Healthtek Solutions, Inc. v. Fortis Benefits Ins.
| Citation | 274 F.Supp.2d 767 |
| Decision Date | 19 May 2003 |
| Docket Number | No. CIV.A. 2:03CV203.,CIV.A. 2:03CV203. |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | HEALTHTEK SOLUTIONS, INC., Plaintiff, v. FORTIS BENEFITS INSURANCE COMPANY Defendant. |
Michael Bruce Ware, Leonard Claro Heath, Jr., Jones Blechman Woltz & Kelly PC, Newport News, VA, for Plaintiff.
Robert Barnes Delano, Jr., Sands Anderson Marks & Miller PC, Richmond, VA, for Defendant.
Presently before the Court are the Defendant's Motion to Dismiss and the Plaintiff's Motion to Remand. In its Motion to Dismiss, Fortis Benefits Insurance Company1 ("Fortis") argues that the Plaintiff's claims are preempted by the Employment Retirement Income Security Act ("ERISA") and that the Plaintiff lacks standing to sue under ERISA. In its Motion to Remand, Healthtek Solutions, Inc. ("Healthtek") argues that federal subject matter jurisdiction is lacking and that removal was improper. For the reasons discussed below, the Court finds that it lacks subject matter jurisdiction and, therefore, will grant the Plaintiffs Motion to Remand. As the Court lacks jurisdiction, it does not reach the merits of the Defendant's Motion to Dismiss.
Healthtek is a small employer that contracted with Fortis to provide group health insurance to Healthtek's employees. Healthtek renewed the contract for group accident and sickness insurance with Fortis in September of 2002 for a period of one year. The contract required Healthtek to pay premiums to Fortis on a monthly basis. On December 9, 2002, Healthtek learned from a third party that claims submitted by Healthtek employees were being denied. On the same day, Healthtek contacted Fortis and was advised by Fortis that the policy had been terminated with no chance of reinstatement. Upon investigation, Healthtek discovered that the November premium had not been mailed to Fortis due to a change in personnel in the Healthtek accounting department.
On December 10, 2002, Healthtek sent a check for the full November premium to Fortis via overnight mail. On December 16, 2002, Fortis cashed Healthtek's check for the November premium. Fortis notified Healthtek by letter dated December 20, 2002, sent via fascimile that Fortis would no longer provide group health insurance coverage for Healthtek's employees and that the policy was terminated "retroactive" to November 1, 2002. On December 23, 2002, Healthtek received from Fortis a letter dated December 13, 2002, in which Fortis notified Healthtek that it would not "reinstate" the group accident and sickness insurance policy. Enclosed with the letter was a notice dated November 8, 2002, prepared by Fortis notifying Healthtek that the November premium was past due and that the premium must be paid with 31 days after the due date or coverage would terminate. Healthtek claims that the November 8, 2002, notice was not delivered to Healthtek until it received it as an enclosure with the December 23, 2002, letter.
In September, 2002, one of Healthtek's employees was diagnosed with cancer. The employee was a member of the Fortis plan. In November, 2002, a spouse of a Healthtek employee had knee replacement surgery. The spouse was allegedly covered under the Fortis plan. Healthtek claims that it is paying or has paid the sickness and accident claims of its employees covered by the Fortis policy for November and December of 2002.
Healthtek filed a Bill for Declaratory Judgment and Other Relief (hereinafter "Complaint") against Fortis in the Circuit Court for the City of Norfolk, Virginia on February 7, 2003. The complaint contained three counts. In Count One, Healthtek asked for a declaratory judgment regarding the effective dates of coverage of Healthtek employees under the Fortis group insurance policy. Healthtek claimed that the termination of Healthtek's group insurance policy was made in bad faith and in violation of Virginia state law. Healthtek plead violations of two specific provisions of Virginia state law in Count One. Healthtek alleged that Fortis violated Virginia Code § 38.2-3527, which requires that every group accident and sickness insurance policy entitle the policy owner to a grace period of not less than thirty-one days. Healthtek alleged that Fortis violated Virginia Code § 38.2-3542, which requires that an insurer continue coverage under a group accident and sickness insurance policy until the employer is provided with written notice of termination that includes a specific date of termination not less than fifteen days from the date of such notice. In paragraphs 38 and 39 of Count One, Healthtek claimed that Fortis also violated the Health Insurance Portability and Accountability Act ("HIPAA"), 29 U.S.C. § 1182.
In Count Two of the Complaint, the Plaintiff alleged that Fortis had breached its contract with Healthtek. In support, Healthtek relied on Virginia Code § 38.2-3526, which requires that insurance policies contain the "standard provisions" contained in the Virginia insurance statutes. The Plaintiff claimed that these "standard provisions" included the previously mentioned state statutes relating to the thirty-one day grace period and written notice of termination requirement. Healthtek claimed that it did not have an adequate remedy at law and asked the Court to order Fortis to specifically perform its obligations under the policy.
In Count Three of the Complaint, the Plaintiff alleged that Fortis's denial of coverage under the policy was a failure to act in good faith. The Plaintiff asked the Court to award Healthtek attorney's fees pursuant to Virginia Code § 38.2-209, which allows an insured individual to recover attorney's fees during a declaratory judgment action against the insurer to determine coverage.
On March 14, 2003, Fortis removed the case to this Court pursuant to 28 U.S.C. § 1441. Fortis claimed that removal was appropriate because the court had original jurisdiction as the case presented a federal question as provided in 28 U.S.C. § 1331. Specifically, Fortis claimed that Plaintiffs claims regarding the administration of the Fortis plan are governed by ERISA. Fortis further claimed that the claims are preempted by ERISA and that the question of preemption provided the grounds for removal.
Fortis filed a Motion to Dismiss on March 18, 2003. In its Motion, Fortis alleged that dismissal was proper for the following three reasons: (1) the Plaintiff alleged only state law causes of action that were preempted by ERISA, (2) the Plaintiff lacked standing to make any claims under ERISA, and (3) the Defendant was not a proper party defendant. In its preemption analysis, Fortis claimed that the group accident and sickness policy provided to Healthtek employees constitutes an employee welfare benefit plan governed by ERISA. As such, Fortis argued that the Plaintiffs claims were preempted because all state laws that "relate to" employee welfare benefit plans are preempted by ERISA. In its second justification for dismissal, Fortis argued that the Plaintiff lacks standing to make any claims under ERISA because employers are precluded from bringing suit under any of the civil enforcement provisions of ERISA.
On March 31, 2003, Healthtek filed its Brief in Opposition to Motion to Dismiss. In its brief, Healthtek argued that its claims were not preempted because ERISA explicitly includes a savings clause that precludes preemption for any law of any State that regulates insurance. The Plaintiff argued that its claims were premised on the Virginia Code sections cited in its complaint and that each of these provisions was saved from preemption because it regulates insurance. The Plaintiff further argued that it would have standing to sue under ERISA if its claims were converted to ERISA claims due to preemption. The Plaintiff has conceded that the Fortis group health insurance plan is, in fact, an employee welfare benefit plan governed by ERISA. The Plaintiff also has conceded that the causes of action pled in its complaint "relate to" an ERISA plan.
On April 16, 2003, Healthtek filed its Motion for Remand with accompanying brief in support thereof. Healthtek stated that its claims were based on Virginia statutory law regulating insurance and were, therefore, exempted from preemption by ERISA's savings clause. Since the claims are not preempted, Healthtek argued, there was no federal question and removal was improper. Later in its brief, Healthtek concedes that it is not the proper party to bring suit under § 1132(a) for benefits but claims that it is not suing for benefits.
On April 28, 2003, Fortis filed its Brief in Opposition to Motion to Remand. In its opposition brief, Fortis pointed the Court to several provisions in the Certificate of Group Medical Insurance ("Certificate"). The Certificate was issued by Fortis to Healthtek employees, and a copy was included as an exhibit in Fortis's Notice of Removal. Pertinent to this decision, the Certificate included the following provisions:
Authority
We have the sole discretionary authority to determine the eligibility for participation or benefits and to interpret the terms of the policy. All determinations and interpretations made by us are conclusive and binding on all parties.
* * * * * *
The plan administrator is usually your participating employer. The plan administrator delegates to us the authority, responsibility, and discretion to determine all questions regarding eligibility for coverage and benefit adjudications under the policy, and to interpret and construe the terms and provisions of the policy ... The construction, interpretation, or determination of the policy and its terms by us shall be final and binding on all parties.
Fortis Benefits Insurance Company Certificate of Group Health Insurance, Attached as Exhibit 5 of Fortis's Exhibits in Support of Notice of Removal (emphasis added). Fortis then argued that removal was...
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