The Sixth Circuit Court of Appeals ruled on August 19, 2026, in the case of Laurel Hill Management Services, Inc. v. La-Z-Boy Inc., No. 25-1727, affirming the dismissal of a lawsuit brought by medical providers against La-Z-Boy and Blue Cross Blue Shield of Michigan. The court determined that the claims made by the medical providers were preempted by the Employee Retirement Income Security Act of 1974 (ERISA). This ruling affects healthcare providers who seek reimbursement under employer-sponsored health plans and clarifies the extent to which state law claims can be pursued in such contexts.
The plaintiffs in this case, Laurel Hill Management Services, Inc., Minimally Invasive Surgical Associates, and Advanced Weight Loss Surgical Associates, provided medical services to a patient covered under La-Z-Boy's health benefit plan. The dispute arose when the medical providers sought reimbursement from Blue Cross, the plan administrator, based on oral assurances that they would be paid at the usual, customary, and reasonable (UCR) rate. However, when they submitted their claims, Blue Cross reimbursed them at a significantly lower rate, leading to the lawsuit.
The case began when the medical providers filed a lawsuit in California state court in March 2024, which was later removed to federal court and transferred to the Eastern District of Michigan. The providers alleged negligent misrepresentation and promissory estoppel against La-Z-Boy and Blue Cross, claiming they relied on the misleading statements made by Blue Cross regarding reimbursement rates. The district court dismissed their claims, ruling that ERISA preempted the state law claims.
The Sixth Circuit Court agreed with the district court's decision, referencing its earlier ruling in Cromwell v. Equicor-Equitable HCA Corp., which established that ERISA preempts state law claims that relate to an ERISA-governed plan. The court stated, "Under Cromwell, ERISA preempts negligent-misrepresentation and promissory-estoppel claims that depend upon a plan administrator’s misstatements about the coverage or reimbursement terms of an employer’s ERISA plan." This ruling was delivered by Circuit Judge Whitney D. Hermandorfer, with Judges Julia Smith Gibbons and Eric E. Murphy concurring.
The court noted that the medical providers' claims were directly tied to the reimbursement terms of La-Z-Boy's ERISA plan, thus falling under the preemption provision of ERISA. The court emphasized that allowing the claims to proceed would interfere with the uniform administration of employee benefit plans, which ERISA aims to protect. The court concluded that the medical providers' claims were preempted because they effectively sought the recovery of benefits from the ERISA plan.
This ruling has significant implications for healthcare providers who often rely on representations made by plan administrators regarding reimbursement rates. The court's decision reinforces the idea that state law claims may not be pursued when they relate to the administration of ERISA plans, thereby limiting the avenues available for providers seeking to challenge reimbursement decisions. This case sets a precedent that may deter similar claims in the future, as it clarifies the boundaries of ERISA preemption.
Looking ahead, the medical providers can potentially appeal the ruling to the United States Supreme Court, though it remains to be seen whether they will pursue this option. The court also denied their request to file a second amended complaint, which they sought after the initial dismissal, citing that the district court lacked jurisdiction to entertain such a request while the appeal was pending. This ruling underscores the importance of timely and thorough filings in litigation involving ERISA plans.