Defendants in State Case Alleging ERISA Denials File Notice to Remove to Federal Court

A case originally brought in Orange County Superior Court by five substance use disorder treatment providers against Anthem Blue Cross Life and Health Insurance Company and affiliates will proceed in federal court, per a notice of removal filed Tuesday in the Central District of California.

The Discovery House LLC, Discovery Transitions Outpatient Inc., DHP Heights LLC, MT Golden Corporation, and MT Process LLC, all out-of-network providers of services, including residential treatment, inpatient and outpatient care, therapy, and medication management, filed a complaint Jan. 19, alleging denial of Employee Retirement and Income Security Act (ERISA) benefits; breach of implied, oral, and written contract; breach of covenant of good faith and fair dealing; promissory estoppel; and unfair competition against the defendants.

The defendants’ health plans provided coverage for 513 patients who were treated across the plaintiffs’ treatment centers, the complaint said. Accordingly, the plaintiffs submitted their claims to the defendants as the patients’ assignees. The defendants were accountable for 50%-80% of covered charges — with most paying 70% of covered charges — until patients meet an annual out-of-pocket threshold and the defendants pay 100%, according to the complaint. However, the plaintiffs argued that the defendants did not sufficiently cover these submitted claims and on average paid only 27.82%.

Notwithstanding the bulk of the plaintiffs’ causes of action, the defendants contended in their notice that Count I “provides ample grounds for removal,” given it asserted claims for ERISA benefits, which arise under federal law.

The defendants also argued that the plaintiffs designated certain causes of action correctly as governed by ERISA, but mischaracterized others as state law claims when they also are governed by ERISA and thus should be adjudicated in a federal court. Pursuant to 28 U.S.C. § 1441(c), an action may be completely removed to federal court “even when removable claims are joined with non-removable claims,” according to the notice.

The plaintiffs are represented by Callahan & Blaine APLC. The defendants are represented by Troutman Pepper Hamilton Sanders LLP.