- G.R.J.H. Inc. v. Oxford Health Plans Inc. 07-cv-00068 N.D.N.Y May 14, 2009
- July 9, 2009 | Authors: Arthur N. Lerner; Bruce O. Tavel
- Law Firm: Crowell & Moring LLP - Washington Office
The U.S. District Court for the Northern District of New York recently held that ERISA preempts employer G.R.J.H's state law breach of contract claims against Oxford Health Plans ("Oxford"). However, the Court denied Oxford's motion to dismiss G.R.J.H.'s claims and permitted G.R.J.H. to amend its complaint to plead an ERISA claim.
Under a group enrollment agreement between G.R.J.H. and Oxford, Oxford agreed to arrange or pay for G.R.J.H.'s employees' medical and hospital care in return for appropriate premium payments made by G.R.J.H. on the first day of the month. Oxford terminated the agreement, claiming G.R.J.H. failed to make timely premium payments. G.R.J.H. then sued Oxford in state court alleging, among other things, that Oxford's termination breached the agreement.
Oxford moved to dismiss G.R.J.H.'s complaint on the grounds that ERISA preempted the state law claim. G.R.J.H. argued that the Court should not dismiss the state law claim and should instead recharacterize it as a federal claim because the facts supporting the state law claim also supported an ERISA claim.
The Court noted that federal courts disagree on whether to accept the recharacterization argument or to instead dismiss the claim pursuant to the preemption doctrine. The Court then referred to a Southern District of New York case in which the court held that a breach of contract claim also including elements of an ERISA § 502 claim should be recharacterized as an ERISA claim.
The Court concluded that G.R.J.H.'s state law claims, as pleaded, did not sufficiently state an ERISA § 502 claim and therefore refused to deem the claim as arising out of ERISA. However, because the substance of the state law claim could raise an ERISA § 502 claim instead of dismissing the claim, the Court permitted G.R.J.H. to replead it as an ERISA claim. The Court therefore denied Oxford's motion todismiss.
Oxford also argued that the complaint should be rejected because G.R.J.H. wrongly named Oxford as a defendant. Oxford argued that it should not have been named as a defendant because it was not a party to the agreement nor was it a plan administrator or trustee. The Court denied Oxford's summary judgment motion on the basis that Oxford had been involved with the agreement and with G.R.J.H. despite not being a signatory to the agreement.