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

The Ninth Circuit recently issued an unpublished memorandum decision in the case of Dedicato Treatment Center, Inc. v. Aetna Life Insurance Co., reinforcing ERISA preemption over certain state-law claims by out-of-network providers. This decision follows the Court's 2024 Bristol Holdings ruling and confirms that state-law claims related to pre-service verification-of-benefits and authorization communications are preempted by ERISA’s remedial framework, even when providers include alternative ERISA claims through assignment of benefits. Dedicato Treatment Center, an out-of-network substance abuse provider, filed contract-based claims against Aetna after a partial denial of reimbursement for services the provider contended were authorized during pre-service communications. The provider argued its claims were independent of ERISA and thus not preempted, but the district court dismissed the case, a ruling upheld by the Ninth Circuit. The panel underscored that the provider’s state-law claims "relate to" ERISA plans under both prongs of ERISA § 514(a) preemption. The court rejected the assertion that the contractual obligations arose independently from authorization communications, emphasizing these claims were inherently linked to benefit plan administration and thus subject to ERISA preemption as established by Bristol Holdings. This decision has significant implications for out-of-network providers attempting to circumvent ERISA preemption by repackaging claims as state-law contract or quasi-contract actions such as promissory estoppel or quantum meruit. The Ninth Circuit’s affirmation clarifies that such claims cannot serve as alternative enforcement mechanisms to secure payment for services covered by ERISA plans. Notably, the court implicitly dismissed arguments limiting the Bristol Holdings ruling’s reach only to claims accompanied by ERISA benefits claims, reinforcing a broad scope of ERISA preemption in similar disputes. This sets a clear precedent within the Ninth Circuit, impacting litigation strategies related to out-of-network reimbursement claims under ERISA-governed plans. Legal professionals and insurers should monitor further developments in this area as the boundaries of ERISA preemption continue to be defined, increasingly restricting providers’ reliance on state-law claims in multipartite reimbursement disputes.