Danca v. Private Health Care Systems

• Decision Date: 09 April 1999
• Docket Number: No. 98-1754,98-1754
• Parties: (1st Cir. 1999) PAMELA DANCA, JOSEPH DANCA, JR., KATELYN J. DANCA AND LISA A. DANCA, Plaintiff, Appellants, v. PRIVATE HEALTH CARE SYSTEMS, INC., AND PHOENIX HOME LIFE MUTUAL INSURANCE CO., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1

185 F.3d 1 (1st Cir. 1999)

PAMELA DANCA, JOSEPH DANCA, JR., KATELYN J. DANCA AND LISA A. DANCA, Plaintiff, Appellants, v. PRIVATE HEALTH CARE SYSTEMS, INC., AND PHOENIX HOME LIFE MUTUAL INSURANCE CO., Defendants, Appellees.

No. 98-1754.

United States Court of Appeals for the First Circuit.

Heard April 9, 1999.

Decided Aug. 2, 1999.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. [Hon. Patti B. Saris, U.S. District Judge] Leonard F. Zandrow, Jr., with whom John W. Brister and Brister & Zandrow, L.L.P. were on brief, for appellants.

Nicholas P. Hansen, with whom Van Aaron Hughes and Ireland, Stapleton, Pryor & Pascoe, P.C. were on brief, for Private Healthcare Systems, Inc.

Albert Zakarian, with whom Day, Berry & Howard LLP was on brief, for Phoenix Home Life Mutual Insurance Company.

Before Stahl, Circuit Judge, Bownes, Senior Circuit Judge, and Lipez, Circuit Judge.

STAHL, Circuit Judge.

In this difficult case, plaintiffs Pamela Danca and members of her family (collectively, plaintiffs) seek to hold defendants-appellees Phoenix Home Life Mutual Insurance Company (Phoenix) and Private Healthcare Systems Inc. (PHSI) responsible for allegedly negligent medical decisionmaking in the course of a precertification requirement apparently mandated by an ERISA-governed health plan. After careful consideration, we affirm the decision of the district court that the state law claims be dismissed.

I. Introduction

Because the record is largely undeveloped, we cull our factual recitation from the district court's opinion and the appellate briefs, as supplemented by the state court complaint.

Pamela Danca is a beneficiary of a health insurance policy governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Phoenix is the insurance company that provided the policy and PHSI is the utilization review firm hired by Phoenix to assess physicians' recommendations for a proposed course of medical treatment for plan beneficiaries. Such assessments, called precertification or prospective utilization review,¹ are apparently required by the terms of the ERISA plan. According to defendants, failure to obtain precertification may result in reduced payment (or no payment at all) for the services for which precertification should have been sought. In such an event, the beneficiary would be liable for the cost of the treatment.

Danca, who had a long history of mental illness that had been treated on occasions prior to those in dispute here, sought care for a new episode of mental illness on September 21, 1994. Her physician recommended inpatient psychiatric care at McLean Hospital. His recommendation was apparently based on the fact that Danca had previously been successfully treated at McLean. After consultation with the physician regarding this recommendation and its rationale, defendants denied precertification for treatment at McLean and instead precertified Danca's admission to Emerson Hospital.

The precise nature of the consultation and the extent of defendants' participation in the medical decisionmaking is not clear on the record before us. Typically, utilization review firms have a set of guidelines and protocols that guide such decisionmaking, see Andrews-Clarke v. Travelers Ins. Co., 984 F. Supp. 49, 50 n.9 (D. Mass. 1997), and we therefore assume that was probably the case here. Thus, it appears that defendants decided, in light of Danca's medical record and after some consultation with her treating physician, that Emerson Hospital was appropriate for her condition.

According to plaintiffs, Emerson Hospital turned out to be inappropriate and provided Danca with inadequate care. Among other things, plaintiffs claim that Emerson failed to provide treatment similar to that which had proven helpful at McLean Hospital for earlier episodes of her mental illness. Danca subsequently required additional hospitalization. She was treated at a third facility, where the care was also alleged to have been inadequate. Danca, allegedly as a result of the totality of her inadequate care, attempted suicide by self-immolation, causing severe burns and permanent disfiguring injuries.

Plaintiffs filed suit in Massachusetts Superior Court against numerous physicians and the health care facilities at which they allege Danca was inadequately treated. Plaintiffs also filed suit against Phoenix and PHSI.

Plaintiffs amended the complaint once in the state court. The amended complaint alleged a number of ways in which the actions or inactions of defendants resulted in Danca's injuries.² Defendants removed the suit to federal district court, claiming federal question jurisdiction. Plaintiffs never challenged the removal on jurisdictional grounds and the district court apparently accepted the removal as proper.

Plaintiffs subsequently amended the complaint again. Phoenix and PHSI then moved to dismiss the state law claims against them, asserting that the claims were preempted by ERISA. See 29 U.S.C. § 1144(a), ERISA § 514 (ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.") (hereinafter, "ERISA § 514 Preemption"). The district court agreed and dismissed these claims.³ After further procedural machinations unimportant for the purpose of this opinion, Danca filed a timely notice of appeal from the order of dismissal.

II. Jurisdiction of the District Court

A threshold issue in this case, as in every case, is subject matter jurisdiction. Because of the importance of the issue, and because the district court apparently did not directly address the question, we review it at some length. Our focus is on the doctrine of complete preemption, which controls the question of subject matter jurisdiction. We find the case was properly removed to the district court.

Under our dual-sovereign system, the plaintiff is the "master to decide what law he will rely upon." Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25 (1913). Plaintiff has the prerogative to rely on state law alone although both federal and state law may provide a cause of action. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Nevertheless, within thirty days of receipt of proper service of the complaint and summons, see Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., __ U.S. __, 119 S. Ct. 1322, 1328-30 (1999), defendants may remove an action from the state court in which it was filed to the appropriate federal district court, provided that the defendant can show some basis for federal jurisdiction, see 28 U.S.C. §§ 1441(a) & 1446(a). The removal statute does not in itself create jurisdiction. Indeed, removal statutes are strictly construed, see Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941), and defendants have the burden of showing the federal court's jurisdiction, see BIW Deceived v. Local S6, Industrial Union of Marine and Shipbuilding Workers of America, IAMAW District Lodge 4, 132 F.3d 824, 831 (1st Cir. 1997). Defendants here claim federal question jurisdiction as the basis for removal. See 28 U.S.C. §§ 1446(a) & 1331. Defendants must therefore make a "colorable" showing that a basis for federal jurisdiction exists. BIW Deceived, 132 F.3d at 832; see also Burns v. Windsor Ins. Co., 31 F.3d 1092, 1097 (11th Cir. 1994) (remanding where federal jurisdiction not clearly shown).

Jurisdiction is normally ascertained from the face of the state court complaint that triggered the removal. See Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983) (describing the "well-pleaded complaint" rule). Here, the state court complaint alleged only causes of action under state law. On its face, then, the complaint presents no federal question.

But there is an exception to this practice of focusing on the face of the complaint. Where a claim, though couched in the language of state law, implicates an area of federal law for which Congress intended a particularly powerful preemptive sweep, the cause is deemed federal no matter how pleaded. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). This exception to the well-pleaded complaint rule is called "complete preemption."

We pause here to emphasize the difference between complete preemption, a concept associated with jurisdiction, and the affirmative federal defense of ERISA § 514 preemption. Standing alone, the likelihood or even certainty of defendants' raising a colorable ERISA § 514 preemption defense is no basis for federal jurisdiction. See Taylor, 481 U.S. at 64 ("ERISA preemption, without more, does not convert a state law claim into an action arising under federal law."). ERISA § 514 is not relevant to the complete preemption analysis; courts look instead only to ERISA § 502(a), see Jass v. Prudential Health Care Plan, 88 F.3d 1482 (7th Cir. 1996) (referring to § 502 and not § 514 for complete preemption analysis); Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d Cir. 1995) (same); Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269 (2d Cir. 1994) (same); Tolton v. American Biodyne, Inc., 48 F.3d 937 (6th Cir. 1995) (same), which contains ERISA's exclusive civil enforcement provisions, see 29 U.S.C. § 1132(a).

To establish complete preemption, defendants must show that the state cause of action falls within the scope of ERISA § 502(a). See Taylor, 481 U.S. at 66. For this to occur, the state law must be properly characterized as an "alternative enforcement mechanism" of ERISA § 502(a) or of the terms of an ERISA plan.⁴ See New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 658 (1995). ERISA § 502(a) provides for, inter alia, a cause of action by a participant or beneficiary "to recover benefits due . . . under the terms of the plan, to enforce . . . rights under the terms of the plan, or to clarify . . . rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)...