United States District Court, D. New Jersey
McNulty, United States District Judge
the latest chapter in the quest of out-of-network health care
providers to be reimbursed by ERISA plans at in-network
rates. The providers first struggled to be heard in federal
court, finally persuading the Third Circuit that they could,
via assignment, assert the rights of their patients. The
Plans in many cases have responded by adopting
anti-assignment provisions. Increasingly, providers have
preferred to pursue claims in state court. To avoid ERISA
preemption and get around the anti-assignment provision, the
provider here has asserted what it deems an independent
state-law contract claim on behalf of itself, rather than its
patient. The insurer, citing ERISA preemption, has removed
the case to federal court and promptly moved to dismiss on,
inter alia, standing grounds. The result, from the
insurer's point of view, should be that the provider
cannot sue anywhere. The provider here agrees that it lacks
derivative standing, but nevertheless seeks remand to a state
forum where it can assert its own rights. Whether its
allegedly independent state-law claims are viable, it says,
is for the state courts to decide.
Spine & Orthopaedics, LLC ("Progressive"), an
out-of-network health care provider, brings this state-law
action to recover reimbursement from the claims administrator
for the patient's health plan, Anthem Blue Cross Blue
Shield ("Anthem"). Progressive alleges that Anthem
underpaid on its claim for reimbursement for surgery
performed on, and billed to, its patient, B.G.
Progressive's state-law complaint asserts three claims
against Anthem: (1) breach of contract; (2) quantum meruit;
and (3) unjust enrichment. Anthem removed this action from
state court on the premise that this Court had subject matter
jurisdiction, because all state law claims were completely
preempted by Section 502(a) of the Employment Retirement
Income Security Act of 1974 ("ERISA"), 29 U.S.C.
§ 1001 et seq.
now moves under Fed.R.Civ.P. 12(b)(6) to dismiss the
Complaint for failure to state a claim upon which relief may
be granted. Progressive cross-moves for the case to be
remanded to state court, and for reimbursement of
attorney's fees. Because the motion to remand implicates
this Court's subject matter jurisdiction, I will address
reasons stated herein, I will grant Progressive's motion
to remand, but deny its motion for attorney's fees.
Anthem's motion to dismiss is denied as moot.
Complaint was originally filed by Progressive in New Jersey
Superior Court, Bergen County, on December 8, 2016. (Cplt.).
It alleges that Progressive "proceed[s] on its own
individual claims" against Anthem. The evident intent is
to state that Progressive is asserting its own rights, not
those of its patient, B.G. Anthem "was engaged in the
business of providing or administering healthcare insurance
benefits for [B.G.]" (Cplt. ¶ 3 and 4). The
Complaint contains three state contract-related claims
against Anthem: (1) breach of contract; (2) quantum meruit;
and (3) unjust enrichment. (Cplt. ¶¶ 15 to 29).
January 26, 2017, Anthem filed a notice of removal to federal
court pursuant to 28 U.S.C. § 1441(a) and (c). (Notice
of Removal). The Notice states that because Progressive is
seeking to recover "increased benefit payments"
under a health benefits plan which is governed by ERISA, the
doctrine of complete preemption confers federal question
subject matter jurisdiction under 28 U.S.C. § 1331.
(Notice of removal, ¶¶ 7 to 13).
February 16, 2017, Anthem filed a motion under Federal Rule
of Civil Procedure 12(b)(6) to dismiss the Complaint with
prejudice for failure to state a claim. (Def. Brf.). In
particular, Anthem maintained that Progressive's claims,
all sounding in state law, should be dismissed because they
are preempted by ERISA. (Def. Brf. at 4 to 6). Anthem argued
in the alternative that, even setting aside preemption, the
claims were deficient. (Def. Brf. 6-9).
April 3, 2017, Progressive filed an opposition to
Anthem's motion to dismiss, and a cross-motion to remand
the case to state court and award attorney's fees
incurred as a result of the improper removal. (PI. Remand
Brf.; PI Brf.). The cross-motion to remand asserted that this
court lacks federal subject matter jurisdiction because ERISA
preemption does not apply. (PI. Remand Brf. at 9 to 19).
April 10, 2017, Anthem submitted a reply memorandum of law in
further support of its motion to dismiss and in opposition to
Progressive's motion to remand. (Def. Reply). On May 8,
2017, Progressive filed a reply brief in further support of
its motion to remand and for attorney's fees and costs.
9, 2017, without having previously requested leave, Anthem
filed a surreply letter. (ECF no. 15). On May 11, 2017,
without have previously requested leave to file, Progressive
filed a letter in response to the surreply. (ECF no. 16). On
that same date, without having previously requested leave,
Anthem filed a letter in response to Progressive's
letter, and Progressive (of course) filed another letter in
response to that. (ECF no. 17 and 18). On August 24,
2017, Progressive filed a letter informing the court that
McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna U.S.
Healthcare, No. 15-CV-2007 KBF, 2015 WL 2183900
(S.D.N.Y. May 11, 2015), relied upon by Anthem in its
opposition brief, had been overruled. (ECF no. 21).
is a health care provider specializing in spinal orthopedics.
(PI. Remand Brf. at 6). Located in Bergen County, New Jersey,
it employs one orthopedic surgeon. (Cplt. ¶ 1; PL Remand
Brf. at 6).
October 24, 2014, Progressive's surgeon, with the aid of
a physician assistant, provided medical services to B.G. The
services consisted of spinal surgery and "related
procedures". (Cplt. ¶ 10; Sheridan Dec. ¶ 8).
a member of an employer-sponsored health benefits plan:
specifically, the Blue Cross Blue Shield Select Plus PPO
Option for Volt Information Sciences, Inc. ("Volt
Plan" or "the Plan"). (Def. Brf. at 2). Anthem
is the Claims Administrator for the Volt Plan. (Def. Brf. at
2; Benefit Description at 82). The parties do not dispute
that the VOLT Plan is governed by ERISA.
B.G.'s initial visit to Progressive, B.G. provided
Progressive with a copy of his Blue Cross Blue Shield card.
(Sheridan Dec. ¶ 3; Ex. A to Sheridan
Dec.). As an out-of-network provider, Progressive
does not have any written agreement with Anthem for payment
of services. (Cplt. ¶ 11). According to Progressive,
before providing medical services to B.G., one of its
representatives contacted Anthem by telephone to gain
information about payment of services. (Sheridan Dec.
¶¶ 5-7) .
Progressive representative allegedly spoke with an Anthem
representative on three occasions. (Sheridan Dec.
¶¶ 5-7). According to Progressive's practice
manager, on May 7, 2014, Progressive "called to confirm
the medical benefits that Patient B.G.'s insurer would
pay." (Id. ¶ 5). Progressive alleges that
an Anthem representative stated that Anthem "paid the
'usual, customary, and reasonable [("UCR")]
rate', and the patient a 30% coinsurance (meaning that
the patient was responsible for 30% of the billed amount
after the deductible, and the insurer would pay the other
8, 2014, Progressive received an assignment of benefits from
B.G. (Notice of Removal Ex. C).
on October 6, 2014, prior to B.G.'s surgery, Progressive
called to "reconfirm the medical benefits that [Anthem]
would pay." (Sheridan Dec. ¶ 6). Anthem reiterated
the information that it had already provided on May 7, 2014.
(Sheridan Dec. ¶ 6).
October 8, 2014, Progressive "called to confirm that
[Anthem] would pay for the particular surgery Progressive
sought to perform on Patient B.G." (Sheridan Dec.
¶7). According to Ms. Sheridan, "[w]e were told
that we could perform the procedure, and that no other
medical documentation was required in order to pre-authorize
it." (Sheridan Dec. ¶7).
on Anthem's representations, on October 24, 2014, the
Progressive doctor performed spinal surgery on B.G. (Cplt.
¶ 10; Sheridan Dec. ¶ 8).
days after B.G.'s surgery, Progressive submitted two
health insurance claim forms: one for the surgeon's
services and the other for the physician assistant's
services. (Sheridan Dec. Ex. C; Claim Form). The total charge
claimed for the surgeon was $60, 453. (Sheridan Dec. Ex. C;
Claim Form). Progressive asserts that only $2, 381.97 of the
surgeon's bill has been reimbursed by Anthem. (Sheridan
Dec. ¶ 14; Sheridan Dec. Ex. F; ECF no. 10 Ex. F),
Progressive appealed the payment decision through
Anthem's administrative appeals process by sending a
letter from counsel dated April 1, 2016. (Genovese Decl., Ex.
1). The outcome of the appeal is not specifically documented,
but the implication is that it was denied.
December 8, 2016, Progressive filed this action in the
Superior Court of New Jersey, Law Division, Bergen County.
Removal and Remand in the Context of ERISA
to the federal removal statute, "any civil action
brought in a State court of which the district courts of the
United States have original jurisdiction" may be removed
by the defendants to the appropriate district court where the
action is pending. 28 U.S.C. § 1441(a). Removal is not
appropriate if the case does not fall within the district
court's original federal question jurisdiction and the
parties are not diverse. See U.S. Express Lines Ltd. v.
Higgins, 281 F.3d 383, 389 (3d Cir. 2002) (citing
Franchise Tax Bd. of Cat v. Constr. Laborers Vacation
Trust for S. Cat, 463 U.S. 1, 8 (1983)); see
generally 28 U.S.C. §§ 1331, 1332(a).
Third Circuit has cautioned that 28 U.S.C. § 1441 must
be strictly construed against removal.
Samuel-Bassett, 357 F.3d at 396, 403 (citing
Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d
Cir. 1990), cert, denied, 498 U.S. 1085 (1991).
Accordingly, all doubts should be resolved in favor of
remand. Id. A party opposing remand must show that
removal was proper. Boyer, 913 F.2d at 111.
may move to remand a civil action to state court "at any
time" based on the federal court's lack of subject
matter jurisdiction. 28 U.S.C. § 1447(c). As in any
federal court case, "the party asserting federal
jurisdiction in a removal case bears the burden of showing,
at all stages of the litigation, that the case is properly
before the federal court." Frederico v. Home
Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citing
Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d
392, 396 (3d Cir. 2004)).
general, under the well-pleaded complaint rule, a cause of
action "arises under" federal law, and removal is
proper, only if a federal question is presented on the face
of a properly pleaded complaint. Dukes v. U.S.
Healthcare, 57 F.3d 350, 353 (3d Cir. 1995) (citing
Franchise Tax Bd., 463 U.S. at 9-12). The complete
preemption doctrine, however, may be viewed as creating a
quasi-exception to the well-pleaded complaint rule:
"Congress may so completely pre-empt a particular area
that any civil complaint raising this select group of claims
is necessarily federal in character."
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64
(1987) (emphasis added); Dukes, 57 F.3d at 354
(citing Taylor); see generally Goepel v. Nat'l Postal
Mail Handlers Union, 36 F.3d 306, 309-13 (3d Cir. 1994)
(discussing the Court's complete-preemption
jurisprudence). In such a case, even a facial state claim
will be deemed to present a federal question.
The complete preemption doctrine applies when the pre-emptive
force of [the federal statutory provision] is so powerful as
to displace entirely any state cause of action [addressed by
the federal statute]. Any such suit is purely a creature of
federal law, notwithstanding the fact that state law would
provide a cause of action in the absence of [the federal
Dukes, 57 F.3d at 354 (quoting Franchise Tax
Bd., 463 U.S. at 23). When the federal law completely
preempts a state law cause of action, a claim within the
scope of that federal law is federal in nature, even if it is
pleaded in terms of state law, and it is therefore removable
under 28 U.S.C. § 1441. Beneficial Nat'l Bank v.
Anderson, 539 U.S. 1, 8 (2003).
ERISA preemption is broad, it is not all-encompassing. The
Supreme Court has "addressed claims of pre-emption with
the starting presumption that Congress does not intend to
supplant state law." N.Y.State Conf. of Blue Cross
& Blue Shield Plans v. Travelers Inc. Co., 514 U.S.
645, 654 (1995). Thus, even though "[t]he governing text
of ERISA is clearly expansive" in prescribing preemption
for any state law claims that "relate to any employee
benefit plan, " the Supreme Court did not extend
"relate to" "to the furthest stretch of its
indeterminacy." Id. at 655 (internal citations
and quotations omitted).
federal question is not presented on the face of the
complaint. Progressive is suing in its individual capacity as
a third-party health care provider, not in its derivative
capacity as an assignee of the patient's ERISA plan
benefits. Its state-law claims are based on alleged
independent promises or obligations of Anthem to Progressive
itself. Such claims, in Progressive's view, lie outside
the scope of the beneficiary/Plan relationship. Anthem's
notice of removal is based on its argument that
Progressive's claims are completely preempted ...