Pryzbowksi v. U.S. Healthcare Inc.

• Decision Date: 14 November 2000
• Docket Number: No. 99-5920,A-,SUCH,99-5920
• Citation: 245 F.3d 266
• Parties: (3rd Cir. 2001) LINDA PRYZBOWKSI, APPELLANT v. U.S. HEALTHCARE, INC.; MEDEMERGE, P.A.; JOHN PILLA, M.D.; CAROL E. SGAMBELLURI, M.D.; KENT R. ELLIS, M.D.; JANE AND JOHN DOES 1-5; CORPORATIONSDEFENDANTS BEING NAMED FICTITIOUSLY TO REPRESENT INDIVIDUALS AND/OR BUSINESS ENTITIES WHOSE ACTIONS LED TO THE DELAYED PERFORMANCE OF SURGERY UPON LINDA PRYZBOWSKI Argued:
• Court: U.S. Court of Appeals — Third Circuit

Page 266

245 F.3d 266 (3rd Cir. 2001)

LINDA PRYZBOWKSI, APPELLANT v. U.S. HEALTHCARE, INC.; MEDEMERGE, P.A.; JOHN PILLA, M.D.; CAROL E. SGAMBELLURI, M.D.; KENT R. ELLIS, M.D.; JANE AND JOHN DOES 1-5; CORPORATIONS A-Z, SUCH DEFENDANTS BEING NAMED FICTITIOUSLY TO REPRESENT INDIVIDUALS AND/OR BUSINESS ENTITIES WHOSE ACTIONS LED TO THE DELAYED PERFORMANCE OF SURGERY UPON LINDA PRYZBOWSKI

No. 99-5920

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued: November 14, 2000

Filed March 27, 2001

On Appeal from the United States District Court for the District of New Jersey District Judge: Hon. Maryanne Trump Barry (D.C. No. 97-CV-03097) [Copyrighted Material Omitted]

Jerrold D. Goldstein (Argued) North Plainfield, NJ 07060, Attorneys for Appellant

Edward S. Wardell (Argued) Kelley, Wardell & Craig Haddonfield, NJ 08033, Attorney for U.S. Healthcare, Inc.

Melvin Greenberg (Argued) Greenberg, Dauber Epstein & Tucker Newark, NJ 07102, Attorney for Medemerge, P.A., John Pilla, M.D., Carol E. Sgambelluri, M.D., and Kent R. Ellis, M.D.

Herbert J. Stern Stern & Greenberg Roseland, NJ 07068, Attorney for Amicus Curiae-Appellee The Medical Society of New Jersey

Before: Sloviter, Ambro and Weis, Circuit Judges

OPINION OF THE COURT

Sloviter, Circuit Judge.

Before us is Linda Pryzbowski's appeal of two orders of the United States District Court for the District of New Jersey: (1) the December 3, 1997 order dismissing her claims against U.S. Healthcare for its delay in approving requested services after determining that those claims were completely preempted under § 502(a) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B); and (2) the September 8, 1999 order granting summary judgment on the state law claims in favor of the remaining defendants, Medemerge, P.A. and Dr. John Pilla, Dr. Carol E. Sgambelluri, and Dr. Kent R. Ellis ("the physician defendants"), on the ground that those claims were expressly preempted by § 514(a) of ERISA, 29 U.S.C. § 1144(a). See Pryzbowski v. U.S. Healthcare, Inc., 64 F. Supp. 2d 361 (D.N.J. 1999).

Our review of the District Court's orders granting dismissal and summary judgment based on ERISA preemption is plenary. See Travitz v. Northeast Dep't ILGWU Health & Welfare Fund, 13 F.3d 704, 708 (3d Cir. 1994). When reviewing the order granting dismissal, we must accept as true all the factual allegations in the complaint and draw all reasonable inferences from them. See Banks v. Wolk, 918 F.2d 418, 419 (3d Cir. 1990). When reviewing the order granting summary judgment, we must draw all reasonable inferences in favor of the non-moving party and may only affirm if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Travitz, 13 F.3d at 708.

I. FACTS AND PROCEDURAL POSTURE

Pryzbowski is enrolled in The Health Maintenance Organization of New Jersey Inc., a wholly owned subsidiary of U.S. Healthcare, Inc. (hereafter "U.S. Healthcare"), which is a health maintenance organization ("HMO") offered by the employer of Pryzbowski's husband under its employee benefit plan within the terms of ERISA. On November 10, 1993, Pryzbowski sought treatment from Medemerge, her primary care provider, for severe back pains that she had been experiencing for several days. Medemerge is a physician practice group under contract with U.S. Healthcare to provide health care services. Pryzbowski had previously undergone numerous surgeries for her back, the most recent having been performed by Dr. Giancarlo Barolat of Thomas Jefferson University Hospital in Philadelphia, all of which were covered under her previous health care plan. At Medemerge, she was treated at different times by Dr. John Pilla, Dr. Carol E. Sgambelluri, and Dr. Kent R. Ellis.

A CT scan performed on November 29, 1993 revealed disc degeneration and a large, extra-dural defect compressing the thecal sac, consistent with disc herniation. It also showed a previously implanted neurostimulator. Medemerge referred Pryzbowski to Dr. Alan Sarokhan, an orthopedic surgeon. Dr. Sarokhan wrote to Dr. Ellis, stating that "[s]he certainly needs a neurosurgical evaluation and needs one promptly.... It is my opinion that she will most likely find that the most recent operating surgeon is the only one in the area who will be likely to even approach this with any confidence." App. J, at J-2. On December 9, 1993, Pryzbowski went to see Dr. Aiden Doyle, a neurosurgeon, again through a referral from Medemerge. Dr. Doyle concluded, "she should go back to the surgeon who put it in. I have discussed this with them and obviously I really don't feel that I should be fiddling with that." App. K, at K-3.

Based on these two reports, Medemerge sent a request to U.S. Healthcare on December 15, 1993 for a consultation with Dr. Barolat, who was the neurosurgeon who last performed surgery on Pryzbowski. Dr. Barolat was not a participant in the particular plan offered by U.S. Healthcare. Pryzbowski's policy with U.S. Healthcare required that it give prior written authorization for services by non-participating providers and facilities. U.S. Healthcare approved the consultation and Dr. Barolat examined Pryzbowski on January 19, 1994. He concluded that surgery was needed and that the following specialists or specialists' services were required: spinal instrumentation and fusion by a separate orthopedic surgeon, pulmonary clearance and follow-up from Dr. Cohen, consultation with the Pain Service, and a psychological assessment and follow-up. The specialists to whom he referred were also associated with Thomas Jefferson University Hospital and outside U.S. Healthcare's network.

Over the next few months, Pryzbowski sought to get U.S. Healthcare to approve the recommended surgery by Dr. Barolat and the related services. In the meantime, Pryzbowski was seen by in-network specialists, including Dr. Edward Barrett (a mental health specialist), Dr. Alexander Levin (a pain management specialist), and Dr. M.A. Sarraf (a pulmonary specialist) between February 19, 1994 and April 18, 1994, and they transmitted their reports thereafter. It is evident that this was not satisfactory to Dr. Barolat, because a handwritten note dated May 3, 1994, headed "Stephanie - Dr. Barolat's office," states "Dr. will not perform the surgery unless specials [sic] at Jefferson in consult. USHC will not approve." Appellees' App., Lang Certification, Ex. A. U.S. Healthcare authorized the out-of- network specialists' services and the back surgery on June 30, 1994, and Dr. Barolat performed the surgery on Pryzbowski on July 7, 1994. Unfortunately, Pryzbowski continued to suffer from severe back pain after the surgery. Dr. Barolat later opined "that the persistence of the excruciating pain... was most likely caused by the significant delay that occurred between the onset of the symptomatology and the surgical intervention." App. M, at M-4.

Pryzbowski filed a complaint, later amended, against U.S. Healthcare, Medemerge, and three physicians with Medemerge in the Superior Court of New Jersey. She asserts six counts against U.S. Healthcare, which allege that U.S. Healthcare "negligently and carelessly delayed in giving its approval for the necessary surgery which the plaintiff... urgently needed," causing Pryzbowski severe and permanent injury, emotional distress, and future expenses for medical care and treatment (Count One); that U.S. Healthcare's delay was arbitrary and capricious (Count Two); and that, by delaying its approval for the surgery, U.S. Healthcare "acted with a willful and wanton disregard for the harm that would likely result to the plaintiff " (Count Three). The complaint also asserts that U.S. Healthcare's delay in approving the surgery breached its health insurance contract with Pryzbowski (Count Four); that the delay in surgery approval was "in bad faith" (Count Five); and that U.S. Healthcare breached its duty to "screen, hire, train and employ capable and responsible individuals... to make thoughtful and reasonable decisions as to healthcare" (Count Seven).

In the five counts Pryzbowski asserts against Medemerge and/or the physician defendants, she alleges that Medemerge "negligently and carelessly delayed in authorizing and/or obtaining authorization from U.S. Healthcare" for the surgery (Count Eight); that Medemerge, in failing to obtain authorization, "acted with a willful and wanton disregard for the harm that would likely result to the plaintiff " (Count Nine); that the physician defendants "negligently and carelessly delayed in authorizing and/or obtaining authorization" for the back surgery (Count Ten); and that they "acted with a willful and wanton disregard" in delaying authorization (Count Eleven). Another count alleges that Medemerge breached its duty to "screen, hire and employ capable and responsible individuals to serve as its agent, servants, and/or employees" (Count Six).

U.S. Healthcare removed the case to the United States District Court for the District of New Jersey. On December 3, 1997, the District Court granted U.S. Healthcare's motion to dismiss the counts against it (Counts 1-5, 7). Subsequently, Medemerge and the physician defendants moved for summary judgment on the remaining counts, which motion was granted on September 8, 1999. Pryzbowski now appeals both the December 3, 1997 dismissal and the September 8, 1999 summary judgment order. We have jurisdiction under 28 U.S.C. S 1291.

II. DISCUSSION

A. Claims Against U.S. Healthcare

There are two separate but related preemption issues that arise under ERISA, both of which are presented in this case. The application of express preemption, set forth in § 514(a) of ERISA, arises in connection with Pryzbowski's claims against Medemerge and the physician defendants. Her claims against U.S. Healthcare raise the issue of complete preemption, a jurisdictional concept based on § 502(a) of ERISA.

We first consider Pryzbowski's...