August 19, 2019

Tenth Circuit: ERISA Preemption Necessitated Removal to Federal Court

The Tenth Circuit Court of Appeals issued its opinion in Salzer v. SSM Health Care of Oklahoma, Inc. on Wednesday, August 6, 2014.

Richard Salzer received medical care at an SSM facility following an accident. At the time, he was covered by a health insurance plan, and he entered into a contract with SSM in which he authorized his health insurance company to pay for his care. SSM had a provider agreement with Salzer’s health insurance company in which it agreed to accept payment from the insurance company at a discounted rate. Although the provider agreement prohibited SSM from seeking payment for covered charges from the insured, SSM billed Salzer for the non-discounted amount.

Salzer filed suit against SSM in Oklahoma state court, alleging breach of contract, violation of the Oklahoma Consumer Protection Act, deceit, and tortious interference with contract. He purported to represent a putative class of Oklahoma residents who received treatment at SSM facilities and were similarly billed in violation of provider agreements with insurance companies. Salzer sought damages and specific performance of the provider agreement. SSM removed the case to federal district court. In its notice of removal, SSM alleged that Salzer was a beneficiary of his wife’s employer-provided health plan operated by Aetna and governed by ERISA. SSM further alleged Salzer’s claims were preempted because they can be characterized as seeking to enforce rights under ERISA. Salzer moved to remove the case back to state court, but the district court denied his motion, ruling that his claims were completely preempted by ERISA.

Salzer then filed an amended complaint that reasserted his original claims and added other state law claims. SSM moved to dismiss for failure to state any ERISA claims. The district court dismissed Salzer’s complaint with prejudice, concluding that Salzer disregarded the court’s prior orders by failing to allege any ERISA claims and by continuing to argue that ERISA did not preempt the lawsuit. Salzer appealed to the Tenth Circuit.

The Tenth Circuit examined first the district court’s denial of Salzer’s motion to remand based on ERISA preemption. The Tenth Circuit looked at each of Salzer’s six claims and decided that the first five claims did not implicate ERISA and could have been remanded to state court. However, the sixth claim was indeed an ERISA claim, and the district court correctly refused to remand to the state court for determination of the ERISA claim. The Tenth Circuit found federal jurisdiction over one claim is sufficient to support removal. Because Salzer did not argue on appeal that the district court incorrectly dismissed his claims with prejudice, the Tenth Circuit affirmed the district court.

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