Lambert v. Mail Handlers Benefit Plan

• Decision Date: 11 May 1995
• Docket Number: No. CV-94-A-1263-N.,CV-94-A-1263-N.
• Parties: Robert LAMBERT, Plaintiff, v. MAIL HANDLERS BENEFIT PLAN, et al. Defendants.
• Court: U.S. District Court — Middle District of Alabama

886 F. Supp. 830

Robert LAMBERT, Plaintiff, v. MAIL HANDLERS BENEFIT PLAN, et al. Defendants.

No. CV-94-A-1263-N.

United States District Court, M.D. Alabama, Northern Division.

May 11, 1995.

John I. Cottle, Tallassee, AL, for plaintiff.

Duncan Blair, Birmingham, AL and Denis F. Gordon, Washington, DC, for defendants.

MEMORANDUM OPINION AND ORDER

ALBRITTON, District Judge.

INTRODUCTION

This cause is before the court on Plaintiff's Motion to Remand, filed on December 16, 1994. Plaintiff originally brought suit in the Circuit Court of Elmore County, Alabama, on August 31, 1994. Defendants removed the case to this court on September 30, 1994.

Plaintiff seeks compensatory and punitive damages from the defendants for what plaintiff characterizes as state causes of action arising out of the defendants' retroactive cancellation of plaintiff's medical benefits in November, 1993. He claims insurance benefits and damages for fraudulent suppression and apparently for bad faith refusal to pay claims.

Defendants removed pursuant to 28 U.S.C. § 1441, and 28 U.S.C. § 1331. They contend that this case presents a federal question and that this court therefore has jurisdiction over the matter. Specifically, the defendants argue that the plaintiff's state causes of action are governed exclusively by federal law. This also presents the issue as to whether the claims are preempted by 5 U.S.C. § 8901, et seq., known as the Federal Employees Health Benefit Act ("FEHBA" or "the Act"). Finally, defendants contend that the complaint states a federal question on its face.¹ For the reasons set forth below, the court finds that Plaintiff's Motion to Remand is due to be GRANTED.

FACTS

Plaintiff Robert Lambert ("Lambert") is a former civilian employee with the Alabama Army National Guard. As part of his employment, he was given an option to enroll in a health insurance program pursuant to FEHBA. The FEHBA was established by Congress to facilitate and subsidize the provision of health benefits to government employees. Under the FEHBA, plans, such as the defendant in this case, contract with the federal government, specifically with the Office of Personnel Management ("OPM"), to provide insurance to government employees. These employees generally have a variety of insurance providers to choose from under the FEHBA. Here, plaintiff chose to enroll in the Mail Handlers Benefit Plan ("MHBP" or "the plan") and began paying premiums through payroll deductions.

Plaintiff was injured on the job in August, 1986. Because of this injury, he was not able to return to his employment, and he began drawing disability benefits. Pursuant to his health plan, plaintiff was eligible to retain his health insurance plan, and premiums were deducted from his disability payments. He paid the premiums in this manner through November, 1993.

According to plaintiff's complaint, between August 1, 1992, and November 29, 1993, plaintiff's family incurred over $20,000 in medical expenses that he believed were covered under his health insurance plan, the MHBP. However, on November 29, 1993, the Office of Personnel Management, the office that oversees the plan pursuant to the terms of the FEHBA, notified the plan that plaintiff was no longer eligible to draw disability benefits, and had not been eligible since August 1, 1992. MHBP then retroactively canceled plaintiff's coverage effective August 1, 1992. The plan then contacted plaintiff's health care providers and demanded reimbursement for payments made for services provided between August 1, 1992 and November 29, 1993.

STANDARD FOR REMAND

Federal courts are courts of limited jurisdiction. See, Kokkonen v. Guardian Life Ins. Co. of Am, ___ U.S. ___, ___, 114 S.Ct. 1673, 1675, 128 L.Ed.2d 391 (1994); Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (1994); Wymbs v. Republican State Executive Committee, 719 F.2d 1072, 1076 (11th Cir.1983), cert. denied, 465 U.S. 1103, 104 S.Ct. 1600, 80 L.Ed.2d 131 (1984). As such, they have the power to hear only those cases that they have been authorized to hear by Congress or by the Constitution. Kokkonen, ___ U.S. at ___, 114 S.Ct. at 1675. The appropriate analysis in a case such as this is whether or not the case could have originally been brought in federal court as removal is only proper in those instances. 28 U.S.C. § 1441(a).

More generally, the court notes that the law in the Eleventh Circuit favors remand where federal jurisdiction is not absolutely clear. As stated by the Court of Appeals, in deciding a motion to remand where the plaintiff and defendant disagree on issues of jurisdiction, questions or doubts are to be resolved in favor of returning the matter to state court. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir.1994).

ANALYSIS

The primary purpose of the FEHBA is to "provide federal employees and retirees with subsidized health care benefits." Hayes v. Prudential Ins. Co. of America, 819 F.2d 921, 922 (9th Cir.1987), cert. denied, 484 U.S. 1060, 108 S.Ct. 1014, 98 L.Ed.2d 980 (1988). Under the FEHBA, insurers contract through the federal government to provide insurance to government workers. The plan is overseen by the OPM, which is in charge of various determinations, such as the interpretation of coverage under the individual plans. The first question that arises in this instance is whether the terms of the FEHBA preempt the plaintiff's state causes of action, and therefore whether federal law controls this action.

The Act contains the following preemption section:

The provisions of any contract under this chapter which relate to the nature or extent of coverage or benefits (including payment with respect to benefits) shall supersede and pre-empt any state or local law, or any regulation issued thereunder, which relates to health insurance or plans to the extent that such law or regulation is inconsistent with such contractual provisions.

5 U.S.C. § 8902(m)(1)

The policy behind the preemption provision is to ensure uniformity in the administration of benefits pursuant to the FEHBA. Burkey v. Government Employees Hospital Association, 983 F.2d 656, 660 (5th Cir.1993).

There is not much dispute that FEHBA's preemption provision means that courts must apply federal, rather than state law. The Eleventh Circuit has specifically ruled that where a state law conflicts with a FEHBA contract, that state law is preempted. Blue Cross & Blue Shield of Fla., Inc. v. Dept. of Banking, 791 F.2d 1501, 1506 (11th Cir.), rehearing den., 797 F.2d 982 (1986). Additionally, although not ruling on a FEHBA issue, the Eleventh Circuit has also ruled that "the interpretation of government health insurance contracts is controlled by federal, not state law." Tackitt v. Prudential Ins. Co. of America, 758 F.2d 1572, 1575 (11th Cir.1985).

Most courts that have addressed the issues of FEHBA preemption have determined that the state law is preempted by the act. For example, courts in other circuits have held that where a plaintiff states a claim that would expand the benefits due plaintiff beyond those specified in the contract, the state law claims are preempted. See, Hayes, 819 F.2d at 926 ("because the state law claims invariably expand appellees' obligations under the Plan, the claims are inconsistent with the Plan and, hence, preempted under § 8902(m)(1)"); Burkey, 983 F.2d 656; Lieberman v. National Postal Mail Handlers Union, 819 F.Supp. 344, 349 (S.D.N.Y. 1993). Generally, as noted in Burkey, "the weight of authority and most persuasive analysis supports the position that state law claims are preempted by § 8902(m)(1) of the FEHBA." Burkey, 983 F.2d at 659 (citing an unpublished opinion); but see, Howard v. Group Hospital Service, 739 F.2d 1508 (10th Cir.1984) (federal law does not apply to FEHBA contract action). The court finds that at least in the Eleventh Circuit, § 8902(m)(1) and the relevant case law require a court hearing a cause of action that involves interpreting the terms of an insurance contract entered into pursuant to FEHBA to apply federal rather than state law.

However, simply because a cause of action will be governed by federal law does not mean that removal is proper. State courts have the power and the duty to hear claims that call for the application of federal law. See Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 101 S.Ct. 2870, 69 L.Ed.2d 784 (1981). In order to determine whether this case is properly removed there are three separate issues to resolve. The first is whether or not the complaint on its face states a cause of action under federal law. Additionally, the court must examine the applicability of federal common law, and whether actions that implicate the FEHBA are of such concern to the federal government that federal common law should govern. Finally, the court must also examine the doctrine of complete preemption. Under this theory, if the court determines that Congress's intent in passing the FEHBA was to completely preempt all other laws in that field, then a cause of action that implicates the statute is necessarily a federal claim, without regard to the wording of the complaint.

WELL PLEADED COMPLAINT

It is settled law that a federal cause of action arises under federal law only where a federal question appears on the face of the complaint. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987); Brown v. Conn. General Life Ins. Co., 934 F.2d 1193, 1195-96 (11th Cir.1991).² Equally axiomatic is the notion that "the party who brings suit is master to decide what law he will rely upon, and therefore does determine whether he will bring a `suit arising under' the ... laws of the United States by his declaration and bill. That question cannot depend upon the answer, and accordingly jurisdiction cannot be conferred by the defense, even when anticipated and replied to in the bill." The Fair v. Kohler Die and Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716 ...