South Atlantic Division Inc v. MultiPlan Inc
4:24-cv-05454
D.S.C.Jul 9, 2025Background
- Plaintiffs South Atlantic Division, Inc. and Grand Strand Regional Medical Center provided medical care to a patient, J.M., after a car accident, alleging that Defendants failed to pay contractually agreed rates under a Facility Agreement.
- Plaintiffs sued in South Carolina state court for breach of contract and quantum meruit after not being reimbursed for services provided to J.M., a participant in an ERISA-governed healthcare plan.
- Defendants removed the case to federal court, asserting that the claims were preempted by the Employee Retirement Income Security Act (ERISA), making federal court the proper venue.
- Plaintiffs moved to remand the case to state court, insisting their claims were solely based on the Facility Agreement, not on rights under the ERISA plan.
- Defendants moved to dismiss, arguing ERISA preemption and failure to state a claim under Rule 12(b)(6).
- The court found the claims preempted by ERISA, denied remand, dismissed the complaint, but granted Plaintiffs leave to amend to replead under ERISA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal Jurisdiction via ERISA Preemption | Claims arise solely under Facility Agreement, not ERISA | Claims are preempted by ERISA, so federal court proper | Federal jurisdiction proper |
| Standing under ERISA § 502(a) | Plaintiffs only have derivative standing by assignment (optional) | Plaintiffs have assignment; seek plan benefits via assignment | Standing exists via assignment |
| Whether Claims Fall within ERISA § 502(a) Scope | Claims only about rate of payment, not right to payment | Claims seek right to payment—covered by ERISA § 502(a) | Claims fall within scope |
| Conflict Preemption under ERISA § 514 | Claims based on Facility Agreement, not dependent on ERISA rights | Right to payment under Facility Agreement depends on ERISA plan | Claims are conflict preempted |
Key Cases Cited
- Exxon Mobil Corp. v. Alapattah Servs., Inc., 545 U.S. 546 (2005) (federal courts possess only limited jurisdiction)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (ERISA preemption enables removal of certain state-law claims)
- Metro. Life Ins. v. Massachusetts, 471 U.S. 724 (1985) (defines broad scope of ERISA’s conflict preemption)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) (state law relates to ERISA plan if connected or referenced)
- Pilot Life Ins. v. Dedeaux, 481 U.S. 41 (1987) (describes deliberately expansive ERISA § 514 preemption)
- Marks v. Watters, 322 F.3d 316 (4th Cir. 2003) (scope of ERISA § 502(a) and preemption analysis)
- Griggs v. E.I. DuPont de Nemours & Co., 237 F.3d 371 (4th Cir. 2001) (state law need not directly target ERISA plans for preemption)