GARRICK COX MD LLC v. QUALCARE

Filing 15

OPINION. Signed by Judge John Michael Vazquez on 7/27/2017. (ld, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

GARRICK COX MD LLC,

Flaintff

Civil Action No. 16-5583
OPINION

V.

QUALCARE,

Defendant.

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

This matter comes before the Court on the motion to remand filed by Plaintiff Garrick Cox
MD LLC. D.E. 4. Defendant Qualcare flied a brief in opposition to which Plaintiff replied. D.E.
10, 12. The Court reviewed the submissions made in support and opposition to the motion, and
considered the motion without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R.
78.1(b). For the reasons that follow, Plaintiffs motion is GRANTED and this case shall be
REMANDED to state court.1
I.

FACTS AND PROCEDURAL HISTORY

The crux of this matter is the allegation that Defendant refused to pay Plaintiff its
reasonable and customary rates for medical services that Plaintiff provided to six, non-party
patients. Plaintiff is a “provider of medical services” located in Wayne, New Jersey. Compi.

Defendant Qualcare filed a motion to dismiss three days afier Plaintiffs motion to remand. D.E.
5. Because the Court is granting the motion to remand, it does not reach the motion to dismiss.

Count One

¶ 1, D.E. 1. As pled, Defendant is an insurance company licensed to do business in

New Jersey. Id.

¶ 2. Plaintiff, an “out-of-network provider,” alleges that Qualcare provided

Plaintiff preauthorization to perform surgery for each patient and that it would not have provided
this medical care without the preauthorization. Id.

¶J 3-5. After each surgery, Plaintiff submitted

bills to Qualcare but Qualcare has not paid Plaintiff the requested amount. Id.

¶ 6.

Plaintiff filed its Complaint on June 22, 2016 in New Jersey state court. On September 14,
2016, Defendant removed this matter to the District of New Jersey pursuant to federal question
jurisdiction, alleging that the claims fall within the purview of the Employee Retirement Income
Security Act (“ERISA”), 29 U.S.C.

§

1002 et seq. Notice of Removal

¶ 3, D.E. 1. Plaintiff filed

this motion in response. Plaintiff contends that it is simply bringing breach of contract claims
against Defendant due to an implied promise to pay usual and customary rates that Defendant
made when authorizing or pre-certifying the six patients for surgery. As such, the dispute centers
on the amount owed to Plaintiff, not the right to payment in general, according to Plaintiff. See
P1? s Br. at 3, D.E. 4. Defendant counters that this matter actually involves an attempt to receive
additional benefits under an ERISA employee benefit plan. Accordingly, Defendant contends, the
matter was properly removed. Def’s Br. at 2-3, D.E. 10.
II.

LAW & ANALYSIS

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.” The party removing the action has the burden of establishing
federal jurisdiction. Steel Valley Auth. v. Union Switch & Signal Div., $09 f.2d 1006, 1010 (3d
Cir. 1987). This burden is heavy, because removal statutes are “strictly construed and all doubts
should be resolved in favor of remand.” Id. In matters where diversity jurisdiction is not alleged,

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removal requires that “a right or immunity created by the Constitution or laws of the United States
must be an element, and an essential one, of the plaintiffs cause of action.” Concepcion v. CFG
Health 5ys. LLC, No. 13-02081, 2013 WL 5952042, at *2 (D.N.J. Nov. 6,2013) (quoting Boncek
v. Pa. R. Co., 105 F. Supp. 700, 705 (D.N.J. 1952)). For removal to be proper, the federal court
must have original jurisdiction to hear the case. 2$ U.S.C.

§ 1441(a). In this instance, Defendant

alleges that this Court has federal question jurisdiction, which applies “to all civil actions arising
under the Constitution, laws, or treatises of the United States.” 28 U.S.C.

§ 1331. Specifically,

Defendant argues that there is federal question jurisdiction because Plaintiffs state law claims are
actually governed by ERISA. Notice of Removal

¶ 3.

In determining whether a complaint alleges a federal question, courts are generally guided
by the well-pleaded complaint rule, which provides that “federal jurisdiction exists only when a
federal question is presented on the face of the plaintiffs properly pleaded complaint.” Caterpillar
Inc. v. Williams, 482 U.S. 386, 392 (1987). There is an exception to the well-pleaded complaint
rule when complete preemption exists. “{C]omplete preemption 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 151, 160 (3d Cir. 1999). State law claims that
fall into the scope of ERISA Section 502(a) are completely preempted. See Progressive Spine &
Orthopaedics, LLC v. Empire Blite Cross Blue Shield, No. 16-1649, 2017 WL 751851, at *6

(D.N.J. Feb. 27, 2017). Here, Defendant did not explain which specific ERISA provision provided
the basis to remove the matter to this Court. Because the Complaint only asserts state law causes
of action and does not even mention ERISA, the Court assumes that Qualcare removed this matter
pursuant to Section 502(a).

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There is a two-part test to determine whether a state law claim is completely preempted
under Section 502(a). A federal court has jurisdiction over a state law claim when (1) the plaintiff
could have brought the action under Section 502(a) of ERISA2 and (2) no independent legal duty
supports the plaintiffs claim.

Pascack Valley Hosp. v. Local 464A UFCW Welfare

Reimbursement Plan, 38$ F.3d 393, 400 (3d Cir. 2004); see also Aetna Health Inc. v. Davila, 542
U.s. 200, 210 (2004) (holding that a state law claim is completely preempted when action could

have been brought under Section 502(a)(1)(B) and no other legal duty independent of ERISA
exists). The test is fashioned in the conjunctive so that “a state-law cause of action is completely
preempted only if both of its prongs are satisfied.” Ni Carpenters & the Trs. Thereofv. Tishman
Constr. Corp. ofNi, 760 F.3d 297, 303 (3d Cir. 2014) (emphasis added).
Plaintiff contends that its claims are not governed by ERISA because it is an out-ofnetwork provider3 and because it provided medical care only after it entered into agreements with
Qualcare authorizing said care. Plfs Br. at 1, 3. Defendant counters that Plaintiffs claims are
preempted because it seeks additional payments contrary to the terms and benefits of an ERISA
plan. Defs Br. at 3.
As pled, Plaintiff alleges that it performed surgery on the relevant patients because of
Qualcare’s preauthorization. Compi. Count One

¶] 3-5.

Thus, Plaintiff appears to be alleging

2

A claim may be brought under Section 502(a) by a participant or beneficiary “to recover benefits
due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the plan.” 29 U.S.C. 1132(a); see also Pilot Life
Ins. Co. v. Dedeaux, 481 U.S. 41, 53 (1987).
Plaintiffs blanket assertion that because it is an out-of-network provider, it is not subject to
ERISA is incorrect. An out-of-network provider may still be subject to ERISA if there is a valid
assignment of a claim from a beneficiary or participant. See Pascack Valley Hosp., 38$ F.3d at
401; see also Univ. Spine Ctr. v. Horizon Blue Cross Blue Shield ofN.i, No. 16-8222, 2017 WL
2560345, at *4 n.5 (D.N.J. June 13, 2017) (“It is now settled, however, that [an out of network]
provider may obtain a derivative right to sue via a valid assignment from a plan participant.”).
Neither party addresses whether any of the patients assigned their rights to Plaintiff
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contractual or quasi-contractual claims. At the outset, the Court notes that Plaintiffs Complaint
is a quintessential example of a notice pleading, which is permissible at the state level but
insufficient in federal court. The two-page complaint largely contains legal conclusions and
provides limited factual allegations to support Plaintiffs claims against Qualcare. See Ashcroft v.
Iqbal, 556 U.S. 662, 67$ (2009) (“A pleading that offers ‘labels and conclusions’ or ‘a fornmlaic
recitation of the elements of a cause of action will not do.” (quoting Belt Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007))). However, the limited information in the Complaint is still enough for
the Court to determine that Plaintiffs claims are not completely preempted by Section 502(a) and
that, as a result, the Court lacks subject matter jurisdiction.
In Pascack Valley, the Third Circuit identified three key facts to support its conclusion that
the plaintiff hospital’s claims were predicated on an independent legal duty and not completely
preempted under Section 502(a). 388 F.3d at 403-04. Those facts were that (1) the hospital’s
claims arose from a written subscriber agreement independent of the ERISA plan, (2) the
participants and beneficiaries of the plan were not parties to the subscriber agreement, and (3) the
dispute centered on the amount of payment as opposed to the right to payment, which depended
on the terms of the subscriber agreement independent of the ERISA plan at issue. Id. All three of
those factors support Plaintiff here. Plaintiff alleges that its claims arise through an independent
verbal agreement with Qualcare, and it does not appear on the face of the pleading that the plan
beneficiary patients were parties to this agreement.4 Compl. Count One

¶

3-6. Moreover, the

The certification Plaintiff submitted in support of this motion actually calls into question
Plaintiffs assertion that it provided services pursuant to a preauthorization agreement with
Qualcare. In the certification, Plaintiff states that for emergency surgery the hospital, not Plaintiff,
obtained approval to provide the medical care for the plan beneficiary patients. Christy Cert. ¶ 5.
Of the six patients Plaintiff alleges that it did not receive full payment for, four had emergency
surgery. Id. ¶ 3. Because this is a motion for remand, all doubts should be resolved in favor of
remand. Steel Valley Auth., 809 F.2d at 1010. Consequently, the Court will take Plaintiffs
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dispute centers on whether Plaintiff is entitled to receive the usual and customary value for its
medical services, or in other words, the amount of payment. Compi. Count Two

¶J 2-4. In short,

Plaintiff is not claiming that it is entitled to payment pursuant to the patients’ health benefit plans.
Instead, Plaintiff alleges that its right to payment stems from a separate, verbal agreement with
Defendant. As a result, for the same reasons as discussed in Pascack Valley, the second complete
preemption prong is not satisfied. Pascack Valley Hosp., 38$ F.3d at 403-04; see also Progressive
Spine & Orthopaedics, LLC, 2017 WL 751851, at *10 (concluding that the second complete
preemption prong was not satisfied under similar facts).
Because the Pascack Valley test is conjunctive, the Court need not address the first
complete preemption prong of Pascack Valley. See Peterson v. Cigna Ins. Co., No. 14-3818, 2014
WL 4054120, at *2 n.2 (D.N.J. Aug. 15, 2014). Accordingly, Plaintiffs state law contract claims
are not completely preempted by Section 502(a) and this Court lacks subject matter jurisdiction.
III.

CONCLUSION

In sum, Plaintiffs motion to remand (D.E. 4) is GRANTED. This case, therefore, shall
be remanded to the Superior Court of New Jersey.

An appropriate Order accompanies this

Opinion.

Dated: July 27, 2017

John

ichael Vazquez,

pleading as true and assume that it did in fact receive preauthorization through a quasi-contract for
every patient’s care here.
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