McSharry v. Unumprovident Corp.

• Decision Date: 04 December 2002
• Docket Number: No. 1:02-CV-208.,1:02-CV-208.
• Citation: 237 F.Supp.2d 875
• Parties: Patrick F. McSHARRY, Plaintiff, v. UNUMPROVIDENT CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of Tennessee

237 F.Supp.2d 875

Patrick F. McSHARRY, Plaintiff, v. UNUMPROVIDENT CORPORATION, Defendant.

No. 1:02-CV-208.

United States District Court, E.D. Tennessee, At Chattanooga.

December 4, 2002.

Harry F. Burnette and Anita B. Hardeman, Chattanooga, TN, for Plaintiff.

Susan Kerr Lee, Chattanooga, TN, Patrick W. Shea, Stamford, CT, for Defendant.

MEMORANDUM AND ORDER

EDGAR, Chief Judge.

Plaintiff Patrick McSharry ("McSharry"), a former employee of defendant UnumProvident Corporation, filed this action in the Circuit Court of Hamilton County, Tennessee. He asserts two similar causes of action under Tennessee law. McSharry claims retaliatory discharge under the Tennessee Public Protection Act, TENN. CODE ANN. § 50-1-304, commonly known as the Tennessee "whistleblower" statute. McSharry also makes a claim under Tennessee common law that he was wrongfully discharged from employment in retaliation for his supporting a public policy of the State of Tennessee. These claims by McSharry are predicated on the contention that he was subjected to retaliation and wrongful discharge from employment because he refused to participate in and remain silent about alleged violations of fiduciary duties under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. McSharry demands back wages, reinstatement to his former position of employment, front pay or future damages in lieu of reinstatement, punitive damages, costs, attorney's fees, and an injunction prohibiting the defendant engaging in any further harassment and retaliation against him.

Defendant removed the case to federal district court pursuant to 28 U.S.C. § 1441. Defendant invokes this Court's subject matter jurisdiction under 28 U.S.C. § 1331 on the basis that McSharry's claims are completely preempted by ERISA.

The matter presently before the Court is a motion by McSharry pursuant to 28 U.S.C. § 1447(c) to remand the case to state court. [Court File No. 15]. The question to be resolved is whether McSharry's claims are completely preempted by ERISA and removable to federal court. After reviewing the record, the Court concludes the motion to remand is not well taken and it is DENIED. McSharry's claims are completely preempted by ERISA, and this civil action has been properly removed pursuant to 28 U.S.C. §§ 1331 and 1441(b).

I. McSharry's Complaint

For the purpose of ruling on the motion to remand, the Court considers the factual allegations in McSharry's complaint to be true. McSharry makes the following allegations.

Defendant UnumProvident is a corporation in the business of providing employment disability insurance to groups and individuals. It processes employment disability insurance claims made by its own insureds as well as serving as an ERISA plan administrator for other companies. In administering employment benefit plans, the defendant is responsible for making determinations whether claimants are disabled within the definitions and scope of insurance policies. A key part of these determinations is assessment of the claimants' medical conditions.

McSharry was one of several medical advisors employed by the defendant for the purpose of enabling it to make medical judgments regarding the disability status of claimants McSharry worked for the defendant in the positions of medical consultant, Associate Medical Director, and Medical Director. It is alleged that the defendant's standard practice and policy was to deny disability claims. According to McSharry, the medical advisors were improperly used by the defendant to provide medical language and conclusions supporting the denial of valid disability insurance claims. The complaint avers that it was the defendant's practice to use non-medical personnel called "claims specialists" and "appeals specialists," together with nurses, to make decisions regarding medical referrals rather than to allow licensed physicians to make such medical decisions.

McSharry states the defendant's physicians were supposed to handle a substantial number of files or claims each day which precluded meaningful analysis. Defendant encouraged medical advisors to use language in their reports that could support the denial of disability insurance claims. If the reports were unsatisfactory to this end, the physicians were asked by the defendant to delete or revise language in the reports so as not to compromise denial of claims. Defendant did not allow its physicians to request further information or suggest additional medical tests. The physicians' reviews were supposed to be based on the existing record. Moreover, the defendant's physicians were not supposed to help a claimant perfect a claim for disability insurance benefits.

McSharry avers it was the defendant's practice and policy to evaluate every medical condition of a claimant in isolation and render a disability decision on the effects of each isolated condition rather than to consider the restrictions of each condition in combination or conjunction with the other medical conditions. Defendant expected the medical advisors to render opinions on medical conditions outside of his or her specialty and not to refer the files to specialists in the field. Defendant also required the non-specialist to support his or her training in a particular medical specialty even where it required falsification of qualifications or expertise. Although an appeal of a denial of benefits is supposed to be reviewed independently and de novo by the defendant, it is averred that the defendant's usual practice is to rely on the original evaluation and not make an independent, de novo review of appeals.

During the early months of his employment, McSharry says he tried to work out his ethical dilemma with the defendant's practices by walking a careful line. McSharry sought to follow the defendant's practices while still rendering truthful medical reports. There came a point, however, when McSharry realized that he could not comply with the defendant's practices and maintain his own integrity or contribute to the defendant corporation's integrity. McSharry let his supervisors know that he would no longer participate in or be part of what he considered unethical and illegal practices in violation of ERISA.

McSharry contends the defendant's practices violated ERISA in the following ways: (1) defendant refused, and refused to allow its agents, to act in a fiduciary capacity toward its participants in violation of 29 U.S.C. § 1105 and corresponding federal regulations; (2) defendant refused, and refused to allow its agents, to inform claimants of information that the claimants could supply to perfect their records in violation of 29 U.S.C. § 1104 and corresponding federal regulations; (3) defendant made what should have been fiduciary decisions on behalf of claimants on the basis of its own business needs in violation of 29 U.S.C. § 1103 and corresponding federal regulations; (4) defendant refused, and refused to allow its agents, to make independent and de novo evaluations of records on appeal in violation of 29 U.S.C. § 1104 and corresponding federal regulations; and (5) defendant refused, and refused to allow its agents, to consult with appropriate health care professionals in deciding appealed claims involving medical judgments, but rather deferred to non-medical judgments, in violation of 29 U.S.C. § 1104 and corresponding federal regulations.

The complaint alleges that when McSharry began writing his reports accurately and without improper conclusions to deny claims, including in his reports and discussions with treating physicians what was necessary to perfect a claim or ERISA administrative appeal, he suffered retaliation from the defendant. McSharry contends he endured oral and written warnings, and disciplinary write-ups. He was subjected to constant criticism and ostracism. His work was routed around him. McSharry contends he refused to yield to the defendant's coercive tactics and he refused to remain silent about the defendant's illegal practices when talking with other medical personnel. In January 2002, the defendant terminated McSharry's employment as Medical Director purportedly for "disruptive behavior."

II. Analysis

The Tennessee whistleblower statute, TENN. CODE ANN. § 50-1-304(a) provides: "No employee shall be discharged or terminated solely for refusing to participate in, or for refusing to remain silent about, illegal activities." The term "illegal activities" is defined in § 50-1-304(c) as meaning activities which are in violation of statutes of the United States of America.

An essential premise of McSharry's complaint is that Tennessee law provides a cause of action and remedy when the employee or agent of an ERISA fiduciary is discharged from employment in retaliation for refusing to participate in and/or remain silent about his employer's violation of its ERISA fiduciary obligations. Because the defendant does not argue otherwise, the Court assumes, without deciding, that McSharry's complaint is sufficient to at least state a claim upon which relief can be granted under Tennessee law. Cf. Authier v. Ginsberg, 757 F.2d 796, 798 (6th Cir. 1985) (concluding that Michigan law would recognize a discharged employee's compliance with ERISA fiduciary duties and obligations as an activity protected by public policy); Fairneny v. Savogran Co., 422 Mass. 469, 664 N.E.2d 5, 7-8 (1996).

The parties disagree about whether McSharry's complaint is removable based on ERISA preemption. Ordinarily, a defendant may remove a case to federal district court only if it could have been brought in federal court in the first place; that is, if the federal district court would have original subject matter jurisdiction over the case. Strong v. Telectronics Pacing Systems, Inc., 78 F.3d 256, 259 (6th Cir.1996); 28 U.S.C. § 1441(a). Defendant removed this case pursuant to 28 U.S.C. § 1441(b) which provides in part that "[a]ny civil action of which the district courts have original...