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McCulloch Orthopedic Surgical Services, PLLC v. United Healthcare Ins. Co. of New York

United States District Court, S.D. New York

June 8, 2015



J. PAUL OETKEN, District Judge.

Plaintiff McCulloch Orthopedic Surgical Services, PLLC, the practice of Dr. Kenneth E. McCulloch ("McCulloch"), brought an action for promissory estoppel against a party identified in the case caption as "United Healthcare Insurance Company of New York a/k/a Oxford (Patient Mary Beth Yarrow)" ("Oxford") in New York Supreme Court for New York County. Oxford removed the action to this Court. McCulloch moves to remand and Oxford moves to dismiss. For the reasons that follow, McCulloch's motion is denied and Oxford's motion is granted.

I. Background

McCulloch performed arthroscopic knee surgery on Mary Beth Yarrow ("the Patient") on February 23, 2012. ( See Dkt. No. 38, Amended Complaint ¶ 7 ["Amended Complaint"].) Prior to performing the surgery, on February 15, 2012, McCulloch's staff "contacted [Oxford] and was assured that the Patient was covered by a health care plan administered by [Oxford], that such plan provided for payment to out-of-network physicians, that the plan covered the surgical procedures that [McCulloch] would be providing for the Patient, and that [Oxford] would reimburse [McCulloch] at 70% of UCR [usual, customary, and reasonable] rates for such procedures." (Id. ¶ 3.) After the surgery, McCulloch billed Oxford $34, 024, allegedly the UCR rate for the procedures it had performed. (Id. ¶ 8.) After certain "deductions and offsets, " McCulloch claimed that Oxford should pay him $15, 479.80 for the surgery. (Id. ¶ 10.) Oxford paid $641.66. (Id. )

McCulloch, noting that $641.66 is "less than what [Oxford] spends on a set of tires for the limousine of its CEO, " sued Oxford in New York Supreme Court on July 3, 2014. (Dkt. No. 4, Ex. 1; Dkt. No. 23, McCulloch's Reply Memorandum of Law in Further Support of its First Motion to Remand, at 3.) On July 15, 2014, McCulloch served a summons and complaint on the New York Department of Financial Services ("NYDFS"), which insurers must appoint as agent for service of process under New York Insurance Law § 1212. NYDFS forwarded the summons and complaint to CT Corporation, Oxford's designated agent for service of process, by regular mail. CT Corporation received the papers on July 28, 2014. Oxford filed a notice of removal 30 days later, on August 27, 2014. (Dkt. No. 1.)

Shortly thereafter, Oxford filed a motion to dismiss the Complaint and McCulloch filed a motion to remand the case to state court. (Dkt. Nos. 3, 8.) After both motions were fully briefed, McCulloch-without seeking leave of the Court or opposing counsel-filed a putative amended complaint. (Dkt. No. 38.) Although the filing was procedurally improper, the Court granted McCulloch leave to amend nunc pro tunc and accepted the filing. (Dkt. No. 41.) McCulloch again moved to remand the case to state court or, in the alternative, to dismiss the Amended Complaint without prejudice. (Dkt. No. 42.) Oxford renewed its motion to dismiss. (Dkt. No. 51.)

II. Motion to Remand

McCulloch moves to remand this case to state court on the grounds that this Court lacks subject matter jurisdiction and that Oxford's removal of the case to federal court was untimely. Oxford moves to dismiss on the ground that McCulloch's claims, although styled as claims for promissory estoppel, are completely preempted by section 502(a) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a), and also contends that the removal was timely.

A. Legal Standard

In order to remove a civil action to federal court, a defendant must file a notice of removal "within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based." 28 U.S.C. § 1446(b). This statute is "strictly construed against removal and all doubts should be resolved in favor of remand." Beatie & Osborn LLP v. Patriot Sci. Corp., 431 F.Supp.2d 367, 383 (S.D.N.Y. 2006) (internal quotation marks omitted).

Under 28 U.S.C. § 1441(a), a defendant may remove from state court to federal court "any civil action... of which the district courts of the United States have original jurisdiction." In most cases, a defense that plaintiff's claims are preempted by federal law will not confer federal question jurisdiction under the well-pleaded complaint rule. See Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003). However, "[w]hen a federal statute wholly displaces the statelaw cause of action through complete pre-emption, the state claim can be removed to federal court." Arditi v. Lighthouse Int'l, 676 F.3d 294, 298 (2d Cir. 2012) (internal quotation marks omitted). In order for a defendant to show that a claim is completely preempted by ERISA, the defendant must demonstrate not only that "the state law cause of action is preempted by ERISA" under the express preemption provision contained in ERISA section 514(a), 29 U.S.C. § 1144(a), but also that "th[e] cause of action is within the scope' of the civil enforcement provisions of ERISA § 502(a), 29 U.S.C. § 1132(a)." Plumbing Indus. Bd. v. E.W. Howell Co., 126 F.3d 61, 66 (2d Cir. 1997) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-67 (1987)); see also Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 371 (4th Cir. 2003) ("The fact that a state law claim is preempted' by ERISA-i.e., that it conflicts with ERISA's exclusive regulation of employee welfare benefit plans-does not... provide a basis for removing the claim to federal court. The only state law claims properly removable to federal court are those that are completely preempted' by ERISA's civil enforcement provision, § 502(a)."); Towne v. Nat'l Life of Vt., Inc., 130 F.Supp.2d 604, 608 (D. Vt. 2000) ("[T]he fact that a claim may ultimately be pre-empted by ERISA § 514(a) can never -standing alone-give federal courts removal jurisdiction over a case. At least one of the claims asserted by the plaintiff must be completely pre-empted under ERISA § 502(a) in order for removal to federal court to be proper.").

The Supreme Court has clarified that an action is "within the scope" of § 502(a) "if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant's actions." Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004); see also Towne, 130 F.Supp.2d at 607 (noting that only "claims that can properly be characterized as seeking to recover benefits, enforce rights, or clarify rights to future benefits under a plan covered by ERISA are said to be completely preempted" (citing Metro. Life, 481 U.S. at 62-67)).

B. Discussion

McCulloch moves to remand the case to state court on the grounds that removal was untimely and that the Court ...

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