The opinion of the court was delivered by: ROBERTSON
A hospital provided medical services to a patient after an insurance claims processor verified that he was covered by an ERISA plan. The verification turned out to be incorrect. The hospital sued the claims processor and the plan administrator for reimbursement of its bill, asserting federal ERISA claims and state law claims of breach of contract and promissory estoppel. The defendants have moved to dismiss. Upon consideration of their motions, I have concluded for the reasons set forth in this memorandum (1) that the federal ERISA claims must be dismissed, because the patient was not a plan participant, but (2) that the state law claims are not pre-empted by ERISA and may go forward under this court's supplemental jurisdiction.
Plaintiff National Rehabilitation Hospital (NRH) provided medical services valued at $ 43,565.61 to Terence Alfonso beginning on January 22, 1996. Alfonso told NRH that he was a member of a health plan managed by Manpower International, Inc. (Manpower). NRH contacted the claims processor for Manpower's plan, Reliastar Life Insurance Company (Reliastar), for verification. A Reliastar employee represented in a telephone conversation that Alfonso was a plan member but cautioned that telephone verifications were not binding. Soon thereafter, Reliastar faxed written verification that "Terence Alfonso is covered for the following hospital benefits by Northwestern Mutual Life Insurance Company. [Describing the benefits.]" Manpower Motion to Dismiss, Ex. B.
Alfonso assigned to NRH his right to reimbursement for his medical services, and NRH then presented its bill to Reliastar. Reliastar, however, now denied coverage. It asserted that Alfonso's coverage had in fact lapsed at the end of December, three weeks before Alfonso's admission to NRH, because: the last month for which Alfonso had paid a premium was December, 1995; Alfonso had not worked the minimum number of hours necessary over the last months of 1995 to remain eligible for plan coverage for the month of January, 1996; and the plan provided for coverage to lapse on the last day of the last month for which a payment is made.
NRH sued Manpower and Reliastar complaining of (1) breach of fiduciary duty under ERISA,
(2) ERISA promissory estoppel, (3) breach of contract, and (4) state law promissory estoppel. The third and fourth counts are non-federal claims that seek to hold defendants directly liable based on plaintiff's theory that a contract between NRH and both Manpower and Reliastar was formed by the representations of Manpower's agent that Alfonso was a plan participant and by NRH's foreseeable and detrimental reliance on those representations.
Manpower has moved to dismiss, and Reliastar has moved for judgment on the pleadings. Because all parties have augmented the pleadings with factual material, the motions will be considered as motions for summary judgment pursuant to Rules 12 and 56 of the Federal Rules of Civil Procedure.
Manpower's motion to dismiss makes four principal arguments: that NRH lacks standing to bring ERISA claims for Alfonso's benefits; that a breach of fiduciary duty claim to recover individual benefits does not lie under ERISA; that the only promissory estoppel claims cognizable under ERISA are those that involve interpretations by plan administrators of ambiguous plan provisions; and that plaintiff's state law claims "relate to" an ERISA plan and are thus preempted by ERISA. See 29 U.S.C. § 1144(a). Reliastar's motion for judgment on the pleadings makes the additional argument that Reliastar -- the claims processor -- is not an ERISA fiduciary party.
At oral argument, the parties all agreed (notwithstanding NRH's allegation to the contrary in the Amended Complaint, P 7) that Alfonso was not in fact a plan participant when he received services. That agreement defeats the first two of NRH's claims: Count One, for breach of ERISA fiduciary duties, must be dismissed because ERISA does not impose fiduciary duties upon plan administrators' actions vis-a-vis third parties. See generally 29 U.S.C. § 1132(a). Count Two, for ERISA promissory estoppel, must be dismissed because this is not a case of a plan administrator's interpretation of an ambiguous plan provision. See Psychiatric Inst. of Washington, D.C. v. Connecticut Gen. Life Ins. Co., 780 F. Supp. 24, 31-32 (D.D.C. 1992).
The case having thus been limited to the state law claims presented in Counts Three and Four,
the next question is whether ERISA preempts a state law contract action against an ERISA plan administrator and an ERISA claims processor where the action is based on incorrect verifications of coverage for a non-plan participant.
In enacting ERISA, Congress intended to provide uniform federal regulation of employee retirement benefit plans and to make regulation of benefits an entirely federal concern. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987). To that end, the plain language of ERISA's preemption provision is broad, see 29 U.S.C. § 1144(a) (preempting "any and all State laws insofar as they now or hereafter relate to any employee benefit plan" covered by the statute). The Supreme Court has repeatedly held that the scope of ERISA preemption -- whether a state law "relates to" ERISA -- is to be broadly interpreted.
See, e.g., Metropolitan Life Ins. Co. v. Mass., 471 U.S. 724, 730, 85 L. Ed. 2d 728, 105 S. Ct. 2380 (1985); Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96-97, 77 L. Ed. 2d 490, 103 S. Ct. 2890 (1983).
Despite the breadth of ERISA preemption, however, not all state law causes of action that might be characterized by artful pleading as "relating to" an ERISA plan are preempted:
Lawsuits against ERISA plans for run-of-the-mill state-law claims such as unpaid rent, failure to pay creditors, or even torts committed by an ERISA plan -- are relatively commonplace.... These suits, although obviously affecting and involving ...