In-Network Provider Has Standing to Pursue ERISA Remedies, But State Law Reimbursement Claim Completely Preempted by ERISA

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In Montefiore Medical Center v. Teamsters Local 272, 642 F.3d 321 (2d Cir. 2011), the U.S. Court of Appeals for the Second Circuit held that an in-network provider's state law based reimbursement claim is completely preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001, et seq. (ERISA), and rejected the provider's argument that an otherwise valid assignment of benefits is a "nullity" whenever care is provided in-network.

In Montefiore, the provider maintained an in-network contract with the defendant plan by virtue of its membership in two preferred provider organizations. Montefiore Medical Center initially filed an action in New York state court seeking more than $1 million in health insurance benefits from the defendant ERISA plan based on state law causes of action, including breach of contract and unjust enrichment. The defendant removed the case to the U.S. District Court of the Southern District of New York, alleging that ERISA completely preempted the claims. The provider moved to remand the action asserting that its claims were based on the contract between the provider and the plan. The district court denied Montefiore's motion to remand, finding that its claims were completely preempted by ERISA. The district court then issued a sua sponte order certifying the questions raised on the remand motion to the Court of Appeals for an interlocutory appeal.

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