Baylor University Medical v. Ark. Blue Cross, Civ.A. 3:03-CV-2084-G.

• Decision Date: 09 January 2004
• Docket Number: No. Civ.A. 3:03-CV-2084-G.,Civ.A. 3:03-CV-2084-G.
• Citation: 331 F.Supp.2d 502
• Parties: BAYLOR UNIVERSITY MEDICAL CENTER, Plaintiff, v. ARKANSAS BLUE CROSS BLUE SHIELD, Defendant.
• Court: U.S. District Court — Northern District of Texas

331 F.Supp.2d 502

BAYLOR UNIVERSITY MEDICAL CENTER, Plaintiff, v. ARKANSAS BLUE CROSS BLUE SHIELD, Defendant.

No. Civ.A. 3:03-CV-2084-G.

United States District Court, N.D. Texas, Dallas Division.

January 9, 2004.

COPYRIGHT MATERIAL OMITTED

Larry Hallman, Burford & Ryburn, Emanuela Prister, Burford & Ryburn, Dallas, TX, for Plaintiff.

Barton L. Ridley, Touchstone, Bernays, Johnston, Beall & Smith, Dallas, TX, for Defendant.

MEMORANDUM ORDER

FISH, Chief Judge.

Before the court are the motions of the plaintiff Baylor University Medical Center ("Baylor") (1) to remand this case to the state court from which it was previously removed and (2) for attorney's fees. For the reasons set forth below, Baylor's motion to remand is granted, but its motion for attorney's fees is denied.

I. BACKGROUND

On July 23, 2003, Baylor filed suit against the defendant Arkansas Blue Cross Blue Shield ("ABCBS") in the County Court at Law No. 1 of Dallas County, Texas, asserting claims for breach of contract and late payment of claims under the Texas Insurance Code. See Plaintiff's Original Petition ("Petition") ¶¶ 10-11, attached to Notice of Removal as Exhibit 1; Baylor University Medical Center's Motion to Remand and Brief in Support Thereof, and Motion for Attorney's Fees Under 28 U.S.C. § 1447(c) and Federal Rule of Civil Procedure 54 ("Motion") at 1-2; Defendant Arkansas Blue Cross and Blue Shield, a Mutual Insurance Company's Response to Plaintiff's Motion to Remand, and Motion for Attorney's Fees and Brief in Support ("Response") ¶ 1.

Baylor entered into a contract with Blue Cross Blue Shield of Texas ("BCBSTX"), effective January 1, 1998, wherein Baylor agreed to provide medical services at a discount to persons insured under a BCBSTX plan, or any out-of-state Blue Cross Blue Shield plan, including ABCBS.¹ Petition ¶ 9; Motion at 2; Response ¶ 2. Baylor brought this suit in a state court to recover for medical services it provided to Bobby Wall ("Wall"), an ABCBS insured.² Petition ¶ 9; see also Motion at 2; Response ¶¶ 1-3; Baylor University Medical Center's Reply to Arkansas Blue Cross Blue Shield's Response to Plaintiff's Motion to Remand and Brief in Support Thereof ("Reply") at 1. Wall was admitted to Baylor's facility on April 6, 2000 and was discharged April 14, 2000. Petition ¶ 9; Response ¶ 4. On April 17, 2000, Baylor submitted a "clean claim"³ to ABCBS for the medical services provided to Wall. Petition ¶ 9. Since submitting this claim, Baylor alleges, it has been paid only a portion of the charges contractually due.⁴ Id.; Motion at 2. Baylor also alleges that because ABCBS' part payments for Wall's account were more than 45 days late, ABCBS is liable for full-billed charges under the Texas Insurance Code. Petition ¶ 11; Motion at 1-2; Response ¶ 4. Consequently, Baylor seeks recovery of over $30,097.65 in damages. Petition ¶ 11; Motion at 1-2; Response ¶ 4.

On September 12, 2003, ABCBS timely removed this action pursuant to 28 U.S.C. § 1441, arguing that Baylor's claims are preempted under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Notice of Removal ¶ 6. On October 8, 2003, alleging improper removal, Baylor filed the instant motion to remand the case back to state court and to collect attorney's fees for improper removal. See Docket Sheet; Motion at 1, 7. The dispositive jurisdictional issue before the court is whether Baylor's claims, both for breach of contract and under the Texas Insurance Code, are preempted by ERISA.

II. ANALYSIS

A. ERISA Preemption Generally

District courts have federal question jurisdiction over civil cases "arising under the Constitution, laws, or treaties of the United States." See 28 U.S.C. § 1331; Frank v. Bear Stearns & Company, 128 F.3d 919, 922 (5th Cir.1997). In determining whether a claim arises under federal law, the well-pleaded complaint rule allows a plaintiff to be the "master to decide what law he will rely upon" in pursuing his claims. The Fair v. Kohler Die & Specialty Company, 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716 (1913); see also Beneficial National Bank v. Anderson, 539 U.S. 1, 123 S.Ct. 2058, 2062, 156 L.Ed.2d 1 (2003); Aaron v. National Union Fire Insurance Company of Pittsburg, Pa., 876 F.2d 1157, 1160-61 (5th Cir.1989), cert. denied, 493 U.S. 1074, 110 S.Ct. 1121, 107 L.Ed.2d 1028 (1990). Where potential remedies exist under both state and federal law, a plaintiff may choose to proceed only under state law and avoid federal court jurisdiction. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Carpenter v. Wichita Falls Independent School District, 44 F.3d 362, 366 (5th Cir.1995). "There is an exception to the well-pleaded complaint rule, though, if Congress `so completely preempt[s] a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'" Arana v. Ochsner Health Plan, 338 F.3d 433, 437 (5th Cir.2003) (en banc) (quoting Metropolitan Life Insurance Company v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)), cert. denied, 72 USLW 3282, ___ U.S. ___, 124 S.Ct. 1044, 157 L.Ed.2d 889 (2003).

The Supreme Court has held that state-law claims seeking relief within the scope of ERISA § 502(a)(1)(B) must be recharacterized as arising under federal law, and as such, are removable to federal court. Metropolitan Life, 481 U.S. at 60, 67, 107 S.Ct. 1542; see also Ramirez v. Inter-Continental Hotels, 890 F.2d 760, 762 (5th Cir.1989). According to § 502(a)(1)(B), ERISA's civil enforcement provision:

§ 1132. Civil enforcement

(a) Persons empowered to bring a civil action

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(a)(1)(B). When a claimant seeks relief "within the scope of [ERISA's] civil enforcement provisions," his or her claims are subject to complete preemption. Metropolitan Life, 481 U.S. at 66, 107 S.Ct. 1542. Complete preemption "`recharacterizes' preempted state law claims as `arising under' federal law for the purposes of ... making removal available to the defendant." McClelland v. Gronwaldt, 155 F.3d 507, 516 (5th Cir.1998); see also Johnson v. Baylor University, 214 F.3d 630, 632 (5th Cir.), cert. denied, 531 U.S. 1012, 121 S.Ct. 567, 148 L.Ed.2d 486 (2000).

Another type of preemption, known as "conflict" or "ordinary" preemption, "arises when a federal law conflicts with state law, thus providing a federal defense to a state law claim, but does not completely preempt the field of state law so as to transform a state law claim into a federal claim." Arana, 338 F.3d at 439. Under ERISA's conflict preemption provision, § 514(a), "any and all State laws [are displaced or superceded] insofar as they ... relate to any employee benefit plan". 29 U.S.C. § 1144(a); see also Christopher v. Mobil Oil Corporation, 950 F.2d 1209, 1217 (5th Cir.), cert. denied, 506 U.S. 820, 113 S.Ct. 68, 121 L.Ed.2d 35 (1992). Any state law "relates to" an ERISA plan "if it has a connection with or reference to" an employee benefit plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983).⁵ Significantly for this case, even if the court were to find that Baylor's state law causes of action against ABCBS relate to an ERISA plan within the meaning of § 514(a), conflict preemption is insufficient to create federal jurisdiction. See McClelland, 155 F.3d at 516-19 (finding that a claim that relates to an ERISA plan, but does not seek to enforce rights under § 502(a), does not create federal removal jurisdiction); Copling v. Container Store, Inc., 174 F.3d 590, 594-95 (5th Cir.1999).⁶ The court will, therefore, only examine the contours of Baylor's state law claims insofar as they relate to complete preemption.

The Fifth Circuit, in Memorial Hospital System v. Northbrook Life Insurance Company, 904 F.2d 236, 245 (5th Cir.1990), outlined two unifying characteristics of cases finding ERISA preemption of a plaintiff's state law causes of action. See also Cypress Fairbanks Medical Center Inc. v. Pan-American Life Insurance Company, 110 F.3d 280, 283 (5th Cir.), cert. denied, 522 U.S. 862, 118 S.Ct. 167, 139 L.Ed.2d 110 (1997); Foley v. Southwest Texas HMO, Inc., 226 F.Supp.2d 886, 894 (E.D.Tex.2002). Preemption of a plaintiff's state law causes of action has been found when: (1) the state law claim addresses areas of exclusive federal concern, and (2) the claim directly affects the relationship between traditional ERISA entities — the employer, the plan and its fiduciaries, and the participants and beneficiaries. Memorial Hospital, 904 F.2d at 245; Foley, 226 F.Supp.2d at 894.

First, preemption is appropriate, according to Memorial Hospital, where the state law addresses areas of exclusively federal concern, including the right to receive benefits under the terms of an ERISA plan. 904 F.2d at 245. Congress' purpose in enacting ERISA was "to promote the interests of employees and their beneficiaries in employee benefit plans, ... and to protect contractually defined benefits." Firestone Tire & Rubber Company v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (internal citations and quotations omitted). The Supreme Court has cautioned, however, that [it has] "addressed claims of [ERISA] pre-emption with the starting presumption that Congress [did] not intend to supplant state law." New York State Conference of Blue Cross and Blue Shield Plans v. Travelors Insurance Company, 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995); see also Fort Halifax Packing Company, Inc. v. Coyne, 482 U.S. 1, 19, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) ("ERISA preemption analysis `must be guided by respect for the separate spheres of governmental...