Napoletano v. CIGNA Healthcare of Connecticut, Inc.

• Decision Date: 23 July 1996
• Docket Number: Nos. 15282,15283,s. 15282
• Citation: 238 Conn. 216,680 A.2d 127
• Court: Connecticut Supreme Court
• Parties: , 65 USLW 2103, 20 Employee Benefits Cas. 2271 Robert S. NAPOLETANO et al. v. CIGNA HEALTHCARE OF CONNECTICUT, INC. F. Barrett HOLLIS et al. v. CIGNA HEALTHCARE OF CONNECTICUT, INC.

Page 127

680 A.2d 127

238 Conn. 216, 65 USLW 2103, 20

Employee Benefits Cas. 2271

Robert S. NAPOLETANO et al. v. CIGNA HEALTHCARE OF CONNECTICUT, INC.

F. Barrett HOLLIS et al. v. CIGNA HEALTHCARE OF CONNECTICUT, INC.

Nos. 15282, 15283.

Supreme Court of Connecticut.

Argued March 28, 1996.

Decided July 23, 1996.

William J. Sweeney, Jr., with whom, on the brief, was David M. Fisher, New Britain, for appellants (plaintiffs in each case).

Theodore J. Tucci, with whom, on the brief, were James A. Wade and Craig A. Raabe, Hartford, for appellee (defendant in both cases).

Richard Blumenthal, Attorney General, and Richard J. Lynch and Thomas J. Ring, Assistant Attorneys General, filed a brief for the state commissioner of health care access as amicus curiae.

Lissa J. Paris, Hartford, Elizabeth J. Stewart, New Haven, and Jeffrey S. Brody, Boston, MA, filed a brief for the Connecticut Business and Industry Association as amicus curiae.

Michael D. Neubert and Peter T. Fay, New Haven, filed a brief for the Connecticut State Medical Society et al. as amici curiae.

Before PETERS, C.J., and CALLAHAN, BERDON, KATZ and PALMER, JJ.

KATZ, Associate Justice.

These cases require us to consider primarily whether an action for misrepresentation and for violations of the Connecticut Unfair Trade Practices Act (CUTPA) pursuant to General Statutes § 42-110b, ¹ the Connecticut Unfair Insurance Practices Act (CUIPA) pursuant to General Statutes § 38a-816 ² and No. 94-235 of the 1994 Public Acts (P.A. 94-235), ³ as alleged by the plaintiffs in Hollis v. CIGNA Healthcare of Connecticut, Inc., and whether an action for breach of contract, breach of an implied covenant of good faith and fair dealing, tortious interference with business expectancies and violations of CUTPA and P.A. 94-235, as alleged by the plaintiffs in Napoletano v. CIGNA Healthcare of Connecticut, Inc., are preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq.

The plaintiffs in Hollis are patients who had commenced treatment with the plaintiff physicians in Napoletano. These physicians participated in the health care network offered by the defendant, CIGNA Healthcare of Connecticut, Inc. (CIGNA). After medical treatment had begun, and although the plaintiff patients had been provided with various assurances that their physicians, who met CIGNA's credentialing standards, would continue to participate in their health care plans, the plaintiff physicians were unilaterally terminated from the network.

Specifically, the nine plaintiffs in Hollis filed a thirty-six count complaint. F. Barrett Hollis, typical of the eight other plaintiffs, ⁴ alleged that he had commenced medical treatment with a physician who participated in CIGNA's health care providers network and who was subsequently unilaterally removed by CIGNA from its list of participating physicians. Specifically, Hollis alleged that several months after his treatment for cancer had begun, CIGNA sent him a letter announcing changes to its network that CIGNA said would help it to achieve its goal of establishing a "comprehensive network of quality doctors who meet [its] credentialing standards...." Because his doctor satisfied CIGNA's criteria but was nevertheless removed from its list, Hollis alleged that this letter misrepresented the credentialing standards. Three months later, CIGNA sent Hollis a second letter stating that should his doctor choose not to reenroll in its plan, Hollis' care would be transferred to another participating provider. According to Hollis, because his physician's removal from the network had been unilateral, this letter was also false. CIGNA then placed an advertisement in the Hartford Courant misrepresenting which physicians had been allowed to file applications to reenroll in CIGNA's network. The advertisement contained the name of Hollis' physician. Additionally, CIGNA sent Hollis a directory of providers, which included his physician, but failed to inform enrollees in its plan that participating physicians could be removed from the list without notice. On the basis of these alleged unfair and deceptive acts of misrepresentation and false advertising, Hollis alleged that CIGNA violated CUTPA and CUIPA. ⁵ Additionally, Hollis alleged that CIGNA had violated P.A. 94-235 by removing his physician from its provider network without advising Hollis of its criteria for removal and despite having listed his physician as a CIGNA provider with the commission on hospitals and health care (commission). Finally, Hollis alleged that CIGNA had committed acts of misrepresentation by removing Hollis' physician from its provider network even though, in the material it had filed with the commission, CIGNA had listed his physician's name and had failed to indicate that it could remove him without notice.

In his demand for relief as to the alleged violations of CUTPA, CUIPA and the allegation of misrepresentation, Hollis sought "[m]onetary damages in excess of $15,000.00 exclusive of interest and costs," "[s]uch other equitable relief as the Court deems necessary and proper," and, with respect to the CUTPA and misrepresentation counts, punitive damages pursuant to General Statutes § 42-110g(a) and reasonable attorney's fees pursuant to § 42-110g(d). As to the alleged violation of P.A. 94-235, Hollis sought a declaratory judgment to determine whether CIGNA had violated P.A. 94-235. He requested that his physician be reinstated as a participant in CIGNA's health care plan. Finally, Hollis sought such other equitable relief as the court deemed appropriate.

The nine plaintiffs in Napoletano were the physicians who had treated the plaintiffs in Hollis. ⁶ In a forty-five count complaint, each plaintiff alleged that he was a physician licensed to practice in Connecticut, that he had been a participating physician in the CIGNA health care network, having contracted with CIGNA through Pro Care Independent Practice Association, Inc. (Pro Care), ⁷ but that, despite satisfying all of CIGNA's credentialing standards, he had been unilaterally terminated without just cause. Each plaintiff also alleged that although he continues to be board certified in his area of specialty and continues to satisfy CIGNA's credentialing standards, he has been denied the opportunity to reenroll as a participating physician in the CIGNA network. Additionally, the complaint alleges that CIGNA had misrepresented to the plan beneficiaries, as well as to each plaintiff, that each plaintiff would remain in its directory of providers throughout the length of CIGNA's annual contract with the patient, that each plaintiff would have the choice whether to reenroll, and that it would be the decision of each plaintiff whether to reenroll. In light of this alleged conduct by CIGNA, the plaintiffs claim that CIGNA breached its contract with each plaintiff, breached its obligation to deal in a manner consistent with good faith and fair dealing, tortiously interfered with each plaintiff's business expectancies, and violated CUTPA. Finally, by removing each plaintiff from CIGNA's plan while being listed as a provider in CIGNA's filing with the commission as mandated by P.A. 94-235, by failing to include in that filing the name and address of the person to whom the physicians could apply for participation in the network, and by rejecting each plaintiff without advising him of the criteria employed, CIGNA allegedly violated P.A. 94-235.

In connection with the common law claims for breach of contract, breach of good faith and fair dealing and tortious interference with business expectancies, each plaintiff sought "[m]onetary damages in excess of $15,000.00 exclusive of interest and costs" and "[s]uch other equitable relief as the Court deems necessary and proper." For the CUTPA violation, each plaintiff requested monetary damages, punitive damages pursuant to § 42-110g(a), reasonable attorney's fees pursuant to § 42-110g(d) and such other equitable relief as is appropriate. Each plaintiff also sought a declaratory judgment to determine whether CIGNA's actions constituted violations of P.A. 94-235, to compel CIGNA's compliance with the requirements of the act, to preclude each plaintiff's termination from the network based upon CIGNA's previous noncompliance with the act and such other equitable relief as is appropriate.

CIGNA moved to strike all counts of both the Hollis and Napoletano complaints, claiming that they were preempted by ERISA. ⁸ The trial court, in a consolidated memorandum of decision, agreed and accordingly, granted CIGNA's motions to strike. ⁹ The plaintiffs in both cases appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c).

I

Following the filing of briefs in this appeal, sua sponte, we ordered the parties to file supplemental briefs addressing the following question: "Did all interested persons have reasonable notice of this action as required by Practice Book § 390(d)? If not, did the trial court have jurisdiction to consider [CIGNA's] motions to strike?"

Practice Book § 390 provides in relevant part that "[t]he court will not render declaratory judgments upon the complaint of any person ... (d) unless all persons having an interest in the subject matter of the complaint are parties to the action or have reasonable notice thereof." This court has consistently required strict adherence to this rule. Hopkins v. Pac, 176 Conn. 318, 319, 407 A.2d 979 (1978). Failure to comply with § 390(d) deprives the trial court of subject matter jurisdiction to render a declaratory judgment. Serrani v. Board of Ethics, 225 Conn. 305, 308, 622 A.2d 1009 (1993).

"This rule ... is not merely a procedural regulation. It is in recognition and implementation of the basic principle that due process of law requires that the rights of no man shall be judicially...