Arana v. Ochsner Health Plan

• Decision Date: 10 July 2003
• Docket Number: No. 01-30922.,01-30922.
• Citation: 338 F.3d 433
• Parties: Julio C. ARANA, Plaintiff-Appellee, v. OCHSNER HEALTH PLAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

338 F.3d 433

Julio C. ARANA, Plaintiff-Appellee, v. OCHSNER HEALTH PLAN, Defendant-Appellant.

No. 01-30922.

United States Court of Appeals, Fifth Circuit.

Filed July 10, 2003. Revised AUGUST 18, 2003.

George Davidson Fagan (argued), Leake & Anderson, New Orleans, LA, for Plaintiff-Appellee.

Perry R. Staub, Jr., Michael Warren Hill (argued), Taggart, Morton, Ogden, Staub, Rougelot & O'Brien, New Orleans, LA, for Defendant-Appellant.

Errol John King, Jr., Ashley Byrd Lowe, Juston M. O'Brien, Emily B. Grey, McGlinchey Stafford, Baton Rouge, LA, for Louisiana Managed Healthcare Ass'n, Inc., Healthcare Recoveries, Inc. and United Healthcare of Louisiana, Inc., Amici Curiae.

Edward H. Cooper, University of Michigan School of Law, Ann Arbor, MI, for University of Michigan Law School, Amicus Curiae.

Dana M. Muir, University of Michigan School of Business Administration, Ann Arbor, MI, for University of Michigan Business School, Amicus Curiae.

Thomas H. Lawrence, John Morris Russell, Lawrence & Russell, Memphis, TN, for Benefit Recovery, Inc., Amicus Curiae.

James L. Craig (argued), Washington, DC, for Chao, Secretary, Dept. of Labor, Amicus Curiae.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before KING, Chief Judge, and JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, WIENER, BARKSDALE, EMILIO M. GARZA, DeMOSS, BENAVIDES, STEWART, DENNIS, CLEMENT, and PRADO, Circuit Judges.

KING, Chief Judge:

Julio C. Arana sued Ochsner Health Plan, Inc. in state court to obtain a declaration that he is entitled to retain tort settlement proceeds free of Ochsner Health Plan, Inc.'s claim for reimbursement of health care benefits previously paid for Arana's account and to obtain attorney's fees and statutory penalties as well. The case was removed to federal court. The district court granted summary judgment for Arana. A panel of this court reversed, holding that the district court did not have subject matter jurisdiction, and directed that the case be remanded to state court. See Arana v. Ochsner Health Plan, Inc., 302 F.3d 462 (5th Cir.2002), vacated and reh'g en banc granted, 319 F.3d 205 (5th Cir.2003). Rehearing en banc was granted, thereby vacating the panel opinion. Because Arana states a claim to recover benefits or to enforce his rights that is completely preempted by ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (2000), we find that the district court had federal subject matter jurisdiction. We do not address the merits of this case, instead returning the case to the panel for that purpose.

I. FACTUAL AND PROCEDURAL HISTORY

A. Facts

Julio C. Arana ("Arana") was injured in a car accident. Ochsner Health Plan, Inc. ("OHP") paid approximately $180,000 in benefits under the terms of an employer-sponsored health plan offered by Arana's mother's employer. Arana then asserted tort claims against, and ultimately settled with, three other insurance companies.¹ Though his mother's health benefits plan, which all parties agree is governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461 (2000), required Arana to notify OHP of any litigation or settlement of claims against third parties for which OHP had made payment, Arana did not do so. OHP learned of the settlements and contacted Arana's mother. OHP claimed a right to subrogation of Arana's personal injury cause of action and reimbursement of benefits it paid for Arana's injuries to the extent that Arana was compensated by other insurers.²

B. District Court Decision

Arana sued OHP in Louisiana state court, seeking a declaratory judgment. Arana asked the court to find that OHP could not obtain reimbursement from him for amounts OHP previously paid for his medical bills. Arana raised two claims: (1) a request for a declaratory judgment "requiring OHP to release its notice of lien and to withdraw and release OHP's subrogation reimbursement and assignment claims" because LA.REV.STAT. § 22:663³ bars OHP from asserting these rights; and (2) a request for statutory penalties and attorney's fees under LA.REV.STAT. § 22:657⁴ for OHP's allegedly wrongful attempt to assert a lien against his tort settlements and obtain reimbursement from him. Arana brought the case as a class action, but no class has been certified.

OHP removed the case to federal district court, basing subject matter jurisdiction on the argument that ERISA completely preempts Arana's claims. The district court found that there was subject matter jurisdiction because Arana stated a claim "to recover benefits" under ERISA § 502(a)(1)(B).⁵ The district court then granted partial summary judgment to Arana on the merits of his claims.

C. Fifth Circuit Proceedings

On appeal, Arana argued that the federal courts do not have subject matter jurisdiction over this action because his claims are not completely preempted by ERISA. The panel agreed. The panel held that Arana's first claim is not a claim "to recover benefits" within the scope of ERISA § 502(a)(1)(B) because OHP has already paid Arana all of the health benefits due and Arana is not seeking additional benefits. The panel also rejected OHP's argument that Arana's first claim is one "to enforce his rights under the terms of the plan" under § 502(a)(1)(B) because Arana is not seeking to enforce the plan's terms but rather to declare a portion of the plan illegal under Louisiana law if enforced. Finally, the panel determined that Arana's second claim, which seeks penalties and attorney's fees, is not within the scope of ERISA § 502(a) because, though LA.REV STAT. § 22:657 may conflict with ERISA, a mere conflict with federal law is insufficient for jurisdiction.

We granted OHP's petition for rehearing en banc to consider the jurisdictional issue.⁶

II. STANDARD OF REVIEW

We review challenges to our subject matter jurisdiction de novo. See, e.g., Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 628 (5th Cir.2002).

III. DISCUSSION OF SUBJECT MATTER JURISDICTION

A. Requirements for Complete Preemption Subject Matter Jurisdiction

The federal removal statute authorizes removal to federal court of a civil action filed in state court if the claim is one "arising under" federal law or if there is diversity jurisdiction and the defendant is not a citizen of the state where the action is brought.⁷ See 28 U.S.C. § 1441(b) (2000). As the Supreme Court recently explained:

To determine whether the claim arises under federal law, we examine the "well pleaded" allegations of the complaint and ignore potential defenses: "A suit arises under the Constitution and the laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution. It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States." Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908); see Taylor v. Anderson, 234 U.S. 74, 34 S.Ct. 724, 58 L.Ed. 1218 (1914).... As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim.

Beneficial Nat'l Bank v. Anderson, ___ U.S. ___, 123 S.Ct. 2058, 2062, 156 L.Ed.2d 1 (2003).

There is an exception to the well-pleaded complaint rule, though, if Congress "so completely pre-empt[s] a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). In Metropolitan Life Insurance Co. v. Taylor, the Supreme Court found that state law claims seeking relief within the scope of ERISA § 502(a)(1)(B) are completely preempted. See id. at 62-66, 107 S.Ct. 1542.

B. Analysis of Arana's LA. REV. STAT. § 22:663 Claim

Arana's first claim requests a declaratory judgment "requiring OHP to release its notice of lien and to withdraw and release OHP's subrogation, reimbursement, and assignment claims" because such claims violate LA.REV.STAT. § 22:663. This claim is completely preempted because it falls within the scope of ERISA § 502(a)(1)(B). Section 502(a)(1)(B) reads:

(a) A civil action may be brought —

(1) by a participant or beneficiary —

...

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan ...

29 U.S.C. § 1132 (2000).

Arana's LA.REV.STAT. § 22:663 claim can fairly be characterized either as a claim "to recover benefits due to him under the terms of his plan" or as a claim "to enforce his rights under the terms of the plan."⁸ As it stands, Arana's benefits are under something of a cloud, for OHP is asserting a right to be reimbursed for the benefits it has paid for his account. It could be said, then, that although the benefits have already been paid, Arana has not fully "recovered" them because he has not obtained the benefits free and clear of OHP's claims. Alternatively, one could say that Arana seeks to enforce his rights under the terms of the plan, for he seeks to determine his entitlement to retain the benefits based on the terms of the plan.

Arana contends that he does not seek relief under ERISA § 502(a)(1)(B) because he claims entitlement to relief under Louisiana law, not under the terms of his ERISA plan. That is, according to Arana, LA.REV.STAT. § 22:663 nullifies the term of his ERISA plan which provides for reimbursement, so his claims do not seek relief under the plan's terms. As we see it, however, Arana does seek benefits "under the terms of the plan" because the plan explicitly provides that the plan is to be enforced according to Louisiana law. Specifically, the plan contains a choice-of-law clause mandating that the plan be construed in light of Louisiana law so long as Louisiana...