Emergency Physician Services of New York v. UnitedHealth Group, Inc.

Background

Emergency Physicians of New York PC, Buffalo Emergency Associates LLP, Exigence Medical of Binghamton PLLC, and Emergency Care Services of New York PC provide medical professionals for New York emergency departments. They alleged that UnitedHealth Group, Inc. (UHG), United HealthCare Services, Inc., UMR, Inc., UnitedHealthcare Service LLC, Oxford Health Plans LLC, and UnitedHealthcare Insurance Company failed to reimburse them for the reasonable value of emergency services provided to insured members.

The providers alleged that they were required by the federal Emergency Medical Treatment and Labor Act (EMTALA) to provide emergency care without regard to a patient’s ability to pay or insurance status. They generally had no written contracts setting payment rates with the defendants and therefore treated the defendants’ members as out-of-network patients. The providers claimed that the defendants paid less than the reasonable value of the services. The defendants disputed the providers’ characterization of the payments and stated that their reimbursement was approximately 2.2 to 3.2 times the providers’ costs.

Earlier in the case, the court dismissed the Racketeer Influenced and Corrupt Organizations Act claims and the breach-of-implied-contract claim. Claims for unjust enrichment and declaratory relief remained. The defendants previously sought summary judgment based on state-court decisions from litigation involving the same providers and Aetna; the court denied that motion in April 2023.

The defendants’ arguments

The defendants’ later summary-judgment motion argued primarily that:

- the providers’ unjust-enrichment claim was expressly preempted by the Employee Retirement Income Security Act of 1974 (ERISA) and the Federal Employees Health Benefits Act (FEHBA); - the providers could not show that the defendants received a benefit, that restitution was required, or that the providers could recover under unjust enrichment despite the health-plan contracts; - the providers lacked constitutional standing because additional payments would be transferred to a nonparty subsidiary rather than retained by the plaintiffs; - the insured patients had assigned their health-plan benefits to hospitals, not to the plaintiffs; - the declaratory-relief request was redundant or barred by federal and state laws governing payment disputes for out-of-network emergency services; - UHG was not a proper defendant because it did not adjudicate, price, or pay the disputed claims; and - claims paid under written contracts with the POMCO Select network could not support unjust enrichment.

Summary judgment is appropriate only when there is no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law. The court explained that, at this stage, it generally identifies factual disputes rather than deciding disputed facts.

ERISA preemption

The court held that ERISA did not expressly preempt the unjust-enrichment claim. ERISA preemption can apply when a state law refers to an ERISA plan or has an impermissible connection with one. The court concluded that unjust enrichment applies to ERISA and non-ERISA plans alike, so it does not refer to ERISA plans in the relevant sense.

The court also concluded that the claim did not have an impermissible connection with ERISA plans. If the providers prevailed, the claim would increase costs, but it would not require plans to provide a particular benefit to a particular person or dictate a central matter of plan administration. Relying particularly on the Supreme Court’s decision in Rutledge v. Pharmaceutical Care Management Association, the court explained that ERISA generally does not preempt state-law rules that merely increase costs without requiring a particular coverage structure. The motion for summary judgment on ERISA preemption grounds was denied.

FEHBA preemption

FEHBA provides that certain federal health-plan contract terms supersede state or local laws relating to health insurance or plans. The court noted uncertainty about the scope of FEHBA preemption because the Supreme Court has provided less guidance on the issue than on ERISA preemption. Because the court had already concluded that ERISA did not preempt the providers’ unjust-enrichment claim, and because the two provisions use similar “relate to” language, it concluded that FEHBA did not preempt the claim either. The motion for summary judgment on FEHBA preemption grounds was denied.

Unjust enrichment

Under New York law, unjust enrichment requires proof that the defendant received a benefit, that the benefit came at the plaintiff’s expense, and that fairness requires repayment. The defendants argued that any benefit from the emergency services went only to the patients, not to the insurers.

The court distinguished cases involving elective medical care. It relied on Wellcare, a New York trial-court decision holding that an insurer can be unjustly enriched when a hospital is legally required to provide emergency treatment to the insurer’s enrollees and the insurer does not pay the hospital fully for the necessary care. The court also relied on provisions of the Restatement of Restitution and Unjust Enrichment concerning services that discharge another person’s duty to a third party or the public.

The court concluded that the providers’ allegations were sufficient at the summary-judgment stage. The providers alleged that they discharged the defendants’ obligation to make emergency care available to insured members. The court did not need to rely on the providers’ alternative theory concerning shared-savings fees, which other courts had rejected.

The court further held that New York law limits recovery on an unjust-enrichment claim to the reasonable value of the services. The providers’ request for that amount was not barred as a matter of law merely because it might exceed their costs. Whether the defendants had paid the reasonable value of the emergency services was a factual question inappropriate for resolution on summary judgment. The court therefore denied summary judgment based on the alleged failure to satisfy the elements of unjust enrichment.

The court also rejected the argument that the health-plan contracts barred the claim. The providers were not parties to those contracts and were not alleged to be third-party beneficiaries. The case therefore did not involve a plaintiff trying to enlarge its rights under a contract to which it had agreed. Summary judgment on this ground was denied.

Standing and assignment arguments

The defendants argued that the providers suffered no injury because any additional reimbursement would be transferred to Emergency Physician Associates, LLC, a nonparty subsidiary. The court rejected that argument. It held that injury and redressability depend on the alleged underpayment and the likelihood that the litigation will remedy that injury, not on what the plaintiffs ultimately intend to do with recovered money. The motion for summary judgment based on lack of standing was denied.

The court also denied summary judgment based on the defendants’ argument that patients assigned their health-plan benefits to hospitals rather than to the providers. The providers were not seeking benefits that belonged to the patients; they were seeking payment for the reasonable value of their own services, independently of the health-plan terms.

Declaratory relief and UHG

The court denied summary judgment on the declaratory-relief claim. It found that the providers sought a declaration concerning reimbursement for claims from July 2021 through December 31, 2021, rather than an open-ended order governing future disputes. The federal and state No Surprises Acts took effect on January 1, 2022, so the court found those laws did not bar the requested declaration covering the earlier period.

The court also denied summary judgment for UHG. In an earlier ruling, the court held that the providers had adequately alleged a direct unjust-enrichment claim against UHG based on the financial benefit UHG allegedly received from its subsidiaries’ underpayment, regardless of whether UHG itself administered plans or adjudicated claims. The defendants did not contest the allegation that UHG benefited financially, so the court held that its earlier ruling controlled.

POMCO claims and disposition

The providers agreed that claims paid under written contracts between them and the POMCO Select network were not part of their unjust-enrichment claim. The parties disagreed about which claims involved POMCO patients. The court stated that the parties should resolve that factual dispute and, if they could not, submit supplemental papers addressing it.

The court denied the defendants’ motion for summary judgment. It directed the Clerk to close all pending motions.