Kindred Hosps. E. v. Local 464A United Food & Commercial Workers Union Welfare Serv. Benefit Fund

• Decision Date: 29 September 2021
• Docket Number: Civil Action 21-10659
• Parties: KINDRED HOSPITALS EAST, LLC, Plaintiff, v. LOCAL 464A UNITED FOOD AND COMMERCIAL WORKERS UNION WELFARE SERVICE BENEFIT FUND, and THE MAXON COMPANY, INC., Defendants.
• Court: U.S. District Court — District of New Jersey

KINDRED HOSPITALS EAST, LLC, Plaintiff,
v.
LOCAL 464A UNITED FOOD AND COMMERCIAL WORKERS UNION WELFARE SERVICE BENEFIT FUND, and THE MAXON COMPANY, INC., Defendants.

Civil Action No. 21-10659

United States District Court, D. New Jersey

September 29, 2021

NOT FOR PUBLICATION

OPINION

John Michael Vazquez, U.S.D.J.

This matter comes before the Court on Defendants Local 464A United Food and Commercial Workers Union Welfare Service Benefit Fund's (“the Welfare Fund”) and the Maxon Company, Inc.'s, (“Maxon” and collectively “Defendants”) motion to dismiss, or, in the alternative, for judgment on the pleadings, D.E. 3, Plaintiff Kindred Hospitals East, LLC's, (“Kindred” or “Plaintiff”) Complaint, D.E. 1-2 (“Compl.”). Plaintiff has also moved to remand the matter to state court. D.E. 10. The Court has reviewed all submissions in support of and in opposition to the motions, ^[1] and decides the motions without oral argument, pursuant to Federal

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Rule of Civil Procedure 78(b) and Local Civil Rule 78.1(b). For the reasons that follow, Defendants' motion to dismiss is granted in part and denied in part, and Plaintiff's motion to remand is denied.

I. FACTS^[2] AND PROCEDURAL HISTORY

The crux of this matter is Defendants' refusal to pay Plaintiff for medical services that Plaintiff provided to an unnamed beneficiary of the Welfare Fund, who is referred to in the submissions as “the Patient.” Id. ¶¶ 1-3. Plaintiff is a Delaware limited liability company that operates in several states, including New Jersey, where it does business as “Kindred Hospital New Jersey-Rahway.” Compl. ¶ 5. The Welfare Fund is a health plan that “provide[s] medical[] ... benefits to beneficiaries . in New Jersey, New York, and Pennsylvania.” Id. ¶ 6.^[3] Maxon “is a New York corporation which provided third-party administration services for the [Welfare] Fund during the events at issue[.]” Id. ¶ 7.

According to Plaintiff, Overlook Hospital referred the Patient to Kindred on January 15, 2018. Id. ¶ 10. The Patient had been in Overlook Hospital's intensive care unit since December

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17, 2017, and Overlook Hospital referred the Patient to Kindred because “the Patient required acute hospital care for a longer period of time than Overlook was equipped to provide[.]” Id.

Before admitting the Patient, a Kindred employee named Sara contacted Maxon “to confirm that the Patient was eligible for coverage [under the terms the Welfare Fund's plan] and determine the terms of payment.” Id. ¶ 11. Sara spoke with a person named Keri, id., and “advised Keri that she was calling from a long-term acute care facility and needed to know whether the [Welfare] Fund would cover and pay for the Patient's care at Kindred.” Id. ¶ 12. Sara also clarified “that Kindred provided inpatient acute care[, ]” and was not “a skilled nursing facility.” Id. ¶ 13. Keri then informed “Sara that the [Welfare] Fund covered the first 31 days of inpatient stays at 100 percent, and 80 percent thereafter.” Id. ¶ 14. Keri added “that as long as Kindred was not a skilled nursing facility, the care was covered[, ]” id. ¶ 15, and “that preauthorization was not required[, ]” id. ¶ 16. As a result of Keri's statements “Kindred admitted the [P]atient and provided him with weeks of care and treatment until his discharge into an acute rehab facility on February 7, 2018.” Id. ¶ 17.

Plaintiff alleges that it “submitted its claims to the [Welfare] Fund, ” but the Welfare Fund refused to pay because “Kindred was ‘a non-covered facility.'” Id. ¶ 18. Defendants agree that the Welfare Fund did not pay “because the treatment was not covered under the written plan terms.” Answ. ¶ 18.

On March 17, 2021, Plaintiff filed a Complaint against Defendants in the Superior Court of New Jersey alleging:(1) fraudulent misrepresentation, (2) negligent misrepresentation, (3) promissory estoppel (only as to the Welfare Fund) as well as seeking a declaratory judgment as to the Welfare Fund. Compl. ¶¶ 19-48. Kindred seeks $171, 485, among other things. Id. ¶¶ 28, 39, 43. That amount, Kindred contends, represents the value of the services that Kindred rendered to

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the Patient. See id. ¶ 28. Plaintiff also seeks punitive damages on the first count. Id. ¶ 29. As to the declaratory judgment, Plaintiff seeks “a judicial declaration that the [Welfare] Fund must comply with [the Patient Protection and Affordable Care Act (PPACA)'s] mandates, that hospitalization is an essential benefit under PPACA, and that the [Welfare] Fund must thus pay Kindred for the care and treatment Kindred provided to the Patient.” Id. ¶ 47.

On May 4, 2021, Defendants removed this matter to the District of New Jersey. The same day, Defendants filed an Answer, D.E. 2, and its current motion, D.E. 3. Plaintiff then moved to remand. D.E. 10. The Court addresses the motion to remand first.

II. LAW AND ANALYSIS

A. Motion to Remand

A motion to remand is governed by 28 U.S.C. § 1447(c), which provides that removed cases shall be remanded to state court “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction.” The party removing the action has the burden of establishing federal jurisdiction. Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987). This burden is heavy, since removal statutes are “strictly construed and all doubts should be resolved in favor of remand.” Id.

The federal removal statute provides in part as follows:

Except as otherwise provided by Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed . to the district court of the United States for the district and division embracing the place where such action is pending.

28 U.S.C. § 1441(a). Defendants invoke both diversity and federal question jurisdiction. See Notice ¶¶ 9-10.

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Diversity jurisdiction is governed by 28 U.S.C. § 1332 and provides that “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between ... [c]itizens of different States[] ....” 28 U.S.C. § 1332(a)(1)-(2). However, 28 U.S.C. § 1441(b)(2) limits the ability of an in-state defendant to remove a case to federal court. That subsection provides that “[a] civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2); see also Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147, 152 (3d Cir. 2018).

Federal question jurisdiction is governed by 28 U.S.C. § 1331 and provides that “[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” In determining whether a complaint alleges a federal question, courts are generally guided by the well-pleaded complaint rule. The rule provides that “federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). A plaintiff is generally “entitled to remain in state court so long as its complaint does not, on its face, affirmatively allege a federal claim.” Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 398 (3d Cir. 2004).

In their notice of removal, Defendants submit that the first three counts of the Complaint are removable because the Court has diversity jurisdiction over those claims. Notice ¶ 9 (citing §§ 1332 and 1441). In a footnote, Defendants contend that “because removal is not based solely on diversity jurisdiction, the limitation on removal of actions in 28 U.S.C. § 1441(b)(2) does not apply.” Id. ¶ 9 n.1. Defendants submit that the fourth count presents a federal question, as Plaintiff

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seeks a declaration of “the Welfare Fund's duties under Section 1302 of the Patient Protection And Affordable Care Act, codified at 42 U.S.C. § 18022.” Id. ¶ 10 (citing 28 U.S.C. §§ 1331, 1441)

Invoking Section 1441(b)(2), Plaintiff counters that the Welfare “Fund is a citizen of New Jersey - the state in which the action was brought. As such, removal on diversity jurisdiction is not permitted.” D.E. 10-1 at 4-5. As to federal question jurisdiction, Plaintiff argues that “[r]emoval cannot be based simply on the fact that federal law may be referred to in some context in the case.” Id. at 6. Plaintiff acknowledges that its fourth claim invokes the PPACA but maintains that “Congress has not created a private right of action under PPACA. As such, federal law does not create the cause of action.” Id. at 7. Plaintiff concludes that “Defendants can only meet their heavy burden of establishing federal-question jurisdiction if they can show all factors under Grable [& Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005)] are met[, ]” id., a showing that Plaintiff argues Defendants cannot make. Id.

Defendants respond that “[t]he declaratory judgment count of Plaintiff's complaint seeks affirmative relief under a federal statute, the [PPACA.]” D.E. 12 at 1. They criticize Plaintiff's Grable analysis as “superfluous because Plaintiff has pled a federal claim on the face of its Complaint.” Id. Defendants maintain that the absence of a cause of action in the PPACA is properly addressed in a motion to dismiss rather than one for remand. See id. at 7-8. They further contend that Section 1441(b)(2)'s “forum defendant rule does not apply because the Court has federal question jurisdiction, so removal of the state-law claims was also proper.” Id. at 2.

At the outset, the Court notes that Plaintiff does not contest...