The Instersection Between Provider Payment Disputes and ERISA Preemption

By: Kendall Jackson, Esq.

It is no secret that one perk of having a self-funded ERISA plan is ERISA preemption. It acts as a comfortable boundary between ERISA plans and state insurance law, effectively eliminating a state’s control over an ERISA plan’s administration and benefits. While there have been attempts to challenge the limits of ERISA preemption through legislation and various lawsuits, the courts  generally uphold the uniform standards of ERISA preemption with regard to plan benefits and administration.

Recently, there have been a number of cases implicating ERISA preemption from a different angle—not challenging ERISA preemption itself but rather using ERISA preemption in certain instances as an argument against providers’ claims. The outcomes of these cases not only help to reinforce the limits of ERISA preemption, but also further inform us on the nature of its applicability.

First, let’s consider a case from the U.S. District Court for the Middle District of Tennessee, Envision Healthcare Operating, Inc. v. United Healthcare Services, Inc, which dealt directly with the intersection of ERISA preemption and provider payment disputes. This case involved allegations of United’s systematic and fraudulent denial or reduction of payments for emergency medical services. Envision cited these alleged practices as a method for being forced to accept unfavorable contract terms to regain in-network status. Envision brought several claims under the Racketeering Influenced and Corrupt Organizations Act (“RICO”) and the Tennessee Prompt Pay Act, as well as claims for unjust enrichment and quantum meruit, civil conspiracy, and fraud. The defendants argued that several of these claims were preempted by ERISA, as the claims related to ERISA-governed benefit plans.

The court opined that the question was whether express preemption under 29 U.S.C. § 1144 applied to the state law claims. The parties focused on the distinction between claims that are, or are not, based on the assignment of benefits by an ERISA plan. The defendants argued that they were to make the argument of ERISA preemption much stronger. However, in the most recent order from June 4, 2026, the court stated that none of the claims were based on the assignment of benefits, and thus the argument for preemption was inapplicable.

This case was quite layered and considered several other concepts outside of ERISA preemption based on the various claims brought by the plaintiffs. The court ultimately dismissed most of the claims with the exception of the implied-in-fact contract claim, which was allowed to proceed. With regard to preemption, the discussion within the opinion is particularly valuable. The court examined complete preemption under 29 U.S.C. § 1132(a) and express preemption under 29 U.S.C. § 1144. These two varieties of preemption of state-law claims, and their application to the claims in question, provide greater insight into how a court approaches implied-in-fact contract claims between providers and the administrators of ERISA plans. The framing of a dispute has significant impact on how it will proceed, and an argument of preemption is not a foolproof defense.

This same issue was addressed in a separate case, Providence Mission Hospital v. UFCW Unions & Food Employers Benefit Fund. The June decision from the U.S. District Court for the Central District of California discussed a provider payment dispute arising from a contractual relationship between the parties. The case was originally filed in state court with claims for breach of implied contract and quantum meruit. The defendants removed the case to federal court, asserting that the plaintiffs’ claims were preempted by ERISA. The court ruled that ERISA preemption was not applicable, as the claims were based on contractual reimbursement rates that arise from independent state law duties that exist regardless of whether the plan in question is an ERISA plan. The case was then remanded to state court where the contractual claim will proceed.

Similar to Envision Healthcare Operating, Inc. v. United Healthcare Services, Inc, this case emphasizes that ERISA plans and their administrators cannot assume that every provider payment dispute can be removed to federal court purely on the grounds that the plan is an ERISA plan. If a separate contractual arrangement exists, ERISA plans and their administrators may lose traction with the argument of ERISA preemption, as it does not carry the same weight as it would for a benefits or administrative issue. The decisions above suggest that these entities must explore and employ different strategies when the dispute centers on contractual payments.

For the sake of comparison, perhaps it would be helpful to examine a case where ERISA preemption was applicable. In Ahn v. Cigna Health and Life Insurance Co., a provider brought suit against Cigna for defamation and related state law claims. This issue stemmed from Cigna sending EOBs to plan members that stated their claims were denied due to the provider not being properly licensed. The third circuit found that ERISA preempted the provider’s defamation claim because the alleged defamatory statements were on EOBs, a communication that is central to plan administration. The court reasoned that if it were to allow state defamation claims to inform and regulate the content of an EOB, it would conflict with the uniform administration described under ERISA. Unlike the other two cases discussed above, this case centers on a matter of plan administration, which made the defendant’s argument of ERISA preemption much stronger.

The cases above illustrate the important intersection between provider disputes and ERISA preemption. The decisions serve as a reminder that ERISA plans and their administrators cannot broadly assert that claims are preempted merely because the plan is an ERISA plan. Depending on the nature of the provider’s claims, the plan may or may not be able to rely on such a defense. It largely depends on whether the provider can point to a separate contractual obligation that would exist regardless of whether the plan is an ERISA plan. That said, where the provider’s claims move into the territory of ERISA plan benefits and administration, an argument of preemption has considerably more force.