COHEN et al v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY
OPINION. Signed by Judge Katharine S. Hayden on 03/31/17. (cm, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JASON D. COHEN, MD, FACS and
ASSOCIATES, PA AS ASSIGNEE AND
REPRESENTATIVE OF PATIENT JE, and
Civil No.: 15-cv-4528 (KSH) (CLW)
HORIZON BLUE CROSS BLUE SHIELD OF
Katharine S. Hayden, U.S.D.J.
This matter comes before the Court upon a motion (D.E. 32) filed by plaintiffs to remand
this case to New Jersey state court on the ground that plaintiffs’ claims are not preempted by the
Employee Retirement Income Security Act of 1974 (“ERISA”). For the reasons set forth below,
plaintiffs’ motion is denied.
On or about May 15, 2015, plaintiffs filed a complaint in New Jersey state court seeking
to recover benefits allegedly due for emergency medical services rendered to patient JE by Jason
Cohen, a shareholder of Professional Orthopaedic Associates, PA (“POA”). Horizon Blue Cross
Blue Shield of New Jersey (“Horizon”) first received a copy of the complaint on May 27, 2015
and filed a timely notice of removal on June 26, 2015, pursuant to 28 U.S.C. § 1331 and § 1441(a)
and (c), based on the position that plaintiffs “seek to recover benefits from Horizon under the terms
of an employee benefit plan governed by ERISA and bring claims for benefits within Section
502(a) of ERISA, 29 U.S.C. § 1132(a), over which this court has federal question jurisdiction
pursuant to 28 U.S.C. § 1131.”
Plaintiffs filed an amended complaint (hereinafter, the
“complaint”) on December 7, 2015 (D.E. 19).
According to the complaint, Horizon is the plan administrator for JE’s employer provided
health insurance plan. (Compl., ¶ 4.) On or about January 6, 2014, Cohen and POA sought
payment from Horizon by filing a claim for emergency surgery and procedures Cohen performed
on JE. (Compl., ¶ 18.) The services provided were “out-of-network,” meaning that Cohen and
POA did not have a contract with Horizon to accept any agreed upon rates. (Compl., ¶¶ 20–21.)
With respect to out-of-network services, JE signed certain agreements with Cohen and POA
making him personally responsible for all medical charges and assigning all rights and benefits
due from Horizon to them, including standing to appeal and/or sue on the basis of Horizon’s claim
payment decisions. (Compl., ¶¶ 13–17.)
On or about March 13, 2014, Horizon made a single payment of $100,507.58 on a claim
that Cohen submitted for the above-referenced medical services. (Compl., ¶ 25.) On July 31,
2014, Horizon sent a refund request for $97,820.00, stating that it had overpaid for the services
rendered to JE. (Compl., ¶ 26.) After denying an appeal by Cohen and POA, and in satisfaction
of its refund request, Horizon allegedly “took back” $97,820.06 from claims being paid to Cohen
by Horizon on behalf of 30 different patients it insured. (Compl., ¶ 31.) Cohen and POA then
filed another appeal which was also denied, giving rise to the instant action.
The complaint pleads violations of N.J.A.C. 11:24-5.3 (“Emergency and urgent care
services”) and the New Jersey Healthcare Information and Technologies Act (“HINT”), in addition
to a common law cause of action for unjust enrichment. Plaintiffs’ motion to remand to state court
on the basis that ERISA does not preempt claims for payment under N.J.A.C. 11:24-5.3 and HINT
has been fully briefed (D.E. 32, 39, 40).
The Court makes its decision on the papers.
Standard of Review
“Any civil action brought in state court may be removed by the defendant to the federal
district court in the district where such action is pending, if the district court would have original
jurisdiction over the matter.” U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 389 (3d Cir.
2002) (citing 28 U.S.C. § 1441(a)). Thus, 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. Id.
The party asserting jurisdiction bears the burden of showing that at all stages of the litigation the
case is properly before the federal court. Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392,
396 (3d Cir. 2004).
“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 the plaintiff's properly
pleaded complaint.” Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 353 (3d Cir. 1995). However,
the Supreme Court has recognized an exception to the well-pleaded complaint rule. Id.
“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 (1987).
Plaintiffs argue that remand is proper because their state law claims under N.J.A.C. 11:24-
5.3 and HINT create legal obligations that are independent of the terms of an ERISA plan and thus
do not fall within the scope of ERISA’s preemption clause. ERISA contains a preemption clause
providing that the act “shall supersede any and all state laws insofar as they may now or hereafter
relate to any employee benefit plan.” 29 U.S.C. § 1144(a) (emphasis added). The Supreme Court
has noted the “expansive sweep of the preemption clause[,]” see Pilot Life Ins. Co. v. Dedeaux,
481 U.S. 41, 47 (1987), and, in a recent decision, elaborated on the current state of the ERISA
First, ERISA pre-empts a state law if it has a ‘reference to’ ERISA
plans. To be more precise, where a State’s law acts immediately
and exclusively upon ERISA plans . . . or where the existence of
ERISA plans is essential to the law’s operation . . ., that ‘reference’
will result in pre-emption. Second, ERISA pre-empts a state law
that has an impermissible ‘connection with’ ERISA plans, meaning
a state law that governs . . . a central matter of plan administration
or interferes with nationally uniform plan administration. A state
law also might have an impermissible connection with ERISA plans
if ‘acute, albeit indirect, economic effects’ of the state law ‘force an
ERISA plan to adopt a certain scheme of substantive coverage or
effectively restrict its choice of insurers.’ (quoting N.Y. State
Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,
514 U.S. 645, 668 (1995)).
Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936, 943 (internal quotations and citations omitted).
With respect to N.J.A.C. 11:24-5.3, plaintiffs argue that the “New Jersey emergency care
regulatory scheme requires no reference to JE’s health benefit plan” and that “[n]othing in any
health benefit plan is required to be interpreted or consulted in order for Horizon to do that which
it is obligated to do under New Jersey law, i.e. pay for the emergency services rendered to its
beneficiary in full for the emergency services rendered.” Plaintiffs’ Moving Br., at pp. 6–7. The
The very first line of N.J.A.C. 11:24-5.3 provides: “The HMO shall establish written
policies and procedures governing the provision of emergency and urgent care which shall be
distributed to each subscriber at the time of initial enrollment.” (emphasis added). The HMO in
question here is JE’s ERISA-governed, employer-provided health insurance plan. Thus, the New
Jersey state law at issue “acts immediately and exclusively” upon an ERISA plan in this case,
and the existence of an ERISA plan is “essential to the law’s operation[,]” such that reference to
the plan results in preemption under the standards clarified in Gobeille. See also 1975 Salaried
Ret. Plan for Eligible Employees of Crucible, Inc. v. Nobers, 968 F.2d 401, 406 (3d Cir. 1992)
(preemption proper where, “if there were no plan, there would have been no cause of action”).
Plaintiffs cite United Wire, Metal & Mach. Health & Welfare Fund v. Morristown Mem'l
Hosp., 995 F.2d 1179, 1192 (3d Cir. 1993) for the proposition that state statutes of general
applicability which do not single out ERISA plans are not subject to preemption. See Reply Br.,
at pp. 4–7. In United Wire, the Third Circuit held that New Jersey regulations concerning
hospital rates were not preempted by ERISA, despite the fact that the regulations had an indirect
economic impact on ERISA plans. Specifically, the United Wire court stated:
Where, as here, a State statute of general application does not affect
the structure, the administration, or the type of benefits provided by
an ERISA plan, the mere fact that the statute has some economic
impact on the plan does not require that the statute be invalidated.
United Wire, 995 F.2d at 1194. Thus, plaintiffs argue, because the “the [New Jersey] regulations
concerning payment of emergency services affect all insurance plans, not specifically those that
are ERISA[,]” they are not preempted by virtue of the United Wire holding.
The Court disagrees. Even if N.J.A.C. 11:24-5.3 affects all insurance plans uniformly and
does not single out ERISA plans, on its face it mandates five categories of emergency services that
must be covered by HMOs in New Jersey, including, according to plaintiff, the ERISA-governed
plan in this case. As set forth in full above, the United Wire holding only applies where “a State
statute of general application does not affect the . . . types of benefits provided by an ERISA plan .
. . .” United Wire, 995 F.2d at 1194 (emphasis added). Similarly, in both Travelers and Gobeille,
the Supreme Court expressly noted that a state law can have “an impermissible connection with
ERISA plans if ‘acute, albeit indirect, economic effects’ of the state law ‘force an ERISA plan to
adopt a certain scheme of substantive coverage . . . .’” (quoting N.Y. State Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 668 (1995)) (emphasis added).
Because, under plaintiffs’ proffered interpretation, N.J.A.C. 11:24-5.3 would affect the “types of
benefits provided by an ERISA plan” and effectively “force an ERISA plan to adopt a certain
scheme of substantive coverage[,]” it is preempted under prevailing Third Circuit and Supreme
Court jurisprudence. 1
Plaintiffs’ purported cause of action under HINT fares no better. Pursuant to N.J.A.C.
11:22-1.5, payment of health insurance claims is required to be made within 30 days of receipt by
the insurance carrier. Thus, plaintiff argues, because “more than (30) days has passed and Horizon
has refused to make the required payment on the claim[,]” defendant has a state law cause of action
under HINT, independent of JE’s ERISA-governed plan, that is not preempted. Plaintiffs’ Moving
Br., at p. 6. Plaintiff’s HINT argument fails for at least three reasons.
First, as Gobeille makes clear, ERISA “seeks to make the benefits promised by an
employer more secure by mandating certain oversight systems and other standard procedures.”
Gobeille, 136 S. Ct. at 943. Specifically, “ERISA plans must present participants with a plan
description explaining, among other things, the plan’s eligibility requirements and claimsprocessing procedures.” Id. at 944 (emphasis added) (citations omitted). Thus, under Gobeille,
a state law that provides procedures for the payment of claims would have an impermissible
“connection with” the ERISA plan in this case because it “governs . . . a central matter of plan
administration[,]” namely, claims-processing procedures. Id.
Setting aside the fact that neither party addresses whether N.J.A.C. 11:24-5.3 provides a private cause of
action in the first instance, plaintiffs have not cited—nor has the Court’s independent search revealed—
any authority that N.J.A.C. 11:23-5.3 mandates coverage of the enumerated emergency services by an
Second, the 30-day time limit prescribed by N.J.A.C. 11:22–1.5 applies only to “clean
claims,” which means in part that “the claim is for a service or supply that is covered by the
health benefits plan[.]” N.J.A.C. 11:22-1.2 (emphasis added). Thus, plaintiffs’ claim under
HINT for past due reimbursement is directly linked to plaintiffs’ claim under N.J.A.C. 11:24-5.3
that JE’s ERISA-governed plan is required to cover the emergency services in question. The
Court’s ruling that N.J.A.C. 11:24-5.3 is preempted by ERISA, and thus does not mandate the
inclusion of additional benefits in JE’s ERISA-governed plan, negates the alleged existence of a
past due amount.
Finally, plaintiffs’ position under HINT is that “Horizon paid the majority of the claim,
and then took back all but $4,744.94 on that emergency treatment claim.” Plaintiffs’ Reply Br.,
at p. 6. Thus, although framed as a failure to pay a claim, there is no dispute as to whether the
claim was paid. Rather, plaintiffs’ HINT cause of action, at its core, hinges on whether the
amount paid on the claim was calculated properly. The Third Circuit has held that “the
calculation and payment of the benefit due to a plan participant” goes to “the essence of the
function of an ERISA plan[.]” Kollman v. Hewitt Assocs., LLC, 487 F.3d 139, 150 (3d Cir.
Although neither party addresses the issue of whether plaintiffs’ unjust enrichment claim is preempted
by ERISA, the Court finds that it is. Plaintiffs’ standing to sue in this case derives from an assignment of
benefits that JE executed granting plaintiffs the right to recover amounts due under an ERISA-governed
plan, and their unjust enrichment cause of action amounts to an allegation that Horizon “improperly
withheld payment” that plaintiffs expected to receive as an assignee of benefits under an ERISA-governed
plan. Plaintiffs’ provide no case law allowing an out-of-network physician or medical practice to proceed
on an unjust enrichment claim against a plan administrator based upon payment made for services
provided to a plan participant, and the Court finds that plaintiffs’ unjust enrichment claim involves “the
calculation and payment of the benefit due to a plan participant” which goes to “the essence of the
function of an ERISA plan[.]” Kollman v. Hewitt Assocs., LLC, 487 F.3d 139, 150 (3d Cir. 2007).
Because all of the claims alleged in the complaint are completely preempted by ERISA,
the Court has original federal question jurisdiction over this action and plaintiffs’ remand motion
For the reasons set forth above, plaintiffs’ motion to remand is denied. An appropriate
order will be entered.
March 31, 2017
/s/Katharine S. Hayden
Katharine S. Hayden, U.S.D.J.
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