Redstone v. Empire HealthChoice HMO, Inc.
- Valerie Caproni
- 1:23-cv-02077
- U.S. District Court · Southern District of New York
- 10
In Redstone v. Empire, Judge Caproni denied amendment because the ERISA claim was inadequate and state claims were already dismissed with prejudice.
Jeremiah Redstone, M.D., John Paul Tutela, M.D., and L.P. were affected by the denial of the proposed amendment; Empire HealthChoice HMO, Inc. and Empire HealthChoice Assurance, Inc. remained the defendants.
What happened
Redstone v. Empire HealthChoice HMO, Inc. concerns two doctors’ attempt to recover additional insurance payments for breast-reconstruction services provided to L.P. Empire paid part of the doctors’ bills, and the doctors alleged that the insurance plan required higher reimbursement.
The doctors sought to amend their complaint by adding L.P. as a plaintiff and reasserting an Employee Retirement Income Security Act claim and state-law claims. They argued that L.P. had standing to pursue benefits under the plan and that the doctors were entitled to payment at higher rates.
Judge Valerie Caproni denied the motion for leave to amend. The court ruled that although L.P. had standing, the proposed complaint did not identify the plan provisions requiring additional payment or an out-of-network exception, so it failed to state an Employee Retirement Income Security Act claim; the state-law claims had already been dismissed with prejudice because that law preempted them.
The detailed version
- Redstone v. Empire HealthChoice HMO, Inc. · No. 1:23-cv-02077
- Valerie Caproni
- Dec. 13, 2024
Background
Jeremiah Redstone, M.D., and John Paul Tutela, M.D., sued Empire HealthChoice HMO, Inc. and Empire HealthChoice Assurance, Inc. over alleged underpayments for breast-reconstruction services provided to L.P., an Empire plan beneficiary. The doctors alleged that Empire paid $26,099.20 of the $671,723 billed for one surgery and $7,216.77 of the $138,451 billed for a second surgery. They claimed that the plan required Empire to reimburse them at higher rates, including through an in-network exception or rates based on competitive-fee data.
The doctors sought leave to file a proposed amended complaint. The proposed complaint would add L.P. as a plaintiff and reassert a claim under the Employee Retirement Income Security Act (ERISA), a federal law governing employee-benefit plans. It also asserted five state-law claims: breach of contract, breach of implied contract, unjust enrichment, tortious interference, and another breach-of-contract claim.
ERISA Claim
The court explained that a proposed amendment is futile if the amended complaint could not survive a motion to dismiss. The court accepted well-pleaded factual allegations as true but did not accept unsupported legal conclusions.
The court held that L.P. had standing under ERISA section 502(a)(1)(B) because she was a plan beneficiary. That provision allows a participant or beneficiary to sue to recover benefits owed under the plan, enforce rights under the plan, or clarify rights to future benefits. Because the proposed complaint failed to state a claim, however, the court did not decide whether the doctors themselves had standing.
The court ruled that the proposed amended complaint failed to state an ERISA benefits claim. It did not identify the specific plan provisions that entitled L.P. to additional reimbursement or required Empire to reimburse the doctors under an in-network exception. It also did not state the relevant amounts in the FAIRHealth databases, explain the claimed “85–90th percentile” standard, or provide facts showing that no in-network microsurgeon could perform the surgery anywhere in the New York metropolitan area. The court therefore found the allegations conclusory and insufficient to show a wrongful denial of benefits under the plan.
State-Law Claims
The court stated that it had already dismissed the state-law claims with prejudice in its earlier opinion. Dismissal with prejudice bars those claims from being reasserted in the case. The court had previously ruled that ERISA expressly preempted the claims because they depended on the ERISA plan and did not seek to remedy a separate legal duty. The court explained that this preemption applied regardless of whether the plaintiffs could sue under ERISA.
Disposition
The court denied the plaintiffs’ motion for leave to amend. It stated that the proposed amended complaint failed to state an ERISA claim and that the state-law claims had already been dismissed with prejudice. The Clerk of Court was directed to terminate the motion at docket entry 33 and close the case.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.