Summary
The United States District Court for the Central District of California granted Beach District Surgery Center’s motion to remand and denied EP Wealth Advisors, LLC’s motion to dismiss as moot. The court held that the plaintiff’s negligent misrepresentation and promissory estoppel claims were not completely preempted under ERISA § 502(a) because they arose from an alleged payment representation independent of the ERISA plan terms. The court remanded the action to the Superior Court of California for Los Angeles County and ordered the federal case closed.
Topics
Practice areas
Questions Presented
- Whether Beach District's negligent-misrepresentation and promissory-estoppel claims were completely preempted by ERISA § 502(a), thereby supporting federal-question removal jurisdiction.
- Whether the court could reach EP's ERISA § 514(a) conflict-preemption-based motion to dismiss after determining that complete preemption did not apply.
- Whether documents submitted by EP should be judicially noticed or incorporated by reference in deciding the motion to remand.
Holdings
- The claims were not completely preempted under ERISA § 502(a) because EP failed to establish both prongs of the Davila test. Beach District could not have brought its claims under ERISA § 502(a)(1)(B), and the claims implicated an independent state-law duty arising from EP's alleged promise to pay a specified rate.
- ERISA § 514(a) conflict preemption does not create federal-question removal jurisdiction, and the court could not reach EP's conflict-preemption arguments after finding no complete preemption under § 502(a).
- The court denied EP's request to judicially notice or incorporate by reference the disputed claim-submission materials and related documents.
Key quotations
“The latter, which provides that ERISA ‘shall supersede any and all State laws insofar as they may now or hereafter relate to’ specified ERISA plans, 29 U.S.C. § 1144(a), provides a defense of conflict preemption that does not give rise to federal-question jurisdiction.” (at 3)
“The Supreme Court has adopted a two-part test for determining whether ERISA completely preempts state law claims.” (at 4)
“Absent binding authority applying Bristol’s conflict preemption analysis of “independent state law claims” to Davila’s complete preemption analysis of “independent legal duty,” the Court declines to add to the confusion by crossing the preemption streams.” (at 7)
“EP fails to establish that both Davila prongs are satisfied. Accordingly, complete preemption does not apply, and the Court lacks subject matter jurisdiction.” (at 8)
Factual background
Beach District, a California medical corporation, provided surgical services to a patient covered by a health plan administered by United Healthcare Services, Inc. Before the procedure, EP's representative allegedly confirmed that EP would pay the usual, customary, and reasonable rate for the identified services rather than the Medicare Fee Schedule. After the procedure, Beach District submitted a bill for $79,695, but EP paid nothing, allegedly relying on a Medicare-based amount below the promised rate. Beach District sued EP under state law for negligent misrepresentation and promissory estoppel based on the pre-service payment representation.
Procedural history
Beach District filed state-law claims for negligent misrepresentation and promissory estoppel in the Superior Court of California, County of Los Angeles. EP removed the action to federal court, asserting complete preemption under ERISA § 502(a), and moved to dismiss based on ERISA § 514(a) conflict preemption. The district court held that complete preemption did not apply, remanded the action to state court, denied the motion to dismiss as moot, vacated all dates, and directed the clerk to close the case.
Remand instructions
The action was remanded to the Superior Court of California, County of Los Angeles, Stanley Mosk Courthouse, 111 N. Hill Street, Los Angeles, California 90012, under Case No. 24STCV30807. All dates were vacated, and the clerk was directed to close the federal case.