Doyle v. Blue Cross Blue Shield of Illinois

• Decision Date: 05 June 2001
• Docket Number: No. 00 C 6851.,00 C 6851.
• Parties: William DOYLE, Jr., et al., Plaintiffs, v. BLUE CROSS BLUE SHIELD OF ILLINOIS, Defendant.
• Court: U.S. District Court — Northern District of Illinois

149 F.Supp.2d 427

William DOYLE, Jr., et al., Plaintiffs, v. BLUE CROSS BLUE SHIELD OF ILLINOIS, Defendant.

No. 00 C 6851.

United States District Court, N.D. Illinois, Eastern Division.

June 5, 2001.

COPYRIGHT MATERIAL OMITTED

Clinton A. Krislov, Michael R. Karnuth, Krislov & Associates, Ltd., Chicago, IL, for Plaintiffs.

Helen E. Witt, Kirkland & Ellis, Chicago, IL, John E. Thies, Barbara J. Mann, Webber & Thies, Urbana, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

GOTTSCHALL, District Judge.

Plaintiffs sued defendant in the Circuit Court of Cook County Illinois, County Department —Chancery Division. Defendant removed the action to this court. Plaintiffs have moved this court to remand the case to the Illinois state court. Plaintiffs have also moved to strike a surreply filed by the defendants in connection with the motion to remand. For the reasons set forth below, plaintiffs' motion to strike is denied, but plaintiffs' motion to remand is granted.

Background

Plaintiffs originally filed this class action lawsuit in the Circuit Court of Cook County Illinois on September 28, 2000. The plaintiffs subsequently filed an amended complaint with that court. Both the original and the amended complaints asserted only state law claims. The amended complaint sought recovery under the Illinois "common fund" doctrine and under the Illinois Consumer Fraud and Deceptive Practices Act. On November 1, 2000, the defendant filed a Notice of Removal with this court, claiming that this court has subject matter jurisdiction over plaintiffs' claims under the "federal question" jurisdictional statute, 28 U.S.C. § 1331. Plaintiffs then filed a motion to remand, arguing that removal was inappropriate because this court lacks subject matter jurisdiction over plaintiffs' claims.

The dispute before the court concerns the Federal Employees Health Benefits Act ("FEHBA"), 5 U.S.C. § 8901 et seq., a federal statute that governs certain aspects of health benefit plans provided to federal employees and their dependents. One of the named plaintiffs in this case, Jose S. Cruz, was enrolled in, and a member of, the Service Benefit Plan ("Plan"), which is one of the federal government's employee health benefits plans.¹ The Plan was created by a federal government contract between the U.S. Office of Personnel Management ("OPM") and the Blue Cross and Blue Shield Association ("Carrier") on behalf of several Blue Cross and Blue Shield plans pursuant to FEHBA. The Plan is underwritten by the participating Blue Cross and Blue Shield plans which administer it on behalf of the Carrier and are referred to as Local Plans. Defendant Blue Cross Blue Shield of Illinois, a Division of Health Care Service Corporation ("HCSC"), is the local plan that underwrites the Plan with respect to Cruz.

The plaintiffs were injured in an accident and received treatment through health benefit plans administered by Blue Cross Blue Shield of Illinois. The named plaintiffs, together with other purported class members, retained counsel to prosecute claims against third-party tortfeasors arising out of the incident that caused plaintiffs' injuries. Plaintiffs and the other purported class members obtained a recovery, and incurred attorney's fees and other related costs in connection with that recovery. Defendant did not assist plaintiffs or their counsel in obtaining the third-party recovery.

Defendant asserted a lien against any recoveries plaintiffs might obtain, pursuant to its reimbursement rights under the Plan. Defendant, however, refused to provide plaintiffs a full set-off for attorney's fees and costs incurred in obtaining the third-party recovery. Plaintiffs contend that the set-off offered by defendant is insufficient and violates Illinois' common fund doctrine. Defendant responds by arguing that it is entitled under the terms of the Plan to a full reimbursement of any benefits paid under the Plan, without a set-off for fees or costs, in the event that an enrollee recovers from a third party. Plaintiffs filed suit in state court. Plaintiffs' amended state court complaint alleged that defendant's refusal to provide a full set-off violates the Illinois common fund doctrine, and that by refusing to follow the dictates of that doctrine, defendant also violated the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq.

Analysis

Defendant HCSC may remove this case to this court only if the federal district courts would have original jurisdiction over the action. See 28 U.S.C. § 1441; Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Defendant does not contend that diversity jurisdiction exists. Thus, removal is appropriate only if the court has federal question jurisdiction over the suit.

The general rule is that a plaintiff is the master of his own complaint and can avoid federal question jurisdiction by pleading exclusively state law claims. See Caterpillar, 482 U.S. at 392, 107 S.Ct. 2425; Franchise Tax Bd. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); Bastien v. AT&T Wireless Services, Inc., 205 F.3d 983, 986 (7th Cir. 2000). Defendant argues that two exceptions to the well-pleaded complaint rule apply in this case, making removal appropriate despite the fact that plaintiff's complaint alleges only state law claims.

Complete Preemption

One recognized exception to the well-pleaded complaint rule is the "complete preemption" doctrine. This doctrine applies where "Congress has so completely preempted a particular area that no room remains for any state regulation and the complaint would be `necessarily federal in character.'" Bastien, 205 F.3d at 986 (citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). Where this is the case, removal to federal court is proper. See id. Complete preemption is to be distinguished from "ordinary preemption" (or "partial preemption") in which a federal law and a state law conflict, but Congress has not clearly indicated that it intends to completely preempt the particular area. In the typical ordinary preemption case, a defendant would raise a federal law as a defense to plaintiff's state law claim. In these circumstances, the Supreme Court has clearly stated that federal question jurisdiction does not exist under the well-pleaded complaint rule, making removal improper. See Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425; Metropolitan Life, 481 U.S. at 63, 107 S.Ct. 1542. Complete preemption, by contrast, is not only a defense, but also provides a basis for federal jurisdiction, making removal proper.

Determining whether a field is completely preempted has been described as a two-part inquiry. First, Congress must have clearly manifested an intent to preempt the field. Second, the court must also find that the plaintiffs' claims fit within the "civil enforcement provisions" provided by the federal statute. Goepel v. National Postal Mail Handlers Union, 36 F.3d 306, 311 (3d Cir.1994) (relying on a comparison of Metropolitan Life and Franchise Tax Bd.); see also Moran v. Rush Prudential HMO, Inc., 230 F.3d 959, 967 (7th Cir.2000) (in ERISA case, plaintiff's claims are completely preempted only if they fall within the scope of an ERISA provision that plaintiff can enforce). In this case, the court finds that Congress has clearly manifested an intent that FEHBA completely preempt certain state law causes of action in the area of federal employee benefit plans. The court, however, concludes that the civil enforcement provisions of the FEHBA do not protect the same interests that plaintiffs seek to vindicate through their state law claims.

To date, the Supreme Court has found two federal laws that completely preempt certain state causes of action: the Labor Management Relations Act (LMRA), and the Employee Retirement Income Security Act (ERISA). Prior to 1998, most lower courts addressing the issue determined that the FEHBA did not completely preempt state law in the area of health benefits for federal employees. See Ramirez v. Humana, Inc., 119 F.Supp.2d 1307, 1310 (M.D.Fla.2000) (providing examples). Since Congress amended the FEHBA in 1998, however, the majority of courts addressing the issue have concluded that Congress has now clearly manifested an intent to preempt state law regarding the FEHBA plans.

Prior to 1998, the preemption provision of FEHBA read:

The provisions of any contract under this chapter which relate to the nature or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance or plans to the extent that such law or regulation is inconsistent with such contractual provisions.

Goepel, 36 F.3d at 312 (quoting pre-1998 language and finding that it did not completely preempt state law). The courts concluding, prior to 1998, that the FEHBA did not completely preempt state law frequently relied on the last, limiting phrase of this provision: "to the extent that such law or regulation is inconsistent with such contractual provisions." These courts often compared this restrictive language to the broader preemptive provisions of ERISA. See, e.g., Goepel, 36 F.3d at 312-13 & n. 7; Cyr v. Kaiser Foundation Health Plan of Texas, 12 F.Supp.2d 556, 567-68 (N.D.Tex.1998); Arnold v. Blue Cross & Blue Shield of Texas, Inc., 973 F.Supp. 726, 732 (S.D.Tex.1997); see also Sarkis v. Heimburger, 933 F.Supp. 828, 831 (E.D.Mo.1996); Lambert v. Mail Handlers Benefit Plan, 886 F.Supp. 830, 835-36 (M.D.Ala.1995).

In 1998, however, Congress broadened the preemption provision, which now reads:

The terms of any contract under this chapter which relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits) shall supersede and preempt any State or local law, or any...