Pascack Valley Hospital, Inc v. LOCAL 464A UFCW WELFARE REIMBURSEMENT PLAN Pascack Valley Hospital, Inc

1
PRECEDENTIAL
UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
__________
No. 03-4196
__________
PASCACK VALLEY HOSPITAL,
INC.;
v.
LOCAL 464A UFCW WELFARE
REIMBURSEMENT PLAN
Pascack Valley Hospital, Inc.,
Appellant
On Appeal From The United States
District Court
For The District Of New Jersey
(D.C. Civil No. 02-cv-05974)
District Judge: The Honorable Dennis
M. Cavanaugh
__________
Argued June 16, 2004
__________
Before: ALITO, SMITH, and
WALLACE, Circuit Judges*
(Filed: November 1, 2004)
Shea H. Lukacsko
Keith R. McMurdy (Argued)
Grotta, Glassman & Hoffman
75 Livingston Avenue
Roseland, NJ 07068
John Sydlar
Maloof, Lebowitz, Connahan & Oleske
127 Main Street
Chatham, NJ 07928
Counsel for Appellant
John M. Agnello
Kerrie R. Heslin
Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
5 Becker Farm Road
Roseland, NJ 07068
Michael T. Anderson (Argued)
Davis, Cowell & Bowe
1701 K Street, N.W.
Suite 210
Washington, DC 20006
Counsel for Appellee
* The Honorable J. Clifford Wallace,
Senior Circuit Judge for the United
States Court of Appeals for the Ninth
Circuit, sitting by designation.

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1
AMENDED
OPINION
SMITH, Circuit Judge.
This case presents a question of
jurisdiction under the civil enforcement
provision of the Employee Retirement
Income Security Act (“ERISA”), 29
U.S.C. § 1132(a). Pascack Valley Hospital
(the “Hospital”) sued the United Food and
Commercial Workers International Union
L o c a l 4 6 4 A , A F L - C I O G r o u p
Reimbursement Welfare Plan (the “Plan”)
in state court for breach of contract. The
Plan removed the case to federal district
court and moved for summary judgment.
The Hospital moved to remand. The
District Court held that the Hospital’s
breach of contract claims against the Plan
were completely pre-empted by ERISA
and therefore raised a federal question
supporting removal under 28 U.S.C. §
1441(a). We hold that, under the well-
pleaded complaint rule, the Hospital’s
complaint does not present a federal
question that would support removal. We
further hold that the Hospital’s state law
breach of contract claims are not
completely pre-empted by ERISA’s civil
enforcement provision because the
Hospital could not have brought its claims
under ERISA. We will therefore vacate
the judgment of the District Court and
remand to that court with instructions that
it, in turn, remand these proceedings to the
state court whence they came.
I.
The Plan is an “employee welfare
benefit plan” as defined by ERISA. 29
U.S.C. § 1002(1).1 The Plan is a
reimbursement plan only; it reimburses
participants and beneficiaries for out-of-
pocket medical expenses but does not
itself provide medical care.
MagNet, Inc. is an independent
consultant. MagNet has organized a
network of hospitals that have agreed to
accept discounted payment for medical
services provided to beneficiaries of group
health plans in return for the plans’
promise to encourage beneficiaries to use
network hospitals. Network hospitals do
not contract directly with the plans.
Instead, MagNet enters into separate
contracts with individual plans, and
separate contracts with individual
hospitals.
Around 1995, the Plan entered into
1 An ERISA Plan is a legal entity that
can sue and be sued. 29 U.S.C. §
1132(d)(1). Accordingly, the term
“Plan” refers not only to the defendant in
the underlying lawsuit and the appellee
before this Court, but also to the
underlying “[r]ules governing collection
of premiums, definition of benefits,
submission of claims, and resolution of
disagreements over entitlement to
services” that make up an employee
welfare plan. Pegram v. Herdrich, 530
U.S. 211, 223 (2000).

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2
a “Subscriber Agreement” with MagNet.
In 1996, the Hospital entered into a
“Network Hospital Agreement” with
MagNet. Section 2.1 of the Subscriber
Agreement governs “Hospital payment,”
and provides that the discounted rate
offered by the Hospital will be forfeited
unless claims are timely paid:
Subscriber . . . shall pay
Network Ho spitals for
Covered Services furnished
to Eligible Persons.
Pursuant to a valid
assignment from Eligible
Person, Subscriber . . . shall
dir ectly pa y N e t w o rk
H ospitals for Covered
S e r v ic e s p r o v i d e d to
Eligible Persons within
thirty (30) days after date of
receipt of submitted Clean
Claims. . . .
For other non-clean claims,
payment shall be made
within thirty (30) days of
receipt of all records and
other information necessary
f o r p r o p e r c l a i m s
adjudication.
. . .
W h e r e o b li g a ted, i f
Subscriber fails to pay
within the appropriate time
f ra m e, the Subscriber
acknowledges that it will
lose the benefit of the
M a g N e t d i s c o u n t e d
reimbursement rate and that
Network Hospital is then
entitled to bill and collect
f r o m S u b s c r i b e r a nd
E l i g i b l e P e r s o n i t s
customary rate for services
rendered. If Subscriber fails
to make the payment, the
Network Hospital may
p u r s u e a n y r e m e d i e s
available against Subscriber
and Eligible Person.
In 1999, the Hospital provided
medical services to Kimberly Rovetto and
Betty Psaras. Both Psaras and Rovetto
were “Eligible Persons” under the
Subscriber Agreement, and the medical
services provided to Psaras and Rovetto
were “Covered Services” under the
Subscriber Agreement. The Hospital
alleges that the Plan failed to pay the
Hospital for the services rendered to
Psaras and Rovetto according to the terms
of the Subscriber Agreement. The
Hospital contends that claims for those
services were properly submitted on April
15, 1999, and October 5, 1999. The
Hospital further contends that it received
payment on these claims at the discounted
rate on June 8, 1999, and November 22,
1999, respectively. According to the
Hospital’s interpretation of § 2.1 of the
Subscriber Agreement, the Plan’s failure
to pay these claims within thirty days of
receipt effected a forfeiture of the
discounted rate provided in the Network
Hospital Agreement. The Hospital
therefore seeks to recover the allegedly
forfeited discount from the Plan.

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3
On October 23, 2002, the Hospital
filed suit in the Superior Court of New
Jersey.
The Complaint alleges that the Hospital is
a third-party beneficiary to the Subscriber
Agreement between MagNet and the Plan,
under which the Plan “became obligated to
pay [the Hospital] for eligible medical
services provided by [the Hospital],” and
“was required to comply with certain terms
and conditions of [the Hospital’s] contract
with MagNet [i.e., the Network Hospital
Agreement], requiring payment in the time
period specified in said contract.” The
two-count complaint alleges that the Plan
breached this contract by improperly
taking a discount on the services provided
to Psaras and Rovetto despite the Plan’s
failure to make timely payment under the
Subscriber Agreement.2
The Plan removed the case to the
District Court. Thereafter, the Plan moved
for summary judgment and the Hospital
cross-moved to remand the case to state
court. The parties’ motions focused on
whether, under the doctrine of “complete
pre-emption,” the Hospital’s state law
breach of contract claims raised a federal
question. The District Court heard oral
argument on the parties’ motions on
September 25, 2003. The next day, on
September 26, 2003, the District Court
issued an Opinion and Order granting the
Plan’s motion for summary judgment,
denying the Hospital’s cross-motion to
remand, and dismissing the complaint
without prejudice. The District Court’s
two-page Opinion and Order states in
relevant part:
Defendant believing
that Plaintiff’s state law
c la im s are completely
preempted by [ERISA] in
that Plaintiff now stands in
the shoes of the Plan’s
beneficiaries as assignee,
and therefore Defendant
believes the facts show it is
entitled to judgment as a
matter of law; and
Plaintiff believing the
action is not preempted by
ERISA since Plaintiff is not
a participant or beneficiary
under ERISA and therefore
there is no federal law
claim, and therefore the
matter should be remanded
to the state court; and
This Court being in
agreement with and adopts
the reasoning of counsel for
Defendant as stated on the
record, and further rejects
the arguments put forth by
counsel for Plaintiff; and
2 The Plan incorrectly states that
“[t]he Hospital’s complaint only claims
unjust enrichment.” Appellee’s Br. at 2,
21-22. Although the Complaint does
allege that the Plan “has been unjustly
enriched to the detriment of [the
Hospital],” the Complaint explicitly
alleges that the Plan “breached” its
contractual obligations to the Hospital.

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4
This Court agrees
with and adopts the analysis
and holding as set forth in
Charter Fairmount Institute,
I n c . v . A l t a H e a l t h
Strategies, 835 F. Supp.
233; and
This Court being
satisfied that [the doctrine of
c o m p l e t e p r e e m p t i o n ]
having been met in this
case; and
As this case falls
with in t h e “ c o m p l e te
preemption” exception to
the well pleaded complaint
doctrine, removal to federal
court was proper, and
remand to state court would
be inappropriate . . . .
(Footnote omitted). The Hospital filed a
timely notice of appeal on October 22,
2003.
II.
Before turning to the District
Court’s removal jurisdiction, we must first
address our own appellate jurisdiction.
Although the District Court purported to
grant summary judgment in favor of the
Plan, the District Court actually dismissed
the H ospital’s complaint without
prejudice. That disposition allowed the
Hospital, which emphatically disavows an
ERISA claim for benefits, to replead its
c o m p l a i n t u n d e r E R I S A ’ s c i v il
enforcement provision. The Hospital
declined to do so and instead filed this
appeal.
28 U.S.C. § 1291 provides this
Court with jurisdiction over a final order
dismissing a complaint as completely
pre-empted. DiFelice v. Aetna U.S.
Healthcare, 346 F.3d 442, 445 (3d Cir.
2003). “Generally, an order which
dismisses a complaint without prejudice is
neither final nor appealable because the
deficiency may be corrected by the
plaintiff without affecting the cause of
action.” Borelli v. City of Reading, 532
F.2d 950, 951 (3d Cir. 1976) (per curiam).3
If the plaintiff elects to stand on the
dismissed complaint, however, the order of
dismissal is final and appealable. Id. at
951-52. At oral argument, counsel for the
Hospital declared the Hospital’s intention
to forego any ERISA claim it may have
and to stand on its complaint. Counsel’s
declaration is sufficient to render the
District Court’s order final and appealable.
Remick v. Manfredy, 238 F.3d 248, 254
(3d Cir. 2001). This Court exercises
plenary review over a district court’s
exercise of jurisdiction and order of
dismissal. DiFelice, 346 F.3d at 445;
3 That the District Court also denied
the Hospital’s motion to remand does not
make the court’s order appealable.
Caterpillar Inc. v. Lewis, 519 U.S. 61, 74
(1996) (“An order denying a motion to
remand, ‘standing alone,’ is ‘[o]bviously
. . . not final and [immediately]
appealable’ as of right.” (quoting
Chicago, R.I. & P.R. Co. v. Stude, 346
U.S. 574, 578 (1954)).

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Pryzbowski v. U.S. Healthcare, Inc., 245
F.3d 266, 268 (3d Cir. 2001).
III.
A civil action filed in a state court
may be removed to federal court if the
claim is one “arising under” federal law.
28 U.S.C. §§ 1331, 1441(a). Under the
“well-pleaded complaint” rule, the plaintiff
is ordinarily entitled to remain in state
court so long as its complaint does not, on
its face, affirmatively allege a federal
claim. Beneficial Nat’l Bank v. Anderson,
539 U.S. 1, 6 (2003). To support removal,
“‘[a] right or immunity created by the
Constitution or laws of the United States
must be an element, and an essential one,
of the plaintiff’s cause of action.’”
Franchise Tax Bd. of Cal. v. Constr.
Laborers Vacation Trust for S. Cal., 463
U.S. 1, 10-11 (1983) (quoting Gully v.
First Nat’l Bank in Meridian, 299 U.S.
109, 112 (1936)). Federal pre-emption is
ordinarily a defense to a plaintiff’s suit
and, as such, does not appear on the face
of a well-pleaded complaint. Anderson,
539 U.S. at 6; Franchise Tax Bd., 463 U.S.
at 12.
On its face, the Hospital’s
complaint does not present a federal
question. Rather, the complaint asserts
state common law claims for breach of
contract. The complaint does not
expressly refer to ERISA and the rights or
immunities created under ERISA are not
elements, let alone essential elements, of
the plaintiff’s claims. The possibility—or
even likelihood—that ERISA’s pre-
emption provision, 29 U.S.C. § 1144(a),
may pre-empt the Hospital’s state law
claims is not a sufficient basis for removal.
Franchise Tax Bd., 463 U.S. at 12.4
The Plan argues that the Hospital’s
claims arise under “the federal common
law” of ERISA. On several occasions, we
have predicated jurisdiction on a plaintiff’s
invocation of the federal common law of
ERISA. Bollman Hat Co. v. Root, 112
4 Pre-emption under § 514(a) of
ERISA, 29 U.S.C. § 1144(a), must be
distinguished from complete pre-emption
under § 502(a) of ERISA, 29 U.S.C. §
1132(a). Only the latter permits removal
of what would otherwise be a state law
claim under the well-pleaded complaint
rule. Under § 514(a), ERISA supersedes
state laws that “relate to” an ERISA plan.
29 U.S.C. § 1144(a). Unlike the scope of
§ 502(a), which is jurisdictional and
creates a basis for removal to federal
court, § 514(a) merely governs the law
that will apply to state law claims,
regardless of whether the case is brought
in state or federal court. Lazorko v. Pa.
Hosp., 237 F.3d 242, 248 (3d Cir. 2000).
Section 514(a), therefore, does not
permit removal of an otherwise well-
pleaded complaint asserting only state
law claims. Pryzbowski, 245 F.3d at 275
(“[W]hen the doctrine of complete
preemption does not apply, but the
plaintiff’s state claim is arguably
preempted under § 514(a), the district
court, being without removal jurisdiction,
cannot resolve the dispute regarding
preemption.” (internal quotation
omitted)).

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6
F.3d 113, 115 (3d Cir. 1997); Airco Indus.
Gases, Inc. Div. of the BOC Group, Inc. v.
Teamsters Health & Welfare Pension
Fund, 850 F.2d 1028, 1033-34 (3d Cir.
1988); N.E. Dep’t ILGWU Health &
Welfare Fund v. Teamsters Local Union
No. 229 Welfare Fund, 764 F.2d 147, 154-
55 (3d Cir. 1985) (Becker, J., writing for
himself). These cases, however, do not
support the Plan’s argument that removal
is proper because “suits between plans and
third parties imp licating ben efits
administration ‘arise under’ ERISA’s
federal common law.” Appellee’s Br. at
54. Instead, the plaintiffs in these cases
deliberately invoked federal ERISA
jurisdiction. See Bollman Hat, 112 F.3d at
115 (lawsu it seeking to enf orce
subrogation provision in ERISA plan);
Airco, 850 F.2d at 1031 (amended
complaint asserting cause of action for
unjust enrichment under ERISA); ILGWU,
764 F.2d at 150, 154-55 (lawsuit seeking
declaratory relief regarding the meaning of
terms in an ERISA plan). As such, their
well-pleaded complaints necessarily arose
under federal law. Here, the Hospital’s
complaint asserts a state law claim for
breach of contract, and the federal
common law of ERISA does not provide
an element—essential or otherwise—of
such a claim. The Plan may be correct
that, in interpreting the Subscriber
Agreement, the federal common law of
ERISA displaces state law. Nevertheless,
potential defenses, even when anticipated
in the complaint, are not relevant under the
well-pleaded complaint rule. Franchise
Tax Bd., 463 U.S. at 10-12.
IV.
Although the we ll-pleaded
complaint rule would ordinarily bar the
removal of an action to federal court where
federal jurisdiction is not presented on the
face of the plaintiff’s complaint, the action
may be removed if it falls within the
narrow class of cases to which the doctrine
of “complete pre-emption” applies. Aetna
Health Inc. v. Davila, 542 U.S. __, No. 02-
1845, slip op. at 5 (June 21, 2004); Metro.
Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64
(1987). As a “corollary of the
well-pleaded complaint rule,” complete
pre-emption recognizes “that Congress
may so completely pre-empt a particular
area that any civil complaint raising this
select group of claims is necessarily
federal in character.” Taylor, 481 U.S. at
63-64; accord Anderson, 539 U.S. at 8
(“When the federal statute completely
pre-empts the state-law cause of action, a
claim which comes within the scope of
that cause of action, even if pleaded in
terms of state law, is in reality based on
federal law.”).
ER ISA’s civil enforc ement
mechanism, § 502(a), “is one of those
provisions with such ‘extraordinary
pre-emptive power’ that it ‘converts an
ordinary state common law complaint into
one stating a federal claim for purposes of
the well-pleaded complaint rule.’” Davila,
slip op. at 7 (quoting Taylor, 481 U.S. at
65-66). As a result, state law causes of
action that are “within the scope of . . . §
502(a)” are completely pre-empted and
therefore removable to federal court.
Taylor, 481 U.S. at 66; DiFelice, 346 F.3d

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7
at 446. The Supreme Court has recently
clarified the inquiry in such cases:
It follows that if an
individual brings suit
complaining of a denial of
coverage for medical care,
where the individual is
entitled to such coverage
only because of the terms of
a n E R I S A - r e g u l a t e d
employee benefit plan, and
where no legal duty (state or
federal) independent of
ERISA or the plan terms is
violated, then the suit falls
within the scope of ERISA §
502(a)(1)(B). In other
words, if an individual, at
some point in time, could
have brought his claim
u n d e r E R I S A §
502(a)(1)(B), and where
t h e r e i s n o o t h e r
independent legal duty that
i s i m p l i c a t e d b y a
defendant’s actions, then the
individual’s cause of action
is completely pre-empted by
ERISA § 502(a)(1)(B).
Davila, slip op. at 8 (internal quotation and
citation omitted).
Accordingly, this case is removable
only if (1) the Hospital could have brought
its breach of contract claim under § 502(a),
and (2) no other legal duty supports the
Hospital’s claim. Id. “[A] federal court
may look beyond the face of the complaint
to determine whether a plaintiff has
artfully pleaded his suit so as to couch a
federal claim in terms of state law.”
Pryzbowski, 245 F.3d at 274 (internal
quotation omitted).
A.
We conclude that the Hospital
could not have brought its claims under §
502(a) because the Hospital does not have
standing to sue under that statute. Section
502(a) of ERISA allows “a participant or
beneficiary” to bring a civil action, inter
alia, “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.” 29 U.S.C. § 1132(a)(1)(B).5
By its terms, standing under the statute is
limited to participants and
beneficiaries.6 Franchise Tax Bd., 463
5 Section 502(a) provides other causes
of action not relevant on this appeal. The
Plan makes no argument that the
Hospital could have brought this action
under any other provision of § 502(a).
6 A participant is defined as
any employee or former
employee of an employer,
or any member or former
member of an employee
organization, who is or
may become eligible to
receive a benefit of any
type from an employee
benefit plan which covers

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8
U.S. at 27 (“ERISA carefully enumerates
the parties entitled to seek relief under §
502 . . . .”). The parties agree that the
Hospital is nether a participant nor a
beneficiary, and that the Hospital does not
have standing under ERISA to sue in its
own right.
The parties dispute whether, under
the law of this Circuit, the Hospital can
obtain standing under § 502(a) by virtue of
an assignment of a claim from a
participant or beneficiary.7 We need not
resolve this dispute, however, because
there is nothing in the record indicating
employees of such
employer or
members of such
organization, or
whose beneficiaries
may be eligible to
receive any such
benefit.
29 U.S.C. § 1002(7). A beneficiary is “a
person designated by a participant, or by
the terms of an employee benefit plan,
who is or may become entitled to a
benefit thereunder.” Id. § 1002(8).
7 In particular, the parties disagree
over whether this Court’s opinion in
ILGWU forecloses derivative standing
under § 502(a). Though the ILGWU
Court denied the claimant’s plan federal
question jurisdiction to sue to recoup
paid medical benefits from a second
plan, 764 F.2d at 153, part of the Court’s
rationale was that the claimant had not,
in fact, assigned her claim to her plan.
Id. at 154 n.6. Therefore, while the
ILGWU Court expressed “serious doubts
whether [the claimant] could assign
along with her substantive rights her
right to sue in federal court,” id., the
Court could not so hold.
District courts in this Circuit have
disagreed over the scope of ILGWU.
Compare Allergy Diagnostics Lab. v.
The Equitable, 785 F. Supp. 523, 526-27
& n.3 (W.D. Pa. 1991) (citing Footnote 6
of ILGWU for the proposition that
assignees of beneficiaries do not have
standing to sue under § 502(a)), and
Health Scan, Ltd. v. Travelers Ins. Co.,
725 F. Supp. 268, 269-70 (E.D. Pa.
1989) (same), with Commonwealth of
Pa. Dep’t of Public Welfare v. Quaker
Med. Care & Survivors Plan, 836 F.
Supp. 314, 317 (W.D. Pa. 1993)
(observing that given the facts of
ILGWU, Footnote 6 is non-binding dicta
in cases involving an actual assignment),
and Charter Fairmount Inst., Inc. v. Alta
Health Strategies, 835 F. Supp. 233, 238
(E.D. Pa. 1993) (same).
Almost every circuit to have
considered the question has held that a
health care provider can assert a claim
under § 502(a) where a beneficiary or
participant has assigned to the provider
that individual’s right to benefits under
the plan, see e..g., Tango Transport v.
Healthcare Fin. Servs., 322 F.3d 888,
891 (5th. Cir. 2003) (collecting cases),
but as the issue is not squarely before us,
we express no opinion on it.

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9
that Psaras and Rovetto did, in fact, assign
any claims to the Hospital.
As the party seeking removal, the
Plan bore the burden of proving that the
Hospital’s claim is an ERISA claim.
DiFelice, 346 F.3d at 452. Accordingly,
the Plan bore the burden of establishing
the existence of an assignment. Hobbs v.
Blue Cross Blue Shield of Ala., 276 F.3d
1236, 1242 (11th Cir. 2001). The Plan
concedes that the record contains no
evidence of an express assignment,
whether oral or written, from either Psaras
or Rovetto to the Hospital. Instead, the
Plan argues that “[t]he MagNet contract
itself establishes the Hospital’s claim as an
assignment from the participant.”
Appellee’s Br. at 25. Essentially, the Plan
argues that (1) under the Subscriber
Agreement, “[the Hospital’s] only right to
demand money from the Plan comes from
the participant’s assignment of her right to
reimbursement,” Appellee’s Br. at 16, 24;
(2) therefore, the Hospital must be suing
on an assignment from Psaras and Rovetto.
The Plan’s argument is a non
sequitur. Whether the Subscriber
Agreement requires the Hospital to obtain
an assignment in order to demand payment
from the Plan says nothing about whether
an assignment was in fact made. Because
neither Psaras nor Rovetto are parties to
the Subscriber Agreement, that document
cannot, in and of itself, establish an
assignment of their claims. At best, the
Plan’s interpretation of the Subscriber
Agreement provides an affirmative
defense to the Hospital’s breach of
contract claims, i.e., that the Plan has no
contractual liability absent a valid
assignment. The Plan’s argument may
therefore entitle it to judgment on the
Hospital’s breach of contract claims in a
court of competent jurisdiction. It does
not, however, convert those breach of
contract claims into derivative claims for
benefits under § 502(a).8
Nor can we find an actual
assignment based on any other documents
in the record.
Section 5 of the Summary Plan
Description, entitled “How Benefits Will
Be Paid,” provides: “If you qualify for
hospital care and are entitled to
reimbursement, and the hospital has sent
in an assignment executed by you, we will
8 The parties vigorously dispute
whether the Subscriber Agreement
requires the Hospital to obtain an
assignment before the Plan is obligated
to make payment. We express no
opinion on the merits of this dispute.
Nor do we express any opinion on other
disputes regarding the interpretation of
the Subscriber Agreement. For example,
the Plan argues that there is no direct
contractual relationship between itself
and the Hospital. The question on appeal
is whether the Hospital could have
brought its claim under § 502(a). If it
could not, then removal was improper,
and the Plan’s arguments on the merits,
including its argument that no contract
exists, can only be adjudicated in state,
not federal, court.

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10
pay the hospital directly . . . .” Thus, the
Plan itself contemplates an independent act
by which a participant or beneficiary
assigns his or her claim to the Hospital.
The record contains no evidence that
Psaras or Rovetto undertook such an act.
The Plan offers the certification of
Kathy Pridmore, the Plan’s Director of
Medical Benefits, to support a finding of
an assignment. Pridmore broadly declares
that, in her experience, the Plan has
“consistently followed the claims and
claim review procedures” contained in the
Summary Plan Description. The Plan
argues that Pridmore’s declaration
constitutes evidence of “routine practice”
that supports an inference of an
assignment. See Fed. R. Evid. 406. We
disagree. Pridmore does not declare that
the Plan routinely receives assignments
prior to payment. In her recitation of the
Plan’s “standard procedure for processing
claims,” she does not even mention the
execution of assignments by Plan
participants or beneficiaries. As such,
Pridmore’s certification cannot establish a
routine practice relevant to this appeal, let
alone satisfy the Plan’s burden of
establishing federal s ubjec t-matte r
jurisdiction by a preponderance of the
evidence.
Because the Plan has failed to
demonstrate that the Hospital obtained an
assignment from Psaras and Rovetto, we
do not reach the “standing-by-assignment
of claim” issue. Therefore, the Plan
cannot demonstrate that the Hospital has
standing to sue under § 502(a). As a
result, the Hospital’s state law claims
could not have been brought under the
scope of § 502(a) and are not completely
pre-empted by ERISA. E.g., Hobbs, 276
F.3d at 1243; Ward v. Alternative Health
Delivery Sys., Inc., 261 F.3d 624, 627 (6th
Cir. 2001); Harris v. Provident Life &
Accident Ins. Co., 26 F.3d 930, 933-34
(9th Cir. 1994).
B.
We further conclude that the
Hospital’s state law claims are predicated
on a legal duty that is independent of
ERISA. See Davila, slip op. at 8. The
Hospital’s claims, to be sure, are derived
from an ERISA plan, and exist “only
because” of that plan. Id. at 11. The crux
of the parties’ dispute is the meaning of
Section 2.1 of the Subscriber Agreement,
which governs payment for “Covered
Services furnished to Eligible Persons.”
Were coverage and eligibility disputed in
this case, interpretation of the Plan might
form an “essential part” of the Hospital’s
claims. Id.
Coverage and eligibility, however,
are not in dispute. Instead, the resolution
of this lawsuit requires interpretation of
the Subscriber Agreement, not the Plan.
The Hospital’s right to recovery, if it
exists, depends entirely on the operation of
third-party contracts executed by the Plan
that are independent of the Plan itself. Cf.
Caterpillar Inc. v. Williams, 482 U.S. 386
(1987) (suit for breach of individual
employment contract, even if defendant’s
action also constituted a breach of an
entirely separate collective bargaining
agreement, not pre-empted by § 301 of the

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Labor Management Relations Act).
We find instructive the Ninth
Circuit’s opinion in Blue Cross of
California v. Anesthesia Care Associates
Medical Group, Inc., 187 F.3d 1045 (9th
Cir. 1999). In that case, the court held that
claims asserted by health care providers
against a health care plan for breach of
their provider agreements were not
completely pre-empted under ERISA. Id.
at 1051-52. The court reached this
conclusion notwithstanding “the fact that
these medical providers obtained
assignments of benefits from beneficiaries
of ERISA-covered health care plans.” Id.
at 1047, 1052.
The litigation in Anesthesia Care
arose from a fee dispute between four
health care providers and Blue Cross. Id.
at 1048. Blue Cross had entered into
“provider agreements” with physicians in
which Blue Cross agreed to identify the
providers in the information it distributed
to beneficiaries of the plan and to direct
beneficiaries to those providers. In return,
the providers agreed to accept payment for
services rendered to ben eficiaries
according to specified fee schedules.
When Blue Cross attempted to change the
fee schedules, the providers filed a class
action in state court alleging a breach of
the provider agreements. Id. at 1049.
The Ninth Circuit held that “the
Providers’ claims, which arise from the
terms of their provider agreements and
could not be asserted by their patient-
assignors, are not claims for benefits under
the terms of ERISA plans, and hence do
not fall within § 502(a)(1)(B).” Id. at
1050. The court explained:
[T] he Providers are
a s s e r ti n g c o n t r a c tu a l
breaches . . . that their
patient-assignors could not
assert: the patients simply
are not parties to the
p r o v i d e r a g r e e m e n t s
between the Providers and
Blue Cross. The dispute
here is not over the right to
payment, which might be
said to depend on the
patients’ assignments to the
Providers, but the amount,
or level, of payment, which
depends on the terms of the
provider agreements.
Id. at 1051 (first emphasis added).
Because the Providers asserted “state law
claims arising out of separate agreements
for the provision of goods and services,”
the court found “no basis to conclude that
the mere fact of assignment converts the
Providers’ claims into claims to recover
benefits under the terms of an ERISA
plan.” Id. at 1052.9
9 The reasoning in Anesthesia Care
was followed in Orthopaedic Surgery
Associates of San Antonio, P.A. v.
Prudential Health Care Plan, Inc., 147
F. Supp. 2d 595 (W.D. Tex. 2001). The
facts in Orthopaedic Surgery are nearly
identical to this case. In Orthopaedic
Surgery, health care providers entered

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The facts of this case are similar to
Anesthesia Care in important respects: (1)
the Hospital’s claims in this case arise
from the terms of a contract—the
Subscriber Agreement— that is allegedly
independent of the Plan; (2) the
participants and beneficiaries of the Plan
do not appear to be parties to the
Subscriber Agreement; and (3) “[t]he
dispute here is not over the right to
payment, which might be said to depend
on the patients’ assignments to the
[Hospital], but the amount, or level, of
payment, which depends on the terms of
the [Subscriber Agreement].” Id. at 1051.
C.
We have not overlooked the
apparent convergence between the
Hospital’s breach of contract claim and a
claim for benefits under § 502(a). Because
the Plan is a reimbursement plan, the
payments made to the Hospital are the
benefits received by Psaras and Rovetto
under the Plan. As a result, it would
appear that any claims the Hospital could
have obtained by assignment from Psaras
and Rovetto would be for the same amount
as the breach of contract claims that are
the subject of this appeal. Moreover, had
the Hospital successfully sued Psaras and
Rovetto for the payments due, it would
appear that any claims for reimbursement
that Psaras and Rovetto would have
against the Plan would be claims for
benefits under § 502(a). Indeed, one of the
principal reasons why courts have allowed
participants and beneficiaries to assign
their claims under § 502(a) is to avoid the
necessity of providers suing patients in the
first instance. See Cagle, 112 F.3d at
1515.
Nevertheless, the absence of an
assignment is dispositive of the complete
pre-emption question. Although the
Hospital “may not defeat removal by
omitting to plead necessary federal
questions in a complaint,” Franchise Tax
Bd., 463 U.S. at 22, it is clear that the
Hospital is asserting a claim that could not
be asserted under the civil enforcement
into contracts with a healthcare plan,
Prudential. Under the contracts,
Prudential agreed to pay the providers for
services rendered to beneficiaries of the
plan. When Prudential allegedly paid the
providers less than the agreed upon
amount, the providers sued for breach of
the physician agreements. Orthopaedic
Surgery, 147 F. Supp. 2d at 597. The
District Court in Orthopaedic Surgery
remanded the case to state court,
concluding that § 502(a) did not
completely pre-empt the providers’
claims. Citing Anesthesia Care, the
court characterized the providers’ claims
as “claim[s] for the amount or level of
payment and not the right to payment.”
Id. at 601. The court rejected
Prudential’s argument that, since the
medical services that were allegedly
unpaid were provided to participants or
beneficiaries of ERISA plans, the
providers’ claims sought benefits payable
under the terms of those plans.

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provision of ERISA. It may very well be
that the Hospital’s breach of contract claim
against the Plan will fail under state law,
or that the Hospital’s state law claims are
pre-empted under § 514(a). These matters,
however, go to the merits of the Hospital’s
breach of contract claim, which can only
be adjudicated in state court.
IV.
Under the well-pleaded complaint
rule, the Hospital’s complaint does not
present a federal question that would
support removal. The complaint does not
expressly refer to ERISA or the federal
common law of ERISA, and the rights or
immunities created under ERISA are not
elements, let alone essential elements, of
the plaintiff’s claims. Moreover, the
Hospital’s state law breach of contract
claims are not completely pre-empted by
ERISA’s civil enforcement provision,
because the Hospital could not have
brought its claims under that provision.
Accordingly, removal in this case was
improper, and the order of the District
Court denying remand will be vacated.
We will remand this case to the District
Court with instructions that the District
Court, in turn, remand to the Superior
Court of New Jersey.
Pascack Valley Hospital, Inc. v. Local
464A
No. 03-4196
ALITO, Circuit Judge, concurring in the
judgment.
I concur in the judgment based on
the decision in N.E. Dept’t ILGWU
Health & Welfare Fund v. Teamsters
Local Union No. 229 Welfare Fund, 764
F.2d 147 (3d Cir. 1985). Although there is
now substantial contrary authority, we are
bound by prior panel decisions of our
Court until they are overruled.
The Court avoids the question
whether an assignee can assert a claim
under Section 502(a)(1)(B) of ERISA, 29
U.S.C. § 1132(a)(1)(B), by holding that
there is insufficient evidence to support a
finding that there were assignments in this
case. I disagree. While the summary
judgment record does not contain any
express assignments of the claims at issue,
there is ample evidence to support a
finding that the claims were assigned to
the Hospital. What happened here is very
common. Participants of a health care
plan received treatment from a provider;
the participants did not pay for those
services but instead gave the provider the
information needed to bill their plan; the
provider then billed the plan pursuant to a
contract obligating the plan to pay the
provider on the assigned claims of
participants; and the plan paid, albeit at a
discounted rate. These facts are more than
sufficient to prove that the claims were
implicitly assigned to the provider. In
holding that the summary judgment record

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is insufficient to prove assignments, the
Court ignores the obvious reality of the
situation.

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