BLANCHE M. MANNING, District Judge.
In this diversity case that was removed from the Circuit Court of Cook County, plaintiff Oak Brook Surgical Centre asserts that defendants Aetna, Inc. and Aetna Health, Inc. (collectively, Aetna) pre-approved medical benefits for patients before Oak Brook Surgical Centre provided treatment. Aetna then declined to provide coverage, leaving Oak Brook Surgical Centre with over $3.4M in unpaid bills. Oak Brook Surgical Centre's amended complaint contains a single count of promissory estoppel. Contending that the promissory estoppel claim is preempted by ERISA, Aetna seeks to dismiss the amended complaint. For the following reasons, Aetna's motion is denied.
Oak Brook Surgical Centre initiated this case by filing a three-count complaint against Aetna in the Circuit Court of Cook County, Illinois, alleging breach of contract, a violation of the Illinois Insurance Code, 215 ILCS § 5/155, and promissory estoppel based on alleged confirmation by Aetna of coverage for services provided by Oak Brook Surgical Centre. The original complaint was based on Aetna's decision not to pay medical benefits to Oak Brook Surgical Centre, which was the assignee of the patients who received care at Oak Brook Surgical Centre. According to Oak Brook Surgical Centre, Aetna wrongfully and in violation of the patients' health insurance
A motion to dismiss based on ERISA preemption followed. In response, Oak Brook Surgical Centre argued that the motion was premature because there is a material question of fact as to whether all of the patients at issue were participants in ERISA plans because: (1) it could not ascertain which policies are governed by ERISA since it could not obtain copies of the patients' insurance plans prior to providing coverage, and (2) it could not identify policyholders in the complaint without violating the Health Insurance Portability and Accountability Act. See Dkt. 22.
The court denied the motion to dismiss, stating:
Id.
Subsequently, Oak Brook Surgical Centre voluntarily dismissed its breach of contract and Illinois Insurance Act claims, leaving only its claim for promissory estoppel. As before, this claim is based on its contacts with Aetna and Aetna's alleged representations that certain services provided to Aetna members would be covered under the Aetna members' insurance benefit plans. Oak Brook Surgical Centre, however, no longer specifically alleges that it received an assignment of benefits under the Aetna members' insurance. It also contends that its claim is based solely on the representations about coverage made by Aetna.
To survive a motion to dismiss, a complaint's request for relief must be "`plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009), quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint meets this standard when the alleged facts "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "[N]aked assertions devoid of further factual enhancement" are insufficient. Id. at 1949 (internal quotation marks omitted). Thus, the Supreme Court recently clarified that determining if a complaint states a plausible claim is "a context-specific task that requires [the court] to draw on [its] judicial experience and common sense." Id. at 1950.
Aetna argues that Oak Brook Surgical Centre's promissory estoppel claim is preempted by ERISA. Any examination
29 U.S.C. § 1144(a).
Unlike with the first motion to dismiss, Oak Brook Surgical Centre has abandoned its claim that the health plans at issue are not covered by ERISA. Instead, it appears to concede that the plans are governed by ERISA but nevertheless argues that a health plan's representations to a provider about coverage provide the basis for an independent cause of action under state law that is not preempted by ERISA. In support, Oak Brook Surgical Centre directs the court's attention to the Seventh Circuit's decisions in Franciscan Skemp Healthcare, Inc. v. Central States Joint Bd. Health and Welfare, 538 F.3d 594 (7th Cir.2008), as well as the Fifth Circuit's decision in Memorial Hosp. System v. Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir.1990), and a case from this district, Rehabilitation Institute of Chicago v. Group Administrators, Ltd., 844 F.Supp. 1275, 1281-82 (N.D.Ill.1994).
The Franciscan Skemp case was brought by a healthcare provider who provided services after receiving an oral verification of coverage from the patient's ERISA-covered health plan. After the provider submitted a claim as the patient's assignee, the plan declined to pay benefits because the patient's coverage had been retroactively canceled due to the patient's failure to pay premiums. The provider then filed suit in state court alleging state law claims of negligent misrepresentation and estoppel. The plan removed on the grounds that the claims were preempted by ERISA. The district court agreed, finding that the provider was the patient's assignee and thus stood in the shoes of the patient and was, in effect, trying to challenge the plan's determination of coverage. Franciscan Skemp Healthcare, Inc. v. Central States Joint Bd. Health and Welfare, 538 F.3d at 595-96.
In considering preemption, the Seventh Circuit turned to the Supreme Court's decision in Aetna Health Inc. v. Davila, 542 U.S. 200, 210, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004), stating:
Franciscan Skemp Healthcare, Inc. v. Central States Joint Bd. Health and Welfare, 538 F.3d at 596, quoting Aetna Health Inc. v. Davila, 542 U.S. at 210, 124 S.Ct. 2488.
The court then rejected the contention that the provider was limited to acting as the patient's assignee, stating:
Id. at 597-98.
The court also rejected the argument that the provider's submission of an assignment of benefits meant it was acting as the patient's assignee, explaining:
Id.
Finally, the court distinguished between a request for payment under the plan and a request for payment flowing from a representation about coverage, noting that:
Id. at 599.
Accordingly, the Seventh Circuit held that the provider's claim could not have been brought under ERISA § 502(a)(1)(B) because it was not "suing `to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan,' which is precisely all § 502(a)(1)(B) provides." Id. Instead, according to the Seventh Circuit, the provider was seeking damages based on alleged misrepresentations
Oak Brook Surgical Centre champions the decision in Franciscan Skemp and argues that like the provider in that case, it is asserting an independent claim of promissory estoppel that is not reliant on the underlying ERISA plan. Aetna, on the other hand, attempts to distinguish the rationale in Franciscan Skemp by noting that in that case and in Memorial Hospital System v. Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir.1990), a case cited by the Franciscan Skemp court, the patient turned out to not have any coverage under an ERISA plan. Aetna then reasons that misrepresentations about coverage can only escape the reach of ERISA preemption if there is no underlying ERISA coverage because in that instance, recovery by the providers would not implicate an ERISA plan. If the patient is a participant in an ERISA plan, however, Aetna asserts that allowing a provider to recover based on representations about coverage would permit the provider to make an end-run around the plan's coverage determination based on a state law theory. Aetna concludes that this so-called end-run is preempted by ERISA.
The precise question presented in this case — whether representations made by an insurer to a provider about patients' coverage under a plan governed by ERISA — has not been squarely addressed by the Seventh Circuit. Both sides can find support for their positions. Besides, Franciscan Skemp, 538 F.3d at 596-99, decisions finding no preemption include Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376, 385-86 (5th Cir.2011) (provider's claim was not preempted because the plans' terms were irrelevant to whether the insurer made misleading claims about coverage and the relationship between the provider and the insurer was not comprehensively regulated by ERISA); Hospice of Metro Denver, Inc. v. Group Health Insurance of Oklahoma, 944 F.2d 752, 756 (10th Cir.1991) (a provider's action to recover promised payment from an insurer "is distinct from an action brought by a plan participant against the insurer seeking recovery of benefits due under the terms of the insurance plan" and a contrary conclusion "would stretch [ERISA's] `connected with or related to' standard too far"); Memorial Hosp. System v. Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir.1990) (state insurance misrepresentation claim not preempted because the risk of non-payment should be shifted from the provider to the insurer which "through its agents misrepresented to the provider the patient's coverage under the plan" because the allocation of risk among commercial actors doing business in a state is a "classically important" state interest that is not regulated by federal law alone); Vencor Hospitals-Ltd. Partnership v. Aetna U.S. Healthcare, Inc., No. IP00-0695CBS, 2001 WL 1029109, at *3 (S.D.Ind. Sept. 6, 2001) (because "the relationship of the parties to the misrepresentation and the source of the duties at the heart of the dispute determine whether state law claims fall within ERISA's preemptive sweep," provider's misrepresentation claim was not preempted since the provider was "suing to recover not [the patient's] benefits under the plan, but the extent of [the insurer's] misrepresentation to [the provider"]); Rehabilitation Institute of Chicago v. Group Administrators, Ltd., 844 F.Supp. 1275, 1281-82 (N.D.Ill. 1994) ("Through its recognition of an action for promissory estoppel, Illinois has decided that the risk of loss from misstatement
There is opposing authority, however, holding that provider claims based on alleged misrepresentations about coverage are preempted. See Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321, 331 (2d Cir.2011) (distinguishing between "claims that implicate coverage and benefits established by the terms of the ERISA benefit plan" and "claims regarding the computation of contract payments or the correct execution of such payments" and concluding that denials of reimbursement to a provider based on a lack of required pre-certification, a plan exclusion, or the member's ineligibility for coverage under the plan are preempted because they implicate "the basic right to payment" under the plan); Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272 (6th Cir.1991) (provider's state law claims for promissory estoppel, breach of contract, negligent misrepresentation, and breach of good faith were preempted by ERISA because the "state law claims are at the very heart of issues within the scope of ERISA's exclusive regulation and, if allowed, would affect the relationship between plan principals by extending coverage beyond the terms of the plan"); Parkview Hosp., Inc. v. White's Residential & Family Services, Inc., No. 1:07-CV-0208 WCL, 2008 WL 89878 (N.D.Ind. Jan. 7, 2008) ("The ultimate question in this case is whether [the provider] is entitled to payment from the Plan for services rendered to the [patients]. The existence of coverage under the Plan is a prerequisite to that entitlement and it is this question that each of the state law claims seek to have resolved" so the provider's state law claims are preempted); Powers v. Corn Products Intern., Inc., 557 F.Supp.2d 928, 935 (N.D.Ill.2008) (provider's claims were preempted because resolution of those claims necessarily turns on an interpretation of the contract, which is governed by federal law and ERISA plans cannot be modified via oral statements).
A district court in this district, many years before the Seventh Circuit's decision in Franciscan Skemp, attempted to reconcile the divergent results reached in third-party provider cases by noting that:
Parkside Lutheran Hosp. v. R.J. Zeltner & Assoc., Inc., 788 F.Supp. 1002, 1006 (N.D.Ill.1992); see also Coonce v. Aetna Life Ins. Co., 777 F.Supp. 759, 768 (W.D.Mo.1991) ("This is not a case where the health care provider simply called the plan administer to verify that a prospective
Here, the court is fundamentally troubled by Aetna's insistence that it can make whatever representations it desires with impunity because ERISA shields it from liability. It is true that if a insurer tells a provider that a service is covered and then decides that the service is not covered, requiring the insurer to pay would, in essence, force the insurer to reverse its decision. Critically, however, the basis for the reversal is completely outside the plan. As discussed in decisions cited above finding that ERISA does not preempt providers' state law misrepresentation claims, a court considering a misrepresentation claim would not need to consider the plan terms to resolve the misrepresentation claim since the plan terms have no bearing on the resolution of that claim.
Moreover, misrepresentations are not oral modifications of a plan (which are prohibited by ERISA) since they exist completely independent of whatever the plan's language may be. Cf. Coonce v. Aetna Life Ins. Co., 777 F.Supp. at 768 (representations made by insurer during calls made by provider were not actionable because the provider engaged in a series of discussions about the patient's ongoing entitlement to benefits, and did not merely call to confirm coverage, so "the representations defendants are alleged to have made would have modified the plan by allowing [the insured] to receive benefits which were no longer available to plan participants"). In other words, if an insurer incorrectly tells a provider "the plan says that the moon is made of green cheese," the provider's misrepresentation claim turns on the representation made by the insurer. If the representation is false, the provider may be able to prevail on a misrepresentation claim regardless of what the plan actually says as the plan's language is irrelevant. The viability of a misrepresentation claim, therefore, is not dependent on the plan's language so the alleged misrepresentation does not orally modify the plan.
Similarly, the fact that the disposition of a misrepresentation claim may impact the plan does not necessarily mean that it is preempted as "ERISA's preemption provision is very broad, but the word `related' must not be taken literally." Pohl v. National Benefits Consultants, Inc., 956 F.2d 126, 128 (7th Cir.1992), citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n. 21, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Thus, in an example provided by the Seventh Circuit, if an ERISA plan participant went to the office of her plan administrator to inquire about coverage and then slipped on a banana peel and filed a negligence suit, that case would not be preempted even though "slip-and-fall liability would increase [the plan administrator's] costs and perhaps therefore the fee it charged for administering the employee welfare plan, and the added fee might hurt the participants." Id. However, the plan participant (who has a direct relationship with the plan, unlike a third party healthcare provider) cannot pursue a state law claim against the plan based on the plan's alleged misrepresentation about coverage because plan participants are "confin[ed]... to the entitlements spelled out in writing. Not the semantics of the word `relate,' but the policy of the statute, requires preemption and the denial of a remedy." Id.
A third-party provider's misrepresentation claim, in contrast, is not constrained by the plan because it, like the banana peel slip and fall case, is simply not related to the plan in any substantive way since its
Moreover, Aetna's emphasis on the fact that the patient in Franciscan Skemp had no coverage at all since the policy was canceled is a distinction without a difference. Notably, the Franciscan Skemp court focused on the fact that the provider's claims were based on representations made by the plan administrator and thus were "independent" and "simply not claims to enforce the rights under the terms of the plan." Franciscan Skemp Healthcare, Inc. v. Central States Joint Bd. Health and Welfare, 538 F.3d at 597-98 (internal quotations omitted). The key to the decision in Franciscan Skemp was the fact that the misrepresentation claim stood alone and did not rely on the plan. That principle dictates the conclusion in this case that Oak Brook Surgical Centre's claims are similarly not preempted.
The court thus finds that ERISA does not preempt Oak Brook Surgical Centre's promissory estoppel claim. This leaves the court with a single state law claim raised in a case that was originally removed on the basis of preempted claims that are no longer at issue. The parties shall file, by March 26, 2012, a joint position paper addressing whether Oak Brook Surgical Centre's claims should continue to be litigated in federal court. See Decatur Memorial Hosp. v. Connecticut General Life Ins. Co., 990 F.2d 925, 927-28 (7th Cir.1993) ("If ERISA leaves some corner open to state law, a district court could resolve the federal claim and dismiss without prejudice, or remand, see Carnegie-Mellon University v. Cohill, 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988), to permit the state court to address the state-law theory. But it need not remand, 28 U.S.C. § 1367, and a remand would be imprudent if the state-law theory does not exist or is preempted").
For the above reasons, Aetna's motion to dismiss the amended complaint [40] is denied. The parties shall file, by March 26, 2012, a joint position paper addressing whether Oak Brook Surgical Centre's claims should continue to be litigated in federal court.