Opinion
CIVIL ACTION NO. 02-900 SECTION "A"(5)
July 30, 2002
Before the Court is a Motion to Remand (Rec. Doc. 2) filed by plaintiff Transitional Hospitals Corporation of Louisiana, Inc. ("Transitional"). Defendant, Louisiana Health Service Indemnity Company d/b/a Blue Cross Blue Shield of Louisiana ("Blue Cross"), opposes the motion. The motion, set for hearing on May 29, 2002, is before the Court on the briefs without oral argument. For the reasons that follow, the motion is GRANTED IN PART AND DENIED IN PART.
The case was transferred to this section after Plaintiff's motion had already been submitted for hearing. The transferor judge concluded that the instant case was related to Civil Action 02-354, a case involving the same parties, allegations, and issues as the instant case.
After the case was transferred the Court withheld ruling on the motion pending the filing of a statement of interest on behalf of the United States.
Factual and Procedural Background
Transitional is a long-term acute care hospital located in New Orleans, Louisiana. Franklin Childers, Myrtle Miller, and Ida Beauregard, not parties to this suit, were patients at Transitional at various times in 2001. Transitional alleges that prior to its admitting these patients for treatment, defendant Blue Cross erroneously represented that Transitional would be reimbursed for treatment rendered to the patients pursuant to their health insurance plans. Following the treatment administered to the three patients, Blue Cross refused payment. Transitional alleges that Blue Cross's assurances of coverage induced it to administer medical treatment to the patients.
Transitional filed suit in the Civil District Court for the Parish of Orleans alleging state law claims of breach of contract and detrimental reliance, and seeking attorney's fees and penalties pursuant to La. R.S. 51:1405, et seq. All of Transitional's claims were brought in its capacity as an independent third-party medical provider rather than as an assignee of the patients' rights against their plans.
Blue Cross removed the suit to this Court pursuant to 28 U.S.C. § 1331 alleging that Transitional's state law claims pertaining to Ida Beauregard "arise under" federal law as suits challenging the administration of FEHBA benefits are governed exclusively by federal common law and therefore necessarily turn on the construction of federal law. Blue Cross also asserted that Transitional's state law claims with respect to Ms. Beauregard were completely preempted by FEHBA thereby creating removal jurisdiction. Alternatively, Blue Cross argued that the claim vis à vis Ms. Beauregard is removable pursuant to 28 U.S.C. § 1442(a)(1), the federal officer removal statute. The claims vis à vis the treatment rendered to the other two non-federal patients were removed pursuant to 28 U.S.C. § 1367, the supplemental jurisdiction statute.
Ida Beauregard was an enrollee in the Service Benefit Plan, a health plan for federal employees and their dependents. That plan is governed by the Federal Employees Health Benefits Act ("FEHBA").
It is undisputed that diversity jurisdiction does not exist as both parties to this suit are citizens of Louisiana. Thus, subject matter jurisdiction and the propriety of removal from state court turn solely on whether Transitional's claims vis à vis Ms. Beauregard, the federal enrollee, arise under federal law.
Transitional moves to remand the case back to state court arguing that complete FEHBA preemption does not apply to Transitional, a third party health care provider, because Transitional is not suing under the terms of the plan. Transitional also argues that Blue Cross is not entitled to removal under 1442(a)(1) because it is not a "federal officer" within the meaning of the statute. Transitional also moves for attorney's fees and costs based on Blue Cross's improper removal of the case.
Discussion
On June 11, 2002, the Court remanded Civil Action 02-354 ("Transitional I"), another suit brought: by Transitional against Blue Cross which raised issues identical to those raised in the instant case and motion to remand. Noting that Blue Cross, as the party seeking the federal forum, had the sole burden of establishing subject matter jurisdiction, and that any ambiguities or doubts as to subject matter jurisdiction must necessarily lead to remand, the Court concluded that Blue Cross had failed to carry its burden and remanded the case to state court. In remanding Transitional I, the Court concluded that Transitional's state law claims did not arise under federal law, that Blue Cross had failed to establish that complete preemption applied, and that removal pursuant to the federal officer removal statute was inappropriate. Transitional Hospitals Corp. v. Louisiana Health Serv. Indemnity Co., 2002 WL 1303121 (E.D. La. 6/11/02).
For the reasons given by the Court when remanding Transitional I, the Court concludes that removal was likewise improper in this case because the Court has no basis for exercising original jurisdiction over any of Transitional's claims. Given, however, that Blue Cross has questioned the reasoning employed by the Court in Transitional I, (see Defendant's Response to Plaintiff's Supplemental Memorandum Defendant's Supplemental Memorandum Upon Transfer of the Case), the Court will address each of Blue Cross's objections to Transitional I in turn.
1. The Court's Failure to Consider a Decision Rendered By the District Court of Maryland and The Court's Failure to Recognize That FEHBA Preemption Is Broader Than ERISA Preemption
The Court has reviewed the statement of interest filed by the United States. While the government's memorandum is very thorough, well researched, and respectfully done, it raises basically the same arguments made by Blue Cross. Further, while the government makes some persuasive policy arguments, those arguments are best made to Congress where the issues raised by the parties can best be clarified and laid to rest.
Blue Cross asserts that the Court erred in distinguishing between FEHBA cases brought by plan participants versus those brought by a provider like Transitional. In its previous ruling the Court stated that none of Blue Cross's cited cases militated against such a finding given that all of the cases involved plan participants. Blue Cross asserts that the Court failed to consider St. Mary's Hospital v. Carefirst, Inc., 192 F. Supp.2d 334 (D. Md. 2002), the "very first case" cited by Blue Cross.
The Court has reviewed the St. Mary's decision but fails to see how the decision supports Blue Cross's position. Although St. Mary's did involve a provider as opposed to a participant, the dispute in that case centered on an interpretation of the terms of the plan involved, i.e., whether certain treatment was medically necessary under the dictates of the plan. Such a claim might very well be subject to preemption regardless of the plaintiff's status. The instant case, however, does not involve a dispute over plan terms but rather a detrimental reliance claim based upon erroneous representations made by Blue Cross's staff. The terms of the plan are not in dispute in this case.
Blue Cross should also take note that the Court recognizes that ordinary preemption might very well apply to Transitional's claims. Nothing about the Court's finding today prevents Blue Cross from raising its preemption defense in state court. The sole issue before the Court today is whether the preemption involved here is "complete" such that removal is proper.
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. 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. Thus, complete preemption is jurisdictional in nature. Id.
As noted above, complete preemption has an extremely narrow application, having been sanctioned by the Supreme Court in certain types of ERISA and Labor Relations Management Act actions. See Rivet v. Regions Bank, 522 U.S. 470, 475-76, 118 S.Ct. 921, 925, 139 L.Ed.2d 912 (1998); Carpenter v. Witchita Falls Indep. Sch. Dist., 444 F.3d 362, 367 n. 2 (5th Cir. 1995). Neither the United States Supreme Court nor the Fifth Circuit nave found complete preemption with respect to all FEHBA claims.
However, for certain types of ERISA claims, i.e., detrimental reliance claims brought by providers, the Fifth Circuit has found that preemption does not apply notwithstanding that certain ERISA claims are unarguably subject to complete preemption. See Transitional Hospitals Corp. v. Blue Cross Blue Shield, 164 F.3d 952 (5th Cir. 1999). Because the Fifth Circuit has cautioned that removal jurisdiction should be strictly construed given the federalism concerns involved, Carpenter, 44 F.3d at 365, and because the facts in the St. Mary's decision are wholly unlike those presented in this case, the Court finds Blue Cross's reliance on the opinion misplaced.
Furthermore, other district courts in this circuit have reached a conclusion contrary to that of St. Mary's yet in accordance with this Court's conclusions — conclusions likely unaffected by any subsequent amendments to FEHBA. See, e.g., Cyr v. Kaiser Found. Health Plan, 12 F. Supp.2d 556 (N.D. Tex. 1998); Transitional Hosp. Corp. v. Blue Cross Blue Shield, 924 F. Supp. 67 (W.D. Tex. 1996).
The preemption provision of FEHBA now includes the term "provision":
The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans.5 U.S.C. § 8902(m)(1) (emphasis added).
The Cyr decision cited above is particularly helpful in explaining the differences between complete preemption and ordinary preemption. The Cyr court remanded the case before it finding that defendants had failed to establish complete preemption so as to authorize removal of the FEHBA claims at issue in that case. 12 F. Supp.2d at 567-68. The Cyr court also explains why Burkey v. Government Employees Hospital Association, 983 F.2d 656 (5th Cir. 1993), also cited by Blue Cross, does not bear on the complete preemption issue.
Finally, Blue Cross' reliance on Boyle v. United Tech. Corp., 487 U.S. 508, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988), for its preemption argument is wholly unpersuasive given that removal jurisdiction via complete preemption was not at issue in that case. In the instant case, complete preemption is the only kind of preemption relevant to a subject matter jurisdiction determination.
2. The Court's Failure to Recognize That Blue Cross Is Entitled to Removal Under the Federal Officer Removal Statute
Blue Cross asserts that the facts in this case are substantially different than those at issue in Transitional I making the federal officer removal statute particularly applicable in this case. In particular, Blue Cross asserts that federal law strictly limits the payments hospitals can collect from Blue Cross as a federal plan provider.
Assuming arguendo that Blue Cross's assertion is correct, the Court nevertheless concludes that Blue Cross has failed to show that its representatives were acting pursuant to federal direction when the alleged misrepresentations regarding Ms. Beauregard were made. Consequently, removal under the federal officer removal statute does not apply.
Accordingly;
IT IS ORDERED that the Motion to Remand (Rec. Doc. 2) filed by Transitional Hospitals Corporation of Louisiana, Inc. should be and is hereby GRANTED IN PART AND DENIED IN PART. The motion is GRANTED insofar as this matter is REMANDED to Civil District Court for the Parish of Orleans pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction. The motion is DENIED as to the request for attorney's fees and costs.