Arkansas Blue Cross v. Little Rock Cardiology

• Decision Date: 07 January 2009
• Docket Number: No. 08-1443.,No. 08-1442.,08-1442.,08-1443.
• Citation: 551 F.3d 812
• Parties: ARKANSAS BLUE CROSS AND BLUE SHIELD, A Mutual Insurance Company; USAble Corporation, Appellants/Cross-Appellees, v. LITTLE ROCK CARDIOLOGY CLINIC, P.A.; Little Rock HMA, Inc., doing business as Southwest Regional Medical Center, Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

551 F.3d 812

ARKANSAS BLUE CROSS AND BLUE SHIELD, A Mutual Insurance Company; USAble Corporation, Appellants/Cross-Appellees, v. LITTLE ROCK CARDIOLOGY CLINIC, P.A.; Little Rock HMA, Inc., doing business as Southwest Regional Medical Center, Appellees/Cross-Appellants.

No. 08-1442.

No. 08-1443.

United States Court of Appeals, Eighth Circuit.

Submitted: September 25, 2008.

Filed: January 7, 2009.

Troy A. Price, argued, Gordon S. Rather, Jr., Michelle M. Kaemmerling, Chet

Roberts, on the brief, Little Rock, AR, for appellant.

Jess Askew III, argued, Little Rock, AR, Thomas B. Staley, Janet Lynn Pulliam, Benjamin D. Brenner, Stephen A. Hester, William T. Marshall, Little Rock, AR, Niki Cung, Erin W. Thompson, Fayetteville, AR, on the brief, for appellees.

Before WOLLMAN, SMITH and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

Arkansas Blue Cross and Blue Shield ("Blue Cross") and its wholly-owned subsidiary, USAble Corporation ("USAble"), brought this action against Little Rock Cardiology Clinic, P.A., and Little Rock HMA, Inc. (jointly, "the health care providers"), seeking to enjoin a civil action between the parties pending in the Circuit Court of Pulaski County, Arkansas.¹ The district court² granted the health care providers' motion to dismiss for lack of subject matter jurisdiction. Blue Cross and USAble appeal, arguing that the district court's dismissal was improper in numerous respects. The health care providers filed a cross-appeal, arguing alternatively that the district court could have found in their favor on grounds of claim or issue preclusion. For the following reasons, we affirm the district court's dismissal for lack of jurisdiction.

I. BACKGROUND

More than ten years ago, the Prudential Insurance Company of America and other health insurers obtained a judgment in the United States District Court for the Eastern District of Arkansas declaring that the Arkansas Patient Protection Act of 1995 ("the Arkansas PPA") was partially preempted by the Employee Retirement Income Security Act of 1974 ("ERISA").³ Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc., 964 F.Supp. 1285, 1299-300 (E.D.Ark.1997). In the same action, Prudential and its co-plaintiffs obtained an injunction barring the enforcement of the Arkansas PPA against the types of employee benefit plans described in 29 U.S.C. § 1003(a). Id. On appeal, we held that the offending provisions of the Arkansas PPA were not severable and that the statute was, therefore, preempted in its entirety. Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc. (Prudential I), 154 F.3d 812, 832 (8th Cir.1998). The district court entered an amended order stating that "[the] Arkansas Patient Protection Act is preempted in its entirety and [the] defendants are enjoined from enforcing the Arkansas Patient Protection Act in its entirety." Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc., No. 4:95-cv-00514-JMM (E.D.Ark. Oct. 5, 1998).

The so-called "Prudential I injunction" was undisturbed for nearly five years. On April 2, 2003, however, the United States Supreme Court handed down its decision in Kentucky Association of Health Plans, Inc. v. Miller, 538 U.S. 329, 123 S.Ct. 1471, 155 L.Ed.2d 468 (2003). In Miller, the Court clarified its precedents concerning the scope of ERISA's "saving clause," which exempts from preemption "law[s] ... which regulat[e] insurance." Id. at 334, 123 S.Ct. 1471 (quoting 29 U.S.C. § 1144(b)(2)(A)). Applying its newly announced two-part test, the Court held that Kentucky's "any willing provider" statutes—which prohibited health insurers from discriminating against health care providers that were "willing" to meet the conditions for participation in an insurer's health benefit plan — were exempt from preemption under ERISA's saving clause. Id. at 341-42, 123 S.Ct. 1471.

Although the Court did not refer to Prudential I or the Arkansas PPA, interested parties soon came forward to argue that the any willing provider provisions of the preempted Arkansas PPA were materially indistinguishable from the Kentucky statutes saved from preemption in Miller. Little Rock Cardiology Clinic and Little Rock HMA (under the name "Southwest Regional Medical Center") sent separate letters to Blue Cross requesting admittance to its provider network in light of the Supreme Court's decision in Miller. Blue Cross and USAble responded to the health care providers' requests by filing suit in the Eastern District of Arkansas (Blue Cross I). Blue Cross and USAble sought, among other things, a declaratory judgment stating that the Prudential I injunction remained valid after Miller. The health care providers counterclaimed, seeking admittance to Blue Cross and USAble's provider networks as well as damages for Blue Cross and USAble's alleged violation of the any willing provider provisions of the Arkansas PPA.

Soon thereafter, the State of Arkansas and two of the original defendants in Prudential I filed a motion under Federal Rule of Civil Procedure 60(b)(5) to dissolve the Prudential I injunction based on the Supreme Court's decision in Miller. On February 12, 2004, the district court granted the motion and dissolved the Prudential I injunction in its entirety. Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc., No. 4:95-cv-00514-JMM, 2004 WL 3550112, at *1-3 (E.D.Ark. Feb.12, 2004). On appeal, we affirmed the court's dissolution of the Prudential I injunction, except as it related to self-funded ERISA plans and claims that could have been brought under 29 U.S.C. § 1132, ERISA's civil enforcement provision. Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc. (Prudential II), 413 F.3d 897, 914-15 (8th Cir.2005). The district court entered an amended order stating that "this court does hereby lift the injunction against the Arkansas Patient Protection Act of 1995, except with regard to (1) direct or indirect application to self-funded ERISA plans and (2) the civil penalties provisions in Ark.Code Ann. § 23-99-207 as far as any cause of action that could have been brought under [29 U.S.C. § 1132]." Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc., No. 4:95-cv-00514-JMM (E.D.Ark. Aug. 2, 2005).

Meanwhile, the district court had stayed Blue Cross I pending the outcome of Prudential II. Once the court lifted its stay, the parties filed cross-motions for judgment on the pleadings. On March 27, 2006, the district court dismissed with prejudice Blue Cross and USAble's declaratory judgment claim, finding that this court's decision in Prudential II "disposed of all or nearly all of the claims asserted in the complaint." Ark. Blue Cross & Blue Shield v. St. Vincent Infirmary Med. Ctr. (Blue Cross I), No. 4:03-cv-00662-JLH, 2006 WL 796949, at *1 (E.D.Ark. Mar.27, 2006). Turning to the health care providers' counterclaims, the district court noted that the equitable relief the health care providers sought was no longer needed because Blue Cross and USAble admitted Little Rock Cardiology Clinic and Little Rock HMA into their provider networks after Prudential II. Id. at *3. The court then declined to exercise supplemental jurisdiction over the health care providers' damages claims and dismissed them without prejudice, holding that the claims raised "novel or complex issues of Arkansas law ... [and] involve[d] significant issues of Arkansas public policy." Id. at *4.

Less than one month later, the health care providers filed suit against Blue Cross and USAble in the Circuit Court of Pulaski County, Arkansas (Blue Cross II), again seeking damages for Blue Cross and USAble's alleged violation of the any willing provider provisions of the Arkansas PPA. While the parties disagree over how far Blue Cross II has progressed, by all accounts the litigation is ongoing.

Not willing merely to defend against the health care providers' claims in state court, Blue Cross and USAble brought this action in federal court (Blue Cross III), seeking to enjoin the health care providers from proceeding in Blue Cross II. Ark. Blue Cross & Blue Shield v. St. Vincent Infirmary Med. Ctr. (Blue Cross III), No. 4:07-cv-00813-JMM, 2007 WL 4287842, at *2 (E.D.Ark. Dec.5, 2007). The health care providers moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing that the district court lacked subject matter jurisdiction or, alternatively, that the action was barred by claim and issue preclusion arising from the district court's dismissal with prejudice of Blue Cross and USAble's declaratory judgment claim in Blue Cross I. Blue Cross III, 2007 WL 4287842, at *2. The district court rejected the health care providers' preclusion arguments but granted their motion to dismiss for lack of jurisdiction. Id. at *3-5. Both parties appeal.

II. DISCUSSION

It is a verity that federal courts are courts of limited jurisdiction. Parties may not enlarge that jurisdiction by waiver or consent. 4:20 Commc'ns, Inc. v. Paradigm Co., 336 F.3d 775, 778 (8th Cir. 2003). Likewise, a court may not assume "hypothetical jurisdiction" to decide "contested questions of law when its jurisdiction is in doubt." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

We review de novo the district court's grant of the health care providers' motion to dismiss for lack of subject matter jurisdiction. Hastings v. Wilson, 516 F.3d 1055, 1058 (8th Cir.2008). The burden of establishing that a cause of action lies within the limited jurisdiction of the federal courts is on the party asserting jurisdiction: here, Blue Cross and USAble. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).

From the outset, federal subject matter jurisdiction is plainly in doubt because Blue Cross and USAble have not shown any basis for federal question jurisdiction under 28 U.S.C. § 1331, or diversity jurisdiction under 28 U.S.C. § 1332. Ordinarily, that would end the inquiry. In this case, however, Blue Cross and...