Kos v. AETNA HEALTH INC.
3:17-cv-00217
D. Nev.Jun 14, 2017Background
- Dr. Michael Kos’s professional corporation treated plan beneficiary Tessie Campbell with SAVI breast brachytherapy after a phone call to Aetna in which Aetna allegedly said no preauthorization was required and the provider was in-network.
- Plaintiff submitted claims; Aetna later denied them, stating Plaintiff was not a contracted provider for Campbell’s plan.
- Plaintiff pursued internal appeals and sought exceptions based on Aetna representatives’ pre-treatment statements; appeals were denied.
- Plaintiff sued in Nevada state court asserting only state-law claims (breach of contract, breach of implied covenant, tortious breach of implied covenant, intentional and negligent misrepresentation, promissory estoppel).
- Aetna removed to federal court, invoking complete preemption under ERISA § 502(a)(1)(B); Plaintiff moved to remand and Aetna moved to dismiss on ERISA preemption grounds.
- The District Court found some claims completely preempted by ERISA and others not, and set a remedy path (dismiss preempted claims with leave to amend or dismiss with prejudice if Plaintiff declines to amend; remand remaining state claims if Plaintiff does not assert ERISA claims).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiff’s state-law contract claims are completely preempted by ERISA § 502(a)(1)(B) | Claims arise from oral promises separate from the ERISA plan; thus not ERISA claims and should be remanded | Claims assert entitlement to plan benefits (including allegations of assignment and breach of insurance contract) and therefore fall within § 502(a)(1)(B) | Court: Partially preempted — contract claims are preempted to the extent they assert entitlement to Plan benefits, but not preempted to the extent they allege an independent oral contract between Plaintiff and Aetna |
| Whether misrepresentation and promissory estoppel claims are preempted | These tort claims arise from statements by Aetna reps and are independent of the Plan | Aetna contends ERISA governs but primarily argues preemption of claims tied to Plan benefits | Court: Not preempted — fraudulent/negligent misrepresentation and promissory estoppel claims are independent and may proceed in federal court as non-ERISA state-law claims or be litigated in state court if remanded |
| Whether removal/remand is proper | Plaintiff seeks remand to state court because Complaint pleads only state claims | Aetna removed under federal question jurisdiction based on ERISA complete preemption | Court: Removal proper as to preempted claims; gives Plaintiff 30 days to amend to plead ERISA claims or to decline — if decline, preempted claims dismissed with prejudice and remaining state claims remanded |
| Remedy and next steps | Plaintiff indicated intent to avoid ERISA litigation in federal court | Aetna seeks dismissal of preempted state claims or assertion of ERISA claims | Court: Grants motion to dismiss in part. Plaintiff has 30 days to amend or notify intent not to amend. If Plaintiff pleads ERISA claims, remand motion denied; if not, preempted claims will be dismissed with prejudice and remaining claims remanded. |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (two-prong test for ERISA § 502(a)(1)(B) complete preemption)
- Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009) (complete preemption under § 502(a) supplies federal removal jurisdiction; oral-contract claims may escape preemption)
- Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972 (9th Cir. 2007) (provider’s independent tort/contract claims not preempted when not asserting beneficiary rights under ERISA)
- The Meadows v. Employers Health Ins., 47 F.3d 1006 (9th Cir. 1995) (misrepresentation and estoppel claims not preempted when functioning independently of an ERISA plan)