ERISA Preempts Out-of-Network Provider’s State Law Claims, As Affirmed By The 9th Circuit 

In Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Company, the Ninth Circuit Court of Appeals ruled that the Employee Retirement Income Security Act (ERISA) preempts state law claims in disputes regarding reimbursements for out-of-network providers by group health plans. This decision upheld a previous judgment by a district court favoring Cigna in a lawsuit initiated by Bristol, the successor of a drug treatment center.

The dispute arose when Cigna rejected reimbursement claims from Sure Haven, a drug rehabilitation facility, for plan-covered patients, citing “fee-forgiving” provisions in the ERISA plan. This led to a legal battle between Bristol, the successor of Sure Haven, and Cigna, with Bristol seeking to recover plan benefits and asserting several state law claims, such as breach of contract and promissory estoppel.

Cigna argued that ERISA preempted these state law claims, and both the district court and the Ninth Circuit Court of Appeals agreed, ruling in favor of Cigna. The Ninth Circuit Court emphasized the extensive scope of ERISA’s preemption over state law actions, particularly in pre-service coverage dealings between healthcare providers and plan administrators.

This decision sets an important standard for sponsors of ERISA group health plans. It highlights ERISA’s broad authority over state law actions in disputes, including those related to pre-service coverage communications between healthcare providers and plan administrators. Consequently, healthcare providers cannot bypass ERISA or expand the scope of legal actions available by asserting state law claims. This has particular significance for individuals seeking reimbursement from group health plans.