Sixth Circuit Reaffirms ERISA Preempts State Law Claims Arising From Benefits Verification Calls

On August 19, 2026, the Sixth Circuit held in Laurel Hill Management Services, Inc., v. La-Z-Boy, Inc., No. 25-1727 (6th Cir. Aug. 19, 2026) (“Laurel Hill”)that the Employee Retirement Income Security Act of 1974 (“ERISA”) preempts state law negligent misrepresentation and promissory estoppel claims brought by out-of-network providers “when those claims arise out of an ERISA-plan administrator’s oral assurances [during a benefits verification call] about the terms of coverage or reimbursement” under an ERISA-governed healthcare plan. In so holding, the Sixth Circuit re-affirmed its nearly 35-year-old precedent in Cromwell v. Equicor-Equitable HCA, Corp., 944 F.2d 1272 (6th Cir. 1991).

The Sixth Circuit’s decision comes on the heels of the Ninth Circuit’s decision in Healthcare Ally Management of California, LLC v. WSP USA, Inc., No. 24-3479 (9th Cir. Aug. 11, 2026) (“HAMOC”), which addressed nearly identical facts (and was brought by the same plaintiff’s counsel). Drawing a distinction between contract- and tort-based claims, the Ninth Circuit held that ERISA preempted the promissory estoppel claim but not the negligent misrepresentation claim—reasoning that ERISA does not preempt a negligent misrepresentation claim by an out-of-network medical provider (a non-ERISA entity) against a plan sponsor or administrator (an ERISA entity) alleging misrepresentations regarding the healthcare plan’s payment terms (e.g., whether the plan will pay for out-of-network medical services based on the Medicare rate or the “Usual, Customary, and Reasonable” rate). That decision aligned the Ninth Circuit with the Fifth, Eighth, and Eleventh Circuits in holding that ERISA does not preempt state law negligent misrepresentation claims based on benefits verification calls.¹ We discuss the HAMOC decision in more detail in our recent Legal Update.

Sixth Circuit Fortifies Preemption of State Law Claims Against ERISA Plans

ERISA Section 514(a) preempts “any and all State laws” that “relate to” a covered employee benefit plan. Courts construe this “clearly expansive” provision broadly. In determining whether ERISA preempts a state-law claim, courts apply two separate tests to evaluate whether the claim “relates to” an ERISA plan: (1) whether the claim ”refers to” the plan (i.e., is premised on the plan’s existence or essential to the claim’s survival); or (2) whether it has an impermissible “connection with” the plan (i.e., governs a central matter of plan administration, interferes with nationally uniform plan administration, or bears upon an ERISA-regulated relationship, such as the relationship between a plan and plan member, a plan and employer, or an employer and employee).

In Laurel Hill, the Sixth Circuit reviewed de novo whether ERISA preempts state law claims for promissory estoppel and negligent misrepresentation, and affirmed the district court’s dismissal of those claims on preemption grounds based on the controlling reasoning in Cromwell. In Cromwell, the Sixth Circuit considered whether ERISA preempted state law negligent misrepresentation and promissory estoppel claims brought by an out-of-network medical provider against an ERISA healthcare plan and arising from alleged misrepresentations during a benefits verification call about whether the patient was covered under the plan. The Sixth Circuit held that ERISA preempted these claims, even though it acknowledged that the providers lacked recourse under ERISA and would be “left without remedy.” The Court explained that permitting such claims “even to providers outside ERISA’s scope” would “affect the relationship between plan and principals by extending coverage beyond the terms of the plan.”

Laurel Hill presented slightly different facts. While the alleged misrepresentation in Cromwell was that the patient was covered by the ERISA plan (when he was not), the alleged misrepresentation in Laurel Hill pertained to the plan’s terms (i.e., the plan’s applicable reimbursement rate). Addressing this distinction, the Sixth Circuit explained that “[i]f Cromwell’s negligent-misrepresentation and promissory-estoppel claims ‘relate[d] to an employee benefit plan’ even in the absence of any ERISA-plan coverage … the same should follow with greater force for claims that implicate the terms of [a] still-operative ERISA plan.” 

The Sixth Circuit also rejected the medical providers’ attempts to distinguish Cromwell. First, the medical providers tried to limit Cromwell to situations involving a patient’s assignment of benefits to a medical provider. But the Court explained that the assignment of benefits did not affect Cromwell’s reasoning because negligent misrepresentation and promissory estoppel claims are “purely state law claims” not seeking the recovery of ERISA plan benefits. Second, the medical providers argued that Cromwell involved the “right” to receive payment from the plan (which implicates the ERISA plan’s terms), whereas their case involved the “extent” of the payment (which was based on the plan administrator’s alleged misrepresentation regarding the payment rate). The Court rejected this supposed distinction. As alleged in the medical providers’ complaint, the supposed misrepresentation was about what the plan would pay the medical providers under its terms. Unlike when an in-network provider brings a breach of contract claim against a plan for not paying the agreed-upon reimbursement rate in a separate “provider agreement,” the out-of-network medical providers’ claims were not pursuant to a “separate contract” independent of the ERISA plan, but instead “related to the contents of the plan’s terms.” Third, the Court rebuffed the medical providers’ argument that Cromwell was not binding because recent Supreme Court precedent allegedly requires a narrow reading of ERISA preemption. Fourth, the Court rejected the medical providers’ reliance on other circuit court decisions purportedly declining to find ERISA preemption or critiquing Cromwell—reasoning that “factual or legal distinctions” might explain those rulings, and in any event, Cromwell’s reasoning controlled.

Takeaways for Plan Administrators and Sponsors

Laurel Hill confirms the existence of a circuit split on whether ERISA preempts state-law tort claims by out-of-network providers against ERISA health plan administrators arising from benefits verification calls. Because the fact pattern underlying these claims has become increasingly common, plan sponsors and administrators should be aware of this split and the evolving law governing ERISA preemption. 

In light of the circuit split, plan sponsors and administrators facing benefits verification call lawsuits should consider whether they can file a motion seeking to transfer the case to a circuit with more favorable preemption precedent, as the defendants did in Laurel Hill by transferring the case to the Sixth Circuit (from the Ninth Circuit). But for that procedural move, the defendants in Laurel Hill would likely still be litigating the negligent misrepresentation claim given the Ninth Circuit’s recent decision in HAMOC.

Because these out-of-network provider lawsuits are often first filed in state court, plan administrators should also consider whether it may be more favorable to address ERISA preemption in federal or state court—as controlling state court precedent on ERISA preemption may be more favorable than the analogous federal court precedent, or vice versa. This must be evaluated carefully, however, because the medical providers bringing these lawsuits have been attempting to manipulate jurisdiction through carefully crafted allegations and other strategic maneuvers designed to avoid federal court jurisdiction, such as limiting the amount in controversy to under $75,000 when diversity jurisdiction would otherwise exist and voluntarily dismissing the complaint’s ERISA claims to force a remand to state court of the state-law claims.

Plan administrators should also expect healthcare providers will continue to assert state law claims based on novel theories, in an attempt to avoid ERISA preemption. The Sixth Circuit stated that its “holding is narrow”—that is, it applies to a specific fact pattern where a plan administrator made alleged misrepresentations “about the coverage or reimbursement under an ERISA-governed plan.” The Court emphasized that it was not determining “whether ERISA expressly preempts other state-law claims brought by third-party healthcare providers against plan administrators in different factual scenarios.” Nonetheless, Laurel Hill is still an important decision for plan sponsors and administrators because it extended ERISA preemption beyond the factual scenario in Cromwell.

Finally, plan administrators should be suspicious of any state-law claims premised on benefits verification calls. As the decision acknowledges, these claims are rightfully subject to “skepticism.” In defending against such claims, plan administrators should consider whether the out-of-network provider actually and justifiably relied on the alleged oral misrepresentations about the plan’s terms, particularly if it was provided a written copy of the plan’s actual coverages and rates. Plan administrators should also compare the complaint’s allegations regarding the alleged misrepresentations with the applicable call recordings, if available. Many of these lawsuits include very similar—and in some cases identical—allegations regarding the alleged benefits verification calls and misrepresentations, which raises questions about the legitimacy of such claims. Plan administrators should review their and their third-party administrator’s call recording policies to evaluate whether to maintain all such call recordings, which can provide them with potentially dispositive evidence debunking any alleged misrepresentation claim.

Footnote

1. Healthcare Ally Management of California, LLC v. WSP USA, Inc., No. 24-3479 (9th Cir. Aug. 11, 2026); Access Mediquip L.L.C. v. UnitedHealthcare Insurance Co., 662 F.3d 376 (5th Cir. 2011); In Home Health, Inc. v. Prudential Insurance Co. of America, 101 F.3d 600 (8th Cir. 1996); Lordmann Enterprises, Inc. v. Equicor, Inc., 32 F.3d 1529 (11th Cir. 1994).