NEW YORK, Nov. 16, 2011 (GLOBE NEWSWIRE) -- The United States Court of Appeals for the Fifth Circuit, reversing a lower court decision, has ruled that ERISA does not preempt certain state statutory and common law claims for negligent misrepresentation and other unfair and deceptive practices,.
In a $22 million lawsuit, Access Mediquip L.L.C. ("AMQ"), which provides medical devices and device management services to hospitals, ambulatory surgery centers and insurers, sued United Healthcare for failing to reimburse AMQ for equipment United had promised it would cover.
"The decision is significant not only for Access Mediquip, but also for many other providers who frequently are confronted with denials by insurers after obtaining assurances that payment will be provided," says D. Brian Hufford of Pomerantz Haudek Grossman & Gross LLP, who argued the appeal. "Now we will be able to pursue claims under ERISA as well as for misrepresentation under state law, both of which have considerable merit in our view," he adds.
AMQ does not make, distribute, or sell medical devices, but purchases the devices from manufacturers after verifying coverage and receiving assurance from the insurer that it can bill the insurer directly for the device. Thus, it ensures that such devices are available when needed for applicable surgeries. In purchasing devices, AMQ relies on such assurances of payment from insurers.
In an action filed in 2009 in the Southern District of Texas, AMQ alleged that defendant United Healthcare Insurance Co., in spite of making such assurances, had refused to pay AMQ over $20,000,000 for devices it had purchased on behalf of United's insureds. AMQ alleged violations of ERISA and state common and statutory law. The Fifth Circuit held that the district court had misread its precedent on the issue and had improperly found that AMQ's state law claims depended on or were derived from the rights of the patients to recover benefits under their ERISA plans, thus requiring preemption. Instead, the Circuit Court held, "[c]onsultation of the plans' terms is . . . not necessary to evaluate whether United's agents' statements [promising AMQ it could bill United] were misleading" and that "[AMQ]'s alleged right to reimbursement does not depend on the terms of the ERISA plans."
In July 2010, United – focusing on three patients' exemplar claims – asked the district court to rule solely on the question of whether ERISA preempted AMQ's state law claims. In October 2010, the court entered summary judgment against AMQ, holding that ERISA preempted the claims because, in the court's view, they related to the extent, rather than the existence, of an insured's coverage and were therefore subject to preemption.
According to the Fifth Circuit decision, the district court's differentiation between extent and existence of coverage in determining preemption was incorrect, and ERISA did not preempt the claims because "[t]he merits of Access's misrepresentation claims do not depend on whether its services were or were not fully covered under the patients' plans." The Court further noted that preventing third parties such as AMQ from pursuing remedies under state law for such misrepresentations frustrates rather than promotes the goals of ERISA.
The Court affirmed summary judgment in favor of United to the extent it agreed that ERISA preempted AMQ's state law claims for unjust enrichment and quantum meruit. The case will now proceed in the district court on the ERISA and three state law claims.
The law firms of Novack and Macey LLP of Chicago and Nathan Sommers Jacobs of Houston were on the briefs.
Pomerantz Haudek Grossman & Gross LLP, which has offices in New York, Chicago, and Washington, D.C., is acknowledged as one of the premier plaintiff class action firms, and, in particular, has been a leader in the industry in health care class actions on behalf of providers and patients. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 70 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of fraud, breaches of fiduciary duty, and corporate misconduct. Pomerantz has recovered numerous multimillion-dollar damages awards on behalf of class members.
Counsel for plaintiffs are continuing to investigate these claims, and other related claims that may be added to the litigation. Questions about this matter may be directed to D. Brian Hufford, Esq. of Pomerantz Haudek Grossman & Gross LLP, by phone (212-661-1100) or email (dbhufford@pomlaw.com).