The opinion of the court was delivered by: John S. Martin, Jr., United States District Judge.
Eric Rubin-Schneiderman ("Plaintiff") originally filed this action
against Merit Behavioral Care Corp. ("Merit"), Sati Ahluwalia, M.D.
("Dr. Ahluwalia"), and Empire Blue Cross and Blue Shield ("Empire Blue
Cross") (collectively "Defendants") in New York Supreme Court. Defendants
removed the case pursuant to 28 U.S.C. § 1441 on the grounds that
Plaintiff's claims are completely preempted under the Employee Retirement
Income Security Act ("ERISA"), 29 U.S.C. § 1144(a). Plaintiff now
moves to remand the case to state court. For the reasons set forth
below, Plaintiff's motion is denied.
Plaintiff's complaint and accompanying affidavits set forth the
following facts. Plaintiff's parents own a company called Barson Hardware
Co., Inc. ("Barson"). During the relevant time period, Barson maintained
a group health plan with Empire Blue Cross known as the Empire BlueChoice
Preferred Provider Organization ("BlueChoice PPO"), which was an
ERISA-governed plan. (Schneiderman Decl. Ex. A.) Plaintiff was insured
under the plan as a dependent of his parents until he no longer qualified
for coverage at age nineteen. In February 1997, Plaintiff's father
submitted an application to Empire Blue Cross to continue Plaintiff's
coverage as an individual. (Schneiderman Decl. Ex. B.)
The BlueChoice PPO allows members to obtain medical care from
in-network or out-of-network doctors, and the reimbursement benefits
differ accordingly. Some medical services require pre-approval by a
utilization review agent before the patient obtains care, whether care is
sought from an in-network or out-of-network doctor. Empire Blue Cross
employed Merit to provide these utilization review services. Mental
health services was one category of treatment that required
Plaintiff suffers from various psychiatric disorders. In August 1997,
Plaintiff's treating physician recommended that Plaintiff be placed in an
in-patient treatment facility known as Four Winds Hospital. Plaintiff's
father contacted Merit and was told that Plaintiff would have to undergo
a pre-admission psychiatric evaluation to determine whether admission to
Four Winds would be covered by his policy. Although the evaluating
physician at Four Winds recommended admission, Merit denied coverage. In a
letter dated September 9, 1997, Dr. Ahluwalia, an employee of Merit,
stated that "[b]ased on the information that we received and national
professional criteria for medical necessity, [Merit] cannot authorize
inpatient psychiatric treatment at Four Winds Hospital" because the
"current level of symptoms can be treated at a lower level of care."
(Pl.'s Mem. Supp. Remand, Ex. A.) Dr. Ahluwalia instead recommended
intensive outpatient treatment. Seven months later, on April 6, 1998,
Plaintiff attempted suicide at his parents' residence. He was
subsequently transferred to Four Winds Hospital.
Plaintiff brought this action against Empire Blue Cross, Merit, and
Dr. Ahluwalia based on Merit's refusal to authorize coverage for
in-patient care for Plaintiff's psychiatric illness.
Plaintiff claims that Merit and Dr. Ahluwalia were negligent in
refusing coverage, and that Empire Blue Cross is vicariously liable for
their acts. Plaintiff also charges both Merit and Empire Blue Cross with
negligent hiring, training, and supervision. Following Defendants'
removal, Plaintiff brought this motion to remand on the basis that (1)
his policy is not governed by ERISA and (2) his state law claims are not
subject to complete preemption.
In order for ERISA to govern the terms of an insurance policy, the
policy must be sufficiently connected to an ERISA-governed plan. Plaintiff
argues that the continuation of his policy as an individual essentially
severed his plan from his parents' ERISA plan because the continuation
was not a plan benefit, but a creature of state law. By the terms of
Section 4305 and of the policy, continuation coverage extends a group
member's coverage for a limited time when membership in the group ends.
The plain language of the statute and the policy thus suggest that the
continuation coverage falls under the original plan. In the context of
continuation under COBRA, courts have held that a policy continuation
remains part of the original ERISA plan.*fn1 See, e.g., Demars v. Cigna
Corp., 173 F.3d 443, 447 (1st Cir. 1999); Mimbs v. Commercial Life Ins.
Co., 818 F. Supp. 1556, 1560-61 (S.D. Georgia 1993). Courts reason that
the ability to continue coverage arises as the result of enrollment in an
ERISA plan, that the terms of the continuation policy are identical to
those of the group contract, and that the employer has continuing
obligations in administering the policy. See Demars, 173 F.3d at 447;
Mimbs, 818 F. Supp. at 1561. This reasoning is no less applicable in
Plaintiff's case, where the statute governing the right to continue
coverage arises under state law, rather than under COBRA. In particular,
Section 4305(e) explicitly provides that premium payments are to be made
directly to the employer.*fn2
Therefore, Plaintiff's continuation of his coverage as an individual in
1997 did not sever his policy from his parents' ERISA plan, and his