ORDER CONCERNING MOTION TO REMAND
Before the Court is Plaintiffs Motion to Remand along with Defendant’s Response and Plaintiffs Reply. Plaintiffs believe the case should be remanded because their claims are based entirely upon state law and are outside of any claimed benefits of an ERISA plan. Defendant maintains no matter how the claims are characterized, plaintiffs are seeking payment for services covered under the terms of ERISA plans, and therefore, the removal is proper.
According to their petition, plaintiffs entered into Speciality Care Physician Agreements with defendant Prudential, beginning in 1990, to provide services under Prudential coverage plans. Prudential agreed to pay the plaintiffs and/or their professional association, Orthopaedic Surgery Associates of San Antonio (OSASA), a specified sum of money for each of the selected services to be rendered. Although Prudential paid the plaintiffs for services rendered, Prudential did not pay the agreed upon amount and “shortchanged the physicians and OSASA on most, if not all of the services that were provided, paying them less than the amount that had been agreed upon by the parties.” Plaintiffs claim Prudential breached its contract with them.
Defendant asserts, in its notice of removal, that plaintiffs’ claims “relate to one or more employee benefit plans” established and maintained pursuant to ERISA. Some, if not all, of the medical services which are alleged to be unpaid, “were provided to participants or beneficiaries of ERISA plans.” Therefore, the claims for the amounts allegedly owed seek “benefits payable under the terms of one or more ERISA plans and relate to such plans and fall within ERISA’s civil enforcement provision and are completely preempted.”
In their motion to remand, plaintiffs state they are not beneficiaries, participants, employees, employers, administrators, the Secretary, or fiduciaries of any ERISA plan. Plaintiffs claim they are not seeking to recover under any plan but are seeking to recover the amount contractually promised by the defendant for services rendered to participants, beneficiaries, and/or employees of plans sold to others by the defendant. Plaintiffs maintain they are not seeking to receive benefits under *598 the terms of an ERISA plan and their claims do not affect the relationship among the traditional ERISA entities such as plan administrator/fiduciaries and plan participants/beneficiaries. Defendant contends this distinction is one without legal significance.
In its response to the motion to remand, defendant argues the plaintiffs completely ignore the relationship between the parties and the contracts under which relief is sought, the fact the service agreements under which relief is sought only provide payment for “Covered Services,” and plaintiffs previously accepted assignments of ERISA plan benefits from their patients and submitted claims to Prudential under those assignments. The challenge to the processing and payment of claims is, in fact, a derivative claim for benefits under ERISA plans and is therefore completely preempted under ERISA’s civil enforcement provision and properly before this Court.
JURISDICTION OF FEDERAL COURTS
It is well settled that federal courts are courts of limited jurisdiction and unlike state courts, are not vested with “inherent” or “general” subject matter jurisdiction.
Columbraria Ltd v. Pimienta,
ERISA PREEMPTION
Because there is no assertion that jurisdiction is based on diversity of citizenship, removal is proper only if a federal question exists. Ordinarily, removal is not allowed unless the plaintiffs well pleaded complaint asserts causes of action under federal law which support federal question jurisdiction.
Rodriguez v. Pacificare of Texas, Inc.,
As set forth in Section 514(a) of ERISA, ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.”
Hook v. Morrison Milling Co.,
38
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F.3d 776, 778-81 (5th Cir.1994). The “relate to” language is to be given a “broad yet common-sense meaning and a state law claim only relates to a benefit plan ‘if it has a connection with or reference to’ the ERISA plan.”
Westbrook v. Beverly Enters.,
The Court’s warning in Shatu on the limits of ERISA preemption stems from the Court’s view that ERISA’s scope, though comprehensive, remains subject to the traditional principle of federalism. In determining ERISA’s preemptive scope, the Court has advised that we “must be guided by respect for the separate spheres of governmental authority preserved in our federalist system.”
Id. (citations omitted). Although cognizant of ERISA’s broad preemptive scope, the court noted that ERISA does not “reach claims that do not involve the administration of plans, even though the plan may be a party to the suit or the claim relies on the details of the plan.” Id. at 784.
The Fifth Circuit has provided additional guidance concerning preemption as follows:
It is clear that ERISA preempts a state law cause of action brought by an ERISA plan participant or beneficiary alleging improper processing of a claim for plan benefits. We have also held in this circuit that ERISA preempts state law claims, based on breach of contract, fraud, or negligent misrepresentation, that have the effect of orally modifying the express terms of an ERISA plan and increasing plan benefits for participants or beneficiaries who claim to have been mislead. Although finer discern-ments might be made, these and similar cases binding in this circuit, which have found preemption of a plaintiffs state law causes of action, have at least two unifying characteristics: (1) the state law claims address areas of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and (2) the claims directly affect the relationship among the traditional ERISA entities-the employer, the plan and its fiduciaries, and the participants and beneficiaries.
Memorial Hosp. Sys. v. Northbrook Life Ins.,
APPLICATION OF ERISA PREEMPTION
Here, we have third-party health care providers asserting breach of contract *600 claims based on their own contracts with the defendant. Plaintiffs agree their claims would be preempted if they had asserted them as assignees of the plan participants, and although plaintiffs may be entitled to seek relief as assignees of the ERISA plan beneficiaries for payment of services, this lawsuit was not filed in that capacity. Instead, plaintiffs maintain their claims stem from a contractual relationship directly between them and the defendant, i.e., the Speciality Care Physicians Agreements, and are not relying, in whole or in part, upon their position as assignees of the benefits of any claimant under an ERISA plan. Defendant contends this argument ignores the fact that “their services are paid based on the benefits available under the terms of the respective ERISA plans and that payment for their services are funded through those plans.” Defendant believes the plaintiffs’ claims are really claims for the recovery of benefits under the plans and as such, are derivative of the participants’ rights to benefits under the plans which are properly recharacterized as federal claims arising under ERISA.
Based on
Transitional Hosps.,
In conducting its own research on the issue presented here, this Court was able to find one published opinion in which the court was asked to “determine whether the claims of medical providers against a health care plan for breach of their provider agreements are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”).”
Blue Cross v. Anesthesia Care Assocs. Med. Group, Inc.,
the fact that these medical providers obtained assignments of benefits from beneficiaries of ERISA-covered health care plans does not convert their claims into claims for benefits under ERISA-covered health care plans, and that the medical providers’ claims do not otherwise fall within ERISA’s express preemption clause.
The litigation in Anesthesia Care arose from a fee dispute between four medical providers, who participated in a medical care plan offered by defendant Blue Cross, and Blue Cross. Id. at 1048. Blue Cross entered into a standardized contract, called the Participating Physician Agreement, with physicians. Under the agreement, Blue Cross agreed to identify the participating physicians in the information it distributed to the members of the Plan and direct its subscribers to those physicians. In return, the physicians agreed to “accept payment from Blue Cross for services rendered to Prudent Buyer Plan Subscribers according to specified fee schedules.” 1 Id. *601 Blue Cross contended the providers’ right to receive remuneration from Blue Cross depended on “the assignment of the right to benefits for payment for medical services from their patients, some of whom are beneficiaries of ERISA-covered health plans.” Id. at 1050. Therefore, Blue Cross maintained plaintiffs claims regarding the fee provisions were claims for benefits under the terms of ERISA benefit plans and fell within 502(a)(1)(B). Id. The court rejected that claim holding, “the Providers’ claims, which arise from the terms of their provider agreements and could not be asserted by their patient assignors, are not claims for benefits under the terms of ERISA plans, and hence do not fall within 502(a)(1)(B).” The court explained the issue before it concerned the terms of the provider agreements and the contention the agreement was breached, and that “the patients simply are not parties to the provider agreements between the Providers and Blue Cross. The dispute here is not over the right to payment, which might be said to depend on the patients’ assignments to the Providers, but the amount, or level, of payment, which depends on the terms of the provider agreements.” Id. at 1051. Because the Providers asserted state law claims “arising out of separate agreements for the provision of goods and services,” the court found “no basis to conclude that the mere fact of assignment converts the Providers’ claims into claims to recover benefits under the terms of an ERISA plan” even though beneficiaries covered by ERISA plans assigned their right to reimbursement to the Providers. Id. at 1052. Analogously, plaintiffs here assert a claim for the amount or level of payment and not the right to payment by stating, “[w]hile PRUDENTIAL paid an amount of money to the Plaintiffs herein for the services rendered, it did not pay the agreed upon amount, but shortchanged the physicians and OSASA on most, if not all of the services that were provided, paying to them less than the amount that had been agreed upon by the parties.” It would appear therefore, that plaintiffs claims also would not be preempted.
A similar result was reached in an unpublished opinion from a United States District Court in the Eastern District of Louisiana. In
Lakeland Anesthesia, Inc. v. Louisiana Health Serv. & Indemnity Co.,
No. Civ.A.00-1151,
Blue Cross wrongfully: (a) delayed their claims for payment; and, (b) in some instances, denied the claims on the erroneous pretense that they had not been timely submitted. Plaintiffs submit that this suit does not challenge the denial of payment on the basis that the services rendered by plaintiffs were not “covered services”, nor does it dispute the denial of “benefits” that might have been due *602 and owing to any ERISA participant or beneficiary. Moreover, plaintiffs argue that this suit does not seek to recover benefits due under ERISA governed health plans, nor have the plaintiffs attempted to stand in the shoes of any ERISA participant or beneficiary, by assignment or otherwise. Although the plaintiffs may have the right, in some cases, where an assignment has been obtained, to elect to claim benefits under. . .ERISA, the plaintiffs’ claim that the present lawsuit is an independent cause of action which arises, not out of the patient’s right to claim benefits, but out of separate and independent obligations owed by Blue Cross to Lakeland and Medical Advantage, pursuant to separate and independent agreements between Blue Cross and plaintiffs.
Id. In response, defendants argued plaintiffs claims were completed preempted because they involve the improper processing of benefits due under ERISA plans. Id. at *3. In response, plaintiffs argued:
As health care providers, the contractual relationships are not contemplated by ERISA. The plaintiffs are not parties to any health insurance plans formed under ERISA. Therefore, plaintiffs have no “relationship” that might be governed by ERISA. Without such a relationship, ERISA preemption must not be invoked. Plaintiffs maintain that this suit is identical to the previous four suits in which this Court remanded to state court. Like its predecessors, the defendants can demonstrate, at best, an indirect effect on an ERISA plan which is insufficient to trigger preemption.
Id. at *3. In granting the motion to remand, the court found the plaintiff was not suing as a participant or beneficiary of an ERISA plan or pursuing claims as an as-signee of a plan but was pursuing claims based upon its separate provider agreement. Id. at *8. Plaintiffs here also appear to be only asserting their claims under their separate agreements.
As additional support for finding the types of claims asserted by the plaintiffs are not preempted, the Court reviewed an article concerning the role of providers in this era of managed care. The following discussion concerning ERISA preemption was instructive:
To combat the breach of contract claim by providers, managed care defendants may argue that the claims are preempted under ERISA, in that they “relate to” ERISA plans, such that the compensatory damages sought by the providers would be precluded. While such a defense has repeatedly been asserted in actions brought by individual providers, however, it appears to be unsuccessful, so long as the provider is pursuing his own contractual rights and not stepping in the shoes of his patient.
D. Brian Hufford,
Health Care Litigation What You Need to Know After Pegram MANAGED CARE LITIGATION: THE ROLE OF PROVIDERS,
1216 PLI/ CORP. 487, 497 (November 2000). Following a discussion of the opinion in
Blue Cross v. Anesthesia Care Assocs. Med. Group, Inc.,
This conclusion [Anesthesia Care ] is supported by the Supreme Court’s decision in Mackey v. Lanier Collection Agency & Service, Inc.,486 U.S. 825 , 832-33,108 S.Ct. 2182 ,100 L.Ed.2d 836 (1988) where the Court recognized two types of civil actions that may be brought against ERISA plans: the first being enforcement actions under Section 502 of ERISA by specified parties, including plan “participants and beneficiaries,” to obtain statutory relief under the Act; and the second being “lawsuits *603-613 against ERISA plans for run-of-the-mill state-law claims such as unpaid rent, failure to pay creditors, or even torts committed by an ERISA plan,” all of which involve claims brought by non-ERISA entities and which “[a]lthough obviously affecting and involving ERISA plans and their trustees,” and are not preempted by ERISA. Actions by network providers seeking to enforce their contracts with insurance companies arguably fall within the latter category. To the extent providers are not being paid the amount to which they are entitled under their contracts, they are suing on their own behalf as creditors— not on behalf of their patients — and are thereby entitled to do so.
A number of cases have reached analogous decisions, many of which permit providers who allege that they have been misled by managed care companies concerning whether their patients were covered by insurance to proceed outside of ERISA. The critical question for the courts is whether the provider’s claim is based on a direct cause of action against the managed care company, in which situation it is not preempted, or whether it is derivative to the patient’s cause of action, where ERISA applies. See, e.g., Memorial Hospital System v. Northbrook Life Insurance Company,904 F.2d 236 , 249-50 (5th Cir.1990)(“Simply put, ... health care providers in this country were not a party to this bargain [in which limitations on the right to sue are accepted in exchange for ERISA’s protections]... .We cannot believe that Congress intended the preemptive scope of ERISA to shield welfare plan fiduciaries from the consequences of their acts toward non-ERISA health care providers when a cause of action based on such conduct would not relate to the terms or conditions of a welfare plan, nor affect— or affect only tangentially — the ongoing administration of the plan.”).
Id. at 498-99.
Based on the foregoing, this Court concludes plaintiffs’ claims as presently asserted are not preempted by ERISA and therefore, this Court does not have subject matter jurisdiction.
See Gutierrez v. Deloitte & Touche, L.L.P.,
No. SA-00-CA-708-FB,
Accordingly, IT IS HEREBY ORDERED that Plaintiffs Motion to Remand (docket # 2) is GRANTED and this case is REMANDED to the 166th Judicial District Court of Bexar County, Texas. It is further ORDERED that the Clerk of the Court send a certified copy of this order to the clerk of the state court. Plaintiffs’ request for costs are DENIED.
It is so ORDERED.
Notes
. With regard to payment, the provider agreements provided: " 'PHYSICIAN shall seek payment only from BLUE CROSS for the provision of Medical Services,’ except pursuant to specified exceptions. The provider agreements also stated that 'PHYSICIAN
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agrees to accept the lee schedule as provided in Exhibit B, attached and made part of this Agreement or PHYSICIAN'S covered billed charges, whichever is less, as payment in full for all Medical Services provided to Members.’ "
Anesthesia Care,