Foundation Ancillary Services, L.L.C. d/b/a Surgical Monitoring Services v. UnitedHealthcare Insurance Company et al
Filing
41
MEMORANDUM AND ORDER denying 28 MOTION to Remand.(Signed by Judge Ewing Werlein, Jr) Parties notified.(chorace)
/
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
FOUNDATION ANCILLARY SERVICES,
L.L.C. d/b/a SURGICAL
MONITORING SERVICES,
Plaintiff,
CIVIL ACTION NO. H-10-1374
UNITED HEALTHCARE INSURANCE
COMPANY and UNITED HEALTHCARE
OF TEXAS, INC.,
Defendants.
MEMORANDUM AND ORDER
Pending is Plaintiff Foundation Ancillary Services, L.L.C.
d/b/a Surgical Monitoring Services1 Motion for Remand (Document No.
28) .
After
carefully considering the motion, response, and
applicable law, the Court concludes that the motion should be
denied.
Backqround
This is an action by a medical care provider to recover
alleged underpayment of medical services from Defendants United
Healthcare Insurance Company and United Healthcare of Texas, Inc.
("Defendants").
Plaintiff Foundation Ancillary Services, L.L.C.
d/b/a Surgical Monitoring Services ("Plaintiff") filed this suit in
state court, alleging only state law claims for Texas Insurance
Code and Deceptive Trade Practices Act violations, negligence,
negligent misrepresentation, promissory estoppel, and quantum
meruit.'
Plaintiff, a "noncontracted," non-participating service
provider that monitors patients during surgery, alleges that
Defendants misrepresented the amount they would pay
for the
"reasonable and fair" medical services that Plaintiff provided to
Defendants'
insureds and
services.'
Plaintiff does not have a provider agreement with
Defendants, but
secured
then underpaid
assignments
of
Plaintiff
ERISA
for those
benefits
from
patients.
Defendants removed this action, asserting that Plaintiff's
claims were completely preempted by ERISA, 29 U.S .C. 51001 et seq.,
because Plaintiff seeks recovery of benefits under ERISA plans . 4
Plaintiff challenges removal, asserting that
completely preempt
its claim because
ERISA does not
(1) Plaintiff is not a
"participant, beneficiary, or fiduciary" such that it could bring
this claim under section 502 (a) of ERISA, 29 U.S.C. 5 1132; and
(2) Plaintiff's claims rely on an independent legal duty rather
than the ERISA plan, as it brings a claim for underpayment for
Document No. 1, ex. C (Orig. Pet.)
Id
I .
ex. C
.
1 10-11, 26.
See id., ex. C 1 10; see also Document No. 31, ex. D at UHC
0254-84, boxes 13, 27 (authorizing and accepting assignments).
Plaintiff does not contest that the insurance plans at issue in
this case are all ERISA plans.
Document No. 1 (Notice of Removal) .
services
rendered
in
contravention
of
Defendants'
alleged
representations.
11.
Cases
filed
in
Leqal Standard
state
court
which
arise
under
the
"Constitution, treaties or laws of the United States shall be
removable without regard to the citizenship or residence of the
parties."
28 U.S.C.
§
1441(b).
"[Wlhen faced with a motion to
remand, it is the defendant's burden to establish the existence of
federal jurisdiction over the controversy."
Winters v. Diamond
Shamrock Chem. Co., 149 F.3d 387, 397 (5th Cir. 1998). Any doubt
as to the propriety of the removal is to be resolved in favor of
remand.
See Acuna v. Brown
&
Root Inc., 200 F.3d 335, 339
(5th Cir. 2000) ; Walters v. Grow Group, Inc., 907 F. Supp. 1030,
1032 (S.D. Tex. 1995) (Harmon, J.) .
When a plaintiff's state law claims are completely preempted
by federal law, the plaintiff's claims arise under federal law,
thereby permitting removal.
See Aetna Health Inc. v. Davila,
124 S. Ct. 2488, 2494 (2004); Metro. Life Ins. Co. v. Taylor, 107
S. Ct. 1542, 1546 (1987). ERISA completely preempts 'any state-law
cause of action that duplicates, supplements or supplants the ERISA
civil enforcement remedy" provided in section 502(a). Davila, 124
S. Ct. at 2495.5 Section 502 (a)(1)(B) authorizes a participant or
beneficiary of an ERISA plan "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."
29 U.S.C.
§
1132 (a)(1)(B).
Because this section
provides a civil enforcement cause of action, it 'completely
preempts any state cause of action seeking the same relief,
regardless of how artfully pleaded as a state action" and can
therefore be removed. Haynes v. Prudential Health Care, 313 F.3d
330, 333-34 (5th Cir. 2002) (quoting Giles v. NYLCare Health Plans,
Inc., 172 F.3d 332, 337
(5th Cir. 1999))
preempts a state-law cause of action 'f
i
.
ERISA completely
an individual, at some
point in time, could have brought his claim under [section 502 (a)],
and where there is no other independent legal duty that is
implicated by a defendant's actions." Davila, 124 S. Ct. at 2496.
ERISA1s other preemption provision, section 514 (a), 29 U.S.C.
5 1144 (a), provides for ordinary c o n f l i c t preemption of state laws
that "relate to" any employee welfare benefit plan. State law
claims that fall outside section 502(a), even though preempted by
section 514, follow the well-pleaded complaint rule and do not
confer original or removal j u r i s d i c t i o n .
See Franchise Tax Bd. of
the State of Cal. v. Const. Laborers Vacation Trust, 103 S. Ct.
2841, 2853-55 (1983); Giles v. NYLCare Health Plans, Inc., 172 F.3d
332, 337 (5th Cir. 1999) ("When the doctrine of complete preemption
does not apply, but the plaintiff's state law claim is arguably
preempted under § 514 (a), the district court, being without removal
jurisdiction, cannot resolve the dispute regarding preemption. It
lacks power to do anything other than remand to the state court
5141 preemption issue can be addressed and
where the §
resolved." ) .
Discussion
Plaintiff s first contention that it could not bring suit
under section 502 (a) because it is not a "participant, beneficiary,
or fiduciary" is unavailing because Plaintiff accepted assignments
from its patients in order to receive payment directly from
defendant^.^
It is well settled that a healthcare provider can
assert a claim under section 502 (a) as an assignee of a participant
or beneficiary in order to claim plan benefits.
Tanqo
See
Transport v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 891 (5th
Cir. 2003) (collecting cases) ; Hermann Hosp. v. MEBA Med.
&
Ben.
Plan, 845 F.2d 1286, 1289 (5th Cir. 1999) (health care provider has
standing to
sue under
section 502(a) as
an
assignee
of
a
participant or beneficiary in order to receive plan benefits); see
also Ambulatory Infusion Therapy Specialists, Inc. v. Aetna Life
Ins. Co., No. H-05-4389, 2006 WL 1663752, at *5 n.2 (S.D. Tex. June
13, 2006) (Rosenthal, J.). Hence, Plaintiff could have brought a
claim under section 502 (a) as assignee of its patients for the
alleged underpayment of benefits.
However, in order to be subject to complete preemption and
hence removal to federal court, Plaintiff must have both standing
to sue under section 502 and the lack of an independent legal duty
supporting a state law claim.
Davila, 124 S. Ct. at 2496.
See Document No. 31, ex. D at UHC 0254-84, boxes 13, 27.
5
Plaintiff relies on Lone Star OB/GYN Associates v. Aetna Health
Inc., 579 F.3d 525 (5th Cir. 2009), for the proposition that its
claims are independent of any legal duty preempted by ERISA,
because it challenges the rate of reimbursement rather than the
right to reimbursement. In Lone Star, the healthcare provider had
entered into a contract or provider agreement with the insurer, and
the agreement delineated the rights and responsibilities of the
parties.
I .at 530-31 ("Lone Star's claims . . . arise out of the
d
independent legal duty contained in the contract
added)).
. . . ."
(emphasis
In contrast to Lone Star, Plaintiff and Defendants here
have no provider agreement between them that would
form an
independent basis for recovery. Resolving this dispute is possible
only by reference to and interpretation of the patients' ERISA
plans, rather than any other contract.
Hence, Lone Star does not
apply.
Plaintiff's reliance on Memorial Hos~ital
Systemv. Northbrook
Life Insurance Co., 904 F.2d 236 (5th Cir. 1990) is similarly
misplaced.
In Memorial, the insurer represented to plaintiff
hospital that the patient was covered, but the insurance in fact
was nonexistent at the time of her hospital stay; thus, there was
I . at 238, 247-48. Here,
d
no coverage under any ERISA plan.
unlike the patient in Memorial, Plaintiff's patients were covered
to some extent by Defendantsr plans.
receiving payments
for
services
In fact, Plaintiff admits
under
the
plans
but
seeks
additional payments for services on the basis of Defendants'
representations about the extent of the coverage for the patients.
This dispute therefore centers on the amount o f coverage that each
patient enjoyed under the plan, rather than the existence o f
coverage.
In Metroplex Infusion Care, Inc. v. Lone Star Container Corp.
the plaintiff medical provider called a patient's insurer to verify
her benefits and eligibility, and the defendant confirmed coverage.
855 F. Supp. 897, 899 (N.D. Tex. 1994) (Solis, J . .
Even though
the insurer or its agents agreed to pay the costs of treatment, it
only paid for a portion of the bill..
I . Following the Fifth
d
Circuit's reasoning in Hermann Hospital v. MEBA Medical
Plan
&
Benefits
959 F.2d 569, 577-78 (5th Cir. 1992) ("Hermann 11") and
I
Hermann Hospital v. MEBA Medical
1291
(5th Cir.
1988)
&
Benefits Plan, 845 F.2d 1286,
("Hermann I
the
court
found
that
plaintiff's claims related to an ERISA plan and were therefore
preempted.
Metroplex, 855 F. Supp. at 901.
Metroplex explained
the distinction between the preemption of state claims based on
nature
and
extent
of
coverage rather than the
e x i s t e n c e of
coverage :
The apparent contradiction between the Hermann cases and
Memorial may be resolved in light of their underlying
factual differences: whereas there was no ERISA coverage
in Memorial, so that the hospital would have had no
recourse under either ERISA or state law had its state
law claims been preempted, in Hermann ERISA coverage did
exist but had allegedly been improperly denied.
Id.
806 F. Supp.
- (citing Brown Schools, Inc. v. Fla. Power C o r ~ . ,
146, 149 (W.D. Tex. 1992)); see also Cmress Fairbanks Med. Ctr.
Inc. v. Pan-American Life Ins. Co., 110 F.3d 280, 284
&
n.7 (5th
Cir. 1997) (citing MetroDlex approvingly and further clarifying
that "the proper inquiry is whether the beneficiary under the ERISA
plan was covered at all by the terms of the health care policy,
because if the beneficiary was not, the provider of health services
acts as an independent, third party subject to our holding in
Memorial").
Here, like Metro~lex, the patients are covered by
their respective plans but the provider is dissatisfied with the
amount it was reimbursed for its services under the terms o f the
plans.
Plaintiff's complaint alleges that:
Defendantsr preferred provider health insurance plans
generally provide a higher level of benefits to consumers
who receive health care services from medical providers
contracted with
UHC
either
as
"preferred" or
"participating" medical providers. Under the terms o f
most UNC plans, if consumers receive services from
noncontracted medical providers, consumers not only
generally receive a lower percentage level of benefits,
but UHC also pays the medical providers based upon an
"allowed" amount only known to UHC.
Thus Plaintiff, in its first fact paragraph, couches its complaint
in terms of the unfairness o f the terms o f the E R I S A plans as
administered by Defendants.
Additionally, Plaintiff's promissory
Document No. 1, ex. C fl 9 (emphasis added) .
8
estoppel claim seeks to recover additional reimbursement from
a
Defendants, alleging that they made a promise to pay Plaintiff '
reasonable and fair amount for the medical services provided to its
members," which Plaintiff claims it relied on to its detriment .'
Any patient who was denied full benefits for the services they
received could also have claimed that Defendants improperly denied
payment for certain charges as not "reasonable and fair" under
section 502(a), based on their plan terms.
See Cleshorn v. Blue
Shield of Ca., 408 F.3d 1222, 1226 (9th Cir. 2005) ("Any duty or
liability that [the insurer] had to reimburse him 'would exist here
only because of [the insurer's] administration of ERISA-regulated
benefits plans'
. . . .
[PlaintiffIs] claim therefore cannot be
regarded as independent of ERISA." (quoting Davila, 124 S. Ct. at
2498))
;
Ambulatory Infusion, 2006 WL 1663752, at *8-9 (holding that
plaintiff's state law breach of contract claim was completely
preempted under ERISA because its claim was dependent on the ERISA
plan terms and not on any independent legal duty) . g
PlaintiffIs
right to payment under the patients1 plans is derivative of each
Id.
- f 26.
Further, this result is "consistent with Congress' intent in
passing ERISA, for allowing a third party provider to maintain
state law claims which would otherwise be preempted under ERISA
would permit the provider not only to expand the limited rights
granted a plan beneficiary but also to circumvent the enforcement
provisions of ERISA altogether simply by filing suit in state court
under state law." Metro~lex,855 F. Supp. at 901.
9
patient's right under the applicable ERISA plan, and therefore is
not independent of the plan.
Davila, 124 S. Ct. at 2498 (a legal
duty is not independent of ERISA if it "derives entirely from the
particular rights and obligations established by [ERISA] benefit
plans") .
Plaintiff's
state claim for promissory estoppel is
completely preempted by ERISA, "giving this Court federal removal
jurisdiction over the claim and supplemental jurisdiction over all
remaining claims."
Ambulatory Infusion, 2006 WL 1663752, at *9.
Plaintiff's Motion to Remand must therefore be denied.
IV.
Order
Based on the foregoing, it is
ORDERED that Plaintiff Foundation Ancillary Services, L.L.C.
d/b/a/ Surgical Monitoring Services' Motion for Remand (Document
No. 28) is DENIED.
The Clerk will enter this Order, providing a correct copy to
all parties of record.
SIGNED at Houston, Texas, on this
12%
of October, 2011.
9
1
WERLEIN, JR .
H
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