On November 24, the Ninth Circuit issued an unpublished memorandum disposition in Dedicato Treatment Center, Inc. v. Aetna Life Insurance Co., affirming dismissal of an out-of-network provider’s state-law claims as preempted by ERISA’s remedial scheme. The panel’s brief decision underscores that the Court’s 2024 decision in Bristol Holdings (discussed here) applies broadly to state-law causes of action arising from pre-service verification-of-benefits and authorization communications, even where a provider also pleads an alternative ERISA benefits claim pursuant to an assignment of benefits from the member. Although not precedential under Ninth Circuit Rule 36-3, the disposition is a clear, persuasive affirmation of Bristol’s reach.
Background
Dedicato Treatment Center, an out-of-network substance abuse treatment provider, alleged contract and quasi-contract claims against Aetna after Aetna partially denied reimbursement for services Dedicato contended were authorized during preservice communications. Dedicato’s opening brief sought to limit Bristol Holdings by arguing that ERISA preemption of non-derivative state-law claims should apply only where the provider simultaneously pleads an ERISA § 502(a) benefits claim, or where specific plan terms are essential to the claims’ survival. The district court dismissed the complaint under Rule 12(b)(6), and the Ninth Circuit affirmed.
The Ninth Circuit’s Decision
The panel confirmed that Dedicato’s state-law theories “relate to” ERISA plans under both prongs of § 514(a) preemption:
- Reference to ERISA plans: Dedicato’s claims were “premised on what all agree were plan-covered services” and sought to “secure plan-covered payments … through the alternative means of state contract law,” tracking Bristol Holdings’ formulation of the “reference to” test.
- Impermissible connection with ERISA plans: Allowing liability based on preservice VOB/authorization calls would interfere with nationally uniform plan administration by subjecting reimbursement to “innumerable phone calls and their variable treatment under state law,” echoing Bristol Holdings’ “central matters of plan administration” concern.
The court rejected Dedicato’s characterization that its obligations arose independently from authorization communications, concluding the claims were still tethered to ERISA plan benefits and administration and preempted under Bristol Holdings.
Why It Matters
This disposition confirms that Bristol Holdings’ ERISA preemption analysis broadly applies to out-of-network provider claims framed as independent state-law obligations stemming from pre-service communications. Providers cannot use contract, promissory estoppel, quantum meruit, or unfair competition claims as alternate enforcement mechanisms to obtain payment for services covered by an ERISA-governed benefit plan. Notably, the panel implicitly rejected Dedicato’s argument that Bristol Holdings applies only where the provider pleads an assignment of benefits and an ERISA benefits claim in the alternative, one of several theories that have been advanced by other out-of-network providers attempting to restrict the expansive scope of the Ninth Circuit’s 2024 decision.