Parrino v. FHP, Inc.
| Decision Date | 28 July 1998 |
| Docket Number | No. 96-55920,96-55920 |
| Parties | 22 Employee Benefits Cas. 1707, 98 Cal. Daily Op. Serv. 4491, 98 Cal. Daily Op. Serv. 5819, 98 Daily Journal D.A.R. 6195, 98 Daily Journal D.A.R. 8087 Nick PARRINO, as Administrator of the Estate of Stephen Frank Parrino, Deceased, and successor to Steve Parrino, D.C., Plaintiff-Appellant, v. FHP, INC., a California Corp.; FHP Healthcare, a California Corp., aka FHP Value Plan; FHP Administrators, a Division of Ultralink Inc., a California Corporation; Friendly Hills Healthcare Network, a California non-profit corporation, dba Friendly Hills Regional Medical Center; Friendly Hills Medical Group, a general partnership; Friendly Hills Regional Medical Center Guild, Inc., a California non-profit corporation; Rem Almirante, M.D., an individual; Jeffrey Wolf, M.D., an individual, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Christopher E. Angelo, and Anthony Kornarens, Mazursky, Schwartz & Angelo, Los Angeles, California, for plaintiff-appellant.
L. Rachel Lerman Helyar, Horvitz & Levy, Encino, California, and Brian P. Barrow, O'Flaherty & Belgum, Long Beach, California, for defendants-appellees.
Appeal from the United States District Court for the Central District of California; Terry J. Hatter, Jr., District Judge, Presiding. D.C. No. CV-95-04830-TJH.
Before: BROWNING, BRUNETTI, and FERNANDEZ, Circuit Judges.
Stephen Parrino subscribed to an HMO plan administered by FHP, Inc. and secured by his employer, Parrino Trucking Co. Friendly Hills acted as the plan's primary health care provider. Parrino was diagnosed with a brain tumor, and Friendly Hills referred him to Loma Linda University Medical Center for treatment. Loma Linda physicians removed the brain tumor, and prescribed immediate proton beam therapy to reduce the chance of recurrence. FHP initially refused to authorize payment for the therapy, claiming it was experimental and unnecessary. Upon further review, FHP approved the therapy, but Parrino was diagnosed with a reoccurring tumor two days later. A second round of surgery failed to arrest the spread of the cancer, and Parrino ultimately succumbed to his illness.
Parrino filed suit in state court against FHP and Friendly Hills, alleging they improperly denied his initial claim for proton beam therapy. FHP and Friendly Hills removed the action to federal court on the ground that Parrino's state law causes of action were completely preempted by ERISA. The district court denied Parrino's motion to remand, and eventually dismissed each of his claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Parrino's estate appeals.
Parrino contends that removal was improper because (1) FHP and Friendly Hills failed to satisfy the procedural requirements for removal; (2) the district court lacked subject matter jurisdiction; and (3) the district court improperly considered an extrinsic document in determining whether it had subject matter jurisdiction. FHP and Friendly Hills counter that Parrino waived his right to appeal the district court's refusal to remand by failing to pursue interlocutory review. We hold that Parrino did not waive his claims challenging removal, but that those claims ultimately fail.
FHP and Friendly Hills argue that circuit precedent required Parrino to seek permission to take an interlocutory appeal under 28 U.S.C. § 1292(b) to preserve his objections to removal, citing, inter alia, Sorosky v. Burroughs Corp., 826 F.2d 794, 798 (9th Cir.1987). This rule was noted and explicitly rejected, however, by Caterpillar, Inc. v. Lewis, 519 U.S. 61, 117 S.Ct. 467, 475, 136 L.Ed.2d 437 (1996). Under Caterpillar, Parrino preserved his objections to removal by moving to remand.
Parrino argues the procedural requirements for removal were not satisfied because Friendly Hills did not join FHP's removal notice until nearly two months after service of Parrino's complaint. All defendants must join a notice of removal, see Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193 n. 1 (9th Cir.1988), and a proper removal notice must be filed within 30 days of service of the plaintiff's complaint, see 28 U.S.C. § 1446(b). Under Caterpillar, however, a procedural defect existing at the time of removal but cured prior to entry of judgment does not warrant reversal and remand of the matter to state court. See 117 S.Ct. at 477 (). 1 Because Friendly Hills' initial failure to join in the notice of removal was cured when Friendly Hills later joined in the notice, remand on procedural grounds would be an empty formality.
Parrino contends the district court erred in concluding it had removal jurisdiction because ERISA completely preempted Parrino's causes of action. Section 502(a)(1)(B) of ERISA provides an exclusively federal remedy for ERISA plan "participants" seeking to recover benefits due under the terms of their plans, to enforce their rights under the plan, or to clarify their rights to future benefits under the plan. See 29 U.S.C. § 1132(a)(1)(B). State causes of action subject to this provision are completely preempted, and will be recharacterized as federal claims for purposes of removal. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Because Parrino was a participant in an ERISA plan, and at least some of his claims fall within the scope of Section 502(a)(1)(B), they were completely preempted.
An ERISA plan exists "if from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits." Carver v. Westinghouse Hanford Co., 951 F.2d 1083, 1086 (9th Cir.1991) (citation and internal quotations omitted). As we have explained, "[e]ven if an employer does no more than arrange for a 'group-type insurance program,' it can establish an ERISA plan, unless it is a mere advertiser who makes no contributions on behalf of its employees." Credit Managers Ass'n of Southern Cal. v. Kennesaw Life & Accident Ins. Co., 809 F.2d 617, 625 (9th Cir.1987). Because the plan covering Parrino was sponsored and paid for by Parrino's employer, and covered all of the firm's full-time employees, it was an employee benefits plan under ERISA. Parrino qualifies as a "participant" in this plan because at the time he filed suit he was an employee or former employee "eligible to receive a benefit ... from an employee benefit plan which cover[ed] employees" of Parrino Trucking. 29 U.S.C. § 1132(a)(1)(B); see Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).
Parrino's causes of action for breach of the implied covenant of good faith and fair dealing and for civil conspiracy are both predicated upon alleged defects in FHP's procedures for processing health insurance claims. These causes of action therefore fall within the scope of Section 502(a)(1)(B), which embraces claims by ERISA plan participants "asserting improper processing of [insurance] claims," Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), and are completely preempted by ERISA. We need not consider whether Parrino's other state causes of action are completely preempted, since they fall within the district court's supplemental jurisdiction. See Jackson v. Southern Cal. Gas Co., 881 F.2d 638, 642 (9th Cir.1989).
Parrino argues that the district court erred by considering a document extrinsic to the complaint, FHP's Master Group Application, in deciding whether it had subject matter jurisdiction. As a general rule, a district court deciding whether to exercise removal jurisdiction must consider only the allegations in the complaint, see City of Chicago v. Int'l College of Surgeons, --- U.S. ----, ----, 118 S.Ct. 523, 529, 139 L.Ed.2d 525 (1997), but the general rule is overridden by the artful pleading doctrine in complete preemption cases. Because complete preemption often applies to complaints drawn to evade federal jurisdiction, a federal court may look beyond the face of the complaint to determine whether the claims alleged as state law causes of action in fact are necessarily federal claims. See Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1488-89 (7th Cir.1996)(in determining whether complete preemption obtains, "we are not limited by the complaint," since "a plaintiff cannot avoid complete preemption ... by artfully pleading a complaint so as to omit facts that include federal jurisdiction"). Because removal was based on complete preemption in this case, the district court properly considered the Master Group Application.
After removal by the defendant, the district court dismissed, on ordinary preemption grounds, all of Parrino's state causes of action other than those for spoliation of evidence. Parrino contends the district court erred in dismissing his non-spoliation state causes of action, and considering the FHP Master Group Application when deciding whether to dismiss his claims. Friendly Hills and FHP counter that Parrino waived any objection to the district court's dismissal of his non-spoliation claims by failing to reallege these claims in his first Amended Complaint.
We hold that Parrino did not waive his non-spoliation causes of action, but that they were properly dismissed.
A plaintiff waives all claims dismissed with leave to amend by failing to reallege those claims in his amended complaint. See London v. Coopers & Lybrand, 644 F.2d 811, 814 (9th Cir.1981). However, we have declined to extend this rule to claims disposed of by way of...
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