Second Circuit Holds Out-of-Network Provider’s State Law Claims Against Cigna for Payment of Medical Services Are Preempted by ERISA

In Park Ave. Podiatric Care, P.L.L.C. v. Cigna Health & Life Ins. Co., No. 23-1134-CV, 2024 WL 2813721 (2d Cir. June 3, 2024), the Second Circuit Court of Appeals affirmed the dismissal of state law claims brought by Appellant Park Avenue Podiatric Care, P.L.L.C. against Cigna Health and Life Insurance Company to recover payment for foot surgeries Park Avenue performed on a patient enrolled in a health plan administered by Cigna. The district court determined that Park Avenue’s claims were preempted by ERISA and dismissed the action. The Second Circuit affirmed. It held that Park Avenue’s claims are expressly preempted by ERISA § 514(a) because any legal duty for Cigna to reimburse Park Avenue arises from its obligations under the patient’s ERISA plan. The court also held that the district court did not err in considering portions of the ERISA plan document submitted by Cigna in support of its motion to dismiss.

Park Avenue performed various foot surgeries on patient “SS” who was a beneficiary of an ERISA-governed health plan for which Cigna served as the claims administrator. Park Avenue is an out-of-network provider and claimed that Cigna, in pre-surgery phone calls, represented to Park Avenue that payment for covered services rendered to SS was based upon 80% of the customary rate. Park Avenue billed Cigna a total of $197,350, of which Cigna only paid $7,199. Park Avenue sued Cigna under New York state common law for breach of contract, unjust enrichment, and promissory estoppel, and for violation of New York’s Prompt Pay Law. Cigna moved to dismiss the claims and the district court granted Cigna’s motion based on ERISA preemption. Park Avenue appealed.

On appeal, Park Avenue argued that “as an out-of-network provider, its bills to Cigna for the foot surgeries were not related to an ERISA-governed plan, but rather to a separate legal duty that arose from the commitment Cigna made to [Park Avenue] during the pre-surgery phone calls.” The court agreed with Cigna that Park Avenue’s causes of action are related to the patient’s ERISA plan and are expressly preempted. ERISA § 514(a) provides that ERISA supersedes or preempts all state laws insofar as they “relate to any employee benefit plan.” To determine Cigna’s liability to Park Avenue, one must review the terms of the ERISA plan because Cigna’s obligation to pay is based on the ERISA plan’s out-of-network coverage.

Park Avenue also took issue with the district court’s consideration of the Cigna Plan Document because its complaint did not cite to the Plan or attach it. The court explained that “[w]hile courts are generally limited on a motion to dismiss to only reviewing documents appended to a complaint or incorporated in the complaint by reference, a court may nevertheless consider a document not expressly incorporated by reference in the complaint whose terms and effects are integral to the complaint.” The court found that the plan terms were integral to the adjudication of Park Avenue’s claims and the district court did not err in considering them.