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Center For Special Procedures v. Connecticut General Life Insurance Company

December 6, 2010


The opinion of the court was delivered by: Cooper, District Judge


Plaintiff, Center for Special Procedures ("Plaintiff"), commenced this action against Connecticut General Life Insurance Company, d/b/a Cigna, Cigna Healthcare of Southern New Jersey, and Cigna Healthplan of New Jersey, Inc. (collectively, "Defendants"), both on its own behalf and, alternatively, as assignee of patients ("Patients 1-50") insured by Defendants to whom Plaintiff rendered surgical services. (Dkt. entry no. 20, 2d Am. Compl.) Defendants removed the action pursuant to 28 U.S.C. § 1441, on the basis that the Court has original subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because Plaintiff's claims challenge the denial of benefits under health benefits plans governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. (Dkt. entry no. 1, Rmv. Not. at 2.)*fn1

Defendants now move to dismiss Count 1 through Count 9 and Count 11 of the Second Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). (Dkt. entry no. 22, Mot. to Dismiss.) Defendants contend, inter alia, that the state law claims are preempted by ERISA. (Dkt. entry no. 22, Defs. Br. at 5-14.) The Court decides the motion on the papers, pursuant to Rule 78(b). For the reasons set forth below, the Court will grant Defendants' motion to dismiss Count 1 through Count 9 and



Plaintiff is an ambulatory surgery center that provided surgical services to Patients 1--50 on an "out-of-network" basis as a "non-participating provider." (2d Am. Compl. at ¶¶ 9, 14.) Plaintiff has identified 38 insurance plans as governing the services rendered to Patients 1-50. (Id. at ¶ 11.) Of these 38 plans, it appears that three are exempt from the provisions of ERISA ("non-ERISA plans"), and 35 are ERISA plans. (Id. at ¶¶ 12-13.)

Plaintiff alleges that it called Defendants to confirm that Patients 1-50 each had out-of-network benefits that would cover services rendered by Plaintiff, and Defendants confirmed that such coverage existed. (Id. at ¶ 15.) Plaintiff received an assignment of benefits from Patients 1-50 assigning "all medical and/or surgical benefits" to Plaintiff. (Id. at ¶¶ 19-20.) Although Defendants had allegedly made payments for services prior to February 16, 2009, after that date, when Plaintiff submitted claims for payment to Defendants, "individually as a service provider and alternatively as assignee of the patients," Defendants denied the claims and refused to pay. (Id. at ¶¶ 22-28.) The apparent basis for this refusal is that Plaintiff "is not licensed [with the New Jersey Department of Health] as an ambulatory care facility." (Id. at ¶ 29.)

Plaintiff contends that Defendants' refusal to pay is in violation of state and federal law. The Second Amended Complaint contains eleven counts, listed here as they appear in the pleading:

Count 1: Breach of Contract Count 2: Unjust Enrichment & Quantum Meruit Count 3: Third Party Beneficiary Count 4: Implied Contract, Contract by Custom or

Dealing, Implied Covenant of Good Faith and Fair Dealing Count 5: Reasonable Reliance, Arbitrary and Disparate


Count 6: Tortious Interference Count 7: Negligent Misrepresentation Count 8: Arbitrary and Capricious Count 9: Promissory Estoppel Count 10: ERISA -- Payment of Benefits Due -- Violation of ERISA [§] 502(a)(1)

Count 11: ERISA - Violation of Fiduciary Duty and $110

Per Day Penalty (2d Am. Compl. at 11-37.) With the exception of Count 10, each count is asserted as to both the ERISA plans and the non-ERISA plans at issue, "to the extent allowable at law." Plaintiff asserts Count 10 as to the ERISA plans only, and solely in the capacity of the assignee of Patients 1-50. (2d Am. Compl. at ¶¶ 172-173, 179-180.) The remaining claims are asserted alternatively in Plaintiff's own right and as assignee of Patients 1-50, designated by Plaintiff as "non-derivative claims" and "derivative claims," respectively. (Pl. Br. at 2.)*fn2

Defendants contend that Count 1 through Count 9, as state law claims, are preempted by ERISA as to the ERISA plans, and further contends that Count 1 through Count 9 and Count 11 should be dismissed as to all plans for failure to conform to the pleading standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). (Defs. Br. at 2-3.) Plaintiff opposes the motion. (Dkt. entry no. 23, Pl. Br.)

The Court determines the motion on the papers, pursuant to Rule 78(b). For the foregoing reasons, the Court will grant the motion.


I. 12(b)(6) Motion to Dismiss Standard

In addressing a motion to dismiss a complaint under Rule 12(b)(6), the Court must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine, whether under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). At this stage, a "complaint must contain sufficient factual matter, accepted as true to 'state a claim to relief that is plausible on its face.' A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--that the 'pleader is entitled to relief.'" Iqbal, 129 S.Ct. at 1950 (quoting Rule 8(a)(2)).

In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court may consider the complaint, exhibits attached thereto, matters of public record, and undisputedly authentic documents if the claimant's claims are based upon those documents. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

II. ERISA Preemption

A. Express Preemption

ERISA contains a broad preemption clause providing that ERISA shall "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44-45 (1987). With this provision, Congress intended: to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government . . . , and to prevent the potential for conflict in substantive law . . . requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.

N.Y. Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656-57 (internal citations and quotations omitted); see Kollman v. Hewitt Assocs., LLC, 487 F.3d 139, 148 (3d Cir. 2007).

The express preemption clause is not limited to "state laws specifically designed to affect employee benefit plans." Pilot Life, 481 U.S. at 47-48 (quoting Shaw v. Delta Airlines, 463 U.S. 85, 98 (1983)). The term "relate to" has been construed broadly to preempt a broad range of state law claims. See Ingersoll-Rand Corp. v. McClendon, 498 U.S. 133 (1990) (state law tort and breach of contract theories preempted by ERISA); Pilot Life, 481 U.S. at 43-44, 47 (breach of contract, breach of duty, and fraud claims preempted by ERISA); Pryzbowski v. U.S. Healthcare, 245

F.3d 266, 278 (3d Cir. 2001) (negligence claim preempted by ERISA); Pane v. RCA Corp., 868 F.2d 631 (3d Cir. 1989) (breach of contract and bad-faith insurance practices claims preempted by ERISA); Schmelzle v. Unum Life Ins. Co. of Am., No. 08-0734, 2008 U.S. Dist. LEXIS 63627, at *8-9 (D.N.J. July 31, 2008) (breach of contract, breach of fiduciary duty, fraud, and negligence claims preempted by ERISA); Wayne Surgical Ctr., LLC v. Concentra Preferred Sys., Inc., No. 06-928, 2007 WL 2416428, at *7 (D.N.J. Aug. 20, 2007) (claims by out-of-network provider assignee for unjust enrichment, tortious interference, and fraud expressly preempted by ERISA); Majka v. Prudential Ins. Co. of Am., 171

F.Supp.2d 410, 413 (D.N.J. 2001) (breach of contract and breach of the implied duty of good faith and fair dealing preempted by ERISA); Alston v. Atl. Elec. Co., 962 F.Supp. 616, 624 (D.N.J. 1997) (breach of contract, negligent misrepresentation, and fraud claims preempted by ERISA).

To decide whether a plaintiff's state law claims are expressly preempted, a court must first determine whether the plan at issue is an ERISA benefit plan. See Pane v. RCA Corp., 667 F.Supp. 168, 170 (D.N.J. 1987), aff'd, 868 F.2d 631 (3d Cir. 1989). A court must ...

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