• Paul M. Sullivan, Jr.

Out-of-Network Hospital "Opts Out"​

Crescent City Surgical Centre elected to sue United Healthcare of Louisiana in Louisiana state court for state law claims: breach of contract, violations of the Louisiana Unfair Trade Practices Act, detrimental reliance, fraud and negligent misrepresentation.

United removed the matter to federal court. United contended the hospital's claims were preempted by ERISA and the federal court had federal question jurisdiction.

The hospital moved the court to remand the case, that is, to send if back to the state court. And so it did.

Why did the court reach its result and remand the case? The court wrote that in regard to ERISA preemption of third-party health care providers' claims against out-of-network insurers, it depends on precisely what rights the providers are enforcing and what has been breached.

The hospital's providers could sue as assignees of their patients' ERISA benefit claims in a derivative capacity. In contrast they can also opt and sue directly based on a separate agreement between them and the insurer. The first type of suit, the derivative action, is removable to federal court. The second type, the direct action, is not.

Tie goes to the runner! The burden is on the removing party to prove federal question jurisdiction. Doubts about the existence of federal subject matter jurisdiction's existence are resolved against the removing party.

The hospital had elected to sue in state court based exclusively on state law causes of action. It even expressly disavowed any ERISA claims as assignee. Even though the hospital in fact was assigned its patients' ERISA claims, the hospital could and did elect not to enforce them. By opting out of ERISA in effect the hospital could pursue its non-ERISA claims in the state court where it had brought them.

Crescent City Surgical Centre v. United Healthcare of Louisiana, Inc., (U.S. D.C. E.D. La, November 18, 2019).

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