AHS Hosp. Corp. v. Aetna Health, Inc.

• Decision Date: 22 May 2023
• Docket Number: Civil Action 22-6601
• Parties: AHS HOSPITAL CORP./MORRISTOWN MEDICAL CENTER, Plaintiff, v. AETNA HEALTH, INC., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

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AHS HOSPITAL CORP./MORRISTOWN MEDICAL CENTER, Plaintiff, v. AETNA HEALTH, INC., et al., Defendants.

Civil Action No. 22-6601

United States District Court, D. New Jersey

May 22, 2023

Not for Publication

OPINION & ORDER

John Michael Vazquez, U.S.D.J.

Presently before the Court is a motion to dismiss filed by Defendant Aetna Health Inc. d/b/a Coventry Health Care of Georgia, Inc. (“Coventry”). D.E. 15. Plaintiff filed a brief in opposition, D.E. 18, to which Coventry replied, D.E 19.^[1] The Court reviewed the parties' submissions and decided the motion without oral argument pursuant to Fed.R.Civ.P 78(b) and L. Civ. R. 78.1(b). For the reasons set forth below, Coventry's motion is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND

Coventry “provided for and/or administered” health care insurance coverage for T.F. and O.F., T.F.'s minor child.^[2] SAC ¶¶ 7, 9. Plaintiff pleads, upon information and belief, that Coventry alleges it is a self-funded health insurance plan under ERISA. Plaintiff, however, pleads that it cannot confirm or deny this allegation. Id. ¶¶ 4-5.

Plaintiff, a hospital, provided medical care to T.F. and O.F. in 2016. Id. ¶¶ 13-15, 19. Presumably before receiving care, T.F. signed a form entitled “Consent for Treatment, Payment and Health Care Operations Including Admissions and Medical Treatment Authorization” for herself and O.F. The form included an assignment of benefits provision.^[3] Id. ¶¶ 16-17. In addition, Plaintiff alleges that Coventry “expressly authorized and approved the aforesaid medical care and treatment” provided to T.F. and O.F. Id. ¶ 22. Coventry reimbursed Plaintiff for T.F.'s care but denied reimbursement for the care provided to O.F. Id. ¶¶ 20-24.

Plaintiff filed suit in the Superior Court of New Jersey, asserting three state law claims against Coventry. D.E. 1-1. Overall, Plaintiff alleges that Coventry should pay for O.F.'s medical care. Coventry removed the matter, based on this Court's diversity jurisdiction. See Notice of Removal ¶ 10. After obtaining leave, Plaintiff filed the SAC. In the SAC, Plaintiff asserts the same state law claims (First through Third Counts), in addition to two claims under ERISA Section 502(a), 29 U.S.C. § 1132(a)(1)(B) (Fourth and Fifth Counts). D.E. 12. Coventry filed the instant motion, seeking to dismiss the SAC pursuant to Rule 12(b)(6). D.E. 15.

II. STANDARD OF REVIEW

Rule 12(b)(6) permits a motion to dismiss for “failure to state a claim upon which relief can be granted[.]” Fed.R.Civ.P. 12(b)(6). For a complaint to survive dismissal under Rule 12(b)(6), it must contain sufficient factual matter to state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Further, a plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery will uncover proof of her claims.” Connelly v. Lane Constr. Corp., 809 F.3d 780, 789 (3d Cir. 2016). In evaluating the sufficiency of a complaint, district courts must separate the factual and legal elements. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009). Restatements of the elements of a claim are legal conclusions, and therefore, are not entitled to a presumption of truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however, “must accept all of the complaint's well-pleaded facts as true” and give a plaintiff the benefit of all reasonable inferences flowing therefrom. Fowler, 578 F.3d at 210.

III. ANALYSIS

1. Express Preemption

Coventry first argues that Plaintiff's state law claims must be dismissed because they are expressly preempted by Section 514(a), 29 U.S.C. § 1144(a). Def. Br. at 5-10. Plaintiff counters that the record does not establish that the plan at issue is governed by ERISA. Plf. Opp. at 11-12.

As discussed, in deciding a Rule 12(b)(6) motion to dismiss, a court assesses a plaintiff's well-pled factual allegations. Fowler, 578 F.3d at 210. Ordinarily, a court only considers allegations in the complaint, and no party needs to “establish” the existence any factual allegations in the pleading. Here, Plaintiff pleads, upon information and belief, that the Coventry plan is a self-funded plan under ERISA.^[4] SAC ¶ 4. Moreover, Plaintiff asserts two ERISA-based claims, to the extent the Coventry plan is a self-funded ERISA plan. Id. ¶¶ 64, 76-77. Despite Plaintiff's current argument to the contrary, Plaintiff adequately alleges that the plan is governed by ERISA. Accordingly, the Court turns to Coventry's preemption argument.

Section 514 preemption, or ordinary preemption, is an affirmative defense that a defendant can assert against a state-law based claim that relates to an ERISA employee benefit plan. Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co., 967 F.3d 218, 226 (3d Cir. 2020). State law claims that are preempted by Section 514 are typically dismissed for failure to state a claim. See, e.g., Sleep Tight Diagnostic Ctr., LLC v. Aetna Inc., 399 F.Supp.3d 241, 250-51 (D.N.J. 2019) (“Indeed, courts within this district have consistently dismissed claims for breach of contract, quantum meruit, promissory estoppel, and negligence when they arise from an ERISA-governed plan on the basis of [Section 514] preemption.”).

Section 514(a) provides as follows: “the provisions of this title and title IV shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan[.]” 29 U.S.C. § 1144(a). “State law,” for Section 514 preemption purposes, is defined as “all laws, decisions, rules, regulations, or State action having the effect of law, of any State.” 29 U.S.C. § 1144(c)(1). State common law claims may fall within this definition. Plastic Surgery Ctr., 967 F.3d at 226. The Supreme Court, however, limited the seemingly endless reach of Section 514(a), recognizing that “if ‘relate to' were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course.” Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312, 319 (2016) (quoting N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655 (1995)); see also Rutledge v. Pharm. Care Mgmt. Assoc., 141 S.Ct. 474, 480 (2020) (“Crucially, not every state law that affects an ERISA plan or causes some disuniformity in plan administration has an impermissible connection with an ERISA plan”). Thus, the Supreme Court “sought to craft a functional test for express preemption.” Plastic Surgery Ctr., 967 F.3d at 226.

Under this functional framework, a claim “relates to” a plan “if it has either (1) a ‘reference to' or (2) a ‘connection with' that plan.” Id. A state-law claim references an ERISA plan if it “act[s] immediately and exclusively upon ERISA plans” or is “premised on” the plan. Id. at 230. Recently, the Third Circuit “distille[ed] two overlapping categories of claims ‘premised on' ERISA plans.” Id. The categories are (a) “claims predicated on the plan or plan administration, e.g., claims for benefits due under a plan or where the plan is a critical factor in establishing liability” and (b) “claims that involve construction of the plan or require interpreting the plan's terms.” Id. at 230 (internal quotations and punctuation omitted). A state-law claim has a connection with an ERISA plan if it “require[s] providers to structure benefit plans in particular ways” and those that have “acute, albeit indirect, economic effects that force an ERISA plan to adopt a certain scheme of substantive coverage or effectively restrict its choice of insurers.” Rutledge, 141 S.Ct. at 480. “As a shorthand for these considerations,” courts must ask “whether a state law governs a central matter of plan administration or interferes with nationally uniform plan administration.” Id. (quoting Gobeille, 577 U.S. at 320).

In the First Count, Plaintiff seeks a declaratory judgment stating that Coventry must provide insurance coverage to O.F. and remit payment for the outstanding bills. Plaintiff pleads that Coventry must do so because Plaintiff timely submitted the claim, provided necessary documentation, and that Coventry “has an obligation to provide insurance coverage to its members and their dependents.” SAC ¶¶ 32-25. In the Second Count, Plaintiff pleads that as the active insurer, Coventry had a contractual duty to remit payment for the care provided to O.F. Id. ¶ 40. Plaintiff further pleads that it is a third-party beneficiary of any express or implied contract with Coventry, and presumably T.F. Id. ¶ 41. In the Third Count, Plaintiff asserts that as the insurer for O.F., Coventry has been unjustly enriched by its retention of the payment for O.F.'s outstanding medical bills. Id. ¶ 48.

Each of these three claims is dependent on Coventry's position as the insurer. In fact, Plaintiff's overarching theory is that it is owed payment pursuant to the plan. This is illustrated by Plaintiff's arguments in opposition to the motion. Plaintiff, for example, argues that “[t]here is no question that the instant suit is one being brought to recover benefits due under the terms of a plan.” Plf Opp. at 13. Accordingly, Plaintiff's state-law claims are predicated on the plan and its administration.^[5] See Menkes v. Prudential Ins. Co. of Am., 762 F.3d 285, 296 (3d Cir. 2014) (“Claims involving denial of benefits . . . require interpreting what benefits are due under the plan” and “are expressly preempted”); Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 278 (3d Cir. 2001) (“Thus, suits...