Laurel Hill Management Services, Inc. v. La-Z-Boy Incorporated
2:24-cv-13230
| E.D. Mich. | Aug 4, 2025Background
- Plaintiffs are out-of-network medical providers who treated a La-Z-Boy employee, covered under La-Z-Boy’s self-funded, ERISA-governed health plan administered by Blue Cross Blue Shield of Michigan (BCBS).
- Plaintiffs allege they contacted BCBS to verify coverage and were told services would be covered with payment at the "Usual and Customary Rate" (UCR), minus listed deductible and out-of-pocket costs.
- After providing over $342,000 in services, plaintiffs were paid under $1,600 by BCBS, far less than expected based on pre-service communications.
- Plaintiffs sued in California state court alleging negligent misrepresentation and promissory estoppel, seeking damages and declaratory relief under state law.
- Defendants removed to federal court and moved to dismiss, arguing plaintiffs’ state-law claims are preempted by ERISA because they relate to an ERISA-governed plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are plaintiffs' state-law claims preempted by ERISA? | Claims are based on independent promises/misrepresentations outside plan terms and thus not preempted. | Claims relate directly to the operation and administration of La-Z-Boy’s ERISA plan and are preempted. | Claims are preempted under § 514(a) of ERISA. |
| Does the complaint state a claim for relief? | Sufficient factual allegations support state tort theories. | Claims are barred for failure to plead non-preempted relief. | No viable state-law claim stated due to preemption; motion to dismiss granted. |
| Are cases from other circuits allowing provider state-law claims persuasive here? | Relies on out-of-circuit cases recognizing limited provider claims against insurers. | Argues those cases distinguishable or inapplicable; local precedent controls. | Out-of-circuit cases are distinguishable and local precedent (Cromwell) controls. |
| Should dismissal be with prejudice? | No, leave to amend could be allowed to plead non-preempted claim. | Yes, claims cannot be pleaded to avoid ERISA preemption. | Dismissal with prejudice appropriate due to lack of claim under law. |
Key Cases Cited
- Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (state-law claims seeking ERISA plan benefits are preempted)
- Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (ERISA broadly preempts state laws referring to benefit plans)
- Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272 (state-law provider claims for nonpayment under ERISA plans are preempted)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (defining "relate to" in ERISA preemption context)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (state-law causes of action related to employee benefit plans are preempted)
- Egelhoff v. Egelhoff, 532 U.S. 141 (clarifying "connection with or reference to" standard for preemption)