Carducci v. Aetna U.S. Healthcare

• Decision Date: 28 May 2002
• Docket Number: Civil Action No. 01-5339(AMW).,Civil Action No. 01-4964(JBS).,Civil Action No. 01-4675(JBS).,Civil Action No. 01-5237(JWB).,Civil Action No. 01-5217(JCL).,Civil Action No. 01-5812(JBS).
• Parties: Caroline CARDUCCI, et al., Plaintiffs, v. AETNA U.S. HEALTHCARE, Defendant. Jean Levine, Plaintiff, v. United Healthcare Corp., Defendant. Carole West, Plaintiff, v. Health Net of the Northeast, Defendant. David Collins, Plaintiff, v. Oxford Health Plans, Defendant. Noreen Bogurski, Plaintiff, v. Horizon Blue Cross Blue Shield of New Jersey, Defendant. Benjamin Edmonson, Plaintiff, v. Horizon Blue Cross Blue Shield of New Jersey, Defendant.
• Court: U.S. District Court — District of New Jersey

Page 796

204 F.Supp.2d 796

Caroline CARDUCCI, et al., Plaintiffs, v. AETNA U.S. HEALTHCARE, Defendant.

Jean Levine, Plaintiff, v. United Healthcare Corp., Defendant.

Carole West, Plaintiff, v. Health Net of the Northeast, Defendant.

David Collins, Plaintiff, v. Oxford Health Plans, Defendant.

Noreen Bogurski, Plaintiff, v. Horizon Blue Cross Blue Shield of New Jersey, Defendant.

Benjamin Edmonson, Plaintiff, v. Horizon Blue Cross Blue Shield of New Jersey, Defendant.

Civil Action No. 01-4675(JBS).

Civil Action No. 01-4964(JBS).

Civil Action No. 01-5217(JCL).

Civil Action No. 01-5237(JWB).

Civil Action No. 01-5339(AMW).

Civil Action No. 01-5812(JBS).

United States District Court, D. New Jersey.

May 28, 2002.

Natalie A. Finkelman, Esquire, Scott R. Shepherd, Esquire, James C. Shah, Esquire, Shepherd & Finkelman, LLC, and John W. Trimble, Jr., Esquire, Morrison & Trimble, Turnersville, NJ, for plaintiffs Carducci, Levine, and Edmonson.

Donna Siegel Moffa, Esquire, Franklin P. Solomon, Esquire, Weitz & Luxenberg, Cherry Hill, NJ, for plaintiffs West, Collins, and Bogurski.

Burt M. Rublin, Ramond A. Quaglia, Ballard Spahr Andrews & Ingersoll, LLP, for defendant Aetna U.S. Healthcare, Horizon Blue Cross Blue Shield of NJ, Horizon Healthcare Services.

Edward S. Wardell, Kelley, Wardell & Craig, LLP, Haddonfield, NJ, for defendant Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey and for Aetna U.S. Healthcare, Horizon Blue Cross Blue Shield of NJ, Horizon Healthcare Services.

William J. O'Shaughnessy, Esquire, Harvey C. Kaish, Esquire, B. John Pendleton, Esquire, McCarter & English, LLP, Newark, NJ, for defendants Oxford Health Plans, Inc. and Health Net of the Northeast, Inc.

Theodore D. Aden, Esquire, Carol A. Lafond, Esquire, Leboeuf, Lamb, Greene & McRae, LLP, Newark, NJ, and Edward A. Scallet, Esquire, Thomas F. Fitzgerald, Esquire, William F. Hanrahan, Esquire, Groom Law Group, Chartered, Washington DC, for defendant United Healthcare Corp., k/n/a United Health Group, Inc.

Edward S. Wardell, Esquire, Raymond Quaglia, Esquire, Kelley, Wardell & Craig, LLP, Haddonfield, NJ, for defendant Horizon Healthcare Services, Inc., d/b/a Horizon Blue Cross Blue Shield of New Jersey.

OPINION

SIMANDLE, District Judge.

I. INTRODUCTION

This matter is presently before the Court on plaintiff's motion to remand this action to state court [Docket Item 13-1], based on a lack of federal jurisdiction. Also pending before this Court is defendants' motion to dismiss plaintiffs' Complaints [Docket Item 13-1], which will be addressed, if necessary, in a later Opinion, if this Court determines that federal question jurisdiction exists over plaintiffs' complaints under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). On January 28, 2002, this Court consolidated six cases¹ for the purpose of deciding the remand and, if necessary, the dismissal motions currently pending. Oral argument was heard on the remand issue on January 25, 2002 and April 4, 2002.

The specific issue presented by this remand motion is whether plaintiffs' state law unjust enrichment claims against their healthcare insurers, which allege that the subrogation clauses in their employee benefit health care contracts were made void and unenforceable by the New Jersey Supreme Court's decision in Perreira v. Rediger, 169 N.J. 399, 778 A.2d 429 (2001), are within federal court jurisdiction under Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"), and therefore properly removed by the defendants to federal court. Essentially, this Court must determine whether the monies plaintiffs now seek, that is the monies paid back to the defendants from plaintiffs' tort recoveries pursuant to the subrogation provisions in their ERISA plans, are "benefits due" under those plans, within the meaning of Section 502(a)(1)(B). Plaintiffs assert that the defendants have no valid right to subrogation from plaintiffs' tort recoveries under New Jersey law, and that the defendants' enforcement of the health care plans' subrogation provisions amounted to the unjust enrichment of the defendants contrary to New Jersey law.

For the reasons stated herein, the Court finds that plaintiffs' unjust enrichment claims are claims for "benefits due" under their ERISA plans, and therefore their state law claims are claims within Section 502(a)(1)(B) of ERISA and were properly removed to federal court. Plaintiffs' motion to remand this action and the consolidated cases to the Superior Court of New Jersey, Camden County, [Docket Item 13-1], and to the other originating Superior Courts of New Jersey, will therefore be denied.

II. ANALYSIS

It must be acknowledged that this case presents a conceptually unclear area of law. Plaintiffs' motion to remand this action to state court requires this Court to determine whether there is federal removal jurisdiction over plaintiffs' claims of unjust enrichment, originally filed in the Superior Court of New Jersey, Camden County. To make that decision this Court must determine whether plaintiffs' claims fall within the purview of ERISA's civil enforcement provision, Section 502(a)(1)(B), and therefore whether plaintiffs' unjust enrichment claims are completely preempted by federal law.² The second, defendants' motion to dismiss, which will be addressed in a separate opinion only after federal jurisdiction is established, requires the Court to decide whether plaintiffs' state common law unjust enrichment claims must be dismissed as completely preempted under Section 502(a)(1)(B) or, alternatively, whether the claims are preempted as conflicting under Section 514(a).

Plaintiffs' Complaints allege only state law unjust enrichment claims, and plaintiffs assert that their cases must be remanded to state court for adjudication under New Jersey law, since no federal question jurisdiction exists under 28 U.S.C. § 1331, no federal diversity jurisdiction exists under 28 U.S.C. § 1332, and therefore no basis for removal under 28 U.S.C. § 1441 exists. Defendants argue that the cases were properly removed to federal court because plaintiffs are ERISA plan "participant[s] or beneficiar[ies]" who are seeking "to recover benefits due to [them] under the terms of [their] plan, [or] to enforce [their] rights under the terms of the plan" and therefore their unjust enrichment claims are completely preempted by the civil enforcement provision of ERISA.

A. The "Well-Pleaded Complaint" Rule

The Supreme Court in Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), held that "where there is no diversity of citizenship between the parties . . . the propriety of removal turns on whether the case falls within the original `federal question' jurisdiction of the United States District Courts." See Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 271 (3d Cir.2001). Defendants do not contest that there is no diversity of citizenship between the parties in these consolidated cases.

The "well-pleaded complaint" rule provides that federal question jurisdiction exists only when an issue of federal law appears on the face of the complaint. See Pryzbowski, 245 F.3d at 271. Anticipation of a federal defense by the defendant does not create federal jurisdiction. See id. Complete preemption, an exception to the "well-pleaded complaint" rule, occurs when Congress so pervasively occupies a particular field (here, benefit enforcement claims under ERISA) that "any complaint that comes within the scope of [a] federal cause of action necessarily `arises under' federal law," and is completely preempted. Pryzbowski, 245 F.3d at 271 (quoting Franchise Tax Bd., 463 U.S. at 24, 103 S.Ct. 2841, 77 L.Ed.2d 420). The United States Supreme Court, in Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), held that Congress had intended that Section 502(a) of ERISA should have extraordinary preemptive force and that "causes of action within the scope of the civil enforcement provisions of § 502(a) [are] removable to federal court." Metropolitan Life, 481 U.S. at 66, 107 S.Ct. at 1542. Essentially, complete preemption functions to recharacterize plaintiffs' state law claims into federal claims for the purpose of removal, thereby creating federal removal jurisdiction.

B. Complete Preemption of Claims Against HMOs Under Section 502(a)(1)(B) of ERISA

Section 502(a)(1)(B) provides, in relevant part:

(a) Persons Empowered to Bring 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.

Section 502(a)(1)(B); 29 U.S.C. § 1132(a)(1)(B). There is no dispute that plaintiffs are all participants or beneficiaries of an ERISA plan. All parties also acknowledge that the third provision in Section 502(a)(1)(B), "to clarify . . . rights to future benefits under the terms of the plan," does not apply here.

The Third Circuit most recently addressed the issue of ERISA preemption under Section 502(a)(1)(B) in Pryzbowski, and articulated the test to be applied when determining whether complete preemption exists:

[T]he ultimate distinction to make for purposes of complete preemption is whether the claim challenges the administration of or eligibility for benefits, which falls within the scope of § 502(a) and is completely preempted, or the quality of medical treatment performed, which may be the subject of a state action.

245 F.3d at 273. This test clarified the distinctions made by the Third Circuit in previous cases in this area, which used a quality/quantity of care analysis. See Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d Cir.1995)(quality of...