Eastern District Concludes that ERISA Preempts Negligent Misrepresentation Claim

Korman v. Consolidated Edison Co., No. 12-CV-1561 (JFB-ARL) (E.D.N.Y. Jan 16, 2013): The plaintiff brought the Employee Retirement Income Security Act (ERISA) and common law claims against his benefits provider, UnitedHealthcare (UHC), arising out of its misrepresentation as to the medical benefits available to him under his employer’s benefits plan after retirement. His employer, Con Edison, had separate medical benefits plans for its employees and retirees. In 2000, the plaintiff received a letter informing him that the plan’s maximum lifetime medical benefit had increased from $1 million to $2 million. In mid-2009, the plaintiff retired and, soon thereafter, received a statement indicating that he had over $1.5 million remaining in his lifetime medical benefit plan. Based on the assumption that he was entitled to a total of $2 million in benefits, the plaintiff underwent elective back surgery. He subsequently received a letter stating that he had exceeded the $1 million benefit limit under the plan.

UHC moved to dismiss the negligent misrepresentation claim on the grounds that it was preempted by ERISA, arguing that the plaintiff’s claim was essentially one for benefits under an ERISA plan. The court agreed, reasoning that the plaintiff’s claim was “colorable” under ERISA because the dispute concerned his right to payment for medical expenses under the plan, and that the substance of UHC’s communication to the plaintiff implicated coverage and benefits determinations under the terms of the plans, requiring the court to analyze the terms of ERISA-governed plans. Thus, the claim was not merely a dispute over a dollar amount. Additionally, the court rejected the plaintiff’s argument that his claim sounded independently of ERISA under state insurance law, explaining that UHC’s actions were “inextricably intertwined” with the terms of the plan,” and that the plaintiff’s right to benefits arose, not from state insurance law, but rather from the plan’s terms.