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Atlantic Shore Surgical Associates v. United Healthcare

United States District Court, D. New Jersey

January 23, 2019



          PETER G. SHERIDAN, U.S.D.J.

         This matter comes before the Court on Defendants United Healthcare Services, Inc.[1] and Atria Senior Living Inc.'s motion to dismiss Plaintiff Atlantic Shore Surgical Associates' complaint, (ECF No. 12). This case arises from a dispute over nonpayment of medical services. Plaintiff Atlantic Shore Surgical Associates ("Atlantic") is a company that provides healthcare services in New Jersey. (Compl. at ¶ 1; ECF No. 1). On October 28, 2015, Jonathan Yrad, M.D., employed by Atlantic, performed extensive surgery on nonparty P.H. (Id. at ¶¶ 18-19).

         P.H. received health coverage through a self-insured plan funded by Defendant Atria Senior Living. (Id. at ¶ 15). The plan is administered by Defendant United Healthcare Services Inc. ("United"). (Id.). Because Plaintiff was an out of network medical provider, it contacted United to receive an authorization to render medical services to P.H. (Id. at ¶ 17). Plaintiff received an authorization under authorization number 9041448600 from United.[2] (Id.) Plaintiff then performed the surgery on P.H. (Id. at ¶ 18). After completion of the surgery, Plaintiff billed United $111, 716.08. (Id. at ¶ 23). United paid only $6, 004.14 toward the charges, leaving a balance of $105.711.94. (Id. at ¶24).

         On March 30, 2018, Plaintiff filed this Complaint in New Jersey Superior Court against Defendants seeking reimbursement for medical services it provided to P.H. Plaintiff asserts claims for breach of contract, promissory estoppel, account stated, and fraudulent inducement. On May 21, 2018, Defendants removed the case to this Court, based on diversity jurisdiction. (ECF No. 1). Presently before the Court is Defendants' motion to dismiss for failure to state a claim (Fed. R. Civ. P. 12(b)(6)). Defendants additionally argue that Plaintiffs claims must be dismissed because: (1) Plaintiff has not sufficiently plead the existence of a principal/agent relationship between defendant Atria and defendant UnitedHealthcare/Oxford; and (2) Plaintiffs state law claims are preempted by ERISA.


         On a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), the Court is required to accept as true all allegations in the Complaint and all reasonable inferences that can be drawn therefrom, and to view them in the light most favorable to the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."* Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         While a court will accept well-pleaded allegations as true for the purposes of the motion, it will not accept bald assertions, unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. Iqbal, 556 U.S. at 678-79; see also Morse v. Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997). A complaint should be dismissed only if the well-pleaded alleged facts, taken as true, fail to state a claim. See In re Warfarin Sodium, 214 F.3d 395, 397-98 (3d Cir. 2000). The question is whether the claimant can prove any set of facts consistent with his or her allegations that will entitle him or her to relief, not whether that person will ultimately prevail. Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir.), cert, denied, Forbes v. Semerenko, 531 U.S. 1149 (2001).


         Defendants argue that, because the plan is an employee welfare benefit plan, it is governed by ERISA, and as such, Plaintiffs claims are preempted by ERISA. In response, Plaintiff argues that its state-law claims arise outside of the plan, and thus are not preempted by ERISA.

         "ERISA possesses 'extraordinary pre-emptive power.'" Menkes v. Prudential Ins. Co. of Am., 762 F.3d 285, 293 (3d Cir. 2014) (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)). ERISA provides for two types of preemption. Under ERISA's civil enforcement provision, Section 502(a), "state law causes of action that are within the scope of... § 502(a) are completely pre-empted." Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004) (quotation omitted). Section 514(a) states that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" as defined under the Act. 29 U.S.C. § 1144(a). "Complete preemption under § 502(a) is a 'jurisdictional concept,' whereas express preemption under § 514 is a 'substantive concept governing the applicable law.'" In re U.S. Healthcare, Inc., 193 F.3d 151, 160 (3d Cir. 1999) (quoting N.J. Carpenters v. Tishman Constr. Corp., 760 F.3d 297, 302 (3d Cir. 2014)). "Unlike ordinary preemption, which would only arise as a federal defense to a state-law claim, complete preemption operates to confer original federal subject matter jurisdiction notwithstanding the absence of a federal cause of action on the face of the complaint." Bauman v. U.S. Healthcare, Inc. (In re US. Healthcare, Inc., 193 F.3d 151, 160 (3d Cir. 1999). "The Supreme Court has held that in enacting the civil-enforcement provisions of section 502(a) of ERISA, Congress intended to completely preempt state law." Id. In Baumann, the court explained it was necessary to distinguish between Sections 502(a) and 514(a), explaining "State-law claims that are subject to express preemption are displaced and thus subject to dismissal. . . Claims that are completely preempted are 'necessarily federal in character,' and thus are converted into federal claims." Baumann, 193 F.3d at 160.

         In Pascack Valley Hosp., Inc and N.J. Carpenter, the courts, in determining whether a claim was removable, and thus completely preempted under Section 502(a), explained, "a claim is completely preempted, and thus removable, under ERISA § 502(a) only if: (1) the plaintiff could have brought the claim under § 502(a); and (2) no other independent legal duty supports the plaintiffs claim." N.J. Carpenters, 760 F.3d at 303.

         The Court first examines whether Plaintiffs claims are completely preempted by Section 502(a), ERISA's civil enforcement provision. For complete preemption to apply, both prongs must be satisfied. Id. Plaintiff agrees that it lacks standing to bring an ERISA claim, as it is an out-of-network provider, and is neither a participant nor a beneficiary under the plan. (See PI. Br., ECF No. 15, at 7). Thus, Plaintiff could not bring its claims pursuant to Section 502(a) of ERISA. Here, Plaintiffs claims are not completely preempted by Section 502(a) of ERISA, because Plaintiff does not have standing to bring a claim under Section 502(a).

         Having determined that Plaintiff may not bring a claim under Section 502(a) because it lacks standing, the Court now evaluates whether Plaintiffs state law claims are expressly preempted under Section 514(a) of ERISA. Section 514(a) states that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" as defined under the Act. 29 U.S.C. § 1144(a). ""Relate to'' has always been given a broad, common-sense meaning, such that a state law 'relates to an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.'" Menkes, 762 F.3d at 293-94 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983)). Under ERISA, "[t]he term 'State law' includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C. § 1144 (c)(1).

         "State common law claims fall within this definition and, therefore, are subject to ERISA preemption." Nat'l Sec. Sys. v. Iola,700 F.3d 65, 83 (3d Cir. 2012). Most recently, the Third Circuit noted that "ERISA preempts parallel state law remedies . . . [such as] breach-of-contract claim[s]." McCann v. Unum Provident, No. 16-2014, 2018 U.S. App. LEXIS 29638, slip op. at 23 (3d Cir. Oct. 5, 2018); see also Ford v. Unum Life Ins. Co. of Am.,351 Fed.Appx. 703, 706 (3d Cir. 2009) ("State law claims such as . . . breach of contract. . . would ordinarily fall within the scope of ERISA preemption, if the claims relate to an ERISA-governed benefits plan."); accord Early v. United States Life Ins. Co.,222 Fed.Appx. 149, 152 (3d Cir. 2007); Pryzbowski v. U.S. Healthcare, Inc.,245 F.3d 266, 278 (3d Cir. 2001). For example, in Iola, the court explained that the common law claims were preempted because the claims '"have a connection with' the ERISA plans because they are premised ...

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