COHEN, M.D., F.A.C.S. et al v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY

Filing 46

OPINION. Signed by Judge John Michael Vazquez on 2/21/2017. (JB, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NOT FOR PUBLICATION

JASON COHEN, M.D., F.A.C.S. AND
PROFESSIONAL ORTHOPAEDIC
ASSOCIATES, PA AS ASSIGNEE AND
DESIGNATED AUTHORIZED
REPRESENTATIVES OF PATIENT AM AND
PATIENT AM,

Civil Action No. 15-4525
OPINION

Plaintiffs,
V.

HORIZON BLUE CROSS BLUE SHIELD OF
NEW JERSEY,

Defendants.

John Michael Vazguez, U.S.D.J.
I.

INTRODUCTION
This matter comes before the Court on Plaintiffs Jason D. Cohen, M.D. (“Dr. Cohen”) and

Professional Orthopaedic Associates, PA’s (“POA”) (collectively “Plaintiffs”) motion to remand
to state court. Defendant opposes this motion.1 This motion was decided without oral argument
pursuant to Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1.

The Court has

considered the parties’ submissions, and for the reasons stated below, Plaintiffs’ motion is denied.

Plaintiffs’ brief in support of its motion to remand will be referred to hereinafter as “P1. Br.”
(D.E. 37), Defendant’s opposition to Plaintiffs’ brief will be referred to hereinafter as “Def. Opp’n”
(D.E. 44), and Plaintiffs’ reply brief in support of its motion to remand will be referred to
hereinafter as “P1. R.Br.” (D.E. 45).
1

FACTS2 AND PROCEDURAL HISTORY

II.

Dr. Cohen is a board certified orthopedic surgeon with an office in Tinton Falls, New
Jersey. FAC

¶J

¶

1. Dr. Cohen owns and/or operates POA, a professional medical association. Id.

1, 2. Patient AM was a patient of Dr. Cohen and POA. Id.

¶ 4.

Defendant is an insurance

company that is “the Plan Administrator for Plaintiff AM’s health insurance plan.” Id.

¶ 5.

Neither

party contests that the health insurance plan was a plan governed by the Employee Retirement
Income Security Act (“ERISA”). This matter centers on Defendant’s refusal to pay Plaintiffs for
emergency medical services provided to Patient AM.

Plaintiffs are allegedly assignees and

designated authorized representatives of Patient AM. Id.

¶J

15, 31. Plaintiffs do not allege that

they had a separate agreement, whether verbal or written, with Defendant regarding Plaintiffs
provision of medical services to Patient AM.
On or about July 4, 2014, “[Dr.] Cohen performed emergency spinal surgery on Patient
AM.” Id.

¶ 20. Plaintiffs allege that the services were “medically necessary and appropriate

according to recognized medical standards in the community where [Dr.] Cohen practices
medicine.” Id.

¶ 22.

Subsequently, on July 18, 2014, “Dr. Cohen submitted a claim to Horizon in

the amount of S 169,390.00 for the [s]ervices rendered to Patient AM.” Id.

¶ 24.

Defendant did

not pay the claim. Id. ¶3 o. “On or about November 24, 2014, POA and Dr. Cohen filed an appeal
[with Defendant] as ‘the designated representative’ of patient AM.” Id.
December 22, 2014, Horizon denied the appeal. Jo’.

¶ 32.

¶ 31.

By a letter dated

On or about february 26, 2015, POA

The facts of this matter derive from Plaintiffs’ First Amended Complaint (“FAC”). D.E. 17. In
ruling on a motion to remand, “the district court must assume as true all factual allegations of the
complaint.” Steel Valley Auth. v. Union Switch & SignalDiv., 809 F.2d 1006, 1010 (3d Cir. 1987).
2

According to the parties’ briefs, since the filing of the complaint, Defendant has paid Plaintiffs a
few thousand dollars. P1. Br. at 6; Def. Opp’n at 3.
2

and Dr. Cohen submitted a second appeal. Id.
denied the second appeal. Id.

¶ 36.

recover the unpaid amounts. Id.

¶ 34.

By a letter dated March 22, 2015, Horizon

Subsequently, Plaintiffs brought the present action seeking to

¶J 38-42.

On May 15, 2016, Plaintiffs filed a four-count complaint in the Superior Court of New
Jersey against Defendant, which asserts: (1) Violation of N.J.A.C. 11:24-5.3, (2) Unjust
Enrichment, (3) Violation of the New Jersey Healthcare Information and Technologies Act
(“HINT”), and (4) Misrepresentation. D.E. 1., Ex. A. On June 26, 2015, Horizon removed the
action to this Court, alleging federal question jurisdiction on the grounds that all of the state law
claims asserted in the complaint were preempted by ERISA. Id. On July 17, 2015, Horizon moved
to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(l) and 12(b)(6). D.E. 4. Judge
Linares dismissed the complaint without prejudice and allowed Plaintiffs to file an amended
complaint to cure any noted deficiencies. D.E. 15. Judge Linares did not reach the ERISA
preemption issue raised by Defendant. Id. Plaintiffs subsequently amended their Complaint on
December 4, 2015, alleging the following causes of action: (1) violation of N.J.A.C. 11:24-5.3
(“emergency services regulation”), (2) unjust enrichment, and (3) violation of HINT.4 FAC ¶ 4372. Defendant answered the FAC. D.E. 20. Plaintiffs now move to remand. D.E. 37.
Plaintiffs allege that this Court lacks subject matter jurisdiction to hear this case and
therefore the case should be remanded to state court. P1. Br. at 1. Since the claims alleged are
premised on New Jersey regulations related to emergency medical treatment, Plaintiffs allege that
they are not preempted by ERISA. Id. at 3. Defendant responds that Plaintiffs are essentially

The amended complaint provides no statutory cite for HINT. HINT can be found at N.J.S.A.
17B:26-9.1. In their moving brief, Plaintiffs cite N.J.A.C. 11:22-1.5 as the applicable regulation
for Count III. The cited regulation, N.J.A.C. 11:22-1.5, implements N.J.S.A. 17B:30-26 through
34. N.J.A.C. 11:22-1.1. In other words, the cited regulation does not apply to HINT.

‘

3

seeking reimbursement under the terms of an ERISA-governed health plan so that the state law
claims are preempted, resulting in the Court having subject matter jurisdiction. Def. Opp’n at 1.
LAW AND ANALYSIS

III.

A. Standard of Review

A motion to remand is governed by 28 U.S.C.

§ 1447(c), which provides that removed

cases shall be remanded “{i]f at any time before final judgment it appears that the district court
lacks subject matter jurisdiction.” Initially when a case is filed in state court, a defendant may
remove any action over which the federal courts havejurisdiction. 2$ U.S.C.

§ 1441(a). The party

removing the action has the burden of establishing federal jurisdiction. Steel Valley A itth. v. Union
Switch & Signal Div., 809 f.2d 1006, 1010 (3d Cir. 1987). This burden is heavy, since removal
statutes are “strictly construed against removal and all doubts should be resolved in favor of
remand.” Id. for removal to be proper, a federal court must have original jurisdiction, that is, the
removed claims must arise from a “right or immunity created by the Constitution or laws of the
United States.” Concepcion v. CfG Health Sys. LLC, No. 13-0208 1, 2013 WL 5952042, at *2
(D.N.J. Nov. 6, 2013); see also 28 U.S.C.

§ 1331 (“The district courts shall have original

jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United
States.”).
In determining whether a complaint alleges a federal question, courts are generally guided
by the well-pleaded complaint rule. According to the rule, a plaintiff is ordinarily entitled to
remain in state court so long as its complaint does not, on its face, affinnatively allege a federal
claim.” Concepcion, 2013 WL 5952042, at *2.

However, an exception to the well-pleaded

complaint rule is found through complete preemption.

Complete preemption applies when

“Congress has so completely preempted a particular area” any complaint raising a claim in that

4

area is “necessarily federal in character” and may be removed to federal court. Lalionica v.
Guardian Ltfe Ins. Co. ofAm., No. 96-6020, 1997 WL 80991, at *3 (D.N.J. Feb. 20, 1997). Put
differently, “[o]nce an area of state law has been completely pre-empted, any claim purportedly
based on that pre-empted state law is considered, from its inception, a federal claim, and therefore
arises under federal law.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987). In short,
complete preemption establishes federal jurisdiction even when there are no federal claims on the
face of the complaint. Piyzbowski v. US. Healthcare, Inc., 245 F.3d 266, 271 (3d Cir. 2001).
ERISA’s civil enforcement mechanism, Section 502(a), is “one of those provisions with such
‘extraordinary pre-emptive power’ that it ‘converts an ordinary state common law complaint into
one stating a federal claim for purposes of the well-pleaded complaint rule.” Fascack Valley
Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 399-400 (3d Cir. 2004)
(quoting Aetna Health Inc. v. Davita, 542 U.S. 200, 209 (2004)).
On its face, Plaintiffs’ FAC does not present a federal question. Rather, the FAC asserts
state law claims pursuant to New Jersey regulations and common law. While the FAC does not
expressly refer to ERISA, Defendant alleges that ERISA completely preempts the state law claims.
B. ERISA PREEMPTION
Before addressing whether Plaintiffs’ state law claims are completely preempted, the Court
notes that under ERISA, the term “preemption’ is used in the law in more than one sense.” In re
US. Healthcare, Inc., 193 f.3d 151, 160 (3d Cir. 1999). The two forms of ERISA preemption are
“complete preemption” under Section 502(a) and “ordinary preemption” under Section 5 14(a).
Joyce v. RJR Nabisco Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997). The significant difference
between complete preemption and ordinary (or conflict) preemption is that “[u]nlike ordinary
preemption, which would only arise as a federal defense to a state-law claim, complete preemption

5

operates to confer original federal subject matter jurisdiction notwithstanding the absence of a
federal cause of action on the face of the complaint.” In re US. Healthcare, 193 F.3d at 160.
In other words, if ERISA completely preempts a state law cause of action, then a defendant
may remove the matter to federal court on that basis alone, “even if the well-pleaded complaint
rule is not satisfied.” Joyce, 126 F.3d at 171.

To this end, ERISA’s complete preemption

provision, Section 502, is a misnomer, since it is “really a jurisdictional rather than a preemption
doctrine, as it confers exclusive federal jurisdiction in certain instances where Congress intended
the scope of a federal law to be so broad as to entirely replace any state-law claim.” Mann Gen.
Hosp. v. Modesto & Empire Traction Co., 581 f.3d 941, 945 (9th Cir. 2009). “But if the doctrine
of complete preemption does not apply, even if the defendant has a defense of ‘conflict
preemption’ within the meaning of

§ 5 14(a)

...

the district court is without subject matter

jurisdiction.” Id.; see also Arana v. Ochsner Health Plan, 338 F.3d 433, 440 (5th Cir. 2003)
(holding that “only complete preemption of a claim under ERISA

§ 502(a) is required for removal

jurisdiction; conflict preemption under ERISA

§ 514 is not required”). By comparison, “[s]tate

law claims which fall outside of the scope of

§ 502, even if preempted by § 5 14(a), are still

governed by the well-pleaded complaint rule and, therefore, are not removable under the completepreemption principles.” Dukes v. US. Healthcare, Inc., 57 f.3d 350, 355 (3d Cir. 1995). In short,
complete preemption pursuant to Section 5 02(a) is a matter of federal subject matter jurisdiction
while conflict preemption under Section 514 is not.
At the outset, the Court notes that in their reply, Plaintiffs apparently confuse the two
different types of preeinption analyses under ERISA. P1. R.Br. at 5-Il. The cases analyzed by
Plaintiffs address conflict preemption under Section 514, which does not provide a means to confer
federal jurisdiction, but instead can be used as a defense in state court.

6

Here, the Court is addressing its subject matter jurisdiction. Thus, only Section 502(a) is
relevant. Section 514 does not enter into the Court’s analysis. Pursuant to Section 502(a), state
law claims are completely preempted when (1) the plaintiff could have brought the action under
Section 502(a) of ERISA and (2) no independent legal duty supports the plaintiffs claims. See
Davila, 542 U.S. at 210; Fascack Valley Hosp., 388 F.3d at 400.

“Because [this] test is

conjunctive, a state-law cause of action is completely preempted only if both of its prongs are
satisfied.” NJ. C’arpenters & Tr. Thereof v. Tishman Const. Corp. ofN.i, 760 f.3d 297, 303 (3d

Cir. 2014). As to the first prong of the Davila test, a claim may be brought under Section 502(a)
“to recover benefits due under the plan, to enforce the participant’s rights under the plan, or to
clarify rights to future benefits.” Pilot Life

Ins.

Co. v. Dedeattx, 481 U.S. 41, 53 (1987); see also

Prvzbrni’ski, 245 F.3d at 272 (“[C]laims challenging the quantum of benefits due under an ERISA

regulated plan are completely preempted under

§ 502(a)’s civil enforcement scheme.”).

Additionally, when asserting a cause of action under Section 502(a), a plan’s participant or
beneficiary may assign his or her rights under the plan to a health care provider. Vaimakis v.
United Healthcare/Oxford, No. 07-5184, 2008 WL 3413853, at *3 (D.N.J. Aug. 8, 2008). Doing

so confers derivative standing on the health care provider. See N. Jersey Brain & Spine Ctr. v.
Aetna, Inc., 801 F.3d 369, 372 (D.N.J. 2015). An assignment, however, does not change the
preemption analysis except that a health care provider must also show that it “received valid
assignments from individuals that receive benefits under an ERISA-governed plan.” Vaimakis,
2008 WL 3413853, at *3 (emphasis added). Defendant has not contested Plaintiffs’ assignment
in its papers, so for the purposes of this analysis, the Court will assume a valid assignment.5

The Court is not ruling that the assignment at issue was in fact valid or that it was not subject to
anti-assigim-ient provision. Instead, solely for purposes of this Opinion, the Court assumes the
validity of the assignment.
7

A legal duty is “independent” if it “would exist whether or not an ERISA plan existed.”
Mann

Gen. Hosp., 581 F.3d at 950. Under the second prong, a court “must examine whether

interpretation or application of the terms and scope of the ERISA insurance plan form an essential
part of Plaintiffs claims.” N. Jersey Brain & Spine Ctr. v. Conn. Gen. Ltfe Ins. Co., No. 10-4260,

2011 WL 4737067, at *6 (D.N.J. June 30, 2011) (internal quotation marks omitted). Thus, this
prong often turns on whether plaintiffs claims are “inextricably intertwined with the interpretation
and application of ERISA plan coverage and benefits.” Id. at *7
Generally, the Third Circuit has broadly addressed two separate scenarios concerning
complete preemption pursuant to Section 502(a). The first involves suits by medical providers,
rather than plan participants, against ERISA plans or plan administrators. See, e.g., Pascack
Valley, 38$ f.3d at 395. The second concerns plan participants’ direct suits against the plans or
their administrators. See, e.g., Pryzbowski, 245 F.3d at 271. The current matter involves the first
scenario, which would logically lead to the conclusion that the Court should analyze this case
pursuant to Pascack Valley and its progeny. However, Pascack Valley concerned a medical
provider’s separate agreement, apart from the ERISA plan itself, with the administrator of the plan.
Here, Plaintiffs do not allege that they had a separate agreement with Defendant which entitles
Plaintiffs to payment. As a result, the Court finds that the facts of Pascack Valley and similar
cases do not easily lend themselves to a comparative analysis to the present matter. As a result,
the Court will consider the analysis in Piyzbowski and related cases as their guidance is pertinent
to the issues here.
In Prvzbowski, the Third Circuit addressed the issue of “how a claim that the HMO or plan
administrator delayed in the approval of benefits should be treated under ERISA.” 245 F.3d at
273. There, the plaintiff had an insurance policy with defendant which required her to receive

8

prior written authorization for services performed by non-participating providers and facilities. Id.
at 269. In conjunction with a back injury, the plaintiff requested approval from defendant to
receive surgery from a non-participating surgeon.

Id.

After six months of requesting such

authorization, the plaintiff received approval and underwent the surgery. Id. However, due to the
delay, the plaintiff continued to suffer back pain after the procedure. Id. at 270. As a result, the
plaintiff asserted claims alleging that the defendant “negligently and carelessly delayed in
authorizing and/or obtaining authorization

[] for the surgery.”

Id.

The plaintiff filed her complaint in state court, and the defendant removed the case to
federal court. The district court held that removal was proper since the plaintiffs claims were
completely preempted pursuant to Section 502, and the plaintiff appealed. Id. at 271. In reviewing
whether the plaintiffs state law claims were preempted by ERISA, the Third Circuit reviewed
cases which had focused on “the distinction between claims raising quality of care issues,” which
were not preempted by ERISA and “claims raising quantity of benefits issues,” which were

completely preempted. Id. at 272. Yet, the Fiyzbowski court noted that “the distinction will not
always be clear.” Id. Thus, the Third Circuit laid out an alternative to the quality/quantity
framework for determining whether a case is completely preempted under Section 502(a) of
ERISA. Id. at 273. This framework distinguished between “eligibility decisions, which turn on
the plan’s coverage of a particular condition or medical procedure for its treatment” and “treatment
decisions, which are choices in diagnosing and treating a patient’s condition.” Id. (internal
quotation marks omitted). The court in Fiyzbowski concluded that “the ultimate distinction to
make for purposes of complete preemption is whether the claim challenges the administration of
or eligibility for benefits, which falls within the scope of § 5 02(a) and is completely preempted, or
the quality of the medical treatment performed, which may be the subject of a state action.” Id.

9

Piyzbowski also acknowledged that there was a category of cases falling between the two

poles of eligibility and treatment, and in those cases it is necessary to look to Section 502(a),
keeping in mind that “Congress has clearly manifested an intent to make causes of action within
the scope of the civil enforcement provisions of

§ 502(a) removable to federal court.” Id. The

claims at issue in P,yzbowski fell into the third category, with the court ultimately determining that
the claims were “limited to [defendant’s] delay in approving benefits,” which fit “squarely within
administrative function” and were therefore completely preempted by ERISA. Id. at 274.
After Piyzbov’ski, the Third Circuit again recognized that certain cases did not fit neatly
within the two analytical parameters set forth in Piyzbowski. See Levine v. United Healthcare
Co.’p., 402 F.3d 156, 162 (3d Cir. 2005).

In Levine, the Third Circuit looked “beyond the

framework set out in Fiyzbowski to determine whether [the] case [fell] within section 502(a).” Id.
In Levine, the plaintiffs suffered personal injuries and their medical expenses were initially paid
by defendant pursuant to the plaintiffs’ ERISA health plan. Id. at 159. After they settled their
underlying tort cases, the plaintiffs reimbursed their health insurance companies for their medical
expenses. Id. at 159-60. Several years later the New Jersey Supreme Court invalidated the New
Jersey regulation that had required the plaintiffs to reimburse their insurance companies. Id. at
160. The plaintiffs in Levine then brought suit to recover the amounts that they had previously
reimbursed defendants. Id.
The Third Circuit determined that plaintiffs’ claims were essentially claims for “benefits
due” and were therefore completely preempted by ERISA. Id. at 163. Comparing the claims to
those in Fiyzbowski, the Third Circuit found that the claims were more akin to challenges to the
“administration of benefits” than challenges to the “quality of benefits received.” Id. Noting that

“[ut

is impossible to determine the merits of the [i]nsureds’ claims without delving into the

10

provisions of their ERISA-govemed plans,” the Levine court held that the claims were completely
preempted by ERISA and federal subject matter jurisdiction was appropriate. Id.
In Dfelice

Aetna US. Healthcare, the Third Circuit once again addressed ERISA

preemption in the context of a claim that did not fall directly into one of Fiyzbowski ‘s two discrete
categories. 346 F.3d 442, 449 (3d Cir. 2003) (“[T]he decision here was in some sense both a
medical treatment and an eligibility decision.”). n Defelice, the plaintiff claimed that his insurance
provider negligently interfered with his medical care by denying plaintiff access to a special
tracheostomy tube and by forcing plaintiff to be discharged too soon. Id. at 445. The plaintiffs
medical benefits were provided pursuant to an ERISA plan that was administered by the defendant.
Id. at 444.

Under the plan, the plaintiff was entitled to covered benefits if defendant made the
determination that they were “medically necessary.” Id. at 444. Afier defendant made the decision
that the special tracheostomy tube was not medically necessary and therefore not covered,
plaintiffs doctor used a different tube that resulted in pain, infection, and surgery. Id. Relying on
Piyzbowski, the court in Difelice found that the defendant’s decision on whether to approve the

specific tube fell between the two clear cut categories of eligibility and medical treatment. As a
result, the Third Circuit referred to section 502(a) to determine whether the claim could have been
the subject of a civil enforcement action under ERISA. Id. at 449. The Dfelice court concluded
that defendant’s decision could only have been an eligibility decision because there was no
allegation that defendant actually provided the medical care. Id. at 449. The plaintiff therefore
could have brought a 502(a) action to request an injunction or recover for benefits due to him under
the plan. Id. Concluding that the plaintiff could have brought the tracheostomy claim under
ERISA, the Third Circuit held that it was completely preempted. Id.

11

As to the count concerning the plaintiffs discharge, the court found that there was not
enough infonnation to demonstrate it was preempted by ERISA. Id. at 452-54. Unlike the first
claim, the plaintiff did not allege that the hospital stay was “medically necessary,” nor did the
plaintiff rely on his plan’s discharge policy. Id. at 452. Since there was nothing in the pleadings
to suggest that the defendant was following the plan’s terms in suggesting discharge, the Difelice
court held that the count was not clearly “plan-related.” Id. The Third Circuit concluded that, as
a result, the count was not completely preempted and could be brought pursuant to state law
negligence liability. Id.
With the foregoing guiding its analysis, the Court now turns to whether Plaintiffs’ claims
are completely preempted pursuant to Section 502(a).
Count I
Plaintiffs bring Count I under N.J.A.C. 11:24-5.3, a New Jersey regulation promulgated
pursuant to the authority set forth in N.J.S.A. 26:2J-1 et seq.6 Plaintiffs allege that, pursuant to the
emergency services regulation, an insurance carrier must “limit a member’s liability for emergency
care rendered by non-participating providers.” FAC ¶ 50.
The regulation begins by stating that “[t]he HMO7 shall establish written policies and
procedures governing the provision of emergency and urgent care which shall be distributed to

6

N.J.S.A. 26:2J-1 et seq. applies to Health Maintenance Organizations, or HMOs. Defendant has
not argued that the regulation, in light of the underlying statute, does not apply to Defendant.
Likewise, Plaintiff has not proven that the regulation pennits a private cause of action, and
Defendant has not contested whether a private right of action exists. As a result, solely for
purposes of this Opinion, the Court will assume that the regulation applies to Defendant and
Plaintiffs have a private right of action. However, the Court is not finding that Defendant is
necessarily governed by the regulation nor is the Court finding that Plaintiffs have a private cause
of action pursuant to the regulation.
HMO stands for Health Maintenance Organization. “HMO,” and other specific words and
phrases such as “carrier,” are subject to specific definitions set forth inN.J.A.C. 11:24-1.2. Neither
‘

12

each subscriber at the time of enrollment.” N.J.A.C. 11:24-5.3.

Subsection 5.3(b)(3) of the

regulation indicates that “[e]rnergency and urgent care services shall include, but are not limited
to

...

[c]overage for out-of-service area medical care when medically necessary for urgent or

emergency conditions where the member cannot reasonably access in-network services.” Id. And
finally, the regulation states that, with respect to the services provided (including those in (b)(3)),
“carriers shall reimburse hospitals and physicians for all medically necessary emergency and
urgent health care services covered under the health benefits plan, including all tests necessary to
determine the nature of an illness or injury, in accordance with the provider agreement when
applicable.” Id. 5.3(c) (emphasis added).
Here, prong one of the Davila test is met. At the outset, no argument is made concerning
the treatment decisions or the quality of treatment (to the contrary, Plaintiffs claim that they
provided appropriate treatment), so the clear non-ERISA category set forth in Piyzbowski is not
relevant. Instead, Plaintiffs argue that the regulation explicitly provides that they are entitled to
their normal and customary fees. Plaintiffs’ argument, however, misses a key condition precedent
to this payment. The emergency health services for which reimbursement is sought must first be
“covered under the health benefits plan[.]” N.J.A.C. 11:24-5.3(c). Thus, the threshold question is
what benefits were covered under Patient AM’s health plan? As a result, it is impossible to
determine the merits of Plaintiffs’ claim without first reviewing the provisions of Patient AM’s
ERISA-governed plan. Like Levine and Defelice, this requirement puts Plaintiffs’ claim squarely
within Section 502(a)’s complete preemption reach.

party has addressed whether the particular definitions impact the Court’s analysis. For example,
Plaintiff has alleged that Defendant is a “plan administrator.” Nowhere has Plaintiff alleged that
Defendant is either an HMO or a carrier as defined under the regulation.
13

Prong two of the Davila test is similarly met since the emergency services regulation does
not create an independent legal duty. Again, the regulation requires the benefits covered to be
determined by a review of Patient AM’s plan. The regulation requires an HMO (see, sttpra, notes
$ & 9) to “establish written policies and procedures governing the provision of emergency and
urgent care” and goes on to provide what that care includes, but the plan itself is the source for
detennining which services are “covered.” Thus, the regulation does not create an independent
legal duty and Count I is preempted by ERISA.
Count II
In Count II Plaintiffs bring a claim against Defendant for unjust enrichment. Plaintiffs
allege that “[flailure of Defendant to []pay for the Services rendered to Patient AM by Dr. Cohen
and POA would be unjust.” Id.

¶ 5$•8 To demonstrate unjust enrichment, “a plaintiff must show

both that defendant received a benefit and that retention of that benefit without payment would be
unjust and that the plaintiff expected remuneration and the failure to give remuneration unjustly
enriched the defendant.” Envirofinance Gip., LLC v. Envtl. Barrier Co., LLC, 440 N.J. Super.
325, 350 (App. Div. 2015) (internal quotation marks omitted). Again, Plaintiffs do not base their

unjust enrichment claim on an independent agreement with Defendants; instead Plaintiffs rely on
Patient AM’s plan and Plaintiffs’ status as an alleged assignee and designated representative of
AM.

8

Although Plaintiffs are asking for a complete remand, they inexplicably fail to address Count II
whether ERISA preempts their claim for unjust enrichment. If the Court found that ERISA
preempts Count II (as it does), then it would not need to address preemption with respect to Counts
I and III since it could exercise supplemental jurisdiction over those claims. See Fiyzbot’ski, 245
F.3d at 275-76 (finding that when ERISA preempted certain state law claims, the district court
properly exercised supplemental jurisdiction over the remaining state law claims because they
“[were] derived from the same factual predicate” and therefore should “be combined in one judicial
proceeding”).
-

14

Plaintiffs point to no case in which an out-of-network physician or medical practice has
been able to proceed with an unjust enrichment claim against a plan administrator solely because
medical services have been provided to a plan participant. Indeed, Plaintiffs have not addressed
their unjust enrichment claim in any detail. See note 11, supra. As a result, the Court assumes
that the basis for Plaintiffs’ claim is its alleged assignment from Patient AM. While the assignment
can confer derivative standing for ERISA claim purposes, the assignment works to put Plaintiffs
in the shoes of AM. AM, in turn, could bring a claim pursuant to Section 502(a), which by
definition meets the first prong of Davila. Also, such a claim would be dependent upon, rather
than independent of, AM’s plan. So, the second prong is also met. Plaintiffs’ unjust enrichment
count is therefore subject to complete preemption.
Count III
In Count III, Plaintiffs apparently allege a violation of N.J.A.C. 11:22-1 59

Plaintiffs

allege that the regulation “requires that a health insurer, such as the Defendant, shall remit payment
for every insured claim no later than the

30th

calendar day following receipt of the claim.” Id.

¶

64. N.J.A.C. 11:22-1.5, titled “Prompt payment of claims,” provides that:
(a) A carrier and its agent shall remit payment of clean claims
pursuant to the following time frames:
1. Thirty calendar days after receipt of the claim where the
claim is submitted by electronic means or the time established
for the Federal Medicare program by 42 U.S.C. § 1 395u(c)2(B),
whichever is earlier; or
2. Forty calendar days after receipt of the claim where the claim
is submitted by other than electronic means.

As discussed in note 6, Count III lists HINT (without citation) but then make allegations
consistent with N.J.A.C. 11:22-1.5 and Plaintiffs claim in their brief that N.J.A.C. 11:22-1.5 is the
pertinent regulation. As a result, the Court is substantively analyzing the count pursuant to the
regulation.
15

(b) Carriers and their agents shall pay claims that are disputed or
denied because of missing information or documentation within 30
or 40 calendar days of receipt of the missing information or
documentation, as applicable, pursuant to (a) above.
N.J. Admin. Code

§ 11:22-1.5(a) & (b).

The regulation only applies to “clean claims.”0 A “clean claim” is, in turn, defined in
N.J.A.C. 11:22-1.2. Among other things, the term means that “the claim is for a service or supply
covered by the health benefits plan[.]” Id. (emphasis added). As a result, and for similar reasons
discussed concerning Count I, Count III is completely preempted. First, Count III could be brought
pursuant to Section 502(a) because it is a claim to recover benefits or enforce rights under AM’s
plan. To do so, Count III requires the Court to delve into AM’s plan to determine what is covered.
Second, Count III is not based upon an independent legal duty. To the contrary, the regulations
make clear that basis for recovery is determined by the plan itself and what is covered.
In sum, each of Plaintiffs’ three asserted claims are completely preempted by Section 502 of
ERISA, and the Court has subject matter jurisdiction. Therefore, Plaintiffs’ motion to remand is
denied.
IV.

CONCLUSION

10

Defendant disputes that N.J.A.C. 11:22-1.5 applies to the present claim since the regulation only
applies to “clean claims” and “does not apply to claims that are denied or disputed.” Def. Opp’n
at 7 n.5. Since this claim is disputed, Defendant contends that the regulation is not applicable. Id.
Additionally, Defendant argues that pursuant to Briglia v. Horizon Healthcare Services, Inc.. No.
03-6033, 2005 WL 1140687, at *1 (D.N.J. May 13, 2005), no private cause of action exists to
pursue a violation of the PPA. Def. Opp’n at 7 n.5. Defendant is incorrect in its analysis of Briglia.
In Briglia, the court found that N.J.A.C. 11:22-1.5 was inapplicable to the facts there and thus did
not reach the issue of whether the statute contained a private cause of action. Id. at *11. Here,
since there is no pending motion to dismiss, the Court does not reach the issues raised by Defendant
whether Plaintiffs have adequately pled a clean claim or whether Plaintiffs have a cause of action
pursuant to the regulation. The Court is analyzing the regulation solely in terms of ERISA
complete preemption. However, nothing in this Opinion prohibits Defendant from raising its
arguments in an appropriate motion if it so chooses.

—

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For the reasons set forth above, Plaintiffs’ motion to remand is DENIED. An appropriate
Order accompanies this Opinion.

Dated: febmary2l, 2017

John

17

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