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PARKSIDE LUTHERAN HOSP. v. R.J. ZELTNER & ASSOCS.

March 24, 1992

PARKSIDE LUTHERAN HOSPITAL, Plaintiff,
v.
R.J. ZELTNER & ASSOCIATES, INC. ERISA PLAN and BLUE CROSS & BLUE SHIELD OF OHIO, Defendants.


PLUNKETT


The opinion of the court was delivered by: PAUL E. PLUNKETT

Hon. Paul E. Plunkett

SECOND MODIFIED

 MEMORANDUM OPINION AND ORDER

 Plaintiff, PARKSIDE LUTHERAN HOSPITAL ("PARKSIDE"), filed suit to recover unpaid medical bills that it incurred for the treatment of one of the Defendants' insureds. Defendant, BLUE CROSS & BLUE SHIELD OF OHIO ("BLUE CROSS"), has moved to dismiss all three counts of Plaintiff's Amended Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). For the reasons that follow, we dismiss Count I of Plaintiff's Amended Complaint with prejudice and dismiss Counts II and III with leave to amend.

 Background *fn1"

 Sometime during the fall and winter of 1987, Linda Zeltner was admitted to Parkside Lutheran Hospital for medical care. While at the hospital Linda Zeltner incurred hospital and medical charges of at least $ 23,372.68. (Pl.'s Am. Comp. Count I P8.)

 During her hospital stay Linda Zeltner had health insurance coverage through an ERISA plan as a dependent of a covered employee. (Id. P6.) BLUE CROSS was a fiduciary under this ERISA plan. (Id. P7.)

 On October 28, 1987, a PARKSIDE employee contacted the ERISA plan and confirmed that Linda Zeltner had health benefit coverage under that plan. (Id. Count II P12.) When she was admitted to PARKSIDE, Linda Zeltner and her husband Robert Zeltner executed an assignment of benefits to PARKSIDE. (Id. Count I P9.) This assignment was intended to transfer their rights under their ERISA plan to PARKSIDE for reimbursement for Linda Zeltner's hospital and medical expenses. (Id.)

 Pursuant to the apparent assignment of benefits, PARKSIDE sent the bill for Linda Zeltner's hospital and medical expenses, which totalled $ 23,372.68, to the address specified by the ERISA plan and BLUE CROSS. (Id. P10.) The Defendants paid $ 11,146.68, but have refused to pay the balance of the bill ($ 12,226.00). (Id. P11.) PARKSIDE filed suit in state court to recover this amount. BLUE CROSS removed the claim to federal court on the grounds that the claim necessarily rests on the Employee Retirement Income Security Act (ERISA).

 In Count I of Plaintiff's Amended Complaint, PARKSIDE asserts its rights as assignee of the ERISA plan to the contractual benefits of that plan. Count II contains a claim for equitable estoppel; Count III, for negligent misrepresentation.

 Analysis

 In their Motion to Dismiss, *fn2" the Defendant BLUE CROSS contends that the Court lacks subject matter jurisdiction over this case because Linda Zeltner's health benefit plan clearly states that beneficiaries may not assign their benefits to others, and therefore, PARKSIDE cannot properly maintain a suit based on the plan against BLUE CROSS. (Def.'s Mot. Dis. at 2.) BLUE CROSS also argues that the claims of equitable estoppel and negligent misrepresentation (Counts II and III) are pre-empted by ERISA and, therefore, are unmaintainable. (Id.) We address the Defendant's challenge to the assignment first.

 A. Assignment Under the Plan

 The Seventh Circuit has recently stated that subject matter jurisdiction is present where a health care provider that is an assignee of an ERISA plan participant has a colorable claim to benefits. Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698, 700 (7th Cir. 1991). The question before us is ...


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