United States District Court, S.D. New York
OPINION AND ORDER
G. SCHOFIELD UNITED STATES DISTRICT JUDGE
action, removed from the Supreme Court of the State of New
York, New York County, concerns payment for an operation
performed at Mount Sinai Hospital (“Mount
Sinai”). Plaintiff Mount Sinai moves to remand the case
to state court. For the following reasons, the motion to
remand is granted.
Allied Welfare Fund Local 338 Plan of Benefits
(“Allied”) is a self-insured employee welfare
benefit plan that provides health benefits to individuals who
work for certain employers. Allied maintains an office in
Nassau County, New York. The Allied Welfare Fund Summary Plan
Description Plan A (“SPD”) is the document that
governs the administration of the claim at issue. The SPD
requires that all hospitals seeking payment from the fund
obtain preadmission certification and continued stay review.
Per the SPD, failure to obtain pre-admission certification
will lead to a 50% reduction in payment. Defendant Crossroads
Healthcare Management LCC (“Crossroads”) is a
third-party administrator and healthcare management company,
which has agreed with Allied to administer the Allied fund.
Allied also contracts with MagnaCare Administrative Services,
LLC (“MagnaCare”), so that fund participants can
access doctors and hospitals that are part of MagnaCare's
network at a discounted rate. Mount Sinai is one of the
hospitals in that network, and it contracts with MagnaCare to
provide healthcare services at agreed upon prices.
was a participant in Allied's benefits plan. On December
21, 2014, E.D. was transferred from Saint Luke's Hospital
to Mount Sinai for emergency surgery. When E.D. arrived at
Mount Sinai, he was already in a coma, and he died in the
hospital two days later without ever regaining consciousness.
Sinai submitted a UB-04 claim form to Crossroads, which
stated (via a box with a “Y” inserted for
“yes”) that E.D. had assigned his benefits under
the Allied plan to Mount Sinai. Mount Sinai attests that it
is the hospital's “regular practice . . . to obtain
an assignment of benefits, which is why all UB-04s indicate
benefits were assigned, but there are instances when a
patient has not been asked to assign his/her benefits or
cannot do so.”
and Crossroads paid Mount Sinai $ 47, 440.26, or half the
billed amount of $94, 880.52, discounting by 50% on account
of the failure to receive precertification authorization.
Mount Sinai states that it is owed the price it had
negotiated with MagnaCare for the type of surgery E.D.
received, $664, 727.46.
28 U.S.C. § 1441, “[t]he defendant, as the party
seeking removal and asserting federal jurisdiction, bears the
burden of demonstrating that the district court has original
jurisdiction.” McCulloch Orthopaedic Surgical
Servs., PLLC v. Aetna Inc., 857 F.3d 141, 145 (2d Cir.
2017). Federal courts are directed to “construe removal
statutes strictly and resolve doubts in favor of
remand.” Purdue Pharma L.P. v Kentucky, 704
F.3d 208, 220 (2d Cir. 2013). Accordingly, Crossroads and
Allied have the burden of proving that the case should not be
instance, the Complaint raises only state law claims, and the
parties are not diverse. Consequentially, the sole basis for
federal jurisdiction -- which was the basis for removal -- is
if Mount Sinai's state law claims are preempted by the
Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. §§ 1001 et seq.
Aetna Health Inc. v. Davila, 542 U.S. 200 (2004),
the Supreme Court established a two-prong test for
determining whether ERISA preempts state law claims. Under
that test, ERISA displaces a state law claim where:
“(1) an individual, at some point in time, could have
brought his claim under ERISA § 502(a)(1)(B) and (2)
where no other independent legal duty is implicated by a
defendant's actions . . .” Id. at 210
(numbering added). The “Davila test is
conjunctive -- a state-law claim is completely preempted by
ERISA only if both prongs of the test are satisfied.”
McCulloch Orthopaedic, 857 F.3d at 146 (citing
Montefiore Med. Ctr. v. Teamsters Local 272, 642
F.3d 321, 328 (2d Cir. 2011)).
Second Circuit has divided the first prong of the
Davila test into two subparts. McCulloch
Orthopaedic, 857 F.3d at 146. Courts are to analyze
“(1) whether the plaintiff is the type of party that
can bring a claim pursuant to § 502(a)(1)(B) and also
(2) whether the actual claim that the plaintiff asserts can
be construed as a colorable ...