GLASTEIN v. AETNA, INC. et al

Filing 14

OPINION filed. Signed by Judge Anne E. Thompson on 9/24/2018. (km)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CARY GLASTEIN, M.D.,
Plaintiff,
Civ. No. 18-9262
v.
OPINION
AETNA, INC., AETNA INSURANCE
COMPANY, JOHN AND JANE DOES
1–10, and ABC CORPORATIONS 1–10,
Defendants.
THOMPSON, U.S.D.J.
INTRODUCTION
This matter comes before the Court upon the Motion to Dismiss filed by Defendant Aetna
Life Insurance Company (“Defendant”). 1 Plaintiff Cary Glastein opposes, and in the alternative
seeks leave to amend. (ECF No. 12.) The Court has decided the Motion on the written
submissions of the parties, pursuant to Local Rule 78.1(b). For the reasons stated herein,
Defendant’s Motion is denied.
BACKGROUND
This case arises from a dispute between a surgeon and an insurance company. Plaintiff is
an orthopedic surgeon specializing in spine surgery. (Compl. ¶ 15.) On October 27, 2016,
Plaintiff provided medically necessary surgery to a patient, “SS.” (Id. ¶¶ 4, 14–16.) SS received

1

The Complaint’s caption includes two ascertainable Defendants: Aetna, Inc. and Aetna
Insurance Company. (ECF No. 1-1.) However, the text of the Complaint itself refers to a singular
defendant, Aetna Insurance Company. (Id. ¶ 2) Defendant Aetna Life Insurance Company claims
that pleading two Defendants was improper, and that there is only one ascertainable Defendant,
Aetna Life Insurance Company. (Notice Remv’l at 1, ECF No. 1.) Only Aetna Life Insurance
Company moves to dismiss. (ECF No. 10.)
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medical benefits through Defendant. (Id. ¶ 5.) Plaintiff was a non-participating or out-of-network
provider. (Id. ¶ 12.) However, Plaintiff had contacted Defendant prior to the surgery, and
Defendant sent Plaintiff a written authorization for the surgery. (Id. ¶ 13.) Plaintiff billed
Defendant $209,000, representing normal and reasonable charges given the complexity of the
procedure and Plaintiff’s qualifications. (Id. ¶¶ 16–17.) Defendant paid nothing. (Id. ¶ 18.)
Plaintiff brought claims for breach of contract, promissory estoppel, account stated, and
fraudulent inducement in the Superior Court of New Jersey, Law Division, Monmouth County.
(Id. ¶¶ 20–43; Notice Remv’l ¶ 5.) Defendant timely removed to this Court. (See generally
Notice Remv’l.) On August 8, 2018, Defendant moved to dismiss. (ECF No. 10.) After receiving
an automatic extension pursuant to Local Rule 7.1(d)(5) (ECF No. 11; Docket Entry dated
08/15/2018), Plaintiff opposed on September 4, 2018, and in the alternative sought leave to
amend the Complaint (ECF No. 12). Defendant replied on September 10, 2018. (ECF No. 13.)
This Motion is presently before the Court.
LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the
sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). The defendant
bears the burden of showing that no claim has been presented. Hedges v. United States, 404 F.3d
744, 750 (3d Cir. 2005). When considering a Rule 12(b)(6) motion, a district court should
conduct a three-part analysis. Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). “First, the
court must ‘take note of the elements a plaintiff must plead to state a claim.’” Id. (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)). Second, the court must “review[] the complaint to
strike conclusory allegations.” Id.; see also Iqbal, 556 U.S. at 679. Finally, the court must
assume the veracity of all well-pleaded factual allegations and “determine whether the facts are
sufficient to show that plaintiff has a ‘plausible claim for relief.’” Fowler v. UPMC Shadyside,
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578 F.3d 203, 211 (quoting Iqbal, 556 U.S. at 679); see also Malleus, 641 F.3d at 563. If the
complaint does not demonstrate more than a “mere possibility of misconduct,” it must be
dismissed. See Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009)
(quoting Iqbal, 556 U.S. at 679).
DISCUSSION
Defendant alleges that it provided health insurance to SS through a plan covered by the
Employee Retirement and Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Defendant
therefore argues that Plaintiff’s Complaint must be dismissed because its state common law
claims are expressly preempted by ERISA. 2
ERISA Section 514(a), 29 U.S.C. § 1144(a), preempts “any and all State laws insofar as
they may now or hereafter relate to any [ERISA plan].” 3 A state law “relate[s] to” an ERISA
plan, and is thus preempted, in two instances: (1) where the state law refers to an ERISA plan,
and (2) where the state law has an impermissible connection with an ERISA plan. Gobeille v.
Liberty Mut. Ins. Co., 136 S. Ct. 936, 943 (2016). In the first category, a state law refers to an
ERISA plan where adjudication of the state law claim requires an inquiry into the plan itself.
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138 (1990); Ragan v. Tri-County Excavating,
Inc., 62 F.3d 501, 511 (3d Cir. 1995). In the second category, “to determine whether a state law

2

ERISA may preempt state law in two “separate but related” ways. Pryzbowski v. U.S.
Healthcare, Inc., 245 F.3d 266, 270 (3d Cir. 2001). Section 514(a) of ERISA, 29 U.S.C. §
1144(a), imposes “express” preemption. Section 502(a), 29 U.S.C. § 1132(a), imposes
“complete” preemption. Pryzbowski, 245 F.3d at 270. The Motion to Dismiss asserts only
express preemption, so the Court need not consider the law of complete preemption.
Accordingly, various complete preemption cases cited by Plaintiff are inapposite. See, e.g.,
Advanced Orthopedics & Sports Med. Inst. v. Blue Cross Blue Shield of N.J., 2018 WL 3630131
(July 31, 2018); Atl. Shore Surgical Assocs. v. Local 464A United Food & Commercial Workers
Union Welfare Fund, 2018 WL 3611074 (July 27, 2018); E. Coast Advanced Plastic Surgery v.
Amerihealth, 2018 WL 1226104 (Mar. 9, 2018).
3
The common law causes of action supporting the Complaint are indisputably “State law” under
the statute. See 29 U.S.C. § 1144(c)(1).
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has the forbidden connection, we look both to ‘the objectives of the ERISA statute as a guide to
the scope of the state law that Congress understood would survive,’ as well as to the nature of the
effect of the state law on ERISA plans.” Cal. Div. of Labor Standards Enforcement v.
Dillingham Constr., N.A., Inc., 519 U.S. 316, 325 (1997) (citing N.Y. State Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656, 658–59 (1995)).
The state laws at issue here—breach of contract, promissory estoppel, account stated, and
fraudulent inducement—neither “refer to” nor have an “impermissible connection with” an
ERISA plan. As to whether these laws “refer to” an ERISA plan, the Complaint does not claim
that Plaintiff was a contracting party to any ERISA plan. It does not allege that payment is due to
him according to the terms of an ERISA plan, or even that any relevant ERISA plan provides
reimbursement rates for the out-of-network services provided. To the contrary, the Complaint
states that Plaintiff is entitled to recover $209,000 because that amount “represents normal and
reasonable charges” under an implied-in-fact contract. (Compl. ¶¶ 17, 21.) The Complaint’s
factual assertions, assumed to be true for the purposes of the Motion to Dismiss, do nothing to
suggest that the claims brought in this case will require examination of an ERISA plan. The state
laws here therefore do not “refer to” an ERISA plan.
Second, these state laws do not have an “impermissible connection with” an ERISA plan.
The central purpose of ERISA is to protect plan participants and beneficiaries. 29 U.S.C. §§
1001, 1001b (repeatedly referring to the interests of participants and beneficiaries in the statute’s
findings and declarations of policy); Peter J. Wiedenbeck, Fed. Judicial Ctr., ERISA in the
Courts 17 (2008) (describing ERISA as having been designed to protect consumers). As several
Circuit Courts have held, 4 claims brought by a provider against an insurance company do not

4

In Home Health, Inc. v. Prudential Ins. Co. of Am., 101 F.3d 600, 605 (8th Cir. 1996) (“[The
provider] sued only as a third-party health care provider for claims that were non-derivative and
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implicate ERISA’s goals of protecting participants and beneficiaries. Such claims therefore do
not have an “impermissible connection with” an ERISA plan, and are not preempted.
The conclusion that Plaintiff’s state common law claims are not preempted is at odds
with several recent decisions in the District of New Jersey. Atlantic Shore Surgical Associates v.
Horizon Blue Cross Blue Shield, 2018 WL 2441770 (D.N.J. May 31, 2018), Advanced
Orthopedics and Sports Medicine Institute v. Empire Blue Cross Blue Shield, 2018 WL 2758221
(D.N.J. June 7, 2018), and Glastein v. Horizon Blue Cross Blue Shield of America, 2018 WL
3849904 (D.N.J. Aug. 13, 2018), are very similar to this case: Each involves an out-of-network
provider obtaining prior authorization to perform a medical procedure and subsequently bringing
common law claims against the insurer. In each case, the plaintiff’s claims were found
preempted by Section 514(a) of ERISA. But the Court today declines to adopt the ultimate
conclusions reached in these three cases.

independent of those which [the patient] might have had against [the insurance company].”); The
Meadows v. Emp’rs Health Ins., 47 F.3d 1006, 1009 (9th Cir. 1995) (“Congress enacted ERISA
to protect the interests of employees and their beneficiaries under employee benefit plans. A
third-party provider’s claim for unfair and deceptive trade practices against a plan does not
infringe upon an area which Congress sought to regulate exclusively under ERISA.” (citing
Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th Cir. 1990))); Lordmann
Enters., Inc. v. Equicor, Inc., 32 F.3d 1529, 1533–34 (11th Cir. 1994) (“Congress enacted
ERISA to protect the interests of employees and beneficiaries covered by benefit plans.
Preemption in a third-party health care provider case would defeat rather than promote this
goal.” (citation omitted)); Hospice of Metro Denver, Inc. v. Grp. Health Ins., Inc., 944 F.2d 752,
756 (10th Cir. 1991) (“[A] state law claim which does not affect the ‘relations among the
principal ERISA entities, the employer, the plan, the plan fiduciaries, and the beneficiaries’ as
such, is not preempted by ERISA.” (quoting Mem’l Hosp. Sys., 904 F.2d at 249)); Mem’l Hosp.
Sys., 904 F.2d at 247 (“We are also unpersuaded that preemption in [a case brought by a
provider] would further the congressional goal of protecting the interests of employees and their
beneficiaries in employee benefit plans.”). One Circuit Court decision finding the opposite,
Cromwell v. Equicor-Equitable HCA Corp., 933 F.2d 1272 (6th Cir. 1991), is distinguishable
because in that case the beneficiary assigned her benefits to the provider. Id. at 1278. Cromwell
has also been described as “somewhat of an exception to the trend.” Franciscan Skemp
Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 538 F.3d 594, 600 (7th
Cir. 2008) (citing In Home Health, 101 F.3d at 604).
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First, in Glastein v. Horizon, the provider sued the patient’s employer as well as the
insurance company, and based his claim on an authorization for surgery that was explicitly not a
guarantee of payment. 2018 WL 3849904, at *2–3. These facts suggested that the claim for
payment was based off the patient’s ERISA plan rather than the authorization obtained by the
provider to perform surgery. Id. Such facts are not present in this case.
Additionally, all three of the above-cited decisions concluded that the provider’s claims
could not be adjudicated without referencing an ERISA plan. Id. at *3; Atl. Shore, 2018 WL
2441770, at *5; Advanced Orthopedics, 2018 WL 2758221, at *5–6. But here, as discussed
above, the Complaint provides no reason why the Court would need to reference an ERISA plan
to adjudicate Plaintiff’s claims.
Finally, these opinions partially rely on cases applying Section 502(a) of ERISA. Pascack
Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004);
N. Jersey Brain & Spine Ctr. v. Conn. Gen. Life Ins. Co., 2011 WL 4737063 (D.N.J. Oct. 6,
2011). They also rely in part on cases brought by ERISA plan beneficiaries. Menkes v.
Prudential Ins. Co. of Am., 762 F.3d 285 (3d Cir. 2014); Ford v. UNUM Life Ins. Co. of Am., 351
F. App’x 703 (3d Cir. 2009); Early v. U.S. Life Ins. Co. in N.Y., 222 F. App’x 149 (3d Cir. 2007);
Levine v. United Healthcare Corp., 402 F.3d 156 (3d Cir. 2005); Pryzbowski v. U.S. Healthcare,
Inc., 245 F.3d 266 (3d Cir. 2001); Estate of Jennings v. Delta Air Lines, Inc., 126 F. Supp. 3d
461 (D.N.J. 2015); D’Alessandro v. Hartford Life & Accident Ins. Co., 2009 WL 1228452
(D.N.J. May 1, 2009); Majka v. Prudential Ins. Co. of Am., 171 F. Supp. 2d 410 (D.N.J. 2001);
Thomas v. Aetna, Inc., 1999 WL 1425366 (D.N.J. June 8, 1999). But since this Motion seeks
claims preemption only under Section 514(a) and is brought by a provider who is not a party to
an ERISA plan, the Court finds that these cases have little relevance to the present Motion. For
these reasons, the Court disagrees with the holdings of Atlantic Shore Surgical Associates,
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Advanced Orthopedics, and Glastein v. Horizon.
Accordingly, Section 514(a) of ERISA does not preempt Plaintiff’s state law claims.
CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss is denied. An appropriate
order will follow.

Date:

9/24/18

/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.

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