Rodriguez v. Pacificare of Texas, Inc.

• Citation: 980 F.2d 1014
• Decision Date: 12 January 1993
• Docket Number: No. 91-5571,91-5571
• Parties: , 16 Employee Benefits Cas. 1354, 37 Fed. R. Evid. Serv. 100 David R. RODRIGUEZ, et al., Plaintiffs-Appellants, v. PACIFICARE OF TEXAS, INC., Michael Heistand, M.D., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1014

980 F.2d 1014

24 Fed.R.Serv.3d 1106, 16 Employee Benefits

Cas. 1354,

37 Fed. R. Evid. Serv. 100

David R. RODRIGUEZ, et al., Plaintiffs-Appellants, v. PACIFICARE OF TEXAS, INC., Michael Heistand, M.D. Defendants-Appellees.

No. 91-5571.

United States Court of Appeals Fifth Circuit.

Jan. 12, 1993.

David R. Rodriguez, Pro se.

Cathy Sheehan, Alan D. Hicks, Plunkett, Gibson & Allen, San Antonio, Tex., for Pacificare of Texas.

Ruth Greenfield Malinas, William R. Crow, Jr., Ball & Weed, San Antonio, Tex., for Heistand.

Appeal from the United States District Court for the Western District of Texas

Before KING, JOHNSON, and DUHE, Circuit Judges.

DUHE, Circuit Judge:

David Rodriguez ("Rodriguez") appeals from a summary judgment entered against him and his two minor children on their claims against Pacificare of Texas, Inc. ("Pacificare"), and Dr. Michael Heistand ("Heistand"). These claims stem from Pacificare's refusal to reimburse Rodriguez for medical expenses he incurred. Finding no reversible error, we affirm.

Background and Procedural History

Rodriguez's employer provided health insurance benefits to its employees through Pacificare, a health maintenance organization (HMO). After being involved in an automobile accident, Rodriguez sought medical attention for himself and his children from Dr. Heistand, their primary care physician. Rodriguez believed that the attention of an orthopedic specialist was needed, but was stymied in his efforts to obtain a referral letter from Heistand or Pacificare. A referral letter is necessary for the HMO to reimburse the cost of the treatment. Dissatisfied with the response he was receiving from Pacificare and Heistand, Rodriguez went outside his HMO's channels and consulted an orthopedist who placed him in therapy.

Pacificare declined to cover the unapproved expenses. Bypassing the administrative procedures for contesting claim denials, ¹ Rodriguez, acting pro se, filed suit in Texas state court against Pacificare and Heistand for failing to "provide prompt and adequate medical care and coverage." The Appellees removed this action to the district court, and moved for summary judgment. Heistand's motion was supported by his own affidavit, given as a medical expert. Although instructed to identify a medical expert who would contradict Heistand's affidavit, Rodriguez instead filed deposition testimony of a physician given in a worker's compensation action Rodriguez was pursuing in state court. The district court granted summary judgment in Heistand's favor on the basis of his uncontroverted affidavit. The state law claims against Pacificare were held preempted by federal statute.

Discussion

On appeal, Rodriguez challenges removal jurisdiction and alleges error in the procedures the district court used in granting summary judgment.

A. Subject-Matter Jurisdiction and Removal.

1. ERISA Preemption.

Rodriguez has continually challenged the district court's exercise of jurisdiction over his lawsuit after it was removed from Texas state court. Removal is proper for "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...." 28 U.S.C. § 1441(b) (1986). While the claims in the present case are couched in terms of state law, the cause of action against Pacificare, as an HMO and health insurance benefits provider, is preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (1985 & Supp.1992). ² See id. at § 1144(a) (Except as otherwise provided, ERISA's provisions "shall supersede any and all State laws insofar as they relate to any employee benefit plan....").

Removal is not possible unless the plaintiff's "well pleaded complaint" raises issues of federal law sufficient to support federal question jurisdiction. Louisville & N.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Generally, federal preemption is a defense to a claim, and "does not appear on the face of a well pleaded complaint, and therefore does not authorize removal to federal court." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987).

An exception to the well pleaded complaint rule has been carved out for those areas in which Congress has "so completely pre-empt[ed] a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Id. at 63-64, 107 S.Ct. at 1546. Such a niche has been carved out by Congress for claims for benefits brought by participants and beneficiaries of ERISA-regulated employee benefit plans. See 29 U.S.C. § 1144(a); Metropolitan Life Ins. Co., 481 U.S. at 66, 107 S.Ct. at 1547; see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 55-56, 107 S.Ct. 1549, 1557-1558, 95 L.Ed.2d 39 (1987) (Congressional intention is clear "that all suits brought by beneficiaries asserting improper processing of claims under ERISA-regulated plans be treated as federal questions governed by [ERISA's civil enforcement mechanisms].").

ERISA regulates employee benefit plans that " 'through the purchase of insurance or otherwise,' provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death." Pilot Life Ins. Co., 481 U.S. at 44, 107 S.Ct. at 1551 (quoting 29 U.S.C. § 1002(1)). The Pacificare HMO plan provided to Rodriguez by his employer clearly meets this test. State law claims are "related to" employee benefit plans, and hence are preempted, if the state law has a "connection with or reference to such a plan." Shaw v. Delta Air Lines, 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). Rodriguez's state law claims, at bottom, result from dissatisfaction over Pacificare's handling of his medical claims. Consequently, his state law causes of action are sufficiently related to the employee benefit plan, in that they clearly have a "connection or reference to such a plan," to be pre-empted by ERISA. Id.; see Pilot Life Ins. Co., 481 U.S. at 55-57, 107 S.Ct. at 1557-1558; Metropolitan Life Ins., 481 U.S. at 62-63, 107 S.Ct. at 1545-1546; Lee v. E.I. Du Pont de Nemours & Co., 894 F.2d 755, 758 (5th Cir.1990); Boren v. N.L. Indus., Inc., 889 F.2d 1463, 1465-66 (5th Cir.1989), cert. denied, 497 U.S. 1029, 110 S.Ct. 3283, 111 L.Ed.2d 792 (1990).

2. Supplemental Jurisdiction.

The claims against Pacificare supported removal based on the existence of a federal question, albeit one not apparent on the face of Rodriguez's complaint. The state law causes of action against Heistand were properly before the district court via its exercise of supplemental jurisdiction. ³

Traditionally, state claims against a defendant in a federal forum could be adjudicated if they were appended to a federal claim against that defendant, and derived from the same nucleus of operative facts. See United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966); Grinter v. Petroleum Operation Support Serv., Inc., 846 F.2d 1006, 1008 (5th Cir.), cert. denied, 488 U.S. 969, 109 S.Ct. 498, 102 L.Ed.2d 534 (1988). This pendent claim jurisdiction spawned pendent party jurisdiction, in which federal claims are levied against one defendant, while state law claims are alleged against a different, nondiverse defendant. If the factual basis for both of these claims was "sufficiently intertwined," a federal court could adjudicate the state law claims against the pendent party. See Feigler v. Tidex, Inc., 826 F.2d 1435, 1439 (5th Cir.1987).

Pendent party jurisdiction was sharply curtailed by the Supreme Court's decision in Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989). The Finley Court assumed that pendent party jurisdiction was constitutional, but that such a power must first be animated by Congressional directive. 490 U.S. at 552, 109 S.Ct. at 2009. Lower courts were directed to look to the federal statutes to ascertain if pendent party jurisdiction was expressly granted in a particular instance. Id. Following this guidance, we held that ERISA did not provide for pendent party jurisdiction. Iron Workers Mid-South Pension Fund v. Terotechnology Corp., 891 F.2d 548, 551 (5th Cir.) (no pendent jurisdiction over Louisiana property owner against whom plaintiffs asserted state law lien claim), cert. denied, 497 U.S. 1024, 110 S.Ct. 3272, 111 L.Ed.2d 782 (1990).

Iron Workers was correctly operating under the principle announced in Finley that "pendent party jurisdiction does not exist, unless Congress has expressly spoken to allow it." Sarmiento v. Texas Bd. of Veterinary Medical Examiners, 939 F.2d 1242, 1247 (5th Cir.1991). Congress has now spoken. As part of the Judicial Improvements Act of 1990, 104 Stat. 5089 et seq., district courts are now granted "supplemental jurisdiction" over claims so related to a federal question "that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). This is a broad grant, and by employing the "case or controversy" language found in Article III "Congress indicates that it wants supplemental jurisdiction at least in the first instance--subject to its declination as a matter of judicial discretion under subdivision (c)--to go to the constitutional limit, to which it appeared to be carried in the Gibbs case." David D. Siegel, Commentary on 1990 Revision, 28 U.S.C.A. § 1367, at 232 (West Supp.1992). ⁴

Section 1367 is applicable to actions that were commenced after December 1, 1990. See Whalen v. Carter, 954 F.2d 1087, 1097 n. 10 (5th Cir.1992). Rodriguez's claims were removed to the district court in September 1989, and are apparently still governed by Finley and Iron Workers. The clear intent of Congress, as illustrated in § 1367, prompts us to agree that "[I]t would make no sense to give an expansive reading to Finley to reach a result that Congress has...