Star Multi Care Services Inc. v. Empire Blue Cross Blue Shield et al
Filing
28
ORDER denying 17 Motion to Amend/Correct/Supplement; denying 18 Motion to Amend/Correct/Supplement; granting 19 Motion to Dismiss. IT IS HEREBY ORDERED that, for the reasons explained herein, plaintiff's claim against Empire under New York law is preempted by ERISA, and plaintiff's motion to remand this action is denied. Empire's motion to dismiss is granted because no claim lies against Empire under ERISA and, in the alternative, because plaintiff has not exhausted administrative remedies. Finally, the Court remands the remaining claims against the Sarrises because no federal claims survive the motion to dismiss. SO ORDERED. Ordered by Judge Joseph F. Bianco on 3/19/2014. (Lamb, Conor)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 13-cv-1138 (JFB)(WDW)
_____________________
STAR MULTI CARE SERVICES, INC.,
Plaintiff,
VERSUS
EMPIRE BLUE CROSS BLUE SHIELD, ET AL.,
Defendants.
___________________
MEMORANDUM AND ORDER
March 19, 2014
___________________
JOSEPH F. BIANCO, District Judge:
Plaintiff Star Multi Care Services, Inc.
(“plaintiff” or “Star”) initiated this action in
the Supreme Court of the State of New
York, County of Suffolk, on February 12,
2013. The state-court complaint alleges that
defendant Empire Blue Cross Blue Shield
(“defendant” or “Empire”) breached a
contract to pay for home health care services
provided by Star to defendant Demetria
Sarris (“Ms. Sarris”). Empire was served
with the complaint on February 12, 2013,
and removed this action to federal court on
March 4, 2013. It appears that the parties
dispute whether Ms. Sarris and her agent,
Van Sarris (“the Sarrises” or “the Sarris
defendants”) had been served on that date,
but in any event, they did not affirmatively
consent to Empire’s removal. Plaintiff has
filed a motion to remand, and in response,
Empire has opposed remand and filed a
motion to dismiss, pursuant to Federal Rule
of Civil Procedure 12(b)(6), asserting
several bases for dismissal.
For the reasons set forth below,
plaintiff’s motion to remand is denied, and
Empire’s motion to dismiss is granted. As a
threshold matter, in connection with the
motion to remand, plaintiff argues that
Empire’s notice of removal is defective
because the other defendants did not consent
to removal and, thus, the rule of unanimity
has been violated. The Court disagrees. It
is well settled that one of the exceptions to
the unanimity rule is where the non-joining
defendants had not been served at the time
the action was removed and, here, it is
conceded that service on the Sarris
defendants had not been completed at the
time Empire had filed its notice of removal
on March 4, 2013. To the extent plaintiff
argues that, after removal and after the
Sarris defendants were served, defendants
still had an affirmative obligation to obtain
their consent to removal, there is no support
that exact argument was expressly rejected
by the Second Circuit in Montefiore Med.
Ctr. v. Teamsters Local 272, 642 F.3d 321
(2d Cir. 2011), where the Second Circuit
held that ERISA preempted a state law
claim for payment based upon a verbal
verification that the anticipated services on a
patient were covered. Thus, plaintiff’s claim
is clearly preempted by ERISA and subject
matter jurisdiction exists in federal court.
Accordingly, plaintiff’s motion to remand
on this ground is denied.
in the removal statute or case authority for
that position. Instead, the statute places the
burden on the later-served defendants to
make a motion to remand within 30 days of
service if they do not consent. See 28
U.S.C. §§ 1447(c), 1448. Here, because the
later-served defendants chose not to make
such a remand motion, plaintiff’s motion for
remand on this ground is without merit.
In addition, plaintiff argues that remand
is warranted because its claim does not arise
under ERISA and, thus, the Court lacks
subject matter jurisdiction. However, as
discussed in detail below, the Court
concludes that Star’s claim is pre-empted by
ERISA and that the motion to remand for
lack of subject matter jurisdiction is denied.
In particular, it is conceded that: (1) Ms.
Sarris is a participant in the ERISA Plan at
issue; (2) Star submitted claims for benefits
under the Plan in its capacity as Ms. Sarris’s
assignee; (3) the claims were denied on
grounds of medical necessity; and (4) Star is
not in Empire’s network of providers, nor
does it have any other formal contract with
Empire for the provision of services to Ms.
Sarris. Thus, it is clear that the claim
asserted by Star raises a colorable claim for
benefits under an ERISA plan and does not
give rise to an independent duty between
Star and Empire. Although Star argues that
Empire did have an independent duty, Star
was required to seek authorization from
Empire before providing services by the
terms of the Plan. In fact, plaintiff’s own
complaint uses the term “authorization” to
describe what it received from Empire
(Compl. ¶ 13), and thus it is clear that the
alleged authorization was pursuant to the
Plan and not an independent duty. At oral
argument, plaintiff’s counsel asserted that a
claim, which is based upon an alleged oral
confirmation by Empire that the services for
Ms. Sarris would be covered by the Plan,
gives rise to an independent duty that does
not implicate the ERISA plan. However,
Finally, given the application of ERISA,
it is clear that an ERISA claim cannot
proceed against Empire, as an insurer,
because an ERISA claim under Section
502(a)(1)(B) can only be asserted against the
plan itself, the plan administrator, and the
plan trustees. In fact, plaintiff concedes this
point. See Pl. Opp. Mem. At 18 (“Star
agrees with Empire’s opening statement to
its final argument for dismissal that
‘Plaintiff’s ERISA benefit claim cannot
proceed forward against Blue Cross.’”).
Moreover, plaintiff does not dispute
Empire’s alternative argument that plaintiff
has failed to exhaust the administrative
remedies under ERISA. Accordingly, the
motion to dismiss is granted as to Empire,
and the case is remanded to state court with
respect to the remaining state law claims
against the Sarris defendants.
I. BACKGROUND
A. Factual Background
According to the complaint, plaintiff
provided home healthcare services to Ms.
Sarris from March 14, 2012, to November 1,
2012, the value of which exceeds
$70,000.00. (Compl. ¶¶ 8, 11.) Plaintiff
contends that Empire is liable for the value
of these services because, as Ms. Sarris’s
health insurer, it “provided authorization” to
2
of proof of service with the clerk of the
court.
plaintiff before plaintiff performed the
services. (Id. ¶ 13.) Although the complaint
does not state the basis for Empire’s
authority, other than to allege that Empire
was Ms. Sarris’s health insurer, it appears
that, during the relevant time period, Empire
was the insurer for the “Verizon Medical
Expense Plan for New York and New
England” (“the Plan”). (Oluwasanmi Decl. ¶
4.) The Plan is a health and welfare benefit
plan under ERISA, and Ms. Sarris was a
Plan participant. Id.
On March 27, 2013, plaintiff moved to
remand this action to state court, and
supplemented its motion on April 26, 2013.
On May 6, 2013, Empire opposed plaintiff’s
remand motion, and moved to dismiss the
complaint. On June 6, 2013, plaintiff
opposed the motion to dismiss and filed a
reply supporting its remand motion. On
June 20, 2013, Empire replied in support of
its motion to dismiss. The Court heard oral
argument on both motions on July 2, 2013.
Counsel for the Sarrises appeared at oral
argument, but the Sarrises have not
otherwise participated in the litigation of
these motions.
B. Procedural History
Plaintiff filed its breach-of-contract
complaint in the Supreme Court of the State
of New York, County of Suffolk, on
February 12, 2013, and served Empire the
same day. Plaintiff states that it initiated
“nail and mail” service on the Sarris
defendants, under N.Y. C.P.L.R. § 308(4),
on February 20 and 22, 2013. Under that
section, service is not complete until ten
days after the serving party files proof of
service with the clerk of the court. Plaintiff
filed an affidavit of service with the Suffolk
County Clerk on February 25, 2013.
II. LEGAL STANDARDS
The Court first discusses the legal
standards governing the motions to remand
and dismiss.
A. Motion to Remand
Generally, a case may be removed from
state court to federal court “only if it could
have originally been commenced in federal
court on either the basis of federal question
jurisdiction or diversity jurisdiction.”
Citibank, N.A. v. Swiatkoski, 395 F. Supp.
2d 5, 8 (E.D.N.Y. 2005) (citing 28 U.S.C. §
1441(a)); see also 28 U.S.C. § 1441. If a
federal district court determines that it lacks
subject matter jurisdiction over a case
removed from state court, the case must be
remanded. 28 U.S.C. § 1447(c). “When a
party challenges the removal of an action
from state court, the burden falls on the
removing party ‘to establish its right to a
federal forum by competent proof.’”1 In re
On March 4, 2013, Empire filed its
Notice of Removal, contending that the
complaint raised federal questions under
ERISA. At that time, the Sarris defendants
had not consented to the removal, and there
is no indication in the parties’ motion papers
that they have ever consented, although they
have not moved to remand this action to
state court. See 28 U.S.C. § 1448 (“This
section shall not deprive any defendant upon
whom process is served after removal of his
right to move to remand the case.”).
On March 7, 2013, service of the statecourt complaint was complete on the
Sarrises under N.Y. C.P.L.R. § 308(4),
because ten days had passed since the filing
1
Competent proof of federal jurisdiction in an
ERISA case includes “the various plan documents.”
Aetna Health Inc. v. Davila, 542 U.S. 200, 211
3
U.S.C. § 1446 as requiring that all
defendants consent to removal within the
statutory thirty-day period.”
Beatie &
Osborn LLP v. Patriot Sci. Corp., 431 F.
Supp. 2d 367, 383 (S.D.N.Y. 2006)
(collecting cases). Courts may excuse the
failure to join all defendants in the removal
petition or to otherwise obtain their consent
for removal where the non-consenting
defendants “have not been served, [are]
unknown defendants, [or have been]
fraudulently joined.” Sherman, 528 F. Supp.
2d at 330.
Methyl Tertiary Butyl Ether (“MTBE”)
Prods. Liab. Litig., No. 1:00-1898, MDL
1358 (SAS), M 21-88, 2006 WL 1004725, at
*2 (S.D.N.Y. Apr. 17, 2006) (quoting R.G.
Barry Corp. v. Mushroom Makers, Inc., 612
F.2d 651, 655 (2d Cir. 1979)). Further, “[i]n
light of the congressional intent to restrict
federal court jurisdiction, as well as the
importance of preserving the independence
of state governments, federal courts construe
the removal statute narrowly, resolving any
doubts against removability.”
Lupo v.
Human Affairs Int’l, Inc., 28 F.3d 269, 274
(2d Cir. 1994) (citing Shamrock Oil & Gas
Corp. v. Sheets, 313 U.S. 100, 108 (1941));
accord Fed. Ins. Co. v. Tyco Int’l Ltd., 422
F. Supp. 2d 357, 367 (S.D.N.Y. 2006).
B. Motion to Dismiss
Motions to dismiss under Rule 12(b)(6)
of the Federal Rules of Civil Procedure
probe the legal, not the factual, sufficiency
of a complaint. See, e.g., Sims v. Artuz, 230
F.3d 14, 20 (2d Cir. 2000). Stated
differently, when assessing the viability of a
complaint’s pleadings at the Rule 12(b)(6)
stage, “the issue is not whether a plaintiff is
likely to prevail ultimately, but whether the
claimant is entitled to offer evidence to
support the claims.” Chance v. Armstrong,
143 F.3d 698, 701 (2d Cir. 1998) (internal
alternation omitted). Thus, when reviewing
a motion to dismiss, “the [c]ourt must accept
the factual allegations set forth in the
complaint as true and draw all reasonable
inferences in favor of the plaintiff.” Volpe v.
Nassau County, 12-CV-2416 (JFB)(AKT),
2013 WL 28561, at *5 (E.D.N.Y. Jan. 3,
2013); see also Erickson v. Pardus, 551 U.S.
89, 93-94 (2007) (per curiam). However,
“the tenet that a court must accept as true all
of the allegations contained in a complaint is
inapplicable to legal conclusions.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009).
Furthermore, in cases with multiple
defendants, the “rule of unanimity” requires
that “‘all named defendants over whom the
state court acquired jurisdiction must join in
the removal petition for removal to be
proper.’” Sleight v. Ford Motor Co., No. 10
Civ. 3629 (BMC), 2010 WL 3528533, at *1
(E.D.N.Y. Sept. 3, 2010) (quoting Burr ex
rel. Burr v. Toyota Motor Credit Co., 478 F.
Supp. 2d 432, 437 (S.D.N.Y. 2006)
(additional citations omitted)); see also
Sherman v. A.J. Pegno Constr. Corp., 528 F.
Supp. 2d 320, 330 (S.D.N.Y. 2007) (“There
is general agreement among the courts that
all the defendants must join in seeking
removal from state court.” (internal
quotation marks and alterations omitted)).
“Although there is no statutory requirement
that all defendants either must join the
petition for removal or consent to removal,
courts have consistently interpreted 28
(2004). Therefore, the Court may consider the
“Verizon Medical Expense Plan for New York and
New England Associates” submitted by Empire. (Ex.
B. to Oluwasanmi Decl.) In addition, the Court may
consider the claim forms. (Ex. C to Oluwasanmi
Decl.); see Montefiore Med. Ctr. v. Teamsters Local
272, 642 F.3d 321, 329 (2d Cir. 2011) (reviewing
claim forms in the context of a remand motion).
To survive a motion to dismiss, a
complaint must set forth “a plausible set of
facts sufficient ‘to raise a right to relief
above the speculative level.’” Operating
Local 649 Annuity Trust Fund v. Smith
4
Barney Fund Mgmt. LLC, 595 F.3d 86, 91
(2d Cir. 2010) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)).
Generally, this standard for survival does
not require “heightened fact pleading of
specifics, but only enough facts to state a
claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 570.
case or within 30 days after. The Court
concludes, however, that Empire was not
required to obtain the Sarrises’ consent
before removal because, at that time, service
was not complete upon the Sarrises in the
state-court action.
See 28 U.S.C. §
1446(b)(2)(A) (“[A]ll defendants who have
been properly joined and served must join in
or consent to the removal of the action.”);
see also Ortiz v. City of New York, No. 13
Civ. 136(JMF), 2013 WL 2413724, at *4
(S.D.N.Y. June 4, 2013) (“[T]he rule of
unanimity . . . requires the consent only of
defendants who have been properly joined
and served.”) (internal citation and quotation
marks omitted). To determine whether the
Sarrises had been served by the date of
Empire’s removal, this Court must look to
New York state law. See Fed. Ins. Co. v.
Tyco Int’l, Ltd., 422 F. Supp. 2d 357, 384
(S.D.N.Y. 2006).
Where a motion to dismiss presents itself
before the court, a court may examine the
following: “(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.” Nasso v. Bio Reference Labs.,
Inc., 892 F. Supp. 2d 439, 446 (E.D.N.Y.
2012) (quoting In re Merrill Lynch & Co.,
273 F. Supp. 2d 351, 356-57 (S.D.N.Y.
2003)) (internal citations omitted).2
Here, the state-law rule is N.Y. C.P.L.R.
§ 308(4), which states that, when parties
must resort to so-called “nail and mail”
service, as plaintiff did here, service is
complete ten days after the serving party
files proof of service with the clerk of the
court. According to the facts provided in
plaintiff’s own memorandum, service was
not complete on the Sarrises under New
York law until March 7, 2013, three days
after Empire’s removal of this case on
March 4, 2013. (Pl. Mem. at 2.) Therefore,
Empire was not required to obtain the
Sarrises’ consent before removal.
III. DISCUSSION
A. Rule of Unanimity
As a threshold matter, plaintiff argues
that this case should be remanded because
the rule of unanimity is not satisfied, since
the Sarris defendants did not consent to
removal, either before Empire removed this
To the extent plaintiff argues that
Empire was required to obtain the Sarrises’
consent after removal, once they had been
served, the Court disagrees.
There is
nothing in the removal statute itself, or in
the case authority interpreting the removal
statute, that requires the removing defendant
to obtain, after removal, the consent of
defendants who had not been served at the
2
As is discussed in more detail infra, plaintiff’s claim
is based upon an ERISA plan. Therefore, the plan
documents submitted by Empire are integral to
plaintiff’s complaint. See DeSilva v. North ShoreLong Island Jewish Health Sys. Inc., 770 F. Supp. 2d
497, 545 n.22 (E.D.N.Y. 2011).
5
motion.
The statute itself
contemplates that after removal
process or service may be completed
on defendants who had not been
served in the state proceeding. The
right which the statute gives to such
a defendant to move to remand the
case confers no rights upon a
plaintiff. 28 U.S.C. § 1448.
time of removal. In fact, the removal statute
itself address this issue by allowing
defendants who were first served after the
case had already been removed to make a
motion to remand within 30 days of
effective date of service if they do not wish
to have the action remain in federal court.
See 28 U.S.C. §§ 1447(c), 1448. Here, the
Sarrises made no such motion. Thus, the
Court rejects plaintiff’s argument that the
failure to obtain the consent of defendants
whose service became complete after
removal renders the removal defective under
the unanimity rule.
Id. at 69 (footnote omitted); see also
Schmude v. Sheahan, 198 F .Supp. 2d 964,
967 (N.D. Ill. 2002) (“Here, the Sheriff was
the only defendant that had been served at
the time of removal, so the absence of [the
Deputy Sheriff’s] consent is of no moment.
In short, there was no defect with the
Sheriff’s removal.”); accord Alexander v.
County of Onondaga, No. 5:08-CV-748,
2009 WL 1322311, at *3 (N.D.N.Y. May
12, 2009).3
Other courts have reached the same
conclusion under similar circumstances. For
example, in Lewis v. Rego Co., 757 F.2d 66
(3d Cir. 1985), the Third Circuit rejected the
precise argument made by plaintiff here:
As noted above, although Bastian
had not been served at the time the
removal petition was filed, Bastian
was served within the 30-day period
after service on the other three
defendants. Appellants contend that
in such circumstances if Bastian did
not join in the petition before the
expiration of the 30-day period, the
action should have been remanded.
Any other rule, appellants argue,
would encourage a race to the
courthouse, enabling the defendants
first served in a case to determine
whether it would be removed.
B. ERISA Preemption
The motions to remand and dismiss both
depend on the question of ERISA
preemption, of which there are “two parallel
and independent” forms. Wurtz v. Rawlings
Co., LLC, 933 F. Supp. 2d 480, 489
(E.D.N.Y. 2013). 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. Co. 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
Appellants cite no authority for the
rule they espouse, and we agree with
the district court that the removal
statute contemplates that once a case
has been properly removed the
subsequent service of additional
defendants who do not specifically
consent to removal does not require
or permit remand on a plaintiff’s
3
The cases plaintiff cites concerning the rule of
unanimity all involve parties who were served before
removal. When asked at oral argument to cite any
case where parties served after removal were required
to consent within a certain time period, counsel for
plaintiff was unable to name such a case.
6
To provide such uniformity, the statute
contains broad preemption provisions,
which safeguard 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). One such source of preemption
under ERISA is § 502(a)(1)(B), which
serves as ERISA’s main enforcement tool in
ensuring a uniform federal scheme:
“‘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)). As set forth infra, the Court
concludes that plaintiffs’ claim is preempted
on both grounds. Therefore, the motion to
remand is denied, and because the
preempted claim could not proceed even if it
was re-styled as an ERISA claim, the motion
to dismiss is granted.
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.
1. Complete Preemption
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 Conf.
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 the
peculiarities of the law of each
jurisdiction.’” (alterations in original)
(quoting Ingersoll-Rand Co. v. McClendon,
498 U.S. 133, 142 (1990))).
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). “[T]he
inclusion of certain remedies and the
exclusion of others under [§ 502’s] federal
scheme . . . ‘provide[s] strong evidence that
Congress 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)). Likewise, the Supreme Court has
acknowledged that “the federal scheme
would be completely undermined if ERISAplan participants and beneficiaries were free
to obtain remedies under state law that
Congress rejected in ERISA.” Id.
7
. . . § 502(a) . . . removable to federal
court”).
For this reason, where a plaintiff brings a
state law claim that is “within the scope” of
ERISA § 502(a)(1)(B), ERISA’s preemption
power will take effect. See Davila, 542 U.S.
at 209. 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).
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).
The test for assessing whether a claim is
“within the scope of” ERISA §
502(a)(1)(B), and therefore completely
preempted, consists of two parts:
i. Davila Prong One
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(a)(1)(B),” and (ii) under
circumstances in which “there is no
other independent legal duty that is
implicated by a defendant’s
actions.”
The Court first addresses whether Star 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 (emphasis in original); see also
Josephson v. United Healthcare Corp., No.
11–CV–3665(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).
Montefiore Med. Ctr. v. Teamsters Local
272, 642 F.3d 321, 328 (2d Cir. 2011)
(quoting Davila, 542 U.S. at 210); see also
Davila, 542 U.S. at 210 (“[I]f an individual
. . . could have brought his claim under
ERISA § 502(a)(1)(B), and where there is
no other independent legal duty that is
implicated by defendant’s actions, then the
individual’s cause of action is completely
pre-empted by ERISA § 502(a)(1)(B).”);
Metro. Life, 481 U.S. at 65-66 (noting that
section 502(a)(1)(B) of ERISA contains
“extraordinary pre-emptive power” that
“converts an ordinary state common law
complaint into one stating a federal claim,”
making “causes of action within the scope of
a. Type of Party
As previously set forth, § 502(a)(1)(B)
clearly provides 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). It is not disputed
that the Plan is an employee welfare benefit
plan under ERISA.
See 29 U.S.C. §
4
1002(1). Although plaintiff is not a direct
4
Section 3(1) of ERISA defines an employee welfare
benefit plan as “any plan, fund, or program which
8
participant in or beneficiary of the plan, “[a]
healthcare provider may stand in place of
the beneficiary to pursue an ERISA claim if
the beneficiary has assigned his or her rights
to the provider in exchange for medical
care.” Neuroaxis Neurosurgical Assocs., PC
v. Cigna Healthcare of N.Y., Inc., No. 11
Civ. 8517, 2012 WL 4840807, at *3
(S.D.N.Y. Sept. 24, 2012). Plaintiff has
stated, by checking “Y” on a claim form,
that Ms. Sarris assigned it her rights in
exchange for care (Oluwasanmi Decl. ¶ 7;
Ex. C), and accordingly, plaintiff is the type
of party who could bring an ERISA claim.
Cf. Montefiore, 642 F.3d at 329 (“Here, each
of the reimbursement forms that provide the
basis for Montefiore's suit contain a “Y” for
“yes” in the space certifying that the patient
has assigned his claim to the hospital.
Accordingly, . . . the first step of the first
prong of the Davila test is satisfied.”)
Empire has therefore satisfied Montefiore’s
first prong.
parties’ positions, the Court agrees with
Empire that Plan benefits are at the heart of
plaintiff’s complaint, making it a
“colorable” claim under ERISA.
Plaintiff’s contention that his state claim
is one for damages, not benefits, is
unpersuasive. The Second Circuit has noted
a distinction between claims concerning a
“right to payment” and claims involving an
“amount of payment.” See Montefiore, 642
F.3d at 331 (emphasis added). While rightto-payment claims “implicate[s] coverage
and benefits established by the terms of the
ERISA benefit plan,” which may be brought
under § 502(a)(1)(B), amount-of-payment
claims are “typically construed as
independent contractual obligations between
the provider and . . . the benefit plan.” Id.
Here, accepting the allegations in
plaintiff’s complaint as true, and in a light
most favorable to plaintiff, the complaint
still does not allege facts to support an
independent contractual obligation, but
instead states that Empire “provided
authorization” for plaintiff’s services.
(Compl. ¶ 13.) An “authorization” plainly
implicates
coverage
and
benefits
determinations, and places plaintiff’s
complaint squarely within the “right to
payment” category. See Neuroaxis, 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
b. Colorable claim
The parties’ primary dispute is whether
plaintiff’s state breach of contract claim is a
“colorable claim” under ERISA, i.e., a claim
“to recover benefits due” under the terms of
the Plan. 29 U.S.C. § 1132(a)(1)(B). Empire
argues that plaintiff’s claim is “colorable”
because the Plan’s benefits are the source of
payment to which plaintiff believes it is
entitled. Plaintiff responds that it seeks
damages for breach of contract, not a denial
of benefits.5 On careful consideration of the
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.” 29 U.S.C. § 1002(1).
5
Plaintiff also argues that its claim cannot be
colorable because it has sued Empire, who (as is
discussed infra) would not be a proper defendant if
plaintiff’s claim were brought under ERISA.
However, it is clear that the identity of the named
defendant is not the touchstone of colorability under
ERISA—the question is whether the claim itself
“implicate[s] coverage and benefits established by
the terms of the ERISA benefit plan.” Monetfiore,
642 F.3d at 331. It is possible for a claim to
implicate coverage and benefits even when the
plaintiff has sued the wrong defendant. See, e.g.,
Wurtz, 933 F. Supp. 2d at 509.
9
cases in which a court has held that the
plaintiff’s claim was better categorized as an
“amount of payment” dispute related to an
independent contractual obligation. 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,
“notwithstanding what the Plan states, they
are entitled to . . . coverage . . . pursuant to a
separate court-ordered settlement”); 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”). As in Montefiore, this case
does not concern “underpayment or
untimely payment, where the basic right to
payment has already been established and
the remaining dispute only involves
obligations derived from a source other than
the Plan.” 642 F.3d at 331. The basic right
to payment remains unestablished in this
case, precisely because of a dispute about
Plan coverage.
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).
Although the Court need not (and does
not) do so at this stage in the litigation,
consideration of the merits of plaintiff’s
claim would require the Court to review the
terms of the Plan, particularly the provision
concerning home health care and the
requirement that it be “precertified.” (Ex. B
to Oluwasanmi Decl. at 44.) This weighs in
favor of a finding that plaintiff’s breach of
contract claim is in fact a colorable ERISA
claim. See Olchovy v. Michelin N. Am., Inc.,
No. 11-CV-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 ERISAgoverned 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 the employee benefit
plan, itself”).
The Court, therefore, concludes that
plaintiff’s claim is not an “amount of
payment” dispute, but instead relates to the
“right to payment” under the Plan. Empire
The allegation that Empire “provided
authorization”—an apparent reference to
Plan coverage—stands in contrast to those
10
has met both facets of the first prong of the
Davila test.
the case for ERISA preemption is
particularly strong when the process of
seeking approval before the provision of
services is itself required by the ERISA
plan, such that the conversation in which a
misrepresentation is alleged to have
occurred only took place because of a plan
term:
ii. Davila Prong Two
The question to be resolved under the
second prong of Davila is whether any other
independent legal duty is implicated by
Empire’s alleged representation to plaintiff
that “provided authorization” for Sarris’s
home health care. 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).
Specifically, Montefiore argues that
prior to providing services to each
beneficiary, it would call the Fund
and verify that the patient was
eligible and that the anticipated
services were covered. These
verbal communications, Montefiore
contends, gave rise to an
independent legal duty between
Montefiore and the Fund.
As discussed above, plaintiff contends
that Empire’s representations created an
“independent,” or “other” contract under
which Empire is obligated to pay plaintiff
for Sarris’s care, regardless of whether the
Plan covers that care. In other words,
plaintiff’s theory is that Empire should be
bound by its representation of coverage,
even if, viewing the allegations in the
complaint in a light most favorable to
plaintiff, that representation was incorrect or
misleading.
We are not persuaded. Whatever
legal significance these phone
conversations may have had, see
Appendix A, they did not create a
sufficiently independent duty under
Davila—indeed, as Montefiore
concedes, this pre-approval process
was expressly required by the terms
of the Plan itself and is therefore
inextricably intertwined with the
interpretation of Plan coverage and
benefits.
Although some courts have concluded
that allegations of misrepresentations of
coverage are distinct from ERISA claims
and should not be preempted, see Vencor
Hosps.-Ltd. Partnership v. Aetna U.S.
Healthcare, Inc., No. IP00-0695-CB/S, 2001
WL 1029109, at *2 (S.D. Ind. Sept. 6, 2001)
(collecting cases), the Second Circuit in
Montefiore addressed a nearly identical
allegation.6 As the Second Circuit stated,
642 F.3d at 332 (emphasis in original).
Here, as in Montefiore, plaintiff has sued
based on representations allegedly made by
Empire when plaintiff sought pre-approval
for its services, and those calls were
“expressly required by the terms of the Plan
itself.” Id.; (Ex. B to Oluwasanmi Decl. at
44.) Indeed, the allegations in the complaint
describe an “authorization” from Empire to
6
To be clear, the complaint does not explicitly allege
that Empire misrepresented coverage, only that it
“provided authorization[s],” on which plaintiff relied.
Nonetheless, construing the complaint in a light most
favorable to plaintiff, the Court has considered
whether a misrepresentation claim would allow
plaintiff to avoid ERISA preemption, and concludes
that it does not, following the Second Circuit’s
decision in Montefiore.
11
Star.7 (Compl. ¶ 13.) Therefore, like the
Second Circuit in Montefiore, this Court
concludes
that
Empire’s
alleged
representations
were
“inextricably
intertwined with the interpretation of Plan
coverage and benefits,” id., and that the
complaint presents a colorable ERISA
claim. To hold otherwise would allow every
conversation or verification with the insurer
or the plan administrator regarding the Plan
and terms of the Plan to be treated as
creating an independent duty to pay that
removes such dispute from the scope of
ERISA.
Such a result is completely
inconsistent with the broad preemption
provisions of ERISA which are designed to
safeguard the exclusive domain of employee
benefit plan regulation.
alleged in the complaint or elsewhere that
Star had a separate contract with Empire that
could plausibly give rise to any legal claim
outside of the Plan. In fact, it appears that
the opposite is true, and that plaintiff was an
out-of-network provider.
(Oluwasanmi
Decl. ¶ 5.) As a result, plaintiff’s citations
to both Thrift Drug Store, Inc. v. Univ.
Prescription Admins., 131 F.3d 95, 96-98
(2d Cir. 1997) and Knickerbocker Dialysis v.
Trueblue, Inc., 582 F. Supp. 2d 364, 367
(E.D.N.Y. 2008), are inapposite. In those
cases, the plaintiff was not assigned a plan
participant’s rights, as plaintiff here was, but
instead was a party to a long-term,
independent contract negotiated with a plan
administrator.
Here, as discussed above, the most that
plaintiff has alleged, viewed in a light most
favorable to it, is reliance on a promise (the
“authorization”), but the promise was based
on an interpretation of Plan benefits.
Therefore, plaintiff’s reliance on Stevenson
v. Bank of N.Y., Inc., 609 F.3d 56, 60 (2d
Cir. 2010) is also misplaced. As the Second
Circuit has since noted:
Plaintiff has not expressly distinguished
the facts of Montefiore, even after the Court
asked plaintiff’s counsel to do so at oral
argument.8 For example, plaintiff has not
7
The Court notes that, in its opposition papers to the
motion to dismiss, plaintiff submitted a declaration
from one of its employees which attempts to describe
the authorization in more detail. The declaration
recounts a telephone call with an unidentified
representative of Empire and asserts that, “[d]uring
said telephone conversation, the representative of
Empire confirmed what had been asserted by Ms.
Sarris and stated that Star would be paid through Ms.
Sarris’s healthcare plan.” (Decl. of Debra Kelly,
dated June 5, 2013, at ¶ 13.) Although the Court
cannot consider that declaration in connection with a
motion to dismiss, it confirms what is clear from the
allegations in plaintiff’s complaint and the Plan
documents—namely, that the claim here is not based
upon any independent duty, but rather is inextricably
intertwined with the Plan and the terms of the Plan.
8
To the extent plaintiff’s counsel attempted to
distinguish Montefiore at oral argument by arguing
that the alleged oral verification there was by a
representative of the fund (rather than the insurer),
the Court finds that argument unpersuasive. The
Second Circuit’s preemption analysis in Montefiore
was not contingent upon the party making the
verification, but rather was based on the fact that
such alleged verification was inextricably intertwined
with the interpretation of coverage under the plan.
In Stevenson, an agreement
separate and independent from the
pension
plan
governed
the
plaintiff’s benefits because the
plaintiff was no longer in the
bank’s employ and was no longer a
participant in the bank’s plan. . . .
Whatever rights the plaintiff had
arose not from the bank’s plan, but
from the independent agreement
that gave him benefits even though
he had no right to them under the
plan.
That inextricable bond with the Plan terms exists
regardless of whether the verification is by the
insurer or the Fund itself.
12
2. Express Preemption
Arditi, 676 F.3d at 300. The Second Circuit
in Arditi held that a similarly independent
agreement did not exist when the alleged
contract simply “described the benefits
Arditi would receive as a Plan member.” Id.
Here, the alleged “authorization” likewise
describes the benefits Sarris would have
received as a Plan member, and created no
new benefits or obligations.
Thus,
Stevenson does not apply, and the Court
must follow Arditi and Montefiore.
In addition to being completely
preempted, Empire also argues that
plaintiff’s state breach-of-contract claim is
expressly preempted by ERISA, and the
Court agrees.
ERISA’s preemption clause provides
that “the provisions of [ERISA] shall
supersede any and all State laws insofar as
they now or hereafter relate to any
employee benefit plan.” 29 U.S.C. § 1144(a)
(emphasis added). It is not disputed that the
Plan in this case is an “employee benefit
plan,” and thus the question is whether
plaintiff’s claim is based on a state law
relating to it.
Considering plaintiff’s arguments on a
broader scale, a finding that plaintiff’s
claims were not preempted by ERISA here
would have problematic implications for
future cases, and undermine the purposes of
ERISA. As previously discussed, 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 to characterize a
statement about benefits coverage as a
separate contractual promise.
“A claim under state law relates to an
employee benefit plan if that law ‘has a
connection with or reference to such a
plan.’” Franklin H. Williams Ins. Trust v.
Travelers Ins. Co., 50 F.3d 144, 148 (2d Cir.
1995) (quoting Metro. Life Ins. Co. v. Mass.,
471 U.S. 724, 739 (1985)); see also
Paneccasio v. Unisource Worldwide, Inc.,
532 F.3d 101, 114 (2d Cir. 2008) (same). A
state law also may “relate to” a benefit plan,
“even if the law is not specifically designed
to affect such plans, or the effect is only
indirect.” Ingersoll-Rand Co. v. McClendon,
498 U.S. 133, 139 (1990). Thus, ERISA
“preempts all state laws that relate to
employee benefit plans and not just state
laws which purport to regulate an area
expressly covered by ERISA.” Howard v.
Gleason Corp., 901 F.2d 1154, 1156 (2d
Cir. 1990) (alteration, citation, and internal
quotation marks omitted).
For the foregoing reasons, the Court
concludes that Empire has carried its burden
to justify removal, because plaintiff’s state
breach-of-contract claim is “within the
scope of” ERISA § 502(a)(1)(B), and
completely preempted. On that basis alone,
removal was proper and the motion to
remand is denied.
Although plaintiff’s state claim is based
on a common law theory, such claims may
still be expressly preempted if they relate to
an employee benefit plan. See Pilot Life,
481 U.S. at 47-48. The Supreme Court has
given the phrase “relate to” a broad
13
C. Motion to Dismiss
meaning, such that a state-law claim is
related to an employee benefit plan “if it has
a connection with or reference to such a
plan.” Id. at 47 (internal quotation marks
and citation omitted). In Pilot Life, the state
common law claims were for “Tortious
Breach of Contract,” “Breach of Fiduciary
Duties,” and “Fraud in the Inducement,” but
the case arose from an insurer’s denial of
benefits, and the Court held that these claims
were expressly preempted by ERISA. Id. at
43, 48. The same result holds true here,
because plaintiff’s state breach-of-contract
claim not only “has a connection with or
reference to” the Plan, id. at 47—it is
entirely based on the denial of benefits
under the Plan.
Empire’s motion to dismiss is granted
because, even if plaintiff’s preempted state
breach-of-contract claim was restyled as an
ERISA claim, it could not proceed under §
502(a)(1)(B) for two independent reasons.9
First, plaintiff’s claim must be dismissed
because the complaint does not allege that
Empire is a proper defendant. The Second
Circuit has held that a claim for benefits
pursuant to ERISA § 502(a)(1)(B) may only
be asserted against the plan itself, the plan
administrator, and the plan trustees. See
Crocco v. Xerox Corp., 137 F.3d 105, 107
(2d Cir. 1998) (“[O]nly the plan and the
administrators and trustees of the plan in
their capacity as such may be held liable.”
(quoting Leonelli v. Pennwalt Corp., 887
F.2d 1195, 1199 (2d Cir. 1989)) (internal
quotation marks omitted)); see also
Chapman v. Choicecare Long Island
Disability Plan, 288 F.3d 506, 509-10 (2d
Cir. 2002); Chapro v. SSR Realty Advisors,
Inc. Severance Plan, 351 F. Supp. 2d 152,
155 (S.D.N.Y. 2004).
Plaintiff has not distinguished Pilot Life
or explained how his claim could meet the
exception to preemption in ERISA’s
“savings clause,” which states that “nothing
in [ERISA] shall be construed to exempt or
relieve any person from any law of any State
which regulates insurance, banking, or
securities.” 29 U.S.C. § 1144(b)(2)(A). The
Court considered in Pilot Life whether the
state common law “bad faith” claim
regulated insurance, and held that it did not,
based on a common-sense understanding of
the phrase “regulates insurance” and on the
broad reach of ERISA. Pilot Life, 481 U.S.
at 56; see also Ky. Ass’n of Health Plans,
Inc. v. Miller, 538 U.S. 329, 334 (2003) (“It
is well established in our case law that a
state law must be “specifically directed
toward” the insurance industry in order to
fall under ERISA’s saving clause; laws of
general application that have some bearing
on insurers do not qualify.”) (citations
omitted). For the same reasons, plaintiff’s
state breach-of-contract claim is not saved,
and it is expressly preempted by ERISA.
Plaintiff
proffers
no
allegations
establishing that Empire qualifies as any of
these types of entities.
At most, the
complaint alleges that Empire was a health
insurer. (Compl. ¶¶ 2, 10.) The Second
9
Defendants also argued, in the alternative, that the
complaint’s sparse allegations concerning Empire’s
“authorization” of plaintiff’s services do not state a
claim even for breach of contract. Cf. Caniglia v.
Chicago Tribune-N.Y. News Syndicate, 612 N.Y.S.2d
146 (N.Y. App. Div. 1994) (dismissing complaint for
“failure to allege, in nonconclusory language, as
required, the essential terms of the parties’ purported
personal services contract, including those specific
provisions of the contract upon which liability is
predicated . . . whether the alleged agreement was, in
fact, written or oral . . . and the rate of
compensation”). However, given the Court’s ruling
that the claim is preempted by ERISA, this argument
is moot.
14
claim with prejudice for failure to plead
exhaustion of administrative remedies under
the plan); Kesselman v. The Rawlings Co.,
LLC, 668 F. Supp. 2d 604, 608 (S.D.N.Y.
2009) (“[Defendants] argue that [plaintiff]
has not stated a viable claim for relief
against them because she has not sufficiently
pled exhaustion of administrative remedies,
a prerequisite to bringing an ERISA action.
The Court agrees.”). Plaintiff’s failure to
plead any exhaustion of administrative
remedies here typically would require
dismissal of its claim on this ground. See,
e.g., Davenport v. Harry N. Abrams, Inc.,
249 F.3d 130, 133-34 (2d Cir. 2001) (per
curiam) (affirming dismissal for failure to
exhaust); Kennedy v. Empire Blue Cross &
Blue Shield, 989 F.2d 588, 595 (2d Cir.
1993) (same); Thomas v. Verizon, No. 02
Civ. 3083(RCC)(THK), 2004 WL 1948753,
at *4 (S.D.N.Y. Sept. 2, 2004) (citing cases
in which a failure to exhaust administrative
remedies under an ERISA plan led to
dismissal). Although “[c]ourts will waive
the exhaustion requirement if the Plaintiff
makes a ‘clear and positive showing’ that
pursuing available administrative remedies
would be futile,” Thomas, 2004 WL
1948753, at *4, plaintiff has made no such
showing. In fact, although Empire argued
that Star failed to exhaust, Star did not even
address the question of exhaustion in its
papers.
Circuit, however, has at least twice “rejected
a claim that an insurance company—under
contract to provide assistance in the
management of an employer’s self-funded
employee benefits plan—was an unnamed
plan administrator.” Crocco, 137 F.3d at
107 (citing Lee v. Burkhart, 991 F.2d 1004,
1010 (2d Cir. 1993)). Viewing the Plan
documents in this case, it is clear that, like
the defendants in Crocco and Lee, Empire is
not named as the plan administrator—that
role is explicitly assigned to the Chairperson
of the Verizon Employee Benefits
Committee. (Ex. B to Oluwasanmi Decl. at
16.) Thus, the claim must be dismissed
against Empire. See Crocco, 137 F.3d at
107 (“[29 U.S.C. §] 1002(16)(A) provides
that if a plan specifically designates a plan
administrator, then that individual or entity
is the plan administrator for purposes of
ERISA.” (alteration and emphasis in
original) (quoting McKinsey v. Sentry
Insurance, 986 F.2d 401, 404 (10th Cir.
1993))).
In the alternative, any claim under
ERISA must be dismissed because plaintiff
has not satisfied ERISA’s exhaustion
requirement. The complaint does not allege
exhaustion, even though establishing
exhaustion is generally considered a
prerequisite to pursuing an ERISA action.
See, e.g., Novella v. Westchester Cnty., 661
F.3d 128, 135 n.10 (2d Cir. 2011) (stating
that “[a]lthough ‘ERISA does not contain an
explicit
exhaustion[-]of[-]remedies
requirement . . . this Circuit has inferred
[one]’”
(quoting
Burke
v.
PricewaterHouseCoopers LLP Long Term
Disability Plan, 572 F.3d 76, 79 n.3 (2d Cir.
2009))); Burke, 572 F.3d at 79 (stating that
“an ERISA action may not be brought in
federal court until administrative remedies
are exhausted”); De-Silva v. North ShoreLong Island Jewish Health Sys., Inc., 770 F.
Supp. 2d 497, 538 (E.D.N.Y. 2011)
(dismissing plaintiffs’ Section 502(a)(1)(B)
D. Claims Against the Sarrises
As noted above, the Sarrises have not
participated in the motions to remand or
dismiss. Nonetheless, the Court sua sponte
declines
to
exercise
supplemental
jurisdiction over the remaining claims
against them, see Coyle v. Coyle, 354 F.
Supp. 2d 207, 214 (E.D.N.Y. 2005), which
appear to assert breaches of contract and
fiduciary duty under New York law, and
raise no federal questions. See 28 U.S.C.
§ 1367(c)(3); United Mine Workers of Am.
15
to the state court.”) (citing Carnegie-Mellon
Univ. v. Cohill, 484 U.S. 343 (1988));
Borden v. Blue Cross & Blue Shield of
Western N.Y., 418 F. Supp. 2d 266, 274
(W.D.N.Y. 2006) (remanding where state
breach of contract and fiduciary duty claims
against removing defendant preempted by
ERISA, and state claims remained against
non-removing defendant).
v. Gibbs, 383 U.S. 715, 726 (1966). “In the
interest of comity, the Second Circuit
instructs
that
‘absent
exceptional
circumstances,’ where federal claims can be
disposed of pursuant to Rule 12(b)(6) or
summary judgment grounds, courts should
‘abstain
from
exercising
pendent
jurisdiction.’” Birch v. Pioneer Credit
Recovery, Inc., No. 06-CV-6497T, 2007 WL
1703914, at *5 (W.D.N.Y. June 8, 2007)
(quoting Walker v. Time Life Films, Inc.,
784 F.2d 44, 53 (2d Cir. 1986)); see also
Cave v. E. Meadow Union Free Sch. Dist.,
514 F.3d 240, 250 (2d Cir. 2008) (“We have
already found that the district court lacks
subject matter jurisdiction over appellants’
federal claims. It would thus be clearly
inappropriate for the district court to retain
jurisdiction over the state law claims when
there is no basis for supplemental
jurisdiction.”); Karmel v. Liz Claiborne,
Inc., No. 99 Civ. 3608, 2002 WL 1561126,
at *4 (S.D.N.Y. July 15, 2002) (“Where a
court is reluctant to exercise supplemental
jurisdiction because of one of the reasons
put forth by § 1367(c), or when the interests
of judicial economy, convenience, comity
and fairness to litigants are not violated by
refusing to entertain matters of state law, it
should decline supplemental jurisdiction and
allow the plaintiff to decide whether or not
to pursue the matter in state court.”).
IV. CONCLUSION
Plaintiff’s claim against Empire under
New York law is preempted by ERISA, and
plaintiff’s motion to remand this action is
denied.10 Empire’s motion to dismiss is
granted because no claim lies against
Empire under ERISA and, in the alternative,
because plaintiff has not exhausted
administrative remedies. Finally, the Court
remands the remaining claims against the
Sarrises because no federal claims survive
the motion to dismiss.
SO ORDERED.
________________________
JOSEPH F. BIANCO
United States District Judge
Dated: March 19, 2014
Central Islip, NY
Accordingly, pursuant to 28 U.S.C.
§ 1367(c)(3), the Court declines to retain
jurisdiction over the remaining state law
claims against the Sarrises given the absence
of any federal claims that survive the motion
to dismiss. The claims against the Sarrises
are therefore remanded to the Supreme
Court of the State of New York, County of
Suffolk. See Bayliss v. Marriott Corp., 843
F.2d 658, 665 (2d Cir. 1988) (“Where the
state claims originally reached the federal
forum by removal from a state court, the
district court has the discretion to dismiss
the claims without prejudice or remand them
***
Plaintiff is represented by John Fazzini and
Mona R. Conway, Law Office of John
Fazzini, 33 Walt Whitman Road, Suite 310,
Huntington Station, NY 11746. Defendant
Empire is represented by Alvin C. Lin and
Howard S. Wolfson, Morrison Cohen LLP,
909 Third Ave, New York, NY 10022.
10
Plaintiff also moved for an award of fees, under 28
U.S.C. § 1447(c), for improper removal by Empire.
As the Court has concluded that the removal was
proper, the motion for attorney’s fees is denied.
16
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