U.S. Supreme Court Denies Cert in Wurtz v. Rawlings Co., LLC



Yesterday, The U.S. Supreme Court denied review of the Second Circuit’s decision in Wurtz v. Rawlings Co., LLC , — F.3d —, 2014 WL 3746801 (2nd Cir. 2014).[i] The basis for writ of certiorari to the Supreme Court stemmed from an ongoing split between the Second, Third, Fourth and Fifth Circuits. As the Second Circuit’s decision stands, this will further cements the application of New York’s anti-subrogation law as it relates to fully insured health plans governed under the Employee Retirement Income Security Act (“ERISA”).


Wurtz involved a class of personal injury plaintiffs who had employer-sponsored health plans funded through insurance arrangements (i.e., fully insured ERISA plans). Plaintiffs sued Rawlings, Oxford Health Plans, and UnitedHealth Group asserting, in part, that NY GOL 5-335 trumped any reimbursement rights that the health plans had under ERISA.

A lower court dismissed the lawsuit, finding that the general rule that insured ERISA plans are subject to state law did not apply to NY GOL 5-335.[ii] Specifically, the Court determined that the New York state law was not “saved” from preemption,” because the statute was neither (1) specifically directed toward insurance entities nor did it (2) “substantially affect the risk pooling arrangement between the insurer and the insured.”[iii] The Court found that NY GOL 5-335 was too limited in scope and excluded reimbursement and subrogation rights falling outside of the tort settlement realm.[iv]

Subsequent to that decision, the New York legislature revised NY GOL 5-335 intending to correct any flaws which may have existed in prior versions by replacing the term “benefit provider” with “insurer” to pull this law directly under the purview of ERISA’s saving clause.[v] This change removed any confusion as to whether an insured ERISA claim fell under the definition of a “statutory reimbursement right.”

In July 2014, the U.S. Court of Appeals reversed the lower court’s decision in Wurtz holding that NY GOL 5-335 was “saved” from preemption after finding that 5-335 was a law regulating insurance and its application against fully insured ERISA plans did not disturb ERISA’s goal of providing national uniformity.[vi]


The Supreme Court’s denial of Cert in this case reinforces the Second Circuit’s holding that NY GOL 5-335 is applicable as it relates to fully insured ERISA plans in New York. Consequently, this decision does not extend to employer sponsored health benefit arrangements which are funded through the general assets of the employer (i.e., self-funded ERISA plans).[vii] In those instances, GRG continues to recommend a thorough review of contractual plan language for weaknesses that may be used to reduce or eliminate the health plan’s claim to reimbursement. Outside of the Second Circuit, similar issues will need to be addressed on a jurisdictional basis taking into account plan language review.

If you have any questions please feel free to contact Charles Medlin at cmedlin@garretsongroup.com or 704.559.4300.

[i] Wurtz v. Rawlings Co., LLC , — F.3d —, 2014 WL 3746801 (2nd Cir. 2014), cert. denied 574 U.S. —, (U.S. February 23, 2015) available at http://www.supremecourt.gov/orders/courtorders/022315zor_e2pg.pdf.

[ii] Wurtz v. Rawlings Co. LLC, 2013 WL 1248631 (E.D.N.Y. March 28, 2013).

[iii] Two prong test established in Kentucky Ass’n of Health Plans, Inc., v. Miller, 538 U.S. 329 (2003).

[iv] The court also discussed ERISA’s Deemer Clause, 29 U.S.C. § 1144(b)(2)(B), but determined that analysis is only needed if the state law is found to be saved from preemption, which was not the case here.

[v] N.Y. Gen. Oblig. Law §§ 5-101; 5-335.

[vi] Wurtz v. Rawlings Co., LLC , — F.3d —, 2014 WL 3746801 (2nd Cir. 2014) (basing its decision on the pre-amended version of N.Y. Gen. Oblig. Law 5-335).

[vii] FMC Corp. v. Holiday, 498 US 52 (1990).

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