Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co.

Decision Date17 July 2020
Docket NumberNo. 18-3381, No. 18-3556,18-3381
Citation967 F.3d 218
Parties The PLASTIC SURGERY CENTER, P.A., Appellant v. AETNA LIFE INSURANCE COMPANY The Plastic Surgery Center, P.A., Appellant v. Aetna Health Inc
CourtU.S. Court of Appeals — Third Circuit

Michael M. DiCicco [ARGUED], James A. Maggs, Maggs & McDermott, 3349 Highway 138, Building C, Suite D, Wall, NJ 07719, Counsel for Appellant, The Plastic Surgery Center, P.A.

Colin J. O'Boyle [ARGUED], Gregory S. Voshell, Elliott Greenleaf, 925 Harvest Drive, Suite 300, Blue Bell, PA 19422, Counsel for Appellees Aetna Life Insurance Co, Aetna Health Inc.

Before: KRAUSE, MATEY, Circuit Judges, and QUIÑONES ALEJANDRO,* District Judge


KRAUSE, Circuit Judge.

This case presents an issue of first impression for this Circuit and of great importance to the healthcare industry: What remedies are available to an out-of-network healthcare provider when an insurer agrees to pay for the provision of services that are not otherwise available in-network and then reneges on that promise? To frame the question in statutory terms, in what circumstances does section 514(a) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq. , which preempts state laws that "relate to" ERISA plans, preempt an out-of-network provider from pursuing common law breach of contract, promissory estoppel, and unjust enrichment claims? The District Court held the provider's claims here were preempted. We disagree as to the breach of contract and promissory estoppel claims, so we will affirm, in part, and reverse, in part.


Aetna2 is an insurer for healthcare plans offered by various employers. Employees of two of those employers—J.L. and D.W.—had plans that did not authorize coverage of out-of-network services under normal circumstances: J.L.’s plan provided out-of-network benefits only in cases of "Urgent Care or a medical Emergency,"3 JA 239, and the procedure J.L. required fell into neither category, and D.W.’s plan did not provide out-of-network benefits at all.

As it turned out, however, both J.L. and D.W. required medical procedures that were not available in-network. J.L. needed bilateral breast reconstruction

surgery following a double mastectomy, and there were no in-network physicians available to perform the procedure. D.W. required facial reanimation surgery—a niche procedure performed by only a handful of surgeons in the United States. Both insureds were therefore referred for treatment to the Plastic Surgery Center, a New Jersey medical practice specializing in plastic and reconstructive surgery. As an out-of-network provider, however, the Center was concerned about how it would be compensated, so before agreeing to provide care, the Center contacted Aetna to confirm that it would make payment.

Aetna agreed. In J.L.’s case, "Aetna contracted with [the Center] to provide multi-stage breast reconstruction

surgery to J.L., along with related medical services, and to pay [the Center] a reasonable amount for those services according to the terms of the Plan." JA 201–02. This agreement was struck during telephone conversations between Aetna and Center employees. In D.W.’s case, as documented in various contemporaneous notes, a Center employee initially asked Aetna for a one-off "single case agreement" with a negotiated rate of payment, but reported back: "(Aetna is stating they don't neg an[y]4 longer it would be paid at the highest in[-]network level) however I will still attempt to get approval for neg payment based on no available providers." JA 65, 67 (capitalization altered). The notes next reflect that an Aetna employee called the Center back to confirm that Aetna "agreed to approve and pay for" D.W.’s surgery and to provide payment at the "highest in[-]network level." JA 59. Pursuant to these alleged oral agreements that "[the Center] and Aetna entered" in each case, the Center then provided the specified services "[i]n exchange for," respectively, payment of a "reasonable amount" and at the "highest in[-]network level" under the plans. JA 60, 204.

Once the Center performed the procedures, however, Aetna allegedly refused to live up to its end of the bargain. Of the $292,742 the Center billed for J.L.’s services, Aetna paid only $95,534.04.5 Of the $420,750 the Center billed for D.W.’s services, Aetna paid only $40,230.32. In both cases Aetna declined to pay the Center anything for some services and paid less than it allegedly agreed to for others, so the Center brought suit in New Jersey, claiming breach of contract, unjust enrichment, and promissory estoppel. Aetna moved to dismiss the claims as expressly preempted by section 514(a) or, alternatively, for failure to state a claim. In D.W.’s case, the Center then cross-moved to file a second amended complaint. The District Court granted Aetna's motion to dismiss in both cases, holding that section 514(a) expressly preempted all claims and, accordingly, denied the Center's motion to amend in D.W.’s case as futile. The Center timely appealed.


The District Court had jurisdiction under 28 U.S.C. § 1332, and we have jurisdiction under 28 U.S.C. § 1291. We review a dismissal on ERISA preemption grounds de novo, see Menkes v. Prudential Ins. Co. of Am. , 762 F.3d 285, 289 (3d Cir. 2014), and we will affirm if, accepting the veracity of factual allegations in the complaint and drawing all reasonable inferences in the plaintiff's favor, the plaintiff failed to plead "enough facts to state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Phillips v. Cty. of Allegheny , 515 F.3d 224, 231 (3d Cir. 2008).


Defining the contours of ERISA's express preemption provision is a nettlesome task. To frame the particular inquiry here, we review, first, the statutory backdrop for our decision and, second, relevant developments in the healthcare industry. With the perspective they provide, we then turn to the Center's claims.

A. Statutory Background

In 1974, in response to mounting public discontent with a pension system that often failed to provide employees with promised benefits, Congress enacted ERISA, which set forth uniform federal standards for not only pension plans, but also welfare plans—a class of benefit plans in which J.L.’s and D.W.’s healthcare plans fall.6 Pub. L. No. 93-406, 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq . ; see Massachusetts v. Morash , 490 U.S. 107, 112–13, 109 S.Ct. 1668, 104 L.Ed.2d 98 (1989) ; DiFelice v. Aetna U.S. Healthcare , 346 F.3d 442, 454 (3d Cir. 2003) (Becker, J., concurring). ERISA's stated goal was "to promote the interests of employees and their beneficiaries in employee benefit plans" by ensuring benefit plans were well managed and would not leave plan participants short-changed. Shaw v. Delta Air Lines, Inc. , 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) ; see also 29 U.S.C. § 1001(b). To achieve this goal, ERISA "impose[d] participation, funding, and vesting requirements on pension plans" and "set[ ] various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility, for both pension and welfare plans." Shaw , 463 U.S. at 91, 103 S.Ct. 2890.

These rules protect plan "participants,"7 i.e., employees eligible to receive benefits under the plan, and "beneficiaries,"8 i.e., individuals designated by participants or the terms of the plan to receive benefits. For example, plans are required to share information about benefits with participants and beneficiaries, and to provide the Secretary of Labor with an annual report on the plan's financial health. See 29 U.S.C. §§ 1021, 1022, 1023, 1024, 1025 ; Gobeille v. Liberty Mut. Ins. Co. , ––– U.S. ––––, 136 S. Ct. 936, 944–45, 194 L.Ed.2d 20 (2016) (detailing requirements). Those involved in the management of plans, i.e., plan "fiduciar[ies],"9 must also act "for the exclusive purpose of ... providing benefits to participants ... [and] defraying reasonable expenses of administering the plan." 29 U.S.C. § 1104(a)(1)(A).

To provide a uniform enforcement mechanism for these rules and requirements and to guarantee that the cost of compliance would not be prohibitive, Congress also put in place two additional, complementary statutory provisions. First, it established federal causes of action under section 502(a) that form "a carefully integrated civil enforcement scheme." Ingersoll-Rand Co. v. McClendon , 498 U.S. 133, 137, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) (internal quotation marks and citation omitted). Section 502(a) thus created a federal cause of action for plan beneficiaries and participants to recover benefits due under a plan or to enforce the terms of the plan. 29 U.S.C. § 1132(a)(1)(B).10

Second, to make clear that ERISA's mandates supplanted the patchwork of state law previously in place and to ensure that plans were not crippled by the administrative cost of complying with not only ERISA, but also innumerable, potentially conflicting state laws, see Gobeille , 136 S. Ct. at 943–44 ; Menkes , 762 F.3d at 293, Congress enacted section 514(a)—a broad express preemption provision, which "supersede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a) ; see Ingersoll-Rand , 498 U.S. at 138, 111 S.Ct. 478. The scope of "[s]tate laws" that may "relate to" a plan is expansive, encompassing "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c)(1). This includes not only state statutes, but also common law causes of action. See Menkes , 762 F.3d at 294.

Recognizing that "[i]f ‘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," N.Y. State Conference of Blue Cross &...

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