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East Coast Advanced Plastic Surgery v. Horizon Blue Cross Blue Shield of New Jersey

United States District Court, D. New Jersey

November 26, 2018

EAST COAST ADVANCED PLASTIC SURGERY, Plaintiff,
v.
HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, JOHN AND JANE DOES 1-10, AND ABC CORPORATIONS 1-10, Defendants.

          OPINION

          Kevin McNulty, United States District Judge.

         This case arises from a dispute over reimbursement for medical services rendered by an out-of-network medical provider. The plaintiff, East Coast Advanced Plastic Surgery ("ECAPS"), filed this action in New Jersey Superior Court to recover payment from defendant Horizon Blue Cross Blue Shield of New Jersey ("BCBS"). That state-court complaint ("Cplt", DE l-l)[1] asserted claims for breach of an implied contract, promissory estoppel, fraudulent inducement, and account stated. BCBS allegedly reimbursed ECAPS for only a fraction of what it owes for certain medically necessary surgeries that it performed on a patient.

         BCBS removed the state court action to this Court, claiming that there is federal jurisdiction because the state law claims are completely preempted by § 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"). BCBS then moved to dismiss the state law claims as preempted under ERISA. (DE 4)

         ECAPS filed a motion (DE 5) to remand the matter to state court, and that motion was referred to United States Magistrate Judge Michael A. Hammer, Jr. The motion to dismiss was stayed pending resolution of the motion to remand. (DE 15) Because the motion to dismiss was stayed, ECAPS has not filed any opposition to it.

         On September 17, 2018, Judge Hammer issued a Report and Recommendation in which he ruled that this matter be remanded to state court. Judge Hammer concluded that BCBS had not met its burden under the First part of the two-part Pascack test, which is used to determine whether a state law claim is completely preempted by ERISA. See Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004).

         BCBS timely filed objections to the Report and Recommendation. (DE 23) Because the Report and Recommendation would essentially dispose of this federal action, I have reviewed it de novo.

         For the reasons stated below, I adopt the Report and Recommendation of Judge Hammer. This matter will be remanded to New Jersey Superior Court, and BCBS's motion to dismiss will be dismissed as moot. I write primarily to supplement Judge Hammer's reasoning to address the objections raised by BCBS on appeal.

         I. Background

         ECAPS is an out-of-network provider that provided a medically-necessary surgery to a patient, A.R. (Cplt. ¶¶12, 16-24). A.R. had health benefits through UFCW Local 464A Welfare Services Fund (the "Fund"), which is a self-insured plan administered by BCBS. (Id. ¶14). BCBS represented to ECAPS that it was the authorized representative of the Fund. (Id. ¶15).

         A.R. had breast cancer. ECAPS claims that it contacted BCBS for preauthorization to perform a double mastectomy and deep inferior epigastric perforator ("DIEP") reconstructive surgery. (Id. ¶27). According to ECAPS, BCBS was aware that ECAPS was an out-of-network provider. (Id.). BCBS told ECAPS that prior authorization was not necessary for coverage. (Id.). The Fund has denied that it authorized BCBS to approve the surgery, and has stated that BCBS is not the Fund's authorized representative. (Id. ¶29).

         Relying on BCBS's representations that preauthorization was not necessary, ECAPS went forward with the surgery on January 29, 2015. (Id. ¶¶ 18-20). ECAPS billed BCBS $470, 210.00 for the surgery. (Id. ¶24). BCBS paid just $9, 306.63, leaving an outstanding balance of more than $460, 903.37. (Id. ¶25).

         ECAPS first filed this action in the Superior Court of New Jersey, Bergen County, on March 6, 2018. Its state-court complaint alleges state-law claims of breach of contract, promissory estoppel, account stated, and fraudulent inducement against BCBS. ECAPS's breach of contract claim asserts that its course of dealing with BCBS created an implied-in-fact contract, and that by not requiring preauthorization of the surgery, BCBS agreed to pay the "usual and customary rates for the medical services" provided by ECAPS. (Id. ¶¶32-33). ECAPS's promissory estoppel count is likewise based on the alleged statement that preauthorization was not required. (Id. ¶39). ECAPS's account-stated claim asserts that it submitted bills to BCBS, that BCBS paid only a small portion of those bills, and that it is owed the outstanding balance. (Id. ¶¶44-47). Finally, ECAPS's fraudulent- inducement claim alleges that BCBS induced ECAPS to perform the surgery by telling ECAPS that preauthorization was not required, and that inherent in that statement was a representation that BCBS would pay the usual and customary rate for the surgery. (Id. ¶¶49-51).

         II. Legal Standards

         A defendant may remove "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). District courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331 (concerning federal question jurisdiction). A removed action must be remanded "[i]f at any time before final judgment it appears that die district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). Removal is "strictly construed, with all doubts to be resolved in favor of remand." Brown v. JEVIC,575 F.3d 322, 326 (3d Cir. 2009) (citations omitted); see also Samuel-Bassett v. KIA Motors Am., Inc.,357 F.3d 392, 396, 403 (3d ...


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