Arnold v. Blue Cross & Blue Shield of Texas, Inc.

• Decision Date: 30 April 1997
• Docket Number: Civil Action No. H-96-0346.
• Citation: 973 F.Supp. 726
• Parties: Rebecca ARNOLD, By and Through her next friend, Phillip B. ARNOLD, Plaintiff, v. BLUE CROSS & BLUE SHIELD OF TEXAS, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

973 F.Supp. 726

Rebecca ARNOLD, By and Through her next friend, Phillip B. ARNOLD, Plaintiff, v. BLUE CROSS & BLUE SHIELD OF TEXAS, INC., Defendant.

Civil Action No. H-96-0346.

United States District Court, S.D. Texas, Houston Division.

April 30, 1997.

COPYRIGHT MATERIAL OMITTED

Jesse Rucker Pierce, Clements O'Neill, Pierce & Nickens, Houston, TX, for Plaintiff.

Cynthia Lea Jones, Funderburk & Funderburk, Houston, TX, Anthony F. Shelley, Miller and Chevalier, Washington, DC, for Defendant.

Marsha S. Edney, Department of Justice, Washington, DC, for Movant Office of Personnel Management.

MEMORANDUM OPINION AND ORDER GRANTING REMAND

ATLAS, District Judge.

Plaintiff Rebecca Arnold ("Plaintiff") originally brought this action against Blue Cross & Blue Shield of Texas, Inc. ("Blue Cross") in state court alleging state statutory violations. Blue Cross removed the action to federal court, and Plaintiff moved to remand. In its Memorandum Opinion and Order of September 10, 1996, ("Order") [Doc. # 37], the Court denied Plaintiff's Motion to Remand [Doc. # 5] and granted the motion of the Office of Personnel Management ("OPM") to Intervene as a Party Defendant [Doc. # 30]. Plaintiff was then permitted to amend her complaint to add a cause of action specifically addressed to OPM [Doc. # 39]. All three parties have since filed motions for summary judgment [Docs. # 48,49, and 61].

Upon further and more detailed consideration, the Court has determined that this case should in fact be remanded to state court. The Court's earlier Memorandum Opinion and Order [Doc. # 37], which denied Plaintiff's Motion to Remand and granted OPM's Motion to Intervene, is therefore VACATED. Plaintiff's Motion to Remand [Doc. # 5] is hereby GRANTED. All Court orders issued following the Memorandum Opinion and Order of September 10, 1996, are VACATED. The pending motions are DENIED AS MOOT.

I. PROCEDURAL BACKGROUND

Plaintiff Rebecca Arnold brought this action after her health insurance carrier, Defendant Blue Cross, denied her coverage for treatment of temporomandibular joint disorder ("TMJ"). Plaintiff is insured by Blue Cross because she is a dependent of her father, Phillip Arnold, a federal employee enrolled in the Blue Cross and Blue Shield Service Benefit Plan. Federal employees may elect to receive health insurance for themselves and their dependents by enrolling in plans, such as this one, which are established by contract between OPM, a federal agency, and health insurance carriers.

After diagnosing and treating Plaintiff for TMJ, her dentist, Dr. John E. Scott, submitted a claim for payment to Blue Cross. Blue Cross paid the bill in part but refused payment for the bulk of the claim.¹ Plaintiff's parents and Dr. Scott submitted a number of letters to Blue Cross and to OPM appealing the denial of coverage, but Blue Cross maintained its refusal to pay, and OPM affirmed the denial. See Petition, at 15-18. Apparently, Plaintiff's claim was originally rejected on the ground that her treatment was not medically necessary, see id. at 16, but the denial was ultimately justified on the ground that her treatment was simply not covered under her health insurance plan, see id. at 17-18.²

Plaintiff sued Blue Cross in state court alleging two primary causes of action. First, she claims that Blue Cross' failure to cover TMJ violates Article 21.53A of the Texas Insurance Code, which requires that every insurance policy issued in Texas that covers treatment of skeletal joints must also provide similar coverage for TMJ.³ Second, she claims that Blue Cross' description of its benefits, in its Service Plan brochure, appears to include coverage for TMJ, but since TMJ is not actually covered, Blue Cross' description constitutes false advertising and a deceptive trade practice in violation of Article 21.21 of the Texas Insurance Code.⁴

Blue Cross removed the action, claiming that this Court has federal question jurisdiction under 28 U.S.C. § 1441(b) because Plaintiff's state law claims are preempted by a federal statute, the Federal Employees Health Benefits Act ("FEHBA"), 5 U.S.C. § 8901 et seq. After Plaintiff moved for remand, Blue Cross attempted to amend its removal notice to allege that federal jurisdiction is also created by 28 U.S.C. § 1442(a)(1), the federal officer removal statute. The Court denied the Motion to Remand, finding that Plaintiff's claims turn on the construction of federal law and that there is a significant federal interest in this litigation. See Order, at 5-6. The Court did not address Blue Cross' argument under 28 U.S.C. § 1442(a)(1), see Order, at 2 n. 1 (denying as moot Blue Cross' Motion to Amend its Notice of Remand), and also explicitly declined to rule at that time whether Plaintiff's claims were preempted by federal law, see id. at 11.

Upon further consideration, the Court has determined that Plaintiff's Motion to Remand should be granted. The next section explains why removal is not justified in this case under the well-pleaded complaint rule and examines Blue Cross' argument that it is entitled to remove under 28 U.S.C. § 1442(a)(1).

II. FEDERAL REMOVAL JURISDICTION

A. The Well-Pleaded Complaint Rule

In its previous Order, the Court ruled that the applicability of federal common law supported removal of this action. However, the mere fact that federal law may be involved or that there is a federal interest in the litigation is not sufficient to confer removal jurisdiction upon a federal court. The state courts are competent to interpret federal law as well as adjudicate cases that may involve a significant federal interest. See Chuska Energy Co. v. Mobil Exploration & Producing, North America Inc., 854 F.2d 727, 730 (5th Cir.1988).

Instead, in order to determine whether the case is removable, the Court must examine Plaintiff's claims under the well-pleaded complaint rule. See Louisville & Nashville Ry. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908); Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362 (5th Cir.1995). It is well established that, under this rule, "federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987).⁵ Unless the federal question appears on the face of Plaintiff's complaint, the case may not be removed even if a federal defense is inevitable. "It is now settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Id. at 393, 107 S.Ct. at 2430 (citing Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust, 463 U.S. 1, 12, 103 S.Ct. 2841, 2847-48, 77 L.Ed.2d 420 (1983)). See also Carpenter, 44 F.3d at 366; Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1161 (5th Cir.1989), cert. denied, 493 U.S. 1074, 110 S.Ct. 1121, 107 L.Ed.2d 1028 (1990). A defendant simply cannot force a plaintiff who chooses to sue in state court to plead a federal cause of action. Caterpillar, 482 U.S. at 398-99, 107 S.Ct. at 2432-33; Aaron, 876 F.2d at 1161 n. 7. Even if the factual predicate underlying Plaintiff's complaint could have served as the basis for a federal claim, Plaintiff has the prerogative to forgo the federal claim and assert only state law claims in order to prevent removal. "The [well-pleaded complaint] rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Caterpillar, 482 U.S. at 392, 107 S.Ct. at 2429.

In this case, Plaintiff has clearly asserted two causes of action under state statutory law. Blue Cross argues that these causes of action are preempted by federal law. However, as just explained, this defense does not in itself confer federal court jurisdiction. Therefore, Blue Cross may prevent remand in this action only by showing that the well-pleaded complaint rule does not apply in this case. Under the circumstances presented here, only two exceptions to the well-pleaded complaint rule are potentially relevant: the complete preemption doctrine and the federal officer removal statute, 28 U.S.C. § 1442.⁶ The Court concludes that Blue Cross has not proved that it is entitled to removal under either exception.⁷

B. Complete Preemption

Under the complete preemption doctrine, Congress may so completely preempt a particular field that any complaint raising claims in that field is necessarily federal in nature. See Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430; Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987). Only complete preemption statutes provide a basis for federal question jurisdiction when pled as a defense; partial preemption statutes do not. Caterpillar, 482 U.S. at 394-99, 107 S.Ct. at 2430-33. Thus, if the FEHBA completely preempts Plaintiff's claims, then removal would be justified in this case. However, for the following reasons, the Court concludes that the FEHBA is not a complete preemption statute. In its previous Order, the Court implicitly rejected Blue Cross' argument that FEHBA is a complete preemption statute by basing its holding instead on the existence of a significant federal interest and the applicability of federal common law. Had the Court determined that the FEHBA is a complete preemption statute, it would not have needed to reserve, for further briefing, the question of whether Plaintiff's state law claims are specifically preempted. If the FEHBA were a complete preemption statute, then the Court could have ruled earlier that Plaintiff's claims are clearly preempted by the federal statute. The following discussion contains a more thorough examination of why the FEHBA is not a complete...