Greenbaum v. Clarksville Health Sys., G.P.
| Decision Date | 06 May 2021 |
| Docket Number | No. 3:21-cv-00030,3:21-cv-00030 |
| Parties | JEREMY GREENBAUM, and CHRISTINA MORTON, on behalf of themselves and all those similarly situated, Plaintiffs, v. CLARKSVILLE HEALTH SYSTEM, G.P., PROFESSIONAL ACCOUNT SERVICES, INC., Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
Plaintiffs Jeremy Greenbaum and Christina Morton, individually and on behalf of a putative class, originally brought this action in state court against Defendants Clarksville Health Systems, G.P. ("Clarksville Health") and Professional Account Services, Inc. ("PASI") for allegedly engaging in "unlawful, unfair, and predatory hospital lien and debt collection practices" under Tennessee law.1 (Doc. No. 1-3 ¶ 1). Defendants then filed a Notice of Removal (Doc. No. 1) asserting that this case implicates a substantial question of federal law under the Medicare Act. Now before the Court is Plaintiffs' Motion to Remand (Doc. No. 20), to which Defendants filed a response in opposition (Doc. No. 23), and Plaintiffs replied (Doc. No. 24). For the following reasons, Plaintiffs' Motion to Remand will be granted.
Clarksville Health has contracts with health insurance providers like Medicare, the Veteran's Administration ("VA"), and Amerigroup Community Care ("Amerigroup") to treat insured patients at reduced rates. (Doc. No. 1-3 ¶¶ 3, 25, 33). But according to the operative Complaint, when Clarksville Health determines that a third party may be liable for a patient's injuries (i.e. if another party was involved in an automobile accident) it "will refuse to submit that patient's discounted medical bills to the patient's health insurance provider even when [Clarksville Health] knows the patient has valid health insurance at the time treatment is rendered." (Id. ¶ 3). Instead, Clarksville Health enlists PASI (a debt collection corporation) to file non-possessory hospital liens2 against the debt for amounts that "far exceed the negotiated reimbursement rates [Clarksville Health] would receive if the patient's medical bills were submitted to his or her health insurance provider[.]" (Doc. No. 1-3 ¶ 4). This business practice "result[s] in such patients paying more for treatment than they are contractually required to pay." (Id.). The Complaint further alleges that Clarksville Health "employs this business model under the belief that it if 'holds out' on submitting the medical bills to the patient's health insurance provider, [Clarksville Health] will ultimately receive a higher reimbursement rate . . . when the patient attempts to recover from the third party and/or its insurance provider." (Id. ¶ 5).
In October 2019, Greenbaum received emergency medical services at the Tennova Healthcare - Clarksville hospital ("Hospital") for injuries he sustained in an automobile accident,and he incurred a debt to Clarksville Health (the Hospital's owner) for his treatments. (Id. ¶¶ 1, 14, 21, 26). The same happened to Morton in May 2020. (Id. ¶ 29, 34). At the time of their treatments, both Plaintiffs provided their valid health insurance information to Clarksville Health. (Id. ¶¶ 22, 30). Greenbaum had health insurance coverage through Medicare and the VA, and Morton had coverage through Medicare and Amerigroup. (Id. ¶¶ 23, 31). But instead of submitting Plaintiffs' medical bills to Plaintiffs' insurance providers at the contractual, discounted rate, Clarksville Health instructed PASI to file hospital liens against those debts for the full, non-discounted amount of treatment. (Id. ¶¶ 26, 34). As a result of these allegedly illegal hospital liens, Plaintiffs filed this action against Defendants in the Chancery Court for Montgomery County, Tennessee, asserting the following state-law causes of action: tortious interference with business relationship (Count I), declaratory judgment that the liens violate the Tennessee Hospitals' Liens Act ("HLA"), Tenn. Code. Ann. § 29-22-101, et seq. (Count II), breach of contract (Count III), request to quash or reduce the liens (Count IV), and violation of the Tennessee Consumer Protection Act ("TCPA") (Count V). (Id. ¶¶ 45-78).
On January 14, 2021, Defendants filed a timely Notice of Removal (Doc. No. 1) stating that this case is removable under 28 U.S.C. § 1441 because it implicates the Medicare Act and therefore arises under federal law within the meaning of 28 U.S.C. § 1331. Defendants also contend that the case may stay in federal court because the Court has supplemental jurisdiction under 28 U.S.C. § 1367. (Id. ¶ 6). In response, Plaintiffs filed a Motion to Remand (Doc. No. 1) arguing that the Medicare Act does not provide grounds for removal in this case.3
Because federal district courts only have original jurisdiction over civil actions "arising under the Constitution, laws, or treaties of the United States," 28 U.S.C. § 1331 (emphasis added), defendants sued in state court generally may remove the case to federal district court under 28 U.S.C. § 1441(a) if the case arises under federal law.4 See Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 324-25 (6th Cir. 2007). On the other hand, "[i]f the complaint relies only on state law, the district court generally lacks subject matter jurisdiction and the action is not removable." Palkow v. CSX Transp., Inc., 431 F.3d 543, 552 (6th Cir. 2005).
To determine whether a claim arises under federal law, courts apply what is commonly referred to as the "well-pleaded complaint rule." This rule provides that federal jurisdiction exists only in those cases in which a well-pleaded complaint (1) states a federal cause of action or (2) includes state-law claims that necessarily depend on a substantial and disputed federal issue.5 Id. at 550 (quoting Thornton v. SW Detroit Hosp., 895 F.2d 1131, 1133 (6th Cir. 1990)); see also Ohio ex rel. Skaggs v. Brunner, 629 F.3d 527, 530 (6th Cir. 2010). As its name suggests, the well-pleaded complaint rule requires courts to ignore potential defenses and look only to the face of the complaint to determine whether a federal question exists. See Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003). Ultimately, "the plaintiff [is] the master of the complaint" and she "maysimply avoid federal jurisdiction by relying exclusively on state law." Gentek, 491 F.3d at 325 (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99 (1987)).
"Most rules have exceptions, of course, and the well-pleaded complaint rule is no different." Dillon v. Medtronic, Inc., 992 F. Supp. 2d 751, 757 (E.D. Ky. 2014) (Thapar, J.). "It has two: complete preemption and artful pleading." Id. Regarding the first exception, "[i]f Congress intends that a federal statute should 'completely preempt' an area of state law, any complaint alleging claims [within] that area of state law is presumed to allege a claim arising under federal law." Palkow, 431 F.3d at 552 (citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64 (1987)); see also Loftis v. United Parcel Serv., Inc., 342 F.3d 509, 515 (6th Cir. 2003). "The complaint may thus be removed to federal court and will be treated as alleging a federal cause of action, notwithstanding that on its face, the . . . complaint alleges only a state-law cause of action." Id. Under the second exception, the artful-pleading doctrine, "plaintiffs may not avoid removal jurisdiction by artfully casting their essentially federal law claims as state-law claims." Mikulski, 501 F.3d at 560; see also Brunner, 629 F.3d at 530 ().
The party seeking removal has the burden of demonstrating that the claims arise under federal law, either through the well-pleaded complaint rule or one of its exceptions, and all doubts should be resolved against removal. See Eastman v. Marine Mech. Corp., 438 F.3d 544, 549 (6th Cir. 2006) (citations omitted). And if "a plaintiff believes that removal is improper because the complaint does not arise under federal law, the plaintiff may challenge removal, including by moving to remand the matter to state court." Gentek, 491 F.3d at 325.
As explained above, "[a] complaint arises under federal law if it: (1) states a federal cause of action; (2) includes state-law claims that necessarily depend on a substantial and disputedfederal issue; (3) raises state-law claims that are completely preempted by federal law; or (4) artfully pleads state-law claims that amount to federal-law claims in disguise." Brunner, 629 F.3d at 530. The first option does not apply here because Defendants admit that "Plaintiffs have not brought federal claims in this case." (Doc. No. 1 ¶ 4). And the fourth option is not at issue because Defendants do not invoke the artful-pleading doctrine.
Instead, Defendants argue that this case should stay in federal court because: (1) the Complaint's allegations necessarily depend on a substantial and disputed federal issue under the Medicare Act; (2) the Medicare Act completely preempts Plaintiffs' claims;6 and (3) the Court should exercise its supplemental jurisdiction now that the case has been removed. The Court will address each of these arguments below.
The Complaint alleges that Defendants committed two overarching wrongful acts. One is a substantive act, namely that Defendants violated Tennessee's HLA by filing hospital liens in excess of negotiated rates. Plaintiffs also allege that Defendants committed a procedural violation by asserting a lien on their treatment instead of first billing Medicare. (See Doc. No. 1-3 at ¶¶ 19, 28, 36). Defendants maintain that this second allegation necessarily depends on the resolution of a substantial question of federal law because specific Medicare regulations and the Medicare Secondary Payer Manual ("MSP Manual")7 provide that "in situations such as these involving a motor-vehicle...
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