The opinion
Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
11-1-2004
Pascack Valley Hosp v. Local 464A UFCW
Precedential or Non-Precedential: Precedential
Docket No. 03-4196
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"Pascack Valley Hosp v. Local 464A UFCW" (2004). 2004 Decisions. Paper 113.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/113
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL Before: ALITO, SMITH, and
WALLACE, Circuit Judges*
UNITED STATES COURT OF
APPEALS (Filed: November 1, 2004)
FOR THE THIRD CIRCUIT
__________ Shea H. Lukacsko
Keith R. McMurdy (Argued)
No. 03-4196 Grotta, Glassman & Hoffman
__________ 75 Livingston Avenue
Roseland, NJ 07068
PASCACK VALLEY HOSPITAL,
INC.; John Sydlar
COMMUNITY MEDICAL CENTER, Maloof, Lebowitz, Connahan & Oleske
(LAWRENCE TAYLOR, DEBRA 127 Main Street
SAVERINO) Chatham, NJ 07928
v. Counsel for Appellant
LOCAL 464A UFCW WELFARE John M. Agnello
REIMBURSEMENT PLAN Kerrie R. Heslin
Carella, Byrne, Bain, Gilfillan,
Pascack Valley Hospital, Inc., Cecchi, Stewart & Olstein
5 Becker Farm Road
Appellant Roseland, NJ 07068
Michael T. Anderson (Argued)
On Appeal From The United States Davis, Cowell & Bowe
District Court 1701 K Street, N.W.
For The District Of New Jersey Suite 210
(D.C. Civil Nos. 02-cv-05974 Washington, DC 20006
& 03-cv-02813)
Counsel for Appellee
District Judge: The Honorable Dennis
M. Cavanaugh
__________
Argued June 16, 2004 *
The Honorable J. Clifford Wallace,
__________
Senior Circuit Judge for the United
States Court of Appeals for the Ninth
Circuit, sitting by designation.
1
I.
OPINION
The Plan is an “employee welfare
benefit plan” as defined by ERISA. 29
U.S.C. § 1002(1). 1 The Plan is a
SMITH, Circuit Judge.
reimbursement plan only; it reimburses
This case presents a question of participants and beneficiaries for out-of-
jurisdiction under the civil enforcement pocket medical expenses but does not
provision of the Employee Retirement itself provide medical care.
Income Security Act (“ERISA”), 29
MagNet, Inc. is an independent
U.S.C. § 1132(a). Pascack Valley Hospital
consultant. MagNet has organized a
(the “Hospital”) sued the United Food and
network of hospitals that have agreed to
Commercial Workers International Union
accept discounted payment for medical
Local 464A, AFL-CIO Group
services provided to beneficiaries of group
Reimbursement Welfare Plan (the “Plan”)
health plans in return for the plans’
in state court for breach of contract. The
promise to encourage beneficiaries to use
Plan removed the case to federal district
network hospitals. Network hospitals do
court and moved for summary judgment.
not contract directly with the plans.
The Hospital moved to remand. The
Instead, MagNet enters into separate
District Court held that the Hospital’s
contracts with individual plans, and
breach of contract claims against the Plan
separate contracts with individual
were completely pre-empted by ERISA
hospitals.
and therefore raised a federal question
supporting removal under 28 U.S.C. § Around 1995, the Plan entered into
1441(a). We hold that, under the well-
pleaded complaint rule, the Hospital’s
complaint does not present a federal 1
An ERISA Plan is a legal entity that
question that would support removal. We
can sue and be sued. 29 U.S.C. §
further hold that the Hospital’s state law
1132(d)(1). Accordingly, the term
breach of contract claims are not
“Plan” refers not only to the defendant in
completely pre-empted by ERISA’s civil
the underlying lawsuit and the appellee
enforcement provision because the
before this Court, but also to the
Hospital could not have brought its claims
underlying “[r]ules governing collection
under ERISA. We will therefore vacate
of premiums, definition of benefits,
the judgment of the District Court and
submission of claims, and resolution of
remand to that court with instructions that
disagreements over entitlement to
it, in turn, remand these proceedings to the
services” that make up an employee
state court whence they came.
welfare plan. Pegram v. Herdrich, 530
U.S. 211, 223 (2000).
1
a “Subscriber Agreement” with MagNet. reimbursement rate and that
In 1996, the Hospital entered into a Network Hospital is then
“Network Hospital Agreement” with entitled to bill and collect
MagNet. Section 2.1 of the Subscriber f r o m S u b s c r i b e r a nd
Agreement governs “Hospital payment,” Eligib le Person its
and provides that the discounted rate customary rate for services
offered by the Hospital will be forfeited rendered. If Subscriber fails
unless claims are timely paid: to make the payment, the
Network Hospital may
Subscriber . . . shall pay
pursue any remed ies
Network Ho spitals for
available against Subscriber
Covered Services furnished
and Eligible Person.
to Eligible Persons.
In 1999, the Hospital provided
Pursuant to a valid
medical services to Kimberly Rovetto and
assignment from Eligible
Betty Psaras. Both Psaras and Rovetto
Person, Subscriber . . . shall
were “Eligible Persons” under the
dir ectly pa y N e t w o rk
Subscriber Agreement, and the medical
H ospitals for Covered
services provided to Psaras and Rovetto
S e r v ic e s p r o v i d e d to
were “Covered Services” under the
Eligible Persons within
Subscriber Agreement. The Hospital
thirty (30) days after date of
alleges that the Plan failed to pay the
receipt of submitted Clean
Hospital for the services rendered to
Claims. . . .
Psaras and Rovetto according to the terms
For other non-clean claims, of the Subscriber Agreement. The
payment shall be made Hospital contends that claims for those
within thirty (30) days of services were properly submitted on April
receipt of all records and 15, 1999, and October 5, 1999. The
other information necessary Hospital further contends that it received
for proper claims payment on these claims at the discounted
adjudication. rate on June 8, 1999, and November 22,
1999, respectively. According to the
...
Hospital’s interpretation of § 2.1 of the
Wh ere o b l i g a ted, if Subscriber Agreement, the Plan’s failure
Subscriber fails to pay to pay these claims within thirty days of
within the appropriate time receipt effected a forfeiture of the
f ra m e, the Subscriber discounted rate provided in the Network
acknowledges that it will Hospital Agreement. The Hospital
lose the benefit of the therefore seeks to recover the allegedly
MagNet discounted forfeited discount from the Plan.
2
On October 23, 2002, the Hospital question. The District Court heard oral
filed suit in the Superior Court of New argument on the parties’ motions on
Jersey. September 25, 2003. The next day, on
September 26, 2003, the District Court
The Complaint alleges that the Hospital is
issued an Opinion and Order granting the
a third-party beneficiary to the Subscriber
Plan’s motion for summary judgment,
Agreement between MagNet and the Plan,
denying the Hospital’s cross-motion to
under which the Plan “became obligated to
remand, and dismissing the complaint
pay [the Hospital] for eligible medical
without prejudice. The District Court’s
services provided by [the Hospital],” and
two-page Opinion and Order states in
“was required to comply with certain terms
relevant part:
and conditions of [the Hospital’s] contract
with MagNet [i.e., the Network Hospital Defendant believing
Agreement], requiring payment in the time that Plaintiff’s state law
period specified in said contract.” The c la im s are completely
two-count complaint alleges that the Plan preempted by [ERISA] in
breached this contract by improperly that Plaintiff now stands in
taking a discount on the services provided the shoes of the Plan’s
to Psaras and Rovetto despite the Plan’s beneficiaries as assignee,
failure to make timely payment under the and therefore Defendant
Subscriber Agreement. 2 believes the facts show it is
entitled to judgment as a
The Plan removed the case to the
matter of law; and
District Court. Thereafter, the Plan moved
for summary judgment and the Hospital Plaintiff believing the
cross-moved to remand the case to state action is not preempted by
court. The parties’ motions focused on ERISA since Plaintiff is not
whether, under the doctrine of “complete a participant or beneficiary
pre-emption,” the Hospital’s state law under ERISA and therefore
breach of contract claims raised a federal there is no federal law
claim, and therefore the
matter should be remanded
2 to the state court; and
The Plan incorrectly states that
“[t]he Hospital’s complaint only claims This Court being in
unjust enrichment.” Appellee’s Br. at 2, agreement with and adopts
21-22. Although the Complaint does the reasoning of counsel for
allege that the Plan “has been unjustly Defendant as stated on the
enriched to the detriment of [the record, and further rejects
Hospital],” the Complaint explicitly the arguments put forth by
alleges that the Plan “breached” its counsel for Plaintiff; and
contractual obligations to the Hospital.
3
This Court agrees declined to do so and instead filed this
with and adopts the analysis appeal.
and holding as set forth in
28 U.S.C. § 1291 provides this
Charter Fairmount Institute,
Court with jurisdiction over a final order
Inc. v. Alta H ealth
dismissing a complaint as completely
Strategies, 835 F. Supp.
pre-empted. DiFelice v. Aetna U.S.
233; and
Healthcare, 346 F.3d 442, 445 (3d Cir.
This Court being 2003). “Generally, an order which
satisfied that [the doctrine of dismisses a complaint without prejudice is
com plete preem ption] neither final nor appealable because the
having been met in this deficiency may be corrected by the
case; and plaintiff without affecting the cause of
action.” Borelli v. City of Reading, 532
As this case falls
F.2d 950, 951 (3d Cir. 1976) (per curiam). 3
with in t h e “ c o m p l e te
If the plaintiff elects to stand on the
preemption” exception to
dismissed complaint, however, the order of
the well pleaded complaint
dismissal is final and appealable. Id. at
doctrine, removal to federal
951-52. At oral argument, counsel for the
court was proper, and
Hospital declared the Hospital’s intention
remand to state court would
to forego any ERISA claim it may have
be inappropriate . . . .
and to stand on its complaint. Counsel’s
declaration is sufficient to render the
District Court’s order final and appealable.
(Footnote omitted). The Hospital filed a
Remick v. Manfredy, 238 F.3d 248, 254
timely notice of appeal on October 22,
(3d Cir. 2001). This Court exercises
2003.
plenary review over a district court’s
II. exercise of jurisdiction and order of
dismissal. DiFelice, 346 F.3d at 445;
Before turning to the District
Court’s removal jurisdiction, we must first
address our own appellate jurisdiction. 3
That the District Court also denied
Although the District Court purported to
the Hospital’s motion to remand does not
grant summary judgment in favor of the
make the court’s order appealable.
Plan, the District Court actually dismissed
Caterpillar Inc. v. Lewis, 519 U.S. 61, 74
the H ospital’s complaint without
(1996) (“An order denying a motion to
prejudice. That disposition allowed the
remand, ‘standing alone,’ is ‘[o]bviously
Hospital, which emphatically disavows an
. . . not final and [immediately]
ERISA claim for benefits, to replead its
appealable’ as of right.” (quoting
c o m p l a i n t u n d e r E R I S A ’ s c i v il
Chicago, R.I. & P.R. Co. v. Stude, 346
enforcement provision. The Hospital
U.S. 574, 578 (1954)).
4
Pryzbowski v. U.S. Healthcare, Inc., 245 may pre-empt the Hospital’s state law
F.3d 266, 268 (3d Cir. 2001). claims is not a sufficient basis for removal.
Franchise Tax Bd., 463 U.S. at 12.4
III.
The Plan argues that the Hospital’s
A civil action filed in a state court
claims arise under “the federal common
may be removed to federal court if the
law” of ERISA. On several occasions, we
claim is one “arising under” federal law.
have predicated jurisdiction on a plaintiff’s
28 U.S.C. §§ 1331, 1441(a). Under the
invocation of the federal common law of
“well-pleaded complaint” rule, the plaintiff
ERISA. Bollman Hat Co. v. Root, 112
is ordinarily entitled to remain in state
court so long as its complaint does not, on
its face, affirmatively allege a federal 4
Pre-emption under § 514(a) of
claim. Beneficial Nat’l Bank v. Anderson,
ERISA, 29 U.S.C. § 1144(a), must be
539 U.S. 1, 6 (2003). To support removal,
distinguished from complete pre-emption
“‘[a] right or immunity created by the
under § 502(a) of ERISA, 29 U.S.C. §
Constitution or laws of the United States
1132(a). Only the latter permits removal
must be an element, and an essential one,
of what would otherwise be a state law
of the plaintiff’s cause of action.’”
claim under the well-pleaded complaint
Franchise Tax Bd. of Cal. v. Constr.
rule. Under § 514(a), ERISA supersedes
Laborers Vacation Trust for S. Cal., 463
state laws that “relate to” an ERISA plan.
U.S. 1, 10-11 (1983) (quoting Gully v.
29 U.S.C. § 1144(a). Unlike the scope of
First Nat’l Bank in Meridian, 299 U.S.
§ 502(a), which is jurisdictional and
109, 112 (1936)). Federal pre-emption is
creates a basis for removal to federal
ordinarily a defense to a plaintiff’s suit
court, § 514(a) merely governs the law
and, as such, does not appear on the face
that will apply to state law claims,
of a well-pleaded complaint. Anderson,
regardless of whether the case is brought
539 U.S. at 6; Franchise Tax Bd., 463 U.S.
in state or federal court. Lazorko v. Pa.
at 12.
Hosp., 237 F.3d 242, 248 (3d Cir. 2000).
On its face, the Hospital’s Section 514(a), therefore, does not
complaint does not present a federal permit removal of an otherwise well-
question. Rather, the complaint asserts pleaded complaint asserting only state
state common law claims for breach of law claims. Pryzbowski, 245 F.3d at 275
contract. The complaint does not (“[W]hen the doctrine of complete
expressly refer to ERISA and the rights or preemption does not apply, but the
immunities created under ERISA are not plaintiff’s state claim is arguably
elements, let alone essential elements, of preempted under § 514(a), the district
the plaintiff’s claims. The possibility—or court, being without removal jurisdiction,
even likelihood—that ERISA’s pre- cannot resolve the dispute regarding
emption provision, 29 U.S.C. § 1144(a), preemption.” (internal quotation
omitted)).
5
F.3d 113, 115 (3d Cir. 1997); Airco Indus. IV.
Gases, Inc. Div. of the BOC Group, Inc. v.
Although the we ll-ple a d ed
Teamsters Health & Welfare Pension
complaint rule would ordinarily bar the
Fund, 850 F.2d 1028, 1033-34 (3d Cir.
removal of an action to federal court where
1988); N.E. Dep’t ILGWU Health &
federal jurisdiction is not presented on the
Welfare Fund v. Teamsters Local Union
face of the plaintiff’s complaint, the action
No. 229 Welfare Fund, 764 F.2d 147, 154-
may be removed if it falls within the
55 (3d Cir. 1985) (Becker, J., writing for
narrow class of cases to which the doctrine
himself). These cases, however, do not
of “complete pre-emption” applies. Aetna
support the Plan’s argument that removal
Health Inc. v. Davila, 542 U.S. __, No. 02-
is proper because “suits between plans and
1845, slip op. at 5 (June 21, 2004); Metro.
third parties imp licating ben efits
Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64
administration ‘arise under’ ERISA’s
(1987). As a “corollary of the
federal common law.” Appellee’s Br. at
well-pleaded complaint rule,” complete
54. Instead, the plaintiffs in these cases
pre-emption recognizes “that Congress
deliberately invoked federal ERISA
may so completely pre-empt a particular
jurisdiction. See Bollman Hat, 112 F.3d at
area that any civil complaint raising this
115 (lawsu it seeking to enf orce
select group of claims is necessarily
subrogation provision in ERISA plan);
federal in character.” Taylor, 481 U.S. at
Airco, 850 F.2d at 1031 (amended
63-64; accord Anderson, 539 U.S. at 8
complaint asserting cause of action for
(“When the federal statute completely
unjust enrichment under ERISA); ILGWU,
pre-empts the state-law cause of action, a
764 F.2d at 150, 154-55 (lawsuit seeking
claim which comes within the scope of
declaratory relief regarding the meaning of
that cause of action, even if pleaded in
terms in an ERISA plan). As such, their
terms of state law, is in reality based on
well-pleaded complaints necessarily arose
federal law.”).
under federal law. Here, the Hospital’s
complaint asserts a state law claim for ER ISA’s civil enforc ement
breach of contract, and the federal mechanism, § 502(a), “is one of those
common law of ERISA does not provide provisions with such ‘extraordinary
an element—essential or otherwise—of pre-emptive power’ that it ‘converts an
such a claim. The Plan may be correct ordinary state common law complaint into
that, in interpreting the Subscriber one stating a federal claim for purposes of
Agreement, the federal common law of the well-pleaded complaint rule.’” Davila,
ERISA displaces state law. Nevertheless, slip op. at 7 (quoting Taylor, 481 U.S. at
potential defenses, even when anticipated 65-66). As a result, state law causes of
in the complaint, are not relevant under the action that are “within the scope of . . . §
well-pleaded complaint rule. Franchise 502(a)” are completely pre-empted and
Tax Bd., 463 U.S. at 10-12. therefore removable to federal court.
Taylor, 481 U.S. at 66; DiFelice, 346 F.3d
6
at 446. The Supreme Court has recently to determine whether a plaintiff has
clarified the inquiry in such cases: artfully pleaded his suit so as to couch a
federal claim in terms of state law.”
It follows that if an
Pryzbowski, 245 F.3d at 274 (internal
individual brings suit
quotation omitted).
complaining of a denial of
coverage for medical care, A.
where the individual is
We conclude that the Hospital
entitled to such coverage
could not have brought its claims under §
only because of the terms of
502(a) because the Hospital does not have
an ERISA-regulated
standing to sue under that statute. Section
employee benefit plan, and
502(a) of ERISA allows “a participant or
where no legal duty (state or
beneficiary” to bring a civil action, inter
federal) independent of
alia, “to recover benefits due to him under
ERISA or the plan terms is
the terms of his plan, to enforce his rights
violated, then the suit falls
under the terms of the plan, or to clarify
within the scope of ERISA §
his rights to future benefits under the terms
502(a)(1)(B). In other
of the plan.” 29 U.S.C. § 1132(a)(1)(B). 5
words, if an individual, at
By its terms, standing under the statute is
some point in time, could
limited to participants and
have brought his claim
under ERISA § beneficiaries.6 Franchise Tax Bd., 463
502(a)(1)(B), and where
there is no other
independent legal duty that 5
Section 502(a) provides other causes
is im p l i c a te d by a of action not relevant on this appeal. The
defendant’s actions, then the Plan makes no argument that the
individual’s cause of action Hospital could have brought this action
is completely pre-empted by under any other provision of § 502(a).
ERISA § 502(a)(1)(B).
6
A participant is defined as
Davila, slip op. at 8 (internal quotation and any employee or former
citation omitted). employee of an employer,
or any member or former
Accordingly, this case is removable
member of an employee
only if (1) the Hospital could have brought
organization, who is or
its breach of contract claim under § 502(a),
may become eligible to
and (2) no other legal duty supports the
receive a benefit of any
Hospital’s claim. Id. “[A] federal court
type from an employee
may look beyond the face of the complaint
benefit plan which covers
7
U.S. at 27 (“ERISA carefully enumerates resolve this dispute, however, because
the parties entitled to seek relief under § there is nothing in the record indicating
502 . . . .”). The parties agree that the
Hospital is nether a participant nor a
beneficiary, and that the Hospital does not
ILGWU Court expressed “serious doubts
have standing under ERISA to sue in its
whether [the claimant] could assign
own right.
along with her substantive rights her
The parties dispute whether, under right to sue in federal court,” id., the
the law of this Circuit, the Hospital can Court could not so hold.
obtain standing under § 502(a) by virtue of District courts in this Circuit have
an assignment of a claim from a disagreed over the scope of ILGWU.
participant or beneficiary.7 We need not Compare Allergy Diagnostics Lab. v.
The Equitable, 785 F. Supp. 523, 526-27
& n.3 (W.D. Pa. 1991) (citing Footnote 6
employees of such of ILGWU for the proposition that
employer or assignees of beneficiaries do not have
members of such standing to sue under § 502(a)), and
organization, or Health Scan, Ltd. v. Travelers Ins. Co.,
whose beneficiaries 725 F. Supp. 268, 269-70 (E.D. Pa.
may be eligible to 1989) (same), with Commonwealth of
receive any such Pa. Dep’t of Public Welfare v. Quaker
benefit. Med. Care & Survivors Plan, 836 F.
Supp. 314, 317 (W.D. Pa. 1993)
29 U.S.C. § 1002(7). A beneficiary is “a (observing that given the facts of
person designated by a participant, or by ILGWU, Footnote 6 is non-binding dicta
the terms of an employee benefit plan, in cases involving an actual assignment),
who is or may become entitled to a and Charter Fairmount Inst., Inc. v. Alta
benefit thereunder.” Id. § 1002(8). Health Strategies, 835 F. Supp. 233, 238
(E.D. Pa. 1993) (same).
7
In particular, the parties disagree Almost every circuit to have
over whether this Court’s opinion in considered the question has held that a
ILGWU forecloses derivative standing health care provider can assert a claim
under § 502(a). Though the ILGWU under § 502(a) where a beneficiary or
Court denied the claimant’s plan federal participant has assigned to the provider
question jurisdiction to sue to recoup that individual’s right to benefits under
paid medical benefits from a second the plan, see e..g., Tango Transport v.
plan, 764 F.2d at 153, part of the Court’s Healthcare Fin. Servs., 322 F.3d 888,
rationale was that the claimant had not, 891 (5th. Cir. 2003) (collecting cases),
in fact, assigned her claim to her plan. but as the issue is not squarely before us,
Id. at 154 n.6. Therefore, while the we express no opinion on it.
8
that Psaras and Rovetto did, in fact, assign contract claims, i.e., that the Plan has no
any claims to the Hospital. contractual liability absent a valid
assignment. The Plan’s argument may
As the party seeking removal, the
therefore entitle it to judgment on the
Plan bore the burden of proving that the
Hospital’s breach of contract claims in a
Hospital’s claim is an ERISA claim.
court of competent jurisdiction. It does
DiFelice, 346 F.3d at 452. Accordingly,
not, however, convert those breach of
the Plan bore the burden of establishing
contract claims into derivative claims for
the existence of an assignment. Hobbs v.
benefits under § 502(a).8
Blue Cross Blue Shield of Ala., 276 F.3d
1236, 1242 (11th Cir. 2001). The Plan Nor can we find an actual
concedes that the record contains no assignment based on any other documents
evidence of an express assignment, in the record.
whether oral or written, from either Psaras
Section 5 of the Summary Plan
or Rovetto to the Hospital. Instead, the
Description, entitled “How Benefits Will
Plan argues that “[t]he MagNet contract
Be Paid,” provides: “If you qualify for
itself establishes the Hospital’s claim as an
hospital care and are entitled to
assignment from the participant.”
reimbursement, and the hospital has sent
Appellee’s Br. at 25. Essentially, the Plan
in an assignment executed by you, we will
argues that (1) under the Subscriber
Agreement, “[the Hospital’s] only right to
demand money from the Plan comes from
8
the participant’s assignment of her right to The parties vigorously dispute
reimbursement,” Appellee’s Br. at 16, 24; whether the Subscriber Agreement
(2) therefore, the Hospital must be suing requires the Hospital to obtain an
on an assignment from Psaras and Rovetto. assignment before the Plan is obligated
to make payment. We express no
opinion on the merits of this dispute.
The Plan’s argument is a non
Nor do we express any opinion on other
sequitur. Whether the Subscriber
disputes regarding the interpretation of
Agreement requires the Hospital to obtain
the Subscriber Agreement. For example,
an assignment in order to demand payment
the Plan argues that there is no direct
from the Plan says nothing about whether
contractual relationship between itself
an assignment was in fact made. Because
and the Hospital. The question on appeal
neither Psaras nor Rovetto are parties to
is whether the Hospital could have
the Subscriber Agreement, that document
brought its claim under § 502(a). If it
cannot, in and of itself, establish an
could not, then removal was improper,
assignment of their claims. At best, the
and the Plan’s arguments on the merits,
Plan’s interpretation of the Subscriber
including its argument that no contract
Agreement provides an affirmative
exists, can only be adjudicated in state,
defense to the Hospital’s breach of
not federal, court.
9
pay the hospital directly . . . .” Thus, the could not have been brought under the
Plan itself contemplates an independent act scope of § 502(a) and are not completely
by which a participant or beneficiary pre-empted by ERISA. E.g., Hobbs, 276
assigns his or her claim to the Hospital. F.3d at 1243; Ward v. Alternative Health
The record contains no evidence that Delivery Sys., Inc., 261 F.3d 624, 627 (6th
Psaras or Rovetto undertook such an act. Cir. 2001); Harris v. Provident Life &
Accident Ins. Co., 26 F.3d 930, 933-34
The Plan offers the certification of
(9th Cir. 1994).
Kathy Pridmore, the Plan’s Director of
Medical Benefits, to support a finding of B.
an assignment. Pridmore broadly declares
We further conclude that the
that, in her experience, the Plan has
Hospital’s state law claims are predicated
“consistently followed the claims and
on a legal duty that is independent of
claim review procedures” contained in the
ERISA. See Davila, slip op. at 8. The
Summary Plan Description. The Plan
Hospital’s claims, to be sure, are derived
argues that Pridmore’s declaration
from an ERISA plan, and exist “only
constitutes evidence of “routine practice”
because” of that plan. Id. at 11. The crux
that supports an inference of an
of the parties’ dispute is the meaning of
assignment. See Fed. R. Evid. 406. We
Section 2.1 of the Subscriber Agreement,
disagree. Pridmore does not declare that
which governs payment for “Covered
the Plan routinely receives assignments
Services furnished to Eligible Persons.”
prior to payment. In her recitation of the
Were coverage and eligibility disputed in
Plan’s “standard procedure for processing
this case, interpretation of the Plan might
claims,” she does not even mention the
form an “essential part” of the Hospital’s
execution of assignments by Plan
claims. Id.
participants or beneficiaries. As such,
Pridmore’s certification cannot establish a Coverage and eligibility, however,
routine practice relevant to this appeal, let are not in dispute. Instead, the resolution
alone satisfy the Plan’s burden of of this lawsuit requires interpretation of
establishing federal s ubjec t-matte r the Subscriber Agreement, not the Plan.
jurisdiction by a preponderance of the The Hospital’s right to recovery, if it
evidence. exists, depends entirely on the operation of
third-party contracts executed by the Plan
Because the Plan has failed to
that are independent of the Plan itself. Cf.
demonstrate that the Hospital obtained an
Caterpillar Inc. v. Williams, 482 U.S. 386
assignment from Psaras and Rovetto, we
(1987) (suit for breach of individual
do not reach the “standing-by-assignment
employment contract, even if defendant’s
of claim” issue. Therefore, the Plan
action also constituted a breach of an
cannot demonstrate that the Hospital has
entirely separate collective bargaining
standing to sue under § 502(a). As a
agreement, not pre-empted by § 301 of the
result, the Hospital’s state law claims
10
Labor Management Relations Act). not fall within § 502(a)(1)(B).” Id. at
1050. The court explained:
We find instructive the Ninth
Circuit’s opinion in Blue Cross of [T] he Providers are
California v. Anesthesia Care Associates a s s e r ti n g c o n t r a c tu a l
Medical Group, Inc., 187 F.3d 1045 (9th breaches . . . that their
Cir. 1999). In that case, the court held that patient-assignors could not
claims asserted by health care providers assert: the patients simply
against a health care plan for breach of are not parties to the
their provider agreements were not provider agreements
completely pre-empted under ERISA. Id. between the Providers and
at 1051-52. The court reached this Blue Cross. The dispute
conclusion notwithstanding “the fact that here is not over the right to
these medical providers obtained payment, which might be
assignments of benefits from beneficiaries said to depend on the
of ERISA-covered health care plans.” Id. patients’ assignments to the
at 1047, 1052. Providers, but the amount,
or level, of payment, which
The litigation in Anesthesia Care
depends on the terms of the
arose from a fee dispute between four
provider agreements.
health care providers and Blue Cross. Id.
at 1048. Blue Cross had entered into
“provider agreements” with physicians in
Id. at 1051 (first emphasis added).
which Blue Cross agreed to identify the
Because the Providers asserted “state law
providers in the information it distributed
claims arising out of separate agreements
to beneficiaries of the plan and to direct
for the provision of goods and services,”
beneficiaries to those providers. In return,
the court found “no basis to conclude that
the providers agreed to accept payment for
the mere fact of assignment converts the
services rendered to ben eficiaries
Providers’ claims into claims to recover
according to specified fee schedules.
benefits under the terms of an ERISA
When Blue Cross attempted to change the
plan.” Id. at 1052.9
fee schedules, the providers filed a class
action in state court alleging a breach of
the provider agreements. Id. at 1049. 9
The reasoning in Anesthesia Care
The Ninth Circuit held that “the was followed in Orthopaedic Surgery
Providers’ claims, which arise from the Associates of San Antonio, P.A. v.
terms of their provider agreements and Prudential Health Care Plan, Inc., 147
could not be asserted by their patient- F. Supp. 2d 595 (W.D. Tex. 2001). The
assignors, are not claims for benefits under facts in Orthopaedic Surgery are nearly
the terms of ERISA plans, and hence do identical to this case. In Orthopaedic
Surgery, health care providers entered
11
The facts of this case are similar to the [Subscriber Agreement].” Id. at 1051.
Anesthesia Care in important respects: (1)
the Hospital’s claims in this case arise
from the terms of a contract—the
Subscriber Agreement— that is allegedly C.
independent of the Plan; (2) the
We have not overlooked the
participants and beneficiaries of the Plan
apparent convergence between the
do not appear to be parties to the
Hospital’s breach of contract claim and a
Subscriber Agreement; and (3) “[t]he
claim for benefits under § 502(a). Because
dispute here is not over the right to
the Plan is a reimbursement plan, the
payment, which might be said to depend
payments made to the Hospital are the
on the patients’ assignments to the
benefits received by Psaras and Rovetto
[Hospital], but the amount, or level, of
under the Plan. As a result, it would
payment, which depends on the terms of
appear that any claims the Hospital could
have obtained by assignment from Psaras
and Rovetto would be for the same amount
into contracts with a healthcare plan, as the breach of contract claims that are
Prudential. Under the contracts, the subject of this appeal. Moreover, had
Prudential agreed to pay the providers for the Hospital successfully sued Psaras and
services rendered to beneficiaries of the Rovetto for the payments due, it would
plan. When Prudential allegedly paid the appear that any claims for reimbursement
providers less than the agreed upon that Psaras and Rovetto would have
amount, the providers sued for breach of against the Plan would be claims for
the physician agreements. Orthopaedic benefits under § 502(a). Indeed, one of the
Surgery, 147 F. Supp. 2d at 597. The principal reasons why courts have allowed
District Court in Orthopaedic Surgery participants and beneficiaries to assign
remanded the case to state court, their claims under § 502(a) is to avoid the
concluding that § 502(a) did not necessity of providers suing patients in the
completely pre-empt the providers’ first instance. See Cagle, 112 F.3d at
claims. Citing Anesthesia Care, the 1515.
court characterized the providers’ claims
Nevertheless, the absence of an
as “claim[s] for the amount or level of
assignment is dispositive of the complete
payment and not the right to payment.”
pre-emption question. Although the
Id. at 601. The court rejected
Hospital “may not defeat removal by
Prudential’s argument that, since the
omitting to plead necessary federal
medical services that were allegedly
questions in a complaint,” Franchise Tax
unpaid were provided to participants or
Bd., 463 U.S. at 22, it is clear that the
beneficiaries of ERISA plans, the
Hospital is asserting a claim that could not
providers’ claims sought benefits payable
be asserted under the civil enforcement
under the terms of those plans.
12
provision of ERISA. It may very well be Pascack Valley Hospital, Inc. v. Local
that the Hospital’s breach of contract claim 464A
against the Plan will fail under state law,
No. 03-4196
or that the Hospital’s state law claims are
pre-empted under § 514(a). These matters, ALITO, Circuit Judge, concurring in the
however, go to the merits of the Hospital’s judgment.
breach of contract claim, which can only
I concur in the judgment based on
be adjudicated in state court.
the decision in N.E. Dept’t ILGWU
IV. Health & Welfare Fund v. Teamsters
Local Union No. 229 Welfare Fund, 764
Under the well-pleaded complaint
F.2d 147 (3d Cir. 1985). Although there is
rule, the Hospital’s complaint does not
now substantial contrary authority, we are
present a federal question that would
bound by prior panel decisions of our
support removal. The complaint does not
Court until they are overruled.
expressly refer to ERISA or the federal
common law of ERISA, and the rights or The Court avoids the question
immunities created under ERISA are not whether an assignee can assert a claim
elements, let alone essential elements, of under Section 502(a)(1)(B) of ERISA, 29
the plaintiff’s claims. Moreover, the U.S.C. § 1132(a)(1)(B), by holding that
Hospital’s state law breach of contract there is insufficient evidence to support a
claims are not completely pre-empted by finding that there were assignments in this
ERISA’s civil enforcement provision, case. I disagree. While the summary
because the Hospital could not have judgment record does not contain any
brought its claims under that provision. express assignments of the claims at issue,
Accordingly, removal in this case was there is ample evidence to support a
improper, and the order of the District finding that the claims were assigned to
Court denying remand will be vacated. the Hospital. What happened here is very
We will remand this case to the District common. Participants of a health care
Court with instructions that the District plan received treatment from a provider;
Court, in turn, remand to the Superior the participants did not pay for those
Court of New Jersey. services but instead gave the provider the
information needed to bill their plan; the
provider then billed the plan pursuant to a
contract obligating the plan to pay the
provider on the assigned claims of
participants; and the plan paid, albeit at a
discounted rate. These facts are more than
sufficient to prove that the claims were
implicitly assigned to the provider. In
holding that the summary judgment record
13
is insufficient to prove assignments, the
Court ignores the obvious reality of the
situation.
14