Haller v. Kaiser Found. Health Plan of the North.

• Decision Date: 13 December 2001
• Docket Number: No. Civ. 01-759-JE.,Civ. 01-759-JE.
• Citation: 184 F.Supp.2d 1040
• Parties: Jennifer L. HALLER, Conservator and Guardian for Joseph A. Orekovich, Plaintiff, v. KAISER FOUNDATION HEALTH PLAN OF THE NORTHWEST, an Oregon corporation, et al., Defendants.
• Court: U.S. District Court — District of Oregon

184 F.Supp.2d 1040

Jennifer L. HALLER, Conservator and Guardian for Joseph A. Orekovich, Plaintiff, v. KAISER FOUNDATION HEALTH PLAN OF THE NORTHWEST, an Oregon corporation, et al., Defendants.

No. Civ. 01-759-JE.

United States District Court, D. Oregon.

December 13, 2001.

L. Paul Hart, Angela J. Hart, Oak Grove, OR, for plaintiff.

Ruth J. Hooper, Troy S. Bundy, Hoffman, Hart & Wagner, LLP, Portland, OR, for defendants.

ORDER

KING, District Judge.

Magistrate John Jelderks filed his Findings and Recommendation (# 11) on August 1, 2001 (the "F & R") and referred it to me on September 18, 2001. The matter is now before me pursuant to 28 U.S.C. § 636(b)(1)(B) and Fed.R.Civ.P. 72(b).

When either party objects to any portion of the Magistrate's Findings and Recommendation, the district court must make a de novo determination of that portion of the Magistrate's report. See 28 U.S.C § 636(b)(1)(C); McDonnell Douglas Corp. v. Commodore Business Machines, Inc., 656 F.2d 1309, 1313 (9th Cir.1981), cert. denied, 455 U.S. 920, 102 S.Ct. 1277, 71 L.Ed.2d 461 (1982).

Having given a de novo review of the issues raised in defendants' objections to the F & R, I find no error. Accordingly, I ADOPT the F & R(# 11) of Magistrate Jelderks.

Plaintiff's motion to remand (# 5) is granted. Defendants' motion to strike (# 8) is denied. Defendants' motion to dismiss (# 1) is denied without prejudice.

IT IS SO ORDERED.

FINDINGS AND RECOMMENDATION

JELDERKS, United States Magistrate Judge.

Plaintiff Jennifer Haller, in her capacity as conservator and guardian for Joseph Oreskovich (collectively referred to as Plaintiff), brings this medical malpractice action against defendants Kaiser Foundation Health Plan of the Northwest; Kaiser Foundation Hospitals; Northwest Permanente, PC; and Dr. Richard Dykstra. At issue is defendants' decision to treat Plaintiff with lithium over a period of several years, and whether Plaintiff suffered ill effects from this course of treatment or from defendants' failure to properly monitor blood levels or otherwise to provide appropriate medical care.

Pending before the court is Plaintiff's motion to remand to state court. I recommend that the motion be granted because this court lacks subject matter jurisdiction over this action.

DISCUSSION

This action was filed in the Multnomah County Circuit Court for the State of Oregon in August 2000. Nine months later, defendants removed this action to federal court. Plaintiff moves to remand, arguing that the removal was untimely, and thus procedurally defective, and that this court lacks subject matter jurisdiction as well. I recommend that this action be remanded because the court lacks subject matter jurisdiction.

A. Procedural Defects

Plaintiff contends the removal notice is untimely because it was filed more than 30 days after defendants first learned the basis for the claims that defendants now contend confer federal jurisdiction. See 28 USC § 1446(b). Defendants counter that the motion to remand is itself untimely, because it was filed more than 30 days (33 to be precise) after the Notice of Removal was filed, hence any procedural defects regarding the removal have been waived. See 28 USC § 1447(c). See also Maniar v. FDIC, 979 F.2d 782 (9th Cir.1992) (district court lacks discretion to sua sponte remand removed case, for procedural defects, after the period established by § 1447(c) has expired).

Resolution of that issue turns on whether FRCP 6(e) applies to a motion to remand.¹ The parties have not cited any Supreme Court or Ninth Circuit authority addressing this question,² and there is a split of authority among the handful of published decisions from other courts. Cf. Rashid v. Schenck Const. Co., 843 F.Supp. 1081, 1084 (S.D.W.V.1993) (FRCP 6(e) does not apply to a remand motion) with Chott v. Cal Gas Corp., 746 F.Supp. 1377, 1377 (E.D.Mo.1990) (rule does apply).

The court need not decide this question, though, if the court lacks subject matter jurisdiction over the removed claims (without regard to any procedural defects). Jurisdictional defects, unlike defects in the removal procedure, are never waived. See 28 USC § 1447(c); Caterpillar, Inc. v. Lewis, 519 U.S. 61, 69, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). In addition, even if the procedural defects are found to have been waived, the court still must determine whether it has subject matter jurisdiction. Accordingly, I will address the jurisdictional question first.

B. Subject Matter Jurisdiction

The Notice of Removal appears to allege that federal jurisdiction is premised upon 28 USC §§ 1331 and 1441(b), 1442(a)(1), and 1446(b). The last is a procedural statute that furnishes no independent basis for jurisdiction, so I will focus solely on the former provisions.

Defendants contend this court has jurisdiction because the medical care in question was furnished pursuant to an employee benefits program governed by the Federal Employees Health Benefits Act (FEHBA), 5 USC § 8901, et seq. Plaintiff's motion to remand asserts that he left the military many years ago and his medical coverage during the period in question (1995 through 1998) was actually furnished by a private employer, Reed College.

Defendants, as the removing party, bear the burden of establishing any disputed jurisdictional facts. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). Defendants have not filed the relevant insurance policy with this court. Nevertheless, for purposes of this motion only, I accept defense counsel's representation, as an officer of the court, that the medical care in question was furnished pursuant to a federal employee medical insurance policy and not a policy provided by Reed College.

1. Section 1442(a)(1) — federal defendant

Defendants' first ground for removal is 28 USC § 1442(a)(1):

(a) A civil action or criminal prosecution commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending:

(1) The United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office or on account of any right, title or authority claimed under any Act of Congress for the apprehension or punishment of criminals or the collection of revenue.

The United States is not a defendant, nor is any agency or officer thereof a defendant. Defendants argue that because they were supplying a product or service pursuant to a contract with the federal government, they are "persons acting under an officer of an agency of the United States." I disagree.

A number of lower courts, often with little discussion, have assumed that a private party such as a defense contractor (to cite one example) may be a "person acting under" an officer of the United States. That is one possible interpretation of that phrase, but not the only permissible interpretation.

Those courts that have deemed private individuals to be "acting under" a federal officer have required that the federal officer have "direct and detailed control over the defendant." The Agent Orange cases are illustrative. In Ryan v. Dow Chemical Co., 781 F.Supp. 934 (E.D.N.Y.1992), Judge Weinstein held that the manufacturers were not acting under direct and detailed control of a federal official, because the government simply purchased off-the-shelf herbicides that the company had previously developed without government intervention. The composition of the product, and the manner in which it was produced, was not determined by the government, which was simply buying the product. Id. at 950. To the extent the contract specifications incorporated a formula, it was one supplied by the manufacturer. The Fifth Circuit reached a different result in Winters v. Diamond Shamrock Chemical Co., 149 F.3d 387 (5th Cir.1998). That court found that Agent Orange was not an off-the-shelf product, but one specially made for the government. Commercial versions of the product were diluted with inert ingredients, but the government had insisted that its Agent Orange be undiluted. The Fifth Circuit said that was sufficient to distinguish Ryan.

Turning to our case, the First Claim, for malpractice, does not implicate any conduct "directly controlled by a federal officer." From the limited record before this court, the government did not tell defendants how to treat this patient. At most, the federal government had some input into what medical conditions are covered by the insurance policy, but that is not at issue in the first claim.

The Second Claim is more problematic, because it goes to issues such as inadequate staffing, giving doctors financial incentives to withhold necessary treatment, restricting a patient's ability to see a psychiatrist without Kaiser's approval, forcing patients to obtain psychiatric care from other (public) providers in order to minimize costs to Kaiser, etc. However, defendants have not established that any federal official ordered Kaiser to do this. As I understand the facts, Kaiser and other prospective health care providers annually submit a bid package in which they offer to provide certain services to federal employees and dependents in return for a fixed payment from the federal government. With limited exceptions, it does not appear that the Office of Personnel Management or other federal officials tell Kaiser how to run its hospital, or staff it, or how to compensate its doctors or what incentives to offer doctors to keep costs down. Kaiser decides that on its own.³ Cf. Pegram v. Herdrich, 530 U.S. 211, 223-27, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000) (the HMO is not the ERISA plan, but a separate entity that pre-dates the plan, and the manner in which the HMO compensates its doctors is not governed by ERISA).

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