Bryant v. Blue Cross and Blue Shield of Alabama

• Decision Date: 23 November 1990
• Docket Number: Civ. A. No. 90-AR-2179-S.
• Citation: 751 F. Supp. 968
• Parties: Thomas E. BRYANT, Jr., as Conservator over the Estate of Ian Douglas Brannan, a minor, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, Defendant.
• Court: U.S. District Court — Northern District of Alabama

751 F. Supp. 968

Thomas E. BRYANT, Jr., as Conservator over the Estate of Ian Douglas Brannan, a minor, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, Defendant.

Civ. A. No. 90-AR-2179-S.

United States District Court, N.D. Alabama, S.D.

November 23, 1990.

Clarence M. Small, Jr., Rhonda K. Pitts, Rives & Peterson, Birmingham, Ala., Bruce E. Mitchell, Atlanta, Ga., for plaintiff.

Cathy S. Wright, James Moody Proctor, II, Jayna Jacobson Partain, Maynard Cooper Frierson & Gale, Birmingham, Ala., for defendant.

MEMORANDUM OPINION

ACKER, District Judge.

Thomas E. Bryant, Jr., who sues in his capacity as conservator over the estate of Ian Douglas Brannan, a minor, has asked this court to remand the above-entitled case to the Circuit Court of Jefferson County, Alabama, from whence it was removed by defendant, Blue Cross and Blue Shield of Alabama.

Blue Cross' notice of removal was based upon its bare-bones contention that the "action will be governed by the provisions of the Employee Retirement Income Security Act (`ERISA'), 29 U.S.C. § 1001, et seq.", and the trailing allegation that the case was removable pursuant to 28 U.S.C. § 1331 because it presents a federal question.

The original complaint neither mentions ERISA nor invokes any other federal statute. It nowhere mentions a constitutional provision or a treaty, the other matters as to which § 1331 provides access to a federal court. To the contrary, the complaint simply alleges that the child, Brannan, is the victim of a garden variety Alabama fraud perpetrated by Blue Cross upon Byrd Construction Services, Inc., and indirectly upon Brannan. More specifically, plaintiff charges that Blue Cross represented to Byrd Construction that the medical benefits coverages under a new group policy proposed by Blue Cross would be the same as under an existing policy written by another insurer to cover the same group. Plaintiff next alleges that the said representation induced a switch of the coverage to Blue Cross. Plaintiff concludes with the allegation that Brannan requires a very expensive rehabilitation program for a brain injury, and that while the former group policy would have paid for these needed medical services, the Blue Cross policy will not.

The notice of removal contains no allegation of fact, verified or otherwise, to reflect that the previous policy or the substitute policy issued by Blue Cross is governed by ERISA. As already pointed out, defendant's original allegation of ERISA governance takes the form of a bare legal conclusion. Only after plaintiff filed his motion to remand did Blue Cross file an affidavit with attachments which, for the first time, provides evidence arguably indicating that the Blue Cross contract for group health benefits constitutes an ERISA "plan". Inter alia, this affidavit asserts that all premiums for the Blue Cross coverage were paid by the employer, Byrd Construction. However, there are a number of unexplored factual matters which bear on whether or not ERISA actually applies to this controversy. A removal based on the existence of a federal question must allege all facts essential to the existence of that federal question. The existence of a federal question cannot be left to mere speculation. See Jordan v. Reliable Life Ins. Co., 694 F.Supp. 822 (N.D.Ala.1988); Clark v. Golden Rule Ins. Co., 737 F.Supp. 376 (W.D.La.1989); Mutual Life Insurance Co. of N.Y. v. Kanakis (Calif.Ct.App. 4th Dist.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 308, 112 L.Ed.2d 261 (1990); Brady v. Empire Blue Cross/Blue Shield, 732 F.Supp. 678 (W.D. La.1990). In other words, even if Blue Cross' post-removal affidavit can be considered by the court, Blue Cross has not adequately demonstrated a factual basis for ERISA application. It still leaves crucial "i's" undotted and "t's" uncrossed.

In its brief opposing remand, Blue Cross understandably disagrees with this court's opinion in Davis v. American General Group Ins. Co., 732 F.Supp. 1132 (N.D.Ala. 1990), even though Blue Cross' case can be distinguished from Davis. Blue Cross does not discuss this court's opinion in Wright v. Sterling Investors Life Ins. Co., 747 F.Supp. 653 (N.D.Ala.1990), mandamus denied, a case closer on its facts than is Davis to this case. This court sees no reason to retreat either from Davis or from Wright.

Blue Cross is correct in pointing out that the Supreme Court of Alabama in HealthAmerica v. Menton, 551 So.2d 235 (Ala. 1989), cert. denied, ___ U.S. ___, 110 S.Ct. 1166, 107 L.Ed.2d 1069 (1990), which held that a cause of action identical to this one is not preempted by ERISA, is in sharp disagreement with the Eleventh Circuit in Farlow v. Union Central Life Ins. Co., 874 F.2d 791 (11th Cir.1989). See Mullenix v. Aetna Life & Casualty, 912 F.2d 1406, 1412, n. 7 (11th Cir.1990). The agony over the differences of opinion represented by Menton and Farlow are carefully explored in Isaac v. Life Investors Ins. Co. of America, 749 F.Supp. 855 (E.D.Tenn.1990), an interesting case which began in an Alabama state court, was removed to this court and transferred by it to the District Court for the Eastern District of Tennessee. Before discussing the preemption question, the Isaac court said, undoubtedly with a sigh of relief, that it "need not address whether raising federal preemption under ERISA law alone would be a sufficient basis for removal". Id. at ___. It was able to say this because the action had been properly removed on the basis of diversity of citizenship. It faced a true anomaly arising from the fact that the Sixth Circuit, there the binding appellate court, agrees with Menton rather than with Farlow. After some intellectual struggling, the Isaac court finally reached the conclusion that plain and simple Alabama fraud causes of action against a group insurer were not "preempted" by ERISA. Similarly, in Deller v. Portland General Elec. Co., 734 F.Supp. 916 (D.Or. 1990), the District Court for the District of Oregon held that a complaint charging misrepresentation filed in an Oregon state court was not "preempted" by ERISA and therefore was due to be remanded. This court cites Isaac and Deller not as binding precedent but as illustrations of the continuing widely divergent judicial views on the concept of ERISA "preemption".

The fact that Menton and Farlow cannot be reconciled except by the Supreme Court of the United States, which denied certiorari in Menton, does not lead this court to believe that it was incorrect in Davis or Wright when it remanded those cases, both of which had originally been brought under state law in a state court. If anything, this conflict between the Supreme Court of Alabama and the Eleventh Circuit over ERISA "preemption" calls for an extra measure of restraint by a district court in Alabama when it is called upon to examine its removal jurisdiction in a case in which the conflict between Menton and Farlow becomes quickly apparent.

Possibly the Supreme Court of the United States in one of the two ERISA cases in which it has granted certiorari will explain the breadth and meaning of ERISA "preemption" as "preemption" bears on the question of the removability of a state action, which, if the well-pleaded complaint rule is applied, does not implicate ERISA; more particularly, a removal in which the removing party does not spell out in its removal papers any factual basis for ERISA application is much less a basis for complete "preemption". This court will not await the Supreme Court's decisions in FMC Corp. v. Holliday, 885 F.2d 79 (3rd Cir.1989) or in Ingersoll-Rand Co. v. McClendon, 779 S.W.2d 69 (Tex.Sup.Ct. 1989) because the Supreme Court may not use either case to answer the pregnant questions. A better vehicle would be Lister v. Stark, 890 F.2d 941 (7th Cir.1989), which has been pending in the Supreme Court on a certiorari petition since February 21, 1990.

Besides the Deller court and this court, there are other district courts in the United States which have scrutinized their removal jurisdiction in an alleged ERISA "preemption" case and found removal improvident. One of these is the District Court for the Western District of Pennsylvania, which recently wrote a thorough opinion in McDonough v. Blue Cross of Northeastern Pennsylvania, 131 F.R.D. 467 (W.D.Pa. 1990), wherein it said:

This action for damages was originally filed in the Court of Common Pleas of Allegheny County, Pennsylvania. Both defendants removed the case to the United States District Court. 28 U.S.C. § 1441(a). Plaintiff has moved for remand. Because the court lacks jurisdiction to entertain this claim, it will be remanded to the state court. Id. § 1447(c).

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Broadly stated, plaintiff's complaint, as amended, contends that the defendants' failure to grant precertification, in contradiction to the terms of the insurance plan, effectively prevented Weiss from receiving the potentially life saving heart-lung transplant. As a direct result, during his lifetime, Weiss suffered unnecessary pain and inconvenience and eventually he died. Plaintiff's claim is advanced in four counts. The first is breach of contract contending that Blue Cross's denial of Weiss's request for pre-certification breached the contract of insurance. Count II is for violation of the Pennsylvania Unfair Insurance Practices Act. 40 P.S. §§ 1171.1-1171.15. Count III is a survival action for fraud, 42 Pa.C.S.A. § 8302; and Count IV is for wrongful death under the Pennsylvania wrongful death statute. 42 Pa.C.S.A. § 8301.

Each of the defendants removed the action to the Western District court contending that the plaintiff's purported claims for relief are cognizable only under the Employee Retirement Income Security Act ("ERISA" or "Act"), 29 U.S.C. § 1001, et seq., and that plaintiff's state law claims are preempted by ERISA. Thus, the claims present a federal question under the provisions of 28 U.S.C. § 1441(b).

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Instantly, plaintiff's complaint sounds purely in

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