Hanshaw v. Life Ins. Co. of N. Am.
| Decision Date | 22 October 2014 |
| Docket Number | CIVIL ACTION NO: 3:14-CV-00216-JHM |
| Parties | PAMELA HANSHAW PLAINTIFF v. LIFE INSURANCE COMPANY OF NORTH AMERICA DEFENDANT |
| Court | U.S. District Court — Western District of Kentucky |
This matter is before the Court on Plaintiff's Motion to Remand [DN 7] the present action to the Jefferson Circuit Court. Fully briefed, this matter is ripe for decision. For the following reasons, the Plaintiff's motion is DENIED.
Plaintiff, Pamela Hanshaw, was employed by St. Claire Medical Center, Inc.1 ("St. Claire"), a non-profit hospital. St. Claire established and funded a group long-term disability ("LTD") insurance policy for its eligible employees. The LTD policy was issued and underwritten by Defendant, Life Insurance Company of North America ("LINA"). (Compl. [DN 1-2] ¶ 9.) Plaintiff, who was an eligible participant in the policy, submitted a claim to LINA for the monthly disability income benefit, after allegedly becoming disabled. (Id. ¶ 11.) Defendant denied Plaintiff's claim. (Id. ¶ 12.)
On February 5, 2014, Plaintiff filed this action in Jefferson Circuit Court against Defendant, alleging claims for breach of contract; breach of the duty of good faith and fair dealing; violation of Kentucky Unfair Claims Settlement Practices Act, KRS 304.12-230 ("UCSPA"); violation of Kentucky Consumer Protection Act, KRS 367.170; negligence per sefor using opinions of medical personnel who are not licensed in Kentucky in violation of KRS 311.560; unjust enrichment; and failure to timely pay the claim in violation of KRS 304.12-235. (Compl. [DN 1-2] ¶¶ 25-51.)
On March 4, 2014, Defendant removed this action from the Jefferson Circuit Court to this Court alleging both diversity jurisdiction and federal question jurisdiction. Defendant contends removal is proper because Plaintiff's claims are governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). (Def.'s Notice Removal [DN 1] ¶¶ 3, 7.) Defendant maintains that while Plaintiff's Complaint did not expressly reference ERISA, the cause of action asserted in the Complaint clearly involves an ERISA plan and is subject to, and preempted by, ERISA, and is therefore properly removable.
On March 13, 2014, Plaintiff filed this Motion to Remand [DN 7] the case to Jefferson Circuit Court arguing that this Court lacks subject matter jurisdiction. Plaintiff alleges that Defendant's Notice of Removal is defective, and maintains that the Complaint alleges only state law claims and makes no mention of ERISA. Further, Plaintiff contends that the facts as stated in the Complaint do not provide a basis for complete preemption under ERISA, and cannot therefore form the basis of subject matter jurisdiction for removal. Additionally, Plaintiff moves to remand on the ground that her claims are exempt from ERISA because the plan at issue is a "church plan" that is exempted from ERISA's coverage pursuant to 29 U.S.C. §§ 1003(b)(2), 1002(33). In response to the diversity jurisdiction basis for removal, Plaintiff asserts that Defendant has failed to demonstrate that the amount-in-controversy exceeds $75,000.
Removal to federal court from state court is proper for "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. §1441(a). One category of cases of which district courts have original jurisdiction is "federal question" cases: cases "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. "Ordinarily, determining whether a particular case arises under federal law turns on the well-pleaded complaint rule[,]" i.e., whether a federal question "necessarily appears in the plaintiff's statement of [her] own claim." Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004) (internal quotation marks omitted). Thus, "the existence of a federal defense normally does not create" federal-question jurisdiction, id., and "a defendant may not [generally] remove a case to federal court unless the plaintiff's complaint establishes that the case 'arises under' federal law," id. (quoting Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10 (1983)) (internal quotation marks omitted).2
However, complete preemption is an exception to the well-pleaded complaint rule: "'when a federal statute wholly displaces the state-law cause of action through complete pre-emption,' the state claim can be removed." Davila, 542 U.S. at 207 (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003)). Removal is permitted in this context because "[w]hen the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law." Beneficial Nat'l Bank, 539 U.S. at 8. In Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58 (1987), the Supreme Court held that the complete preemption exception to the well-pleaded complaint rule applies to claims within the scope of ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). Metro. Life Ins., 481 U.S. at 66-67.
ERISA § 502(a)(1)(B) provides:
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.
29 U.S.C. § 1132(a)(1)(B). Therefore, in order to be subject to complete preemption, and properly removable to federal court, the state law claim must be brought by a participant or beneficiary "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," as provided in § 1132(a)(1)(B). See Barrow v. Aleris Intern, No. 1:07-CV-110-JHM, 2007 WL 3342306, at *2 (W.D. Ky. Nov. 7, 2007).
Plaintiff filed this Motion to Remand [DN 7] the case to state court arguing that this Court lacks subject matter jurisdiction. Plaintiff alleges that the removal notice is defective because Defendant failed to provide sufficient factual support for its allegation that ERISA governs Plaintiff's claims. Further, Plaintiff maintains that the Complaint alleges only state law claims against Defendant and that Defendant failed to prove Plaintiff's claims are subject to complete preemption so as to avoid the well-pleaded complaint rule. Additionally, Plaintiff contends that even if the LTD plan constituted an ERISA plan, it is exempt from ERISA as a "church plan," and as a result, the case should be remanded to state court.
Defendant disagrees, contending that it specifically alleged facts establishing that Plaintiff's claims are governed under ERISA. Further, Defendant argues that the LTD policy is an ERISA employee welfare benefit plan. Defendant maintains that because Plaintiff's Complaint asserts claims seeking to recover benefits under that plan, Plaintiff's claims are completely preempted by ERISA. Furthermore, Defendant maintains that the LTD policy is nota church plan. Defendant contends that it properly removed Plaintiff's claims to federal court, and therefore, Plaintiff's Motion to Remand should be denied.
In determining whether removal of Plaintiff's claims to federal court is proper, the Court must determine as an initial matter whether Defendant's Notice of Removal was sufficient to establish grounds for removal. The Court must then determine whether the LTD insurance policy is an ERISA plan, and if so, whether ERISA completely preempts Plaintiff's state law claims. Lastly, the Court must determine whether the LTD policy is a church plan exempt from ERISA.
Plaintiff argues that Defendant's Notice of Removal is defective because it lacks factual allegations and instead alleges in conclusory terms the basis for federal jurisdiction. See, e.g., Thomas v. Burlington Indus., Inc., 763 F. Supp. 1570, 1576 (S.D. Fla. 1991); Bryant v. Blue Cross & Blue Shield of Ala., 751 F. Supp. 968, 969 (N.D. Ala. 1990) (). However, the Notice of Removal in this case is distinguishable from the Thomas and Bryant notices of removal because it contains allegations of fact that the LTD plan is an employee welfare benefit plan, which are governed by ERISA. (Def.'s Notice Removal [DN 1] ¶¶ 3, 7.) Thus, Defendant's Notice of Removal in this case contains more than a "bare-bones contention" that the action is governed by ERISA and is sufficient to establish grounds for removal.
Moreover, the removal statute requires that a notice of removal merely contain "a short and plain statement of the grounds for removal." 28 U.S.C. § 1446(a). This statute has been interpreted to mean that the same liberal rules testing the sufficiency of a pleading should alsoapply to evaluating the sufficiency of a defendant's notice of removal. See, e.g., Charter Sch. of Pine Grove, Inc. v. St. Helena Parish Sch. Bd., 417 F.3d 444, 447 (5th Cir. 2005); White v. Humana Health Plan, Inc., No. 06 C 5546, 2007 WL 1297130, at *1 (N.D. Ill. May 2, 2007) (citing 14C Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3733 (3d ed. 2006)) ("The court need only be provided with the facts from which removal jurisdiction can be determined."). Thus, Plaintiff's argument that the Notice of Removal is defective fails.
Congress enacted ERISA to "protect . . . the interests of participants in employee benefit plans and their beneficiaries" by setting out substantive regulatory requirements for employee benefit plans and "providing for appropriate remedies, sanctions, and ready access to the Federal...
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