Suzanne Downey, on behalf of Plaintiff and a class v. ATI Holdings, LLC, doing business as ATI Physical Therapy, and Cherokee Funding II, LLC, doing business as Gain Servicing

Summary

The United States District Court for the Northern District of Illinois dismissed without prejudice Suzanne Downey’s ERISA claim against ATI Holdings, LLC and Cherokee Funding II, LLC because the complaint did not plausibly allege rights or obligations arising under the ERISA plan. The court declined to exercise supplemental jurisdiction over the remaining state-law claims and stated that those claims would be remanded if Plaintiff did not seek to amend the ERISA claim. The court denied ATI Holdings’ request for attorneys’ fees.

Holdings

1. Plaintiff failed to state a plausible ERISA claim because the plan did not confer on her rights concerning medical providers' liens or impose obligations on defendants; her theory arose from the separate contract between Optum and ATI Holdings. Count VI was dismissed without prejudice.
2. After dismissing the sole federal claim, the court declined to exercise supplemental jurisdiction over Counts I through V and ordered those claims remanded to state court if plaintiff did not intend to replead the ERISA claim.
3. ATI Holdings was not entitled to attorneys' fees because plaintiff's position was not shown to be brought in bad faith or without substantial justification, and the unresolved question whether a medical provider may be a proper ERISA defendant made the claim not baseless.

Questions Presented

1. Whether plaintiff plausibly stated an ERISA claim under 29 U.S.C. § 1132(a)(1)(B) against ATI Holdings and Cherokee Funding, including whether the alleged rights arose under the ERISA plan rather than an independent provider contract.
2. Whether the court should exercise supplemental jurisdiction over the remaining state-law claims after dismissing the sole federal claim, where defendants asserted defensive ERISA preemption.
3. Whether ATI Holdings was entitled to attorneys' fees under 29 U.S.C. § 1132(g)(1).

Disposition

other