Recent ERISA Preemption Decision in District of New Jersey Marks Departure from Prior Precedent

In Glastein v. Aetna, Inc., et al., the U.S. District Court for the District of New Jersey, departing from several recent decisions in the District, denied Defendant Aetna, Inc.’s motion to dismiss a medical provider’s claim for reimbursement of insurance benefits on the ground that such claim was preempted by ERISA.

Glastein, an out-of-network orthopedic surgeon, allegedly performed a medically necessary surgery for an Aetna-insured patient. Prior to the surgery, Glastein secured a written authorization for the service from Aetna. Glastein later billed Aetna $209,000, allegedly the “normal and reasonable” charges for the procedure. Aetna did not pay any portion of the charged amount. Glastein sued Aetna, alleging several state common law claims, including breach of contract, promissory estoppel, accounting, and fraudulent inducement. After removing the action from the Superior Court of New Jersey to the District of New Jersey, Aetna moved to dismiss Glastein’s complaint under Federal Rule of Civil Procedure 12(b)(6).

Defendant’s sole argument for dismissal was that Plaintiff’s state-law causes of action were expressly preempted by ERISA’s “express preemption” provision, under which ERISA preempts state laws where the state law refers to an ERISA plan or has an impermissible connection with an ERISA plan. In support of its preemption argument, Aetna cited to several recent decisions where the District dismissed complaints alleging the same state-law causes of action as expressly preempted under ERISA.

The Honorable Anne E. Thompson, U.S.D.J., rejected Aetna’s argument. Acknowledging the recent decisions in the District where common-law claims by out-of-network providers with prior authorizations were found to be preempted, Judge Thompson reached a different result, finding no preemption. In so doing, Judge Thompson distinguished one of the cases reaching a contrary result, Glastein v. Horizon, because the authorization in that case expressly disclaimed a guarantee of payment, indicating that the patient’s claim for benefits was grounded in the patient’s ERISA plan. Judge Thompson distinguished the remaining authority because the provider’s claims in those cases required reference to an ERISA plan, while the complaint before her provided no reason as to why reference to an ERISA plan was necessary.

Ultimately, this decision raises questions as to consistency in analysis of ERISA preemption in the District of New Jersey.

E. Evans Wohlforth, Jr., a Director in the Gibbons Commercial & Criminal Litigation Department, and Charlotte Howells, an Associate in the Gibbons Commercial & Criminal Litigation Department, authored this post.
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