Bauman v. U.S. Healthcare Inc.

• Decision Date: 06 April 1999
• Docket Number: 98-5262 and 98-5263,Nos. 98-5222,s. 98-5222
• Citation: 193 F.3d 151
• Parties: (3rd Cir. 1999) IN RE: U.S. HEALTHCARE, INC., PETITIONER IN NO. 98-5222 STEVEN BAUMAN, MICHELLE BAUMAN, INDIVIDUALLY AND AS ADMINISTRATORS AD PROSEQUENDUM OF THE ESTATE OF MICHELINA BAUMAN, DECEASED v. U.S. HEALTHCARE, INC., KENNEDY MEMORIAL HOSPITAL, WASHINGTON TOWNSHIP DIVISION, KAMILA NEMEH, M.D., JOHN DOES (1-5) U.S. HEALTHCARE, INC., APPELLANT IN NO. 98-5262 STEVEN BAUMAN, MICHELLE BAUMAN, INDIVIDUALLY AND AS ADMINISTRATORS AD PROSEQUENDUM OF THE ESTATE OF MICHELINA BAUMAN, DECEASED, APPELLANTS IN NO. 98-5263 V. U.S. HEALTHCARE, INC., KENNEDY MEMORIAL HOSPITAL, WASHINGTON TOWNSHIP DIVISION, KAMILA NEMEH, M.D., JOHN DOES (1-5) Argued:
• Court: U.S. Court of Appeals — Third Circuit

Page 151

193 F.3d 151 (3rd Cir. 1999)

IN RE: U.S. HEALTHCARE, INC., PETITIONER IN NO. 98-5222

STEVEN BAUMAN, MICHELLE BAUMAN, INDIVIDUALLY AND AS ADMINISTRATORS AD PROSEQUENDUM OF THE ESTATE OF MICHELINA BAUMAN, DECEASED v. U.S. HEALTHCARE, INC., KENNEDY MEMORIAL HOSPITAL, WASHINGTON TOWNSHIP DIVISION, KAMILA NEMEH, M.D., JOHN DOES (1-5)

U.S. HEALTHCARE, INC., APPELLANT IN NO. 98-5262

STEVEN BAUMAN, MICHELLE BAUMAN, INDIVIDUALLY AND AS ADMINISTRATORS AD PROSEQUENDUM OF THE ESTATE OF MICHELINA BAUMAN, DECEASED, APPELLANTS IN NO. 98-5263

V.

U.S. HEALTHCARE, INC., KENNEDY MEMORIAL HOSPITAL, WASHINGTON TOWNSHIP DIVISION, KAMILA NEMEH, M.D., JOHN DOES (1-5)

Nos. 98-5222, 98-5262 and 98-5263

U.S. Court of Appeals, Third Circuit

Argued: April 6, 1999

Filed September 16, 1999

On Appeal from the United States District Court for the District of New Jersey (D.C. Civ. No. 97-cv-02905) District Judge: Hon. Stanley S. Brotman

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[Copyrighted Material Omitted]

Joshua M. Spielberg (Argued) Tomar, Simonoff, Adourian, O'Brien, Kaplan, Jacoby & Graziano Cherry Hill, N.J. 08034 Attorney for Respondents in No. 98-5222, Appellees in No. 98-5262

Burt M. Rublin (Argued) Ballard, Spahr, Andrews & Ingersoll Philadelphia, PA 19103 Howard J. Bashman Richard M. Simins Montgomery, McCracken, Walker & Rhoads Philadelphia, PA 19109 Edward S. Wardell Kelley, Wardell & Craig Haddonfield, N.J. 08033 Attorneys for Petitioner in No. 98-5222, Attorneys for Appellant in 98-5262, Appellee in No. 98- 5263

Henry L. Solano Solicitor of Labor Marc I. Machiz Associate Solicitor Karen L. Handorf G. William Scott (Argued) United States Department of Labor Plan Benefits Security Division Washington, D.C. 20003 Amicus-respondent in No. 98-5222, Amicus-appellee in No. 98-5262 & 98-5263

Before: Sloviter, Alito and ALARCON,^* Circuit Judges

OPINION OF THE COURT

Sloviter, Circuit Judge.

This case calls upon us to revisit the issue of "complete preemption" under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a), in the context of a lawsuit claiming medical malpractice, a question we last considered in Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d Cir. 1995).

The plaintiffs, Steven and Michelle Bauman, brought suit in a New Jersey state court for damages arising from the death of their newborn daughter, Michelina Bauman. The complaint names as defendants Kamilah Nemeh, M.D. (the pediatrician responsible for the treatment of Michelina); Kennedy Hospital in Washington Township, New Jersey (the hospital where Michelina was born); and The Health Maintenance Organization of New Jersey, Inc., a subsidiary of U.S. Healthcare, Inc. (collectively "the HMO") (the health maintenance organization of which the Baumans were members). The complaint asserts direct tort claims against all three defendants and also alleges vicarious liability on the part of Kennedy Hospital and the HMO.

U.S. Healthcare, joined by the other defendants, filed a removal petition, basing federal jurisdiction on the doctrine of complete preemption under section 502 of ERISA. U.S. Healthcare then moved in the District Court for dismissal or, in the alternative, summary judgment on the ground that all of the Baumans' claims were subject to express preemption under section 514(a) of ERISA. The Baumans moved to remand, arguing that there was no federal jurisdiction over any of their claims. The District Court granted U.S. Healthcare's motion in part, concluding that federal jurisdiction exists over Count Six of the Baumans' complaint by virtue of the complete preemption doctrine. The court further concluded that Count Six was subject to express preemption under ERISA section 514(a) and it therefore dismissed that count. Having dismissed the only count for which it found there was federal jurisdiction, the District Court then declined to exercise supplemental jurisdiction over the remaining counts against U.S. Healthcare and the other defendants and remanded them to state court under 28 U.S.C. § 1367(c)(3).

U.S. Healthcare has filed both a Petition for a Writ of Mandamus and a Notice of Appeal from the District Court's order. The Baumans have cross-appealed the District Court's order dismissing Count Six and denying their motion to remand all their claims to New Jersey state court under 28 U.S.C. § 1447.

I.

Michelle Bauman gave birth to Michelina Bauman at Kennedy Hospital in Washington Township, New Jersey, on May 16, 1995. In accordance with the health care benefits pre-certification provided by the HMO, Dr. Nemeh, an independent health care provider contracting with the HMO, discharged mother and newborn from the hospital after twenty-four hours. On May 18, the day after Michelina was discharged and two days after she was born, the Baumans noticed that Michelina was ill. They made numerous telephone calls to Doctor Nemeh, but she did not advise them to bring Michelina back to the hospital. They also contacted U.S. Healthcare and requested an in-home visit by a pediatric nurse, but no such nurse was provided. Michelina contracted a Group B strep infection that was undiagnosed and untreated. It developed into meningitis and she died that same day.

The Baumans' complaint was filed in New Jersey Superior Court, Camden County, in May 1997. We address only the four counts against U.S. Healthcare.¹ In Count One, the Baumans allege that the U.S. Healthcare policy "encouraged, pressured, and/or directly or indirectly required" the twenty-four hour pre-certified discharge used by the doctor and hospital. App. at 16. In implementing this policy, the complaint continues, U.S. Healthcare acted "without adequate consideration" for the policy's medical appropriateness and "without due care for the health and safety" of members and their children. App. at 16. Count One also includes a claim for vicarious liability against U.S. Healthcare for the negligence of its alleged agents Nemeh and Kennedy Hospital in prematurely discharging the newborn after only twenty-four hours while the infection went undiagnosed.

Count Two alleges that Michelina did not receive timely diagnosis and treatment of the deadly infection. The count states that U.S. Healthcare's adoption of the twenty-four-hour pre-certified discharge policy, despite U.S. Healthcare's knowledge that newborns were at risk for developing diseases and that the policy would delay diagnosis and treatment, manifested reckless indifference to the "health consequences of its policy" and was "motivated only by the financial profit" realizable from having to pay for only a single day in hospital. App. at 17.

The Baumans allege in Count Five that U.S. Healthcare negligently adopted "policies with respect to hospital utilization" that discouraged participating physicians from "re-admitting infants to the hospital when health problems" arose after discharge. App. at 20. They also allege that U.S. Healthcare negligently "fail[ed] to exercise due care in the selection, supervision, training, and/or monitoring" of Dr. Nemeh. App. at 20. This count includes both a direct negligence claim and a vicarious liability claim for the failure to diagnose and treat Michelina's infection.

Count Six alleges that in light of the discharge, Michelina's "medically appropriate care" required an in-home visit by a pediatric nurse to "ensure [her] health and well-being." App. at 21. The Baumans requested such a visit in their May 18 phone call and, according to the complaint, the plan's L'il Appleseed Program assured such visits, which U.S. Healthcare negligently failed to provide in this instance. This count also included negligence claims against the hospital and doctor for their failure to report Michelina's birth to the HMO, which would have supported the request for a pediatric nurse.

On June 12, 1997, U.S. Healthcare removed the action to the District Court for the District of New Jersey on the ground that section 502(a) of ERISA provides federal jurisdiction over the complaint by virtue of the "complete preemption" doctrine. A month later, the Baumans moved to remand the case to state court. While the case was in the District Court, U.S. Healthcare requested dismissal of all four counts or claims against it on the basis of section 514(a) express preemption under ERISA.

The District Court remanded Counts One, Two and Five, but did so pursuant to 28 U.S.C. § 1367(c)(3) rather than under 28 U.S.C. § 1447(c) as the Baumans requested. The court denied the motion to remand Count Six and, as to that count, granted U.S. Healthcare's motion to dismiss.

In its opinion dated March 30, 1998, the District Court explained these rulings as follows: The court held that removal was proper because Count Six states a claim that fits within the scope of section 502(a) of ERISA (covering claims "to recover benefits due" under the terms of the plan), and that therefore it had subject matter jurisdiction under the doctrine of "complete preemption." It held, concomitantly, that Count Six was expressly preempted under section 514(a) of ERISA and should be dismissed. See Bauman v. U.S. Healthcare, Inc., 1 F. Supp. 2d 420, 425 (D.N.J. 1998). However, the District Court held that the other three counts pled against U.S. Healthcare were not completely preempted. Id. at 423-24. It then exercised its discretion and remanded those claims to state court under 28 U.S.C. § 1367(c)(3), reasoning that the case was relatively early in its proceedings and the single dismissed claim providing subject matter jurisdiction was relatively minor among all the claims asserted against U.S. Healthcare. Id. at 426.

On April 1, the District Court amended its original order to state that it dismissed Count Six with respect to U.S. Healthcare only. The remand of the other counts was not changed.

U.S. Healthcare filed a timely notice of appeal as well as a separate petition for a writ of mandamus. The Baumans cross-appealed the court's dismissal of Count Six and...