Bellaire General Hosp. v. Blue Cross Blue Shield of Michigan

• Decision Date: 23 October 1996
• Docket Number: No. 95-21020,95-21020
• Citation: 97 F.3d 822
• Parties: BELLAIRE GENERAL HOSPITAL, Plaintiff-Appellee, v. BLUE CROSS BLUE SHIELD OF MICHIGAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 822

97 F.3d 822

36 Fed.R.Serv.3d 422

BELLAIRE GENERAL HOSPITAL, Plaintiff-Appellee, v. BLUE CROSS BLUE SHIELD OF MICHIGAN, Defendant-Appellant.

No. 95-21020.

United States Court of Appeals Fifth Circuit.

Oct. 23, 1996.

Thomas Daniel Hollaway, Sullins, Johnston, Rohrbach & Magers, Houston, TX, for Plaintiff-Appellee.

Richard John Tyler, New Orleans, LA, Mark Wayne Mercante, Bari L. Giordano, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for Defendant-Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before DAVIS, JONES and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Defendant Blue Cross Blue Shield of Michigan appeals the district court's denial of its motion to dismiss for lack of personal jurisdiction and the district court's order that the parties submit their dispute to the court for resolution on a written record. Blue Cross also challenges the standard of review the district court applied to factual determinations made by Blue Cross. Finally, Blue Cross contests the district court's award of attorneys' fees to Plaintiff Bellaire General Hospital. We affirm in part and vacate in part, remanding for a proper determination of attorneys' fees.

I

Arlene White and Rebecca Catlin are Michigan residents and participants in health benefits plans underwritten by Blue Cross Blue Shield of Michigan, a nonprofit corporation operating exclusively within the State of Michigan. White was admitted to Bellaire General Hospital in Bellaire, Texas for depression and suicidal thoughts, and received in-patient hospital care from March 11 to April 9, 1993. Catlin was also admitted to Bellaire for depression and suicidal thoughts; she received in-patient hospital care from May 8 to June 10, 1993.

Both women assigned their insurance claims to Bellaire. Bellaire submitted the claims to Blue Cross for payment. In evaluating Bellaire's claim regarding White's medical treatment, a Blue Cross registered nurse reviewed White's medical records, initially deciding to deny the claim entirely for lack of medical necessity for in-patient treatment. Because Blue Cross's initial determination was a complete denial of coverage, the claim was automatically submitted to Blue Cross's appeals committee, which approved coverage for seven days of in-patient hospital care for White. The committee denied coverage for the remainder of White's in-patient care. After White's treating physician requested second-level appeal, Blue Cross submitted the claim to an independent company, Peer Review Analysis of Massachusetts. Peer Review confirmed Blue Cross's decision to approve coverage for seven days of care and to deny coverage for the remainder of White's hospital stay. Thus, Blue Cross denied payment for Bellaire's claim regarding White's hospital care beyond seven days.

Similarly, after Bellaire submitted a claim to Blue Cross for Catlin's in-patient treatment, a Blue Cross registered nurse reviewed Catlin's medical records, also initially deciding to deny the claim entirely for lack of medical necessity for in-patient treatment. Again, the initial claim denial was sent automatically to Blue Cross's appeals committee which approved three days of in-patient hospital care for Catlin. After Blue Cross submitted Catlin's claim to Peer Review for second-level appeal, Peer Review concluded that Catlin's condition did not warrant in- patient hospital treatment at all. However, Blue Cross denied payment for Bellaire's claim regarding Catlin's treatment beyond three days.

Subsequent to Blue Cross's denial of the claims, Bellaire filed suit against Blue Cross in the Southern District of Texas, alleging that Blue Cross had breached its insurance contracts with White and Catlin, or, in the alternative, that Blue Cross had violated ERISA, 29 U.S.C. § 1001 et seq. Blue Cross filed a motion to dismiss Bellaire's complaint for lack of personal jurisdiction; the district court denied the motion without explanation. After ordering the parties to submit their dispute to the court for resolution on a written record, the district court determined that Blue Cross had improperly denied Bellaire's claims. The court awarded Bellaire $68,764 on its insurance claims and $7,500 in attorneys' fees. Blue Cross appeals.

II

A

Blue Cross appeals the district court's denial of its motion to dismiss for lack of personal jurisdiction. Blue Cross argues that the district court lacked personal jurisdiction over it because Blue Cross is a nonprofit corporation operating exclusively within the State of Michigan. When, as here, "the [alleged jurisdictional] facts are not in dispute, we review de novo a district court's determination that its exercise of personal jurisdiction over a nonresident defendant is proper." Wilson v. Belin, 20 F.3d 644, 647-48 (5th Cir.), cert. denied, 513 U.S. 930, 115 S.Ct. 322, 130 L.Ed.2d 282 (1994).

ERISA, 29 U.S.C. § 1132(e)(2), provides for nationwide service of process. Specifically, § 1132(e)(2) directs that "[w]here an action under this subsection is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district court where a defendant resides or may be found."

We have previously addressed nationwide service of process provisions in federal statutes. In Busch v. Buchman, Buchman & O'Brien, Law Firm, 11 F.3d 1255 (5th Cir.1994), we analyzed the nationwide service of process provision contained in § 78aa of the 1934 Securities Exchange Act. ¹ Concluding that service of process and personal jurisdiction are conceptually related concepts, we determined that when a federal court attempts "to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States." Id. at 1258. We specified that in such a case the relevant sovereign is the United States, and held that the due process concerns of the Fifth Amendment are satisfied and traditional notions of fair play and substantial justice are not offended where a court exercises personal jurisdiction over a defendant residing within the United States. Id.

The nationwide service of process provision in the statute at issue here, § 1132(e)(2) of ERISA, mirrors the provision we considered in Busch. Though the statutes obviously address different legislative subjects, we placed no limitation on our conclusion in Busch regarding personal jurisdiction in cases involving federal statutes providing for nationwide service of process. Rather, we stated And, when a federal court is attempting to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States.

Busch, 11 F.3d at 1258 (emphasis added). As a result, we find that the instant case falls squarely within our Busch holding, and hold that the district court properly exercised personal jurisdiction over Blue Cross based on its contacts with the United States. ²

Although we dutifully apply Busch, ³ we emphasize our disagreement with it to the extent it concludes that the proper personal jurisdiction test in a national service of process case is whether minimum contacts exist between the individual and the national sovereign. See id. We view personal jurisdiction and service of process as conceptually distinct issues. We fail to apprehend how personal jurisdiction can be separated from due process by Congressional enactment of nationwide service of process provisions. See id. at 1259 (Garza, J., dissenting) ("Because the personal jurisdiction requirement is a function of the individual liberty interest, the proper focus for a personal jurisdiction test should be on protecting an individual's liberty interest in avoiding the burdens of litigating in a distant or inconvenient forum. Requiring that the individual defendant in a national service of process case only reside somewhere in the United States does not protect this interest."); see also Willingway Hosp., Inc. v. Blue Cross & Blue Shield of Ohio, 870 F.Supp. 1102, 1106 (S.D.Ga.1994) ("To allow Congress to dictate personal jurisdiction through the enactment of nationwide service of process provisions, unquestioned by the judiciary is nonsensical.... To say that due process has no place in a personal jurisdiction inquiry seems contrary to the whole concept of due process."). It is far from clear to us that Blue Cross, a corporation operating exclusively within the State of Michigan, had sufficient contacts with the State of Texas to permit the district court to exercise personal jurisdiction over it under the traditional personal jurisdiction analysis, i.e., whether the defendant has had minimum contacts with the forum and whether maintenance of the action in the forum will offend traditional notions of fair play and substantial justice. See International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) ("[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.") (citation omitted). Thus, though we follow Busch today and find that the district court properly exercised personal jurisdiction over Blue Cross in this case, we do so with grave misgivings regarding the authority upon which we rely.

B

Blue Cross contends that the district court violated FED.R.CIV.P. 43(a) when it ordered the parties to submit their dispute to the court for...