Butler v. Wu

• Decision Date: 17 May 1994
• Docket Number: Civ. A. No. 93-3597 (JEI).
• Citation: 853 F. Supp. 125
• Parties: Edward M. BUTLER Administrator Ad Prosequendum for the Heirs-at-Law of Edward J. Butler, deceased and as Administrator of the Estate of Edward J. Butler, deceased and individually, Plaintiffs, v. Jack WU, M.D.; U.S. Healthcare, Inc.; and John Doe, M.D., Defendants.
• Court: U.S. District Court — District of New Jersey

853 F. Supp. 125

Edward M. BUTLER Administrator Ad Prosequendum for the Heirs-at-Law of Edward J. Butler, deceased and as Administrator of the Estate of Edward J. Butler, deceased and individually, Plaintiffs, v. Jack WU, M.D.; U.S. Healthcare, Inc.; and John Doe, M.D., Defendants.

Civ. A. No. 93-3597 (JEI).

United States District Court, D. New Jersey.

April 22, 1994.

As Modified May 17, 1994.

Klein, Cettei, Halden, & Goldberg by Richard C. Klein, Haddonfield, NJ, for plaintiffs.

Saul, Ewing, Remick, & Saul by Edward S. Wardell, Jeffrey S. Craig, Voorhees, NJ, for defendant U.S. Healthcare, Inc.

MEMORANDUM OPINION GRANTING DEFENDANT U.S. HEALTHCARE'S MOTION TO DISMISS AND GRANTING PLAINTIFF'S MOTION TO REMAND

IRENAS, District Judge.

Plaintiff filed a medical malpractice action against a health maintenance organization ("HMO") and one of its participating physicians, alleging that the negligence of the physician had contributed to the death of plaintiff's decedent. Defendant U.S. Healthcare ("USH") now moves to dismiss the complaint against it, alleging that plaintiff's state-law claims are preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and that to the extent plaintiff's claims are not preempted by ERISA, the New Jersey HMO Act ("HMO Act"), N.J.S.A. 26:2J-1 et seq., renders USH immune from suit. Plaintiffs oppose the motion and move for remand. Because we find that plaintiff's state law claims are preempted by ERISA, defendant's motion will be granted. In addition, because the remaining action is a state-law malpractice suit over which we lack subject matter jurisdiction, plaintiff's cross-motion to remand will be granted.

I. BACKGROUND

A. Factual Background

Defendant U.S. Healthcare, Inc. is a health maintenance organization governed by the ERISA and the New Jersey HMO Act. USH maintains a wholly owned subsidiary known as the Health Maintenance Organization of New Jersey ("HMO-NJ"), which contracts with independent physicians to provide health care services to employees of its contracted member groups.¹ Plaintiff's decedent, Edward J. Butler ("Butler"), was a participant in HMO-NJ by means of his employment with the Orleans Group.

On January 15, 1991, Butler went to Dr. Jack Wu because of a sore throat and difficulty swallowing. Complaint at ¶ 10. Butler continued to feel discomfort and on March 19, 1991, Dr. Wu referred him to Dr. Angello S. Agro for his throat problems. Id. at ¶ 12. Dr. Agro diagnosed Butler as suffering from a swelling of the epiglottis with erythema,² a jugulodigastric node on the left side of the neck, and a supraglottic neoplasm. Butler subsequently underwent a laryngoscopy and tracheostomy on March 24, 1991. Id. at ¶ 13. He died on June 26, 1992. Id. at ¶ 16.

B. Procedural Background

On March 19, 1993, plaintiff brought suit in the Superior Court of New Jersey, Law Division, Camden County, against Dr. Wu, USH, and other unnamed physicians, alleging causes of action for negligence, constructive misrepresentation, malpractice, breach of warranty, and wrongful death. Plaintiff contended that Dr. Wu's inaction caused his decedent to suffer severe pain, permanent injury, and disfigurement, and ultimately led to Butler's death. Plaintiff also argued that USH was liable for failing to supervise the care and medical treatment provided by Dr. Wu.

USH filed a notice of removal to the United States District Court for the District of New Jersey, asserting that plaintiff's claims "related to" an employee benefit plan as that term is defined by ERISA, and were therefore subject to federal jurisdiction. The petition for removal was granted on August 13, 1993.

On November 3, 1993, USH filed a motion to dismiss for failure to state a cause of action pursuant to Fed.R.Civ.P. 12(b)(6), and in the alternative moved for summary judgment pursuant to Fed.R.Civ.P. 56. The gist of the defendant's submission was that the plaintiff's state-law tort claims against USH were preempted by ERISA, and, that to the extent they were not preempted, the HMO Act rendered it immune from suit. Plaintiff filed a cross-motion for remand, contending that ERISA did not apply to the facts of this case and therefore the federal courts did not have subject matter jurisdiction.

II. LEGAL ANALYSIS

A. Standard of Review

Under Fed.R.Civ.P. Rule 56(c), "summary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

At the summary judgment stage, it is not the role of the judge to weigh the evidence or to evaluate its credibility, but to determine "whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). There is no issue for trial unless there is sufficient evidence favoring the nonmoving party such that a reasonable jury could return a verdict for that party. Id. A non-moving party may not rest upon mere allegations, general denials, or vague statements. If the non-moving party's evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Bixler v. Central Penn. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir.1993); Trap Rock Indus. Inc. v. Local 825, Int'l Union of Operating Engineers, 982 F.2d 884, 980-91 (3d Cir.1992).

The substantive law governing the dispute will determine which facts are material, and only disputes over those facts "that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Finally, summary judgment should be granted unless a dispute over a material fact is genuine, which the Court has defined as such that "a reasonable jury could return a verdict for the nonmoving party." Id.

B. The Scope of Preemption Under ERISA

In crafting ERISA, Congress intentionally adopted a broad preemption clause.³ Section 514(a) of the statute provides that its provisions "shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). This preemption provision has been broadly construed by the Supreme Court to include state statutory and commonlaw actions that "relate to" employee benefit plans. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); accord Shiffler v. Equitable Life Assur. Soc., 838 F.2d 78 (3d Cir.1988).

According to the Supreme Court, a state law "relates to" an employee benefit plan when "it has a connection with or reference to such a plan." Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). The applicability of ERISA preemption in the instant case, therefore, turns on whether a state-law tort claim premised on vicarious liability for medical malpractice "relates to" USH's employee benefit plan.

In an early case addressing the issue, Altieri v. CIGNA Dental Health, Inc., 753 F.Supp. 61, 64 (D.Conn.1990), the District of Connecticut found that ERISA preempted state-law negligence claims against a benefit plan premised on the alleged malpractice of the plan's providers, because the claims arose from the delivery of health benefits and thus "related to" a benefit plan.

Altieri involved a claim for dental malpractice in which the plaintiff sued both his dentist and his dental health plan, alleging that the health plan was negligent (1) in not sufficiently evaluating its medical care providers and (2) in failing to provide plaintiff with competent medical care. Id. The court found that since the crux of the plaintiff's claim was the circumstances of medical treatment under the health services plan, the claim "related to" the benefit plan and was therefore preempted by ERISA. Id. at 64. The court concluded that the plaintiff's claims were preempted because "they all `had one central feature: the circumstances of the the plaintiff's medical treatment under his employer's dental services plan for employees.'" Id. (quoting Rollo v. Maxicare of Louisiana, Inc., 695 F.Supp. 245, 248 (E.D.La.1988) (holding that ERISA preempted employee's state law claims)).

Other courts followed the Altieri lead. In Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th Cir.), cert. denied, ___ U.S. ___, 113 S.Ct. 812, 121 L.Ed.2d 684 (1992), the Fifth Circuit held that ERISA preempted a medical malpractice action brought against an administrative entity whose function involved furnishing medical benefits and even giving "medical advice." Id. at 1331. In so holding the Corcoran court observed that Congress "enacted a preemption clause so broad and a statute so comprehensive that it would be incompatible with the language, structure and purpose of the statute to allow tort suits against entities so integrally connected with a plan." Id. at 1334. In affirming the decision of the district court to grant summary judgment, the Fifth Circuit found that although plaintiff's claims did not explicitly refer to or were premised on an ERISA plan, the negligence-based causes of action had a sufficient effect on the ERISA plan to warrant their preemption. Id. at 1334.

A recent case from this District has likewise concluded that state-law negligence claims arising from the circumstances of treatment under the health care plan are preempted under ERISA. The plaintiffs in Ricci v. Gooberman, 840 F.Supp. 316, 317 (D.N.J.1993), sought to hold an HMO vicariously liable for a doctor's failing to advise plaintiff of certain test abnormalities and for careless, reckless treatment. 840 F.Supp. at 316. Like the court in Altieri, the Ricci court reasoned that the...