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Montefiore Medical Center v. Teamsters Local 272

November 12, 2009

MONTEFIORE MEDICAL CENTER, PLAINTIFFS,
v.
TEAMSTERS LOCAL 272, FRED ALSTON IN HIS CAPACITY AS PRESIDENT OF TEAMSTERS LOCAL 272, LOCAL 272 WELFARE FUND, AND MARK GOODMAN IN HIS CAPACITY AS FUND MANAGER OF LOCAL 272 WELFARE FUND, DEFENDANTS.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION & ORDER

Plaintiff Montefiore Medical Center ("Montefiore" or the "Hospital") initially brought this action in New York Supreme Court, Bronx County, against Defendants Teamsters Local 272 (the "Union"), the Local 272 Welfare Fund (the "Fund"), and Fred Alston and Mark Goodman, in their capacities as President of the Union and Manager of the Fund, respectively (collectively, "Defendants"), seeking payment for medical care services provided to the Union's members. On its face, Montefiore's Complaint alleges claims for breach of express or implied contract between the Hospital and the Fund, unjust enrichment, and breach of the Collective Bargaining Agreement (the "CBA") between the Union and its members under a third-party beneficiary theory. Defendants timely removed the action to this Court. Montefiore now moves to voluntarily dismiss its third and fourth causes of action that sound in breach of the CBA pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure and to remand the remaining causes of action to the state court. Defendants oppose remand and cross-move to dismiss the third and fourth causes of action with prejudice and for costs. For the reasons set forth below, Montefiore's motion to voluntarily dismiss the third and fourth causes of action is granted, its motion to remand is denied, and Defendants' cross-motion to dismiss is denied as moot.

I. FACTUAL BACKGROUND

This action arises out of Montefiore's submission of claim forms to the Union and the Fund for payment for medical services rendered to Fund members and participants, and the Fund's alleged non-payment (in full or in part) for those services. The subject claims relate to hospitalization and related services; Montefiore alleges that it is owed upwards of $1 million for such services.

Montefiore is a not-for-profit hospital located in the Bronx, New York. The Union represents employees of parking garage facilities located in the New York metropolitan area and has entered into various CBA's with employers. The employers contribute to the Fund and the Fundadministers an employee welfare benefit plan (the "Plan") that provides medical benefits to employees. Pursuant to the Plan, the Fund receives claims for medical benefits from, and on behalf of, participants or beneficiaries of the Fund and the Fund pays benefits to the participants or beneficiaries, or in appropriate circumstances, directly to health care providers.

From approximately April 2003 through January 1, 2007, the Fund provided healthcare benefits to its members through a contractual relationship with Horizon Healthcare of New York, Inc. ("Horizon"), which is a Preferred Provider Organization ("PPO"). After January 1, 2007, the Fund had a similar agreement with MagnaCare Administrative Services LLC ("MagnaCare"), another PPO. Through these agreements, the Fund's members were given access to a network of healthcare providers. Montefiore was a member of both Horizon's and MagnaCare's network during the relevant time periods. Pursuant to Network Hospital Agreements ("NHA's") with the PPO's, Montefiore provided healthcare services to members of the Fund and charged the Fund agreed-upon rates for its services, which rates typically are established at a discount from Montefiore's customary rates. In exchange, the Fund encourages its members to obtain healthcare services at in-network providers, such as Montefiore. Members who receive care at an in-network provider such as Montefiore pay nothing out-of-pocket other than a modest co-pay, and the Fund makes payment directly to the network providers. However, Montefiore's contract with MagnaCare explicitly provides that if it does not receive payment from the Fund, it is entitled to seek payment directly from the member or beneficiary who received its services.

In this case, Montefiore provided health care services to certain participants and beneficiaries of the Fund and submitted claims for payment to the Fund. Pursuant to the Plan, the Fund requires that it receive claims for payment for services on a uniform billing form called a UB-04 or UB-92. Among other provisions, the UB-04 claim form contains a space for the provider to certify that it has an assignment of benefits from the patient for that claim. Each of the claim forms that Montefiore provided to the Fund as the basis of its claims for payment in this case contain a "Y" for "Yes" in the box certifying that it had received an assignment of benefits from the patient. The Hospital alleges that the Fund has failed to pay these claims, in whole or in part, and that it is owed nearly $1 million. The Fund argues that manyclaim forms were rejectedfor reasons that arise under the terms of the Plan -- to wit, claims were denied because the services were not covered under the Plan, the patient was not an eligible person under the Plan, or certain other actions were not taken as required under the Plan.

Montefiore initially filed this action in New York Supreme Court, Bronx County on March 10, 2009. Defendants timely removed the action to this Court on March 31, 2009 alleging that the first and second causes of action fall within the civil enforcement provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a), and are therefore completely preempted by ERISA; Defendants further alleged that the third and fourth causes of action were completely preempted by section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Defendants then filed their answer on April 15, 2009. Plaintiffs now move to dismiss voluntarily their third and fourth causes of action and to remand the remaining causes of action to New York Supreme Court, Bronx County.

II. DISCUSSION

A. Motion to Dismiss the Third and Fourth Causes of Action

Preliminarily, the Court must address Montefiore's voluntary dismissal of its third and fourth claimsfor breach of the CBA pursuant to Rule 41(a)(2). Under that Rule, "an action may be dismissed at the plaintiff's request only by court order on terms that the court considers proper." Fed. R. Civ. P. 41(a)(2). Here, Montefiore seeks to withdraw both of its claims that assert a breach of contract between the Union and its members based on its determination that "it would not be a judicious use of resources to pursue these third party beneficiary claims, both for reasons of available proof, and in light of the preemption issues they present." Declaration of John G. Martin ("Martin Decl.") ¶ 8. Additionally, Plaintiffs note that the relief sought in the third and fourth causes of action is duplicative of the relief sought in the other claims brought against Defendants and would therefore be "an unwise use of resources." This Court grants Montefiore's request that the third and fourth causes of action be withdrawn from this action, and those causes of action are hereby dismissed without prejudice pursuant to Rule 41(a)(2).

B. Motion to Remand

The central issue before the Court is whether Montefiore's first and second causes of action, although styled as common law claims for breach of contract and unjust enrichment, are completely preempted by ERISA's civil enforcement provision and thus invoke federal subject matter jurisdiction sufficient for removal from the state ...


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