Marquette Gen. Hosp. Inc. v. Starmark Ins. Co.

• Decision Date: 26 May 2011
• Docket Number: Case No. 2:11-CV-31
• Court: U.S. District Court — Western District of Michigan
• Parties: MARQUETTE GENERAL HOSPITAL, INC., Plaintiff, v. STARMARK INSURANCE CO., Defendant.

MARQUETTE GENERAL HOSPITAL, INC., Plaintiff,

v.STARMARK INSURANCE CO., Defendant.

Case No. 2:11-CV-31

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN NORTHERN DIVISION

Dated: May 26, 2011

HON. GORDON J. QUIST

OPINION

Plaintiff, Marquette General Hospital, Inc. ("MGHI") filed a one-count complaint in the Marquette Circuit Court against Defendant, Trustmark Life Insurance Company¹ ("Trustmark"), seeking to recover medical benefits under a Trustmark group insurance policy (the "Policy") for medical services MGHI provided to the minor children of Joshua and Andrea Osborn. MGHI attached to its complaint a copy of the assignment it had received from the Osborns, which indicated that the insurance policy was issued to Joshua Osborn's employer, Shute Oil Company, Inc. Trustmark removed the case to this Court on January 24, 2011, pursuant to 28 U.S.C. § 1441(a) and (b), on the basis of both federal question jurisdiction under 28 U.S.C. § 1331 and diversity jurisdiction under 28 U.S.C. § 1332. With regard to federal question jurisdiction, Trustmark alleged that MGHI's claims are completely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001, et seq.

Trustmark has now moved to dismiss MGHI's complaint on the grounds that the sole state law claim MGHI asserts is preempted by ERISA and any claim for medical benefits is time-barred under the Policy's three-year limitations period. In response, MGHI has moved for remand to state court. For the reasons that follow, the Court will deny MGHI's motion to remand and grant Trustmark's motion to dismiss, but will allow MGHI an opportunity to file a motion for leave to amend its complaint to allege a breach of contract claim based upon the alleged preferred provider agreement between Upper Peninsula Managed Care, LLC, d/b/a the U.P. Health Plan ("UPHP") and Trustmark.

I. MOTION TO REMAND

MGHI's entire complaint states as follows:

1. Plaintiff is a medical care facility located in the city of Marquette in the state of Michigan.

2. On information and belief, defendant, [Trustmark] is a medical insurance company which provided medical benefits for the family of Joshua and Andrea M. Osborn.

3. Attached hereto as Exhibit A is an assignment for authorization to sue defendant insurance company for medical benefits provided to the minor children of Mr. and Mrs. Osborn.

4. Between the dates of January 19, 2006 and February 12, 2007 Plaintiff provided medical services to the minor children of Andrea and Joshua Osborn.

5. A copy of itemized statements of account are available upon request.

6. The defendant made partial payments for the services provided to the minor children of Mr. and Mrs. Osborn, but has failed and refused to pay the balance due. There now remains due the sum of $132,276.32.

7. This matter is within the jurisdiction of this court.

(Compl., dkt. no. 1-3.) The assignment attached to the complaint states: "At the time the services were provided, we [the Osborns] were insured by [Trustmark], Group ID: SM72598X, ID: 01507573. The employer was Shute Oil Company, Inc."

As courts of limited jurisdiction, "federal court[s] must proceed with caution in deciding that [they have] subject matter jurisdiction." Musson Theatrical, Inc. v. Fed. Express Corp., 89 F.3d 1244, 1252 (6th Cir. 1996). Removal statutes are thus strictly construed to promote comity and preserve jurisdictional boundaries between state and federal courts. Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994). "The removing party bears the burden of demonstrating federal jurisdiction, and all doubts should be resolved against removal." Harnden v. Jayco, Inc., 496 F.3d 579, 581 (6th Cir. 2007) (citing Eastman v. Marine Mech. Corp., 438 F.3d 544, 549-50 (6th Cir. 2006)).

A. Federal Question Jurisdiction

The existence of federal question jurisdiction is determined by examining the plaintiff's well-pleaded complaint. Federal question jurisdiction arises where a "well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S. Ct. 2841, 2856 (1983). Under this rule, the plaintiff is the master of his claim and can avoid federal court jurisdiction by relying exclusively on state law. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429 (1997). Where the plaintiff relies exclusively on state law to establish its claim, removal is not permitted even where the claim is subject to a federal defense. City of Warren v. City of Detroit, 495 F.3d 282, 286 (6th Cir. 2007). As the Supreme Court has explained:

Although such allegations show that very likely, in the course of the litigation, a question under the Constitution would arise, they do not show that the suit, that is,the plaintiff's original cause of action, arises under the Constitution. For better or worse, under the present statutory scheme as it has existed since 1887, a defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case arises under federal law.

Franchise Tax Bd., 463 U.S. at 10, 103 S. Ct. at 2846-47 (quotation marks, citations, and edits omitted). This rule applies to any federal defense, "including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Caterpillar, 482 U.S. at 393, 107 S. Ct. at 2430.

The complete preemption doctrine is a limited exception to the well-pleaded complaint rule. See AmSouth Bank v. Dale, 386 F.3d 763, 776 (6th Cir. 2004). Complete preemption derives from the premise that "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in nature." Metro. Life Ins. v. Taylor, 481 U.S. 58, 63-64, 107 S. Ct. 1542, 1546 (1987). ERISA is one the few federal statutes to which the Supreme Court has applied complete preemption. See Gentek Bldg Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 325 (6th Cir. 2007). A state law claim will be completely preempted only if it falls within ERISA's civil enforcement provision set forth in § 502(a), 29 U.S.C. § 1132(a). Metro. Life, 481 U.S. at 67, 107 S. Ct. at 1548.

ERISA is also one of the few federal statutes where complete preemption and ordinary, or conflict, preemption may arise. See Taylor Chevrolet Inc. v. Med. Mut. Servs. LLC, 306 F. App'x 207, 210 (6th Cir. 2008). Pursuant to 29 U.S.C. § 1144(a), "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" are preempted. Because preemption under § 1144(a) is a defense, it "does not create a federal cause of action itself, and cannot convert a state cause of action into a federal cause of action under the well-pleaded complaint rule." Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th cir. 1995). See also Roddy v. Grand Trunk W. R.R. Inc., 395 F.3d 318, 323 (6th Cir. 2005) ("Complete preemption that supports removal and ordinarypreemption are two distinct concepts."). Thus, "no removal jurisdiction exists under § 1144." Warner, 46 F.3d at 534. Because the issue here is whether removal was proper, the focus is on complete preemption rather than ERISA preemption under § 1144.²

In Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S. Ct. 2488 (2004), the Court summarized complete preemption for purposes of ERISA as follows:

[I]f an individual brings suit complaining of a denial of coverage for medical care, where the individual is entitled to such coverage only because of the terms of an ERISA-regulated employee benefit plan, and where no legal duty (state or federal) independent of ERISA or the plan terms is violated, then the suit falls "within the scope of" ERISA § 502(a)(1)(B). In other words, if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there was no other independent legal duty that is implicated by a defendant's actions, then the individual's cause of action is completely pre-empted by ERISA § 502(a)(1)(B).

Id. at 210, 124 S. Ct. at 2496. Thus, complete preemption requires two inquiries: (1) whether the plaintiff could have brought its claim under § 502(a); and (2) whether any other legal duty supports the plaintiff's claim.

With regard to the first inquiry, generally, only certain persons - the Secretary of Labor, participants, beneficiaries, and fiduciaries - have statutory standing to bring an action under § 1132(a). See Local 6-0682 Int'l Union of Paper v. Nat'l Indus. Grp. Pension Plan, 342 F.3d 606, 609 n.1 (6th Cir. 2003). Although MGHI does not fall into any of these categories, it nonetheless has standing to bring an ERISA claim because it has a valid assignment of ERISA benefits from the Osborns. See Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1277 (6th Cir. 1991) (holding that a healthcare provider has standing to assert a claim under ERISA if it has received a valid assignment of benefits from a participant or beneficiary). Regarding the second inquiry -whether any other legal duty supports MGHI's claim, MGHI's claim is for recovery of medical benefits to which the Osborns are entitled under the Policy. This is a quintessential claim for benefits under ERISA § 502(a)(1)(b). No other legal duty is implicated by these allegations.

MGHI contents that its claim is not completely preempted because it is a simple collection action subject to state collection law. Yet, it is a collection action seeking to recover benefits from an ERISA plan. As the Court recognized in Davila, a plaintiff's label or characterization of its claim is irrelevant to determining whether a claim is or is not preempted. See Davila, 542 U.S. at 214, 124 S. Ct. at 2498. The cases MGHI cites...