López-Muñoz v. Triple-S Salud, Inc., 13–1417.

• Decision Date: 09 May 2014
• Docket Number: No. 13–1417.,13–1417.
• Citation: 754 F.3d 1
• Parties: Raquel LÓPEZ–MUÑOZ and Orlando Ríos–Walker, Plaintiffs, Appellants, v. TRIPLE–S SALUD, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

754 F.3d 1

Raquel LÓPEZ–MUÑOZ and Orlando Ríos–Walker, Plaintiffs, Appellants,

v.TRIPLE–S SALUD, INC., Defendant, Appellee.

No. 13–1417.

United States Court of Appeals,First Circuit.

May 9, 2014.

José Vázquez García, for appellants.

Cesar T. Alcover, with whom Casellas Alcover & Burgos, P.S.C. was on brief, for appellee.

Before HOWARD, SELYA and LIPEZ, Circuit Judges.

SELYA, Circuit Judge.

In this matter of first impression within our circuit, we confront the question of whether the Federal Employees Health Benefits Act of 1959 (FEHBA), 5 U.S.C. §§ 8901–8914, completely preempts local-law tort and contract claims arising out of a refusal by an FEHBA insurer to cover a medical procedure. Concluding that complete preemption does not exist, we reverse the orders appealed from and direct the district court to remand the action to the Puerto Rico Court of First Instance.

I. BACKGROUND

In 2009, physicians diagnosed plaintiff-appellant Raquel López–Muñoz with morbid obesity and recommended that she undergo gastric lap band surgery. Defendant-appellee Triple–S Salud, Inc., a health-care insurer that covered the plaintiff by virtue of her husband's employment with the federal government, initially denied authorization for the surgery. The plaintiff eventually persuaded the defendantto reconsider its refusal and scheduled the procedure for October 27, 2009.

Despite the plaintiff's confidence that her path had been cleared, obstacles loomed. The defendant voiced newfound objections to the cost of the lap band and the anesthesiologist's fees. During the next month, the plaintiff unsuccessfully attempted to quell these objections.

In due course, the plaintiff repaired to the Puerto Rico Court of First Instance and brought tort and breach of contract claims for damages against the defendant.¹ The defendant removed the action to the federal district court.

The notice of removal recited two grounds. First, it asserted that the FEHBA completely preempted the plaintiff's local-law claims, transmogrifying them into federal questions and conferring original jurisdiction upon the federal court. See28 U.S.C. §§ 1331, 1441(a). Second, it asserted that the defendant was acting under the direction of a federal officer, thus warranting removal. See id. § 1442(a)(1).

The plaintiff balked. She challenged the propriety of the removal and entreated the district court to remand the case to the Court of First Instance. The defendant meantime moved to dismiss the case, arguing that the FEHBA demanded (and the plaintiff had not pursued) exhaustion of administrative remedies.

The district court denied the plaintiff's motion to remand. It held that the FEHBA completely preempted the plaintiff's claims and, thus, federal jurisdiction attached. See id. § 1331. The court proceeded to dismiss the action without prejudice for failure of the plaintiff to exhaust administrative remedies. This timely appeal ensued.

II. ANALYSIS

We start with an overview of the pertinent provisions of the FEHBA and the implementing regulations. The FEHBA “establishes a comprehensive program of health insurance for federal employees” and family members covered under their plans. Empire HealthChoice Assur., Inc. v. McVeigh, 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006); see5 U.S.C. § 8905(a)(3). Premiums shared by enrollees and the federal government fund the program. See5 U.S.C. §§ 8906(b)-(c), 8909(a). A panoply of health-care offerings is constructed through negotiation: the federal Office of Personnel Management (OPM) contracts with private insurers to provide and administer particular plans. See id. § 8902(a)-(d).

The FEHBA itself does not delineate specific procedures for resolving denial-of-benefits disputes. Instead, it grants OPM authority to prescribe necessary regulations. See id. § 8913(a).

In pursuance of this authority, OPM promulgated a regulation that dictated, among other things, that denial-of-benefits disputes under FEHBA plans must pass through an administrative review process prior to any resort to the courts. See5 C.F.R. § 890.107(d)(1); Federal Employees Health Benefits Program: Filing Claims, 61 Fed.Reg. 15,177, 15,179 (Apr. 5, 1996). The same regulation specified that OPM, not any private insurer, must be named as the defendant in any court suit seeking judicial review of a denial of benefits. See5 C.F.R. § 890.107(c); Federal Employees Health Benefits Program: Filing Claims, 61 Fed.Reg. at 15,179. The mechanics of the judicial review process are governed by the general statutory framework of the Administrative ProcedureAct, 5 U.S.C. §§ 701–706. See, e.g., Muratore v. U.S. OPM, 222 F.3d 918, 920 (11th Cir.2000).

The FEHBA contains a preemption clause, which explicitly provides: “The terms of any contract [issued] under [the FEHBA] which relate to the nature, provision, or extent of coverage or benefits ... shall supersede and preempt any State or local law ... which relates to health insurance or plans.” 5 U.S.C. § 8902(m)(1).

Against this backdrop, we turn to the plaintiff's claims. The parties agree that the defendant's policy was issued under, and is subject to, the terms of the FEHBA. Here, however, the plaintiff insists that her claims are local-law claims for damages, not claims that seek to reverse an insurer's refusal either to authorize or pay for certain medical procedures. In her appeal, she challenges both the district court's denial of her motion to remand and its subsequent dismissal of her suit.

At the heart of the plaintiff's asseverational array lies her contention that her case was not properly removable. Our appraisal of the denial of her motion to remand depends, of course, on whether federal jurisdiction exists. See BIW Deceived v. Local S6, Indus. Union of Marine & Shipbldg. Workers, 132 F.3d 824, 830 (1st Cir.1997). This inquiry is cabined by the notice of removal. See, e.g., Ervast v. Flexible Prods. Co., 346 F.3d 1007, 1012 n. 4 (11th Cir.2003). While the defendant cited the federal officer removal statute, 28 U.S.C. § 1442(a)(1), in the notice, it made no effort to defend removal on that ground either in its opposition to the plaintiff's motion to remand or in its appellate briefing. Consequently, that putative ground for removal is waived.²See Viqueira v. First Bank, 140 F.3d 12, 16 n. 2 (1st Cir.1998).

Eliminating the federal officer removal statute means that the propriety of removal in this case hinges on whether the district court had original jurisdiction over the matter. See28 U.S.C. § 1441(a). When, as now, there is neither diversity of citizenship nor any other special basis for jurisdiction, the question reduces to the existence vel non of federal question jurisdiction. See Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 8, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). A federal question exists when the action is one “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.

The “arising under” analysis is informed by the well-pleaded complaint rule, which “requires the federal question to be stated on the face of the plaintiff's well-pleaded complaint.” R.I. Fishermen's All., Inc. v. R.I. Dep't of Envtl. Mgmt., 585 F.3d 42, 48 (1st Cir.2009); accord Franchise Tax Bd., 463 U.S. at 9–10, 103 S.Ct. 2841. As a general matter, this rule envisions “that the plaintiff is master of his complaint and that a case cannot be removed if the complaint's allegations are premised only on local law.” Negrón–Fuentes v. UPS Supply Chain Solutions, 532 F.3d 1, 6 (1st Cir.2008). These principles normally govern when the defendant asserts that the plaintiff's local-law claims are preempted by federal law. See Franchise Tax Bd., 463 U.S. at 10, 14, 103 S.Ct. 2841; Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908).

But the general rule that gives birth to these principles, like virtually every general rule, admits of exceptions. One such exception is embodied in the artful pleading doctrine, which is designed to prevent a plaintiff from unfairly placing a thumb on the jurisdictional scales. To this end, the artful pleading doctrine allows a federal court to peer beneath the local-law veneer of a plaintiff's complaint in order to glean the true nature of the claims presented. See Rivet v. Regions Bank, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998); BIW Deceived, 132 F.3d at 831. When such a glimpse reveals that a federal statute entirely displaces the local-law causes of action pleaded in the complaint, a hidden core of federal law sufficient to support federal jurisdiction emerges. See Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). In such a case, the plaintiff's claims are deemed “federal claims in state law clothing and, to defeat artful pleading, the district court can simply ‘recharacterize’ them to reveal their true basis.” Negrón–Fuentes, 532 F.3d at 6; see BIW Deceived, 132 F.3d at 831.

This jurisdiction-granting exception, known as complete preemption, comprises a narrow exception to the well-pleaded complaint rule. See Beneficial Nat'l Bank, 539 U.S. at 5, 123 S.Ct. 2058. Despite its name, complete preemption does not simply play übermensch to the more commonplace defense of federal preemption. The doctrine of complete preemption is conceptually distinct from the doctrine of ordinary (or defensive) preemption: the latter defends against a plaintiff's local-law claims without any jurisdictional ramifications, but the former clears a path—albeit one that is rarely traversed successfully—into federal court. See Fayard v. Ne. Vehicle Servs., LLC, 533 F.3d 42, 45, 48 (1st Cir.2008).

The linchpin of the complete preemption analysis is whether Congress intended that federal law provide the exclusive cause of action for the claims asserted by the plaintiff. See Beneficial Nat'l Bank, 539 U.S. at 9, 123 S.Ct. 2058. “The Supreme Court decisions finding complete...