APRIL 2013 BAD FAITH CASES: COURT DISMISSES VIOLATION OF THE DUTY OF GOOD FAITH AND FAIR DEALING SUIT AS PREEMPTED UNDER FEDERAL ERISA STATUTE (New Jersey Federal)

In MHA, LLC, v. Aetna Health, Inc., a healthcare provider brought ERISA and state law claims against an insurance carrier to recover $39 million in damages after the carrier allegedly underpaid for services that plan beneficiaries had received at one of the healthcare provider’s facilities. Originally, the dispute arose because the carrier continued to pay the healthcare provider at the rates governed by a contract, which the carrier had entered into with an entity later purchased by the healthcare provider in this case. The healthcare provider essentially argued that the contract no longer governed the parties’ current relationship.

The court granted the carrier’s motion to dismiss all counts, including the state law bad faith claim that was preempted by ERISA.

Date of Decision: February 25, 2013

MHA, LLC v. Aetna Health, Inc., No. 12-2984, 2013 U.S. Dist. LEXIS 25743, U.S. District Court for the District of New Jersey (D.N.J. Feb. 25, 2013) (New Jersey Federal) (Chesler, J.)