Nealy v. US Healthcare HMO

• Decision Date: 02 March 1994
• Docket Number: No. 93 Civ. 1577 (CSH).,93 Civ. 1577 (CSH).
• Citation: 844 F. Supp. 966
• Parties: Susan NEALY, individually, and as Administratrix of the Estate of Glenn Nealy, deceased, Plaintiff, v. U.S. HEALTHCARE HMO, U.S. Healthcare Versatile Plus HMO, U.S. Health Insurance Co., Inc., Richard H. Bernstein, M.D. and Ralph Yung, M.D., Defendants.
• Court: U.S. District Court — Southern District of New York

844 F. Supp. 966

Susan NEALY, individually, and as Administratrix of the Estate of Glenn Nealy, deceased, Plaintiff, v. U.S. HEALTHCARE HMO, U.S. Healthcare Versatile Plus HMO, U.S. Health Insurance Co., Inc., Richard H. Bernstein, M.D. and Ralph Yung, M.D., Defendants.

No. 93 Civ. 1577 (CSH).

United States District Court, S.D. New York.

March 2, 1994.

COPYRIGHT MATERIAL OMITTED

Kenneth J. Kelly, Epstein Becker & Green, P.C., New York City, for U.S. Healthcare HMO, U.S. Healthcare Versatile Plus HMO, U.S. Health Insurance Co., Inc. and Richard H. Bernstein, M.D.

Eliot R. Clauss, Peltz, Walker & Dubinsky, New York City, for Ralph Yung, M.D.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

Plaintiff Susan Nealy commenced this action in the Supreme Court of the State of New York, County of Bronx, individually and as administratrix of the estate of Glenn Nealy, against Defendants U.S. Healthcare HMO, U.S. Healthcare Versatile Plus HMO, U.S. Health Insurance Co. Inc. (collectively "US Healthcare"), Richard H. Bernstein, M.D. ("Bernstein") and Ralph Yung, M.D. ("Yung"). Defendant US Healthcare is a health maintenance organization in the business of issuing policies of insurance for health care coverage. Defendant Bernstein, at all relevant times, served as Vice President and Director of Defendant US Healthcare. Defendant Yung, at all relevant times, was a primary care practitioner who provided medical care to individuals enrolled in plans provided by Defendant US Healthcare. Defendants US Healthcare and Bernstein contend that neither provided direct medical services. (Defs.' Mem.Supp. Dismiss at 2). Plaintiff does not contest any of these statements.

Plaintiff's complaint alleges breach of contract, misrepresentation, professional misconduct, medical malpractice, wrongful death, loss of services, negligent infliction of emotional distress and breach of fiduciary duty. These causes of action arise out of the death of Plaintiff's decedent husband, Glenn Nealy, while he was enrolled in a health care plan provided by defendant US Healthcare.

Defendants US Healthcare and Bernstein removed the action to this Court pursuant to 28 U.S.C. §§ 1331 and 1441(a), (b) and (c), on the ground that Plaintiff's claims are based on a federal question under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 ("ERISA"). Those Defendants now move to dismiss the complaint pursuant to Rule 12(b)(6), Fed.R.Civ.P. Plaintiff cross-moves to remand the action to state court for want of a federal question. Defendants US Healthcare and Bernstein contend that Plaintiff's state law claims are preempted by ERISA and therefore the complaint fails to state a claim upon which relief can be granted. Defendant Yung did not join in this motion. Plaintiff argues that her claims are not preempted and thus this Court lacks subject matter jurisdiction.

BACKGROUND

Plaintiff's decedent, Glenn Nealy, was employed by Photocircuits Corp. (Complaint ¶ 14.) During March 1992, Plaintiff's decedent enrolled in the "US HealthCare Versatile Plus" health care plan ("the plan") offered by Defendant US Healthcare to employees of Photocircuits Corp. It is undisputed that under this plan defendant US Healthcare was to provide Glenn Nealy with insurance coverage for his medical care.

Plaintiff alleges that Defendant US Healthcare represented to Plaintiff's decedent that the plan would enable him to continue treatment of his pre-existing anginal condition. According to the complaint, Defendants' plan and policy provided "expressly and implicitly, that Plaintiff's decedent's special medical needs would be covered, and that Plaintiff's decedent would be entitled to continue, uninterrupted" the medical treatment that had been in progress, including treatment by the doctors Glenn Nealy had been seeing. (Complaint ¶¶ 27-28.) Plaintiff further contends that Glenn Nealy followed all necessary procedures for enrollment and qualification under the plan and attempted to see Defendant Yung, a participating primary care physician. (Complaint ¶ 29.) Plaintiff alleges that as a result of US Healthcare's failure to furnish Glenn Nealy with the proper identification, Yung refused to see him on or about April 2, 1992 and April 3, 1992. Thus, Plaintiff states, Glenn Nealy was unable to obtain the proper "referral" from Yung that defendant US Healthcare told him was necessary to continue treatment by his own doctors. (Complaint ¶¶ 30-35.)

On or about April 9, 1992, Yung agreed to see Glenn Nealy but denied any knowledge as to US Healthcare's alleged procedures regarding the "referral" for follow-up treatment by Glenn Nealy's own physicians. Defendant Yung renewed Glenn Nealy's prescriptions for medication previously prescribed by his physicians, but according to Plaintiff, Glenn Nealy was unable to fill the prescriptions because "representatives of defendant US Healthcare provided incorrect and invalid information to the pharmaceutical provider." (Complaint ¶ 38.)

Plaintiff's decedent, between April 9 and May 18, 1992, repeatedly tried to obtain the proper authorization from representatives of Defendant US Healthcare to continue treatment by his physicians. (Complaint ¶ 39.) According to Plaintiff, on or about April 29, 1992, Defendants US Healthcare and Bernstein, "in violation of representations previously made to Plaintiff's decedent, ... formally denied, in writing, Plaintiff's decedent's request for `follow-up visits' to his own physicians for the reason that they had `a participating provider in the area.'" (Complaint ¶ 40-41.)

On or about May 15, 1992 Defendant Yung provided Plaintiff's decedent with a "referral" that authorized Plaintiff's decedent to visit a "participating" cardiologist on May 19, 1992. (Complaint ¶¶ 42-43.) On May 18, 1992, Glenn Nealy suffered cardiac arrest and died as a result of a massive myocardial infarction. (Complaint ¶ 44.)

Plaintiff contends that Defendants' negligence and wrongful acts caused a delay in her husband's medical treatment which eventually led to his death. Plaintiff pleads the following causes of action:

(1) Against all Defendants: breach of contract and misrepresentation,

(2) Against all Defendants: violation of "standard of professional conduct",

(3) Against Defendants Bernstein and Yung: medical malpractice,

(4) Against all Defendants: wrongful death pursuant to New York State Estate, Powers and Trusts Law § 5-4.1,

(5) Against all Defendants: negligence,

(6) On behalf of Plaintiff Susan Nealy, individually, against all Defendants: loss of services,

(7) Against all Defendants: breach of fiduciary duty.

In evaluating a defendant's motion to dismiss, the court must construe all facts in the light most favorable to the Plaintiff, and accept as true all Plaintiff's well-pleaded factual allegations. See Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

DISCUSSION

I. Propriety of Removal

In Plaintiff's motion to remand, she contends that removal to this Court was improper because her Complaint is framed solely on the basis of state law and makes no reference to ERISA. The sole case on which Plaintiff relies, Davis v. American Gen. Group Ins. Co., 732 F.Supp. 1132 (N.D.Ala.1990), stands for the proposition that a defendant's motion to dismiss following removal from state court, on the grounds that the complaint fails to state a claim under ERISA, is a concession of a lack of federal question jurisdiction. Plaintiff's reliance on this case is misplaced. I first note that Davis is not binding on this Court, nor is it in accordance with the law of the Second Circuit. But more importantly, the Northern District of Alabama failed to cite or consider Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), in which the Supreme Court dealt directly with this issue.

Ordinarily, a federal court's determination of its removal jurisdiction is guided by the "well-pleaded complaint" rule. The rule states that a defendant cannot remove a case to federal court unless the plaintiff's complaint establishes that the case "arises under" federal law. See Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 10, 103 S.Ct. 2841, 2864, 77 L.Ed.2d 420 (1983). A federal defense, such as federal preemption, which does not appear on the face of a well-pleaded complaint, is insufficient by itself to permit removal. See Louisville & Nashville R.R. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908).

However, in Metropolitan Life, 481 U.S. at 63-67, 107 S.Ct. at 1546-48, the Supreme Court noted that a corollary to the well-pleaded complaint rule has developed where Congress "may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Id. at 63-64, 107 S.Ct. at 1546-47. The plaintiff in Metropolitan Life filed a number of state law claims against his insurance company and his employer. Id. at 61, 107 S.Ct. at 1545. The defendants removed the suit to federal court alleging federal question jurisdiction over the disability benefits claim by virtue of ERISA. Id. Relying on Congress' intent to have causes of action fall within the civil enforcement provision of ERISA and the preemptive force of ERISA, the Court concluded that a defense of ERISA preemption constitutes an exception to the well-pleaded complaint rule. See id. at 65-66, 107 S.Ct. at 1547-48. This holding has been followed by the Second Circuit in Smith v. Dunham-Bush, Inc., 959 F.2d 6, 11 (2d Cir.1992), as well as a number of other circuits. See McCoy v. Massachusetts Inst. of Technology, 950 F.2d 13 (1st Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1939, 118 L.Ed.2d 545 (1992); Bartholet v. Reishauer, 953 F.2d 1073 (7th Cir.1992); Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124 (9th Cir.1992).

In the case now before this Court, Plaintiff asserts a number of state law claims to...