Jacks v. Meridian Res. Co.

• Decision Date: 17 December 2012
• Docket Number: No. 11–3037.,11–3037.
• Citation: 701 F.3d 1224
• Parties: Shannon JACKS, Plaintiff–Appellee v. MERIDIAN RESOURCE COMPANY, LLC; Blue Cross Blue Shield, of Kansas City, Defendants–Appellants Association of Federal Health Organizations, Amicus on Behalf of Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

701 F.3d 1224

Shannon JACKS, Plaintiff–Appellee

v. MERIDIAN RESOURCE COMPANY, LLC; Blue Cross Blue Shield, of Kansas City, Defendants–AppellantsAssociation of Federal Health Organizations, Amicus on Behalf of Appellant.

No. 11–3037.

United States Court of Appeals, Eighth Circuit.

Submitted: June 12, 2012.

Filed: Dec. 17, 2012.

Anthony F. Shelley, argued, Washington, DC, Richard N. Bien, Robyn Lyn Anderson, James V. Moloney, Kansas City, MO, Jeffrey Hahn, Jonathan D. Kossak, Washington, DC, on the brief, for appellant.

Mitchell L. Burgess, argued, Ralph K. Phalen, Don P. Saxton, on the brief, Kansas City, MO, for appellee.

David M. Ermer, Jason SC. Suter, Washington, DC, on the brief, for amicus.

Before BYE, BEAM, and SMITH, Circuit Judges.

BEAM, Circuit Judge.

Meridian Resource Company and Blue Cross Blue Shield–Kansas City (hereinafter BCBS–KC collectively) appeal the district court's remand based upon the local controversy exception to the Class Action Fairness Act (CAFA), its determination that federal common law was not contemplated in this action, and its decision that BCBS–KC could not remove this matter under the federal officer removal statute. We vacate the district court's judgment and remand the case for further consideration consistent with this opinion.

I. BACKGROUND

The Federal Employees Health Benefits Act of 1959 ¹ (FEHBA) establishes a comprehensive program of health insurance for federal employees and charges the United States Office of Personnel Management (OPM) with negotiating contracts with private insurance carriers to provide an array of health-care plans. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). “Largest of the plans for which OPM has contracted, annually since 1960, is the Blue Cross Blue Shield Service Benefit Plan (Plan), administered by local Blue Cross Blue Shield companies [such as BCBS–KC].” Id. Appellant BCBS–KC administers the Plan in Missouri. FEHBA provides that the government pays about 75% of health-plan premiums and the enrollee pays for the rest. 5 U.S.C. § 8906(b). Premiums thus shared are deposited in a special Treasury Fund, from which carriers draw to pay for covered benefits. Id. § 8909(a). Meridian Resource Company is a vendor, based in Wisconsin, that provides subrogation and reimbursement services for BCBS–KC, as well as many other BCBS Plan administrators in other locales.

FEHBA requires that contracts between OPM and carriers “contain a detailed statement of benefits offered,” including “such maximums, limitations, exclusions, and other definitions of benefitsas [OPM] considers necessary or desirable,” and allows OPM to “prescribe reasonable minimum standards for health benefits plans [and carriers].” 5 U.S.C. § 8902(d), (e). Concerning reimbursement and subrogation, matters FEHBA itself does not address, the Plan's Statement of Benefits reads in part:

If another person or entity ... causes you to suffer an injury or illness, and if we pay benefits for that injury or illness, you must agree to [the following]: All recoveries you obtain (whether by lawsuit, settlement, or otherwise), no matter how described or designated, must be used to reimburse us in full for benefits we paid. Our share of any recovery extends only to the amount of benefits we have paid or will pay to you or, if applicable, to your heirs, administrators, successors, or assignees.

If the insured does not voluntarily reimburse under these terms, the Plan requires the carrier to make a “reasonable effort to seek recovery of amounts ... it is entitled to recover in cases ... brought to its attention,” and gives the carrier discretion to file suit in federal court to enforce its rights. “Pursuant to the OPM–BCBSA [Blue Cross Blue Shield Association] master contract, reimbursements obtained by the carrier must be returned to the Treasury Fund.” Empire, 547 U.S. at 685, 126 S.Ct. 2121.

In 2007, Shannon Jacks, a Missouri resident, was in a motor vehicle accident and received benefits from BCBS–KC for her injuries. Jacks subsequently asserted a personal injury claim against the third-party tortfeasor, reached a settlement, and recovered funds for her injuries. BCBS–KC asserted a lien on Jacks' third-party award in an amount equal to the amount BCBS–KC had paid on her behalf for the injuries she sustained in the accident. Jacks sued BCBS–KC in Jackson County, Missouri, on behalf of herself and others similarly situated alleging Missouri state law violations. Missouri has laws prohibiting subrogation.

The crux of this suit challenges the application, in Missouri, of the provision in the Plan administered by BCBS–KC that requires a Plan enrollee who receives benefits in connection with any injury in addition to compensation from a third party must reimburse BCBS–KC the amount of benefits paid. Given the state's anti-subrogation laws, Jacks contends that BCBS–KC is unable to recover its reimbursement lien in Missouri.

BCBS–KC removed the action to federal district court, citing three grounds in support: (1) CAFA, 28 U.S.C. § 1332(d); (2) 28 U.S.C. § 1441 federal question jurisdiction on the ground that Jacks' claims “turn on the construction of federal common law and otherwise raise substantial issues of federal law;” and (3) 28 U.S.C. § 1442(a)(1), the federal officer removal statute. Jacks moved to remand the matter to state court, and the district court granted the motion. BCBS–KC appealed. The bases for Jacks' motion and the district court's remand are discussed in turn below, as appropriate, in juxtaposition with our analyses. The sole question on appeal concerns where this action will be adjudicated as between the available state and federal courts.

II. DISCUSSIONA. Jurisdiction on Appeal

The parties first dispute whether this court has jurisdiction to hear all of the issues presented by this appeal.² Jacks concedes that jurisdiction lies to review the district court's remand under the local controversy exception of CAFA, but without citation to supporting authority, claims that this panel lacks jurisdiction to address the remainder of the district court's order. The basis on which Jacks grounds this latter argument is wholly unclear. BCBS–KC simply counters that because this is an appeal from a final order under § 1291, this court has jurisdiction over the entire order. Neither argument carries the day but jurisdiction lies nonetheless.

Section 1447(d) generally provides that “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” Despite this broadly worded prohibition, the Supreme Court has held that § 1447(d) only bars appellate review of a district court's remand order that is “based on a ground specified in [28 U.S.C.] § 1447(c).” Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 638, 129 S.Ct. 1862, 173 L.Ed.2d 843 (2009). This means that “remand orders based on a procedural defect or lack of subject matter jurisdiction are unreviewable.” Carlson v. Arrowhead Concrete Works, Inc., 445 F.3d 1046, 1050 (8th Cir.2006). A remand order that is based on some other, non-section 1447(c) ground is a final decision appealable under 28 U.S.C. § 1291. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 713, 715, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996).

The district court remanded this matter, in part, based upon its interpretation of the local controversy exception in CAFA, which operates as an abstention doctrine and does not divest the district court of subject matter jurisdiction. Graphic Commc'ns Local 1B v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir.2011). “The local controversy provision, which is set apart from the ... jurisdictional requirements in the statute, inherently recognizes the district court has subject matter jurisdiction by directing the court to ‘decline to exercise’ such jurisdiction when certain requirements are met.” Id. Accordingly, § 1447(d) interposes no bar to appellate review and the order is final and appealable as a collateral order under § 1291 on that issue. Quackenbush, 517 U.S. at 711–14, 116 S.Ct. 1712.

In light of this § 1447(d) jurisprudence, however, we do lack jurisdiction to review the district court's determination concerning the availability of federal common law to resolve this suit, given the above analysis regarding § 1447(d), as it is a remand based upon the court's determination that it lacked subject matter jurisdiction. Nonetheless, we retain jurisdiction to review the district court's remand on the issue of whether the federal officer removal statute, 28 U.S.C. § 1442(a)(1), applies. The plain language of § 1447(d) governs this final analysis. See28 U.S.C. § 1447(d) (“An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court ... pursuant to section 1442 ... shall be reviewable by appeal or otherwise.”). Accordingly, we have jurisdiction to address two of the three bases relied upon by the district court to support remand of this action.

B. Removal Jurisdiction

Noted previously, BCBS–KC removed this action from Missouri state court, citing three bases in support of removal—each one, if valid, is independently sufficientto support removal. The district court rejected each separately in its order and remanded the matter. On appeal, then, reversal of any one basis rejected by the district court supports retention of this matter in federal court, although, noted above, only two fall within our appellate purview. Because we hold that the federal officer removal statute applies, we reverse the district court's order and remand for further consideration.

Title 28 U.S.C. § 1442(a)(1) “grants independent jurisdictional grounds over cases involving federal officers where a district court otherwise would not have jurisdiction.” Johnson v. Showers, 747 F.2d 1228, 1229 (8th Cir.1984) (quotation omitted). Section...