To the extent that a health-care provider’s promissory-estoppel claim depends on and derives from the rights of the plan participants and beneficiaries to recover benefits under an ERISA plan’s terms, the claim is preempted. . . . But if the claim is based on the defendants’ misrepresentations about the extent to which—not whether—the plan would reimburse the health-care provider, the claim is not preempted.
HOUSTON METRO AND SPINE SURGERY CENTER,LLC, Plaintiff, v. HEALTH CARE SERVICE CORPORATION, d/b/a BLUECROSS BLUESHIELD OF ILLINOIS, et al., Defendants., No. CV H-16-1402, 2017 WL 1231072, at *2 (S.D. Tex. Apr. 4, 2017)
This case offers insight into how promissory estoppel may play a role where a provider seeks reimbursement from an ERISA plan. Houston Metro, the provider, obtained telephone verification that it would be compensated for services provided to a plan participant.
Houston Metro alleges that before it provided medical services to any patient, it sought and “received verification by telephone from Defendants that each patient was covered by a health benefit plan,” and “that the particular procedures were covered by the health benefit plans and would be paid in accordance with the health benefit plan.” Houston Metro alleges that it would not have provided the services if the defendants had not made these statements.
Although promissory estoppel is a simple concept in principle, it becomes much more complicated in the ERISA setting. The courts make a fine distinction between situations when it is allowed based upon whether the court must refer to the ERISA plan document to resolve the issue.
Claim Not Preempted
For example, ERISA does not preempt a third-party provider’s state-law claims based on allegations that the defendants misrepresented that the beneficiary was covered by an ERISA plan when he or she was not. See Access Mediquip, 662 F.3d at 382 (citing Memorial Hosp. System v. Northbrook Life Ins. Co., 904 F.2d 236, 238 (5th Cir. 1990)).
In Memorial, the patient was a new employee, and his insurance coverage would not take effect until 35 days after the treatment began. When the employer represented that the employee was covered when he was not, the court held that ERISA did not preempt the misrepresentation claim. The reason: the claim was based on the existence of coverage, as opposed to the amount or rate of reimbursement for covered services.
In the case at bar, the district court held that Houston Metro did not assert that the defendant insurers misrepresented the existence of coverage. Thus, this line of cases would not apply.
Claims Are Preempted
On the other hand, if a health-care provider’s promissory-estoppel claim depends on and derives from the rights of the plan participants and beneficiaries to recover benefits under an ERISA plan’s terms, the claim is preempted. See Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376, 383 (5th Cir. 2011), opinion reinstated in part on reh’g, 698 F.3d 229 (5th Cir. 2012). Thus, breach of contract claims based on defendants’ alleged failure to pay the full amount of benefits due under the terms of the policy are preempted. See,Transitional Hosps. Corp. v. Blue Cross & Blue Shield of Texas, Inc., 164 F.3d 952, 955 (5th Cir. 1999)
The court held that the provider’s promissory estoppel claims fell into this category:
Houston Metro’s allegation is that the defendants stated that each patient and procedure were covered under an ERISA health-benefit plan and that Houston Metro would be paid in accordance with that plan. Interpreting the plan terms is necessary to learn what payment was due and whether the defendants misrepresented what they would pay.