Opinion
No. 00-1061
June 14, 2000
MEMORANDUN AND ORDER
This matter comes before the Court on Plaintiff's motion to remand for lack of subject matter jurisdiction, pursuant to 28 U.S.C. § 1447(c). Considering the parties' arguments presented during a hearing, held June 7, 2000, the parties' voluminous pre- and post-hearing submissions, and the applicable case law, I find that Defendant has failed to carry its burden of establishing the existence of federal subject matter jurisdiction and, therefore, grant Plaintiff's motion. I remand this case to the Civil District Court for the Parish of Orleans.
BACKGROUND
Plaintiff, Lakeland Anesthesia, Inc. ("Lakeland"), commenced this proposed class action against Defendant, Aetna U.S. Healthcare, Inc. ("Aetna"), in the Civil District Court for the Parish of Orleans, seeking, on behalf of itself and all Louisiana physicians, hospitals, clinics and other medical providers similarly situated, damages, costs, penalties and attorney's fees for Aetna's alleged willful and/or negligent breach of contract in failing to make payment for services rendered pursuant to the terms of physician group agreements, participating group service provider agreements and other similar contracts in a timely and reasonable manner.
Specifically, Lakeland alleges that Aetna adopted a routine practice of intentionally and/or negligently delaying payment of "complete," "clean," or otherwise valid claims beyond 30, 45 and even 90 days. Lakeland also claims that Aetna routinely classified complete and clean claims as "incomplete"; delayed requests for information for the evaluation, assessment or resolution of claims and/or requested information already in Aetna's possession; "lost" claims; bundled claims; failed to recognize modifiers on claims; denied claims that had been received; understaffed intake personnel; made arbitrary and immaterial changes to the alleged information required to process claims; frequently changed its mailing address; and otherwise delayed resolving claims.
As a result of these alleged activities, Lakeland asserts claims against Aetna for (1) breach of contract; (2) abuse of right under the Louisiana Insurance Code, La. R.S. 22:250.32, 22:250.33, 22:657, and 22:1220 and La. C.C. art. 2055, 2298, 1759, 1770, and 1983; (3) violating several provisions of state tort law, La. C.C. art. 2315-2316; and (4) breaching a duty of good faith under the Louisiana Insurance Code, La. R.S. 22:250.32, 22:250.33, 22:657 and 22:1220. In addition, Lakeland asserts additional claims for unjust enrichment pursuant to La. C.C. art. 1757, 2298 and 2303.
On April 7, 2000, Aetna timely filed a notice of removal, alleging federal question jurisdiction pursuant to 28 U.S.C. § 1331. In its notice of removal, Aetna claims that Lakeland's claims relate to benefits due under employee benefit plans offered by Aetna to employers within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1002. Accordingly, Aetna argues that removal of this case is proper because ERISA preempts Lakeland's state law claims and provides the basis for federal question jurisdiction. Aetna provides the Court with no copy of any employee welfare benefit plan upon which Lakeland allegedly relies nor any alleged assignment by a plan participant or beneficiary to Lakeland of any rights arising under the terms of an employee welfare benefit plan.
On April 20, 2000, Lakeland filed a motion to remand the case to state court pursuant to 28 U.S.C. § 1447(c), arguing that this Court lacks jurisdiction over the case because, contrary to Aetna's assertions, no federal question exists. Lakeland claims that because "an independent claim by a third-party medical provider does not `arise under' ERISA" and its claims are not derivative claims for employee welfare benefits within the meaning of 29 U.S.C. § 1132(a)(1), no federal question subject matter jurisdiction exists. Aetna opposes Lakeland's motion to remand.
DISCUSSION
A. Well-Pleaded Complaint Doctrine
Title 28, United States Code, Section 1441(a) provides that a defendant may remove to a federal district court "any civil action brought in a State court of which the district courts of the United States have original jurisdiction" unless certain exceptions apply. Pursuant to 28 U.S.C. § 1441(b), "any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable." Because "the effect of removal is to deprive the state court of an action properly before it, removal raises significant federalism concerns, which mandate strict construction of the removal statute."
Carpenter v. Wichita Falls Independent Schools District, 44 F.3d 362, 365-66 (5th cir. 1995) (citing Merrell Dow Pharmaceuticals. Inc. v. Thompson, 478 U.S. 804, 809 (1986) and Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 107 (1941)).
To support removal of a state court action pursuant to § 1441(b), the defendant bears the burden of establishing that a federal question exists. District courts, in determining whether an action presents a federal question, look to the allegations in the plaintiff's well-pleaded complaint. Generally, an action presents a federal question "if there appears on the face of the complaint some substantial, disputed question of federal law." Therefore, to support removal,
See carpenter, 44 F.3d at 365 (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92 (1921)).
See carpenter, 44 F.3d at 366 (citing Louisville Nashville R. Co. v. Mottley, 211 U.S. 149 (1908)).
Carpenter, 44 F.3d at 366 (citing Federal Tax Board v. Construction Laborers vacation Trust, 463 U.S. 1, 12 (1983)).
[T]he defendant must locate the basis of federal jurisdiction in those allegations necessary to support the plaintiff's claim, ignoring his own pleadings and petition for removal. A defendant may not remove on the basis of an anticipated or even inevitable federal defense, but instead must show that a federal right is "an element, and an essential one, of the plaintiff's cause of action."
Carpenter, 44 F.3d at 366 (quoting Gully v. First Nat'l Bank, 299 U.S. 109, 111 (1936)).
Here, it is clear that the allegations of Lakeland's well-pleaded complaint and its amended complaint present no apparent federal question upon which Aetna may rely to support its petition for removal. Lakeland alleges only state law claims arising out of Aetna's alleged failure to pay timely Lakeland and others similarly situated pursuant to the terms of service provider contracts between Aetna and the proposed class of plaintiffs, provisions of the Louisiana Insurance Code and state contract law.
B. Artfully-Pleaded Complaint Doctrine
Nevertheless, as Aetna correctly asserts, a narrow exception to the well-pleaded complaint rule exists. "[W]here the plaintiff necessarily has available no legitimate or viable state cause of action, but only a federal claim, the plaintiff may not avoid removal by artfully casting his federal suit as one arising exclusively under state law." This exception to the well-pleaded complaint rule provides that where a defendant carries its burden of showing that complete preemption of the plaintiff's state law claims exists, removal is proper. Thus, the artful pleading doctrine "does not convert legitimate state claims into federal ones, but rather reveals the suit's necessary federal character."
Carpenter, 44 F.3d at 366.
Carpenter, 44 F.3d at 367 (citing Franchise Tax Board, 463 U.S. at 23)).
Here, Aetna invokes the artfully plead complaint doctrine and argues that ERISA preempts Lakeland's state law claims. Aetna attempts to establish that Lakeland's claims are preempted by ERISA either as derivative claims for benefits due under alleged employee benefit plans as assigned by plan participants or beneficiaries, pursuant to 29 U.S.C. § 1132(a), or as claims based on state laws that "relate to" an employee benefit plan and do not "regulate insurance," pursuant 29 U.S.C. § 1144.
C. ERISA Preemption
ERISA contemplates two types of preemption: complete preemption under 29 U.S.C. § 1132 and conflict preemption under 29 U.S.C. § 1144. In complete preemption under § 1132, ERISA occupies a particular field. "This functions as an exception to the well-pleaded complaint rule: `Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'" Section 1132, by providing the civil enforcement ERISA action, "completely preempts any state cause of action seeking the same relief, regardless of how artfully pled as a state action." Thus, § 1132 provides a basis for federal subject matter jurisdiction.
See Copling v. The Container Store, 174 F.3d 590, 594 (5th Cir. 1999) (citing McClelland v. Gronwaldt, 155 F.3d 507 (5th cir. 1998)).
See Copling, 174 F.3d at 594 (citing Metropolitan Life, 481 U.S. at 66).
Copling, 174 F.3d at 594 (quoting Metropolitan Life, 481 U.S. at 64-66).
Id.
Where issues of ERISA preemption of state law claims, however, arise under ERISA's conflict preemption provision, 29 U.S.C. § 1144, no basis for removal exists. "State law claims which fall outside the scope of ERISA's civil enforcement provision, [§ 1132], even if preempted by [§ 1144], are still governed by the well-pleaded complaint rule, and, therefore, are not removable under the complete-preemption principles." As the Fifth Circuit recently explained,
Copling, 174 F.3d at 595 (citing Franchise Tax Board, 463 U.S. at 23-27 (holding that preemption under § 1144 does not permit a defendant to remove where plaintiff's state law claim falls outside the scope of ERISA's civil enforcement provision)).
Conflict preemption simply fails to establish federal question jurisdiction. Rather than transmogrifying a state cause of action into a federal one, as occurs with complete preemption, conflict preemption serves as a defense to a state action. `When the doctrine of complete preemption does not apply, but the plaintiff's state claim is arguably preempted under [ 29 U.S.C. § 1144], the district court, being without removal jurisdiction, cannot resolve the dispute regarding preemption. It lacks the power to do anything other than remand to the state court where the preemption issue can be addressed and resolved.'
Copling, 174 F.3d at 595 (quoting Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 255 (3rd Cir. 1995) (further citation omitted).
Therefore, to the extent that Aetna relies on § 1144 as its basis for removal, removal is clearly improper. That provision, while providing Aetna with a potential defense to Lakeland's state law claims, does not confer upon this Court any federal subject matter jurisdiction.
D. Complete Preemption Under § 1132
Turning now to ERISA's complete preemption provision, Title 29, United States Code, Section 1132(a) 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." Although the statute clearly provides only that a participant or beneficiary may bring such civil actions, numerous courts have determined that 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.
Title 29, United States Code, Section 1002(2)(B)(8) defines "beneficiary" 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. A "participant" is "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."
As the Fifth Circuit explained in Herman Hospital v. MEBA Medical Benefits Plan, 845 F.2d 1286, 1289 (5th cir. 1988), derivative actions under § 1132 are allowable only for health care benefits. Unlike the "elaborate and complex statutory anti-assignment clause for ERISA pension benefits," ERISA "contains no anti-assignment provisions with regard to health care benefits of ERISA-governed medical plans. . . . [because such an assignment] facilitates rather than hampers the employee's receipt of health benefits."
See Herman Hospital, 845 F.2d at 1289.
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)." "Health care providers [do not] have independent standing to seek redress under ERISA."
Id.
Memorial Hospital System v. Northbrook Life Ins. Co., 904 F.2d 236, 249 (5th cir. 1990).
Here, aside from Aetna's unsupported and conclusory statements, there is nothing before this Court that suggests that federal subject matter jurisdiction exists based on ERISA's complete preemption provision. In its post-argument brief, Aetna provides the Court with a sample of one its blank group insurance agreement contracts and copies of two "Health Insurance Claim Forms" in which patients assign to Lakeland rights to payment under Aetna insurance policies, BKGFG020 and QDZXX010. The documents provided by Aetna do nothing more than establish that Aetna offers or has offered group insurance policies and sometimes, patients who receive health care benefits under Aetna plans, whether such plans qualify as ERISA plans or not, assign rights to service providers. Aetna fails to provide any evidence that the copies of the claims forms pertain to coverage under an ERISA plan and fail to establish that any of Lakeland's claims are derived from claims for benefits under an actual, existing employee benefit plan. The Court has nothing before it that relates an assignment of health care benefits due under a qualified ERISA plan with Lakeland's claims.
Specifically, Aetna fails to provide the Court with a single employee benefit plan under which Lakeland allegedly seeks to recover assigned benefits of a plan participant or beneficiary. In addition, even if Aetna had shown that a qualified employee benefit plan exists in this case, Aetna fails to present any of the additional prerequisites to support a finding that Lakeland has artfully pled a derivative action for benefits under an ERISA-governed health care plan. Aetna has not identified a single participant or beneficiary of an employee welfare benefit plan and provides no assignment of rights to Lakeland from a qualified ERISA participant or beneficiary. Furthermore, there is nothing to suggest that any assignment would be valid. Absent such evidence, there is no basis for a finding that Lakeland's claims are completely preempted here.
Aetna speculates that, because it "offers employee benefit plans to employers in Louisiana and other states," Lakeland's claims must therefore be artfully pled derivative actions under ERISA's civil enforcement provision. Such speculation is clearly insufficient support for federal subject matter jurisdiction. Aetna fails to carry its burden to establish that a federal question exists. Accordingly, this action is remanded to the Civil District Court for the parish of Orleans.
Accordingly,
IT IS ORDERED that Lakeland's motion to remand is GRANTED.
IT IS FURTHER ORDERED that this case be REMANDED to the Civil District Court for the Parish of Orleans.