ERISA And Promissory Estoppel

The Employee Retirement Income Security Act of 1974 (ERISA) applies to a lot of employer benefit plans.  Each of these cases need to be examined by looking at the wording of the plan and the facts of the case.

A 2021 opinion from the Northern District of Texas, Dallas Division, is a good opinion to look at when there is a cause of action for Promissory Estoppel.  The style of the case is, Medarc, LLC vs. Meritain Health, Inc.

Promissory Estoppel is the legal principle that a promise is enforceable by law, even if made without formal consideration when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment.

The facts of the case are spelled out in the opinion.  What follows is the way the Court looked at the claim for Promissory Estoppel in the context of an ERISA claim.

In this case the defendant contends that Plaintiff’s promissory estoppel claim is preempted because it is based on the very terms of the Plans, as opposed to any promise made independently of the Plans.

As discussed in the case, a state law claim relates to an employee benefit plan and is preempted if it has a connection with or reference to the plan.  Plaintiff’s first amended complaint asserts a promissory estoppel claim on behalf of the Liquidating Trustee of Revolution’s estate, separate and apart from
any assignment of benefits.  It alleges that “Revolution received verification by
telephone from Defendant that each patient and the particular procedures were covered by a health benefit plan” and it “would be paid a reasonable amount for the services rendered.”

Plaintiff’s promissory estoppel claim is not dependent on or derivative of the rights of plan beneficiaries; the claim is brought on Revolution’s own behalf for damages resulting from Defendant’s representations regarding health care coverage and payment for services.  While a medical provider’s promissory estoppel claim that “depends on and derives from the rights of the plan participants and beneficiaries to recover benefits under an ERISA plan’s terms” is preempted by ERISA, 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.  Even though its promissory estoppel claim is based on Defendant’s representations that medical services were “covered by a health benefit plan,” Plaintiff does not seek benefits from the plans, nor does it claim that Defendant wrongfully denied benefits due under the terms of the plans or that it improperly administered the plans.  Plaintiff’s promissory estoppel claim is thus independent of the plan’s actual obligations under the terms of the insurance policy and in no way seeks to modify those obligations.

Because Plaintiff’s promissory estoppel claim is not preempted under ERISA, Defendant’s motion to dismiss the claim on preemption grounds should be denied.

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