Ninth Circuit Affirms Broad ERISA Preemption Over Out-of-Network Provider Claims

The Ninth Circuit recently affirmed the dismissal of an out-of-network provider's state-law claims against Aetna Life Insurance Company, ruling that these claims are preempted by the Employee Retirement Income Security Act (ERISA). This decision aligns with the court's earlier 2024 ruling in Bristol Holdings, which broadly applies ERISA preemption to state-law causes of action related to pre-service verification-of-benefits and authorization communications, even when providers allege alternative ERISA benefits claims via assignment of benefits. Dedicato Treatment Center, an out-of-network substance abuse treatment provider, had pursued contract and quasi-contract claims after Aetna partially denied reimbursement for services it claimed were authorized during pre-service communications. The provider argued that ERISA preemption should only apply when an ERISA benefit claim was simultaneously pled or specific plan terms were essential to the claim's survival. However, the courts rejected this, affirming the dismissal based on ERISA's comprehensive preemptive scope. The Ninth Circuit emphasized that the provider's claims were intrinsically linked to ERISA-governed plan benefits and administration, thereby falling under ERISA's preemption under Section 514(a). This interpretation underscores that claims framed as independent state-law obligations cannot circumvent ERISA preemption by relying on theories such as contract or promissory estoppel to seek payment for services covered by an ERISA plan. This ruling reinforces the broad reach of ERISA's remedial scheme and limits the strategies out-of-network providers can use to enforce payment claims outside the ERISA framework. The court's decision implicitly dismisses attempts by providers to narrow the application of Bristol Holdings by relying on alternative legal theories involving assignment of benefits. Legal experts involved in this area suggest that the decision provides clear guidance on ERISA preemption, particularly in disputes between insurers and out-of-network providers. It also highlights the importance of understanding the regulatory and litigation landscape related to ERISA in managing reimbursement disputes. The case is significant for health plans, insurers, and providers navigating the complexities of ERISA preemption, emphasizing the need for compliance with federal regulations when handling claims and disputes involving ERISA-governed health benefit plans. The decision serves as a reference point for future litigation and policy considerations within the health insurance and managed care sectors.