• Lone Star OB/GYN Associates v. Aetna Health Inc. No. 08-50646 (5th Cir. Aug. 18, 2009)
  • October 2, 2009 | Authors: Arthur N. Lerner; Bruce O. Tavel; Matthew T. Fornataro
  • Law Firm: Crowell & Moring LLP - Washington Office
  • The Fifth Circuit ruled that a claim involving the rate of payment as set forth in a provider agreement is not preempted by ERISA. Lone Star OB/GYN Associates ("Lone Star") sued Aetna under Texas' prompt pay statutes for Aetna's failure to pay the contracted amounts provided in the provider agreement as well as for Aetna's failure to make its payment within the time period required under the prompt pay statutes. Aetna removed the case to federal court on ERISA preemption grounds. Upon a motion made by Lone Star, the district Court permitted Lone Star to amend its complaint, redacting claims which were denied by Aetna because coverage was denied. The only claims that would remain were those that were partially paid by Aetna. The case was remanded back to state court and Aetna appealed.

    Referring to similar holdings made by the Third and Ninth Circuits, the Court concluded that "a claim that implicates the rate of payment as set out in the Provider Agreement, rather than the right to payment under the terms of the benefit plan, does not run afoul of Davila and is not preempted by ERISA." The Court noted that Lone Star's claims were completely separate from a coverage determination and arose out of a independent legal duty encompassed in the provider agreement and the prompt pay law. The Court further stated that "…where claims do not involve coverage determinations, but have already been deemed "payable," and the only remaining issue is whether they were paid at the proper contractual rate, ERISA preemption does not apply.

    The Court then examined whether Lone Star's claims implicated issues involving the rate of payment or whether they instead involved benefit determinations. The Court noted that Lone Star had originally submitted a list that included partially paid claims as well as claims fully denied claims but that Lone Star had later redacted all the fully denied claims. Consequently, the Court concluded that claims for underapaid claims were not preempted by ERISA because they did not implicate coverage determinations. However, the Court also held that based on the facts, it could not determine whether Aetna partially paid the claims because Aetna decided that only part of the claim was covered under the plan or because Aetna misinterpreted the agreement or mistakenly referred to the wrong fee schedule.