Park Avenue Podiatric Care, P.L.L.C. v. Cigna Health and Life Insurance Company

Background

Park Avenue Podiatric Care, P.L.L.C. sued Cigna Health and Life Insurance Company for payment for foot surgeries performed for “SS,” whom the opinion identifies as a beneficiary of an employee health-benefit plan governed by the Employee Retirement Income Security Act of 1974 (ERISA). Park Avenue was an out-of-network provider. It alleged that, before treating SS, it contacted Cigna and was told that payment for covered services would be based on 80 percent of the customary rate.

Park Avenue performed surgeries between November 1 and December 13, 2019, and billed Cigna $197,350. Cigna paid $7,199. Park Avenue alleged that Cigna incorrectly calculated 80 percent of the customary rate and asserted four state-law claims: breach of an oral contract, unjust enrichment, promissory estoppel, and violation of New York’s Prompt Pay Law.

Cigna’s Motion

Cigna moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. Cigna argued that ERISA expressly preempted Park Avenue’s state-law claims. The court considered an excerpt from the health-plan document because the complaint relied heavily on the plan’s terms and effect. The document identified an employer-sponsored medical-benefit plan and established that SS was a beneficiary of the ERISA-regulated plan.

ERISA Preemption

The court held that Park Avenue’s claims were expressly preempted by ERISA section 514(a). ERISA preemption applies when a state-law claim has a connection with or refers to an ERISA plan. The court concluded that Park Avenue’s claims arose from coverage and payment determinations made under the plan. Deciding how much Cigna owed would require the court to analyze the plan’s terms and determine the benefits owed.

The court rejected Park Avenue’s argument that its communications with Cigna created an oral contract independent of the plan. According to the complaint, Park Avenue contacted Cigna in its capacity as SS’s plan administrator, the parties discussed what Cigna would pay under the plan, and Cigna later adjudicated the claims and paid $7,199 for covered services. The court therefore concluded that each state-law claim required reference to the ERISA plan.

Disposition

The court granted Cigna’s motion to dismiss. It expressly declined to address the merits of the state-law claims because they were preempted. The court stated that any claim must be brought under ERISA and that Park Avenue must demonstrate standing to assert such a claim. Park Avenue may replead by March 27, 2023; the court stated that failure to replead timely would be a basis for dismissal of the action. The Clerk of Court was directed to terminate the motion.