FMS Nephrology Partners N. Cent. Ind. Dialysis Ctrs., LLC v. Meritain Health, Inc.

144 N.E.3d 692

FMS NEPHROLOGY PARTNERS NORTH CENTRAL INDIANA DIALYSIS CENTERS, LLC, Appellant,

v.MERITAIN HEALTH, INC., et al., Appellees.

Supreme Court Case No. 20S-PL-302

Supreme Court of Indiana.

Argued: October 10, 2019

Filed May 11, 2020

Rehearing Denied August 12, 2020

ATTORNEYS FOR APPELLANT FMS NEPHROLOGY PARTNERS NORTH CENTRAL INDIANA DIALYSIS CENTERS, LLC: Bryan H. Babb, Bradley Dick, Bose McKinney & Evans LLP, Indianapolis, IN, Caroline Turner English, Brian D. Schneider, Emily Baver Slavin, Arent Fox LLP, Washington, D.C.

ATTORNEYS FOR APPELLEES BEACON HEALTH SYSTEM, INC; BEACON HEALTH SYSTEM GROUP BENEFIT PLAN; BEACON HEALTH SYSTEM GROUP BENEFIT PLAN-UNION PLAN: Richard B. Urda, Jr., Urda Professional Corporation, South Bend, IN, Joseph L. Amaral, R. William Jonas, Hammerschmidt, Amaral & Jonas, South Bend, IN

ATTORNEYS FOR APPELLEES UNIVERSITY OF NOTRE DAME DULAC; UNIVERSITY OF NOTRE DAME CHA HMO PLAN (MEDICAL); UNIVERSITY OF NOTRE DAME SELECT HMO PLAN (MEDICAL); UNIVERSITY OF NOTRE DAME PPO PLAN (MEDICAL): Brian E. Casey, Kelly J. Hartzler, Alice J. Springer, Barnes & Thornburg LLP, South Bend, IN

On Petition to Transfer from the Indiana Court of Appeals, Case No. 18A-PL-1349

Slaughter, Justice.

The Employee Retirement Income Security Act of 1974 establishes minimum federal standards governing employee-benefit plans. Under ERISA, the responsibility for regulating this system of benefit plans is exclusively a federal concern. To further the goal of uniform federal standards, ERISA contains two preemption provisions. These provisions' preemptive effect on state laws is far-reaching but not absolute. Some state laws—and hence the claims arising under such laws—survive ERISA preemption, such as those not requiring interpretation of benefit-plan documents. A claim withstands preemption to the extent its validity turns not on the meaning of the plan documents but on a separate legal duty independent of the plan.

Here, a health-care provider sued defendant health-insurance plans, which are governed by ERISA, alleging they failed to pay agreed reimbursement rates for covered services under their plans. On this record, we hold that the trial court erred by entering summary judgment for the defendant plans based on ERISA preemption. A key factual dispute exists concerning a central issue in this case. Contrary to the defendants' arguments, the designated summary-judgment evidence does not establish either that the provider's claims were denied coverage under the plans or that the provider's claims necessitate interpreting the plan documents. We grant transfer, vacate the entry of summary judgment for the defendants, and remand with instructions.

Background Facts and Procedure

Third-party networks are common in the health-care industry. These networks serve as middlemen that connect patients with health-care providers by entering separate, individual contracts with both providers and employee-health plans. The plans receive access to a network of certified providers that have agreed to be reimbursed at negotiated rates discounted from the provider's full sticker price. And providers within these networks receive the certainty and predictability of fixed rates with prompt reimbursement.

Plaintiff, FMS Nephrology Partners North Central Indiana Dialysis Centers, LLC, is a health-care provider. It owns and operates facilities in Indiana that provide dialysis treatments to patients suffering from end-stage renal disease, and it participates in third-party networks. Over the years, FMS has contracted with two such networks, Community Health Alliance and Select Health Network. Defendants University of Notre Dame and its affiliated employee health-insurance plans have contracted with both health networks. Defendants Beacon Health and its affiliated employee health-insurance plans have contracted only with Community Health Alliance.

To handle various claims-administration functions for the plans, both the Notre Dame and Beacon Health plans engaged Defendant Meritain Health as their third-party administrator. In that capacity, Meritain processes the claims a health-care provider submits to the Notre Dame and Beacon Health plans. Meritain then issues an "Explanation of Benefits" for each claim. The EOB memorializes information about the claim, including the date of service, the total amount billed, and whether the claim is covered under the plan. This coverage determination is reflected in an EOB's various columns:

• "Provider Discount",

• "Ineligible Amount",

• "Pymt Made By Plan",

• "Patient Responsibility", and

• "Notes".

Once Meritain determines that a claim is covered under the applicable plan, the provider agrees to accept, and Notre Dame and Beacon Health agree to pay, the discounted rates for that provider's services as reflected in the network agreements.

Of relevance here, seven patients received dialysis-related treatments from FMS over a four-year period: five patients were covered under Notre Dame's plans and two under Beacon Health's plans. As administrator, Meritain issued EOBs for the claims FMS submitted. According to FMS, the EOBs show Meritain's coverage determinations and the agreed reimbursement payable to FMS for services rendered. FMS alleges that some line items in the EOBs reflect that it received the negotiated rate for its claims, while other line items show the claims were subject to a one-hundred-percent "Provider Discount". According to FMS, some of these amounts reflect claims for covered services for which FMS received an amount less than the agreed rates.

FMS thus sued Meritain, Notre Dame, and Beacon Health, alleging, among other things, breaches of the Community Health Alliance and Select Health Network agreements. FMS also sued in the alternative for implied contract and promissory estoppel. Notre Dame and Beacon Health answered that FMS's claims were foreclosed under principles of both "complete" and "conflict" ERISA preemption. Early in discovery, FMS moved for summary judgment on its claim that Notre Dame and Beacon Health breached the Community Health Alliance network agreement. Notre Dame and Beacon Health opposed this motion and cross-moved for summary judgment, again arguing ERISA preemption. These defendants also argued lack of contractual privity between FMS and themselves.

The trial court granted the defendants' motions and entered partial summary judgment in their favor and against FMS, concluding that FMS's claims were preempted under ERISA's conflict-preemption provision, 29 U.S.C. § 1144(a). The court believed that resolving payment disputes under the network contracts would require it to interpret the plans' terms to determine how much FMS was owed. In addition, the court found there was no just reason for delay and directed the entry of final judgment under Trial Rule 54(B) in favor of the Notre Dame and Beacon Health defendants and against FMS.

The court of appeals affirmed, agreeing with Notre Dame and Beacon Health that ERISA preempted FMS's claims. FMS Nephrology Health Partners N. Cent. Ind. Dialysis Ctrs, LLC v. Meritain Health, Inc. , 120 N.E.3d 1012, 1014 (Ind. Ct. App. 2019), trans. granted. The appellate court believed our opinion in Midwest Security Life Insurance Co. v. Stroup , 730 N.E.2d 163 (Ind. 2000), compelled the conclusion that FMS's claims were preempted. Analogizing to Stroup , the court found that "FMS's claims are based on an alleged failure to pay sums due for services covered by an ERISA-regulated plan." FMS Nephrology Partners , 120 N.E.3d at 1020–21. Thus, the court concluded, FMS's claims were preempted because "the trial court would have had to refer to and interpret the Beacon and Notre Dame Plans to determine (1) whether proper payment had been rendered, and (2) if not, how much additional payment FMS was entitled to receive." Id. at 1021.

After the appellate court denied rehearing, FMS sought transfer, arguing that the court of appeals' opinion is at odds with Stroup , 730 N.E.2d 163, and puts Indiana out of step with settled ERISA case law from elsewhere. Having granted transfer, thus vacating the appellate decision, we vacate the trial court's judgment and remand.

Discussion and Decision

At issue is whether FMS can proceed with its claims, all brought under state law, or whether ERISA preempts those claims. Two forms of ERISA preemption are before us: complete preemption and conflict preemption. The courts below determined that FMS's claims were foreclosed by ERISA's conflict-preemption provision. But we consider both that provision and the alternative ground—complete preemption—urged for affirming the trial court's judgment.

We begin with complete preemption. Despite its name, complete preemption is not about preemption but jurisdiction. It confers federal-question jurisdiction even for claims denominated as state-law claims. The Supreme Court has pronounced a two-prong test for complete preemption asking, first, whether the claim at some point could have been brought under ERISA's civil-enforcement scheme; and, second, whether the defendant's actions implicate any independent legal duty apart from ERISA. On this record, we hold that FMS's claims satisfy neither prong and thus are not completely preempted.

Then we address conflict (or express) preemption. We briefly discuss express preemption under the Supreme Court's general preemption jurisprudence, which looks to the plain text of the applicable preemption statute. Despite its literalism when interpreting most preemption statutes, the Court continues to endorse an atextual, policy-driven test for ERISA preemption. This test asks whether a claim has either a "reference to" or a "connection with" an ERISA plan. Applying the test, we hold first that express preemption does not prevent a health-care provider from enforcing a separate contract against a plan. We also hold that a key factual dispute remains over whether the underlying claims were deemed covered under the defendant plans. If covered, then...