Attachment Of Proof Of Benefit Assignment May Prove Critical To Removal

The second prong of the Pascack test is also satisfied. Plaintiff identifies no other “independent legal duty” that would support its claims. Plaintiff’s argument that this is a “rate of payment” case is of no avail. 6 Plaintiff admits that it has no contractual relationship with any Defendants. At the same time, it argues that its right to payment is dependent upon assignments of benefits. The amount of payment (i.e., the “rate”) at issue would necessarily implicate the rates in the ERISA plans under which Plaintiff claims it has received assignments.

Sportscare of Am., P.C. v. Multiplan, Inc., 2011 U.S. Dist. LEXIS 6295 (D.N.J. Jan. 24, 2011)

The plaintiff in this case,  Sportscare of America, P.C. (”Plaintiff”), is a physical therapy facility.  The plaintiff filed its complaint in New Jersey Superior Court, naming twenty-one insurance providers and one medical claim processing company.

The gravamen of the complaint, “couched in terms of fraud, negligence, and interference with contract,” consisted of a claim for additional reimbursement.

In short, Plaintiff submitted claims to the health insurers and received some payment but at a rate that it claims is improper. Plaintiff apparently sues for the difference between what Plaintiff was paid and what it thinks it should have been paid on various insurance claims . . .

ERISA intrudes upon these controversies, of course, and requires its due, whether in argument and satisfaction that it does not apply, or in acknowledgment that it does and the consequences that flow from that fact.  In this case, ERISA claimed the field.

The Third Circuit has some distinctive and influential case law on provider reimbursement issues stemming from Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. N.J. 2004).

In this case, however, the Court found most important the lack of foundation for removal of the case to federal court.

On its face, the Hospital’s complaint does not present a federal question. Rather, the complaint asserts state common law claims for breach of contract. The complaint does not expressly refer to ERISA and the rights or immunities created under ERISA are not elements, let alone essential elements, of the plaintiff’s claims. The possibility–or even likelihood–that ERISA’s pre-emption provision, 29 U.S.C. § 1144(a), may pre-empt the Hospital’s state law claims is not a sufficient basis for removal.

So the defendant’s removal was found wanting inasmuch as the only claims asserted by the plaintiff were state law claims.  Undoubtedly, the court could have found the image of a claim for benefits here.  Had the defendant proved assignments of benefits the matter may turned out that way.  But no assignments were before the court in the removal papers.

The court observed that:

As the party seeking removal, the Plan bore the burden of proving that the Hospital’s claim is an ERISA claim.  Accordingly, the Plan bore the burden of establishing the existence of an assignment. The Plan concedes that the record contains no evidence of an express assignment, whether oral or written, from either Psaras or Rovetto to the Hospital.

The mere argument that assignments should be assumed from the facts did not carry any weight.

The Plan argues that the Hospital’s claims arise under “the federal common law” of ERISA. On several occasions, we have predicated jurisdiction on a plaintiff’s invocation of the federal common law of ERISA.

Here, the Hospital’s complaint asserts a state law claim for breach of contract, and the federal common law of ERISA does not provide an element–essential or otherwise–of such a claim. The Plan may be correct that, in interpreting the Subscriber Agreement, the federal common law of ERISA displaces state law.

The capstone of the court’s decisional analysis rested on a key principal of preemption jurisprudence:

Nevertheless, potential defenses, even when anticipated in the complaint, are not relevant under the well-pleaded complaint rule.

Note: The importance of assignments varies from jurisdiction to jurisdiction.  This case illustrates that attachment of assignments to the removal papers (if they are available) is a good practice.

Testimony as to business practice may not carry the day:

The Plan offers the certification of Kathy Pridmore, the Plan’s Director of Medical Benefits, to support a finding of an assignment. Pridmore broadly declares that, in her experience, the Plan has “consistently followed the claims and claim review procedures” contained in the Summary Plan Description. The Plan argues that Pridmore’s declaration constitutes evidence of “routine practice” that supports an inference of an assignment. See Fed. R. Evid. 406. We disagree. Pridmore does not declare that the Plan routinely receives assignments prior to payment. In her recitation of the Plan’s “standard procedure for processing claims,” she does not even mention the execution of assignments by Plan participants or beneficiaries. As such, Pridmore’s certification cannot establish a routine practice relevant to this appeal, let alone satisfy the Plan’s burden of establishing federal subject-matter jurisdiction by a preponderance of the evidence.

On Remand – The plan can still argue ERISA preemption as a defensive proposition in state court.  It just failed to justify complete preemption warranting removal.

Practice Pointer – This case suggests that a provider reimbursement case filed in state court may have some advantages, subject to the point noted above regarding the situation on remand.