Korman v. Consolidated Edison Company of New York, Inc. et al

Filing 35

ORDER granting 22 Motion to Dismiss for Failure to State a Claim. For the reasons set forth in the attached Memorandum and Order, the Court grants defendant's motion to dismiss plaintiff's negligent misrepresentation claim on the ground s of ERISA preemption. Because that claim is the only remaining claim against UnitedHealthCare Service, UnitedHealthCare Service is terminated as a defendant in this case. SO ORDERED. Ordered by Judge Joseph F. Bianco on 1/16/2013. (O'Donnell, Kaitlin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 12-CV-1561 (JFB) (ARL)
_____________________

BARRY S. KORMAN,
Plaintiff,
VERSUS

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., D/B/A CON EDISON,
CONSOLIDATED EDISON EMPLOYEE BENEFITS PLAN, UNITEDHEALTHCARE SERVICE,
LLC, AND CIGNA CORPORATION D/B/A CONNECTICUT GENERAL LIFE INSURANCE
COMPANY AND CIGNA,
Defendants.
___________________
MEMORANDUM AND ORDER
January 16, 2013
___________________

JOSEPH F. BIANCO, District Judge:

benefits plans after he had retired from his
job.2 United filed a motion to dismiss
Korman’s amended complaint, pursuant to
Federal Rule of Civil Procedure 12(b)(6), on
the grounds that ERISA preempts Korman’s
negligent misrepresentation claim.3 For the

Plaintiff Barry S. Korman (“plaintiff” or
“Korman”) seeks relief pursuant to the
Employee Retirement Security Act of 1974
(“ERISA”) and under common law against
UnitedHealthCare
Service
LLC
(“defendant” or “United”).1 Specifically,
Korman seeks damages arising from
United’s alleged misrepresentation as to the
Lifetime Maximum Medical Benefits
available to Korman under his employer’s

2

Although in his complaint Korman brings both a
claim of negligent misrepresentation and a claim of
declaratory judgment against United, (see Am.
Compl. ¶¶ 99-112), in Korman’s opposition to
United’s motion to dismiss, he stated that he was no
longer pursuing the latter claim against United, (see
Korman Opp’n Mot. to United’s Mot. to Dismiss
(Korman Opp’n Mot.) at 2.) Thus, the Court limits its
analysis to Korman’s claim of negligent
misrepresentation against United.
3
United initially moved to dismiss Korman’s
declaratory judgment claim. As noted above, because

1

The majority of Korman’s claims are brought
against his employer, defendant Consolidated Edison
Company (“Con Edison”). The Court does not
address these claims here, as the pending motion only
concerns the claims against United.

1

reasons set forth herein, the Court concludes
that Korman’s negligent misrepresentation
claim is preempted by ERISA and, because
no claim lies against former claims
administrator United under ERISA (as
conceded by plaintiff), United’s motion to
dismiss is granted.
I.

Con Edison self-insures two different
employee welfare benefit plans. One is for
active employees (the aforementioned
Employee Plan), and the other, for retirees
(“Retiree Plan”) (collectively, the “Plans”).
(Id. ¶¶ 4-5.) United was the claims
administrator of each Plan up to and
including December 31, 2009, when all
claims administration was conducted by
Cigna Corporation (“Cigna”). (Id. ¶ 33.)

BACKGROUND

A.

language to mean that he was entitled to the
referenced two million dollar benefit for his
lifetime. (Id. ¶ 11-16.)

Factual History

The following facts are taken from the
amended complaint and are not findings of
fact by the Court. Instead, the Court assumes
these facts to be true for purposes of
deciding the pending motion to dismiss and
will construe them in a light most favorable
to plaintiff, the non-moving party.
1.

2.

The Diagnosis

In April 2009, while still an employee at
Con Edison, Korman received a different
notification: he learned that he had a rare
form of cancer. (Id. ¶ 17.) Korman informed
Con Edison of his health status and began
undergoing treatments at North Shore
University Hospital. (Id. ¶¶ 17-19.)

The Employee Plan

Korman
was
an
employee
of
Consolidated Edison Company (“Con
Edison”) for thirty-nine years; he first joined
the company in 1970. (Am. Compl. ¶¶ 11,
20.) Throughout his employment, Korman
participated in an open enrollment plan
(“Employee Plan”). (Id. ¶ 12.) In March
2000, Korman received a letter that notified
him of benefit updates to his Employee Plan,
specifically, that the plan’s Lifetime
Maximum Medical Benefit had increased
from one million to two million dollars. (Id.
¶¶ 13-14.)4 Korman understood this

On approximately April 13, 2009, David
Schaffer (“Schaffer”), Con Edison’s retiree
benefits representative, visited Korman in
the hospital. (Id. ¶ 21.) During the visit,
Schaffer encouraged Korman to retire; he
claimed that retirement would be in
Korman’s wife’s best interest because it
would improve her pension-payment
position. (Id. ¶ 23.) Specifically, Schaffer
informed Korman that if he should die
before retiring, his wife would only receive
50% of Korman’s pension; if Korman
retired, took a lower pension, and then died,
however, his wife would receive 100% of
the lower pension. (Id. ¶¶ 21-23.) Korman

Korman subsequently stated in his opposition motion
that he was no longer pursuing such a claim, the
Court need not and does not address United’s
arguments as to this point.
4
The particular language of interest was contained in
a document entitled, “Summary of Material
Modifications”
(“SMM”).
The
identified
modification stated: “Under Hospital/Medical Option
A, each covered person’s lifetime maximum medical
benefit increases from $1,000,000 to $2,000,000.
There is no lifetime limit on most hospital benefits.

Under Hospital/Medical Option B, C and D, each
covered person’s lifetime maximum medical and
hospital benefit increases from $1,000,000 to
$2,000,000.” (Am. Compl. ¶ 13.)

2

mean that he still carried a Lifetime
Maximum Medical Benefit of two million
dollars, had elective back surgery. (Id. ¶¶ 32,
34.) Approximately one year later, on
October 15, 2011, Korman received an EOB
from Cigna. (Id. ¶ 35.) The letter stated that
Korman had exceeded his medical insurance
limit of one million dollars. (Id. ¶¶ 31-32,
34-35.)

claims he received no documentation from
Schaffer during this visit. (Id. ¶ 24.)
Several nights later, Schaffer called Mrs.
Korman. (Id. ¶ 25.) He informed her that he
had papers for her husband to sign, and that
he wanted to go to the hospital so that
Korman could review them. (Id.) The
following morning, Schaffer picked Mrs.
Korman up and they drove together to the
hospital. (Id. ¶ 27.) Once there, Schaffer
handed
Korman
documents,
which
addressed the company’s retirement process
and its corresponding change to his pension
benefit status. (Id. ¶¶ 25, 27.) Schaffer
instructed Korman to sign the paperwork.
(Id. ¶ 27.) Korman asked if he and his wife
could have time to review the paperwork.
Essentially refusing Korman’s request,
Schaffer said he was in a rush to leave and
needed the documents signed then and there.
(Id.) Korman did so and, as of May 1, 2009,
was an official retiree of Con Edison. (Id. ¶¶
25-27, 30.)
3.

B.

Procedural History

Korman filed the initial complaint in this
action on March 30, 2012; he filed an
amended complaint on June 20, 2012. On
August 1, 2012, United moved to dismiss
Korman’s amended complaint. Korman filed
an opposition to the motion to dismiss on
September 7, 2012. On September 21, 2012,
United submitted its reply. Oral argument
was conducted on November 26, 2012.
Plaintiff filed a supplemental letter on
December 10, 2012. The Court has fully
considered the parties’ arguments and
submissions.

Back Problems with No Back-Up
II.

On approximately August 27, 2009
(post-retirement), Korman received an
explanation of benefit form (“EOB”) from
United. (Am. Compl. Ex. D.) Dated August
19, 2009, the EOB had been issued in
response to a claim for benefits for a
medical procedure that Korman had
undergone on April 9, 2009 (pre-retirement).
The EOB stated that Korman had a
“Lifetime Plan Maximum” of two million
dollars, and a “Lifetime Maximum
Remaining” of $1,526,405.50. (Am. Compl.
¶ 31.)

STANDARD OF REVIEW

In reviewing a motion to dismiss
pursuant to Rule 12(b)(6), the Court must
accept the factual allegations set forth in the
complaint as true and draw all reasonable
inferences in favor of the plaintiff. See
Cleveland v. Caplaw Enters., 448 F.3d 518,
521 (2d Cir. 2006); Nechis v. Oxford Health
Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005).
“In order to survive a motion to dismiss
under Rule 12(b)(6), a complaint must
allege a plausible set of facts sufficient ‘to
raise a right to relief above the speculative
level.’” Operating Local 649 Annuity Trust
Fund v. Smith Barney Fund Mgmt. LLC, 595
F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555
(2007)). This standard does not require
“heightened fact pleading of specifics, but

In 2010, there was a change in claim
administration, i.e., Cigna replaced United
as claims administrator for Con Edison’s
benefits. (Id. ¶ 33.) In December 2010,
Korman, understanding United’s EOB to
3

incorporated by reference in the complaint –
such as the Explanation of Benefit form
from United, the summary plan description
(“SPD”) for the Employee Plan, and the
SPD for the Retiree Plan –, the Court may
consider those documents on the motion to
dismiss.

only enough facts to state a claim to relief
that is plausible on its face.” Twombly, 550
U.S. at 570.
The Supreme Court clarified the
appropriate pleading standard in Ashcroft v.
Iqbal, setting forth a two-pronged approach
for courts deciding a motion to dismiss. 556
U.S. 662 (2009). The Court instructed
district courts to first “identify[ ] pleadings
that, because they are no more than
conclusions, are not entitled to the
assumption of truth.” Id. at 679. Though
“legal conclusions can provide the
framework of a complaint, they must be
supported by factual allegations.” Id.
Second, if a complaint contains “wellpleaded factual allegations, a court should
assume their veracity and then determine
whether they plausibly give rise to an
entitlement to relief.” Id.

III.

DISCUSSION

United contends that Korman’s state law
negligent misrepresentation claim is
preempted by ERISA, 29 U.S.C. § 1001 et
seq., because it is, in effect, a claim for
benefits. Additionally, United argues that
Korman cannot state an ERISA claim
against United. For the following reasons,
the Court agrees with United.
A. ERISA Preemption
1. Legal Standard

The Court notes that in adjudicating this
motion, it is entitled to consider: “(1) facts
alleged in the complaint and documents
attached to it or incorporated in it by
reference, (2) documents ‘integral’ to the
complaint and relied upon in it, even if not
attached or incorporated by reference, (3)
documents or information contained in
defendant’s motion papers if plaintiff has
knowledge or possession of the material and
relied on it in framing the complaint, (4)
public disclosure documents required by law
to be, and that have been, filed with the
Securities and Exchange Commission, and
(5) facts of which judicial notice may
properly be taken under Rule 201 of the
Federal Rules of Evidence.” In re Merrill
Lynch & Co., 273 F. Supp. 2d 351, 356-57
(S.D.N.Y. 2003) (internal citations omitted),
aff’d in part and reversed in part on other
grounds sub nom., Lentell v. Merrill Lynch
& Co., 396 F.3d 161 (2d Cir. 2005). In the
instant case, because the Plan documents are
either attached to the amended complaint or

ERISA was enacted to “‘protect . . . the
interests of participants in employee benefit
plans and their beneficiaries’ by setting out
substantive regulatory requirements for
employee benefit plans and to ‘provid[e] for
appropriate remedies, sanctions, and ready
access to the Federal courts.’” Aetna Health
Inc. v. Davila, 542 U.S. 200, 208 (2004)
(quoting 29 U.S.C. § 1001(b)) (alteration in
original). Its main objective “is to provide a
uniform regulatory regime over employee
benefit plans.” Id.; see also N.Y. State
Conference of Blue Cross & Blue Shield
Plans v. Travelers Ins. Co., 514 U.S. 645,
656-57 (1995) (“Congress intended ‘to
ensure that plans and plan sponsors would
be subject to a uniform body of benefits law;
the goal was to minimize the administrative
and financial burden of complying with
conflicting directives among States or
between States and the Federal Government
. . . , [and to prevent] the potential for
conflict in substantive law . . . requiring the
tailoring of plans and employer conduct to
4

did not intend to authorize other remedies
that it simply forgot to incorporate
expressly.’” Id. (quoting Mass. Mut. Life
Ins. Co. v. Russell, 473 U.S. 134, 146
(1985)). It likewise has acknowledged that
“the federal scheme would be completely
undermined if ERISA-plan participants and
beneficiaries were free to obtain remedies
under state law that Congress rejected in
ERISA.” Id. For this reason, where a
plaintiff brings a state law claim that is in
reality an ERISA-claim cloaked in state-law
language, ERISA’s preemption power will
take effect. See Davila, 542 U.S. at 207
(“When a federal statute wholly displaces
the state-law cause of action through
complete pre-emption, the state claim can be
removed” to federal court (quoting
Beneficial Nat. Bank v. Anderson, 539 U.S.
1, 8 (2003) (alterations and internal
quotation marks omitted)); id. at 207-08
(“[W]hen the federal statute completely preempts the state-law cause of action, . . . even
if pleaded in terms of state law, [it] is in
reality based on federal law.”); id. at 208
(describing ERISA as “one of these statutes”
that holds complete preemption power).5

the peculiarities of the law of each
jurisdiction.’” (alterations in original)
(quoting Ingersoll-Rand Co. v. McClendon,
498 U.S. 133, 142 (1990))).
To provide such uniformity, the statute
contains broad preemption provisions,
specifically, section 514, 29 U.S.C. § 1144,
which safeguards the exclusive federal
domain of employee benefit plan regulation.
See Davila, 542 U.S. at 208; see also Alessi
v. Raybestos-Manhattan, Inc., 451 U.S. 504,
523 (1981). Section 514 of ERISA states
that, unless so limited, ERISA “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).
Section 502(a)(1)(B) serves as ERISA’s
main enforcement tool in ensuring a uniform
federal scheme. Section 502(a)(1)(B) of
ERISA provides:
A civil action may be brought – (1) by a
participant or beneficiary - . . . (B) 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.

5

At oral argument, United argued that Korman’s
claims were preempted under both the complete
preemption doctrine and the express preemption
doctrine. (Oral Arg. Nov. 26, 2012.) Complete
preemption applies where Congress has so
“completely pre-empt[ed] a particular area that any
civil complaint raising this select group of claims is
necessarily federal in character.” Bloomfield v.
MacShane, 522 F. Supp. 2d 616, 620 (S.D.N.Y.
2007) (quoting Metro. Life Ins. v. Taylor, 481 U.S.
58, 63-64 (1987)) (internal quotation marks omitted).
In contrast, express preemption applies where a
federal law “contains an express preemption clause,”
requiring the court to “‘focus on the plain wording of
the clause, which necessarily contains the best
evidence of Congress’ preemptive intent.’” Chamber
of Commerce of U.S. v. Whiting, 131 S. Ct. 1968,
1977 (2011) (quoting CSX Transp., Inc. v.
Easterwood, 507 U.S. 658, 664 (1993)). Because
Korman’s negligent misrepresentation claim is
completely preempted pursuant to ERISA’s

29 U.S.C. § 1132(a)(1)(B).
The Supreme Court has explained that
“the detailed provisions of § 502(a) set forth
a comprehensive civil enforcement scheme
that represents a careful balancing of the
need for prompt and fair claims settlement
procedures against the public interest in
encouraging the formation of employee
benefit plans.” Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 54 (1987). The
Supreme Court has noted that “the inclusion
of certain remedies and the exclusion of
others under [§ 502’s] federal scheme . . .
‘provide[s] strong evidence that Congress
5

The effect of this preemptive power cannot
be understated: it “prevents plaintiffs from
‘avoid[ing] removal’ to federal court ‘by
declining to plead necessary federal
questions.’” Arditi v. Lighthouse Int’l, 676
F.3d 294, 298-99 (2d Cir. 2012) (quoting
Romano v. Kazacos, 609 F.3d 512, 519 (2d
Cir. 2010)) (alteration in original).

2. Application
a. Davila Prong One
The Court first assesses whether Korman
“is the type of party that can bring a claim”
under § 502(a)(1)(B); it then considers
“whether the actual claim” at issue
constitutes a colorable claim for benefits
under § 502(a)(1)(B). Montefiore, 642 F.3d
at 328; see also Josephson v. United
Healthcare
Corp.,
No.
11-CV3665(JS)(ETB), 2012 WL 4511365, at *3
(E.D.N.Y. Sept. 28, 2012) (acknowledging
the Second Circuit’s interpretation of
Davila’s two-pronged test as consisting of
two inquiries under the first prong).

The relevant test for assessing whether a
claim is preempted under ERISA consists of
two parts:
claims are completely preempted by
ERISA if they are (i) brought by “an
individual [who] at some point in time,
could have brought his claim under
ERISA § 502(1)(B),” and (ii) under
circumstances in which “there is no
other independent legal duty that is
implicated by a defendant’s actions.”

i. Type of Party
As previously set forth, section
502(a)(1)(B) makes clear that a civil action
may be brought (1) “by a participant or
beneficiary” of (2) an ERISA employee
benefit plan. 29 U.S.C. § 1132(A)(1)(B).
The Court addresses each of these elements.

Montefiore Med. Ctr. v. Teamsters Local
272, 642 F.3d 321, 328 (2d Cir. 2011)
(quoting Davila, 542 U.S. at 210).
Additionally, “[t]o avoid potential confusion
under the first prong of Davila, [the Second
Circuit] has further clarified that the plaintiff
must show that: (a) he is the type of party
who can bring a claim pursuant to
§ 502(a)(1)(B) of ERISA; and (b) the actual
claim asserted can be construed as a
colorable claim for benefits pursuant to
§ 502(a)(1)(B).” Arditi, 676 F.3d at 299.
Where both of Davila’s factors are satisfied
– including the two sub-parts to Davila’s
first prong – ERISA will preempt the state
law claim. Id. (citing cases).

First, Con Edison’s self-insured plans,
namely, the Employee Plan and Retiree
Plan, each constitute an employee welfare
benefit plan within the meaning of Section
3(1) of ERISA, 29 U.S.C. § 1002(1).6
Second, Korman was a “participant or
beneficiary” of the Employee Plan until his
retirement; he then became a “participant or
beneficiary” of the Retiree Plan. (Am.
Compl. ¶¶ 1, 12, 30.) Thus, Korman meets
6

The Fund’s plans fall within the meaning of an
employee welfare benefit plan as defined under
Section 3(1) of ERISA, 29 U.S.C. § 1002(1)
(defining “employee welfare plan” as “any plan,
fund, or program which was heretofore or is hereafter
established or maintained by an employer or by an
employee organization, or by both, to the extent that
such plan, fund, or program was established or is
maintained for the purpose of providing for its
participants or their beneficiaries . . . benefits”).

expansive scope regarding employment welfare
benefit plans, see Metro. Life, 481 U.S. at 63-64, the
Court need not also address the express preemption
issue.

6

Count I, ¶¶ 39-45 (asserting a claim under
29 U.S.C. § 1132(a)(1)(B); noting that Con
Edison’s Plans “are both ERISA welfare
plans”; stating that “[Korman] has standing
to pursue benefits and other remedies
because he was a participant under the
Plans”; and alleging against Con Edison that
it is liable to Korman for “full medical
benefits per the Lifetime Maximum Medical
Benefit of $2,000,000 pursuant to 29 U.S.C.
§ 1132(a)(1)(B)” (emphasis added)); id.
Count X, ¶¶ 109-112 (stating “[a]n actual
controversy exists as to whether [Korman]
is entitled to be reinstated to a Lifetime
Maximum Benefit for medical coverage at
the level of $2,000,000 rather than
$1,000,000”;
requesting
declaratory
judgment “reinstating [Korman] to a
Lifetime Maximum Benefit for medical
coverage of, $2,000,000 under the
Plan . . . .” (emphasis added)).)

at least the initial standing requisites to bring
a civil action under § 502(a)(1)(B). See 29
U.S.C. § 1132(a)(1)(B); see also Arditi, 676
F.3d at 299 (concluding that plaintiff “is the
type of party who can bring an ERISA claim
because he is a Plan participant and he is
seeking benefits under the Plan”).
ii. Colorable Claim
The true source of contention here under
Davila’s prong one is whether Korman’s
claim for negligent misrepresentation
constitutes a “colorable claim” under
ERISA, i.e., a claim “to recover benefits
due,” “to enforce his rights under,” or “to
clarify his rights to future benefits” under
the terms of the employee welfare benefit
plan. 29 U.S.C. § 1132(a)(1)(B).
United asserts that Korman’s claim is
“colorable” because plaintiff, in effect, seeks
a reinstatement of benefits under the terms
of Con Edison’s Plans. (United’s Mem. of L.
in Supp. of Mot. to Dismiss at 6; United’s
Reply Br. at 2, 4-5.) Korman counters that
he seeks compensatory damages for
negligent misrepresentation, not benefits;
ergo, his claims are not preempted by
ERISA. (Korman’s Mem. of Law in Opp’n
to Mot. to Dismiss (Korman Opp’n Mot.) at
5.) On careful consideration of the parties’
positions, the Court agrees with United that
Korman’s claim is a “colorable” one under
ERISA.

Second, Korman’s contention that his
Count IX negligent misrepresentation claim
simply seeks compensatory damages,
thereby removing it from a benefit-claim
categorization,
is
unpersuasive.7
Specifically, the Second Circuit has noted a
distinction between claims concerning a
“right to payment” versus claims involving
an “amount of payment.” See Montefiore,
642 F.3d at 331 (emphasis added). Whereas
7

Korman also argues that his Count IX claim cannot
be construed as a benefit-determination claim
because “United was no longer the claims
administrator by the time Mr. Korman’s health
insurance coverage was terminated in October 2011.”
(Korman Opp’n Mot. at 6.). The Court does not find
this argument convincing. The crux of Korman’s
negligent misrepresentation claim against United is
the latter’s alleged misstatement to Korman in its
August 2009 EOB, which described Korman’s
supposed coverage and benefits at that time. At the
time United sent the EOB (August 2009), it was still
the claims administrator for Con Edison; it was not
until 2010 that Cigna replaced United, a fact that
Korman does not dispute. (Am. Compl. ¶ 33.) Thus,
the Court finds no merit to this point.

To begin with, Korman expressly states
in his complaint that he seeks a
reinstatement of benefits as allegedly
guaranteed to him under Con Edison’s
Plans. (See Am. Compl. ¶ 1 (stating
“[Korman] seeks relief pursuant to the
Employee Retirement Security Act of 1974,
as amended (“ERISA”) and common law. In
particular, [Korman] seeks reinstatement by
the Plan of his Lifetime Maximum Medical
Benefit” (emphasis added)); see also id.
7

Healthcare of N.Y., Inc., No. 11 Civ. 8517
BSJ AJP, 2012 WL 4840807, at *3-4
(S.D.N.Y. Oct. 4, 2012) (noting that only
“right to payment” claims “are considered
actual claims for benefits and can be
preempted”; further clarifying that “‘[r]ight
to payment’ claims involve challenges to
benefits determinations, depend on the
interpretation of plan language, and often
become an issue when benefits have been
denied,” whereas “‘[a]mount of payment’
claims involve the calculation and execution
of reimbursement payments, depend on the
extrinsic sources used for the calculation,
and are commonly tied to the rate schedules
and arrangements included in provider
agreements”); Josephson, 2012 WL
4511365, at *3 (noting distinction between
claims for plan benefits that turn on a “right
to payment” as opposed to an “amount of
payment,” and concluding that because
some of the reimbursement claims at issue
“were denied for reasons that would
implicate coverage determinations under the
terms of the United benefit plans,” federal
subject matter jurisdiction applied).

the former class of claims “implicate[s]
coverage and benefits established by the
terms of the ERISA benefit plan,” which
may be brought under § 502(a)(1)(B), the
latter
are
“typically
construed
as
independent contractual obligations between
the provider and . . . the benefit plan.” Id.
Although at first blush Korman’s claim
seems like a dispute over a dollar amount
(here, the specific quantity of medical
benefits available to him under the Plans),
careful examination suggests that it is, in
fact, a dispute concerning his right to
payment for medical expenses under Con
Edison’s Plans.
Korman’s claim centers on United’s
alleged misstatement that, in August 2009,
Korman had a Lifetime Medical Maximum
Benefit of two million dollars. (Am. Compl.
¶¶ 100-07.) Korman argues that, contrary to
United’s statement in the EOB, United
should have informed Korman that his
actual Lifetime Maximum Medical Benefit,
at that time and going forward, was actually
one million dollars. (Id. ¶¶ 100-107.)
Breaking Korman’s allegations down to
their most basic form, the amended
complaint asserts that at the time United
made the alleged misrepresentation to
Korman, it was acting in its capacity as a
claims administrator for the Plans. (See Am.
Compl. ¶¶ 31-33; Decl. of Gretchen Hess
(“Hess Decl.”) ¶¶ 3-4.) The substance of
United’s communication to Korman – made
via a Plan-issued EOB – implicates coverage
and benefits determinations under the terms
of Con Edison’s Plans. Thus, the matter
goes beyond a simple dispute concerning a
quantity of payment; instead, it triggers
issues regarding both coverage availability
and benefit eligibility under the ERISAgoverned Plans. In particular, it concerns the
effect of Korman’s May 2009 retirement
upon his entitlement to medical benefits
under
the
Plans.
See
Neuroaxis
Neurosurgical Assocs., PC v. Cigna

Although the Court need not (and does
not) do so at this stage in the litigation, even
if it were to consider the merits of Korman’s
claim, such an analysis would require the
Court to review the terms of the ERISAgoverned
Plans,
particularly
those
provisions concerning medical benefits for
employees versus medical benefits to
retirees.8 This weighs in favor of a finding
that Korman has brought a “colorable claim”
8

For instance, the challenged EOB sent in August
2009 concerned Korman’s April 2009, pre-retirement
claim for medical expenses. As of May 2009,
however, Korman was a retiree of Con Edison, and
thus, was subject to different benefits upon the start
of his retirement. Whether and how his May 2009
retiree status affected a claim dating back to his preretirement days and an EOB issued during his postretirement days would require this Court to examine
Con Edison’s different ERISA-governed Plans.

8

separate court-ordered settlement”; because
the dispute did not concern payment under
the ERISA plan itself, but instead, under the
separate,
court-ordered
settlement
agreement, it was not an ERISA “colorable
claim”); cf. Zummo v. Zummo, No. 11 CV
6256(DRH)(WDW), 2012 WL 3113813, at
*4 (E.D.N.Y. July 31, 2012) (because
plaintiff’s breach-of-contract claim required
an examination of an employee benefit
plan’s language and essentially sought
enforcement of a right to payment under the
terms of that plan, plaintiff’s “claim [fell]
squarely within the enforcement provision
of ERISA”).

under § 502(a)(1)(B). See Montefiore, 642
F.3d at 331 (describing “right to payment”
as “claims that implicate coverage and
benefits established by the terms of the
ERISA benefit plan” and “amount of
payment” as “claims regarding the
computation of contract payments or the
correct execution of such payments”);
Olchovy v. Michelin N. Am., Inc., No. CV
11-1733(ADS)(ETB), 2011 WL 4916891, at
*4 (E.D.N.Y. Sept. 30, 2011) (Report and
Recommendation)
(stating
Montefiore
“teaches that a dispute is a colorable claim
for benefits under ERISA when its
resolution depends on an interpretation of
the terms of an ERISA-governed employee
benefit plan; that is, when, in order to
determine whether the plaintiff is entitled to
relief, the court must look to the terms of
employee benefit plan, itself”).

Finally, although plaintiff attempts to
label his negligent misrepresentation claim
as a dispute about the calculation of benefits,
the Court asked plaintiff’s counsel at oral
argument what the measure of damages
would be if plaintiff were to prevail on his
negligent misrepresentation claim. (Oral
Arg. Nov. 26, 2012.) In response, plaintiff’s
counsel did not reference any amount under
the plan; rather, counsel suggested that the
damages were unclear and would be based
upon common law. (Id.) However, the only
plausible damages for a negligent
misrepresentation claim, based upon an
alleged misrepresentation on an EOB that
plaintiff’s lifetime medical maximum was
$2 million (rather than $1 million), would be
to reinstate the $2 million maximum. Thus,
it is clear that plaintiff’s claim is not a
dispute as to the amount of benefits under
the Plan; rather, Korman, in essence, seeks a
reinstatement of benefits pursuant to the
terms of the Plan under the guise of a
negligent misrepresentation claim against a
former claims administrator.

The allegations in this case stand in
contrast to those cases in which a court has
held that the plaintiff’s claim was better
categorized as an “amount of payment”
dispute, and not a “right to payment” matter.
See, e.g., Marin Gen. Hosp. v. Modesto &
Empire Traction Co., 581 F.3d 941, 943-44
(9th Cir. 2009) (holding that action against
an ERISA plan administrator based on his
alleged oral promise to pay for the majority
of beneficiary’s medical expenses was not a
“colorable claim” under § 502(a)(1)(B)
because dispute concerned the terms of the
alleged oral promise, not of the ERISA plan
itself); Olchovy, 2011 WL 4916891, at *5
(where plaintiffs alleged they were entitled
to family medical coverage pursuant to a
settlement agreement with defendants’
predecessor, this did not constitute a
“colorable claim” under ERISA because it
was “not a case in which plaintiffs seek
benefits under [an ERISA-governed] Plan,
or seek to clarify or enforce any rights under
the Plan[;] [r]ather, plaintiffs assert that,
notwithstanding what the Plan states, they
are entitled to. . . coverage . . . pursuant to a

For these reasons, Korman’s claim does
not fit into the confines of a simple “amount
of payment” dispute. The Court, therefore,
concludes that Korman’s claim meets both
facets of the first prong of the Davila test.
9

corresponding appeal procedures. (Id.)
United’s actions were thus “inextricably
intertwined” with the terms of the Employee
Plan itself. Korman’s rights as to benefits,
along with United’s obligations, arose not
from state insurance law, but rather, from
the Plans’ terms, which described those
benefits and procedures available to Korman
by virtue of his status as a Plan participant.
Cf. Stevenson v. Bank of N.Y., Inc., 609 F.3d
56, 60 (2d Cir. 2010) (finding bank’s
promise to maintain plaintiff’s benefits
under its pension plan, even after employee
had left bank’s employ and was no longer a
plan participant, to constitute a separate and
legal duty from that set forth in the
employer’s pension plan).

b. Davila Prong Two
The question to be resolved under the
second prong of Davila is whether any other
independent legal duty is implicated by
United’s alleged misrepresentation to
Korman in its August 2009 EOB. The
Second Circuit has made clear that the “key
words” in conducting this analysis are
“other” and “independent.” See Montefiore,
642 F.3d at 332 (internal quotation marks
omitted).
Here, Korman asserts that his claim
sounds separately and independently in state
insurance law. (See Korman Opp’n Mot. at
5-6.) Specifically, Korman argues that
United held a duty separate from
§ 502(1)(a)(B) because its conduct “was
governed by New York Insurance Law
§ 3234, which requires ‘every insurer’ to
‘provide the insured or subscriber with an
explanation of benefits form in response to
the filing of a claim under a policy or
certificate providing coverage for hospital or
medical expenses . . . .’” (Id. at 5.) This law,
Korman contends, creates an independent
legal duty between United and Korman,
thereby extracting his claim from ERISA’s
domain.

Second, the law that Korman cites to
establish a separate and independent legal
duty offers him no assistance. Section 3234
of New York insurance law applies to
“insurers,” which the law defines as one
“obligated to confer benefit of pecuniary
value upon another party, the ‘insured’ or
‘beneficiary,’ dependent upon the happening
of a fortuitous event in which the insured or
beneficiary has, or is expected to have at the
time of such happening, a material interest
which will be adversely affected by the
happening of such event.” N.Y. Ins. Law
§ 1101(a)(1) (McKinney 2012). United was
not acting as an insurer when it delivered the
EOB to Korman; rather, it was acting in its
then-capacity as claims administrator for
Con Edison’s self-insured Plans.9 United,
itself, was not “obligated to confer benefit of
pecuniary value” on Korman; thus, it was
not Korman’s “insurer” under the clear
terms of the law.

The Court is not persuaded. First,
Montefiore explained that where an ERISA
entity’s conduct is “inextricably intertwined
with the interpretation of Plan coverage and
benefits,” there is no separate or
independent duty. Montefiore, 642 F.3d at
332.
Here,
the
Employee
Plan’s
documentation identified United as the
“claim fiduciary for Hospital/Medical
Options B, C, D and the O&R Plan.” (Am.
Compl. Ex. A, at 153.) Thus, pursuant to the
Plan, United – as the then claims
administrator of Con Edison’s Plans – was
required to notify Plan members (here,
Korman) of the denial of a claim, setting
forth the reasons for doing so and the

9

Indeed, Korman confirms in his amended complaint
that United held the role of claims administrator to
both of Con Edison’s Plans until December 31, 2009.
(See Am. Compl. ¶ 33.)

10

required such a pre-approval process). As
previously set forth, a review of United’s
conduct shows that United sent Korman the
contested EOB stating those benefits
allegedly available to Korman for his
submitted April 2009 medical claim
pursuant to its obligations as a claims
administrator for Con Edison’s ERISAgoverned Plans. The fact that New York
state law might be applicable is not, under
the facts presented, sufficient to block
ERISA’s sweeping preemptive power in this
case.

Third, considering Korman’s separateand-independent-legal-duty arguments on a
broader scale, a finding that Korman’s
claims were not preempted by ERISA here
would have problematic implications for
future cases, and undermine the purposes of
ERISA. As previously set forth, Congress
enacted ERISA to “‘protect . . . the interests
of participants in employee benefit plans and
their beneficiaries’ by setting out substantive
regulatory requirements for employee
benefit plans and to ‘provid[e] for
appropriate remedies, sanctions, and ready
access to the Federal courts.” Davila, 542
U.S. at 208 (quoting 29 U.S.C. § 1001(b)).
Congress’s goal of establishing a “uniform
regulatory regime over employee benefit
plans” and “to ensure that employee benefit
plan regulation is exclusively a federal
concern,” id. (citation and internal quotation
marks omitted), would be considerably
weakened if all a party need do to avoid
such preemption were point to another,
seemingly applicable law falling in the state
law realm.

Indeed, if New York insurance law were
not preempted by ERISA here, then federal
and state laws would be creating the very
conflict that Congress sought to prevent in
enacting ERISA’s broad preemption
power.10 See 29 U.S.C. § 1132(a)(1)(B); see
also Miner v. Empire Blue Cross/Blue
Shield, No. 97 Civ. 6490(LAP), 2001 WL
96524, at *5-6 (S.D.N.Y. Feb. 5, 2001)
(stating plaintiff “may not circumvent
ERISA’s
preemption
provision
by
attempting to dress up a state law claim as
an ERISA cause of action by alleging
violations of state minimum standards for
claims processing”). Where such statutory
conflict presents itself, the question arises:
which law should govern? Congress has
answered, and quite clearly: ERISA “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.

The Court’s concern here is not a novel
one. To avoid such confusion, the Second
Circuit has clarified that a court’s focus in
this context should not be on the source of
the law per se when considering preemption,
but rather, on the targeted ERISA entity’s
conduct, and assessing whether the same
better triggered ERISA or a different,
independent legal duty. See, e.g., Arditi, 676
F.3d at 300-01 (concluding that ERISA
entity’s issued employment agreement did
not provide separate duty to support a
breach of contract claim because the
agreement “merely described the benefits
[an employee] would receive as a Plan
member; it made no promises of benefits
separate and independent from the benefits
under the Plan”); Montefiore, 642 F.3d at
332 (phone conversations between insurer
and provider as to patient coverage did not
create a separate duty because the plan

10

For instance, ERISA regulation 29 C.F.R.
§ 2560.503-1(g) sets forth the manner and content for
proper notification of a benefit determination by a
plan administrator. See 29 C.F.R. § 2560.503-1(g)
(stating “the plan administrator shall provide a
claimant with written or electronic notification of any
adverse benefit determination,” which “shall set forth
. . . the specific reason or reasons for the adverse
determination” in accordance with its statutorily
required provisions). New York state insurance law
similarly sets forth notification requirements. See
supra.

11

coverage under an ERISA plan, as here;
rather, it concerns state-law regulation of
health and safety matters on entities.
Second, the Supreme Court provided helpful
language in clarifying why the facts of De
Buono did not trigger ERISA preemption.
Specifically, it noted earlier cases in which
preemption was deemed clear because there
was a “clear ‘connection with or reference
to’” an ERISA benefit plan; significantly,
although such circumstances were not
present in that case, they are present here.
Id. at 813 (quoting Shaw v. Delta Air Lines,
Inc., 463 U.S. 85, 96-97 (1983)). However,
the Supreme Court noted those cases in
which ERISA preemption would be
appropriate, including where “the existence
of a pension plan is a critical element of a
state-law cause of action.” Id. at 815. Such
is the case here, where Korman’s state law
negligent misrepresentation claim turns
directly on United’s obligations, as claims
administrator of an ERISA-governed
welfare benefit plan, to apprise plan
members of their benefits and coverage.

In short, if New York insurance law
were permitted to eclipse ERISA’s
preemptive force in the manner suggested by
plaintiff, it would severely undercut
ERISA’s “extraordinary pre-emptive power”
that “converts an ordinary state common law
complaint into one stating a federal claim.”
Davila, 542 U.S. at 209 (quoting Metro.
Life, 481 U.S. 65-66). This is not what
Congress intended in enacting ERISA, and it
is not how courts have applied the
preemption doctrine in similar scenarios. See
Berry v. MVP Health Plan, Inc., No. 1:06CV-120 (NAM/RFT), 2006 WL 4401478, at
*5 (N.D.N.Y. Sept. 30, 2006) (concluding
that “allowing plaintiffs to proceed with
their state-law suit would pose an obstacle to
the purposes and objectives of Congress,
because plaintiffs are attempting to utilize
N.Y. Ins. Law to vindicate their rights under
the relevant [employer] ERISA-governed
plans”; further noting that “plaintiffs are
seeking to use N.Y. Ins. Law . . . as separate
vehicle[s] to assert a claim for benefits
outside of . . . ERSIA’s remedial scheme, . .
. [and t]hus, these causes of action are
preempted and removable to this Court”
(internal citations and quotation marks
omitted)); Miner, 2001 WL 96524, at *6
(stating “inferring a cause of action under
ERISA based on a violation of state law
would undermine ERISA’s enforcement
scheme”).

Korman’s references to Hattem v.
Schwarzenegger, 449 F.3d 423 (2d Cir.
2006) and New England Health Care
Employees Union v. Mount Sinai Hosp., 65
F.3d 1024 (2d Cir. 1995) are similarly
distinguishable. In such cases, the Second
Circuit dismissed the notion of ERISA
preemption simply because a state law might
have an impact on the cost, administration,
or economic effect of an ERISA plan. See
Hattem, 449 F.3d at 431-32; New Eng.
Health Care Employees Union, 65 F.3d at
1032. In those cases, the Second Circuit
noted that the state law at issue concerned an
area traditionally relegated to the states, and
found as weighing against preemption the
fact that an ERISA plan was not explicitly or
implicitly triggered by the state law at issue.
See Hattem, 449 F.3d at 431-32; New Eng.
Health Care Employees Union, 65 F.3d at
1032. Such is not the reality here. This is not

Finally, the cases to which Korman cites
to advance his position that preemption is
not warranted are inapposite to the
circumstances here. For example, Korman
points to De Buono v. NYSA-ILA Medical &
Clinical Services Fund, 520 U.S. 806, 809
(1997), in which the Supreme Court held
that ERISA does not preempt a New York
state gross receipts tax on hospitals’ income,
including those hospitals operated by
ERISA funds. There are a few notable
differences: first, De Buono does not
concern the administration of benefits or
12

a case in which ERISA funds are indirectly
affected by a state law; rather, this case
concerns the benefits and coverage available
to an ERISA plan participant under his
employer’s Plans.
*

*

Supp. 2d 399, 408-09 (S.D.N.Y. 2009)
(finding that state law claims based upon
alleged misleading representations were
preempted by ERISA).
Given that ERISA preempts the
negligent misrepresentation claim, there
remains the question as to whether any
claim might arise against United under
ERISA. The answer is simple: because
United was not the plan administrator and is
no longer the claims administrator, no cause
of action may lie against United under
ERISA. Indeed, at oral argument, counsel
for plaintiff conceded that if plaintiff’s
claims were deemed preempted, his claims
could not proceed against United under
ERISA. (Oral Arg. Nov. 26, 2012.)

*

For all of these reasons, the Court
concludes
that
United’s
alleged
misrepresentation via the EOB was
inextricably
intertwined
with
an
interpretation of Con Edison’s Plan
coverage and benefits. Therefore, Korman’s
state law negligent misrepresentation against
United is preempted.11 This holding rests on
firm precedential ground. See, e.g., Griggs v.
E.I. DuPont De Nemuors & Co., 237 F.3d
371, 378 (4th Cir. 2001) (concluding that
ERISA preempted claim for negligent
misrepresentation and stating generally that
“ERISA preempts state common law claims
of fraudulent or negligent misrepresentation
when the false representations concern the
existence or extent of benefits under an
employee benefit plan”); Smith v. DunhamBush, Inc., 959 F.2d 6, 10 (2d Cir. 1992)
(holding that ERISA preempted claim for
negligent misrepresentation because the
alleged misrepresentation directly and
exclusively concerned plaintiff’s benefits
under an ERISA-governed plan); see also
Watson v. Consol. Edison of N.Y., 594 F.

To the extent plaintiff suggests that such
an interpretation immunizes United from
liability, however, such an argument misses
the point of ERISA preemption. Although
plaintiff cannot sue the former claims
administrator under ERISA in this situation,
plaintiff is certainly not without a full
ERISA remedy. Specifically, if plaintiff is
able to prove his entitlement to the $2
million lifetime medical maximum benefit,
he will be able to achieve full recovery
under ERISA through his remaining ERISA
claims in the amended complaint, with no
need to sue former claims administrator,
United. Similarly, if plaintiff’s other claims
against the remaining defendants fail –
namely, if it is determined that plaintiff was
not entitled to a $2 million lifetime medical
maximum benefit based upon, inter alia, the
alleged misconduct of the plan administrator
– then the negligent misrepresentation claim
arising from the EOB also would necessarily
fail. Thus, contrary to plaintiff’s assertion,
ERISA preemption and the corresponding
dismissal of the negligent misrepresentation
claim
against
the
former
claims
administrator does not lead to an anomalous,

11

At oral argument, in contrast to the abovereferenced cases supporting United’s position,
plaintiff’s counsel was unable to provide any case
authority in which a court had concluded that a
negligent misrepresentation claim arising out of an
EOB (or any analogous circumstances) was not
preempted under ERISA. (Oral Arg. Nov. 26, 2012.)
In addition, the Court’s independent research
revealed no such case. The Court also gave plaintiff’s
counsel an opportunity to provide any such authority
in a supplemental letter to the Court after oral
argument. In a letter dated December 10, 2012,
counsel advised the Court that plaintiff had no
additional legal authority to support its position.
(Pl.’s Letter of Dec. 10, 2012.)

13

or potentially unjust, result under the
circumstances of this case.
IV. CONCLUSION
For the reasons set forth above, the
Court grants United’s motion to dismiss
Korman’s
negligent
misrepresentation
claim. Because that claim is the only
remaining claim against United, United is
terminated as a defendant in this case.
SO ORDERED.
______________________
JOSEPH F. BIANCO
United States District Judge

Dated:

January 16, 2013
Central Islip, NY
***

Plaintiffs are represented by Allison
Greenberg, Law Offices of Alison
Greenberg, 14 Penn Plaza, Suite 2116, New
York, New York 10122. Defendant United
Healthcare Service, LLC is represented by
Francis X. Manning, Stradley Ronon
Stevens & Young, LLP, Libertyview, 457
Haddonfield Road, Suite 100, Cherry Hill,
NJ 08002, and John J. Reilly, Reilly &
Reilly, 170 Old Country Road, Suite 308,
Mineola, New York 11501.

14