Opinion
Case No. 1:03CV00072
December 29, 2003
MEMORANDUM OPINION
This matter is before the Court on Plaintiff's Motion to Remand to the General Court of Justice, District Court Division, Scotland County, North Carolina [Doc. #5] and Defendant's Motion to Dismiss [Doc. #3]. For the reasons set forth below, the Plaintiff's Motion to Remand will be GRANTED. Because the case will be remanded, the Motion to Dismiss must be decided by the state court.
I.
Plaintiff Four-County Community Services, Inc. ("Four-County") is a nonprofit corporation that provides community services to the residents of several North Carolina counties. Four-County provides health insurance to its employees through a self-funded health insurance program. In connection with this health insurance program, Four-County contracted with Defendant FIA Administrators, Inc. ("FIA") to provide specified administrative services. Pursuant to one of its contractual duties, FIA obtained for Four-County a stop-loss insurance policy through an excess insurer to cover medical claims against Four-County exceeding $30,000. The contract between Four-County and FIA obligated FIA to file claims with this excess insurer when appropriate.
Maggie Humphrey, a Four-County employee covered through its health insurance program, became ill and then died in March 2000. Four-County alleges that claims for Ms. Humphrey's illness exceeded $30,000, thereby obligating FIA to file a claim with the excess insurer. FIA failed to file a timely claim with the excess insurer, the policy lapsed, and now Four-County is unable to obtain reimbursement from the excess insurer for the claims exceeding $30,000.
On December 18, 2002, Four-County filed suit against FIA in the General Court of Justice, District Court Division, Scotland County, North Carolina. [Doc. #1]. Four-County's suit seeks to recover from FIA the amount of reimbursement that would have been available from the excess insurer had FIA filed a timely claim with the excess insurer. On January 17, 2003, FIA removed to the Middle District of North Carolina. [Doc. #1]. On February 5, 2003, FIA filed its Answer [Doc. #2], and a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim [Doc. #3]. On February 19, 2003, Four-County filed a Motion to Remand to the General Court of Justice in Scotland County, North Carolina [Doc. #5]. For the reasons discussed below, Four-County's Motion to Remand to North Carolina state court will be GRANTED.
II.
A proper defendant may remove a claim from state court to federal court if the claim is one over which the district court has original jurisdiction. 28 U.S.C. § 1441 (a) (2003). However, a case must be remanded to state court "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c) (2003). The party seeking to remove a case to federal court has the burden of establishing federal jurisdiction.Mulcahey v. Columbia Organic Chemicals Co., 29 F.3d 148, 151 (4th Cir. 1994). If federal jurisdiction is doubtful, a remand is necessary. Id.FIA removed the case to federal court pursuant to 28 U.S.C. § 1441, alleging that the district court has original jurisdiction under the Employee Retirement Income Security Act, 29 U.S.C. § 1001-1461 (1999) ("ERISA"). The general rule is that federal question jurisdiction must be clear from the face of the well-pleaded complaint. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). Because federal preemption is a defense, and hence does not appear in the complaint, it normally cannot provide a basis for removal jurisdiction. However, the Supreme Court has held that the civil enforcement provisions of ERISA are completely preempted by federal law and may be removed even though the complaint only alleges state law claims, Id.
ERISA was enacted in order to protect the interests of employers, employees and beneficiaries of employee benefit plans. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983). The law regulates matters such as participation in and funding of pension plans, and provides uniform standards for the administration of such plans. Id. at 91. In order to secure the rights of the parties and avoid inconsistent standards, ERISA preempts any and all state law claims which "relate to any employee benefit plan," unless the claims are specifically exempted by the statute. 29 U.S.C. § 1144(a).
Consistent with the legislative purposes of ERISA, the Supreme Court has broadly defined claims that "relate to" employee benefit plans to include claims with any connection with or reference to such a plan.Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990). However, state law claims which relate to employee benefit plans in "too tenuous, remote, or peripheral a manner" are not preempted. Shaw, 463 at 100, n. 21. Specifically, ERISA does not go so far as to preempt a general state law which "functions irrespective of the existence of an ERISA plan." Id. at 139. In other words, if the state law cause of action would be available regardless of the existence of the ERISA plan, the state law cause of action is not preempted. Id. at 140. Furthermore, Congress did not intend to preempt "traditional state-based laws of general applicability that do not implicate the relationships among the traditional ERISA plan entities including the principals, the employer, the plan, the plan fiduciaries and the beneficiaries." Coyne Delany Co. v. Selman, 98 F.3d 1457, 1469 (4th Cir. 1996) (citations omitted).
To prevent remand in the case at hand, FIA carries the burden of showing that Four-County's claim sufficiently "relates to" an employee benefit plan, and is therefore preempted by federal law. FIA maintains that this case is essentially a dispute as to whether, under Four-County's employee benefit plan, FIA must pay some of the bills incurred by Ms. Humphrey. However, Four-County states that "[t]he present case does not involve any dispute or any issue regarding the benefits due Ms. Humphrey's estate of the health care providers who cared for Ms. Humphrey; rather, the case is limited to Four-County's attempt to obtain the benefits of a stop-loss policy which it has been denied through Defendant's malfeasance." (P.'s Mem. Supp. M. to Remand at 2.)
The Fourth Circuit has not specifically addressed whether an employer's state law claim against a plan administrator for failure to file a claim with an excess insurance carrier is preempted by ERISA. However, other jurisdictions have found such claims not preempted by ERISA. In a situation such as the one at hand, an employer's state law tort and contract claims against its plan administrator does not sufficiently "relate to" the employee benefit plan such that the claim is preempted by ERISA.
Four-County cites several illustrative cases from other jurisdictions: Geweke Ford v. St. Joseph's Omni Preferred Care, Inc., 130 F.3d 1355 (9th Cir. 1997); Tie Communications, Inc. v. First Health Strategies, Inc., 1998 WL 171126 (D. Kan. 1998);Union Health Care, Inc. v. John Alden Life Ins. Co., 908 F. Supp. 429 (S.D. Miss. 1995).
Four-County's suit stems from its contractual relationship with FIA, and functions irrespective of the terms of Four-County's employee benefit plan. Contrary to FIA's position, an interpretation of the terms of Four-County's plan is unnecessary and irrelevant to the determination of the dispute at hand. In addition, the relationship between traditional ERISA plan entities is not implicated. The dispute here is between Four-County and FIA, its plan administrator. While Four-County, as an employer, is a traditional ERISA plan entity, FIA is not. Therefore, the rights and relationship between two entities are not implicated. In short, FIA has not carried its burden to show that Four-County's claim sufficiently relates to an ERISA employee benefit plan such that the state law claims would be preempted and jurisdiction would be proper in this Court.
Four-County's plan does not describe or reference stop-loss insurance. There is no mention of any of FIA's duties regarding the acquisition and administration of a stop-loss insurance policy for the benefit of Four-County.
III.
In summary, Plaintiff Four-County's state law claims against FIA are not preempted by ERISA. Therefore, Four-County's Motion to Remand will be GRANTED. Because the case will be remanded, FIA's Motion to Dismiss must be decided by the state court.
ORDER
For the reasons set forth in a contemporaneously filed Memorandum Opinion, Plaintiff's Motion to Remand to the General Court of Justice, District Court Division, Scotland County, North Carolina [Doc. #5] is GRANTED. Because the case will be remanded, Defendant's Motion to Dismiss [Doc. #3] must be decided by the state court.