 60, 111 S.Ct. at 409. To ensure that
ERISA would be governed by a "uniform administrative scheme, which
[would] provide[ ] a set of standard procedures to guide processing of claims
and disbursement of benefits," Congress preempted state laws "connected" to
ERISA. Id. (quoting Fort Halifax Packing Co. Inc. v. Coyne, 482 U.S. 1, 9, 107
S.Ct. 2211, 2216, 96 L.Ed.2d 1 (1987)).

19

Travitz's contention that Section 1722's effect on ERISA plans is "too tenuous,
remote, or peripheral ... to warrant a finding that the law 'relates to' the plan,"
Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21, is unavailing. Several
factors have been examined in analyzing whether a state law falls within the
"remote and peripheral" exception to Sec. 1144. Those factors include: (1)
whether the state law represents a traditional exercise of state authority; (2)
whether the state law affects relations among the principal ERISA entities--the
employer, the plan, the plan fiduciaries, and the beneficiaries--rather than
relations between one of these entities and an outside party, or between two
outside parties with only an incidental effect on the plan; and (3) whether the
effect of the state law upon the ERISA plan is direct or merely incidental.
Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550, 555-56 (6th Cir.1987).

20

Application of the foregoing factors compels the conclusion that Section 1722
is preempted by ERISA. Although, in specifying the damages that may be
recovered from a tortfeasor, Section 1722 arguably represents a traditional
exercise of state power, the remaining factors referred to above clearly tilt the
balance against Travitz. Section 1722, by shifting ultimate liability for medical
and health care benefits to the ERISA Fund, has a direct and possibly
devastating effect on it. That effect implicates the relations between the
principal parties--the Fund and its beneficiaries--by requiring the Fund to pay
Travitz's medical benefits and by making less overall benefits available to the
other beneficiaries of the Fund. Thus, the exception set forth in Shaw is not
applicable and, unless saved by another ERISA provision, Section 1722 will be
preempted.

21

Arguably, Section 1722 falls within the purview of the saving clause which
specifically reserves the regulation of insurance to the states. Although, on its
face, the statute does not seem to be regulating insurance, it is part of a broadbased law which not only has an impact on insurance companies but is also
specifically directed towards that industry. See Pilot Life Ins. Co. v. Dedeaux,
481 U.S. 41, 50, 107 S.Ct. 1549, 1554, 95 L.Ed.2d 39 (1987). The deemer
clause, however, would proscribe a state from regulating self-insured ERISA
plans. The clause provides that states are forbidden to deem ERISA plans "to
be an insurance company or other insurer." 29 U.S.C. Sec. 1144(b)(2)(B).
Therefore, even if a state law is saved because it regulates insurance it has no
effect on self-insured ERISA plans by virtue of the deemer clause. See FMC,
498 U.S. at 61, 111 S.Ct. at 409.

22

Thus, we hold that Section 1722 of the Pennsylvania Motor Vehicle Financial
Responsibility Law or any state statute that attempts to shift liability for
medical and health care benefits to a plan, group contract, or other arrangement
operating within the meaning of ERISA is preempted by it.5

23

Travitz persists in arguing, however, that notwithstanding its preemption,

Section 1722 should still be interpreted to apply because it can be read as
consistent with the exclusions in the Fund's Plan. Travitz is mistaken. The
Court has held that preemption is not precluded "simply because a state law is
consistent with ERISA's substantive requirements." Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990)
(citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105
S.Ct. 2380, 2388, 85 L.Ed.2d 728 (1985)). Moreover, Section 1722 and
Exclusion 5 of the Fund's Plan are in no way consistent. Each attempts to shift
the responsibility for the payment of benefits from itself to another source.

24

It is ironic that in her attempt to construe the provisions as consistent with each
other, Travitz is endeavoring to circumvent the purpose of both provisions. By
arguing that she could not have received medical benefits from her settlement
with the tortfeasor because of Section 1722's restriction, she is seeking to
recover twice for the same injury. Her classification of the settlement as one for
pain and suffering rather than for medical benefits is disingenuous, in the face
of the language of the settlement agreement she executed which provides a
discharge for "all claims," including those for "personal injuries." Travitz's
characterization of the settlement award underscores the need to have but one
authority dealing with benefits. Provisions enacted pursuant to ERISA would
thus govern and Section 1722 of the Pennsylvania Act must therefore be
preempted with respect to the Fund's self-insured ERISA plan. Accordingly, as
Section 1722 is preempted it cannot and could not have prevented Travitz from
recovering medical benefits from the tortfeasor. Consequently, under the plain
terms of Exclusion 5 which is controlling, the Fund is not responsible for the
medical benefits because they were recoverable from the tortfeasor.

25

In her statement of the issues presented for review, Travitz also asserts that the
district court erred in granting summary judgment in favor of the Fund with
respect to its counterclaim for the $2,924.78 advanced to her, along with
prejudgment interest. Under Fed.R.App.P. 28(a)(5), an appellant is required to
list the issues raised on appeal and present an argument in support of them.
Simmons v. City of Philadelphia, 947 F.2d 1042, 1065 (3d Cir.1991) ("absent
extraordinary circumstances, briefs must contain statements of all issues
presented for appeal, together with supporting arguments and citations."), cert.
denied, --- U.S. ----, 112 S.Ct. 1671, 118 L.Ed.2d 391 (1992). When an issue is
not pursued in the argument section of the brief, the appellant has abandoned
and waived that issue on appeal. Nagle v. Alspach, 8 F.3d 141 (3d Cir.1993);
Kost v. Kozakiewicz, 1 F.3d 176, 182 (3d Cir.1993); Institute for Scientific
Info., Inc. v. Gordon & Breach, Science Publishers, Inc., 931 F.2d 1002, 1011
(3d Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 302, 116 L.Ed.2d 245 (1991); 16
Charles A. Wright, et al., Federal Practice and Procedure Sec. 3974, at 421
(1977 & Supp.1993, at 690) (issue must be raised in both the issues and
argument sections of the brief).

26

In the present case, Travitz completely fails to articulate or pursue these issues.
Neither does she attempt to argue extraordinary circumstances which might
excuse her failure to argue them. We therefore conclude that Travitz has
abandoned and waived these issues and we refuse to address them.

27

Accordingly, the judgment of the district court will be affirmed. Costs taxed to

the appellant.

The district court exercised subject matter jurisdiction pursuant to 29 U.S.C.

Sec. 1001 et seq. as the action constituted a suit under 29 U.S.C. Sec. 1132(a)
(1)(B) to recover benefits due under a covered plan, and pursuant to 28 U.S.C.
Sec. 1331(a) as the counterclaim arose under federal common law. We have
jurisdiction under 28 U.S.C. Sec. 1291

Effective January 1, 1990, the Northeast Department ILGWU Health and

Welfare Fund merged into the ILGWU Eastern States Health and Welfare
Fund, which is the surviving plan of the merger. The Fund is now known as the
ILGWU Eastern States Health and Welfare Fund

The provision provides, in pertinent part:

If you have a right to recover payment for an injury or illness from another
source, there may be delays because of the time it takes to process the claim or
because of lawsuits. If this happens, the Fund may be able to help you
temporarily by paying benefits in advance. If this is done you must sign a legal
document stating that the Fund will be repaid in full, from any settlement you
receive. The Fund must be repaid to the Full Extent ... of the benefits it
provided.... (Emphasis in original).

Travitz characterizes the settlement she received from the tortfeasor as one for
pain and suffering. The Fund does not provide benefits for pain and suffering
and thus, in accordance with her interpretation, Section 1722 did not preclude
the recovery of those benefits from the tortfeasor

Although United Wire, Etc. v. Morristown Memorial Hospital, 995 F.2d 1179
(3d Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 382, 126 L.Ed.2d 332 (1993), not
cited by any of the parties, reached a contrary result in construing a New Jersey
statute pertaining to hospital rates, the case is inapposite on its facts. Unlike the
case sub judice, the state law in United Wire did "not have either the effect of
dictating or restricting the manner in which ERISA plans structure or conduct
their affairs or the effect of impairing their ability to operate simultaneously in
more than one state." Id