Good Samaritan Hosp. L.P. v. Multiplan, Inc.
| Docket Number | 22-cv-02139-AMO |
| Decision Date | 15 September 2023 |
| Parties | GOOD SAMARITAN HOSPITAL, L.P., Plaintiff, v. MULTIPLAN, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Before the Court is Plaintiff's Motion to Remand. The matter is fully briefed and suitable for decision without oral argument. See Civ. L.R. 7-6. Accordingly, the hearing set for July 6, 2023, was vacated. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing the Court hereby rules as follows.
Plaintiff Good Samaritan Hospital, L.P. (“Good Samaritan”) is a 474-bed acute care hospital in San Jose, California, that operates a 24-hour emergency room and includes a state-of-the art NICU center for the care of infants. Second Amended Complaint (“SAC”) ¶ 4. Good Samaritan is a citizen of Tennessee and Delaware. Defendant MultiPlan, Inc. (“MultiPlan”), is a health network provider that arranges, manages, and offers national preferred provider organization plans. SAC ¶ 5. MultiPlan is a citizen of New York. Defendant Trustmark Health Benefits, formerly known as CoreSource, Inc. (“Trustmark”) is a third-party administrator of healthcare benefits who acts on behalf of employers to administer health care benefits in accordance with the terms of the health plans and the terms of the contracts between plans and providers. SAC ¶ 6. Trustmark is a citizen of both Illinois and Delaware. Altimetrik Corp. (“Altimetrik”) is a data and digital engineering corporation with Michigan citizenship.
MultiPlan and Good Samaritan operate in accordance with the MPI Participating Facility Agreement (the “Network Agreement”). SAC ¶ 16. Through this Network Agreement, Good Samaritan agreed to participate in MultiPlan's network and accept payment for services at discounted rates for Good Samaritan's otherwise applicable billed charges, in part based on the assurance that MultiPlan would ensure timely compensation to Good Samaritan in accordance with the terms of the Network Agreement for services rendered to members of the plans sold by MultiPlan. SAC ¶ 17. This case arises out of Defendants' alleged failures to honor and properly apply the Network Agreement. That is, Good Samaritan avers that Defendants have refused to properly pay for the medically necessary services provided to an infant patient. SAC ¶ 30.
Good Samaritan asserts that Defendants “fail[ed] to pay or cause payment for” medical services in excess of $970,000. SAC ¶ 3. Plaintiff alleges that the bill in question was underpaid, in part, because Defendants applied improper Line Item Disallowances (“LIDs”), unilaterally striking portions of Good Samaritan's charges. SAC ¶ 31. The Network Agreement prohibits such unilateral adjustments to billed charges. SAC ¶ 32. Good Samaritan also alleges that Defendants further underpaid the bill by improperly deeming the medical level of care provided by Good Samaritan, as purportedly non-medically necessary or justified, and then applying a lower rate than what the contract required for the medically necessary services. SAC ¶ 39.
Good Samaritan asserts ten contract-based state law causes of action against Defendants relating to purported breaches of the Network Agreement:
On February 8, 2022, Plaintiff Good Samaritan filed its initial complaint in the Santa Clara Superior Court against Defendants MultiPlan, Trustmark, and Altimetrik. ECF 1, Ex. D.
On April 4, 2022, Defendant Trustmark filed a notice of removal solely “on the basis of diversity jurisdiction under 28 U.S.C. § 1332,” with the consent of all other Defendants. ECF 1. The notice of removal alleged “complete diversity of citizenship” between the parties based on the assertion that “Plaintiff is a citizen of California,” “Trustmark is a citizen of Delaware and Illinois, Multiplan is a citizen of New York, and Altimetrik is a citizen of Michigan for removal and diversity purposes.” ECF 1, ¶ 2. At the time, no party contested removal.
Following some amendments to the pleadings, Plaintiff filed the instant Motion to Remand on May 19, 2023. ECF 92. Defendant Altimetrik filed an opposition brief (ECF 95),[1] which Trustmark joined (ECF 97).
Good Samaritan moves to remand on the basis that diversity of citizenship is lacking where it and Defendant Trustmark are both corporate citizens of the State of Delaware. ECF 92 at 5-7. Because diversity is not complete, Good Samaritan reasons, subject matter jurisdiction is lacking and the case should be remanded. Defendants counter that the case should not be remanded because federal subject matter jurisdiction exists based on federal question jurisdiction because the claims are completely preempted by ERISA.
A defendant may remove a class action from state to federal court by filing a notice of removal that lays out the grounds for removal. 28 U.S.C. § 1453(b); 28 U.S.C. § 1446(a). “A motion to remand is the proper procedure for challenging removal.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). Grounds for remand include either lack of subject matter jurisdiction or a procedural defect in the notice of removal. See, e.g., Smith v. Mylan Inc., 761 F.3d 1042, 1044 (9th Cir. 2014); Maniar v. F.D.I.C., 979 F.2d 782, 784-85 (9th Cir. 1992) (citing 28 U.S.C. § 1447(c)). The “strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper, and that the court resolves all ambiguity in favor of remand to state court.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (internal quotation marks omitted).
“Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant,” and “[a]bsent diversity of citizenship, federal-question is required.” Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987). Whether federal question jurisdiction exists “is governed by the ‘well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.'” Id. Thus, federal question jurisdiction cannot rest upon an actual or anticipated defense or counterclaim. Id.; Vaden v. Discover Bank, 556 U.S. 49, 60 (2009). Thus, an action can only be removed to federal court “where original federal jurisdiction exists” - “it is now settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption.” Id.
“Ordinarily, federal question jurisdiction does not lie where a defendant contends that a state-law claim is preempted by federal law.” Fossen v. Blue Cross & Blue Shield of Montana, Inc., 660 F.3d 1102, 1107 (9th Cir. 2011) (citations omitted). “But state-law claims may be removed to federal court if the ‘complete preemption' doctrine applies.” Id. (citations omitted). “ERISA § 502(a) sets forth a comprehensive civil enforcement scheme that completely preempts state-law causes of action within the scope of these civil enforcement provisions.” Id. (alterations and internal quotation marks omitted) (citing Aetna Health Inc. v. Davila, 542 U.S. 200, 208-09 (2004)). “Thus, [Section] 502 dictates whether a federal court can exercise jurisdiction over a particular claim for benefits.” Rudel v. Hawai'i Mgmt. All. Ass'n, 937 F.3d 1262, 1270 (9th Cir. 2019). “According to its terms, an action to recover benefits due under the terms of a plan to enforce rights under the terms of the plan, or to clarify rights to future benefits will be heard in a federal court.” Id. (simplified).
Under the test set out by the Supreme Court in Davila, ERISA completely preempts a state-law claim if: “(1) the individual could have brought his claim under this ERISA provision; and (2) no other independent legal duties are implicated by the defendant's actions.” Rudel, 542 U.S. at 1269 (citing Davila, 542 U.S. at 210). To show complete preemption, both elements must be met. Hansen v. Grp. Health Coop., 902 F.3d 1051, 1059 (9th Cir. 2018). The Court considers each element in turn.
The first prong of the Davila test asks “whether a plaintiff seeking to assert a state-law claim at some point in time, could have brought the claim under ERISA § 502(a)(1)(B).” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 947 (9th Cir. 2009) (simplified) (citing Davila, 542 U.S. at 210). As summarized by the Davila court, Section 502(a)(1)(B), otherwise known as ERISA's civil enforcement provision, provides that:
If a participant or beneficiary believes that benefits promised to him under the terms of the plan are not provided, he can bring suit seeking provision of those...
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