Medical Provider Gets Paid in Access Mediquip, LLC v. United Health Care Insurance F.3d (5th Cir. 2012)
The District Court Dismisses the Provider’s State Law Claims
Access Mediquip provided equipment to insured’s of United, based on United’s representation of coverage. After claims were filed, United refused to pay. Suit was filed alleging various state law claims. United had filed a motion claiming that the state law claims were pre-empted by ERISA and it filed a motion for partial summary judgment. The district court in Access MediQuip, LLC v. United Health, 2010 WL3909544 (S.D. 2010) ruled in favor of the defendant, United Health. The court granted the motion for partial summary judgment, finding that the state law claims related to an ERISA plan.
The court did note that ERISA did not pre-empt state law causes of action when asserted by an independent third party health care provider against an insurer for its negligent misrepresentation regarding coverage. However, when there was “some coverage” then that necessarily implicated the court’s review of the ERISA plan and the state law causes of action would then be pre-empted.
The Fifth Circuit Reverses
An appeal was taken to the Fifth Circuit and a panel reviewed that decision at 662 F.3d 376 (5th Cir. 2011). In that review, the court held that the misrepresentation claim was not pre-empted, but that the unjust enrichment and quantum meruit claims were pre-empted. Thus, the district courts’ decision was affirmed in part, reversed in part, and remanded. The Fifth Circuit analyzed the district court decision, which cited to a supreme court case Egelhoff v. Egelhoff ex rel., 532 U.S. 141 (U.S. 2001), for the proposition that “relate to” could encompass virtually all state law claims. Therefore, the court needed to be look at the objectives of the ERISA statute to better define the statutory words “relate to”. The court found that the practical assurances, given by United Health, was that Access could expect to be paid reasonable charges if it would procure or finance the devices needed by several patients for their surgeries. While there was some superficial issue about coverage extent, actual coverage was the prime issue. There was not a close enough relation to ERISA or its purposes.
The Fifth Circuit court held that the state law claims were not dependent on or derived from the rights of the patients to recover benefits under the ERISA plans. The court also held that the “existence of coverage” vs. the “extent of coverage” distinction applied by the district court was at odds with two prior cases, Memorial and Transitional. Therefore, the district courts’ decision regarding pre-emption of the misrepresentation claim was reversed.
As to unjust enrichment and quantum meruit; however, these related more to the amount due to be paid under the plan. Therefore, ERISA pre-emption protected the plan from unexpected financial consequences that could result from routine exposure to state law claims. Therefore, those claims were found to be pre-empted.
The Fifth Circuit En Banc Clarifies the Law
The Fifth Circuit; however, then took the case en banc with all of the judges participating. The en banc court noted the Fifth Circuit panels reliance on Transitional Hospital v. Blue Cross Blue Shield of Texas, Inc. 164 F.3d 952 (5th Cir. 1999) and Memorial Hospital Systems v. Northbrook Life Insurance Company, 904 F. 2d 236 (5th Cir. 1990). The panel implicitly rejected a decision that was “in conflict” or “in tension” with the prior cases. This decision was Cypress Fairbanks Medical Center v. Pan American Life Insurance Company, 110 F.3d 280 (5th Cir. 1997) as well as two other earlier cases known as Herman I and Herman II. Interestingly, the oldest case was Herman I, which was a 1988 case, which favored United’s position. The latest case was Transitional Hospital, which was a 1999 case. Accordingly, the rule that one panel cannot overrule another panel was seemingly implicated. This rule was not discussed at length.
The en banc court instead explicitly overruled, remanded, and rejected Cypress Fairbanks, as well as Herman I and II, and reinstated the Fifth Circuit panel opinion and reversed the district court’s opinion. The case was sent to the district court for further proceedings. There was no challenge to the panels’ rejection of the state law claims for unjust enrichment and quantum meruit.
Urge your medical providers to pursue misrepresentation claims regarding coverage. They should hire experienced ERISA counsel to navigate these waters. While ERISA pre-emption is broad, it is not always applicable.