Psychiatric Institute v. CONNECTICUT GENERAL, Civ. A. No. 90-2391 SSH.

• Decision Date: 03 January 1992
• Docket Number: Civ. A. No. 90-2391 SSH.
• Citation: 780 F. Supp. 24
• Parties: The PSYCHIATRIC INSTITUTE OF WASHINGTON, D.C., INC., Plaintiff, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and Michael T. White, Defendants.
• Court: U.S. District Court — District of Columbia

780 F. Supp. 24

The PSYCHIATRIC INSTITUTE OF WASHINGTON, D.C., INC., Plaintiff, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and Michael T. White, Defendants.

Civ. A. No. 90-2391 SSH.

United States District Court, District of Columbia.

January 3, 1992.

COPYRIGHT MATERIAL OMITTED

Robert O. Johnson, Bethesda, Md., for plaintiff.

Theresa E. Cummins, Daniel J. Conway, Arlington, Va., for defendants.

OPINION

STANLEY S. HARRIS, District Judge.

This matter is before the Court on defendant Connecticut General Life Insurance Company's (CGL's) motion to dismiss the action and on its motion to strike plaintiff's pleading captioned "Reply." CGL bases its motion to dismiss on the assertion that plaintiff's four state law claims are preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. ("ERISA"), and bases its motion to strike on the assertion that plaintiff's pleading violates Local Rule 108. Upon consideration of the entire record, the Court denies defendant's motion to strike, denies the motion to dismiss with regard to Counts II and IV of the complaint, and grants the motion to dismiss with regard to Counts I and III of the complaint. The Court's dismissal of Counts I and III is without prejudice to plaintiff's right to file an amended complaint within 30 days of the date of this Opinion.

BACKGROUND

Plaintiff, The Psychiatric Institute of Washington, D.C., Inc. (PIW), is a healthcare provider seeking compensation for services rendered to defendant Michael T. White. White was a participant in a group health insurance plan provided by defendant CGL through White's employer, Comsite. PIW treated defendant White as an inpatient between July 6, 1988, and August 1, 1988, and between September 3, 1988, and September 9, 1988. Having received only partial compensation for those services, PIW filed this action in the Superior Court of the District of Columbia. Defendant CGL subsequently removed the case to this Court, based on 28 U.S.C. § 1331 and 29 U.S.C. § 1132(a)(1)(B). See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

PIW contends that, at the outset of each period of treatment, it obtained oral verification of defendant White's coverage from defendant CGL. PIW also alleges that, prior to each admission, White entered into a written agreement with PIW, authorizing PIW to file insurance claims on his behalf and assigning his insurance benefits to PIW. At the time of White's second admission to PIW, plaintiff mailed CGL an insurance benefits questionnaire requesting written confirmation of the health insurance coverage available to White. However, plaintiff did not receive the completed questionnaire from CGL until after the conclusion of White's second period of treatment. The document stated that White's health insurance coverage had been canceled as of July 5, 1988, one day prior to White's first admission to PIW. Although CGL paid PIW $4,385.60 on August 26, 1988, it subsequently refused to pay the remaining $14,388.15 in charges for White's treatment at PIW.

On its face, PIW's complaint is grounded entirely on state law. The complaint consists of two contract claims against CGL, Count I and Count III, a claim of promissory estoppel against CGL, Count IV, and a contract claim against White, Count II. PIW seeks damages from defendants CGL and White in the amount of $14,388.15, prejudgment interest at the statutory rate from September 9, 1988, and attorneys' fees of $2,158.22.

DISCUSSION

1. CGL's Motion To Strike.

Defendant CGL moved to strike plaintiff's pleading captioned "Reply," based on Local Rule 108 and Fed.R.Civ.P. 12(f). Defendant argues that the pleading should be stricken because it was not accompanied by Points and Authorities as required by Rule 108, because it did not meet Rule 108's requirement that opposing Points and Authorities be filed "within eleven (11) days of the date of service or at such other time as the court may direct," and because it constitutes an unauthorized additional pleading. In the interests of developing a more complete record, the Court exercises its discretion and denies defendant's motion to strike.

2. CGL's Motion To Dismiss.

A. The Existence of an ERISA "Plan."

Plaintiff PIW contends that CGL's Motion To Dismiss is "premature," because plaintiff has not alleged that the contract of insurance between White and CGL was part of an ERISA "plan," and because the evidence in the record does not conclusively demonstrate that the health insurance benefits in this case were governed by ERISA. Section 1003 of ERISA provides that with limited exceptions, ERISA "shall apply to any employee benefit plan if it is established or maintained — (1) by any employer engaged in commerce or in any industry or activity affecting commerce." 29 U.S.C. § 1003(a)(1). Although PIW's complaint does not explicitly allege the existence of an ERISA plan, plaintiff does allege the existence of a plan of the kind ERISA covers. PIW's complaint alleges that "defendant CGL was the health benefits insurer for employees of Comsite, a corporation which is located in Beltsville, Maryland, pursuant to a contract of insurance," and that White was "an employee of Comsite and a participant in the health insurance plan of his employer." Furthermore, the insurance benefits questionnaire completed by CGL and attached to PIW's complaint lists "Comsite" as the "Group Name" for the policy covering White until July 5, 1988, the date on which CGL alleges White's benefits were canceled. In light of PIW's pleadings, the Court concludes that defendant's motion to dismiss is not premature.¹

B. Claims Against CGL Based on Breach of Insurance Contract.

Counts I and III set forth state law claims alleging that CGL breached its contract of insurance with White. The complaint asserts that CGL is contractually obligated to pay PIW the remaining charges for services rendered to White, due to PIW's status as an assignee of White's healthcare benefits (Count I) or as a third-party beneficiary to White's contract of insurance with CGL (Count III). CGL contends that ERISA preempts these contractual claims arising from state common law, because they "relate to" an employee benefit plan. The Court agrees.

ERISA preempts every state law that "relates to ... employee benefit plans" classified under § 1003(a), unless the state law "regulates insurance, banking, or securities." 29 U.S.C. §§ 1144(a), 1144(b). "A law `relates to' an employee benefit plan, in the normal sense of the phrase, if it has connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983); see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987). "In order to regulate insurance, a law must not just have an impact on the insurance industry, but must be specifically directed toward that industry." Pilot Life, 481 U.S. at 50, 107 S.Ct. at 1553; see Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985). Thus, to be exempt from preemption, a law must regulate the "business of insurance," as defined for the purposes of the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq. Metropolitan Life, 471 U.S. at 742-744, 105 S.Ct. at 2390-91 (citing Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129, 102 S.Ct. 3002, 3008, 73 L.Ed.2d 647 (1982)).

Ultimately, "`the question whether a certain state action is pre-empted by federal law is one of congressional intent.'" Pilot Life, 481 U.S. at 45, 107 S.Ct. at 1552 (quoting Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208, 105 S.Ct. 1904, 1909, 85 L.Ed.2d 206 (1985)); see Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 8, 107 S.Ct. 2211, 2215, 96 L.Ed.2d 1 (1987). Congress intended ERISA to provide a comprehensive and exclusive civil enforcement scheme that would protect the interests and contractually-defined benefits of ERISA-plan participants and beneficiaries. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 955, 103 L.Ed.2d 80 (1989); Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148, 105 S.Ct. 3085, 3093, 87 L.Ed.2d 96 (1985); Shaw, 463 U.S. at 90, 103 S.Ct. at 2896. Congress also intended to protect employers from the burden of accommodating diverse and conflicting state laws regulating the administration of employee benefit plans. Fort Halifax, 482 U.S. at 10-11, 107 S.Ct. at 2217. To accomplish these ends, Congress replaced the original, limited preemption clause, contained in the bill that became ERISA, with "deliberately expansive" provisions. Pilot Life, 481 U.S. at 46, 107 S.Ct. at 1552. Section 502(a) of ERISA contains "`six carefully integrated civil enforcement provisions which ... provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.'" Pilot Life, 481 U.S. at 54, 107 S.Ct. at 1556 (quoting Massachusetts Mut. Life, 473 U.S. at 146, 105 S.Ct. at 3092).²

State law contract claims brought by plan participants and by health care providers that have rendered services to plan participants are preempted by ERISA because they "relate to" employee benefit plans and are not based on state laws "which regulate insurance." Thayer v. Group Hospitalization and Medical Servs., Inc., 674 F.Supp. 924, 925 (D.D.C. 1987).³ PIW's state law contract claims not only "relate" to an employee benefit plan, they depend on an employee benefit plan. Alleging a breach of the insurance contract between CGL and White, PIW seeks to recover the healthcare benefits provided under the contract. PIW's allegations and requested relief are centrally "connected to the concerns addressed by ERISA," Hartle v. Packard Elec., 877 F.2d 354, 356 (5th Cir.1989), and directly "affect relations among principal ERISA entities — the employer, the plan fiduciaries, the plan, and the beneficiaries...