Background
La Peer Surgery Center provided out-of-network surgical services to a patient covered by an ERISA health plan sponsored by WSP USA and administered by Aetna. Before the procedure, La Peer called Aetna to verify coverage. According to the complaint, Aetna said the plan would pay the remaining balance at the usual, customary, and reasonable rate, rather than under the Medicare fee schedule.
La Peer performed the surgery and billed WSP, which paid at the Medicare rate—about five percent of the bill. Healthcare Ally Management of California, La Peer’s successor in interest, sued WSP and Aetna. The district court dismissed HAMOC’s ERISA-benefits claim for lack of derivative standing, a ruling HAMOC did not appeal, and dismissed its California negligent-misrepresentation and promissory-estoppel claims as ERISA-preempted.
The Court’s Holding
The Ninth Circuit reversed the dismissal of the negligent-misrepresentation claim. The claim alleged an independent injury arising from Aetna’s pre-service representation about the reimbursement rate and La Peer’s reliance on that representation—not a claim for plan benefits or an effort to enforce or alter the plan’s terms.
ERISA did not preempt that tort claim under either the “connection with” or “reference to” tests. A provider’s claim based on alleged misrepresentations during a verification call does not regulate an ERISA-governed relationship or function as an alternative ERISA enforcement action merely because the representation concerns an ERISA plan. But the court affirmed dismissal of the promissory-estoppel claim because Ninth Circuit precedent in Bristol required preemption of that claim.
Key Takeaways
- An out-of-network provider may pursue a California negligent-misrepresentation claim based on alleged pre-service reimbursement representations by an ERISA plan administrator.
- The claim remains independent and nonderivative when it seeks damages for reliance on the representation rather than benefits due under the plan.
- Promissory estoppel based on reimbursement assurances remains preempted under Bristol SL Holdings.
Why It Matters
The decision preserves a state-law remedy for providers that allegedly render services in reliance on inaccurate coverage or reimbursement statements, even when the patient is enrolled in an employer-sponsored ERISA plan. The court emphasized that allowing such claims does not alter patient benefits or undermine uniform plan administration.
The ruling is limited: HAMOC still must prove the alleged misrepresentation and reasonable reliance, and its promissory-estoppel theory cannot proceed.