Plaintiff, a medical practice specializing in plastic surgery, filed this lawsuit in state court, alleging that defendants (“United”) breached a contract to pay health insurance benefits assigned to plaintiff by its patients. The benefits-due for one patient, known as Jane Doe, form the primary dispute in this lawsuit. When Jane Doe was treated by plaintiff, she was insured by defendants through the “Group Life and Health Benefits Plan” (“the Plan”) sponsored and administered by her employer, American Airlines.
United removed this action and now moves to dismiss it, while plaintiff moves to remand it. Although plaintiff styled its causes of action under New York law, the allegations in the complaint make clear that plaintiff asserts a right to be paid benefits under the Plan, which raises a colorable federal claim under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. This case does not involve merely the amount of payment because the complaint and the Plan documents reveal that any shortfall in benefits is due to a dispute over the medical necessity of Jane Doe’s treatment, which could only be resolved by interpreting the Plan. Furthermore, plaintiff has identified no independent legal obligation implicated by United’s withholding of payments to plaintiff, which is essential to amount-of-payment claims. Therefore, plaintiffs claims are completely preempted by ERISA and plaintiffs motion to remand is denied.
Furthermore, for the reasons discussed herein, United’s motion to dismiss is granted beсause no claim lies against United, who is not named as the plan administrator. ERISA Sections 502(a)(3) and 503 do not provide alternative avenues of relief against United, because § 502(a)(1)(B) would provide adequate relief to plaintiff if it sued the proper party. Although the Court grants plaintiffs request to amend the complaint to include the proper party, all claims against United are dismissed.
I. Background
A. Factual Background
The following facts, are taken from the complaint. The Court assumes these facts to be true for the purpose of deciding these motions.
Plaintiff is a medical practice specializing in plastic surgery. (Compl. ¶ 1.) On
Despite having paid plaintiff, United later determined that it overpaid for the services provided to Jane Doe, and demanded that plaintiff return most of the funds in July 2012. {Id. ¶¶ 32-33.) Plaintiff alleges that it appealed the repayment demand, and that United acknowledged it was an error. {Id. ¶¶ 34-37.) However, approximately one year later, in August 2013, United began withholding reimbursements due for plaintiffs treatment of other patients, who plaintiff refers to as Patients A, B, C, and D (“Patients A-D”). {Id. ¶¶ 6, 39.) According to plаintiff, United’s sole reason for withholding these payments was its determination that it had overpaid for the services plaintiff provided to Jane Doe. {Id. ¶¶ 39^45.)
B. The Plan
In 2011, when she received plaintiffs services, Jane Doe was enrolled in the “Group Life and Health Benefits Plan for Employees of Participating AMR Corporation Subsidiaries for employees of American Airlines” (“the Plan”). (Knoblach Decl. ¶ 3.) Relevant portions of the Plan are quoted and cited herein. In short, it entitled Jane Doe to coverage for “medically necessary” treatment, and authorized United to recoup overpayments by withholding future payments to Jane Doe or her provider.
C. Procedural History
Plaintiff filed the complaint in this action on February 6, 2014, in thе Supreme Court of the State of New York, County of Nassau. The complaint asserts four causes of action under New York law: the first for a declaratory judgment, the second for injunctive relief, the third for unjust enrichment, and the fourth for breach of contract. Defendants removed the entire action to this Court on March 19, 2014.
On May 16, 2014, defendants filed a motion to dismiss the complaint in its entirety, pursuant to Federal Rule of Civil Procedure 12(b)(6). On June 23, 2014, plaintiff opposed the motion to dismiss and filed a cross-motion to remand this action to state court. Defendants responded in opposition to the remand motion and replied in further support of their motion to dismiss on July 8, 2014, and plaintiff filed a reply in further support of its rеmand motion on July 17, 2014. The Court heard oral argument on July 29, 2014.
II. Plaintiff’s Motion To Remand
A. Legal Standard
Generally, a case may be removed from state court to federal court “only if it could have originally been commenced in federal court on either the basis of federal question jurisdiction or diversity jurisdiction.” Citibank, N.A. v. Swiatkoski,
In short, United carries the burden to show that removal was proper because plaintiffs claims raise a federal question, which would provide subject-matter jurisdiction to this Court.
B. ERISA Preemption
Defendant argues that removal was proper because ERISA completely preempts plaintiffs claims. Although “[flederal preemption is ordinarily a federal defense to the plaintiffs suit .... [which] does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court,” а corollary to this rule “is that Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.” Metro. Life Ins. Co. v. Taylor,
The Supreme Court has held that ERISA’s civil enforcement scheme completely preempts state law causes of action within its scope, because Congress’s purpose in enacting ERISA was “to provide a uniform regulatory regime over employee benefit plans,” which would “ensure that employee benefit plan regulation would be exclusively a federal concern.” Davila,
To provide such uniformity, the statute contains broad preemption provisions, which safeguard the exclusive federal domain of еmployee benefit plan regulation. See Davila,
A civil action may be brought — (1) by a participant or beneficiary — ... (B) to recover benefits due to him under-the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
29 U.S.C. § 1132(a)(1)(B).
The Supreme Court has explained that “the detailed provisions of § 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formаtion of employee benefit plans.” Pilot Life Ins. Co. v. Dedeaux,
For this reason, where a plaintiff brings a state law claim that is “within the scope” of ERISA § 502(a)(1)(B), ERISA’s complete preemption power will take effect, and state law claims may be properly removed. See Davila,
The test for assessing whether a claim is “within the scope of’ ERISA § 502(a)(1)(B), and therefore completely preempted, consists of two parts:
claims are completely preempted by ERISA if they are (i) brought by “an individual [who] at some point in time, could have brought his claim under ERISA § 502(a)(1)(B),” and (ii) under circumstances in which “there is no other independent legal duty that is implicated by a defendant’s actions.”
Montefiore Med. Ctr. v. Teamsters Local 272,
Additionally, “[t]o avoid potential confusion under the first prong of Davila, [the Second Circuit] has further clarified that the plaintiff must show that: (a) he is the type of party who can bring a claim pursuant to § 502(a)(1)(B) of ERISA; and (b) the actual claim asserted can be construed as a colorable claim for benefits pursuant to § 502(a)(1)(B).” Arditi,
1. Davila Prong One
The Court first addresses whether plaintiff is “the type of party that can bring a claim” under § 502(a)(1)(B); it then considers “whether the actual claim ” at issue constitutes a “colorable claim” for benefits under § 502(a)(1)(B). Montefiore,
a. Type of Party
As previously set forth, § 502(a)(1)(B) clearly provides that a civil action may be brought (1) “by a participant or beneficiary” of (2) an ERISA employee benefit plan. 29 U.S.C. § 1132(a)(1)(B). It is not disputed that the Plan is an employee welfare benefit plan under ERISA. See 29 U.S.C. § 1002(1).
b. Colorable claim
The parties’ primary dispute is whether' plaintiffs state claims are “color-able” under ERISA, i.e., claims “to recover benefits due” under the terms of the Plan. 29 U.S.C. § 1132(a)(1)(B).' Both parties acknowledge the distinction between claims concerning a “right to payment” and claims involving an “amount of payment” — in fact, plaintiff suggests that “[t]he outcomes of both United’s motion to dismiss and [plaintiffs] cross-motion to remand turn almost entirely оn whether [plaintiffs] claims involve the right to payment or the amount of payment due.” (PI. Mem. at 9.) While right-to-payment claims “implicate coverage and benefits established by the terms of the ERISA benefit plan,” which may be brought under § 502(a)(1)(B), amount-of-payment claims are “typically construed as independent contractual obligations between the provid
The Court agrees with United. Courts in this circuit have distinguished between right-to-payment and amount-of-payment cases by examining the degree to which “the actual claims asserted seek enforcement of specific provisions of the Plan, ‘implicate coverage and benefits established by the terms of the ERISA benefit plan,’ and ‘can be construed as ... color-able elaim[s] for benefits pursuant to § 502(a)(1)(B).’ ” Arditi,
“Right to payment” claims involve challenges to benefits determinations, depend on the interpretation of plan language, and often become an issue when benefits have been denied.... “Amount of payment” claims involve the calculation and execution of reimbursement pajments, depend on the extrinsic sources used for the calculation, and are commonly tied to the rate schedules and arrangements included in provider agreements.
Neuroaxis,
Even viewing the complaint in a light most favorable to plaintiff, it is clear that this case concerns the right to payment because the complaint alleges that United withheld payment for Patients A-D based solely on a dispute over Jane Doe’s entitlement to benefits (Compl. ¶¶ 6, 39-45), which could only be resolved by interpreting the terms of the Plan. For example, the complaint refers directly to a Plan term in alleging that plaintiff was entitled to payment for the services to Jane Doe because they were “medically necessary” — -a standard imposed by the Plan. (Cоmpl. ¶ 3; Ex. F-2 to Knoblach Deck at 59-60); cf. Neuroaxis,
Finally, plaintiffs claims necessarily “depend on the interpretation of plan language,” Neuroaxis,
Plaintiffs argument that its claims relate only to the amount of payment attempts to narrow the focus of these motions to the services provided to Patients A-D, which no one disputes qualified for Plan benefits. That argument is unavailing, however, in light of the complaint’s allegations concerning the dispute over Jane Doe’s benefits. In other words, even if it is literally true that the “amount” due for the Patient A-D services is in question, United’s position is that the complaint and the Plan documents establish that any amount due for Patients A-D is dependent on the right to payment for the Jane Doe services. Therefore, there is no question that the Court will need to interpret the language of the Plan to resolve this dispute. Cf. Enigma Mgmt. Corp. v. Multi-plan, Inc.,
Furthermore, plaintiffs argument that this is an amount-of-payment case fails because plaintiff has not identified how its claims “implicate duties separate from the ERISA plan.” Enigma,
As in Montefiore, the dispute in this case — even accepting plaintiffs characterization of it as a dispute over the payments
Therefore, the Court concludes that plaintiffs claims do not relate solely to the amount of payment, but instead to the right to payment under the Plan — specifically, plaintiffs right to payment for the services it provided to Jane Doe. United, as the removing party, has met both facets of the first prоng of the Davila test.
2. Davila Prong Two
Under the second prong of Davila, “the only question remaining is whether some other, completely independent duty forms another basis for legal action.” Montefiore,
Therefore, United has satisfied both steps under Davila and carried its burden to justify removal. Plaintiffs state claims are completely preempted because they are “within the scope of’ ERISA § 502(a)(1)(B). Accordingly, plaintiffs motion to remand is denied.
III. DEFENDANTS’ MOTION TO DISMISS
A. Legal Standard
Motions to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure
To survive a motion to dismiss, a complaint must set forth “a plausible set of facts sufficient ‘to raise a right to relief above the speculative level.’ ” Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC,
Where a motion to dismiss presents itself before the court, a court may examine the following: “(1) facts alleged in the complaint and documents attached to it or incorporated in it by reference, (2) documents ‘integral’ to the complaint and relied upon in it, even if not attached or incorporated by reference, [and] (3) documents or information contained in defendant’s motiоn papers if plaintiff has knowledge or possession of th.e material and relied on it in framing the complaint.” Nasso v. Bio Reference Labs., Inc.,
B. Application
Empire’s motion to dismiss is granted because, even if plaintiffs preempted state claims were restyled as ERISA claims, they could not proceed under § 502(a)(1)(B) because plaintiff has sued the wrong party. Furthermore, §§ 502(a)(3) and 503 do not provide additional avenues of relief.
1. Section 502(a)(1)(B)
Plaintiffs claims would fail even if brought under § 502(a)(1)(B) because the complaint does not allege that United is a proper defendant. The Second Circuit has held that a claim for benefits pursuant to § 502(a)(1)(B) may only be asserted against the plan itself, the plan administrator, and the plan trustees. See Crocco v. Xerox Corp.,
United is not the plan itself, and plaintiff has not alleged that it is either the plan administrator or a trustee. In fact, American Airlines is the named plan administrator (Ex. F-l to Knoblach Decl. at 180), and “if a plan specifically designates a plan administrator, then that individual or entity is the plan administrator for purposes of ERISA.” Crocco, 137 F.3d at 107 (quoting McKinsey v. Sentry Insurance,
Plaintiff points to a statement in United’s memorandum of law that United “administers the claims under these plans.” (Def. Mem. at 1), but “claims do not lie against any and every ‘administrator’ associated with a Plan,” such as a claims administrator. New York State Psychiatric Ass’n, Inc. v. UnitedHealth Grp.,
In short, plaintiffs claims may not proceed under § 502(a)(1)(B) for the samе reason cited by the Second Circuit in Croc-co: “it is clear from the Plan documents that [United] was neither the designated Plan administrator nor a Plan trustee, and because it could not, under the rationale underlying Lee, be a de facto co-administrator. ... [United] is, therefore, entitled to dismissal of the claims against it.” Id. at 107-08.
2. Section 502(a)(3)
Plaintiff argues, in the alternative, that it is entitled to relief under ERISA § 502(a)(3), an equitable provision which allows “a participant, beneficiary, or fiduciary” to bring an action “to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or ... to obtain other appropriate equitable relief.” 29 U.S.C. § 1132(a)(3).
Here, despite plaintiffs request for declaratory and injunctive relief in the сomplaint, the claims are plainly legal claims for money damages, because “they seek no more than compensation for loss resulting from the defendant’s breach of legal duty.”
To be clear, the Court concludes that § 502(a)(1)(B) provides adequate relief to plaintiff even though plaintiff may not sue United under that section. See New York State Psychiatric Ass’n,
3. Section 503
Plaintiffs argument that the complaint should be construed to allege a claim under ERISA § 503 likewise fails, because that section — which requires adequate notice of the reason for a benefits denial— “imposes obligations only upon the ‘employee benefit plants]’ themselves.” New York State Psychiatric Ass’n,
C. Leave to Amend
At oral argument and by letter dated August 5, 2014, plaintiff sought leave to amend its complaint to add the proper defendants under ERISA. Whether plaintiffs motion is considered one to amend under Federal Rule of Civil Procedure 15, or one to join parties under Rule 21, “courts adhere to the same standard of liberality,” Sly Magazine, LLC v. Weider Publications L.L.C.,
IV. . Conclusion
Because plaintiffs claims against United under New York law are completely preempted by ERISA, plaintiffs motion to remand this action is denied. United’s mоtion to dismiss is granted because no claim lies against United, which is not named as the plan administrator. Furthermore, ERISA § 502(a)(1)(B) would provide adequate relief to plaintiff if it sued the proper party, and therefore ERISA sections 502(a)(3) and 503 do not provide alternative avenues of relief against United. Plaintiffs motion to amend the complaint to add the proper party is granted, but the Clerk of the Court shall remove United from the caption of the amended complaint. Plaintiff shall file the amended complaint within 30 days of the date of this order.
SO ORDERED.
Notes
. Competent proof of federal jurisdiction in an ERISA case includes "the various plan documents.” Aetna Health Inc. v. Davila,
. Section 3(1) of ERISA defines an employee welfare benefit plan as “any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries ... benefits.” 29 U.S.C. § 1002(1).
. The three cases оn which plaintiff relies each clearly involved an independent legal obligation outside of the ERISA plan, which plaintiff has not alleged here. See Somerset Orthopedic Assocs., P.A. v. Aetna Life Ins. Co., No. 06-867(MLC),
. Defendants suggested, without directly arguing, that these claims are also expressly preempted by ERISA, see Pilot Life v. Dedeaux,
. The parties do not dispute that the Plan documents submitted by United are integral to plaintiff's complaint, and the Court has considered them on the motion to dismiss. See DeSilva v. North Shore-Long Island Jewish Health Sys. Inc.,
. Some courts within this circuit have applied a more flexible definition of "plan administrator” under other circumstances, but "the larger number of judges on ... Second Circuit courts adhere to a bright-line rule that only entities that have been formally designated as 'plan administrators’ under 29 U.S.C. § 1002(16)(A) are proper 'administrator' defendants in § 502(a)(1)(B) actions.” New York State Psychiatric Ass’n,
. In Biomed, the court noted that "Second Circuit cases have made clear that Varity did not eliminate the possibility of a plaintiff successfully asserting a claim under both ERISA § 502(a)(1)(B) аnd ERISA § 502(a)(3), but rather indicated that equitable relief under § 502(a)(3) would not 'normally' be appropriate.” Biomed,