Horizon Surgery Center, PLLC v. The Reynolds Company

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
HORIZON SURGERY CENTER,
PLLC,
Plaintiff.
V.
D. REYNOLDS COMPANY, LLC,
Defendant.
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CIVIL ACTION NO. 3:25-cv-00255
MEMORANDUM AND RECOMMENDATION
Pending before me is Defendant’s Partial Motion to Dismiss. Dkt. 13. I
recommend that the motion be granted.
BACKGROUND
Horizon Surgery Center, PLLC has sued D. Reynolds Company, LLC for
alleged nonpayment of medical services that Horizon provided to Mary Bruce, a
participant in Reynolds’s health benefit plan (the “Plan”). Reynolds is the Plan’s
administrator. The Plan is governed by the Employee Retirement Income Security
Act of 1974 (“ERISA”). According to Horizon, it provided healthcare services to
Bruce between March 19, 2021, and March 18, 2022. Horizon claims that it
confirmed Bruce’s treatments were eligible for coverage under the Plan before
providing the services. Bruce has assigned her rights to benefits under the Plan to
Horizon. Horizon alleges that it is owed $579,548.40 for the services provided to
Bruce and that Reynolds has wrongfully withheld payments under the terms of the
Plan.
In its First Amended Complaint, Horizon asserts five causes of action: (1)
denial of benefits under ERISA (29 U.S.C. § 1132(a)(1)(B)); (2) breach of fiduciary
duty under ERISA (29 U.S.C. § 1132(a)(3)); (3) breach of contract; (4) promissory
estoppel; and (5) quantum meruit. Reynolds moves to dismiss all of Horizon’s
claims aside from the ERISA denial of benefits claim. Specifically, Reynolds
United States District Court
Southern District of Texas
ENTERED
December 01, 2025
Nathan Ochsner, Clerk
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contends that Horizon’s ERISA breach of fiduciary duty claim is duplicative of its
ERISA denial of benefits claim, and that Horizon’s state law claims for breach of
contract, promissory estoppel, and quantum meruit are preempted by ERISA.
LEGAL STANDARD
A defendant may move to dismiss a complaint when a plaintiff fails “to state
a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is
not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility
that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).
Conversely, “when the allegations in a complaint, however true, could not raise a
claim of entitlement to relief, this basic deficiency should be exposed at the point
of minimum expenditure of time and money by the parties and the court.”
Twombly, 550 U.S. at 558 (cleaned up).
When evaluating a Rule 12(b)(6) motion, I accept “all well-pleaded facts as
true and view[] those facts in the light most favorable to the plaintiff.” Cummings
v. Premier Rehab Keller, P.L.L.C., 948 F.3d 673, 675 (5th Cir. 2020) (quotation
omitted). 	I 	“do 	not, 	however, 	accept 	as 	true 	legal 	conclusions, 	conclusory
statements, or naked assertions devoid of further factual enhancement.” Benfield
v. Magee, 945 F.3d 333, 336–37 (5th Cir. 2019) (cleaned up). “Threadbare recitals
of the elements of a cause of action, supported by mere conclusory statements, do
not suffice.” Iqbal, 556 U.S. at 678.
ANALYSIS
A motion to dismiss in the ERISA context is an “important mechanism for
weeding out meritless claims.” Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409,
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425 (2014). District courts are instructed to undertake “careful, context-sensitive
scrutiny of a complaint’s allegations” to “divide the plausible sheep from the
meritless goats.” Id.
A. 	HORIZON’S ERISA BREACH OF F IDUCIARY D UTY CLAIM I S
D UPLICATIVE OF I TS ERISA D ENIAL OF BENEFITS CLAIM
Reynolds argues that Horizon’s breach of fiduciary duty claim under ERISA
should be dismissed because it is “predicated on the same operative facts, and
seeks the same relief, as [Horizon]’s denial of benefits claim.” Dkt. 13 at 4. In
response, Horizon contends that its breach of fiduciary duty claim is distinct from
its denial of benefits claim because its breach of fiduciary duty claim “targets
[Reynolds’s] flawed and unlawful process, not just its ultimate denial of payment.”
Dkt. 16 at 3. Horizon adds that Reynolds’s failure “to adhere to federally mandated
emergency extensions . . . is a clear breach of the duty of prudence and the duty to
administer the plan in accordance with the law.” Id.
ERISA’s denial of benefits provision, 29 U.S.C. § 1132(a)(1)(B), authorizes a
suit by a plan participant or beneficiary “to recover benefits due to him under the
terms of his plan, to enforce his rights under the terms of the plan, or to clarify his
rights to future benefits under the terms of the plan.” ERISA’s breach of fiduciary
duty provision, 29 U.S.C. § 1132(a)(3), permits a party to bring a civil action “(A)
to enjoin any act or practice which violates any provision of this subchapter or the
terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress
such violations or (ii) to enforce any provisions of this subchapter or the terms of
the plan.” Because “§ 1132(a)(3) only allows claims for the types of equitable relief
typically available in equity, it follows, then, that relief under § 1132(a)(3) generally
is unavailable when a plaintiff may seek monetary relief under § 1132(a)(1)(B).”
Innova Hosp. San Antonio, Ltd. v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d
719, 733 (5th Cir. 2018) (cleaned up).
Fifth Circuit precedent is clear that “a claimant whose injury creates a cause
of action under . . . 	§ [1132](a)(1)(B) may not proceed with a claim under . . .
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§ [1132](a)(3).” Manuel v. Turner Indus. Grp., 905 F.3d 859, 865 (5th Cir. 2018)
(cleaned up). Indeed, courts “must focus on the substance of the relief sought and
the allegations pleaded, not on the label used.” Gearlds v. Entergy Servs., Inc., 709
F.3d 448, 452 (5th Cir. 2013). Notably, the Fifth Circuit has affirmed dismissal of
a breach of fiduciary duty claim under § 1132(a)(3) when the plaintiff had “an
adequate mechanism for redress under § 1132(a)(1)(B).” Innova Hosp., 892 F.3d
at 734. Additionally, because “plaintiffs may attack problematic administrative
claims procedures under . . . § [1132](a)(1)(B),” the Fifth Circuit has affirmed
dismissal of such claims under § 1132(a)(3). Manuel, 905 F.3d at 867.
In its operative complaint, Horizon alleges that Reynolds “breached its
fiduciary duties by incorrectly and untimely processing claims, failing to apply the
applicable COVID-19 filing extension, and otherwise disregarding the terms of the
Plan.” Dkt. 8 at 5. The alleged injury that resulted from this alleged breach is
“damages in the form of unpaid or underpaid claims.” Id.
First, 	Horizon’s 	alleged 	damages—unpaid 	or 	underpaid 	claims—are
inextricably tied to the “benefits due to [Horizon] under the terms of [the] plan,”
making the denial of benefits section the appropriate avenue for redress. 29 U.S.C.
§ 1132(a)(1)(B). Second, Reynolds’s allegedly “flawed and unlawful process,” Dkt.
16 at 3, is no different than the “problematic administrative claims procedures”
that the Fifth Circuit has said are appropriately addressed under § 1132(a)(1)(B),
not § 1132(a)(3). Manuel, 905 F.3d at 867. Third, the monetary relief that Horizon
seeks for its injury is clearly legal, not equitable. See Mertens v. Hewitt Assocs.,
508 U.S. 248, 255 (1993) (“Money damages are, of course, the classic form of legal
relief.”).
Because “a claimant whose injury creates a cause of action under . . .
§ [1132](a)(1)(B) may not proceed with a claim under . . . § [1132](a)(3),” Horizon
may seek recovery from the Plan for allegedly unpaid and underpaid claims only
under a denial of benefits theory. Manuel, 905 F.3d at 865 (cleaned up). Horizon’s
breach of fiduciary duty claim under § 1132(a)(3) fails because Horizon has an
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“adequate mechanism for redress under” § 1132(a)(1)(B) for its alleged unpaid and
underpaid claims. Innova Hosp., 892 F.3d at 733. Accordingly, I recommend that
Horizon’s breach of fiduciary duty claim be dismissed.
B. 	ERISA PREEMPTS HORIZON’S S TATE L AW CLAIMS
Reynolds also moves to dismiss Horizon’s Texas state law breach of contract,
promissory 	estoppel, 	and 	quantum 	meruit 	claims. 	In 	support 	of 	dismissal,
Reynolds argues that “all three of [Horizon’s] state law claims ‘relate to’ both an
ERISA plan and [Horizon]’s claim that it is entitled to benefits under the Plan.”
Dkt. 13 at 6. Reynolds also maintains that “the state law claims all directly affect
the relationship among traditional ERISA entities – the employer, the plan and its
fiduciaries, and the participants and beneficiaries.” Id. In response, Horizon
contends that Reynolds’s “direct, pre-service communications created a separate
promise and an independent relationship between Horizon and [Reynolds].”
Dkt. 16 at 5.
“Section 514(a) of ERISA, 29 U.S.C. § 114(a), pre-empts ‘any and all State
laws insofar as they may now or hereafter relate to any employee benefit plan’
covered by ERISA.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91 (1983). The
Supreme Court has “observed repeatedly that this broadly worded provision is
‘clearly expansive.’” Egelhoff v. Egelhoff, 532 U.S. 141, 146 (2001). The Fifth Circuit
has adopted a two-part test for determining whether a claim relates to an employee
benefit plan:
In analyzing preemption issues under § 514(a), we first ask whether
the benefit plan at issue constitutes an ERISA plan; if it is, we must
then determine whether the state law claims ‘relate to’ the plan. . . . In
determining whether state law claims ‘relate to’ a plan, we have
commonly asked (1) whether the state law claims address areas of
exclusive federal concern, such as the right to receive benefits under
the terms of an ERISA plan; and (2) whether the claims directly affect
the relationship among the traditional ERISA entities—the employer,
the plan and its fiduciaries, and the participants and beneficiaries.
Woods v. Tex. Aggregates, L.L.C., 459 F.3d 600, 602 (5th Cir. 2006).
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Here, there is no dispute that ERISA governs the Plan. So, to determine
whether Horizon’s state law claims are preempted by ERISA, I must ascertain
whether the claims “relate to” the Plan. Because Horizon’s state law claims clearly
“address areas of exclusive federal concern” and “directly affect the relationship
among the traditional ERISA entities,” I recommend that each of Horizon’s state
law claims be dismissed. Id.
1. 	Breach of Contract
I first note that Horizon has failed to explain why its breach of contract claim
is not preempted by ERISA. In its live complaint, Horizon alleges that “its
representatives 	spoke 	with 	[Reynolds]’s 	representatives 	to 	verify 	[Bruce]’s
eligibility under [Reynolds]’s health plan and confirm that [Reynolds] would pay
for the medical services.” Dkt. 8 at 5 (emphasis added). Horizon further alleges
that it performed the services and Reynolds “breached the Agreement by failing to
pay [Horizon]’s customary and usual billed charges for the services provided to
[Bruce].” Id. at 6. These allegations are inextricably related to the Plan because
they “arise out of a claim for benefits under an ERISA plan.” Holick v. Aetna Life
Ins. Co., No. 4:19-cv-02976, 2020 WL 5412635, at *4 (S.D. Tex. Sept. 8, 2020).
The buck stops there.
Horizon observes that the Fifth Circuit held a state law breach of contract
claim not to be preempted by ERISA in Innova Hospital. See Dkt. 16 at 4. But
Horizon’s comparison misses the mark. The contract allegedly breached in Innova
Hospital was a non-ERISA contract, separate and distinct from the ERISA plan at
issue. See Innova Hosp., 892 F.3d at 732. That is not the case here. Horizon alleges
it verified Bruce’s coverage “under [Reynolds]’s health plan.” Dkt. 8 at 5 (emphasis
added). Yet, Horizon has not identified any other contract—aside from the Plan—
that could form the basis of a breach of contract claim. As such, I recommend that
Horizon’s breach of contract claim be dismissed with prejudice. See Swenson v.
United of Omaha Life Ins. Co., 876 F.3d 809, 810 (5th Cir. 2017) (affirming
dismissal with prejudice of state law claims on ERISA preemption grounds).
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2. 	Promissory Estoppel
Horizon’s promissory estoppel claim is based on allegations that:
Before [Horizon] rendered reasonable and necessary medical
services . . . , [it] received verification by telephone from [Reynolds]
that 	a 	health 	benefit 	plan 	covered 	[Bruce] 	and 	the 	particular
procedures. Additionally, [Reynolds] verified that [Horizon] would be
paid a reasonable amount for the services rendered. [Horizon] would
not have provided these services to [Bruce] without obtaining this
verification from [Reynolds].
Dkt. 8 at 6.
To the extent that a healthcare provider’s promissory estoppel claim “is
dependent on, and derived from the rights of the plan beneficiaries to recover
benefits under the terms of the plan,” the claim is preempted. Access Mediquip
L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376, 383 (5th Cir. 2011), opinion
reinstated on reh’g, 698 F.3d 229 (5th Cir. 2012); see also Transitional Hosps.
Corp. v. Blue Cross & Blue Shield of Tex., Inc., 164 F.3d 952, 955 (5th Cir. 1999).
On the other hand, “ERISA does not preempt a third-party provider’s state-law
claims 	based 	on 	allegations 	that 	the 	defendants 	misrepresented 	that 	the
beneficiary was covered by an ERISA plan when he or she was not.” Houston Metro
& Spine Surgery Ctr., LLC v. Health Care Serv. Corp., No. CV H-16-1402, 2017
WL 1231072, at *2 (S.D. Tex. Apr. 4, 2017).
Horizon does not contend that Reynolds misrepresented that Bruce was
covered by an ERISA plan when she was not covered. Rather, Horizon claims that
it received “verification” that it would be paid a reasonable amount for the services
it rendered to Bruce. Dkt. 8 at 6. Relying heavily on Memorial Hospital Systems v.
Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir. 1990), Horizon argues that
its promissory estoppel claim is not preempted because its “right to relief is derived
from [Reynolds]’s direct representations to Horizon, not from [Bruce]’s rights
under the Plan.” Dkt. 16 at 5.
Memorial Hospital is readily distinguishable from the facts at bar. The
plaintiff in that case brought a cause of action for negligent misrepresentation
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when a health plan administrator misrepresented that a plan beneficiary was
covered by a health plan, when she in fact was not covered by the plan. See
Memorial, 904 F.2d at 238. As such, the plaintiff’s negligent misrepresentation
claim was “independent of the plan’s actual obligations under the terms of the
insurance policy and in no way [sought] to modify those obligations.” See id. at
250. The crux of this dispute, however, is not Bruce’s coverage under the Plan, but
whether the claims that Horizon has submitted on her behalf are eligible for
payment under the Plan. Thus, Memorial Hospital is inapplicable.
Taking as true Horizon’s claim that its “right to relief is derived from
[Reynolds]’s direct representations to Horizon,” those “direct representations”
concern the terms and benefits of the Plan. Dkt. 16 at 5. Perhaps more importantly,
the promissory estoppel claim requires interpreting the Plan’s terms to ascertain
the extent to which Reynolds would be obliged to pay to Horizon for Bruce’s
treatments. This applies equally to the alleged unpaid and underpaid claims that
Horizon asserts form the basis of its injury. See Houston Metro & Spine Surgery
Ctr., LLC, 2017 WL 1231072, at *3 (holding that ERISA preempted a promissory
estoppel claim because “[b]oth the no-payment and partial-payment claims
require interpreting the plan terms.”). “Whether there was a misrepresentation is
‘dependent on, and derived from the rights of [Bruce] to recover benefits under the
terms of the plan.’” Id. (quoting Transitional Hosps., 164 F.3d at 955). Thus, I
recommend that Horizon’s promissory estoppel claim be dismissed with prejudice
because it is preempted by ERISA.
3. 	Quantum Meruit
Horizon alleges that Reynolds “accepted . . . the medical services provided
by [Horizon]”; Reynolds “has not paid for such services and things of value”; and
Horizon “is entitled to payment from [Reynolds] for the reasonable value of the
services rendered in an amount to be proven at trial.” Dkt. 8 at 6. Akin to its breach
of contract claim, Horizon has failed to explain why its state law quantum meruit
claim is not preempted by ERISA.
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Horizon’s quantum meruit claim “unquestionably ‘relate[s] to’ the plan, as
[it] is seeking to recover damages for conduct surrounding the denial of benefits
under the plan.” Young v. Prudential Ins. Co. of Am., No. CIV A H-07-612, 2007
WL 1234929, at *4 (S.D. Tex. Apr. 24, 2007) (citation modified). As in Young, there
can be no quantum meruit claim without the denial of benefits under the Plan.
Allowing this claim to proceed would “run afoul of Congress’s intent that the causes
of action created by ERISA be the exclusive means of enforcing an ERISA plan’s
terms, and permit state law to interfere with the relations among ERISA entities.”
Access Mediquip, 662 F.3d at 387. Because Horizon’s quantum meruit claim
plainly relates to the Plan, it is preempted by ERISA. For that reason, I recommend
that Horizon’s state law quantum meruit claim be dismissed with prejudice.
CONCLUSION
For the reasons discussed above, I recommend that Reynolds’s partial
motion to dismiss (Dkt. 13) be granted.
The 	parties 	have 	14 	days 	from 	service 	of 	this 	Memorandum 	and
Recommendation to file written objections. See 28 U.S.C. § 636(b)(1)(C); Fed. R.
Civ. P. 72(b)(2). Failure to file timely objections will preclude appellate review of
factual findings and legal conclusions, except for plain error.
SIGNED this 	day of December 2025.
______________________________
ANDREW M. EDISON
UNITED STATES MAGISTRATE JUDGE
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