Background
La-Z-Boy sponsored an ERISA-regulated employee health plan administered by Blue Cross Blue Shield of Michigan. Before treating a covered patient, several out-of-network medical providers contacted Blue Cross to determine how the plan would reimburse their services. Blue Cross representatives allegedly stated orally that reimbursement would be calculated at the usual, customary, and reasonable rate. The providers relied on those statements and rendered treatment.
The providers billed $342,296, but Blue Cross paid $1,598.40 based on Medicare rates. The providers sued La-Z-Boy and Blue Cross for negligent misrepresentation and promissory estoppel, seeking payment at the usual, customary, and reasonable rate. The district court dismissed the amended complaint with prejudice, concluding that ERISA expressly preempted the claims, and implicitly rejected a one-sentence request for leave to amend.
The Court’s Holding
The Sixth Circuit affirmed. Applying its controlling decision in Cromwell v. Equicor-Equitable HCA Corp., the court held that ERISA expressly preempted the providers’ negligent-misrepresentation and promissory-estoppel claims because they depended on a plan administrator’s alleged misstatements about coverage or reimbursement under an ERISA plan. The operative complaint tied the promised reimbursement rate to the plan’s terms rather than to a separate agreement between the providers and Blue Cross.
The court declined to consider new allegations and claims contained only in a proposed second amended complaint filed after judgment and after the providers appealed. It also held that the district court did not abuse its discretion by denying leave to amend because the providers’ single-sentence request in their opposition brief supplied neither proposed allegations nor grounds for amendment. The court emphasized that its preemption holding was narrow and did not decide whether ERISA would preempt different state-law claims arising under other factual circumstances.
Key Takeaways
- In the Sixth Circuit, ERISA preempts providers’ negligent-misrepresentation and promissory-estoppel claims when they rest on oral assurances about coverage or reimbursement terms under an ERISA plan.
- Characterizing a dispute as concerning the amount of payment does not avoid preemption when the operative allegations tie the reimbursement rate to plan terms rather than to an independent provider agreement.
- A bare request for leave to amend, without proposed allegations or an explanation of the amendment, does not require a district court to permit amendment.
Why It Matters
The decision confirms that Cromwell remains binding in the Sixth Circuit even though other courts have allowed some provider misrepresentation claims to escape ERISA preemption. Providers relying on preauthorization or verification calls may be unable to pursue state-law remedies when their pleadings make the promised payment depend on an ERISA plan’s terms.
Judge Murphy concurred but criticized Cromwell’s approach and urged that it be read narrowly. He indicated that claims based on contractual duties arising from a genuinely separate agreement between a provider and plan administrator may present a different preemption question.