EAST COAST ADVANCED PLASTIC SURGERY v. PALISADES GENERAL CARE, INC. et al

Filing 19

OPINION. Signed by Judge Susan D. Wigenton on 3/9/2018. (JB, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

EAST COAST ADVANCED PLASTIC
SURGERY,
Civil Action No: 17-8409-SDW-LDW
Plaintiff,
v.
OPINION

AMERIHEALTH, Administrator,
PALISADES GENERAL CARE, INC., JOHN
AND JANE DOE 1-10, ABC CORPS. 1-10,

March 9, 2018
Defendants.

WIGENTON, District Judge.
Before this Court are Plaintiff East Coast Advanced Plastic Surgery’s (“Plaintiff”) Motion
to Remand pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(1); and Defendant Palisades
General Care, Inc.’s (“Palisades”) Motion to Dismiss pursuant to Rule 12(b)(6). This opinion is
issued without oral argument pursuant to Rule 78. For the reasons stated herein, Plaintiff’s Motion
to Remand is GRANTED and Palisades’ Motion to Dismiss is DENIED as moot.
I.

BACKGROUND AND PROCEDURAL HISTORY
Plaintiff is a private healthcare services provider located in Hoboken, New Jersey. (Compl.

¶ 1, ECF No. 1, Ex. B.) At all relevant times, Plaintiff was a “non-participating or out-of-network
provider[]” that rendered pre-authorized medically necessary surgical services to patient “XF.”
(Id. ¶¶ 16-17, 20.) Patient XF received health benefits through her employer, Defendant Palisades,

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whose claims are administered by Defendant AmeriHealth Administrators, Inc. (“AmeriHealth”). 1
(Id. ¶¶ 2, 5, 9-11, 17.) The Complaint alleges that Plaintiff received pre-authorization from
AmeriHealth prior to performing breast reconstruction surgeries on XF. (Id. ¶¶ 20, 24, 26.)
Thereafter, XF underwent surgeries on July 10, 2013, July 22, 2013, and October 29, 2013. (Id.
¶¶ 21-26.) Plaintiff billed Defendants $172,332.00 for services rendered, of which Defendants
have paid $6,876.07. (Id. ¶¶ 29-30.) Plaintiff alleges that Defendants’ pre-authorization created
an implied-in-fact contract to pay Plaintiff for XF’s surgeries. (Id. ¶¶ 35-36; ECF No. 7-1 at 1.)
Plaintiff further alleges that Defendants were aware that Plaintiff was a non-participating, out-ofnetwork provider and at no time did Defendants disclose that “payments made for the procedures
would be denied in full or paid far below the usual and customary rates for these services.” (Id. ¶
33.)
On August 28, 2017, Plaintiff filed suit against Defendants in the Superior Court of New
Jersey, Law Division, Hudson County. (See generally id.) Plaintiff’s four-count Complaint asserts
claims for breach of contract, promissory estoppel, account stated, and fraudulent inducement.
(See generally id.) The Complaint explicitly states that Plaintiff’s claims arise under state law,
and not under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §
1001 et seq. (“ERISA”), or other federal law. (See id. ¶ 12.)
On October 16, 2017, Palisades filed a Notice of Removal (“Notice”) to federal court
pursuant to 28 U.S.C. §§ 1441, 1446. (Notice, ECF No. 1.) The Notice states that because
Plaintiff’s claims relate to a self-insured medical benefits plan governed by ERISA, Plaintiff’s
claims are “removable from state court to this Court pursuant to 28 U.S.C. § 1441 because this

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AmeriHealth was incorrectly identified by Plaintiff as Amerihealth Administrator. (ECF No.
5.)
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Court has original jurisdiction under 28 U.S.C. § 1331.” (Id. ¶¶ 8-10.) On October 23, 2017,
Palisades moved to dismiss the complaint pursuant to Rule 12(b)(6) for failure to state a claim
upon which relief can be granted, arguing that Plaintiff’s claims are preempted by ERISA and/or
insufficiently pled. (ECF No. 3-1.) Plaintiff moved to remand on November 3, 2017. (ECF No.
7.) After an extended briefing schedule, both motions were fully briefed as of February 5, 2018.
(ECF Nos. 12-13, 15-18.)
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. § 1331.2
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.
“If at any time before final judgment it appears that the district court lacks subject matter
jurisdiction,” a removed action must be remanded. 28 U.S.C. § 1447(c). 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 did not seek to remove on the basis of diversity jurisdiction. Instead, Defendants
relied solely on the Court’s original subject matter jurisdiction pursuant to 28 U.S.C. § 1331.
(Notice ¶ 10.)
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III.

DISCUSSION
A. Complete Preemption Under ERISA § 502(a)
Generally, a plaintiff “may avoid federal jurisdiction” when the complaint exclusively

relies on state law. Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 228 (3d Cir. 1995). 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 Prods., 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, 400 (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, 63-64 (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 (SDW)(LDW),

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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 the plaintiff’s claim.” N.J. Carpenters, 760 F.3d at 303 (citing Pascack Valley Hosp.,
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. 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 requires this Court to determine not only whether
Plaintiff has standing to bring a claim under § 502(a)(1)(B), but also whether Plaintiff’s claim is a
colorable claim for benefits. As to the first question, § 502(a) permits claims brought by a
“participant” or “beneficiary.” 3 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 participant, or by the terms of an employee benefit plan,

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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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who is or may become entitled to a benefit thereunder.” 29 U.S.C. § 1002(8). Here, Plaintiff is
neither a participant nor a beneficiary as defined by ERISA. Because Plaintiff is a third-party
provider and does not attempt to assert the rights of XF, Plaintiff does not have standing to bring
suit under § 502(a).
Even if Plaintiff had standing, its claims are not the type permissible under § 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, Plaintiff does not challenge the type, scope
or provision of benefits under Palisades’ healthcare plan. Rather, it only asserts its right as a thirdparty provider to be reimbursed for pre-authorized medical services it rendered to XF. Disputes
over the amount of reimbursement are not preempted by ERISA. See, e.g., Pascack Valley Hosp.,
388 F.3d at 403-04 (holding that ERISA does not preempt dispute regarding the amount of
payment made to a provider); CardioNet, 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);
Emergency Physicians of St. 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”). Because
Plaintiff does not have standing to bring a claim under § 502(a), this Court need not reach the
second prong of the Pascack test. 4

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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 (citing Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 950
(9th Cir. 2009). “In other words, if the state law claim is not ‘derived from, or conditioned upon’
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B. Express Preemption Under ERISA § 514(a)
Here, in opposition to Plaintiff’s Motion to Remand, AmeriHealth argues that Plaintiff’s
claims are expressly preempted by § 514, 29 U.S.C. § 1144(a), because any determination as to
Plaintiff’s right to reimbursement of costs can only be made by referencing the terms of the plan,
which is governed by ERISA. 5 (ECF No. 12 at 1 n.2, 3-4.) “Express preemption under Section
514(a) of ERISA . . . provides that ‘[e]xcept as provided in subsection (b) of this section, the
provisions of this subchapter and subchapter III of this chapter shall supersede any and all State
laws insofar as they may not or here after relate to any employee benefit plan.’” Wayne Surgical
Ctr., LLC v. Concentra Preferred Sys., No. 06-928, 2007 WL 2416428, at * 6 (D.N.J. Aug. 20,
2007) (quoting 29 U.S.C. § 1144(a)). However, “[t]he finding of preemption under Section 514(a)
. . . does not serve as an independent basis for subject matter jurisdiction.” Id. at * 7 (citing Dukes
v. U.S. Healthcare, 57 F.3d 350, 355 (3d Cir. 1995) (“When the doctrine of complete preemption
does not apply, but the plaintiff’s state claim is arguably preempted under § 514(a), the district
court, being without removal jurisdiction, cannot resolve the dispute regarding preemption. It
lacks power to do anything other than remand to the state court where the preemption issue can be
addressed and resolved.”).

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. (citing Gardner v. Heartland Indus. Partners, LP,
715 F.3d 609, 614 (6th Cir. 2013)). Plaintiff claims that Defendants’ pre-authorization of the
services rendered provided Plaintiff with independent assurances regarding payment for services
it provided. (ECF No. 7-1 at 9-10.) Thus, at this stage of the litigation, Plaintiff has alleged legal
duties distinct from an ERISA plan. See, e.g., Garrick Cox, 2016 WL 6877778, at *4.
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AmeriHealth’s reliance on Levine v. United Healthcare Corp., 402 F.3d 156 (3d Cir. 2005), cert.
denied, 546 U.S. 1054 (2005) and Aetna Health, Inc. v. Davila, 542 U.S. 200 (2004) to support its
proposition is misplaced given that, in those cases, the insureds brought suits related to benefits
and coverage under their respective ERISA plans. Levine, 402 F.3d at 162-64; Davila, 542 U.S.
at 211-12, 221. Thus, those holdings are inapplicable to the facts in this case. Here, Plaintiff is
not insured under an ERISA plan; nor does it seek to recover benefits due. Instead, Plaintiff seeks
reimbursement from Defendants for pre-authorized medical services it rendered.
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Because Plaintiff’s claims are not preempted under § 502(a), this Court does not have
subject matter jurisdiction over this action. As a result, remand is appropriate. 6
IV.

CONCLUSION
For the reasons set forth above, Plaintiff’s Motion to Remand is GRANTED and

Defendants’ Motion to Dismiss is DENIED as moot. An appropriate order follows.

/s/ Susan D. Wigenton
SUSAN D. WIGENTON, U.S.D.J.

Orig:
cc:

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Clerk
Leda D. Wettre, U.S.M.J.
Parties

This Court takes no position as to the merit of Plaintiff’s claims.
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