MHA, LLC v. EMPIRE HEALTHCHOICE HMO, INC. et al
Filing
21
OPINION. Signed by Judge Susan D. Wigenton on 1/25/18. (sr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
MHA, LLC d/b/a MEADOWLANDS
HOSPITAL MEDICAL CENTER,
Civil Action No: 17-6391-SDW-LDW
Plaintiff,
OPINION
v.
EMPIRE HEALTHCHOICE HMO, INC.,
EMPIRE HEALTHCHOICE ASSURANCE,
INC., ABC CORPS. 1-100,
January 25, 2017
Defendants.
WIGENTON, District Judge.
Before this Court are 1) Plaintiff MHA, LLC’s (“MHA” or “Plaintiff”) Motion to Remand
for Lack of Subject Matter Jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1); and
2) Defendant Empire Healthchoice HMO, Inc. and Empire Healthchoice Assurance, Inc.’s
(collectively, “Empire” or “Defendants”) Motion to Dismiss for Failure to State a Claim pursuant
to Federal Rule of Civil Procedure 12(b)(6). This opinion is issued without oral argument pursuant
to Federal Rule of Civil Procedure 78. For the reasons stated herein, Plaintiff’s Motion to Remand
is GRANTED and Defendants’ Motion to Dismiss is DISMISSED AS MOOT.
I.
BACKGROUND AND PROCEDURAL HISTORY
MHA, a privately held company located in Secaucus, New Jersey, provides healthcare
services to patients who “at all relevant times, were covered under healthcare plans sponsored,
funded, operated, controlled and/or administered by” Defendants. (Id. ¶¶ 2, 5.) Defendants are
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New York corporations providing “healthcare coverage to members and their dependents, as well
as administrative services to various other plans.” (Id. ¶¶ 7-9.) MHA was, at all relevant times,
“an out-of-network, or non-participating healthcare provider” with regard to Defendants. (Id. ¶
16.) MHA alleges Defendants wrongfully “refused to issue proper payment” for services MHA
provided to thousands of patients covered by Defendants, even though Defendants explicitly preauthorized or indicated “through word and deed” that they would reimburse Plaintiff for those
services. (Id. ¶¶ 19-22.) As of April 2017, MHA alleges that it billed Defendants nearly $44
million for services rendered, of which Defendants have paid just under $5 million. (Id. ¶ 5.)
On July 12, 2017, MHA filed suit against Defendants in the Superior Court of New Jersey,
Law Division, Essex County. (Dkt. No. 1-1.) MHA’s ten-count Complaint asserts state and
common law claims including breach of implied contract, breach of the covenant of good faith and
fair dealing, unjust enrichment and quantum meruit, promissory estoppel, negligent
misrepresentation, interference with economic advantage, and violations of New Jersey and New
York statutes. (Id. at 12-25.) MHA asserts that all claims “arise from New Jersey and New York
state common, statutory and regulatory law” and that no claims arise from “an assignment of
benefits from the patient.” (Id. ¶ 39.) The Complaint also explicitly states that the claims involve
“reimbursement amounts paid by” Defendants and “do not arise under or implicate federal subject
matter jurisdiction under the Employee Retirement Income Security Act (ERISA), or any other
federal or statutory regulatory scheme.” (Id. ¶ 40.)
On August 24, 2017, Defendants filed a notice of removal to federal court pursuant to 28
U.S.C. § 1441, 1446 (the “Notice”). (Dkt. No. 1.) The Notice states that because MHA is seeking
“to recover alleged medical benefits that are subject to” ERISA, “the doctrine of complete
preemption confers [federal question subject matter] jurisdiction pursuant to 28 U.S.C. § 1331.”
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(Id. ¶ 10.) On September 14, 2017, Defendants moved to dismiss the Complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be
granted, arguing that MHA’s state law claims are preempted, or in the alternative, are barred and/or
deficient. (Dkt. No. 6.) Plaintiff moved to remand on October 31, 2017. (Dkt. No. 16.) After a
protracted briefing schedule, both motions were fully briefed as of December 22, 2017.
II.
LEGAL STANDARD
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); see also Caterpillar,
Inc. v. Williams, 482 U.S. 386, 392 (1987). District courts have “original jurisdiction of all civil
actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.1
A claim “arises under” federal law if “a well-pleaded complaint establishes that either federal law
creates the cause of action or that the plaintiff’s right to relief necessarily depends on the resolution
of a substantial question of federal law.” Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 27-28 (1983); see also Caterpillar, 482 U.S. at 392.
Pursuant to 28 U.S.C. § 1447(c) “[i]f at any time before final judgment it appears that the
district court lacks subject matter jurisdiction,” a removed action must be remanded. Removal
statutes are “strictly construed, with all doubts to be resolved in favor of remand.” Brown v.
JEVIC, 575 F.3d 322, 326 (3d Cir. 2009); see also Samuel-Bassett v. KIA Motors Am., Inc., 357
F.3d 392, 396, 403 (3d Cir. 2004). The removing party bears the burden of showing that removal
is appropriate. See Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007).
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Defendants do not seek to remove on the basis of diversity jurisdiction, and rely “solely on the Court’s original
subject matter jurisdiction pursuant to 28 U.S.C. § 1331.” (Dkt. No. 18 at 5.)
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III.
DISCUSSION
Defendants’ removal of MHA’s suit is predicated on the argument that, even though
MHA has only pleaded state law claims, those claims are pre-empted by ERISA. (Dkt. No. 18 at
15-35.) Generally, a plaintiff is “the master of the claim; he or she may avoid federal jurisdiction
by exclusive reliance on state law.” Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 228 (3d
Cir. 1995) (internal citation omitted). In certain limited cases, however, federal question
jurisdiction exists over state law claims where “the state law claim necessarily raise[s] a stated
federal issue, actually disputed and substantial, which a federal forum may entertain without
disturbing any congressionally approved balance of federal and state judicial responsibilities.”
Grable & Sons Metal Prod., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). One such
limited circumstance exists if the action “falls within the narrow class of cases to which the
doctrine of ‘complete pre-emption’ applies.” Pascack Valley Hosp., Inc. v. Local 464A UFCW
Welfare Reimbursement Plan, 388 F.3d 393, 399 (3d Cir. 2004) (citing Aetna Health, Inc. v.
Davila, 542 U.S. 200, 207 (2004)). “[C]omplete pre-emption recognizes ‘that Congress may so
completely pre-empt a particular area that any civil complaint raising this select group of claims
is necessarily federal in character.’” Id. (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 6364 (1987)); see also Progressive Spine & Orthopaedics, LLC v. Anthem Blue Cross Blue Shield,
Civ. No. 17-536 (KM)(MAH), 2017 WL 4011203, at *4 (D.N.J. Sept. 11, 2017).
“ERISA’s civil enforcement mechanism, § 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, and permits
removal.’” N.J. Carpenters v. Tishman Constr. Corp., 760 F.3d 297, 303 (3d Cir. 2014) (quoting
Davila, 542 U.S. at 209); see also Garrick Cox MD LLC v. Cigna Healthcare, Civ. No. 16-4611
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(SDW)(LDW), 2016 WL 6877778, at *2 (D.N.J. Oct. 28, 2016), R&R adopted, 2016 WL
6877740 (D.N.J. Nov. 21, 2016) (remanding case to state court). Under ERISA § 502(a), a claim
is completely pre-empted and removable only if: “(1) the plaintiff could have brought the claim
under § 502(a); and (2) no other independent legal duty supports plaintiff’s claim.” N.J.
Carpenters, 760 F.3d at 303 (citing Pascack, 388 F.3d at 400). Some decisions have “further
disaggregated the first prong . . . into two inquiries: 1(a) Whether the plaintiff is the type of party
that can bring a claim pursuant to Section 502(a)(1)(B), and 1(b) whether the actual claim that
the plaintiff asserts can be construed as a colorable claim for benefits pursuant to Section
502(a)(1)(B).” Progressive, 2017 WL 4011203 at *5 (emphasis in original). This two-part
analysis, commonly referred to as the Pascack test, is “conjunctive [and] a state law cause of
action is completely preempted only if both of its prongs are satisfied.” N.J. Carpenters, 760
F.3d at 303 (internal citation omitted).
The first prong of the Pascack test, therefore, requires this Court to determine not only
whether Plaintiff has standing to bring a claim under Section 502(a)(1)(B), but also whether
Plaintiff’s claim is a colorable claim for benefits. As to the first question, Section 502(a) permits
claims brought by a “participant” or “beneficiary.” 2 29 U.S.C. § 1132(a) (1)-(4). A
“participant” is defined as “any employee or former employee of an employer, or any member or
former member of an employee organization, who is or may become eligible to receive a benefit
of any type from an employee benefit plan which covers employees of such employer or
members of such organization, or whose beneficiaries may be eligible to receive any such
benefit.” 29 U.S.C. § 1002(7). A “beneficiary” is defined as “a person designated by a
2
Although the statute allows claims by other entities such as the Secretary of Labor or individual States, those
categories are inapplicable here. 29 U.S.C. § 1132(a)(1)-(11)
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participant, or by the terms of an employee benefit plan, who is or may become entitled to a
benefit thereunder.” 29 U.S.C. § 1002(8). MHA is neither a participant nor a beneficiary as
defined by ERISA. Because MHA is a third-party provider and disclaims any attempt to assert
the rights of the patients it treated, 3 MHA does not have standing to bring suit under Section
502(a).
Even if Plaintiff had standing, its claims are not the type permissible under Section
502(a). Section 502(a) allows a participant or beneficiary to sue “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 under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). Here, MHA does not challenge
the type, scope or provision of benefits under Defendants’ healthcare plans. Rather, it seeks to
assert rights as a third-party provider for payment. Disputes over the amount of reimbursement
are not preempted by ERISA. See, e.g., Pascack Valley, 388 F.3d at 403-04 (holding that ERISA
does not preempt dispute regarding the amount of payment made to a provider); Cardonet, Inc. v.
Cigna Health Corp., 751 F.3d 165, 177-78 (3d Cir. 2014) (noting that claims “seeking coverage
under a benefit plan, and claims seeking reimbursement for coverage provided” are different and
that the latter is not preempted by ERISA) (emphasis in original); Emergency Physicians of St.
3
The Complaint specifically pleads that no claims arise from “an assignment of benefits from the patient.” (Compl.
¶ 39.) Defendants challenge this assertion by filing what they state is a valid assignment between MHA and one
patient whose account remains unpaid by Defendants, and argues that MHA routinely enters into such assignments
and is likely to have done so here. (Dkt. No. 18-1; Defs.’ Br. 10.) Plaintiff in turn argues that the assignment is not
valid because Defendants’ plans contain an anti-assignment clause. (Pl.’s Reply Br. at 2.) This Court is not in a
position to ascertain the authenticity or validity of the alleged assignment, nor does one assignment in a case
involving thousands of patients alter this Court’s analysis, particularly where MHA has chosen not to bring a claim
as an assignee. See, e.g., N. Jersey Brain & Spine Ctr. v. Aetna Life Ins. Co., Civ. No. 16-1544 (WJM), 2017 WL
659012, at *4 (D.N.J. Feb. 17, 2017), R&R adopted by 2017 WL 1055957 (noting that even if a provider “had
received valid assignments and could have filed suit under ERISA, the mere existence of an assignment does not
covert [a] state law claim for breach of contract into a claim to recover benefits under the terms of an ERISA plan”).
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Clare’s v. United Health Care, Civ. No. 14-404 (ES)(MAH), 2014 WL 7404563, at *5 (D.N.J.
Dec. 29, 2014) (holding that ERISA does not “preempt claims over the amount of coverage
provided, which includes disputes over reimbursement”) (emphasis in original).
Because Plaintiff does not have standing to bring a claim under Section 502(a), this Court
need not reach the second prong of the Pascack test. 4 As a result, remand is appropriate in this
matter and Defendants’ Motion to Dismiss is dismissed as moot. This Court takes no position as
to the ultimate sustainability of Plaintiff’s claims as that is a determination that can only be made
by a court with subject matter jurisdiction over the Complaint.
IV.
CONCLUSION
For the reasons set forth above, Plaintiff’s Motion to Remand is GRANTED and
Defendants’ Motion to Dismiss is DISMISSED AS MOOT. An appropriate order follows.
___/s/ Susan D. Wigenton_____
SUSAN D. WIGENTON, U.S.D.J.
Orig:
cc:
Clerk
Leda D. Wettre, U.S.M.J.
Parties
4
This Court notes, however, that Plaintiff’s claims appear to be supported by legal duties independent of ERISA.
“[A] legal duty is ‘independent’ if it is not based on an obligation under an ERISA plan, or if it ‘would exist whether
or not an ERISA plan existed.’” N.J. Carpenters, 760 F.3d at 303 (internal citation omitted). “In other words, if the
state law claim is not ‘derived from, or conditioned upon, the terms of an ERISA plan, and [n]obody needs to
interpret the plan to determine whether that duty exists,’ then the duty is independent.” Id. (internal citation
omitted). MHA claims that Defendants provided it with independent assurances regarding payment for services it
provided. This is sufficient at this stage of the proceedings to allege legal duties distinct from an ERISA plan. See,
e.g., Garrick Cox, 2016 WL 6877778 at *4.
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