Opinion
Civil Action No: 04-2024 Section: "A" (4).
September 10, 2004
ORDER AND REASONS
Before the Court is a Motion to Remand and Request for Sanctions (Rec. Doc. 10) filed by plaintiff Sono Tech Enterprises, Inc. Defendants, New Orleans Regional Physician Hospitals, Inc., Tenet Healthcare Corp., and Tenet Choices, Inc., oppose the motion. The motion, set for hearing on September 8, 2004, is before the Court on the briefs without oral argument. For the reasons that follow, the Motion to Remand is DENIED, and this ruling is certified for immediate appeal pursuant to 28 U.S.C. § 1292(b).
BACKGROUND
Plaintiff, Sono Tech Enterprises, Inc. ("Sono Tech" or "Plaintiff") contracts with certain physicians in Orleans and Jefferson Parishes to provide mobile ultrasound services. Defendant New Orleans Regional Hospital Organization d/b/a Peoples Health Network ("PHN") contracts with various health care plans and agrees to arrange for the provision of health care services to persons enrolled in the plans. In July 2002, PHN entered into an "ancillary services agreement" with Sono Tech for the provision of mobile ultrasound services. Sono Tech alleges that it provided services to patients pursuant to the agreement but that PHN refused to pay.
In October 2002, Sono Tech filed suit against PHN in state court asserting claims only under state law. On June 24, 2004, Sono Tech amended its petition and added as additional defendants Tenet Health Network, Inc. Tenet HealthSystem Hospitals, Inc., Tenet Healthcare Corporation, and Tenet Choices, Inc. ("collectively "the Tenet Entities"). On July 19, 2004, PHN and the Tenet Entities removed the case to this Court asserting that Sono Tech's amended petition asserts claims that arise under federal law. Specifically, Defendants contend that Sono Tech's claims are completely preempted by ERISA. In their amended notice of removal, Defendants further contend that 42 U.S.C. § 405(g), pertaining to review of denied Medicare claims, provides a basis for complete preemption.
Employee Retirement Income Security Act, 29 U.S.C. § 1001,et seq.
DISCUSSION
1. The Parties' ContentionsSono Tech argues that its well-pleaded complaint contains only state law claims and that ERISA does not create a basis for Defendants to remove the suit. Sono Tech likewise contends that the Medicare Act does not create a basis for federal jurisdiction. Finally, Sono Tech argues that the removal was untimely because Defendants filed their notice of removal well beyond the thirty days allowed by 28 U.S.C. § 1446(b).
In opposition, Defendants argue that this case became removable only after Sono Tech filed its Amended Petition and that Defendants removed the case within thirty days of having been served with that pleading. Thus, according to Defendants, removal was timely.
Defendants contend that the original petition asserted claims only against PHN, the third party administrator, but by adding Tenet Choices as a defendant the character of Plaintiff's claims was fundamentally changed because Tenet Choices is an entity governed entirely by the Medicare Act. Defendants argue that Sono Tech's claim against Tenet Choices is in effect a claim for medicare benefits that "arises under" federal law for purposes of removal jurisdiction.
2. Law and Analysis
A civil action filed in state court may be removed to federal court if the claim is one "arising under" federal law.Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003) (citing 28 U.S.C. § 1441(b)). To determine whether the claim arises under federal law, the court examines the "well-pleaded" allegations of the complaint and ignores any potential defenses. Id. A suit arises under federal law only when the plaintiff's statement of his own cause of action shows that it is based upon federal law.Id. Therefore, plaintiff's state law claim does not arise under federal law simply because defendant has a defense to that claim that is based upon federal law, even where plaintiff specifically mentions the anticipated federal defense in his complaint. Id. However, plaintiff cannot defeat removal by "artfully pleading" claims so to omit necessary federal questions from his cause of action. Rivet v. Regions Bank, 522 U.S. 470, 475, 118 S. Ct. 921, 925, 139 L. Ed. 2d 912 (1998) (citing Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 14, 103 S. Ct. 2841, 2848, 77 L. Ed. 2d 420 (1983)). If one claim in the petition arises under federal law then the entire case is removable. Franchise Tax Bd., 463 U.S. at 13, 103 S. Ct. at 2848 (citing 28 U.S.C. § 1441(c)).
It is well-settled in this circuit that two types of preemption exist: complete preemption and ordinary preemption. See Heimann v. National Elevator Indus. Pension Fund, 187 F.3d 493, 499-500 (5th Cir. 1999). Complete preemption, a very narrow exception to the well-pleaded complaint rule, creates removal jurisdiction by transforming plaintiff's state law cause of action into a federal claim, i.e., a claim that "arises under" federal law. Id. Ordinary preemption, on the other hand, is a federal defense to plaintiff's suit and as such does not create removal jurisdiction. Id. at 500. Claims to which ordinary preemption applies do not "arise under" federal law.
At the outset, the Court agrees with Plaintiff's contention that complete preemption under ERISA does not create removal jurisdiction in this case. Complete preemption under ERISA applies to claims brought pursuant to § 502(a) of the Act, 29 U.S.C. § 1132(a), which is ERISA's civil enforcement scheme applicable to plan participants and beneficiaries. See Aetna Health, Inc v. Davilla, 124 S. Ct. 2488 (2004). Even if ordinary conflict preemption applies under § 514 of ERISA, an issue not before the Court at this time, removal jurisdiction does not necessarily follow.
Given that ERISA does not provide a basis for removal, the only basis remaining to support removal is Defendants' contention that Sono Tech has pled a claim under the Medicare Act. The Medicare Act was only arguably implicated in Sono Tech's Amended Petition. Defendants removed the case within thirty days of being served with the Amended Petition so the removal was timely. The only remaining question then is whether the Medicare Act provides a valid substantive basis for removal.
The Amended Petition adds Tenet Choices as a defendant. Tenet Choices is a Medicare Plus Choice health maintenance organization ("M + C HMO") existing under and regulated by the Medicare Act. According to Defendants, Tenet Choices' decision to decline payments to Sono Tech was governed by the Act. Defendants assert that Sono Tech's claim against Tenet Choices is in fact a claim for Medicare benefits and that such a claim arises under federal law.
In Heckler v. Ringer, 466 U.S. 602 (1984), a case upon which Tenet Choices places much reliance, the Supreme Court articulated the analytical framework for determining whether claims arise under the Medicare Act. Individual claimants who had been denied Medicare benefits by the government sued to challenge certain agency rules and procedures that precluded them from receiving benefits. Even though the plaintiffs had sought declaratory and injunctive relief rather than the actual payment of benefits, the Court had no trouble concluding that the relief plaintiffs sought was in effect a claim for benefits governed by the Medicare Act.Id. at 615-16. The Court reasoned that "both the standing and the substantive basis for the presentation" of the claims was the Social Security Act, and that the claim was not wholly "collateral" to a claim for benefits. Id. at 618. Thus, the claims "arose under" the Medicare Act and was subject to the administrative exhaustion requirements dictated by the Act.
42 U.S.C. § 405(g) specifically pertains to review of claims for Social Security benefits. This provision is made applicable to the Medicare Act by 42 U.S.C. § 1395ii.
Although Ringer did not address the applicability of the Act in situations where service providers bring suit against a Medicare "entity," several courts have extended Ringer to such situations. In Foley v. Southwest Texas HMO, Inc., 226 F. Supp. 2d 886 (E.D. Tex. 2002), the plaintiffs were physicians who had contracted with a third party administrator to provide medical services to patients of various HMOs. The HMOs later refused to pay the physicians and the physicians filed suit claiming unjust enrichment and alleging violations of the Texas Insurance Code. The district judge concluded that the physicians' claims were "at bottom" claims for Medicare benefits and that such claims arise under the Medicare Act. Foley, 226 F. Supp. 2d at 905-906. The court reasoned that the physicians were attempting to force Medicare-governed entities to pay for services given to Medicare beneficiaries and that such payments were nothing more than claims for benefits. Id. at 906. Thus, those claims arose under the Act and were subject to administrative exhaustion See also Lifecare Hospitals, Inc. v. Oshsner Health Plan, Inc., 139 F. Supp. 2d 768 (W.D. La. 2001) (concluding that a hospital's claim to recover payment for services rendered to Medicare patients through an M + C HMO was a claim arising under the Medicare Act);Bodimetric Health Servs., Inc. v. Aetna Life Cas., 903 F.2d 480 (7th Cir. 1990) (concluding that claims by Medicare providers against a fiscal intermediary arises under the Act).
Based on the foregoing authorities, the Court concludes that Sono Tech's claim against Tenet Choices arises under the Medicare Act. Sono Tech is a medical care provider seeking payment for services that Defendants contend is not covered by Medicare. Tenet Choices is an entity existing by virtue of the Medicare Act. Sono Tech's claim, like the claims in Foley, Lifecare Hospitals, and Bodimetric, supra, are in effect claims for Medicare benefits. Because Sono Tech's claim against Tenet Choices arises under federal law the entire case was properly removed.
In opposition, Sono Tech argues that the Medicare Act does not confer jurisdiction because Sono Tech does not allege claims on behalf of Medicare patients nor seek to enforce the rights of Medicare patients to obtain payments under the Act. Oppo. at 8. To be sure, the Court is cognizant of the fact that Ringer, the only binding case cited by Defendants, did in fact deal with Medicare patients seeking benefits. Those "patient" claims were clearly covered by the Act but Sono Tech is not a Medicare patient. While the Court finds the reasoning employed by other courts in applying Ringer to non-patient claims to be sound, the Court is nonetheless apprehensive about the lack of controlling authority on this issue.
Because this Court's jurisdiction is grounded upon Sono Tech's claims arising under the Medicare Act, an issue for which the Court has been unable to locate any binding authority on point, the Court concludes that this matter is appropriate for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The Court specifically finds that this ruling involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the ruling may materially advance the ultimate termination of this litigation.
Section 1292 provides in pertinent part:
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.28 U.S.C.A. § 1292(b) (West 1993 Supp. 2004).
Accordingly;
IT IS ORDERED that the Motion to Remand and Request for Sanctions (Rec. Doc. 10) filed by plaintiff Sono Tech Enterprises, Inc. should be and is hereby DENIED; IT IS FURTHER ORDERED that within fifteen (15) days of entry of this order Sono Tech shall either file its appeal with the Fifth Circuit Court of Appeals or advise this Court in writing of its intent to waive an interlocutory appeal. If the appeal is waived, the Court will take up Defendants' pending motion to dismiss for immediate consideration on the briefs. If Sono Tech pursues an interlocutory appeal, the Court will stay this matter in its entirety and administratively close the case pending a ruling from the Fifth Circuit.