Health Care Service Corp. v. Lack

• Decision Date: 01 September 1994
• Docket Number: No. 93-1564,93-1564
• Citation: 35 F.3d 568
• Parties: NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit. HEALTH CARE SERVICE CORPORATION, d/b/a Blue Cross and Blue Shield of Illinois, Plaintiff-Appellant, v. Timothy LACK, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 568

35 F.3d 568

NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit.

HEALTH CARE SERVICE CORPORATION, d/b/a Blue Cross and Blue Shield of Illinois, Plaintiff-Appellant, v. Timothy LACK, Defendant-Appellee.

No. 93-1564.

United States Court of Appeals, Seventh Circuit.

Submitted Sept. 1, 1994. ^*

Decided Sept. 2, 1994.

Before CUMMINGS, BAUER and FLAUM, Circuit Judges.

ORDER

Health Care Service Corporation d/b/a Blue Cross and Blue Shield of Illinois ("Blue Corss") disputes the district court's dismissal of its complaint on the ground that the court lacked personal jurisdiction over defendant Timothy Lack, a citizen of Arizona. We affirm.

Blue Cross filed suit in Sangamon County, Illinois, alleging that Lack had failed to provide information needed to determine whether Blue Cross had a claim for reimbursement against him pursuant to a group health and welfare insurance benefit plan ("the Plan") organized under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461. The Plan is a contractual agreement entered into by Osco Drug Stores ("Osco") and Blue Cross to provide Osco's employees with health insurance. Lack, an Osco employee in Mesa, Arizona, was a beneficiary of the Plan.

In March 1986, Lack required medical treatment due to his involvement in a serious automobile accident in Mesa, Arizona. Blue Cross paid out $16,006.70 for Lack's medical expenses. Although Lack subsequently reached a settlement with the tortfeasor in Arizona, he allegedly refused to reimburse Blue Cross out of the settlement funds as the Plan requires. Blue Cross then filed suit in Sangamon County and Lack removed the case to federal court. 28 U.S.C. Sec. 1441(b). The district court dismissed the cause of action without prejudice because Lack did not have the minimum contacts to Illinois necessary to satisfy the due process requirements of the Illinois long-arm statute. 735 ILCS 5/2-209. We review de novo whether the district court has personal jurisdiction over Lack. McIlwee v. ADM Industries, Inc., 17 F.3d 222, 223 (7th Cir.1994). The burden to demonstrate the existence of jurisdiction rests with Blue Cross. Id.

The parties agree that whether the district court has personal jurisdiction over Lack in this case is governed by state law. To assert personal jurisdiction over a nonresident defendant, Illinois courts must comply with the state's long-arm statute and are constrained by the defendant's right to due process under both the federal and Illinois constitutions. Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir.1992); Rollins v. Ellwood, 565 N.E.2d 1302, 1316 (Ill.1990). Blue Cross argues that the district court has personal jurisdiction over the defendant pursuant to the following provisions of Illinois' long-arm statute:

(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person ... to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:

(1) The transaction of any business within this State;

* * *

(7) The making or performance of any contract or promise substantially connected with this State.

(c) A court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States.

735 ILCS 5/2-209. Because we find that the district court's personal jurisdiction over Lack is barred by due process considerations, we need not discuss whether jurisdiction would be proper under subsection (a) of Illinois' long-arm statute.

Under the Due Process clause, personal jurisdiction may be exercised only where the defendant has established minimum contacts with the forum state so that "traditional notions of fair play and substantial justice" are not offended. Quill Corp. v. North Dakota, 112 S.Ct. 1904, 1910 (1992); International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Such contacts exist where the defendant "purposefully avails [himself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Federated Rural Electric Ins. Corp. v. Inland Power and Light Co., 18 F.3d 389, 394 (7th Cir.1994) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Only after it has been determined that these minimum contacts are present, may the court consider other factors, including public policy concerns. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985).

Blue Cross argues in favor of personal jurisdiction because Osco negotiated and entered into the contract in Illinois and thus, Blue Cross claims, Lack implicitly agreed to abide by the contract when he became a beneficiary of the Plan. The mere purchase of insurance from the forum state, however, is insufficient to establish personal jurisdiction over the defendant. Federated Rural Electric Ins. Corp., 18 F.3d at 395. Blue Cross also emphasizes that Lack submitted claims to Blue Cross in Illinois over a two-year period which were then processed and paid by checks issued and mailed from Illinois.

Initially, we note that the processing of Lack's claims by Blue Cross and the use of checks purportedly issued by an Illinois bank are irrelevant to this discussion since only the actions of the non-resident defendant determine whether the court has jurisdiction over him. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416-17 (1984); Dehmlow, 963 F.2d at 946. Although Blue Cross cites several cases to support the exercise of personal jurisdiction, they are easily distinguishable from this situation in that the non-resident defendants in those cases were all directly involved in extensive contractual negotiations with the plaintiffs, and therefore, voluntarily assented to their contractual obligations. See Burger King Corp., 471 U.S. at 473; In re Spill by the Amoco Cadiz, 699 F.2d 909, 916 (7th Cir.), cert. denied, 464 U.S. 864 (1983); Swissland Packing Co. v. Cox, 627 N.E.2d 686 (Ill.App.Ct. 3d Dist.1994); Autotech Controls Corp. v. K.J. Electric Corp., 628 N.E.2d 990, 996 (Ill.App.Ct. 1st Dist.1993). Because it was Osco, not Lack, that negotiated and finalized the contract with Blue Cross, we do not agree with Blue Cross's assertion that Lack purposefully availed himself of the Plan's benefits. See Trustees of the Central States, Southeast and Southwest Areas Health and Welfare Fund v. State Farm Mutual Automobile Ins. Co. [hereinafter...