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September 28, 2001


The opinion of the court was delivered by: Seybert, District Judge.


On June 21, 2000, Defendants moved for an order of dismissal pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted. On June 28, 2000, Plaintiff moved to remand this action to the Supreme Court of the State of New York, Suffolk County, pursuant to 28 U.S.C. § 1447(c). By Order dated August 22, 2000, this Court referred the motion to Magistrate Judge E. Thomas Boyle. The magistrate judge completed his report and recommendation on March 13, 2001, recommending to the Court that the Plaintiffs motion to remand be denied and Defendants' motion to dismiss as to all counts be granted. Plaintiff filed her objections to the Report and Recommendation on March 23, 2001 and Defendants filed papers on April 17, 2001 which urge the Court to adopt the Magistrate's report.

The issues raised arise from Plaintiff's claim that defendant Vytra delayed in approving a tandem double stem cell transplant until it was too late to benefit her husband, who died of multiple myeloma, a blood cancer, in May of 1998. After Plaintiff initiated an action in state court, wherein she alleged eighteen state causes of action,*fn1 the Defendants removed the case to federal court, which gave rise to the instant motions.

In his report and recommendation, the magistrate judge, applying the two-prong test for ERISA removal and preemption set forth in Romney v. Lin, 94 F.3d 74 (2d Cir. 1996), found that the Plaintiffs state law claims were preempted by ERISA and were within the exclusive scope of ERISA's civil enforcement provisions. See Report and Recommendation at 295-99. He then found that although asserted as causes of action for breach of contract, negligence and malpractice under state law, the gravamen of the complaint was an attack on benefits decisions — preempted by ERISA § 514 — and, as such, could not be sustained. Id. at 299-301. For the reasons discussed below, the report and recommendation is adopted in its entirety, the Plaintiffs motion to remand is denied, Defendants' motion to dismiss is granted, and this case is dismissed with prejudice.

The procedural history of this case is amply set forth in Magistrate Judge Boyle's report, as are the other facts of this case. Thus, pursuant to Fed.R.Civ.P. 72(b), the Court proceeds to a de novo review of that "portion of the magistrate judge's disposition to which specific written objection has been made."

In sum, Plaintiff objects to the magistrate judge's determinations that: (1) removal to federal court was proper because her claims relate to an ERISA plan and thus are preempted thereunder; and, (2) dismissal of her claims is warranted. She urges the Court to reject these findings as clearly erroneous. See Pltf.'s Aff. in Opp'n ¶ 2; Pltf.'s Memo. of Law at 1, 4-10. Plaintiff advances four arguments: (1) that ERISA does not apply to HMOs and utilization review; (2) that Vytra is not an ERISA plan; (3) that her state law claims arise from improper medical care and should not be construed under ERISA and/or dismissed; and, (4) that her claims against Dr. Spears and John Doe physicians should be remanded because they are not governed by ERISA. These objections are discussed below.

1. ERISA Applies to All of Plaintiffs Causes of Action

In his Report and Recommendation, the magistrate judge found that,

Plaintiffs policy constitutes an employee welfare benefit plan within the meaning of ERISA. It was a plan established by an employer, North Fork Bank, for the purposes of providing medical benefits through the purchase of insurance. See 29 U.S.C. § 1002(I)(A) (definition of an "employee benefit plan").

Report and Recommendation at 8.

Plaintiff takes issue with the magistrate judge's conclusion. Plaintiffs first and second objections are based on her contention that VYTRA's health care plan is not an employee benefit plan such that it falls within the exclusive enforcement provisions of ERISA. She asserts that although Congress intended for ERISA enforcement mechanisms to provide the exclusive remedy for employee pension plans, it did not intend to have ERISA govern claims relating to HMOs, utilization review and other health-plan issues. See Pltf.'s Memo. at 3-4. Plaintiff argues that the courts' failure to acknowledge the distinction between pensions plans and health care plans has led to "unfair and counter-intuitive decisions" which "strip[] plaintiffs of their rights." Id.

The Court concurs with the magistrate judge's findings and the well-reasoned authority on which he relies. Vytra's health plan is an ERISA "benefit plan" and, as such, Section 514(a) preempts Plaintiffs common law and statutory claims arising from breach of contract, bad faith breach of insurance contract, misrepresentation and negligent misrepresentation under Counts Nine, Ten, Eleven, Fifteen and Sixteen of the Complaint. See Report and Recommendation at 297-99. As recognized by the Supreme Court,

ERISA's comprehensive regulation of employee welfare and pension benefit plans extends to those that provide "medical, surgical, or hospital care or benefits" for plan participants or their beneficiaries "through the purchase of insurance or otherwise." The Federal statute does not go about protecting plan participants and their beneficiaries by requiring employers to provide a given set of minimum benefits, but instead controls the administration of benefit plans.

N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 1674, 131 L.Ed.2d 695 (1995).

In construing the scope of the statute, courts have recognized ERISA's reach over claims arising from a variety of medical and other employee benefit plans. See, e.g., Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (ERISA preemption of tort and contract claims based upon denial of disability benefits); Zervos v. Verizon New York, 252 F.3d 163 (2d Cir. 2001) (reviewing denial of insured plaintiffs motion for a preliminary injunction arising from an ERISA dispute over denial of experimental medical treatment); Kolasinski v. Cigna Healthplan of CT., Inc., 163 F.3d 148 (2d Cir. 1998) (ERISA preemption of state law claims arising from failure to provide insured with compensation for medical treatment); Nealy v. U.S. Healthcare HMO, 844 F. Supp. 966 (S.D.N.Y. 1994) (ERISA governs claims for breach of contract, medical malpractice, wrongful death and misrepresentation based upon delaying husband's medical treatment); Raff v. Travelers Ins. Co., No. 90-CV-7673, 1996 WL 137310, at *3 (S.D.N.Y. Mar. 26, 1996) (recognizing ERISA's extension over claims for breach of contract, conversion and unjust enrichment); see also Logan v. Empire Blue Cross & Blue Shield, 275 A.D.2d 187, 194-95, 714 N.Y.S.2d 119 (2d Dep't 2000) (tort and contract claims for denial of experimental Lyme disease treatment preempted by ERISA), leave to appeal denied, 96 N.Y.2d 823, 729 N.Y.S.2d 443, 754 N.E.2d 203 (2001).

Plaintiff is mistaken in her contention that "Vytra is not the ERISA" plan and in relying on Pegram v. Herdrich, 530 U.S. 211, 120 S.Ct. 2143, 2147, 147 L.Ed.2d 164 (2000). As noted by the magistrate judge, the "plan" at issue is not Vytra but the agreement between Vytra and Plaintiff's employer which sets forth the rules under which beneficiaries are entitled to benefits. This conclusion is consistent with rather than contrary to Pegram, supra, wherein the Court recognized that "[r]ules governing . . . definition of benefits, submission of claims, and resolution of disagreements over entitlement over services are the sorts of provisions that constitute a [employee benefit] plan." Id. at 223, 120 S.Ct. at 2151. In this case, the Plaintiffs claim arise from a health care policy administered by Vytra which set forth rules and conditions for medical care and which excluded procedures deemed by Vytra's medical director to be experimental. See Compl. ¶ 13 & Ex. A. at § 9.3(f).

Accordingly, the Court concurs with the magistrate judge's findings that the subject plan was an employee benefit plan within the meaning of ERISA and that the Plaintiffs claims "relate to" the plan and are thus preempted. The Plaintiffs first and second objections are unsupported and contrary to controlling authority and are, therefore, DENIED.

2. Dismissal is Warranted because all of the claims are Preempted by ERISA Because they Arise from Administration of the Plan

As and for her third and fourth objections, Plaintiff argues that the magistrate misunderstood that, in fact, she alleges claims for improper medical care which are not preempted under ERISA. See Pltf.'s Memo. of Law at 6-7. Relying again on Pegram, supra, Plaintiff argues that mixed eligibility decisions such as those at issue here are not preempted. See id. at 8.

Plaintiff misconstrues Pegram, which involved a physician owned-and-operated HMO and a claim for breach of fiduciary duty within the meaning of 29 U.S.C. § 1109(a).*fn2 In Pegram, the Supreme Court noted that "pure `eligibility decisions' turn on the plan's coverage of particular condition or medical procedure for treatment. `Treatment decisions,' by contrast, are choices about how to go about diagnosing and treating a patient's condition: given a patient's constellations of symptoms, what is the appropriate medical response?" Id. at 228, 120 S.Ct. at 2154. On the facts presented, the Court considered whether the inherent conflict of interest implicated when treating physicians derive financial benefit from withholding care automatically gives rise to a breach of fiduciary duty.

This case is distinguishable on its facts. The magistrate judge, while recognizing that a degree of medical judgment was necessarily implicated, correctly determined that the utilization review determination which gave rise to the instant Complaint involves eligibility for coverage such that Defendants' roles, including that of Dr. Spears, were administrative. See Report and Recommendation at 300-301 (citing Pegram).

The Plaintiff does not cite any authority for her proposition that Vytra, the plan administrator, engaged in the practice of medicine when it reached its benefits determination. The magistrate judge correctly noted the distinction between true medical malpractice claims arising from negligent treatment (Report and Recommendation at 300-301, citing Pacificare of Okla., Inc. v. Burrage, 59 F.3d 151, 153 (10th Cir. 1995)) and claims for wrongful denial of coverage for care recommended by a treating physician which are preempted by ERISA (id., citing Corcoran v. United HealthCare, Inc., 965 F.2d 1321 (5th Cir. 1992), cert. denied, 506 U.S. 1033, 113 S.Ct. 812, 121 L.Ed.2d 684 (1992)). In fact, in recommending dismissal of the claims, the magistrate noted two district court cases in this Circuit wherein statelaw causes of action were dismissed on ERISA preemption grounds on nearly identical facts. See id. at 301-302 (citing Brandon v. Aetna Servs., Inc., 46 F. Supp.2d 110, 113-14 (Conn. 1999); Nealy v. U.S. Healthcare HMO, 844 F. Supp. 966 (S.D.N.Y. 1994)).

The Court concurs with the magistrate judge's determination that all of the Plaintiffs state law claims center on Vytra's refusal to approve coverage and thus stem from an adverse benefits determination such that the claims are preempted by ERISA. The Plaintiffs third and fourth objections are, therefore, DENIED.


Having conducted a de novo review of Magistrate Judge Boyle's March 13, 2001 Report and Recommendation, Plaintiffs objections thereto, and all other submissions made in connection with Plaintiffs motion to remand and Defendants' motion to dismiss, the Court ADOPTS the Report and Recommendation in its entirety. Plaintiffs Motion to Remand is DENIED and ...

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