ALLIANCE HEALTH v. NATIONAL PRESTO INDUS.

• Decision Date: 29 March 2005
• Docket Number: No. 23,301.,23,301.
• Parties: ALLIANCE HEALTH OF SANTA TERESA, INC., d/b/a Alliance Hospital of Santa Teresa and Alliance Behavioral Health Services of Southern New Mexico, Inc. d/b/a The Adolescent Pointe, Artc, Plaintiffs-Appellants, v. NATIONAL PRESTO INDUSTRIES, INC. and The Araz Group, John Doe No. 1, Mary Roe, and John Doe No. 2, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

113 P.3d 360

137 N.M. 537

ALLIANCE HEALTH OF SANTA TERESA, INC., d/b/a Alliance Hospital of Santa Teresa and Alliance Behavioral Health Services of Southern New Mexico, Inc. d/b/a The Adolescent Pointe, Artc, Plaintiffs-Appellants, v. NATIONAL PRESTO INDUSTRIES, INC. and The Araz Group, John Doe No. 1, Mary Roe, and John Doe No. 2, Defendants-Appellees.

No. 23,301.

Court of Appeals of New Mexico.

March 29, 2005.

Colbert N. Coldwell, Enrique Palomares, Guevara, Rebe, Baumann, Coldwell & Reedman, LLP, El Paso, TX, for Appellants.

Alice Tomlinson Lorenz, James J. Widland, Miller Stratvert, P.A., Albuquerque, NM, for Appellee, National Presto Industries, Inc.

CaraLyn Banks, Barney James Reeves, Reeves, Chavez, Albers, Anderson & Montes, P.A., Las Cruces, NM, for Appellee, Araz Group.

OPINION

KENNEDY, Judge.

{1} Alliance Health of Santa Teresa, Inc. and its affiliates (Alliance) appeals the district court's dismissal of its claim for monetary damages against Defendants National Presto Industries, Inc. (National Presto) and The Araz Group (Araz) (collectively, Defendants). In the course of litigation, dismissals of various claims against Defendants occurred at different times. Despite an early dismissal of claims against Araz, Araz continued to act as a party in the case, and we hold that its active role in the proceedings preserved Alliance's ability to timely appeal.

{2} In this opinion, we hold that a third-party healthcare provider is not preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1144 (2000) (ERISA), from seeking payment of claims based on theories sounding in contract and promissory estoppel under state law. In short, where such a party alleges that the insurer or its agent promised payment of claims to a provider, that promise stands independently, and can support a lawsuit that ERISA does not preempt to collect the promised funds. Accordingly, we reverse the grant of Defendants' motions to dismiss Alliance's state law claims owing to ERISA preemption, and remand for further proceedings.

{3} The controversy in this case is whether National Presto, Araz, or both, are obligated to pay for hospital services that Alliance rendered to a patient, and if so, how much. The question with which we are presented is whether a third-party health care provider such as Alliance can maintain an action under state law against entities that provide and administer health insurance for services provided to an insured based on the insurer's promises to pay or whether such state claims are preempted by ERISA.

{4} ERISA preemption has been generously called a "quagmire of conflicting precedent." Forest Springs Hosp. v. Ill. New Car & Truck Dealers Ass'n, 812 F.Supp. 729, 733 (S.D.Tex.1993). One commentator describes the area as one in which "courts cannot agree whether ERISA preempts [or does not preempt the cause of action] . . .; in fact, they cannot even agree on how to analyze the issue." Jay Conison, ERISA and the Language of Preemption, 72 Wash. U. L.Q. 619, 620 (1994). Against this less than promising history, we try to make clear one corner of the problem. We discern a pattern of law allowing courts to distinguish between the issues arising from ERISA-covered plans, plan principals, and plan administration, and those interests that are outside the perimeters of ERISA's preemptive interest.

The Parties and Their Claims

{5} Parties John Doe No. 2 (Doe 2), Mary Roe, and John Doe No. 1 are a child and his parents, respectively. Doe 2's father is employed by National Presto, whose employees receive benefits through a self-insured health plan. In this case, National Presto is an employer that provides a group health plan to its employees and, by virtue of its self-insurance, it is also an insurer. National Presto's plan is an ERISA plan. Doe 2 was covered as an insured beneficiary under his father's health plan through National Presto when he required psychiatric treatment on an inpatient basis.

{6} Alliance is a corporation that operates the mental health care facilities where Doe 2 was treated. Alliance claims that Araz is an agent of National Presto and the administrator of the plan. Araz claims that it is no more than a medical precertifier and not a benefits administrator, and that benefits documents make this distinction clear.

{7} The complaint alleges the following facts. In May 1999, Doe 2 was admitted to Alliance Hospital at Santa Teresa for inpatient psychiatric treatment. Subsequently, Araz took over case management of Doe 2's case. Araz, acting as representative or agent of National Presto, represented to Alliance that Doe 2 was indeed covered by National Presto's insurance benefit plan, which is subject to ERISA, and that Alliance would be paid for services rendered. On June 7, 1999, at Araz's request, Alliance Hospital discharged Doe 2, who then was transferred to The Adolescent Pointe, a residential treatment center also operated by Alliance. Over the following months, Alliance and Araz had discussions concerning Doe 2's coverage from the June transfer through December 1999, when Doe 2 was discharged from The Adolescent Pointe by Alliance.

{8} Araz and National Presto contend that residential treatment of the sort provided to Doe 2 was not covered by the plan. They claim that under the plan Doe 2 was covered for only thirty days of inpatient psychiatric treatment, not the residential treatment that was provided after the early part of June 1999, and that no representations were made to Alliance authorizing his treatment or the payment thereof. On October 26, 1999, Araz's consulting psychiatrist informed Alliance that in Araz's consideration, Doe 2 no longer met the criteria for medically necessary psychiatric services. Alliance continued to treat Doe 2 until his discharge in December 1999. {9} Doe 2's treatment was covered to some extent by National Presto, whose health plan was allegedly administered by Araz. Alliance was not paid for certain amounts of these services that it turns out are not covered under the insurance plan. The parties do not dispute that National Presto insured Alliance's patient to some extent. Alliance received payment for some services that all agree were covered by National Presto's plan. It is suing for payment for services that National Presto has declined to cover.

Procedural Background

{10} Alliance sued National Presto as the insurer under the plan and Araz as the plan administrator or the authorized agent administering National Presto's plan for promissory estoppel, fraud, and breach of contract based on Araz's promises to pay for Alliance's services.¹ These claims are based on state law. A fourth claim for payment of benefits due Doe 2 under ERISA was filed against National Presto alone. The district court dismissed the first three claims against both Defendants based on ERISA preemption on February 26, 2001. It later dismissed the separate ERISA claim against National Presto by summary judgment on May 23, 2002. Araz was dismissed from the suit on May 28, 2002.

{11} Following an April 2002 hearing on National Presto's motion for summary judgment, National Presto's attorney, having secured the approval of all counsel to the form of judgment, sent the judgment to the district court for filing on May 9, 2002. The district court filed the order on May 23, 2002. Araz had obtained an order dismissing "all claims" against it that was filed on May 28, 2002.

{12} Alliance immediately filed a motion for a new trial as to National Presto. It filed a motion for a new trial as to Araz on June 12, 2002, and then, on June 21, 2002, Alliance filed an amended consolidated motion for a new trial, incorporating the previous two motions, specifically requesting reconsideration of all orders entered previously, and for the granting of a new trial. Alliance then filed its notice of appeal on June 26, 2002, taking an appeal against both National Presto and Araz.

DISCUSSION

I. Timeliness of the Appeal

{13} Araz maintains that Alliance did not file a timely appeal following the dismissal of the state law claims against Araz. National Presto does not contest the timeliness of Alliance's appeal.

{14} As this case proceeded through the district court, all state law claims against National Presto and Araz were dismissed from the suit early on when the district court found ERISA preemption of those claims. Alliance filed a motion to reconsider that dismissal, to which Araz responded. The motion was denied. All this occurred by April 2001. Following this dismissal, no other claim remained naming Araz as a defendant. Only the claim against National Presto under ERISA for plan benefits due Doe 2 remained.

Araz's Potential Liability as National Presto's Agent Continued Beyond the Dismissal of State Law Claims

{15} The ERISA claim against National Presto remained active until May 23, 2002, when, during the trial of the remaining ERISA claim, the district court entered its order of summary judgment dismissing the claim as to National Presto. Araz followed up with a response to National Presto's motion for summary judgment that argued for dismissal of all counts against both National Presto and, specifically, Araz. Araz's request was granted and filed by the court on May 28, 2002. At the hearing on the motion, Araz acknowledged that while it was "[t]echnically" out of the case in February 2001, because allegations remained concerning the agency or apparent authority of Araz to bind National Presto, it "was still in the case simply because the ERISA allegations against National Presto remained." We believe that Araz's concession in this regard was correct.

The Remaining Question of Agency Kept the Potential Claim Against Araz Alive

{16} The question of an agent's actual or apparent authority to bind its principal is a question of fact which would preclude summary judgment. See, e.g., Romero v. Mervyn's, 106 N.M. 389, 390, 744 P.2d 164, 165 (1987)

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