McCulloch Orthopaedic Surgical Services, PLLC v. Aetna Inc.
2017 U.S. App. LEXIS 8694
| 2d Cir. | 2017Background
- McCulloch Orthopaedic Surgical Services (an out-of-network surgeon) performed two knee surgeries on an Aetna-plan member after Aetna phone representatives told McCulloch the procedures were covered and that reimbursement would be 70% of the usual, customary, and reasonable (UCR) rate.
- McCulloch billed Aetna $66,048 but Aetna paid only $15,267.51; McCulloch sued in New York state court for promissory estoppel to recover the remainder.
- The patient-signed CMS-1500 claim forms indicated assignment and provider acceptance, but the ERISA-governed plan contains an unambiguous anti-assignment clause forbidding assignments to out-of-network providers.
- Aetna removed the suit to federal court, asserting complete preemption under ERISA § 502(a)(1)(B); the district court denied remand, ordered McCulloch to plead ERISA claims, and dismissed when he did not amend.
- The Second Circuit reviews whether ERISA completely preempts the state-law promissory‑estoppel claim under the two-prong Davila test and whether McCulloch is the type of party who could bring a § 502(a)(1)(B) action (standing/assignment issue).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA completely preempts McCulloch’s promissory‑estoppel claim | McCulloch: No; his claim arises from Aetna’s independent promise and not from plan terms | Aetna: Yes; claim is really for plan benefits and thus preempted under Davila | Not preempted — ERISA does not completely preempt the claim |
| Whether McCulloch is the “type of party” who could sue under § 502(a)(1)(B) (assignment/standing) | McCulloch: He is not; the plan’s anti‑assignment clause makes any assignment void | Aetna: The submitted claim forms and direct payments make McCulloch a colorable assignee for preemption analysis | McCulloch is not the type of party; anti‑assignment clause nullified the assignment |
| Whether the promissory‑estoppel claim is a colorable claim for benefits under § 502(a)(1)(B) | McCulloch: The claim does not implicate plan administration or require interpretation of plan terms | Aetna: The promise concerned coverage and goes to plan administration and benefits | Not a colorable ERISA benefits claim; resolution does not require interpreting plan terms |
| Whether Aetna’s oral statements created an independent legal duty separate from plan obligations (Davila prong 2) | McCulloch: Yes; the promise is a freestanding state‑law duty (equity/estoppel) independent of the plan | Aetna: No; any duty derives solely from the ERISA plan and is inextricably tied to plan administration | Duty is independent of plan obligations; prong 2 not met by Aetna |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (establishes ERISA § 502(a)(1)(B) complete preemption (two‑prong Davila test))
- Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321 (2d Cir.) (discusses when provider assignees can bring § 502(a)(1)(B) claims and complete preemption)
- Stevenson v. Bank of N.Y. Co., 609 F.3d 56 (2d Cir.) (promissory‑estoppel claim not preempted where resolution does not require reviewing administrator’s benefits determination)
- Franciscan Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 538 F.3d 594 (7th Cir.) (provider’s misrepresentation/estoppel claims based on insurer’s oral promises not completely preempted)
- Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236 (5th Cir.) (declining to preempt providers’ state‑law claims where preemption would leave providers without any remedy)
- Physicians Multispecialty Group v. Health Care Plan of Horton Homes, Inc., 371 F.3d 1291 (11th Cir.) (anti‑assignment provisions render attempted assignments ineffectual)