A federal appeals court has thrown out an out-of-network provider lawsuit over oral reimbursement promises, ruling ERISA bars the state-law claims.
The Sixth Circuit Court of Appeals ruled on August 19, 2026, affirming the dismissal of a suit against La-Z-Boy and Blue Cross Blue Shield of Michigan.
La-Z-Boy sponsors an employee health plan governed by Employee Retirement Income Security Act of 1974 (ERISA), the federal law covering employer benefit plans. The plan covered a patient the court called "Patient AA."
In early 2022, Patient AA sought care from several out-of-network providers. Before treating, the providers phoned Blue Cross, which administers the plan, to check what they would be paid. Blue Cross representatives said reimbursement would follow the "usual, customary, and reasonable" rate - the UCR rate, an industry benchmark "based on what providers in the area usually charge for the same or similar medical service," according to the providers.
The providers went ahead and billed $342,296. Blue Cross paid $1,598.40, an amount the providers said was "based on Medicare" rather than the UCR rate they expected.
The providers sued for negligent misrepresentation and promissory estoppel, seeking payment at the UCR rate. The trial court dismissed the case, and the appeals court agreed.
The sticking point was preemption. ERISA bars state-law claims that "relate to" an employer health plan. Following a 1991 circuit precedent, the court held that provider claims built on an administrator's oral assurances about a plan's coverage or reimbursement terms are preempted, whatever label the claim carries. Here, the court said, the claims turned on the terms of La-Z-Boy's plan.
For administrators and their carriers, the ruling confirms a defense against a recurring problem: a provider relies on a phone call, treats the patient, then sues over a shortfall. In the Sixth Circuit, that path is now closed where the dispute traces back to plan terms.
The court stressed that its holding was narrow. It left open whether ERISA preempts provider claims based on separate rate agreements.
A concurring opinion flagged that the area is contested, describing the 1991 precedent as an "outlier" and "poorly reasoned" and noting that other appeals courts have let similar claims proceed. Outside the Sixth Circuit, the same facts could land differently.
