Kight v. Kaiser Found. Health Plan of Mid-Atlantic, Civ.A. 98-1479-A.
| Decision Date | 22 January 1999 |
| Docket Number | No. Civ.A. 98-1479-A.,Civ.A. 98-1479-A. |
| Citation | 34 F.Supp.2d 334 |
| Parties | Katherine KIGHT, Plaintiff, v. KAISER FOUNDATION HEALTH PLAN OF THE MID-ATLANTIC STATES, INC., t/a Kaiser Permanente, Mid-Atlantic Permanente Medical Group, P.C., Farideh Sadeghi, M.D., and Earle Hales, M.D., Defendants. |
| Court | U.S. District Court — Eastern District of Virginia |
Michael J. Miller, Miller and Associates, Alexandria, Virginia, for plaintiff.
Anthony J. Trenga, Washington, D.C., for defendants.
This matter comes before the Court on Plaintiff Katherine Kight's Motion to Remand and Defendants Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., et al.'s Motion for Judgment on the Pleadings with Respect to Portions of Counts II and III and All of Counts IV and V. In August 1998, Plaintiff filed a motion for judgment asserting medical malpractice and related claims in the Circuit Court of Prince William County, stemming from her treatment for breast cancer. Plaintiff named as defendants Kaiser Foundation Health Plan of the Mid-Atlantic States (Kaiser), the Mid-Atlantic Permanente Medical Group (Medical Group), and doctors Farideh Sadeghi and Earle Hales, who were employed by the Medical Group. The motion for judgment includes five counts: Count I (Negligence against Drs. Sadeghi and Hales); Count II (Negligence against Kaiser); Count III (Negligence against the Medical Group); Count IV (Tortious Interference with a Contract against all Defendants); and Count V (Fraud against all Defendants). Defendants removed the case to the United States District Court for the Eastern District of Virginia.
The issues presented are: 1) whether Plaintiff's claims for negligence, tortious interference with contract, and fraud, against the plan carrier and health care providers for concealing a physician financial incentive program, which allegedly encouraged physicians to reduce the quality of medical care to patients, are preempted under the Federal Employee Health Benefits Act (FEHBA) or federal common law; and 2) whether Plaintiff's claims should be remanded to state court. Plaintiff argues that her state law claims are not federally preempted and that the state court has proper jurisdiction. Defendants contend that portions of Counts II and III and all of Counts IV and V must be dismissed because they are either preempted by federal law, or require the application of federal common law which provides no remedy. The Court will address Plaintiff's Motion to Remand and Defendants' Motion for Judgment on the Pleadings in a single opinion as they are intertwined. For the reasons stated below, Plaintiff's Motion to Remand is denied and Defendants' Motion for Judgment on the Pleadings is granted as to portions of Counts II and III and all of Counts IV and V.
In 1959, Congress enacted the Federal Employees Health and Benefits Act (FEHBA), 5 U.S.C. §§ 8901-8914. The purpose of FEHBA was to provide health insurance coverage for federal employees and their dependents. The statute authorizes the Office of Personnel Management (OPM) to contract with carriers to provide health insurance to federal employees and to police those administering FEHBA plans. Kaiser is just one carrier contracting with OPM to provide comprehensive health care coverage. To provide its coverage to plan enrollees, Kaiser contracts with the Medical Group, which employs doctors who perform the actual care. Drs. Sadeghi and Hales are employed by the Medical Group.
On June 13, 1996, Plaintiff Katherine Kight presented to Defendant Dr. Sadeghi for a physical examination. On July 16, 1996, Plaintiff underwent a bilateral mammogram which indicated the presence of an asymmetrical density in her left breast. Defendant Dr. Earle Hales performed an ultrasound examination. Although the parties disagree on the transpiring of events, Plaintiff did not receive treatment for breast cancer at that time. On March 18, 1997, Plaintiff felt a lump in her breast and was later diagnosed with breast cancer.
Count I alleges that the doctors were negligent in their care and treatment of Ms. Kight. Counts II and III are brought against Kaiser and the Medical Group, respectively. These counts charge that both defendants were vicariously liable for the malpractice of the doctors. However, these counts also contend that Kaiser and the Medical Group were directly negligent for establishing the improper policies and procedures and for failing to properly train physicians. Specifically, the complaint charges that the Medical Group and Kaiser instituted non-disclosed policies and procedures, whereby the physicians would receive financial incentives for reduced usage of diagnostic testing and reduced usage of referrals to high-risk specialists. According to Plaintiff, the physician financial incentive program resulted in the physicians rendering below standard medical care. Finally, Count IV, tortious interference with a contract, and Count V, fraud, center on all Defendants' institution of and failure to disclose the physician financial incentive program.
Primarily, the Court must address the issue of removal jurisdiction. If removal was improper, the Court lacks jurisdiction and Defendants' motion for judgment on the pleadings is moot. However, if removal is proper, then the Court has jurisdiction to consider Defendants' motion.
United States District Courts have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. Removal jurisdiction is proper only if the action could have originally been brought in the district court. Caterpillar Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Caudill v. Blue Cross & Blue Shield of North Carolina, 999 F.2d 74 (4th Cir. 1993). Generally, whether any of the plaintiff's claims "arise under" federal law is determined by application of the well-pleaded complaint rule. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). The rule states that a state court claim may be removed to the district court if it presents a federal question which appears on the face of the plaintiff's well-pleaded complaint. Caterpillar, 482 U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318. There are two exceptions to the general rule: 1) where the "complete preemption doctrine" applies; and 2) where the vindication of a right under state law necessarily turns on some construction of federal law.
While conceding removal is proper where a cause of action is completely preempted, Plaintiff contends that a case may not be removed on the basis of a federal defense. According to Plaintiff, the complaint is based on state negligence and fraud claims and does not depend on the existence of the FEHBA health care plan. Thus, Plaintiff contends that Defendants cannot argue that this cause of action may be federally preempted. Furthermore, Plaintiff argues that Congress must show a clear and manifest purpose that these traditionally state regulated areas are preempted by federal law within the language of the statute or its legislative history. Burkey v. Government Employees Hosp. Ass'n, 983 F.2d 656 (5th Cir.1993). Plaintiff distinguishes FEHBA from ERISA, which preempts all state law. Plaintiff alleges that FEHBA only preempts state law and regulations which are "inconsistent with such contractual provisions." 5 U.S.C. § 8902(m)(1) (1996). In the present case, Plaintiff alleges that the state law does not conflict with the contractual provisions or FEHBA and thus is not preempted by federal law.
Defendants argue that the tortious interference, fraud, and negligence (in respect to the physician financial incentive program) claims are completely preempted. Defendants contend that there is a two-part inquiry: 1) whether the relevant statute contains civil enforcement provisions; and 2) whether evidence indicates a clear Congressional intent to preempt state law. According to Defendants, FEHBA contains specific enforcement mechanisms for remedying denials of benefits and other enforcement structures. Defendants characterize Plaintiff's claims regarding the physician financial incentive program as a challenge to an administrative decision denying medical benefits.
Likewise, Defendants argue that the plaintiff's tortious interference and fraud claims should be treated as raising denial-of-benefits issues. Defendants argue that several courts have held that state law claims aimed at HMO physician financial incentive programs in essence challenge an administrative decision denying medical benefits. Lancaster v. Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., 958 F.Supp. 1137, 1147 (E.D.Va.1997). See also Anderson v. Humana, Inc., 24 F.3d 889 (7th Cir.1994); Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997); Negron v. Patel, 6 F.Supp.2d 366 (E.D.Pa.1998). Defendants argue that FEHBA provides a remedy for denials of benefits: appealing to the plan administrator and then seeking judicial review of the plan administrator's decision.
On the issue of Congressional intent, Defendants argue that Congress intended to federally preempt claims within the scope of FEHBA's enforcement provisions. Defendants rely upon Congress' 1998 amendment to FEHBA, which effectively repealed the limiting language of the preemption provision, and the accompanying legislative history. The new language of § 8902(m) states that the statute shall "supersede and preempt any State or local law, or any regulation issued thereunder, which relates to health insurance plans." Pub.L. No. 105-266, § 3(c) ().
In this case, § 8902 (as amended 1998) was amended after both the alleged actionable conduct and the commencement of this lawsuit. The change in language was substantial. Congress' explicit declaration that § 8902 (...
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