Hobbs v. Blue Cross and Blue Shield of Alabama

• Decision Date: 16 June 2000
• Docket Number: Civil Action No. 99-S-1161-N.
• Citation: 100 F.Supp.2d 1299
• Parties: Norman HOBBS, et al., Plaintiffs, v. BLUE CROSS AND BLUE SHIELD OF ALABAMA, Defendant.
• Court: U.S. District Court — Middle District of Alabama

100 F.Supp.2d 1299 Norman HOBBS, et al., Plaintiffs,
v.
BLUE CROSS AND BLUE SHIELD OF ALABAMA, Defendant. Civil Action No. 99-S-1161-N. United States District Court, M.D. Alabama, Northern Division. June 16, 2000.

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Royce A. Ray, III, Mobile, Richard A. Bearden, Birmingham, AL, for plaintiff.

Cavender Kimble, Leigh Anne Hodge, Mark Tindal, Birmingham, AL, for defendant.

MEMORANDUM OPINION AND ORDER

COODY, United States Magistrate Judge.

I. Introduction

The plaintiffs filed a complaint in the Circuit Court of Montgomery County seeking compensatory and punitive damages and, purportedly, an injunction on a class wide basis against Blue Cross for its alleged refusal to comply with ALA. CODE § 27-51-1 (1975) (the "Physician Assistant Statute").¹ Specifically, the plaintiffs allege that Blue Cross has failed to pay claims for medical services provided by physician assistants covered under various Blue Cross contracts.² Plaintiffs seek injunctive relief, requiring Blue Cross to comply with the statute, and an award of damages for claims denied allegedly in violation of the statute. A large portion of the plans, under which these claims were submitted and denied, are ERISA plans. (See Aff. of Janet L. McGowan, Blue Cross Vice President and Actuary).

Blue Cross timely removed the action to this court on the grounds of complete preemption by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001(1), et. seq. and based on independent federal question jurisdiction pursuant to the Federal Employees Health Benefits Act ("FEHBA"), 5 U.S.C. §§ 8901 et. seq.³ The court has original

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jurisdiction pursuant to 28 U.S.C. § 1331 if the court determines the plaintiffs' claims are preempted by ERISA. The plaintiffs filed a motion to remand and to tax costs and attorney fees against Blue Cross. For the reasons that follow, the court concludes that the plaintiffs' motion to remand is due to be denied.

II. Plaintiffs' Arguments

The plaintiffs argue that there is no federal question jurisdiction because the "well-pleaded complaint" rule requires remand; the defendant's notice of removal is defective; there is no ERISA preemption because the plaintiffs' Alabama state law claims do not "relate to" any ERISA plan; and there is no ERISA preemption due to the operation of the ERISA "savings clause." As explained below, the court concludes that the plaintiffs' first two arguments lack merit. Thus, the court will focus primarily upon plaintiffs' argument that there is no ERISA preemption.

A. The "Well-Pleaded Complaint" Rule

"Under the `well-pleaded complaint' rule, a case does not arise under federal law unless a federal question is presented on the face of the plaintiff's complaint." Whitt v. Sherman Int'l Corp., 147 F.3d 1325, 1329 (11th Cir.1998). The plaintiffs argue that the court lacks subject matter jurisdiction over their well-pleaded complaint because they raised no federal questions or claims on the face of the complaint.

The doctrine of "complete preemption" or "super preemption," however, qualifies the general well-pleaded complaint rule. Where Congress preempts an area of law so completely that any complaint raising claims in that area is necessarily federal in character, super preemption applies, and federal jurisdiction exists, even if the face of the complaint does not plead federal claims.... Super preemption converts state law claims into federal claims for purposes of the well-pleaded complaint rule, allowing a defendant to remove the case to federal court.

Id. See also, Blab T.V. of Mobile, Inc. v. Comcast Cable Communications, Inc., 182 F.3d 851, 854-55 (11th Cir.1999). Thus, the well-pleaded complaint rule is not a bar to this court's jurisdiction. Because the court concludes that the plaintiffs' claims are preempted by ERISA, the court has jurisdiction over this matter.

B. The Notice of Removal

The plaintiffs argue that Blue Cross's notice of removal is defective because it alleges in "conclusory terms" the basis for federal jurisdiction. See, e.g., Bryant v. Blue Cross and Blue Shield of Alabama, 751 F.Supp. 968 (N.D.Ala.1990) (State law fraud claim against group medical benefits insurer was not subject to removal where insurer made only bare-bones contention in the notice of removal that "action will be governed by the provisions of the Employee Retirement Income Security Act (ERISA)"). The notice of removal in the instant action is distinguishable from the Bryant notice of removal because it contains facts relating to the types of plans administered by Blue Cross and the effect ALA. CODE § 27-51-1 (1975) would have on Blue Cross's administration of those plans. (Notice of Removal ¶¶ 3-6). Thus, Blue Cross's notice of removal in the instant action contains more than a "bare-bones contention" that the action is governed by ERISA.

Moreover, the federal statute governing removal requires that a notice of removal contain only "a short and plain statement of the grounds for removal." 28 U.S.C. § 1446. This statute has been interpreted to mean that the same liberal rules testing the sufficiency of a pleading should also apply to evaluating the sufficiency of a defendant's notice of removal. See, e.g., Rachel v. Georgia, 342 F.2d 336, 340 (5th Cir.1965) ("[W]e have no doubt that the rules of notice pleading apply with as much vigor to petitions for removal as they do to

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other pleadings, which according to Rule 8(f) of the Federal Rules of Civil Procedure `shall be so construed as to do substantial justice.'"). Thus, the plaintiffs' argument that the notice of removal is defective fails.

C. ERISA Preemption

The plaintiffs argue that there is no ERISA preemption because the plaintiffs' Alabama state law claims do not "relate to" any ERISA plan. The plaintiffs argue, in the alternative, that even if the court were to find that the state law claims do "relate to" ERISA plans, there is no ERISA preemption due to operation of the ERISA "savings clause." As discussed below, the court concludes that the plaintiffs' claims do "relate to" ERISA plans and the plaintiffs' claims are not "saved" from preemption by operation of ERISA's saving clause.

1. Plaintiffs' Alabama state law claims "relate to" an ERISA plan

The plaintiffs assert that because ALA. CODE § 27-51-1(a) (1975) makes no explicit reference to ERISA plans and functions regardless of the existence of any ERISA plan, it is a statute of general application and thus, is not preempted by ERISA. See Ingram v. American Chambers Life Ins. Co., 643 So.2d 575, 577 (Ala. 1994) (citing Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)).⁴ The plaintiffs concede that the statute "applies equally to ERISA plans and non-ERISA plans." Thus, the court must determine whether the statute "relates to" or has "a connection" with employee benefit plans to determine whether the plaintiffs' claims are preempted by ERISA or whether the statute is one of general application and thus, not preempted by ERISA.

"[T]he question whether a certain state action is pre-empted by federal law is one of congressional intent. `The purpose of Congress is the ultimate touchstone.'" Ingersoll-Rand, 498 U.S. at 137-38, 111 S.Ct. 478. ERISA preemption is noticeable for its breadth and scope. See FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990). "Its `deliberately expansive' language was `designed to "establish pension plan regulation as exclusively a federal concern." '" Ingersoll-Rand, 498 U.S. at 139, 111 S.Ct. 478 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)). A state law does not need to specifically cover subject matter regulated by ERISA to be preempted. Id.

In fact, however, Congress used the words "relate to" in § 514(a) in their broad sense. To interpret § 514(a) to preempt only state laws specifically designed to affect employee benefit plans would be to ignore the remainder of § 514. It would be unnecessary to exempt generally applicable state criminal statutes from preemption under § 514(b), for example, if § 514(a) applied only to state laws dealing specifically with ERISA plans.

Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983).

A law relates to an employee welfare benefit plan if it has "a connection with or reference to such plan." Pilot Life, 481 U.S. at 47, 107 S.Ct. 1549. "[The preemption clause] establishes as an area of exclusive federal concern the subject of every state law that `relate[s] to' an employee benefit plan governed by ERISA." FMC Corp., 498 U.S. at 58, 111 S.Ct. 403.

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While the statute makes no explicit reference to ERISA plans, it does include any "group policy or accident or health insurance or ... group hospital or healthcare service contract[s], ... [and] group health maintenance organization contract[s]" which would include employee welfare benefit plans sponsored and maintained by employers for the benefit of their employees. ALA.CODE § 27-51-1(e) (1975). The plaintiffs recognize that the Physician Assistant Statute includes, within the scope of its application, employee benefit plans governed by ERISA, as well as non-ERISA governed plans. "Section 514(a) of ERISA, 29 U.S.C. § 1144(a), preempts `any and all State laws insofar as they may now or hereafter, relate to any employee benefit plan' covered by ERISA." Shaw, 463 U.S. at 91, 103 S.Ct. 2890. ERISA preemption is not limited to only those state statutes which specifically reference or are created to affect employee benefit plans because such narrow construction ignores the language and intent of ERISA.

To determine whether the statute "relates to" or has a "connection with" ERISA plans, the court must return to the intent of Congress.

Congress intended "to ensure that plans and plan sponsors would be subject to a uniform body of...