Virginia Lawyers Weekly//June 11, 2023
Virginia Lawyers Weekly//June 11, 2023//
Where a doctor alleged an insurance company failed to fairly compensate him for his services, and the insurance company removed the suit to federal court and argued the claim was preempted by the Employee Retirement Income Security Act of 1974, the suit was remanded. The doctor lacked standing to assert claims under ERISA.
On Sept. 21, 2022, Jianyi Zhang filed a complaint in the circuit court against Cigna Healthcare Inc. Zhang alleges that from December 2019 to May 2021, CIGNA “only paid Plaintiff around 1% of the fair-market rate” for his services. Although the complaint alleges one cause of action for negligence, Zhang also states in the complaint that CIGNA violated two Virginia statutes: Va. Code § 38.2-510 (Unfair Claim Settlement Practices) and § 38.2-3407.15 (Ethics and fairness in carrier practices).
On Oct. 28, 2022, CIGNA removed the action to federal court on the basis of federal question jurisdiction, arguing that Zhang’s claims are completely preempted by the Employee Retirement Income Security Act of 1974, or ERISA. CIGNA has filed a motion to dismiss and Zhang has filed a motion to remand.
The Fourth Circuit has identified a three-prong test to determine whether a claim is completely preempted under ERISA: “(1) the plaintiff must have standing under § 502(a) to pursue its claim; (2) its claim must ‘fall[ ] within the scope of an ERISA provision that [it] can enforce via § 502(a)’; and (3) the claim must not be capable of resolution ‘without an interpretation of the contract governed by federal law,’ i.e., an ERISA-governed employee benefit plan.”
The court need not reach the second or third prongs, as it finds that Zhang possesses neither direct statutory nor derivative standing to assert claims under § 502. Zhang lacks statutory standing under § 502, which provides only that a “participant or beneficiary” may bring a civil action under the provision. “Healthcare providers,” such as Zhang, “are generally not participants or beneficiaries under ERISA and thus lack independent standing to sue under ERISA.”
A healthcare provider may have derivative standing to sue under ERISA if the provider has a valid assignment of the participant’s or beneficiary’s right to payment of their medical benefits. Here, there is nothing in the record to suggest that the participants or beneficiaries of the ERISA plans have made any such valid assignment of payment of medical benefits to Zhang. Accordingly, this court lacks subject matter jurisdiction over this action, has no jurisdiction to consider the motion to dismiss and remands the action to the circuit court.
Plaintiff’s motion to remand granted. Defendant’s motion to dismiss denied as moot.
Zhang v. Cigna Healthcare Inc., Case No. 1:22-cv-1221, May 30, 2023. EDVA at Alexandria (Nachmanoff). VLW 023-3-287. 6 pp.