Opinion
CIVIL ACTION NO. 00-CV-1761 SECTION "K"(2).
November 17, 2000.
ORDER AND REASONS
Before the Court are a Motion to Remand filed by Lakeview Medical Center LLC d/b/a Lakeview Regional Medical Center ("Lakeview") and a Motion to Dismiss filed by Aetna Health Management, Inc., Aetna Health Plans of Louisiana, Inc. and Aetna U.S. Healthcare, Inc. (referred to collectively as "Aetna" or "the Aetna defendants." The Court entertained oral argument on August 30, 2000 on these motions.
This case is brought by Lakeview as one for breach of contract that establishes a reimbursement schedule for services already provided by Lakeview Hospital. Aetna removed this matter from Civil District Court for the Parish of Orleans on June 15, 2000 based on Aetna's contention that the claims arise under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1002(1), because "Lakeview's claims for failure to pay for `covered services' allegedly rendered to its patients relate to an ERISA plan." ¶ 9). Thus, Aetna contends that the Court has original federal question jurisdiction over this action pursuant to 28 U.S.C. § 1331 and Section 502 of ERISA, 29 U.S.C. § 1132(a) and (e)(1) As such, defendants argue that its complete preemption defense requires the Court to exercise jurisdiction over this matter. (Notice of Removal ¶ 12). The Court is not persuaded by Aetna's arguments and finds that the Motion to Remand must be granted for the reasons that follow.
It is within the court's discretion to determine whether it will consider a motion to remand prior to a motion to dismiss.Walker v. Savell, 335 F.2d 536 (5th Cir. 1964). Here, the motion to dismiss reaches the merits of the case, not personal jurisdiction. Thus, judicial economy would not be served to decide the motion to dismiss prior to the motion to remand as it would where personal jurisdiction is at issue.
PROCEDURAL BACKGROUND AND LEGAL CONTENTIONS
Lakeview has brought what it contends are state law claims based on a breach of contract by the Aetna defendants. Plaintiffs predecessor, Notami of Louisiana, d/b/a Highland Park Hospital ("Highland"), entered into a Facility Participation Agreement ("FPA") with Aetna Health Management ("AHM") on May 24, 1993. A contract amendment was executed on May 27, 1996 which provided for new rates of compensation (referred to collectively as "the Agreement"). Lakeview contends that the purpose of these contracts were for Lakeview to provide certain hospital services for which it would be reimbursed in accordance with a compensation schedule set forth in the Agreement.Lakeview urged the following causes of action:
1. failure to Pay the PCU Rate
2. failure to Pay Ambulatory Hospital
3. Failure to Pay ER Rate
4. Failure to Pay Stop Loss
5. Unjustified Denials
6. Observation Services
7. General and Incidental Damages and Loss of Use of Money.
Lakeview argues that the first six causes of action specifically are premised on the express language in the Compensation schedule of the Agreement. Thus, plaintiff contends that these issues do not relate to an ERISA plan but purely to the contract between them. Thus, Lakeview maintains that there is no federal question presented that supports the removal of this matter as Lakeview's state law claims are not preempted by ERISA.
The first cause of action ("COA") is allegedly based upon Section I.A. or alternatively I.B. of the Compensation Schedule. COA 2, COA3, COA5 are allegedly based upon Section I.B., Compensation Schedule. COA4 is based upon Section I.C. Compensation Schedule. COA 6 is based upon Section I, Reimbursement Rate, Compensation Schedule. (Memorandum in Support of Motion to Remand at 3)
Aetna responds maintaining that removal is proper because the FPA incorporates terms from ERISA plans and cannot be understood or enforced without interpretation of those terms. Furthermore, Aetna argues that because Lakeview's right to reimbursement includes rights derived from assignments of members' rights to benefits under ERISA plans, the matter was properly removed as it is actually seeking to enforce ERISA claims as contemplated under 29 U.S.C. § 1132.
ANALYSIS
Standard to Determine Removal Jurisdiction with respect to ERISA Claim
As this Court has previously noted, a determination as to whether a cause of action presents a federal question, and therefore subject to removal in this context, depends upon the allegations made on the face of the plaintiffs well-pleaded complaint. Carpenter v. Wichita Falls Indep. School Dist., 44 F.3d 362, 366 (5th Cir. 1995). A federal defense to a state law claim does not create removal jurisdiction. Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1161 (5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990). A defendant may not remove a case on the basis of an anticipated or even inevitable federal defense, but instead must show that a federal right is an essential element of the plaintiffs cause of action. Gully v. First Nat'l Bank, 299 U.S. 109, 111, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936); Carpenter, 44 F.3d at 366; see Sears v. Chrysler Corp., 884 F. Supp. 1125 (E.D.Mich. 1995).
There is an exception to the well-pleaded complaint rule — where federal law so completely preempts a field of state law, a plaintiffs complaint must be recharacterized as stating a federal cause of action. Aaron, 876 F.2d at 1161, citing Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235 (1968). The doctrine does not convert legitimate state claims into federal ones, but rather reveals the suit's necessary federal character. Carpenter, 44 F.3d at 367 (5th Cir. 1995).
In the context of ERISA, there are two types of preemption — complete preemption under § 502(a), 29 U.S.C. § 1132(a) and conflict preemption or ordinary preemption under § 514, 29 U.S.C. § 1144. Copling v. Container Store, Inc., 174 F.3d 590, 594-95 (5th Cir. 1999). The first — complete preemption — provides removal jurisdiction; the second — conflict preemption — does not. Id. For there to be complete preemption, which as noted acts as an exception to the well-pleaded complaint rule, the Court must find that Congress has "so completely pre-empted a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life Ins. Co. v. Taylor, 107 S.Ct. 1542 (1987). Section 502 of ERISA which provides a civil enforcement cause of action completely preempts any state cause of action seeking the same relief regardless of how artfully pled as a state cause of action. Copling, 174 F.3d at 594. Thus, if plaintiffs claims arise under the civil enforcement provision so contemplated, this Court would be required to exercise its removal jurisdiction.
On the other hand, if Aetna's defense arises under federal law and not under the civil enforcement provision, such "conflict preemption" will not "transmogrify a state cause of action into a federal one." As stated in Copling:
"When the doctrine of complete preemption does not apply, but the plaintiffs state claim is arguably preempted under § 514(a), the district court, being without removal jurisdiction, cannot resolve the dispute regarding preemption. It lacks power to do anything other than remand to the state court where the preemption issue can be addressed and resolved." Dukes [v. U.S. Healthcare, Inc., 57 F.3d 350, 355 (3d Cir. 1995)] (citing Franchise Tax Bd. v. Contr. Laborers Vacation Trust, 103 S.Ct. 2841).Copling, 174 F.3d at 595. Thus, to the extent Aetna has relied on § 1144 for removal, such reliance is misplaced and inadequate. Such potential defenses to Lakeland's state law claims are insufficient to provide subject matter jurisdiction for this Court. Thus, the inquiry becomes whether the claims raised by Lakeview's petition really constitute a claim under § 1132 of ERISA and thus removable.
This removal is not Aetna's first attempt to bootstrap its way into federal court. Substantially similar suits have been removed and remanded by our sister and brother courts in the Eastern District of Louisiana. A listing there of includesLakeland Anesthesia v. Aetna U.S. Healthcare, Inc., as cited herein, Lakeland Anesthesia, Inc. v. SMA Health Plan, Inc., et al., C.A. No. 00-1219 "J"; Lakeland Anesthesia, Inc. v. CIGNA health Care of Louisiana. Inc., C. A. No. 00-1208"B"(1); andLakeland Anesthesia, Inc. v. United Health Care of Louisiana, Inc., C. A. 00-1149"C".
Section 1132 of ERISA
This section of ERISA "provides that a participant or beneficiary of an employee welfare benefit plan may bring a civil action `to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.'" Lakeland Anesthesia, Inc. v. Aetna U.S. Healthcare, Inc., 2000 WL 777911, *3 (E.D.La. June 15, 2000) (Sear, J). The term "beneficiary" is defined under the statute as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C. § 1002(2)(B)(8). A "participant" is defined as "any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, whose beneficiaries may be eligible to receive any such benefit." 29 U.S.C. § 1002(2)(B)(7).
In addition to these two potential claimants, the courts have recognized that a "where a participant or beneficiary assigns to a third party service provider his or her rights to health care benefits and that assignment is valid, the third-party service provider may bring a derivative action for health care benefits due to the participant or beneficiary under the terms of the plan." Lakeland v. Aetna at *3 citing Herman Hospital v. MEBA Medical Benefits Plan, 845 F.2d 1286, 1289 (5th Cir. 1988). As the Court in Lakeland v. Aetna:
Without such an assignment, a third-party service provider "has no standing as a `non-enumerated party' to pursue an action described in § 1132(a)." [ Herman] "Health care providers [do not] have independent standing to seek redress under ERISA. [ Memorial Hospital System v. Northbrook Life Ins. Co., 904 F.2d 236 249 (5th Cir. 1990).]Lakeside v. Aetna, 2000 WL 777911, at *3-*4; Lakeland Anesthesia, Inc. v. United Healthcare of Louisiana, Inc., C.A. No. 00-1149 (June 30, 2000) (Berrigan, J.).
It is beyond cavil that Lakeview is not a beneficiary, participant or a fiduciary. As such, proof of an assignment of ERISA claims to Lakeview would be necessary to create standing under § 502, and for this Court to find that the case was properly removed based on its claims would being "completely preempted" thereunder. To begin, this case does not arise in the more traditional context of a provider seeking reimbursement under the provisions of a Plan which has failed to pay for services rendered based on coverage as seen for example in Herman. Here, the claims were brought in state court for breach of contract claims that arise under state law for Aetna's failure to pay pursuant to the Agreement between it and Lakeview, which terms state that "[t]his Agreement, including its amendments, constitutes the entire agreement between the parties with respect to the matters addressed herein and supersedes all prior oral and written understandings between the parties." (the Agreement, ¶ 5.8). While the contractual claims may be dependent on some part of an ERISA plan, they are not derivative of that Plan.
"Fiduciary within the meaning of ERISA must be someone acting in the capacity of manager, administrator, or financial advisor to a plan." See 29 U.S.C. § 1002(21)(A)(i)-(iii). Obviously, a fiduciary would be the party sued to obtain benefits or other relief.
Defendant contends that because a decision with respect to the contractual claims so relates to ERISA plans, plaintiffs claims are totally preempted. Such analysis fails to recognize the refining of the meaning of that term as recognized by the Fifth Circuit in Corporate Health Ins. Inc. v. Texas Dept. of Ins., 215 F.3d 526 (5th Cir. 2000). The appellate court stated:
We have repeatedly struggled with the open-ended character of the preemption provisions of ERISA and FEBBA. We faithfully followed the Supreme Court's broad reading of "relate to" preemption under § 502(a) in its opinions decided during the first twenty years after ERISA's enactment. Since then, in a trilogy of cases, the Court has confronted the reality that if "relate to" is taken to the furthest stretch of its indeterminacy, preemption will never run its course, for "really, universally, relations stop nowhere." Justice Souter, speaking for a unanimous court in Travelers, acknowledged that "our prior attempt to construe the phrase `relate to' does not give us much help drawing the line here." Rather the Court determined that it "must go beyond the unhelpful text . . . and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive.Id. at 532-33 (footnotes omitted). As such, the Court finds that this contractual claim is not so "related to" ERISA plans such that a court's decision with respect to these breach of contract claims would undermine or affect the objectives of the ERISA statute. Simply put, this controversy does not implicate "a significant conflict with an identifiable federal policy or interest" which the Supreme Court has required for a field to be preempted. Id. at 533 citing Boyle v. United Tech Corp., 108 S.Ct. 2510 (1988).
This Court's analysis is likewise analogous to the holding Pegram v. Herdrich, 120 S.Ct. 2143 (2000) which held that mixed eligibility decisions by HMO physicians are not fiduciary decisions under ERISA. The claim here is equally attenuated and only indirectly implicates an ERISA plan.
Furthermore, the primary proof adduced of the putative "assignments" consists of UB-92 forms wherein a box is checked noting an "assignment" of benefits. There are no documents presented that provide adequate legal proof of an actual assignment. Practically identical documents and affidavits were presented to Judge Sear in Lakeland Anesthesia, Inc. v. Aetna U.S. Healthcare, Inc., 2000 WL 777911, *3 (E.D.La. June 15, 2000) and the Court concurs in his analysis. The affidavit of James P. Wolf presented here is substantially similar to the one presented to Judge Sear, and the Court finds that the differences do not persuade it that the rights asserted by plaintiff are in essence derivative. The Court has no subject matter jurisdiction. Accordingly,
IT IS ORDERED that this motion to remand is GRANTED, and pursuant to 28 U.S.C. § 1447, this matter is REMANDED to Civil District Court for the Parish of Orleans.