Ouellette v. Christ Hosp.

• Decision Date: 10 October 1996
• Docket Number: No. C-1-96-370.,C-1-96-370.
• Citation: 942 F.Supp. 1160
• Parties: Victoria L. OUELLETTE, et al., Plaintiffs, v. The CHRIST HOSPITAL, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

942 F.Supp. 1160

Victoria L. OUELLETTE, et al., Plaintiffs, v. The CHRIST HOSPITAL, et al., Defendants.

No. C-1-96-370.

United States District Court, S.D. Ohio, Western Division.

October 10, 1996.

Thomas F. Payne, Montgomery, OH, for plaintiffs.

Nancy Ann Lawson, June Smith Tyler, Dinsmore & Shohl, Cincinnati, OH, for defendant Christ Hospital.

Walter Elliott Haggerty, Jr., Frost & Jacobs, Cincinnati, OH, William J. O'Neill, McDonald, Hopkins, Burke & Haber Co., LPA, Cleveland, OH, for defendant ChoiceCare Health Plans Inc.

ORDER GRANTING PLAINTIFFS' MOTION TO REMAND

SPIEGEL, Senior District Judge.

This matter is before the Court on Plaintiffs' motion to remand (doc. 8), Defendant The Christ Hospital's response (doc. 10), Defendant ChoiceCare's response (doc. 11) and Plaintiffs' reply (doc. 12).

BACKGROUND

Plaintiff, Victoria Ouellette, is employed by Federated Credit Services. As a benefit incident to employment, she receives health insurance offered by ChoiceCare. ChoiceCare uses a process called Utilization Management to determine if health services are medically necessary. ChoiceCare has a policy of limiting the hospital stays of patients according to predetermined standards. In this instance, ChoiceCare policy limited a hospital stay for the removal of ovaries to two days. Ms. Ouellette alleges that ChoiceCare contracts directly with health care providers to ensure adherence with these policies.

Ms. Ouellette entered The Christ Hospital on September 30, 1994, for the surgical removal of her ovaries. Early on the morning of October 2, 1994, Ms. Ouellette's obstetrics and gynecology specialist examined her and authorized her discharge from the hospital. Later on October 2, 1994, Ms. Ouellette began to experience severe pain and fever and to pass blood clots in her urine. The nursing staff failed to inform Ms. Ouellette's specialist about the change in her condition. The nurse on duty told Ms. Ouellette that she would have to leave the hospital by 6:00 p.m. because of ChoiceCare's policy limiting hospital stays. Ms. Ouellette went home that day and continued to suffer from the after-effects of surgery.

Ms. Ouellette sued The Christ Hospital and ChoiceCare in the Court of Common Pleas, Hamilton County, Ohio. Ms. Ouellette's specialist stated that he would not have authorized her discharge had he known of the deterioration of her condition. She claims medical malpractice on the part of the hospital staff. She further alleges that ChoiceCare's financial relationship with The Christ Hospital caused that malpractice. Defendants removed the case to the federal court pursuant to 28 U.S.C. §§ 1441 and 1446, based upon federal question jurisdiction. Defendants argue that Ms. Ouellette's claims arise under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.

STANDARD OF REVIEW

On a motion to remand, the issue is whether the case was removed properly in the first instance. Generally, a defendant has a right to remove "any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States ... without regard to the citizenship or residence of the parties." 28 U.S.C. § 1441(b). In order to find that a cause of action arises under federal law, the plaintiff's well-pleaded complaint must on its face raise an issue of federal law. Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908).

Defendants argue that Ms. Ouellette's claims arise under the laws of the United States because they are "completely preempted" by ERISA, 29 U.S.C. § 1132(a). Ordinarily, federal preemption is only a defense to a plaintiff's suit, and therefore, the defense does not appear on the face of the plaintiff's well-pleaded complaint. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987). The Supreme Court, however, has created an exception to the well-pleaded complaint rule. Id.; see also, Avco Corp. v. Machinists, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968) (finding that § 301 of LMRA displaces any state law claims related to the breach of contract between management and a labor organization). The Supreme Court stated that "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life Ins. Co., 481 U.S. at 63-64, 107 S.Ct. at 1546-1547. Whether a statute has such preemptive force is a question of Congressional intent. Id. at 66, 107 S.Ct. at 1548. ("The touchstone of the federal district court's removal jurisdiction is ... the intent of Congress.").

Only when an area of law is completely preempted does preemption lead to federal question jurisdiction. On the other hand, federal preemption that serves only as a defense to a state law claim (often referred to as "conflict" or "defensive" preemption) does not confer federal question jurisdiction. Rice v. Panchal, 65 F.3d 637, 639 (7th Cir. 1995). In other words, even though a cause of action is preempted by a statute, that preemption does not necessarily mean that the cause of action presents a federal question. See Caterpillar Inc. v. Williams, 482 U.S. 386, 398, 107 S.Ct. 2425, 2432-33, 96 L.Ed.2d 318 (1987) ("The fact that a defendant might ultimately prove that a plaintiff's claims are pre-empted under the LMRA does not establish that they are removable to federal court."); Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir.1995) (finding that "removal and preemption are two different concepts."). The difficulty arises in trying to distinguish between claims that are "completely preempted" and claims to which "conflict or defensive preemption" is a defense.

ERISA contains two provisions pertaining to preemption. The first is 29 U.S.C. § 1132. It is the civil enforcement provision of ERISA, which impliedly preempts actions brought in state court that could have been brought under its provisions. Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 943 (6th Cir.1994). Under § 1132, anyone who qualifies as a "participant or beneficiary" of an employee benefit plan may sue to enforce his rights conferred by ERISA. Id. The second is § 1144, the express preemption provision of ERISA. It preempts all non-exempt state laws insofar as they "relate to" an employee benefit plan. Id.

In Metropolitan Life, the Supreme Court found that Congress intended to make causes of action within the scope of the civil enforcement provisions of ERISA (§ 1132) removable to federal court. Metropolitan Life Ins. Co., 481 U.S. at 66, 107 S.Ct. at 1547-48. The Sixth Circuit has found that complete preemption under Metropolitan Life is limited to preemption claims under § 1132(a). Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 943 (6th Cir.1994). The Sixth Circuit noted that the Supreme Court relied on the similarity between the language of § 1132 of ERISA and § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a). Id. at 944. Furthermore, the legislative history of § 1132 expressed an obvious intent to mirror the preemptive effect of § 301 of the LMRA. Id. The Sixth Circuit did not find a similar historical and textual foundation for complete preemption under § 1144. Therefore, the Sixth Circuit concluded that a preemption defense under § 1144 of ERISA does not create federal jurisdiction for the purpose of removal. Id. at 945.

"Thus, a state cause of action may be removed to federal court if the cause of action is preempted by ERISA and falls within the scope of ERISA's civil enforcement provision, section 502(a) [codified at 29 U.S.C. § 1132(a)]." Tolton v. American Biodyne, Inc., 48 F.3d 937, 941 (6th Cir. 1995); see also Rice v. Panchal, 65 F.3d 637, 639 (7th Cir.1995) (concluding that § 1132(a) provides a basis for complete preemption, whereas § 1144(a) provides the basis for conflict preemption). The Seventh Circuit summarized the distinction between conflict and complete preemption as applied under ERISA:

The difference between complete preemption under § 502(a) [§ 1132(a)] and conflict preemption under § 514(a) [§ 1144(a)] is important because complete preemption is an exception to the well-pleaded complaint rule that has jurisdictional consequences. If a state law claim has been "displaced," and therefore completely preempted by § 502(a), then a plaintiff's state law claim is properly "recharacterized" as one arising under federal law. But state law claims that are merely subject to "conflict preemption" under § 514(a) are not recharacterized as claims arising under federal law; in such a situation, the federal law serves as a defense to the state law claim, and therefore, under the well-pleaded complaint rule the state law claims do not confer federal question jurisdiction. Thus, complete preemption under § 502(a) creates federal question jurisdiction whereas conflict preemption under § 514(a) does not.

Id. at 640.

DISCUSSION

The question on this motion to remand is whether Ms. Ouellette's cause of action falls with the scope of ERISA's civil enforcement provisions of § 1132(a)¹. Ms. Ouellette filed a two count complaint alleging medical malpractice on the part of The Christ Hospital and ChoiceCare. Specifically, Ms. Ouellette asserts that ChoiceCare breached its duty to her by "limiting the hospital stays of its subscribers and enforcing those limitations by an unreasonable system of financial incentives to hospitals."

ChoiceCare argues that this claim is preempted by § 1132(a). Section 1132(a) "preempts state claims by `participants or beneficiaries' to enforce certain rights guaranteed by ERISA." Alexander, 13 F.3d at 946.

There are two prerequisites to complete preemption under § 1132(a). First, the plaintiff must be eligible to bring an action under § 1132(a). Rice, 65 F.3d at 641. ("[I]t seems clear that the ability to bring...