Hyperion Medical, P.C. v. UnitedHealthcare Insurance Company of New York

Background

Hyperion Medical, P.C., an out-of-network healthcare provider, sued UnitedHealthcare Insurance Company of New York in New York Supreme Court on November 13, 2019. Hyperion alleged that it had provided medical services to patients insured by UnitedHealthcare and that UnitedHealthcare had failed to pay for those services.

After the complaint was served, the parties exchanged information during settlement efforts. Hyperion emailed UnitedHealthcare Explanation of Benefit forms on December 4, 2019, and March 16, 2020. The forms identified patients, dates of service, employers, and other information about insurance claims.

UnitedHealthcare removed the case to federal court on July 2, 2020. It asserted federal-question jurisdiction under 28 U.S.C. § 1331 and argued that the claims sought benefits or clarification of rights under the Employee Retirement Income Security Act (ERISA). Hyperion moved to remand the case to state court, arguing that UnitedHealthcare should have removed it earlier because the settlement-related forms showed that ERISA was implicated. Hyperion also requested discovery about UnitedHealthcare’s investigation into whether the case was removable.

Legal standard

Federal law generally gives a defendant 30 days to remove a case after receiving an initial pleading or other paper from which federal jurisdiction can be ascertained. If the initial pleading is not removable, a later paper can start a new 30-day period when it first makes removability ascertainable.

The court applied the rule that the removal period begins when a defendant can intelligently ascertain from the face of the relevant pleading or paper that the case is removable. A defendant must use reasonable intelligence, but it does not have an independent duty to investigate whether a case is removable.

Court’s analysis

The parties agreed that Hyperion’s initial complaint did not expressly provide a basis for federal jurisdiction. The issue was whether the Explanation of Benefit forms explicitly stated facts from which UnitedHealthcare could determine, without further investigation, that ERISA applied.

The court concluded that they did not. The fact that the forms identified large employers did not automatically establish that the patients were covered by ERISA plans. UnitedHealthcare’s earlier review of the forms had been directed toward settlement, not toward determining whether ERISA applied. The court found that a separate, targeted investigation was necessary and that this investigation began and ended within 30 days before UnitedHealthcare filed its removal petition.

The court distinguished a prior case involving a federal officer defense, where the face of an interrogatory response directly showed the facts supporting federal jurisdiction. Here, the forms did not directly address the nature of the insurance policies or show that ERISA governed them. The court therefore concluded that UnitedHealthcare’s removal was timely.

The court also rejected Hyperion’s request for discovery. UnitedHealthcare was not required to investigate removability, and the court stated that courts should avoid spending extensive time determining what a defendant should have known or could have discovered earlier. Although UnitedHealthcare’s targeted search was not especially difficult or lengthy, the forms did not clearly connect the claims to ERISA.

Disposition

Judge Andrew L. Carter, Jr. denied the motion to remand and denied the request for discovery. The order addressed the timing of removal and the discovery request; it did not decide whether Hyperion was entitled to payment for the medical services.