Good Samaritan Hospital L.P. v. MultiPlan, Inc.

Background

Good Samaritan Hospital, L.P. sued MultiPlan, Inc., Trustmark Health Benefits, and Altimetrik Corp. in California state court. Good Samaritan alleged that the defendants failed to honor a network agreement governing payment for services provided to an infant patient. It alleged that the defendants underpaid more than $970,000 by applying improper line-item reductions and by treating the level of care as not medically necessary or justified, resulting in payment at a lower rate.

Good Samaritan asserted ten state-law claims, including breach of written and implied contracts, breach of agreements involving Trustmark and Altimetrik, intentional interference with contractual or prospective economic relations, and relief from forfeiture. Trustmark removed the case to federal court based on diversity jurisdiction, with the other defendants’ consent. Good Samaritan later moved to remand the case to state court.

Federal-Question Jurisdiction and ERISA

The defendants argued that federal-question jurisdiction existed because the state-law claims were completely preempted by the Employee Retirement Income Security Act (ERISA). Complete preemption is a doctrine that can convert certain state-law claims into federal claims for jurisdictional purposes. Under the two-part test discussed by the court, the claim must be one the plaintiff could have brought under ERISA’s civil-enforcement provision, and the defendant’s conduct must not implicate an independent legal duty outside the ERISA plan.

The court held that the first part of the test was not satisfied. Good Samaritan was neither a plan participant nor a beneficiary under ERISA, so it could not bring the claims under ERISA’s civil-enforcement provision. The court also concluded that the second part was not satisfied: the defendants’ duties arose from the network agreement with Good Samaritan, not from the infant patient’s right to benefits under an ERISA plan. The network agreement established Good Samaritan’s right to payment and did not function as an ERISA plan document governing coverage decisions.

Diversity Jurisdiction

Diversity jurisdiction requires an amount in controversy exceeding $75,000 and complete diversity, meaning that no plaintiff may share state citizenship with any defendant. The court found that Good Samaritan, a limited partnership, was a citizen of Delaware and Tennessee. Trustmark was also a citizen of Delaware and Illinois. Because Good Samaritan and Trustmark shared Delaware citizenship, complete diversity was absent.

Disposition

The court determined that both federal-question jurisdiction and diversity jurisdiction were lacking. It therefore granted Plaintiff’s Motion to Remand and remanded the case to the Superior Court of California for the County of Santa Clara. The order addressed federal jurisdiction and remand; it did not decide the underlying payment and contract claims. Judge Araceli Martinez-Olguin signed the order.