Opinion
CIVIL ACTION NO. 4:20-CV-1282
2020-08-17
ACS PRIMARY CARE PHYSICIANS SOUTHWEST, P.A., et al., Plaintiffs, v. UNITED HEALTHCARE INSURANCE COMPANY, et al., Defendants.
John Zavitsanos, Michael Alexander Killingsworth, Sammy Ford, IV, Ahmad Zavitsanos Anaipakos Alavi & Mensing PC, Houston, TX, Jonathan E. Siegelaub, Justin C. Fineberg, Lash Goldberg LLP, Miami, FL, for Plaintiffs. Donald C. Colleluori, Andrew G. Jubinsky, Figari Davenport LLP, Dallas, TX, for Defendants.
John Zavitsanos, Michael Alexander Killingsworth, Sammy Ford, IV, Ahmad Zavitsanos Anaipakos Alavi & Mensing PC, Houston, TX, Jonathan E. Siegelaub, Justin C. Fineberg, Lash Goldberg LLP, Miami, FL, for Plaintiffs.
Donald C. Colleluori, Andrew G. Jubinsky, Figari Davenport LLP, Dallas, TX, for Defendants.
ORDER
Andrew S. Hanen, United States District Judge
The Plaintiffs ACS Primary Care Physicians Southwest, P.A., Hill Country Emergency Medical Associates, P.A., Longhorn Emergency Medical Associates, P.A., Central Texas Emergency Associates, P.A., Emergency Associates of Central Texas, P.A., and Emergency Services of Texas, P.A. (collectively, the "Plaintiffs") filed a motion to remand this case to the 190th District Court of Harris County, Texas. (Doc. No. 10). Defendants UnitedHealthcare Insurance Company and UnitedHealthcare of Texas, Inc. (collectively, the "Defendants") filed a response. (Doc. No. 14). Plaintiffs replied. (Doc. No. 16). Following a hearing, the parties submitted supplemental briefing. See (Doc. Nos. 33 & 37). I. Factual Background
A. The Present Action
Unlike many physicians, emergency care providers do not have the same general, albeit perhaps theoretical, ability to choose their patients due to federal and state law requirements requiring them to serve all those who need emergent care. Since the law imposes these duties on emergency health care providers, Texas has also set up minimum compensation requirements to ensure these doctors do not go unpaid or underpaid. Under these requirements, Texas law requires health insurers to compensate emergency medical providers at usual and customary rates, regardless of whether the doctors are participants in the insurer's preferred provider network.
Plaintiffs are emergency care physician groups in Texas. Defendants are health care insurance companies. Based upon the pleadings, from January 2016 through the present, Plaintiffs have provided emergency medical services to patients enrolled in Defendants’ health care plans. The parties apparently agree that the Plaintiffs should have been compensated for these services and that Defendants have paid benefits to Plaintiffs for these services. Due to the fact that Plaintiffs did not participate in Defendants’ provider network, there was no written contract between the parties and consequently no explicitly agreed-upon rate. Plaintiffs allege that the reimbursement levels were "significantly less than the usual and customary rate for the services provided." (Doc. No. 1-6 at 11).
Plaintiffs sued Defendants in the 190th Judicial District Court, Harris County, Texas seeking "to collect damages from Insurance Companies for Insurance Companies’ failure to comply with Texas law and to compel Insurance Companies to pay Plaintiff[s] the usual and customary rate for the emergency services that Plaintiff[s] provided to Insurance Companies’ Members." (Doc. No. 9 at 12). Their Original Petition pleads three causes of action: (1) violations of the Texas Insurance Code; (2) breach of contract implied in fact; and (3) quantum meruit. Id. at 12-14. Defendants removed this case to federal court pursuant to this Court's federal question jurisdiction arguing that Plaintiffs’ claims are completely preempted by the Employment Retirement Income Security Act ("ERISA"). (Doc. No. 1 at 3). Subsequently, Plaintiffs amended their pleadings to extrapolate on certain factual and legal allegations and moved to remand. (Doc. Nos. 9 & 10).
B. The Hill Country Action
Four of the six Plaintiffs in this case previously filed an eerily similar action in the 201st Judicial District Court, Travis County, Texas under the caption Hill Country Emergency Medical Associates, P.A., et al. v. UnitedHealthcare Insurance Company, et al. See (Doc. No. 1-2). Citing almost the same factual allegations, the Hill Country plaintiffs alleged violations of the Texas Insurance Code and the Texas Prompt Pay Act, as well as claims for quantum meruit and declaratory relief. See id. That case was removed to the United States District Court for the Western District of Texas, Austin Division on the basis of complete preemption by ERISA. See No. 1:19-CV-548-RP, Hill Country Emergency Medical Associates, P.A., et al. v. UnitedHealthcare Insurance Company, et al ., Doc. No. 1. The Hill Country plaintiffs filed a motion to remand, which was denied. See id. , Doc. No. 18 (filed as Doc. No. 1-3 in the present action). Following that ruling, the Hill Country plaintiffs moved to voluntarily dismiss the action, and the case was dismissed without prejudice. See (Doc. Nos. 1-4 & 1-5). Subsequently, this action was filed.
This action includes the four plaintiffs from the Hill Country action plus two new plaintiffs. The new plaintiffs are ACS Primary Care Physicians Southwest, P.A. and Emergency Services of Texas, P.A. One of these emergency room physician groups, ACS Primary Care Physicians Southwest, P.A., primarily provides services in the Southern District of Texas.
II. Standard of Review
Under the federal removal statute, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant" to federal court. 28 U.S.C. § 1441(a). The party "seeking removal bears the burden of demonstrating that a federal question exists." Gutierrez v. Flores , 543 F.3d 248, 251 (5th Cir. 2008). Further, "[b]ecause removal raises significant federalism concerns, the removal statute is strictly construed ‘and any doubt as to the propriety of removal should be resolved in favor of remand.’ " Id. (citation omitted).
Defendants removed this action to federal court under 28 U.S.C. § 1331 seeking to invoke this Court's federal question jurisdiction. Under 28 U.S.C. § 1331, federal "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." A case typically "aris[es] under the Constitution, laws, or treaties of the United States" if it passes the "well-pleaded complaint" rule. Under the well-pleaded complaint rule, "the plaintiffs federal law claims must appear on the face of the complaint." McKnight v. Dresser, Inc. , 676 F.3d 426, 430 (5th Cir. 2012). In other words, "a defendant may not [generally] remove a case to federal court unless the plaintiff's complaint establishes that the case ‘arises under’ federal law." Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal. , 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983).
"There is an exception, however, to the well-pleaded complaint rule." Aetna Health Inc. v. Davila , 542 U.S. 200, 207, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). "When a federal statute wholly displaces the state-law cause of action through complete preemption, the state claim can be removed." Id. (citation, quotation, and alteration omitted). As the Supreme Court has explained, "[w]hen the federal statute completely preempts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law." Beneficial Nat. Bank v. Anderson , 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003).
"[T]he ERISA civil enforcement mechanism is one of those provisions with 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.’ " Davila , 542 U.S. at 209, 124 S.Ct. 2488 (citation omitted). The Supreme Court has provided a two-part inquiry to determine whether a claim is completely preempted by ERISA. Under that test, a claim is completely preempted where: (1) a plaintiff "could have brought his claim under ERISA § 502(a)(1)(B)"; and (2) "there is no other independent legal duty that is implicated by a defendant's actions." Id. at 210, 124 S.Ct. 2488. A defendant need only demonstrate that one of the plaintiff's claims is preempted by ERISA for a court to exercise federal question jurisdiction. See Giles v. NYLCare Health Plans, Inc. , 172 F.3d 332, 337 (5th Cir. 1999) III. Analysis
A. Davila Prong 1—Whether Plaintiffs Could Have Brought Their Claims Under ERISA
The first prong of the Davila test inquires into whether the plaintiff could have brought their claims under ERISA § 502(a)(1)(B). Davila , 542 U.S. at 210, 124 S.Ct. 2488. Under ERISA § 502(a)(1)(B), a participant or beneficiary may bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B).
The parties disagree as to whether Plaintiffs could derivatively bring claims under ERISA § 502(a)(1)(B). Plaintiffs in this case are health care providers, and therefore are not "participants" or "beneficiaries" under the language of ERISA § 502(a)(1)(B). Nevertheless, while a health care provider lacks independent or direct standing to bring a claim under ERISA, the provider "may possess standing under ERISA by virtue of a valid assignment." Dallas Cty. Hosp. Dist. v. Associates’ Health & Welfare Plan , 293 F.3d 282, 285 (5th Cir. 2002). Plaintiffs argue that they are "pursu[ing] claims based upon duties owed directly to them, not derivative claims based upon duties owed to their patients." (Doc. No. 10 at 21-22). Defendants counter that the Davila test does not question "whether Plaintiffs are asserting an ERISA claim, but whether ‘at some point in time, [they] could have brought [their] claim under ERISA § 502(a)(1)(B)." (Doc. No. 14 at 11) (emphasis in original) (quoting Davila , 542 U.S. at 210, 124 S.Ct. 2488 ). The Court agrees with Defendants. Plaintiffs would have no relationship with (or cause of action against) Defendants relating to the reimbursements in question without the patient-insurance company relationship. Moreover, Defendants submitted evidence showing that Plaintiffs made the claims for reimbursement at issue here based on an assignment of rights. See (Doc. No. 14-1 at 17). Therefore, Plaintiffs’ claims could have been brought under ERISA.
B. Davila Prong 2—Whether an Independent Legal Duty is Implicated by Defendants’ Actions
The second prong of the Davila test inquires into whether there is an independent legal duty that is implicated by a defendant's actions. Davila , 542 U.S. at 210, 124 S.Ct. 2488. This element is a much closer call. The parties’ dispute on this prong largely focuses on the Fifth Circuit's decision in Lone Star OB/GYN Assocs. v. Aetna Health Inc. , 579 F.3d 525 (5th Cir. 2009). In Lone Star , a health care provider sued an insurer, alleging that the insurer had reimbursed it at a rate lower than the terms set out in a provider agreement between the two parties. The insurer argued that the claims were completely preempted by ERISA. The Fifth Circuit disagreed, holding that "[a] claim that implicates the rate of payment as set out in the Provider Agreement, rather than the right to payment under the terms of the benefit plan, does not run afoul of Davila and is not preempted by ERISA." Id. at 530 (emphasis added). Therefore, where a "partial payment ... resulted from a denial of benefits under the plan, the claim may be preempted," id. at 533, but "where claims do not involve coverage determinations, but have already been deemed ‘payable,’ and the only remaining issue is whether they were paid at the proper contractual rate, ERISA preemption does not apply." Id. at 532.
The parties, as have some courts, analyzed some of the specific claims in the context of Davila's first prong. That could be viewed as somewhat contrary to the Fifth Circuit distinction between the right-of-payment/rate-of-payment. In Lone Star , the Fifth Circuit emphasized the second prong of Davila —the question of whether there was an independent legal duty—before discussing its rationale. While it does not change the result, the Court believes in this context that the analysis of the allegedly non-ERISA based claims is best considered under Davila's second prong.
The second case upon which the parties focus is the aforementioned Hill Country case. There, the court found that Lone Star's holding hinged on the existence of an express provider agreement between the plaintiffs and defendants. In accord with this understanding, the court held that "[a]bsent an independent provider agreement with a separate fee schedule, both the right to payment and the rate of reimbursement would depend on the terms of the ERISA plan." (Doc. No. 1-2 at 7). As the Hill Country plaintiffs did not sue under a breach of contract theory, the court found that the rate of payment was dependent on the terms of the ERISA plan, and thus, that their claims were preempted. The Hill Country court also found that the provisions of the Texas Insurance Code did not create independent legal duties. Importantly, the court held that the Texas Insurance Code § 1301.155(b) "link[s] reimbursement to either a plan's terms or a separate provider agreement, which Plaintiffs—as out-of-network providers—have not negotiated." (Doc. No. 1-2 at 9). Thus, the crux of that court's holding is that without an express provider agreement between the plaintiffs and the defendants, physicians’ claims, even those involving the rate of payment, are completely preempted.
The parties dispute the breadth of the rule that can be derived from Lone Star's holding and the soundness of the Hill Country decision. Plaintiffs argue that Hill Country was wrongly decided because the Fifth Circuit's decision in Lone Star stands for the broader proposition that any claim based upon the rate of payment is not preempted by ERISA. In the alternative, the Plaintiffs argue that, at the very least, Lone Star stands for the proposition that breach of contract claims between an insurer and a medical care provider, like the implied-in-fact contract claims brought here, are not preempted. Plaintiffs also contend that Hill Country's interpretation of Texas Insurance Code § 1301.155(b) is incorrect because it erroneously treated the duty to pay the insured as synonymous with the duty to pay the medical groups.
While it is clear that this Court is bound by the Fifth Circuit's decision in Lone Star , and while it is clear that the decision in Hill Country is not binding precedent, since it is a decision of a fellow district court, both parties focus on this latter decision as well—no doubt because of the similarities of the cases and because of the thoughtful consideration given these issues by the judge in that case.
Defendants argue that the Lone Star holding is much more limited, contending that the Fifth Circuit only held that claims for underpayment brought pursuant to an express provider agreement are not preempted by ERISA. Defendants also argue that Plaintiffs’ interpretation of Texas Insurance Code § 1301.155(b) relies on the amended text that was not added to the provision until September 2019, and not effective until 2020; therefore, the Hill Country court was correct in its interpretation. The Court will address the prevailing law, including the scope of the Lone Star holding, first as it applies to Plaintiffs’ breach of contract and quantum meruit claims, and then discuss the interpretation of the Texas Insurance Code.
1. Whether Plaintiffs’ Breach of Contract Claims Are Preempted Under Lone Star
Although the Plaintiffs may be acting under an assignment of claims from their patients, the Court notes that there is no written or oral contract between the parties that governs to the issues at hand. Having said that, the Court agrees with Plaintiffs that Lone Star requires a finding that their contract claims are not preempted. The parties have cited an array of cases from across the country, with some cases finding that implied-in-fact contract claims are preempted, see, e.g., Emergency Group of Arizona v. United Healthcare , 448 F.Supp.3d 1077, (D. Ariz. 2020) ; Houston Home Dialysis, LP v. BCBS of Texas , 2018 WL 2562692 (S.D. Tex. 2018) ; Spring E.R., LLC v. Aetna Life Ins. Co. , No. CIV.A. H-09-2001, 2010 WL 598748, at *4 (S.D. Tex. Feb. 17, 2010) ; Foundation Ancillary Services v. United Healthcare Insurance Company , 2011 WL 4944040 (S.D. Tex. 2011), and others finding that they are not. See, e.g., Garber v. United Healthcare Corp. , 2016 WL 1734089, at *3-5 (E.D.N.Y. May 2, 2016) ; Long Island Thoracic Surgery, P.C. v. Building Serv. 32BJ Health Fund , 2019 WL 5060495, at *2 (E.D.N.Y. Oct. 9, 2019) ; Premier Inpatient Partners LLC v. Aetna Health & Life Ins. Co. , 371 F. Supp. 3d 1056, 1068-74 (M.D. Fla. 2019). The Court believes the rationale of the latter to be more consistent with Fifth Circuit precedent, and the former to, at times, draw a distinction without a difference, at least under Texas law.
As a general proposition, the cases favoring remand (no complete preemption) find that, in cases of both implied-in-fact contracts and express contracts, there is no need to interpret an ERISA plan because the rate to be paid is external from the ERISA plan. That rule seems to apply in the Fifth Circuit. In a later case interpreting Lone Star , the Fifth Circuit held that the question before a court applying the Davila test was not "whether plaintiff's claims relate to benefits under ERISA plans, but rather whether adjudication of those claims requires an interpretation of an ERISA plan." Kelsey-Seybold Med. Grp. PA v. Great-W. Healthcare of Texas, Inc. , 611 F. App'x 841, 842 (5th Cir. 2015). In a breach of implied contract case, like the one pleaded here, there is no need to interpret an ERISA plan because the claims have already been deemed payable, and the question is simply whether payment has been made at the usual and customary rate. The contract allegations in this case, like those in Lone Star and Kelsey-Seybold , do not involve any claims seeking a right-to-payment under the terms of the plan, nor do they involve the rate of payment defined under the insurance plan. Instead, Plaintiffs contend that all of their claims have already been deemed payable. Therefore, the only dispute is that Defendants did not reimburse Plaintiffs at the usual and customary rate required by the Texas Insurance Code and the parties’ implied-in-fact contract. Contra Spring E.R. , 2010 WL 598748, at *4 (denying motion to remand because "the implied contract at issue here is limited by the terms of the ERISA plan, and therefore not independent"). Since the claims do not require interpretation of an ERISA plan, Plaintiffs’ breach of contract claim cannot be completely preempted.
A defendant may argue that the price terms in its plan, if indeed there are actual payment schedules in the plan itself as opposed to some ancillary agreement, are the "usual and customary rate," but that might only be part of the story, and a jury might be able to determine a usual and customary rate without any reference to the plan by considering other unrelated evidence such as similar provider agreements, prevailing costs of performing the services, and the experience, expertise, and compensation of other doctors in a particular region performing the medical procedure in question.
Despite this conclusion, the Court finds it necessary to address the arguments put forward in the cases finding that ERISA completely preempted similar implied-in-fact contract claims. For the most part, the courts that ruled in favor of preemption draw a distinction between implied-in-fact contracts and express contracts. See Emergency Group of Arizona v. United Healthcare , 448 F.Supp.3d at 1083, (denying motion to remand because "Plaintiffs here cannot [claim they are suing under a provider agreement] because they are not suing to enforce a contract with UHC. Instead, their complaint asks a state court to first conclude that an implied-in-fact contract exists ...."); Foundation Ancillary Services , 2011 WL 4944040 (denying motion to remand because "[i]n contrast to Lone Star , Plaintiff and Defendants here have no provider agreement between them that would form an independent basis for recovery.").
In Texas, this distinction comes with little difference. Under Texas law, "the distinction between an express and an implied[-in-fact] contract is of little importance, if it can be said to exist at all." Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros. Welding Co. , 480 S.W.2d 607, 609 (Tex. 1972). The only difference exists in contract formation. Houston Med. Testing Servs., Inc. v. Mintzer , 417 S.W.3d 691, 698 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (Busby, J.). Defendants cannot articulate any reason why the formation and enforcement of an implied contract requires the interpretation of an ERISA plan, while the formation and enforcement of an express contract does not. See Kelsey-Seybold , 611 F. App'x at 842. Express and implied contracts both create independent legal duties to pay in accordance with their terms, Davila , 542 U.S. at 210, 124 S.Ct. 2488, and Defendants have not shown why the Court should treat them differently for complete preemption purposes. See also Fremont Emergency Servs. (Mandavia), Ltd. v. UnitedHealth Grp., Inc. , No. 219CV832JCMVCF, 2020 WL 1970710, at *3 (D. Nev. Feb. 20, 2020) (rejecting distinction between express and implied contracts for preemption purposes). Therefore, the Court finds Plaintiffs’ breach of implied-in-fact contract claims are not completely preempted.
2. Whether Plaintiffs’ Quantum Meruit Claim is Completely Preempted
The next question is whether Plaintiffs’ quantum meruit claim is completely preempted. Under Texas law, recovery under quantum meruit is "based upon a promise implied by law to pay for beneficial services rendered and knowingly accepted." Leasehold Expense Recovery, Inc. v. Mothers Work, Inc. , 331 F.3d 452, 462 (5th Cir. 2003) (citation omitted). "The measure of recovery for quantum meruit is the reasonable value of the services." Hudson v. Cooper , 162 S.W.3d 685, 688 (Tex. App.—Houston [14th Dist.] 2005, no pet.). Plaintiffs’ Amended Complaint alleges that they rendered valuable services to Defendants’ insureds and that Defendants knew that Plaintiffs would expect to be paid at rates at least as high as the standard codified in the Texas Insurance Code, and which were impliedly agreed to by the parties. Finally, Plaintiffs allege that Defendants arbitrarily reimbursed the Plaintiffs at rates lower than the value of the services provided. (Doc. No. 9 at 10).
The Texas Insurance Code currently requires that the physicians be paid at the usual and customary rate. Given the wide variety of plans and reimbursement rates, there is no guarantee (and nothing written here should be interpreted as the Court holding) that the usual and customary rate is the same as the value of the services provided.
The Court finds these claims are not preempted. Defendants have not shown that adjudication of the merits of Plaintiffs’ quantum meruit claim will require an interpretation of the applicable ERISA plans. Kelsey-Seybold , 611 F. App'x at 842. In Hill Country , the court found that the quantum meruit claims were preempted because Defendants only "accepted the benefit of Plaintiffs’ emergency care according to the terms their enrollees’ plans," and therefore, Plaintiffs "would only be entitled to the rate of reimbursement specified in the [ERISA] plans, no more and no less." (Doc. No. 18 at 10). This Court understands why the court in Hill Country made this finding. Indeed, seemingly the value received by the insurance provider is the fulfillment of its obligations to their insured, and the insurer has a plan or ancillary agreement which presumably sets out or in some manner incorporates or contemplates a rate schedule for the payments owed to the patients or their assignee. Nevertheless, the Court respectfully finds that interpretation disregards the duties imposed on insurers by state law. In Texas, common law pursuant to the concept of quantum meruit and statutory law pursuant to the Insurance Code (discussed below), provided a means to bridge a gap, if one exists, by ensuring emergency room physicians are paid at the usual and customary rates for the services they provide, especially in the absence of an agreement. That duty to pay, where applicable, is placed on the insurers. Plaintiffs allege that Defendants’ payments have fallen short of meeting that requirement. Absent conflict preemption, see infra , note 7, by participating in the insurance business in Texas, Defendants are subject to the additional obligation to provide payment at the "usual and customary rate" to out-of-network emergency room physicians for the medical services provided to their insured. The value of the service could vary greatly; it may be higher, lower, or equal to the reimbursement owed under the plan. Nevertheless, at this stage, the Court cannot find that the value is necessarily tethered to the ERISA plan. As the adjudication of Plaintiffs’ quantum meruit claim does not require an interpretation of the ERISA plan, Plaintiffs’ quantum meruit claim is not preempted. Kelsey-Seybold , 611 F. App'x at 842.
3. Whether Plaintiffs’ Texas Insurance Code Claim is Completely Preempted
The next question is whether Plaintiffs’ Texas Insurance Code claims are completely preempted. The three provisions that Plaintiffs cite as authority are Texas Insurance Code Sections 1271.155(a), 1301.0053(a), and 1301.155(b).
Under Section 1271.155(a) :
A health maintenance organization shall pay for emergency care performed by non-network physicians or providers at the usual and customary rate or at an agreed rate.
Under Section 1301.0053(a) :
If an out-of-network provider provides emergency care ... to an enrollee in an exclusive provider benefit plan, the issuer of the plan shall reimburse the out-of-network provider at the usual and customary rate or at a rate agreed to by the issuer and the out-of-network provider for the provision of the services and any supply related to those services.
Under Section 1301.155(b) :
If an insured cannot reasonably reach a preferred provider, an insurer shall provide reimbursement for [certain] emergency care services at the usual and customary rate or at an agreed rate and at the preferred level of benefits until the insured can reasonably be expected to transfer to a preferred provider.
For reasons discussed below, the Court believes it would be more expedient to discuss the first two provisions ( Sections 1271.155(a) and 1301.0053(a) ) together first and address Section 1301.155(b) last.
The Court finds that the claims under the first two provisions are not completely preempted by ERISA. These two provisions create an independent legal duty on health insurers to pay emergency health care providers "at the usual and customary rate or at an agreed rate." See TEX. INS. CODE §§ 1271.155(a) & 1301.0053(a). In each of their six opportunities to address the matter, Defendants have yet to argue that these provisions do not create an independent legal duty under Davila. On a motion to remand, Defendants "bear[ ] the burden of showing that removal was proper and establishing federal jurisdiction." Kelsey-Seybold , 611 F. App'x at 842. They have not done so here. Moreover, the Hill Country decision, upon which they heavily rely, did not address either of these provisions in its order on the motion to remand. The Court finds that Sections 1271.155(a) & 1301.0053(a) are not completely preempted by ERISA.
This includes Defendants’ notice of removal, (Doc. No. 1), motion to dismiss the original petition, (Doc. No. 5), motion to dismiss the amended complaint, (Doc. No. 13), response to the motion to remand, (Doc. No. 14), reply in support off the motion to dismiss the amended complaint, (Doc. No. 27), and supplement response to the motion to remand, (Doc. No. 37).
Even if Defendants did contend that these provisions were completely preempted, the Court would likely be unpersuaded. To date, states are permitted to impose an "independent legal duty" like the one imposed here by the Texas Insurance Code. Texas places affirmative obligations on emergency room physicians to provide medical care to patients. It does so knowing that these doctors will be conferring benefits on those that are insured (and indirectly their insurer) and those that are not. It stands to reason that in situations like this where the state compels one party (the emergency care doctors) to confer benefits to another (the insurance company) that the state should be permitted to impose a duty on the party receiving the benefit to pay compensation at a reasonable rate. Otherwise, emergency care might not be economically feasible, and the medical care provided by them could be lost. Similarly, if such an obligation is not imposed on the insurance company, a patient in need, even if insured, may hesitate to seek important medical help in emergency situations.
Having said that, the Court notes that the issue of whether state regulation of reimbursement rates is "conflict preempted" by ERISA is currently pending before the Supreme Court. Rutledge v. Pharmaceutical Care Management Association , ––– U.S. ––––, 140 S.Ct. 812, 205 L.Ed.2d 449 (2020) (granting petition for certiorari). While conflict preemption is not a necessary pre-requisite to complete preemption, see Arana v. Ochsner Health Plan , 338 F.3d 433, 440 (5th Cir. 2003) (en banc), if a state ratemaking system is permitted, then claims seeking to recover fees under those rates should not be completely preempted unless the ERISA plan ties its reimbursement rates to the rates imposed by the states.
Section 1301.155(b) presents a somewhat different question. As mentioned, the Hill Country court found the claim under Section 1301.155(b) was completely preempted because its language invokes the plan by requiring a PPO plan to reimburse out-of-network emergency care "at the preferred level of benefits." (Doc. No. 1-2 at 9). Plaintiffs argue that interpretation of the provision is incorrect. They argue that the phrase "at the usual and customary rate or at an agreed rate" refers to the reimbursement that must be made to the emergency care provider, while the phrase "at the preferred level of benefits" refers to the reimbursement (or other consideration or benefits) that must be paid to the insured.
While the statute is perhaps poorly worded, Plaintiffs’ interpretation of the provision is hypothetically correct. The rationale put forward by Plaintiffs in their motion to remand explains this well:
A PPO plan, by design, provides coverage for both in-network and out-of-network medical services, but may provide for different patient cost-share (co-pays, deductibles, or co-insurance) (i.e., "benefits") for services performed by in-network (i.e., "preferred") providers. The significance of the "at the preferred level of benefits" language is to prohibit any such differential in situations where an insured is facing a medical emergency and cannot "reasonably reach" a preferred provider. That provision has nothing to do with the out-of-network rate calculation, which is governed by the preceding clause: "an insurer shall provide reimbursement ... at the usual and customary rate or at an agreed rate ...." The disjunctive phrasing—"at the usual and customary rate or at an agreed rate"—followed by the conjunctive "and at the preferred level of benefits," clearly denotes that the two clauses impose distinct obligations. The first clause governs the rate-of-payment calculation between the medical provider and the insurer, and it makes no reference to plan terms. The second clause imposes a separate requirement governing the relationship between insurer and insured: that plans cannot distinguish between in-network and out-of-network "level[s] of benefits" in their coverage of emergency medical care.
(Doc. No. 10 at 26–27). Plaintiffs brought suit to recover only for the failure to pay at the usual and customary rate. Defendants have not presented any new arguments that the duty to pay at the usual and customary rate runs afoul of Davila. Therefore, to the. extent Plaintiffs’ claims are brought for the Defendants’ failure to pay at the usual and customary rate, they are not preempted.
Nevertheless, a complicating factor exists. Defendants accurately point out that Plaintiffs ignore the fact that the phrase "at the usual and customary rate or at an agreed rate" was added to the statute last September and that it applies only to services provided on or after January 1, 2020. The prior statute was amended in September 2019, and "a health care or medical service or supply provided before January 1, 2020 is governed by" the prior version of the law. See Acts 2019, 86th Leg., ch. 1342 (S.B. 1264), §§ 1.08 and 5.01, eff. Sept. 1, 2019. Therefore, for all claims brought before January 1, 2020, the only potential duty to pay placed on the insurer by the Insurance Code was to pay "at the preferred level of benefits." Plaintiffs have brought claims seeking reimbursement for services performed "[f]rom January 2016 through the present." (Doc. No. 9 at 6). From January 2016 through December 31, 2019, the only claims that could have been brought under this provision would be for reimbursement "at the preferred level of benefits." The preferred level of benefits available in these cases could only be determined by interpretation of the ERISA plan. Therefore, Plaintiffs’ claims for reimbursement pursuant to Texas Insurance Code, Section 1301.155(b), from January 2016 through December 31, 2019, are completely preempted by ERISA. Kelsey-Seybold , 611 F. App'x at 842.
4. Effects of the Court's Ruling as to Section 1301.155(b) on Plaintiffs’ Breach of Contract and Quantum Meruit Claims
The Court has held that Plaintiffs’ breach of contract and quantum meruit claims were not completely preempted as a general matter. Nevertheless, as pleaded, Plaintiffs’ breach of contract and quantum meruit claims assume that the Texas Insurance Code provides an implied agreement to pay at the "usual and customary rate." See (Doc. No. 9 at 8-10). As the Court has found, before January 1, 2020 a price term for claims involving a preferred provider benefit plan could only be pegged under Texas Insurance Code, Section 1301.155(b) "at the preferred level of benefits." The preferred level of benefits available in these cases could only be determined by interpretation of the ERISA plan. Plaintiffs brought claims seeking reimbursement from January 2016 through the present. From January 2016 through December 31, 2019, the only price term available under Texas Insurance Code Section 1301.155(b) for claims involving a preferred provider benefit plan would be for reimbursement "at the preferred level of benefits." Therefore, all breach of contract and quantum meruit claims involving preferred provider benefit plans from January 2016 through December 31, 2019 are completely preempted by ERISA. Kelsey-Seybold , 611 F. App'x at 842.
5. Summary of Davila Prong 2
In summary, Plaintiffs’ claims for breach of implied-in-fact contract and quantum meruit under health maintenance organization ( Section 1271.155(a) ) and exclusive provider benefit ( section 1301.0053(a) ) plans for the entirety of the time in question and under preferred provider benefit plans ( Section 1301.155(b) ) from January 1, 2020 through the present arise from independent legal duties and are not completely preempted by ERISA. Similarly, Plaintiffs’ claims for breaches of Texas Insurance Code Sections 1271.155(a) & 1301.0053(a) and claims for breaches of Texas Insurance Code Section 1301.155(b) from January 1, 2020 through the present are not completely preempted by ERISA. On the other hand, Plaintiffs’ claims for implied-in-fact contract and quantum meruit under preferred provider benefit plans from January 2016 through December 31, 2019 are completely preempted. Similarly, Plaintiffs’ claims for breaches of Texas Insurance Code Section 1301.155(b) from January 2016 through December 31, 2019 are completely preempted. Under Davila , those claims which have been completely preempted are "convert[ed from] an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." 542 U.S. at 209, 124 S.Ct. 2488. One preempted claim is enough to deny remand. See Giles , 172 F.3d at 337. Therefore, the Motion to Remand is DENIED.
IV. Supplemental Jurisdiction
Under 28 U.S.C. § 1367, "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy." In cases involving the ERISA civil enforcement provision, if a defendant demonstrates that one of the plaintiff's claims is completely preempted by ERISA, a court may exercise supplemental federal jurisdiction over the remaining state law claims. See Giles , 172 F.3d at 337. Defendants have shown that at least one of Plaintiffs’ state law claims is completely preempted by ERISA, therefore, this Court has supplemental jurisdiction over the remaining state law claims. See id. As such, this Court has jurisdiction over both the claims which have been completely preempted and the remaining state law claims. See 28 U.S.C. § 1367.
V. Plaintiffs’ Preempted Claims and Defendant's Pending Motion to Dismiss
The Court has held that certain claims filed by Plaintiff are completely preempted by the ERISA civil enforcement mechanism § 502(a)(1)(B). Claims that have been completely preempted by the ERISA civil enforcement mechanism are subject to dismissal. Quality Infusion Care Inc. v. Humana Health Plan of Texas Inc. , 290 F. App'x 671, 682 (5th Cir. 2008). Nevertheless, the Fifth Circuit has held that district courts do not abuse their discretion where they grant a Plaintiff leave to amend their complaint to replace causes of action that were completely preempted with an action under the ERISA civil enforcement mechanism. Ellis v. Liberty Life Assur. Co. of Bos. , 394 F.3d 262, 269 (5th Cir. 2004). In essence, Plaintiffs are faced with the choice to seek leave to amend their complaint to plead the completely preempted causes of action as suits under § 502(a)(1)(B) or have these claims dismissed. See Quality Infusion , 290 F. App'x at 682.
Defendants have filed a separate motion to dismiss seeking dismissal of Plaintiffs’ causes of action for, inter alia , being completely preempted by ERISA. See (Doc. No. 13). The Court will refrain from ruling on that motion for twenty-one days to allow Plaintiffs time to amend their complaint, if they so choose. In the event Plaintiffs choose to amend their pleadings, Defendants are hereby given twenty-one days from the filing of the amended complaint to file an amended response.
VI. Conclusion
For the foregoing reasons, the Plaintiffs’ Motion to Remand (Doc. No. 10) is DENIED.