UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
January 24, 2011
SPORTSCARE OF AMERICA, P.C., PLAINTIFF,
MULTIPLAN, INC., AETNA, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Falk, U.S.M.J.
NOT FOR PUBLICATION
REPORT AND RECOMMENDATION
Before the Court is Plaintiff's motion to remand this case to state court. [CM/ECF No. 14.] The motion is opposed. This Recommendation is made on the papers submitted. Fed. R. Civ. P. 78(b). For the reasons set forth below, it is respectfully recommended that Plaintiff's motion be denied.
On July 22, 2010, Plaintiff, Sportscare of America, P.C. ("Plaintiff"), a physical therapy facility, filed the instant complaint in New Jersey Superior Court. The Complaint contains 89 counts and is 65 pages long. Named as defendants are twenty-one insurance providers and one medical claim processing company. The Complaint is couched in terms of fraud, negligence, and interference with contract claims alleged against each insurance plan. However, in reality, the Complaint seeks to recover fees Plaintiff claims it is entitled to as a result of its treatment of individuals insured by the various health plan entities. (Compl. ¶¶ 7-10.) In short, Plaintiff submitted claims to the health insurers and received some payment but at a rate that it claims is improper.*fn1 (Compl. ¶¶ 8, 10.) Plaintiff apparently sues for the difference between what Plaintiff was paid and what it thinks it should have been paid on various insurance claims.
On August 27, 2010, the action was removed to this Court. The Notice of Removal alleges that Plaintiff's claims are actually claims for benefits due under employee benefit plans governed by the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. § 1001, et seq. and are thus preempted. (Notice of Removal ¶ 6.)
On October 27, 2010, Plaintiff filed this motion to remand. Plaintiff argues that it is not a "participant" or "beneficiary" in any ERISA plan, and thus, the claims are not preempted because they could not have been brought under ERISA. Plaintiff also contends "the 'rate of payment' . . . is a non-federal issue [that] is not preempted by ERISA." (Pl.'s Br. 9.)
Defendants opposed the motion on November 22, 2010.*fn2
They contend that the Complaint expressly pleads that
Plaintiff is entitled to recover fees pursuant to "assignment of
benefits documents," which establish ERISA jurisdiction.*fn3
Defendants assert that the plain language of the Complaint
establishes federal jurisdiction. Defendants also argue that there is
no independent legal duty that supports Plaintiff's claim beyond
ERISA, and thus, no independent legal basis for Plaintiff to bring its
claim beyond the federal scheme.
On November 29, 2010, Plaintiff filed a reply brief, arguing -- despite the express allegations in its own Complaint that assignments exist -- that Defendants have failed to establish the existence of valid assignments.
A. Legal Standard
Federal courts have original jurisdiction over cases that "arise
under" federal law. See 28
U.S.C. § 1331, 1441(a). In this regard, pursuant to the "well-pleaded
complaint" rule, a plaintiff is ordinarily entitled to remain in state
court so long as its complaint does not allege a federal claim on its
face. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987);
Franchise Tax Bd. of Cal. v. Contr. Laborers Vacation Tr. for S.
Ca., 463 U.S. 1, 10 (1983) ("[A] defendant may not remove a case to
federal court unless the plaintiff's complaint establishes that the
case arises under federal law."). However, the doctrine of complete
preemption serves as an exception to the "well-pleaded complaint"
rule. See, e.g., Lazorko v. Pa. Hosp., 237 F.3d 242, 248 (3d Cir.
2000) ("One exception to [the well-pleaded complaint rule] is for
matters that Congress has so completely preempted that any civil
complaint that falls within this category is necessarily federal in
The doctrine of complete preemption "creates removal jurisdiction even though no federal question appears on the face of the plaintiff's complaint." Id. Claims which fall within the scope of ERISA §502(a) have been deemed to be completely preempted. See Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 398 (3d Cir. 2004) ("State law causes of action that are 'within the scope of . . . §502(a) are completely preempted . . . ."); Vaimakis v. United Healthcare/Oxford, No. 07-5184, 2008 WL 3413853, at * 3 (D.N.J. Aug. 8, 2008) ("ERISA's civil enforcement provision falls within the doctrine of complete preemption."). Therefore, such claims are removable to federal court. See, e.g., Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 271 (3d Cir. 2001) ("Following the decision in Metropolitan Life, there can be no question that 'causes of action within the scope of the civil enforcement provisions of § 502(a) [are] removable to federal court.' ") (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 62 (1987)).
The Third Circuit has set forth two conditions which must be met for a claim to be completely preempted under §502(a) and, therefore, subject to removal: (1) that the plaintiff could have brought the claim under §502(a); and (2) that "no other legal duty supports" plaintiff's claim. See Pascack, 388 F.3d at 400. Both conditions must be met in order for the claim to be completely preempted. See, e.g., N.J. Spinal Med. & Surgery, PA v. Aetna Ins. Co., No. 09-2503, 2009 WL 3379911, at *2 (D.N.J. Oct. 19, 2009); Vaimakis, 2008 WL 3413853, at *3.
Section 502(a) of ERISA provides that "a participant or beneficiary" may bring a civil action "to recover benefits due to him under the terms of his plan, [or] to enforce his rights under the terms of the plan . . . . " 29 U.S.C. § 1132(a). However, in addition to "participant[s]" and "beneficiar[ies]," it has been widely held that a health care provider may sue under ERISA § 502(a) if there is a valid assignment to the provider by a plan participant or beneficiary. At least seven Courts of Appeals have so held. See, e.g., Pascack, 388 F.3d at 401 n.7 ("Almost every circuit to have considered the question has held that a health care provider can assert a claim under § 502(a) where a beneficiary or participant has assigned to the provider that individual's rights to benefits under the plan" (citing Tango Trans. Healthcare Fin. Servs., 322 F.3d 888, 891 (5th Cir. 2003) (citing various circuit courts of appeals so holding))). Federal jurisdiction based on assignment of ERISA claims has been adopted in this district. See, e.g., Zahl v. Cigna Corp., No. 09-1527, 2010 WL 1372318, at *2 (D.N.J. Mar. 31, 2010) ("It is settled in this District that Zahl, as an assignee of these rights, stands in the shoes of his patients and may sue on their behalf to collect unpaid benefits."); JFK Med. Ctr. v. Dialysis Clinic, Inc., No. 09-4208, 2009 WL 4573741, at *3 n.2 (D.N.J. Dec. 3, 2009); North Jersey Ctr. for Surgery, PA v. Horizon Blue Cross Blue Shield of N.J., No. 07-4812, 2008 WL 4371754 (D.N.J. Sept. 18, 2008); Wayne Surgical Ctr., LLC v. Concentra Preferred Sys., Inc., No. 06-298, 2007 WL 24166428, at *4 (D.N.J. Aug. 20, 2007); Israel v. N. New Jersey Teamsters Ben. Plan, No. 03-2922, 2006 WL 2830973, at *5 (D.N.J. Sep. 29, 2006). Therefore, standing to sue under ERISA § 502(a) exists for participants and beneficiaries in ERISA plans and for providers suing pursuant to appropriate assignments. See, e.g., id.
The issue here is whether, despite the presence of supposed state law claims in the Complaint, Plaintiff's claims are completely preempted as claims that could have been brought under ERISA § 502(a). Since Plaintiff is not a participant or beneficiary in any of Defendants' ERISA plans, this question depends on whether Plaintiff is proceeding as a health provider pursuant to an assignment of benefits from a plan participant associated with at least one of the Defendants' twenty-one ERISA plans.
The allegations of a complaint are assumed true for purposes of a motion to remand. See Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987) ("Ruling on whether an action should be remanded to the state court from which it was removed, the district court must focus on the Plaintiff's complaint at the time the petition for removal was filed. In so ruling, the district court must assume as true all factual allegations of the complaint."); see also Delaware v. Smith, 644 F. Supp. 2d 475, 477 (D. Del. 2009). In its Complaint, Plaintiff alleges:
At all times mentioned herein the plaintiff was out-of-network and did not have a contract with any of the defendants therefore entitling the plaintiff to be paid for services rendered to individual insureds through the use of assignment of benefits documents or through patient reimbursement. (Compl. ¶ 7) (emphases added).
The Complaint expressly alleges the existence of assignments of benefits and specifically states that its right to payment is dependent upon them. Plaintiff's request for remand is apparently based on the faulty premise that only a "participant" or "beneficiary" has standing to sue under ERISA. Not so. See, e.g., Zahl, 2010 WL 1372318, at *2 ("It is settled in this District that Zahl, as an assignee of these rights, stands in the shoes of his patients and may sue on their behalf to collect unpaid benefits."); Wayne Surgical Ctr., 2007 WL 24166428, at *4. As a result of its express pleading that it relies upon assignment of benefit documents from participants in Defendants' ERISA plans to support its claim for fees, Plaintiff's Complaint conclusively establishes the existence of federal jurisdiction. Because Plaintiff relies on assignment of benefit documents, it could have brought its claims under ERISA § 502(a), and, therefore, its claims are completely preempted. See Pascack, 388 F.3d at 398 ("State law causes of action that are 'within the scope of . . . §502(a) are completely preempted . . . .").
Plaintiff's pleading relying on assignments of benefits is clear. Yet, the Court is somewhat troubled by the ambiguity in Plaintiff's reply brief over the existence of assignments and the implication that Defendants must actually produce the assignments to remain in federal court. In its reply brief, Plaintiff frames its argument "[a]ssuming, arguendo, that there are valid assignments of benefits . . ." (Pl.'s Reply Br. 2.) Arguendo? Plaintiff expressly pleads that it entitled to payment from Defendants "through the use of assignment of benefits documents." (Compl. ¶ 7.) That allegation constitutes a judicial admission. See Berckeley Inv. Group, Ltd. v. Colkitt, 455 F.3d 195, 211 n. 20 (3d Cir. 2006) ("Judicial admissions are concessions in pleadings or briefs that bind the party who makes them."); see also e.g., Sovereign Bank v. BJ's Wholesale Club, 533 F.3d 162, 181 (3d Cir. 2008) ("the allegation in the amended complaint is a binding judicial admission"); Soo Line R.R. Co. v. St. Louis Southwestern Ry. Co., 125 F.3d 481, 483 (7th Cir. 1997) (noting that it is "well-settled . . . that a party is bound by what it states in its pleadings"). Moreover, this allegation is placed in a pleading signed by counsel pursuant to New Jersey Court Rule 1:4-8(a) and Federal Rule of Civil Procedure 11 (both requiring investigation before signing and filing pleadings). If that allegation is untrue and there are no assignments, counsel should have rushed to correct it by seeking to amend the Complaint, rather than being ambivalent in its brief.
However, from a legal standpoint, the actual existence of assignments is unimportant for the remand motion.*fn4 There are strict time limits for removal, see 28 U.S.C. § 1446(b), and Defendants have a right to rely on the allegations of the complaint in removing a case, which are assumed as true for removal purposes. See Steel Valley Auth., 809 F.2d at 1010; see also 14B Charles A. Wright, et al., Federal Practice and Procedure § 3722 (existence of federal jurisdiction is determined based upon allegations made in well-pleaded complaint); cf. Goosby v. Osser, 409 U.S. 512, 521 n.7 (1973) (all well-pleaded allegations in complaint are assumed true in determining existence of federal subject matter jurisdiction).*fn5 Defendants need not attach the assignments to their notice of removal or supply them with their briefs. Plaintiff has unequivocally alleged that assignments exist and has pleaded that it is relying on them to support its right to recovery. Nothing further is required.
The second prong of the Pascack test is also satisfied. Plaintiff identifies no other "independent legal duty" that would support its claims. Plaintiff's argument that this is a "rate of payment" case is of no avail.*fn6 Plaintiff admits that it has no contractual relationship with any Defendants. At the same time, it argues that its right to payment is dependent upon assignments of benefits. The amount of payment (i.e., the "rate") at issue would necessarily implicate the rates in the ERISA plans under which Plaintiff claims it has received assignments.
This is not a case where, despite the existence of an assignment, the plaintiff is suing under a second agreement or document separate from the underlying plan, in which case preemption may not arise. See, e.g., Blue Cross of Cal. v. Anesthesia Care Assoc. Med. Grp., 187 F.3d 1045, 1051-52 (9th Cir. 1999) (no preemption despite assignment when claim was brought under provider agreement separate from underlying ERISA plan).*fn7 Thus, Plaintiff identifies no independent legal duty to support its claims, and the second Pascack prong is satisfied.
In sum, Plaintiff has expressly relied upon the existence of assignments, establishing that their claims could have been brought under ERISA § 502(a). It has also failed to identify an independent legal duty supporting its claim. As such, under Pascack, the case was properly removed. Therefore, Plaintiff's motion to remand should be denied.
For the reasons set forth above, it is respectfully recommended that Plaintiff's motion to remand be denied.
MARK FALK United States Magistrate Judge