Healthcare Providers Provider Reimbursement

:: Provider Reimbursement Case Remanded to State Court

“Ultimately, the Court holds that significant portions of Plaintiff’s claims fail both prongs of the Pascack Valley test, and any portions of Plaintiff’s claims that survive the test, fail to provide a sufficient basis for the Court to exert supplemental jurisdiction over the other claims.”

N. Jersey Brain & Spine Ctr. v. Multiplan, Inc., Civil Action No. 17-05967 (MAS) (LHG), at *11-12 (D.N.J. Dec. 14, 2018)

In a provider reimbursement suit, the provider will often be confronted with ERISA preemption issues and typically in the context of the defendant’s attempt to remove the provider’s claims to federal court.  

Subsection (a) of 28 U.S.C. § 1441 provides that defendants may remove a state-court civil action to the appropriate federal district court if the district court has “original jurisdiction” over the matter.  So, in a provider reimbursement case, the question will be whether ERISA provides such jurisdiction.

In the MultiPlan case, the court considered whether the plaintiff’s claims were superceded by ERISA’s  civil-enforcement provisions found in 29 U.S.C. § 1132(a).   A claim falls within the ambit of that statute if “(1) the [plaintiff] could have brought its . . . claim under [Section] 502(a), and (2) no other legal duty supports the [plaintiff’s] claim.” Aetna Health Inc. v. Davila, 542 U.S. 200, 211-12 (2004).

Application of Pascack Valley Rule

To determine whether the provider’s claims are essentially ERISA claims (which results in complete preemption and supports removal), the court applied the rule in Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004).

#1  Under the first prong of the Pascack Valley test, the court examines (1) whether the plaintiff is the type of party that can bring a claim pursuant to 502(a)(1)(B) and (2) whether the actual claim that the plaintiff asserts can be construed as a colorable claim for benefits pursuant to Section 502(a)(1)(B).

#2  Under the second prong of the Pascack Valley test, a legal duty is independent if it is not based on an obligation under an ERISA plan, or if it would exist whether or not an ERISA plan existed.

The Court held that the first subpart of the first prong of the Pascack Valley test was only partially satisfied and the second prong was not satisfied at all.   Therefore, the provider’s claims were not tantamount to ERISA claims. Thus, the Court concluded that it lacked subject matter jurisdiction and remanded the case to state court.

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