Dukes v. US Health Care Systems of Pennsylvania

• Decision Date: 17 March 1994
• Docket Number: Civ. A. No. 93-0577.
• Citation: 848 F. Supp. 39
• Parties: Cecilia DUKES, Trustee ad litem of the Estate of Darryl Dukes, Deceased v. UNITED STATES HEALTH CARE SYSTEMS OF PENNSYLVANIA, INC.; Germantown Hospital and Medical Center; William W. Banks, M.D.; Charles R. Drew Mental Health Center; and Edward B. Hosten, M.D.
• Court: U.S. District Court — Eastern District of Pennsylvania

848 F. Supp. 39

Cecilia DUKES, Trustee ad litem of the Estate of Darryl Dukes, Deceased v. UNITED STATES HEALTH CARE SYSTEMS OF PENNSYLVANIA, INC.; Germantown Hospital and Medical Center; William W. Banks, M.D.; Charles R. Drew Mental Health Center; and Edward B. Hosten, M.D.

Civ. A. No. 93-0577.

United States District Court, E.D. Pennsylvania.

March 17, 1994.

Stephen C. Josel, Attarah B. Feenane, Stephen C. Josel & Assoc., P.C., Philadelphia, PA, for Cecilia Dukes.

Richard M. Simins, Gilbert F. Casellas, Arline L. Bayo-Santiago, Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, for U.S. Health Care.

Pamela A. LaTorre, James I. Devine & Associates, Plymouth Meeting, PA, Alan S. Gold, Monaghan & Gold, P.C., Elkins Park, PA, for Germantown Hosp. & Medical Center, William W. Banks, M.D. and Charles R. Drew Mental Health Center.

Joseph Goldberg, Philadelphia, PA, Pamela A. LaTorre, James I. Devine & Associates, Plymouth Meeting, PA, for Edward B. Hosten, M.D.

MEMORANDUM AND ORDER

DITTER, District Judge.

This case was originally brought in state court and involves allegations of negligence on the part of two doctors, two medical centers, and a health maintenance organization ("HMO"). United States Health Care Systems of Pennsylvania, Inc. ("USHC"), the HMO, has moved to dismiss the claims against it on the ground that the state claims are pre-empted by ERISA. For the reasons set forth below, USHC's motion to dismiss Counts I and II will be granted. Plaintiff's motion to remand will be denied in part and granted in part: counts I and II will not be remanded; counts III through X will be remanded.

I. FACTS

Plaintiff's decedent, Darryl Dukes, belonged to an employee group health plan administered by USHC. In August, 1990, Mr. Dukes sought medical attention for various complaints. He visited Dr. William W. Banks, M.D., who ordered blood tests, which Germantown Hospital allegedly refused to perform. Decedent visited another doctor, Dr. Edward B. Hosten, M.D., the next day. Dr. Hosten ordered a blood test, which was performed. Decedent's condition apparently worsened and he was admitted to Germantown Hospital, where he died three days later.

Plaintiff, Cecilia Dukes, brought actions in state court against Doctors Banks and Hosten, who had treated Mr. Dukes; Germantown Hospital and Charles R. Drew Mental Health Center, where Drs. Banks and Hosten worked; and USHC. USHC removed Ms. Dukes' suit to this court, contending that her state claims were in fact ERISA claims subject to original jurisdiction here, pursuant to 28 U.S.C. § 1331.¹

In her third amended complaint,² plaintiff makes two claims against USHC. In Count I, a survival action, plaintiff alleges in paragraph 26 that the acts of the defendant doctors and hospitals are imputed to USHC because Mr. Dukes looked to USHC for care and USHC held out the other defendants as its agents and employees. Paragraph 27 then alleges certain negligent acts on the part of USHC including failure to exercise reasonable care in selecting, retaining, screening, monitoring, and evaluating the other defendants. In Count II, a wrongful death action, plaintiff incorporates previous allegations and, in paragraph 35, repeats from paragraph 27 the allegations of USHC's particular acts of negligence. In short, plaintiff contends USHC is liable on a theory of vicarious liability and for its own negligence.

As with the other complaints, USHC has moved to dismiss the claims against it, arguing that the claims are "related to" an ERISA plan and are therefore pre-empted by ERISA.

II. DISCUSSION

In crafting ERISA, Congress adopted a broad pre-emption clause. 29 U.S.C. § 1144(a). That section, ERISA's Section 514(a), provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." See Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990) (emphasis added) (describing "conspicuous" breadth of ERISA's pre-emption clause). Pre-emption applies both to state statutory and common law claims. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987). It follows that if a cause of action brought under state law provisions has some connection with or reference to an employee benefit plan, it "relates" to that plan for ERISA purposes and is governed solely by ERISA. Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). Despite the broad scope of the pre-emption clause, there are limits. See, e.g., Mackey v. Lanier Collection Agency & Serv., 486 U.S. 825, 833, 108 S.Ct. 2182, 2187, 100 L.Ed.2d 836 (1988) (state garnishment of ERISA welfare benefit plan not preempted; dicta states that ERISA plans can be sued for other, run-of-the-mill state law violations such as unpaid rent, failure to pay creditors, and torts which are unrelated to the plan's administration).

Several courts in this district and elsewhere have held that ERISA pre-empts state claims that seek to hold an HMO liable for injuries resulting from the HMO's own negligent administration of cost-containment procedures and funding decisions. Kuhl v. Lincoln Nat'l Health Plan, 999 F.2d 298, 303 (8th Cir.1993) (ERISA pre-empts plaintiff's claim against HMO for denying surgery pre-certification), cert. denied, ___ U.S. ___, 114 S.Ct. 694, 126 L.Ed.2d 661 (1994); Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1331 (5th Cir.) (ERISA pre-empts claim for erroneous medical decision made in context of determining plan benefits), cert. denied, ___ U.S. ___, 113 S.Ct. 812, 121 L.Ed.2d 684 (1992); Elsesser v. Hospital of the Phila. College of Osteopathic Medicine, 802 F.Supp. 1286, 1290-91 (E.D.Pa.1992) (ERISA pre-empts direct liability claim for failure to provide funding for medical device); Kohn v. Delaware Valley HMO, No. 91-2745, 1991 WL 275609, at *5 (E.D.Pa. Dec. 20, 1991) (same). The basis for ERISA preemption in those cases is that a claim for failure to pay a benefit claim or pre-approve a procedure has an obvious connection or reference to a benefit plan and therefore "relates" to it.

Some courts in this district have held, however, that ERISA does not pre-empt state law claims against an HMO sued on a theory of vicarious liability generally or ostensible agency specifically³. Stratton v. Bryant, No. 92-3873, 1992 U.S.Dist. LEXIS 18050, at *8 (E.D.Pa. Nov. 18, 1992) (plaintiff's claim alleging vicarious liability of HMO which recommended allegedly negligent doctor not pre-empted); Elsesser, 802 F.Supp. at 1290 (plaintiffs' claim alleging vicarious liability of HMO for actions of physician acting ostensibly as HMO's agent not preempted); Kohn, 1991 WL 275609 at *2 (same); Independence HMO v. Smith, 733 F.Supp. 983, 988 (E.D.Pa.1990) (same). These cases conclude that the negligence claims have nothing to do with a denial of rights under a benefit plan since they do not affect the regulatory scheme devised by Congress in ERISA and thus are not sufficiently "related to" ERISA so as to warrant pre-emption. E.g., Stratton, 1992 U.S.Dist. LEXIS 18050 at *8; Smith, 733 F.Supp. at 988.

In my view, the same connections to a plan and policy reasons apply whether the claim is for the HMO's own negligence or is being asserted against the HMO on the theory of vicarious liability.

To sustain a claim under a theory of ostensible agency, a plaintiff must show that he or she looked to the HMO for medical care and that the HMO held out the supposedly negligent doctor as its employee. Elsesser, 802 F.Supp. at 1289-90; Boyd v. Albert Einstein Med. Ctr., 377 Pa.Super. 609, 547 A.2d 1229, 1233 (1988). Paragraph 26 of plaintiff's complaint follows the Elsesser language and alleges that her husband looked to USHC (rather than to the individual doctors) for care, and that USHC held out those doctors and hospitals as its agents and employees. This language adequately sets forth a claim based on ostensible agency.⁴ I conclude, however, that ERISA's pre-emption provision encompasses claims that are based on a theory of ostensible agency for two reasons: First, any ostensible agency claim must be made on the basis of what the benefit plan provides and is therefore "related" to it. Second, the treatment received must be measured against the benefit plan and is therefore also "related" to it.

A claim against an HMO based on the ostensible agency of a physician will necessarily involve an examination of what representations were made to its members to determine if the HMO in fact "held out" the physician as its employee. In this case, for example, in order to determine if USHC held out Drs. Hosten and Banks as its employees, the court would have to probe the information USHC provided to Mr. Dukes and how USHC described the relationship between itself and the doctors and hospitals. USHC did not give Mr. Dukes such information in a vacuum. Rather, it would only have done so as part of some description or explanation of the benefit plan. A claim based on such references, descriptions, or explanations is "related to" the benefit plan. Matters relating to a benefit plan are pre-empted by ERISA.

The second reason is equally persuasive: a medical malpractice claim against an HMO, whether couched in direct or vicarious liability terms relates to the benefit plan⁵. One who enrolls in an HMO is assured of medical services of a given extent and quality. A malpractice claim asserts the services provided did not measure up to the benefit plan's promised quality. The question is one of relating plan performance to plan-promise, and is therefore pre-empted by ERISA. See William A. Chittenden, III, "Malpractice Liability and Managed Health Care: History and Prognosis," 26 Tort & Insur.L.J. 451 (Spring 1991).

Two courts have held recently that ERISA pre-empts state law negligence claims against a benefit plan for the alleged malpractice of the plan's providers because the claims...