McCulloch Orthopaedic Surgical Services v. Aetna, No. 15-2150 (2d Cir. 2017)
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Plaintiff filed suit against Aetna and its wholly-owned subsidiaries, seeking reimbursement from Aetna for performing two knee surgeries on a patient who was a member of an Aetna-administered health care plan that was governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The Second Circuit held that ERISA does not completely preempt an "out-of-network" health care provider's promissory-estoppel claim against a health insurer where the provider did not receive a valid assignment for payment under a health insurance plan and received an independent promise from the insurer that he would be paid for certain medical services provided to the insured. Accordingly, the court vacated the denial of plaintiff's motion to remand and the dismissal of his complaint. The Second Circuit remanded to the district court with instructions to remand to state court.
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15 2150 cv McCulloch Orthopaedic Surgical Services, PLLC v. Aetna Inc., et al. 1 2 In the 3 United States Court of Appeals 4 For the Second Circuit 32 ________ AUGUST TERM, 2015 ARGUED: APRIL 26, 2016 DECIDED: MAY 18, 2017 No. 15 2150 cv MCCULLOCH ORTHOPAEDIC SURGICAL SERVICES, PLLC, A/K/A DR. KENNETH E. MCCULLOCH, Plaintiff Appellant, v. AETNA INC., DBA AETNA HEALTH AND LIFE INSURANCE CO., et al., Defendants Appellees. ________ Appeal from the United States District Court for the Southern District of New York. No. 15 Civ. 2007 – Katherine B. Forrest, Judge. ________ Before: WALKER, CALABRESI, and HALL, Circuit Judges. ________ We consider in this case whether the Employee Retirement 33 Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 2 No. 15 2150 cv 1 completely preempts an “out of network” health care provider’s 2 promissory estoppel claim against a health insurer where the 3 provider (1) did not receive a valid assignment for payment under a 4 health insurance plan and (2) received an independent promise from 5 the insurer that he would be paid for certain medical services 6 provided to the insured. We hold that ERISA does not completely 7 preempt such a claim. 8 9 10 11 12 13 14 15 16 17 18 ________ KENNETH J. MCCULLOCH, Law Office of Kenneth J. McCulloch, New York, NY, for Plaintiff Appellant. EDWARD WARDELL (Patricia A. Lee, on the brief), Connell Foley LLP, New York, NY, for Defendants Appellees. ________ JOHN M. WALKER, JR., Circuit Judge: 19 We consider in this case whether the Employee Retirement 20 Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., 21 completely preempts an “out of network” health care provider’s 22 promissory estoppel claim against a health insurer where the 23 provider (1) did not receive a valid assignment for payment under 3 No. 15 2150 cv 1 the health care plan and (2) received an independent promise from 2 the insurer that he would be paid for certain medical services 3 provided to the insured. We hold that ERISA does not completely 4 preempt such a claim. BACKGROUND 5 6 Plaintiff appellant McCulloch Orthopaedic Surgical Services, 7 PLLC, a/k/a Dr. Kenneth E. McCulloch (“McCulloch”) filed this 8 action against defendant appellee Aetna Inc. and several of its 9 wholly owned subsidiaries1 in New York State Supreme Court. 10 McCulloch, an orthopedic surgeon, seeks reimbursement from 11 Aetna for performing two knee surgeries on a patient who is a 12 member of an Aetna administered health care plan that is governed 13 by ERISA. McCulloch is an “out of network” provider under this 14 plan—he does not have a contract with Aetna and is not identified In addition to Aetna Inc., the following subsidiaries were named as defendants in this action: Aetna Health Inc., Aetna Health and Life Insurance Company, Aetna Life Insurance Company, and Aetna Health Insurance Company of New York. We refer to all of the defendants collectively as “Aetna.” 1 4 No. 15 2150 cv 1 by Aetna as a participating physician who has agreed to abide by a 2 set fee schedule. 3 Before performing the patient’s surgeries, McCulloch’s office 4 staff called a number listed on the patient’s Aetna insurance card to 5 obtain information about the patient’s coverage. An Aetna 6 representative informed McCulloch’s staff that the patient was 7 covered by a health care plan administered by Aetna, that the plan 8 provided for payment to out of network physicians, and that the 9 plan covered the surgical procedures that McCulloch would be 10 providing for the patient. The Aetna representative stated that 11 McCulloch would be reimbursed at seventy percent of the usual, 12 customary, and reasonable (“UCR”) rate for the knee surgeries and 13 that this rate would be based on an industry standard schedule.2 14 Relying on Aetna’s promise of reimbursement, McCulloch 15 performed the two surgeries and billed Aetna at the UCR rate for a 16 total of $66,048. McCulloch then submitted a health insurance claim McCulloch alleges that he charges UCR rates in accordance with those established by Ingenix, now known as the OptumInsight/FAIRPLAN program. Aetna does not dispute that this is an industry standard schedule. 2 5 No. 15 2150 cv 1 form to Aetna for each surgery (Centers for Medicare and Medicaid 2 Services Form 1500). The claim form has two sections that concern 3 the assignment of payment for medical benefits. First, in Box 13, the 4 insured must authorize the “payment of medical benefits to the 5 undersigned physician . . . for services described below.” The 6 parties do not dispute that the patient signed both of the completed 7 forms submitted by McCulloch. Second, in Box 27, the form asks if 8 the provider will “Accept Assignment?”. The parties also do not 9 dispute that McCulloch checked “yes” in response to this question 10 11 12 13 14 15 16 17 18 19 20 21 22 on the forms. The patient’s health care plan, however, has an anti assignment provision, which states that: Coverage may be assigned only with the written consent of Aetna. To the extent allowed by law, Aetna will not accept an assignment to an out of network provider, including but not limited to, an assignment of: The benefits due under this contract; The right to receive payments due under this contract; or Any claim you make for damages resulting from a breach or alleged breach, of the terms of this contract. 6 No. 15 2150 cv 1 Despite this provision, Aetna reimbursed McCulloch $842.51 for the 2 first surgery and $14,425 for the second surgery, for a total of 3 $15,267.51. 4 On February 17, 2015, McCulloch sued Aetna in New York 5 State court on a single cause of action: promissory estoppel. 6 McCulloch alleged that Aetna had made a clear and unambiguous 7 promise to reimburse him for seventy percent of the UCR rate for 8 both knee surgeries ($46,233.60), that he had reasonably and 9 foreseeably relied on that promise, and that he had been injured as a 10 result. McCulloch sought $30,966.09—the difference between 11 seventy percent of the UCR rate ($46,233.60) and what Aetna had 12 paid him ($15,267.51)—plus interest from August 4, 2011, costs, and 13 other appropriate relief. 14 On March 17, 2015, Aetna timely removed this action to the 15 United States District Court for the Southern District of New York. 16 Aetna invoked federal question jurisdiction, asserting that 17 McCulloch’s complaint raised a claim for benefits under an 18 employee welfare benefit plan governed by ERISA. McCulloch then 7 No. 15 2150 cv 1 filed a motion to remand the action to state court. On May 11, 2015, 2 the district court (Katherine B. Forrest, J.) issued an opinion and 3 order denying McCulloch’s motion to remand and directing 4 McCulloch to amend his complaint “to assert ERISA cause[s] of 5 action not later than . . . May 25, 2015.” App’x at 233. 6 On May 21, 2015, McCulloch moved for reconsideration of the 7 district court’s order. He requested that the district court either 8 remand this case to state court or enter a final judgment dismissing 9 the action for failure to state a claim under ERISA. McCulloch did 10 not file an amended complaint. On June 8, 2015, the district court 11 denied McCulloch’s motion for reconsideration and, “[i]n light of 12 plaintiff’s refusal to amend,” dismissed this action. McCulloch 13 timely appealed. 14 LEGAL STANDARD 15 We review de novo whether a district court has subject matter 16 jurisdiction. Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 17 327 (2d Cir. 2011). An action filed in state court may be properly 18 removed by a defendant to federal court in “any civil action . . . of 8 No. 15 2150 cv 1 which the district courts of the United States have original 2 jurisdiction.” 28 U.S.C. § 1441(a). “The district courts shall have 3 original jurisdiction of all civil actions arising under the 4 Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. 5 The defendant, as the party seeking removal and asserting 6 federal jurisdiction, bears the burden of demonstrating that the 7 district court has original jurisdiction. See Montefiore, 642 F.3d at 8 327. Under the “well pleaded complaint rule,” a defendant 9 generally may not “remove a case to federal court unless the 10 plaintiff s complaint establishes that the case arises under federal 11 law.” Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004) (citation 12 and internal quotation marks omitted). There is, however, an 13 exception to this rule. Id. A defendant may properly remove a state 14 law claim when a federal statute “wholly displaces the state law 15 cause of action,” such that the claim, “even if pleaded in terms of 16 state law, is in reality based on federal law.” Id. at 207 08 (citation 17 omitted). 9 No. 15 2150 cv 1 ERISA provides for the wholesale displacement of certain 2 state law claims. Pursuant to ERISA § 502(a)(1)(B), a participant or 3 beneficiary may bring an action “to recover benefits due to him 4 under the terms of his plan, to enforce his rights under the terms of 5 the plan, or to clarify his rights to future benefits under the terms of 6 the plan.” ERISA § 502(a)(1)(B), codified at 29 U.S.C. § 1132(a)(1)(B). 7 This civil enforcement scheme “completely preempts any state law 8 cause of action that ‘duplicates, supplements, or supplants’ an 9 ERISA remedy.” Montefiore, 642 F.3d at 327 (citation omitted). 10 In Aetna Health Inc. v. Davila, the Supreme Court established a 11 two pronged test to determine whether a state law claim is 12 completely preempted by ERISA § 502(a)(1)(B) (the “Davila” test). 13 542 U.S. at 209 10; see Wurtz v. Rawlings Co., 761 F.3d 232, 242 (2d 14 Cir. 2014). The Davila test is conjunctive—a state law claim is 15 completely preempted by ERISA only if both prongs of the test are 16 satisfied. Montefiore, 642 F.3d at 328. Under the first prong, the 17 claim must be brought by “an individual [who], at some point in 18 time, could have brought his claim under ERISA § 502(a)(1)(B).” 10 No. 15 2150 cv 1 Davila, 542 at 210. In making this determination, we consider: (1) 2 whether the plaintiff is the type of party that can bring a claim 3 pursuant to § 502(a)(1)(B) and also (2) whether the actual claim that 4 the plaintiff asserts can be construed as a colorable claim for benefits 5 pursuant to § 502(a)(1)(B). Montefiore, 642 F. 3d at 328. Under the 6 second prong of the Davila test, the claim must involve “no other 7 independent legal duty that is implicated by a defendant’s actions.” 8 Davila, 542 U.S. at 210. 9 DISCUSSION 10 The district court held that McCulloch’s promissory estoppel 11 claim was completely preempted by ERISA under the Davila test. 12 The district court found that the first prong of this test was satisfied 13 because McCulloch was assigned the right to receive payment under 14 the plan and because McCulloch s promissory estoppel claim could 15 be construed as a colorable claim for benefits pursuant to § 16 502(a)(1)(B). The district court further found that the second prong 17 of the Davila test was satisfied because the Aetna representative’s 18 oral statements did not give rise to an “independent legal duty” and, 11 No. 15 2150 cv 1 instead, that any duty to reimburse McCulloch “ar[ose] out of the 2 terms and conditions of [the patient’s] plan.” App’x at 243 44. 3 On appeal, McCulloch argues inter alia that his state law claim 4 is not preempted by ERISA because: (1) he did not receive a valid 5 assignment and thus is not the “type of party” that can bring a claim 6 pursuant to § 502(a)(1)(B) and (2) Aetna’s oral statements gave rise 7 to a duty that was distinct and independent from its obligations 8 under the patient s health care plan. We agree. 9 I. Davila, Prong 1, Step 1 10 We first must determine whether McCulloch is “the type of 11 party that can bring a claim pursuant to § 502(a)(1)(B).” See 12 Montefiore, 642 F.3d at 328. Aetna argues that, despite the health 13 care plan’s anti assignment provision, it has established a “colorable 14 claim” that McCulloch was assigned the patient’s right to payment 15 for medical benefits and that, thus, McCulloch is the type of party 16 that can bring a claim under ERISA. We find this argument 17 unpersuasive. McCulloch—an “out of network” health care 18 provider who plainly did not have a valid assignment for 12 No. 15 2150 cv 1 payment—is not the type of party who can bring a claim pursuant to 2 § 502(a)(1)(B). 3 Under § 502(a), a civil action may be brought “by a participant 4 or beneficiary” of an ERISA plan to recover benefits due to him 5 under the terms of that plan. See 29 U.S.C. § 1132(a)(1)(B). ERISA 6 defines a beneficiary as “a person designated by a participant, or by 7 the terms of an employee benefit plan, who is or may become 8 entitled to a benefit thereunder.” Id. § 1002(2)(B)(8). Although § 9 502(a) is narrowly construed to permit only the enumerated parties 10 to sue directly for relief, we have “‘carv[ed] out a narrow exception 11 to the ERISA standing requirements’ to grant standing ‘to healthcare 12 providers to whom a beneficiary has assigned his claim in exchange 13 for health care.’” Montefiore, 642 F.3d at 329 (quoting Simon v. Gen. 14 Elec. Co., 263 F.3d 176, 178 (2d Cir. 2001)). 15 In Montefiore Medical Center v. Teamsters Local 272, an “in 16 network” hospital brought state law claims against a union’s 17 employee benefit plan that was governed by ERISA. 642 F.3d at 324 18 25. The hospital sought reimbursement for medical services that it 13 No. 15 2150 cv 1 had provided to beneficiaries of the plan. Id. at 325 26. We found 2 that the hospital’s state law claims were completely preempted by 3 ERISA because, among other things, the hospital had received a 4 valid assignment of the beneficiaries’ right to payment and it was, 5 therefore, the type of party that could bring its claim regarding 6 benefits pursuant to § 502(a)(1)(B). Id. at 328, 333. In making this 7 determination, we noted that the hospital’s reimbursement forms 8 contained a “Y” for “yes” in the space certifying that the beneficiary 9 patients had assigned their claims to the hospital. Id. at 329. 10 Here, McCulloch submitted claim forms to Aetna indicating 11 that the patient had authorized payment of medical benefits to 12 McCulloch and that McCulloch had accepted this assignment from 13 the patient. As we held in Montefiore, this normally would constitute 14 an assignment to the provider of the patient’s right to payment. See 15 Montefiore, 642 F.3d at 329. Unlike in Montefiore, however, the health 16 care plan in this case has an anti assignment provision. This 17 provision states that although “[c]overage may be assigned . . . with 14 No. 15 2150 cv 1 the written consent of Aetna[,] . . . Aetna will not accept an 2 assignment to an out of network provider.” App’x at 280. 3 Based on the plain language of this provision, McCulloch’s 4 acceptance of an assignment was ineffective—a legal nullity. See 5 Allhusen v. Caristo Constr. Corp., 303 N.Y. 446, 452, 103 N.E.2d 891 6 (1952) (holding that a “clear” and “definite” no assignment 7 provision “may be construed in no other way but that any 8 attempted assignment of either the contract or any rights created 9 thereunder shall be ‘void’ as against the obligor”); see also Physicians 10 Multispeciality Grp. v. Health Care Plan of Horton Homes, Inc., 371 F.3d 11 1291, 1295 (11th Cir. 2004) (“[W]e are persuaded by the reasoning of 12 the majority of federal courts that have concluded that an 13 assignment is ineffectual if the [ERISA benefit] plan contains an 14 unambiguous anti assignment provision.”) (collecting cases). 15 Aetna does not dispute that this provision renders invalid 16 McCulloch’s attempt to enforce the purported assignment. Instead, 17 Aetna argues—and the district court found—that in determining 18 whether preemption applies, we should ignore that the health care 15 No. 15 2150 cv 1 plan prohibits any assignment to McCulloch. The district court 2 noted that “[w]hether the assignment is valid under the terms of the 3 ERISA plan at issue is a question to be decided once an ERISA claim 4 is before the Court” and that the attempted assignment between the 5 patient and McCulloch was “all that [was] required to render 6 [McCulloch] ‘the type of party that can bring a claim pursuant to § 7 502(a)(1)(B)’ for purposes of complete preemption.”3 App’x at 241. The first prong of the Davila test, however, requires that we 8 9 must assess whether a party has standing to pursue an ERISA claim. 10 See Montefiore, 642 F.3d at 328 n. 7. We have noted that, “[a]bsent a 11 valid assignment of a claim, . . . non enumerated parties lack The district court also stated that, “Aetna in fact sent two payments . . . for [the] surgery directly to [McCulloch] despite the anti assignment provision” which “is sufficient for purposes of the complete preemption analysis.” App’x at 241. There are several district court cases in this circuit that have held that where an ERISA plan either permits assignment with the consent of an insurer or the plan is ambiguous as to whether assignment is permitted, direct payment is sufficient to demonstrate a patient’s assignment for preemption purposes. See, e.g., Neuroaxis Neurosurgical Assocs., PC v. Cigna Healthcare of N.Y., Inc., No. 11 CIV. 8517 (BSJ) (AJP), 2012 WL 4840807, at *3 (S.D.N.Y. Oct. 4, 2012). Even assuming arguendo that these cases reach the correct holding, we find that they are not analogous to the instant case, which involves a benefit plan that clearly prohibits assignments to out of network providers. 3 16 No. 15 2150 cv 1 statutory standing to bring suit under [ERISA] even if they have a 2 direct stake in the outcome of the litigation.” Conn. v. Physicians 3 Health Srvs. of Conn., Inc., 287 F.3d 110, 121 (2d Cir. 2002) (emphasis 4 added); see also Am. Psychiatric Ass n v. Anthem Health Plans, Inc., 821 5 F.3d 352, 361 (2d Cir. 2016) (“[W]e have allowed physicians to bring 6 claims under § 502(a) based on a valid assignment from a patient.” 7 (emphasis added)). 8 If we were to ignore that the health care plan prohibits an 9 assignment to McCulloch in determining whether his claim is 10 preempted, this would lead to a result that is both unjust and 11 anomalous: McCulloch would be barred from pursuing state law 12 claims in state court on preemption grounds and from pursuing an 13 ERISA claim in federal court for lack of standing. McCulloch—and 14 other third party providers in similar situations—would be left 15 without a remedy to enforce promises of payment made by an 16 insurer. 17 Such a rule would not further the principal purpose of ERISA 18 to protect plan beneficiaries and participants. As the United States 17 No. 15 2150 cv 1 Department of Labor noted in its amicus brief,4 this risk of non 2 payment might lead medical providers to decide not to treat, or to 3 otherwise screen, patients who are participants in certain plans. See 4 Lordmann Enterprises, Inc. v. Equicor, Inc., 32 F.3d 1529, 1533 (11th Cir. 5 1994) (“[H]ealth care providers [must] be able to rely on insurers’ 6 representations as to coverage. If ERISA preempts their potential 7 causes of action for misrepresentation, health care providers . . . 8 must either deny care or raise fees to protect themselves against the 9 risk of noncoverage.”); Hospice of Metro Denver, Inc. v. Grp. Health Ins. 10 of Okla., Inc., 944 F.2d 752, 756 (10th Cir. 1991) (“Denying a third 11 party provider a state law action based upon misrepresentation by 12 the plan s insurer in no way furthers the purposes of ERISA.”); 13 Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 247 48 (5th 14 Cir. 1990) (“[D]iscouraging health care providers from becoming This amicus brief was filed in support of McCulloch in a companion case with identical issues—McCulloch Orthopedic Surgical Services, PLLC v. United Healthcare Insurance Co. of New York, No. 15 2144 cv. Although the parties ultimately withdrew this case, we may take judicial notice of the brief. See In re Enter. Mortg. Acceptance Co., LLC, Securities Litig., 391 F.3d 401, 410 n.8 (2d Cir. 2004) (taking judicial notice of Securities and Exchange Commission amicus brief in another appeal addressing similar issues). 4 18 No. 15 2150 cv 1 assignees would undermine Congress’ goal of enhancing 2 employees’ health and welfare benefit coverage. . . . This does not 3 serve, but rather directly defeats, the purpose of Congress in 4 enacting ERISA.” (citation and internal quotation marks omitted)). 5 Indeed, as the Fifth Circuit has concluded, “[i]f providers have no 6 recourse under either ERISA or state law[,] . . . providers will be 7 understandably reluctant to accept the risk of non payment, and 8 may require up front payment by beneficiaries—or impose other 9 inconveniences—before treatment will be offered.” Mem’l Hosp. 10 Sys., 904 F.2d at 247. 11 In sum, while the patient attempted to assign McCulloch the 12 right to payment for the surgeries that McCulloch performed, this 13 assignment was prohibited under the terms of the patient’s health 14 care plan. Aetna—which has not argued on appeal that the anti 15 assignment provision does not apply—has failed to establish that 16 McCulloch is the “type of party” who may bring claims pursuant to 17 § 502(a)(1)(B). 18 II. Davila, Prong 1, Step 2 19 No. 15 2150 cv 1 Although Aetna’s failure to meet any part of the Davila test 2 requires that we reverse the district court’s ruling, we briefly 3 address why Aetna has failed to satisfy the remaining requirements 4 as well. Under the Davila test, we next must determine “whether the 5 actual claim that [McCulloch] asserts can be construed as a colorable 6 claim for benefits pursuant to § 502(a)(1)(B).” Montefiore, 642 F.3d at 7 328. A colorable ERISA claim exists when the claim “implicates 8 coverage and benefit determinations as set forth by the terms of the 9 ERISA benefit plan.” Id. at 325. On appeal, Aetna argues that 10 McCulloch’s claim “goes to the heart of administration of the Plan 11 and necessarily implicates the patient’s assigned right to payment 12 under the Plan.” Appellees’ Br. at 26. We disagree and conclude 13 that the actual claim asserted here cannot be construed as a colorable 14 ERISA claim for benefits. 15 In Montefiore, we determined that the “in network” hospital 16 provider’s suit against the ERISA plan, seeking reimbursement for 17 medical services that the hospital had provided to beneficiaries of 18 the plan, were “colorable claims for benefits pursuant to § 20 No. 15 2150 cv 1 502(a)(1)(B).” Id. The hospital had entered into agreements with 2 preferred provider organizations that it would offer medical services 3 to the plan’s beneficiaries at certain rates. Id. at 326. The preferred 4 provider organizations, in turn, had contracted with the ERISA plan 5 to set reimbursement rates and terms. Id. We concluded that the 6 hospital’s state law claims of breach of contract and quasi contract 7 concerned the hospital’s right to be reimbursed as a valid assignee 8 under the ERISA plan and that deciding whether the hospital should 9 be reimbursed would implicate the plan’s coverage and benefits 10 11 determinations. Id. at 331. The instant case differs from Montefiore for several reasons. 12 First, because McCulloch is not a valid assignee and has no plan 13 related relationship with Aetna, the benefits under the health care 14 plan belong to the patient, not to McCulloch. The health care plan 15 simply provides the context for McCulloch’s claim—if no plan had 16 existed, McCulloch’s office would not have called Aetna to inquire 17 about the patient’s coverage and Aetna likely would not have made 18 such representations. 21 No. 15 2150 cv 1 Second, unlike the contract and quasi contract claims at issue 2 in Montefiore, McCulloch’s promissory estoppel claim does not 3 depend on the specific terms of the relevant health care plan or on 4 Aetna’s determination of coverage or benefits pursuant to those 5 terms. The Aetna representative’s statements to McCulloch may 6 have been a mere summary of the patient’s health care plan and the 7 coverage and benefits that would apply to an “out of network” 8 provider.5 But McCulloch’s claim rests on whether Aetna promised 9 to reimburse him for seventy percent of the UCR rate, whether he 10 reasonably and foreseeably relied on that promise, and whether he 11 suffered a resulting injury.6 The claim does not implicate the actual 12 coverage terms of the health care plan or require a determination as 13 to whether those terms were properly applied by Aetna. See 14 Stevenson v. Bank of N.Y. Co., 609 F.3d 56, 61 (2d Cir. 2010) (finding 15 promissory estoppel claim not preempted by ERISA where, inter The health care plan, for example, covers seventy percent of an out of network provider’s surgical procedures after a calendar year deductible. 6 We note that Aetna made two payments to McCulloch and it does not contest that it had a legal duty to make these payments. 5 22 No. 15 2150 cv 1 alia, the claim’s “resolution does not require a court to review the 2 propriety of an administrator’s or employer’s determination of 3 benefits under such a plan”); see also Wurtz, 761 F.3d at 242 (finding 4 state law claim not preempted because “the terms of plaintiffs’ 5 ERISA plans are irrelevant to their claims”); Franciscan Skemp 6 Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 7 538 F.3d 594, 598 (7th Cir. 2008) (finding action arising from 8 insurer’s “alleged misrepresentations made . . . in response to 9 [provider’s] inquiry” was not an action “to recover benefits due to [a 10 patient] under the terms of his plan, to enforce [a patient’s] rights 11 under the terms of the plan, or to clarify [a patient’s] rights to future 12 benefits under the terms of the plan”); DaPonte v. Manfredi Motors, 13 Inc., 157 F. App’x 328, 331 (2d Cir. 2005) (summary order) (finding 14 fraudulent misrepresentation claim not completely preempted 15 where “neither the existence of an ERISA plan nor the interpretation 16 of any such plan’s terms is material” to the claim). 17 Thus, because McCulloch’s promissory estoppel claim does 18 not implicate the terms of the plan—and instead is based on the 23 No. 15 2150 cv 1 Aetna representative’s oral statements (regardless of whether those 2 statements accurately represent the plan’s terms)—McCulloch has 3 not alleged a colorable claim for benefits pursuant to § 502(a)(1)(B). 4 5 III. Davila, Prong 2 Finally, we proceed to the second prong of the Davila test. 6 “Under Davila, a claim is completely preempted only if ‘there is no 7 other independent legal duty that is implicated by [the] defendant’s 8 actions.’ The key words here are ‘other’ and ‘independent.’” 9 Montefiore, 642 F.3d at 332 (quoting Davila, 542 U.S. at 210); see also id. 10 at 328 (noting claim fails to satisfy second prong of Davila test where 11 it “could have been brought under ERISA, but also rests on ‘[an]other 12 independent legal duty that is implicated by [the] defendant s 13 actions’” (citation omitted)). Aetna argues that its “only duty arises 14 out of the terms and conditions of” the ERISA plan and that our 15 decision in Montefiore “squarely foreclose[s]” that an independent 16 duty may arise from a provider’s conversation with an insurer to 17 confirm a plan’s coverage. Appellees’ Br. at 31. 24 No. 15 2150 cv 1 We conclude that any legal duty Aetna has to reimburse 2 McCulloch is independent and distinct from its obligations under 3 the patient’s plan. McCulloch’s promissory estoppel claim against 4 Aetna arises not from an alleged violation of some right contained in 5 the plan, but rather from a freestanding state law duty grounded in 6 conceptions of equity and fairness. See generally 57 N.Y. JUR. 2D 7 Estoppel, Ratification, and Waiver § 51. Aetna is correct that, in 8 Montefiore, we found that an insurer’s statements in response to a 9 provider’s phone inquiry about plan coverage did not create a 10 “sufficiently independent duty.” Montefiore, 642 F.3d at 332. In 11 making this determination, however, we noted that the “pre 12 approval process [of calling the insurer] was expressly required by the 13 terms of the Plan itself and is therefore inextricably intertwined with 14 the interpretation of Plan coverage and benefits.” Id. We did not, as 15 Aetna argues and the district court found, establish a per se rule that 16 pre approval calls with an insurer could not give rise to an 17 independent legal duty. 25 No. 15 2150 cv 1 Here, unlike in Montefiore, McCulloch’s phone call with Aetna 2 was not in furtherance of an ERISA plan. McCulloch was not a valid 3 assignee of the plan, he had no preexisting relationship with Aetna, 4 and he was not required by the plan to pre approve coverage for the 5 surgeries that he performed.7 Instead, McCulloch called Aetna for 6 his own benefit to decide whether he would accept or reject a 7 potential patient who sought his out of network services. 8 McCulloch’s conversation with Aetna, therefore, is not governed by 9 the plan’s terms or “inextricably intertwined” with an interpretation 10 of the plan’s coverage and benefits. Id. at 332. 11 Franciscan Skemp Healthcare, Inc. v. Central States Joint Board 12 Health & Welfare Trust Fund is illustrative. See 538 F.3d at 594. In 13 that case, the health care provider called the plan administrator “to 14 verify [its] coverage of [a particular patient] and the relevant 15 services” before providing medical services. Id. at 596. A plan 7 Although the plan states that the insured is “responsible for obtaining the necessary precertification from Aetna prior to receiving services from an out of network provider,” it does not require an out of network provider to make a pre approval call. App’x at 89. 26 No. 15 2150 cv 1 representative “made oral representations that they were covered,” 2 and the provider treated the patient. Id. The Seventh Circuit found 3 that the provider’s state law claims of negligent misrepresentation 4 and 5 communications” between the provider and insurer, did not 6 duplicate, supplement, or supplant the ERISA exclusive remedy. Id. 7 at 598 601. The court made such a determination in part because 8 these claims were not brought by the plaintiff “as a beneficiary, nor 9 [as a party] standing in the shoes of a beneficiary” and the plaintiff 10 was not “arguing about plan terms” or “seeking to recover plan 11 benefits.” Id. at 601; see also Marin Gen. Hosp. v. Modesto & Empire 12 Traction Co., 581 F.3d 941, 950 (9th Cir. 2009) (finding provider’s 13 state law claims based on oral contract not completely preempted 14 where claims “are in no way based on an obligation under an ERISA 15 plan, and . . . would exist whether or not an ERISA plan existed”); cf. 16 Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 532 (5th 17 Cir. 2009) (finding independent obligation existed under a contract 18 between provider and insurer and noting provider’s state law estoppel, based on “alleged shortcomings in the 27 No. 15 2150 cv 1 claim’s “mere reference to or consultation of an ERISA plan” does 2 not mean such claims “duplicate, supplement, or supplant ERISA”); 3 cf. Geller v. County Line Auto Sales, Inc., 86 F.3d 18, 23 (2d Cir. 1996) 4 (finding, in context of § 514, state law fraud claim not preempted by 5 ERISA where “the essence of the plaintiffs’ . . . claim does not rely on 6 the . . . plan’s operation or management”). 7 For similar reasons, McCulloch’s promissory estoppel claim is 8 not completely preempted by ERISA. McCulloch does not seek to 9 enforce the patient’s right to reimbursement. He is suing in his own 10 right pursuant to an independent obligation. In other words, this is 11 simply a suit between a third party provider and an insurer based 12 on the insurer’s independent promise. See Stevenson, 609 F.3d at 60 13 (finding promissory estoppel claim not preempted by ERISA where 14 defendant’s promise to insured gave rise to legal liability, not 15 defendant’s obligations under ERISA plan).8 Aetna relies on Devlin v. Transportation Communication International Union, 173 F.3d 94, 102 (2d Cir. 1999) in support of its contention that “state law promissory estoppel claims are not immune from ERISA preemption.” Appellees’ Br. at 32 33. This case is inapposite. There, we affirmed the district court’s 8 28 No. 15 2150 cv 1 In sum, we conclude that because any legal duty Aetna has to 2 reimburse McCulloch is independent and distinct from its 3 obligations under the patient’s plan, Aetna has failed to satisfy the 4 second prong of the Davila test. CONCLUSION 5 6 Because we find that ERISA does not preempt McCulloch’s 7 state law promissory estoppel claim, we VACATE the district 8 court’s orders denying McCulloch’s motion to remand and 9 dismissing McCulloch’s complaint. We REMAND this action to the 10 district court with instructions to remand the case to New York state 11 court. determination that a promissory estoppel claim could not be pursued by the beneficiaries and participants of a heath care plan— not a third party health care provider—under ERISA § 514. Id. at 97, 101. We did not address whether such an action would be completely preempted under ERISA § 502, and we affirmed the district court’s determination in part because we found that plaintiffs had not presented “extraordinary circumstances” to pursue both an ERISA claim and a claim for promissory estoppel. Id. at 102.
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