Opinion
22-CV-01915 (PAE)(SN)
01-03-2023
SAMUEL TALLER, Plaintiff, v. METLIFE GROUP INC., et al., Defendants.
REPORT AND RECOMMENDATION
SARAH NETBURN UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE PAUL A. ENGELMAYER:
Plaintiff Samuel Taller brings claims, interpreted to include defamation, tortious interference, and fraud, under New York law against MetLife Group Inc., Metropolitan Life Insurance Company, and MetLife Inc. (together, “MetLife” or “Defendants”). Defendants moved to dismiss these claims because they are preempted by the Employee Retirement Income Security Act (“ERISA”) and otherwise fail to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. I recommend that Defendants' motion to dismiss be GRANTED because Plaintiff's claims are preempted by ERISA.
BACKGROUND
I. Plaintiff's Allegations
The following facts are assumed to be true for the purposes of this motion.
Plaintiff is a dentist who treats patients regardless of their insurance status or insurer. ECF No. 26, Am. Compl., ¶ 1. Plaintiff bills his patients for services rendered and “[s]ome patients” assign their dental insurance benefits to him and agree to pay the remaining balance after the insurance provider has covered its portion. Id.
For certain patients, “Metlife reimbursed Metlife insured patients less for their treatment than the fee” charged by Plaintiff. Am. Compl., ¶ 2. MetLife notified those patients in an Explanation of Benefits (“EOBs”) that they should pay a lower “negotiated fee” than what Plaintiff charged because Plaintiff was in a “reduced fee” plan. Am. Compl., ¶ 2, Ex. 2 (Explanation of Benefits).
Plaintiff alleges that he has “no contractual relationship with Metlife, any Metlife affiliates or Metlife's third parties.” Am. Compl., ¶ 1. Plaintiff, however, references a letter he received from MetLife in response to his inquiries regarding the EOBs and attached that letter to his complaint. Am. Compl., ¶ 3, Ex. 3. The letter explained that Plaintiff participated in the Maverest network until May 15, 2021. Am. Compl., Ex. 3. Maverest was acquired by Zelis, which is a “third-party network vendor.” Id. An agreement between Zelis and MetLife allows providers who do not participate in MetLife's network, but do participate in Zelis's network, to be “made available to members of MetLife's dental plans.” Id. By virtue of the MetLife contract with Zelis, “[t]he network fees established between the provider [i.e., Plaintiff] and their network vendor [i.e., Zelis] are applied to claims submitted by the provider for MetLife members.” Id. MetLife obtained access to the Maverest network and the providers with whom it contracted (such as Plaintiff) when Zelis acquired Maverest. Id. Following Plaintiff's inquiries, MetLife agreed to reprocess claims submitted after May 15, 2021, to reflect Plaintiff's “out-of-network status, corrected benefits and applicable accrued interest.” Id.
Plaintiff does not assert any specific causes of action. He alleges that he has lost $16,508 because of MetLife's claims adjustments and seeks $21,706, which includes investigation costs, court fees, loss of income and reputational harm. Am. Compl., ¶¶ 2, 6. Plaintiff also seeks an injunction prohibiting MetLife from sending Plaintiff's patients copies of notices from MetLife to Plaintiff demanding reimbursement of overpayments. Id., ¶ 7.
II. Procedural History
Plaintiff initially filed this action in the Bronx County Civil Court, Small Claims Court, against MetLife Group Inc., alleging that “MetLife underpaid patient claims and advised patients not to pay Claimant in full for the services rendered.” ECF No. 1, Notice of Removal (“Notice”), Ex. B at 2. Plaintiff sought $10,000 in damages-the jurisdictional limit. Id. MetLife removed Plaintiff's action to this Court pursuant to ERISA's federal preemption provision because at least one patient involved in Plaintiff's claims participated in the Memorial Sloan Kettering Cancer Center Value PDP plan, which is governed by ERISA. See Notice. Subsequently, Plaintiff filed an Amended Complaint, abandoning many of his original claims and replacing them with claims of twelve different MetLife insureds. See Am. Compl., Ex. 1. Defendants contend that all the patients listed in Exhibit 1 to Plaintiff's Amended Complaint are insured by ERISA-governed plans. See generally ECF No. 41, Declaration of Judith Crouse (“Crouse Decl”).
Plaintiff also added defendants Metropolitan Life Insurance Company and MetLife Inc., but did not request a summons for these defendants. Defendants state that the proper defendant is Metropolitan Life Insurance Company and seek dismissal of MetLife Group, Inc. and MetLife Inc. as improper defendants because neither entity is a party to the subject insurance policies. See Def. Reply Mem. of Law at 1.
Defendants move to dismiss the case, and Judge Engelmayer referred this matter to my docket for a report and recommendation.
DISCUSSION
I. Standard of Review
A motion to dismiss pursuant to ERISA's preemption provision is considered a motion to dismiss for failure to state a claim under Rule 12(b)(6). Jiras v. Pension Plan of Make-Up Artist & Hairstylists Local 798, 170 F.3d 162, 165 (2d Cir. 1999). To survive a Rule 12(b)(6) motion, a complaint “must allege sufficient facts . . . to state a plausible claim for relief.” Johnson v. Priceline.com, Inc., 711 F.3d 271, 275 (2d Cir. 2013) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). In reviewing such a motion, courts “accept as true all factual statements alleged in the complaint and draw all reasonable inferences in favor of the nonmoving party.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007).
Although ordinarily the Court is limited to the four corners of a complaint when evaluating a motion to dismiss, documents attached to a complaint as an exhibit, or incorporated in the complaint by reference, may be considered. See Rothman v. Gregor, 220 F.3d 81, 88-89 (2d Cir.2000) (noting that the complaint includes “any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference” and that documents “plaintiffs either possessed or knew about and upon which they relied in bringing the suit” may be incorporated); Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002) (noting that, where a complaint relies heavily upon the “terms and effect” of a document, the document is rendered “integral” to the complaint); see also Prof'l Orthopaedic Assocs., P.A. v. 1199 Nat'l Benefit Fund, No. 16-cv-4838 (KBF), 2016 WL 6900686, at *1 n.2 (S.D.N.Y. Nov. 22, 2016), affd, 697 Fed.Appx. 39 (2d Cir. 2017) (“Although the Plan was not attached as an exhibit to the complaint, it is integral to the complaint and is incorporated by reference.....It is therefore properly considered by the Court on deciding the instant motion to dismiss.”) (citing cases).
The “submissions of a pro se litigant must be construed liberally and interpreted to raise the strongest arguments that they suggest.” Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (cleaned up); see also Hill v. Curcione, 657 F.3d 116, 122 (2d Cir. 2011). The Court must, however, examine a pro se plaintiff's complaint “for factual allegations sufficient to meet the plausibility requirement.” Hill, 657 F.3d at 122; see Twombly, 550 U.S. at 570 (a complaint must allege “enough facts to state a claim for relief that is plausible on its face”). Courts “are obligated to draw the most favorable inferences that [a pro se] complaint supports,” but “cannot invent factual allegations that [the plaintiff] has not pled.” Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 2010); see also Aponte v. Fischer, No. 14-cv-3989 (KMK), 2018 WL 1136614, at *4 (S.D.N.Y. Feb. 28, 2018) (a pro se plaintiff is not excused “from compliance with relevant rules of procedural and substantive law”). The Court will not assume the truth of legal conclusions or conclusory statements. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
II. Complete Preemption under ERISA § 502
Defendants first argue that Plaintiff's state common law claims should be dismissed because they are preempted by ERISA. “Congress enacted ERISA to ‘protect . . . the interests of participants in employee benefit plans and their beneficiaries' by setting out substantive regulatory requirements for employee benefit plans and to ‘provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.'” Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (quoting 29 U.S.C. § 1001(b)). “The purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans. To this end, ERISA includes expansive preemption provisions, see ERISA § 514, 29 U.S.C. § 1144, which are intended to ensure that employee benefit plan regulation would be ‘exclusively a federal concern.'” Id. (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)). ERISA's “comprehensive legislative scheme” also includes “an integrated system of procedures for enforcement.” Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985). “This integrated enforcement mechanism, ERISA § 502(a), 29 U.S.C. § 1132(a), is a distinctive feature of ERISA, and essential to accomplish Congress' purpose of creating a comprehensive statute for the regulation of employee benefit plans.” Davila, 542 U.S. at 208. See also Metro. Life Ins. Co. v. Gen. Motors Corp., 481 U.S. 58, 65 (1987) (the ERISA civil enforcement mechanism has such “extraordinary preemptive power” that it “converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule”).
As the Supreme Court has explained:
The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. “The six carefully integrated civil enforcement provisions found in § 502(a) of the statute as finally enacted . . . provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.”Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987) (quoting Russell, 473 U.S. at 146).
Section 502(a)(1)(B) of ERISA provides participants or beneficiaries with a civil remedy to recover benefits due under their plans, to enforce rights under their plans, or to clarify rights to future benefits under their plans. ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a). This “comprehensive civil enforcement scheme . . . completely preempts any state law cause of action that ‘duplicates, supplements, or supplants' an ERISA remedy.” Montefiore Med. Cntr. v. Teamsters Local 272, 642 F.3d 321, 327-28 (2d Cir. 2011) (quoting Davila, 542 U.S. at 209). In other words, state laws that “provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to an employee” are preempted. Stevenson, 609 F.3d at 62 (citation omitted).
Plaintiff's assumed tortious interference, defamation, and fraud claims cannot succeed without first demonstrating that the EOBs and overpayment recovery letters were incorrect, and that MetLife engaged in purposeful interference by sending its letters. And, to decide whether the EOBs and overpayment were incorrect or improper, the Court will have to evaluate the claims and determine whether they were processed in accordance with each patient's ERISA-governed plan. This type of review is precisely what would be considered under a § 502(a)(1)(B) claim “to recover benefits due [a participant] under the terms of his plan” or “to enforce his rights under the terms of the plan.” 29 U.S.C. § 1132(a)(1). See e.g., Segerberg v. Pipe Fitters' Welfare Fund, Local 597, 918 F.Supp.2d 781 (N.D. Ill. 2013) (tortious interference claim against plan administrator preempted because question of whether administrator's conduct was justified “directly depends on plan's terms”); Milwaukee Carpenter's Dist. Council Health Fund v. Philip Morris, Inc., 70 F.Supp.2d 888 (E.D. Wis. 1999) (tortious interference claim preempted because evaluation of the claim “requires interpretation of the agreements themselves”).
Within the Second Circuit, courts apply the Davila test to determine whether a state common law claim is preempted. Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008). ERISA preempts a cause of action where (1) “an individual, at some point in time, could have brought his or her claim under ERISA §502(a)(1)(B)”; and (2) “no other independent legal duty . . . is implicated by a defendant's actions.” Davila, 542 U.S. at 210. The Court of Appeals has further clarified that, under the first prong, “the plaintiff must show that: (a) he is the type of party who can bring a claim pursuant to § 502(a)(1)(B) of ERISA; and (b) the actual claim asserted can be construed as a colorable claim for benefits pursuant to § 502(a)(1)(B).” Arditi v. Lighthouse Int'l, 676 F.3d 294, 299 (2d Cir. 2012).
A. Davila 's First Prong
The question of whether Plaintiff is the type of party that may bring a claim for ERISA benefits turns on whether the benefits in question are assignable. Montefiore, 642 F.3d at 329 (first step of Davila's first prong can be satisfied if the plaintiff is a “healthcare provider to whom a beneficiary has assigned his claim in exchange for health care”). The ERISA-governed plans insuring eight of Plaintiff's patients allow for assignment of benefits, and the plan insuring three other patients do not prohibit assignment. See Crouse Decl. Exs. F at p. 78; J at p. 72; L at p. 74; G at p. 71; H at p. 65; I at p. 79; K; M. Only two patients' plans contain an anti-assignment provision. See id. at Exs. E, at p. 48; N at p. 23. Where there is a valid assignment from a patient, physicians have standing to bring a claim under § 502(a). Am. Psychiatric Ass'n v. Anthem Health Plans, Inc., 821 F.3d 352, 361 (2d Cir. 2016). Thus, Plaintiff is the type of party who can bring a claim for benefits.
Accordingly, assuming these claims are otherwise preempted, Plaintiff lacks standing to bring any claims resulting from Patients M.L.'s and C.I.'s insurance plans. See McCulloch Orthopaedic Surgical Servs., PLLC v. Aetna Inc., 857 F.3d 141, 147 (2d Cir. 2017).
Next, the Court must consider whether Plaintiff's claims “can be construed as a colorable claim for benefits pursuant to § 502(a)(1)(B).” Arditi, 676 F.3d at 299 (internal quotations omitted). A claim is a “colorable claim for benefits” where it “implicates coverage and benefit determinations as set forth by the terms of [an] ERISA benefit plan.” Montefiore, 642 F.3d at 325. Plaintiff is deemed to have asserted state law claims for tortious interference, defamation, and fraud, a “postcard example of the type of state law claim preempted by ERISA.” Chau v. Hartford Life Ins. Co., 167 F.Supp.3d 564, 573 (S.D.N.Y. 2016) (dismissing as preempted claims including tortious interference, defamation, and fraud). Because Plaintiff asserts a “right to payment” for medical services provided under ERISA plans, Montefiore, 642 F.3d at 331, the Court must interpret the plans to determine whether MetLife appropriately made coverage determinations on the patients' claims.
The same is true for Plaintiff's defamation claim. Plaintiff asserts that MetLife made its allegedly defamatory statements in letters sent to its insureds while processing benefit claims. Thus, the challenged conduct - MetLife's EOBs and overpayment letters - “is part and parcel of the ordinary fiduciary responsibilities connected to the administration of a plan,” Davila, 542 U.S. at 219. And because “claims related to the method of processing benefits implicate the plan administrator's fiduciary conduct, [they] qualify as alternative enforcement mechanisms to § 502.” Allen v. Unum Life Ins. Co. of Am., No. 3:15-cv-219 (JAG), 2015 WL 5560072, at *3 (E.D. Va. Sept. 17, 2015) (citing Pilot Life Ins., 481 U.S. at 48). See also Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 5-7 (1st Cir. 1999) (finding that claims for negligent supervision and negligent infliction of emotional distress, based on conduct allegedly committed while processing a claim for benefits, were preempted by ERISA when these claims were shown to have provided for an alternative enforcement mechanism to 29 U.S.C. § 1132(a)).
Accordingly, Plaintiff's state law claims are colorable claims for benefits under § 502(a)(1)(B).
B. Davila 's Second Prong
The second Davila prong asks whether there is any “other independent legal duty that is implicated by a defendant's actions.” Davila, 542 U.S. at 210. “The key words here are ‘other' and ‘independent.'” Montefiore, 642 F.3d at 332. As discussed above, the claims at issue implicate the right to payment and MetLife's conduct in processing claims. So, “the only question remaining is whether some other, completely independent duty forms another basis for legal action.” Id. A cause of action does not give rise to an independent legal duty if liability “derives entirely from the particular rights and obligations established by the benefit plans.” Davila, 542 U.S. at 213. See also Montefiore, 642 F.3d at 332 (no independent duty where causes of action are “inextricably intertwined with the interpretation of Plan coverage and benefits”).
Plaintiff contends that MetLife's communications with its insureds (through the EOBs) interfered with Plaintiff's agreements with his patients to pay his full fee. Am. Compl., ¶ 2. He further claims that MetLife's statements that Plaintiff is not entitled to full payment (through the overpayment letters) hurt his reputation. Am. Compl., ¶ 4. Finally, Plaintiff alleges that MetLife's representations with respect to its insureds and Plaintiff's contractual relationship with MetLife constitutes fraud. Am. Compl., ¶ 3. These communications all arise out of MetLife's administration of claims under Plaintiff's patients' respective ERISA-governed plans.
“Regardless of the characterization of this cause of action by Plaintiff, it arises from the manner in which Defendant communicated its claims determinations to its members and the content of those communications. As a result, analysis of the cause of action will necessarily require the court to examine the claims processes and how they were implemented by Defendant.” Sasson Plastic Surgery, LLC v. UnitedHealthcare of New York, Inc., No. 17-cv-1674 (SJF), 2021 WL 1224883, at *11 (E.D.N.Y. Mar. 31, 2021), recon. granted in part on other grounds, 2022 WL 2664355 (E.D.N.Y. Apr. 26, 2022). Similarly, any tortious interference, defamation, or fraud claim is inextricably intertwined with the interpretation of the relevant ERISA-governed plans. There is no independent legal duty implicated by the Defendants' actions. Thus, the second prong of Davila is satisfied, and Plaintiff's claims are preempted entirely.
CONCLUSION
I recommend that the Court dismiss Plaintiff's claims, as interpreted to include common law tortious interference, defamation, and fraud, because they are preempted under Section 502(a)(1)(B) of ERISA. If the Court disagrees with this recommendation, I respectfully request that the Court remand the matter to me for further evaluation of Plaintiff's claims under Rule 12(b)(6).
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Paul A. Engelmayer at the United States Courthouse, 40 Foley Square, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Engelmayer. of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).