Ninth and Second Circuit Courts of Appeals Rule that Preauthorization Process Does Not Impose Independent Contractual Liability on Issues of First Impression in Both Circuits

Within days of one another, the U.S. Court of Appeals for the Ninth and Second Circuits ruled—on issues of first impression for both—that ERISA expressly preempts state law breach of contract and promissory estoppel claims asserted by out-of-network providers who allege that preauthorization communications with claim administrators impose reimbursement obligations independent and irrespective of the terms and conditions contained in a patient’s ERISA-governed health benefit plan. The decisions are Bristol SL Holdings, Inc. v. Cigna Health & Life Ins. Co., 103 F.4th 597 (9th Cir. 2024) and Park Ave. Podiatric Care, P.L.L.C. v. Cigna Health & Life Ins. Co., No. 23-1134-CV, 2024 WL 2813721 (2d Cir. June 3, 2024).

Preauthorization of benefits is a routine but vital part of the managed care system. It is a vehicle through which ERISA-governed health benefit plans (both plans that are self-funded by employers and plans that are fully insured by health…