Pascack Valley Hosp. v. Local 464A Ufcw Welfare

Decision Date01 November 2004
Docket NumberNo. 03-4196.,03-4196.
PartiesPASCACK VALLEY HOSPITAL, INC.; Community Medical Center, (Lawrence Taylor, Debra Saverino) v. LOCAL 464A UFCW WELFARE REIMBURSEMENT PLAN Pascack Valley Hospital, Inc., Appellant.
CourtU.S. Court of Appeals — Third Circuit

Appeal from the United States District Court for the District of New Jersey, Dennis M. Cavanaugh, J.

COPYRIGHT MATERIAL OMITTED

Shea H. Lukacsko, Keith R. McMurdy (Argued), Grotta, Glassman & Hoffman, Roseland, John Sydlar, Maloof, Lebowitz, Connahan & Oleske, Chatham, for Appellant.

John M. Agnello, Kerrie R. Heslin, Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, Roseland, Michael T. Anderson (Argued), Davis, Cowell & Bowe, Washington, for Appellee.

Before ALITO, SMITH, and WALLACE, Circuit Judges.*

ALITO, Circuit Judge, concurring in the judgment.

OPINION

SMITH, Circuit Judge.

This case presents a question of jurisdiction under the civil enforcement provision of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a). Pascack Valley Hospital (the "Hospital") sued the United Food and Commercial Workers International Union Local 464A, AFL-CIO Group Reimbursement Welfare Plan (the "Plan") in state court for breach of contract. The Plan removed the case to federal district court and moved for summary judgment. The Hospital moved to remand. The District Court held that the Hospital's breach of contract claims against the Plan were completely pre-empted by ERISA and therefore raised a federal question supporting removal under 28 U.S.C. § 1441(a). We hold that, under the well-pleaded complaint rule, the Hospital's complaint does not present a federal question that would support removal. We further hold that the Hospital's state law breach of contract claims are not completely pre-empted by ERISA's civil enforcement provision because the Hospital could not have brought its claims under ERISA. We will therefore vacate the judgment of the District Court and remand to that court with instructions that it, in turn, remand these proceedings to the state court whence they came.

I.

The Plan is an "employee welfare benefit plan" as defined by ERISA. 29 U.S.C. § 1002(1).1 The Plan is a reimbursement plan only; it reimburses participants and beneficiaries for out-of-pocket medical expenses but does not itself provide medical care.

MagNet, Inc. is an independent consultant. MagNet has organized a network of hospitals that have agreed to accept discounted payment for medical services provided to beneficiaries of group health plans in return for the plans' promise to encourage beneficiaries to use network hospitals. Network hospitals do not contract directly with the plans. Instead, MagNet enters into separate contracts with individual plans, and separate contracts with individual hospitals.

Around 1995, the Plan entered into a "Subscriber Agreement" with MagNet. In 1996, the Hospital entered into a "Network Hospital Agreement" with MagNet. Section 2.1 of the Subscriber Agreement governs "Hospital payment," and provides that the discounted rate offered by the Hospital will be forfeited unless claims are timely paid:

Subscriber ... shall pay Network Hospitals for Covered Services furnished to Eligible Persons.

Pursuant to a valid assignment from Eligible Person, Subscriber ... shall directly pay Network Hospitals for Covered Services provided to Eligible Persons within thirty (30) days after date of receipt of submitted Clean Claims....

For other non-clean claims, payment shall be made within thirty (30) days of receipt of all records and other information necessary for proper claims adjudication.

...

Where obligated, if Subscriber fails to pay within the appropriate time frame, the Subscriber acknowledges that it will lose the benefit of the MagNet discounted reimbursement rate and that Network Hospital is then entitled to bill and collect from Subscriber and Eligible Person its customary rate for services rendered. If Subscriber fails to make the payment, the Network Hospital may pursue any remedies available against Subscriber and Eligible Person.

In 1999, the Hospital provided medical services to Kimberly Rovetto and Betty Psaras. Both Psaras and Rovetto were "Eligible Persons" under the Subscriber Agreement, and the medical services provided to Psaras and Rovetto were "Covered Services" under the Subscriber Agreement. The Hospital alleges that the Plan failed to pay the Hospital for the services rendered to Psaras and Rovetto according to the terms of the Subscriber Agreement. The Hospital contends that claims for those services were properly submitted on April 15, 1999, and October 5, 1999. The Hospital further contends that it received payment on these claims at the discounted rate on June 8, 1999, and November 22, 1999, respectively. According to the Hospital's interpretation of § 2.1 of the Subscriber Agreement, the Plan's failure to pay these claims within thirty days of receipt effected a forfeiture of the discounted rate provided in the Network Hospital Agreement. The Hospital therefore seeks to recover the allegedly forfeited discount from the Plan.

On October 23, 2002, the Hospital filed suit in the Superior Court of New Jersey. The Complaint alleges that the Hospital is a third-party beneficiary to the Subscriber Agreement between MagNet and the Plan, under which the Plan "became obligated to pay [the Hospital] for eligible medical services provided by [the Hospital]," and "was required to comply with certain terms and conditions of [the Hospital's] contract with MagNet [i.e., the Network Hospital Agreement], requiring payment in the time period specified in said contract." The two-count complaint alleges that the Plan breached this contract by improperly taking a discount on the services provided to Psaras and Rovetto despite the Plan's failure to make timely payment under the Subscriber Agreement.2

The Plan removed the case to the District Court. Thereafter, the Plan moved for summary judgment and the Hospital cross-moved to remand the case to state court. The parties' motions focused on whether, under the doctrine of "complete pre-emption," the Hospital's state law breach of contract claims raised a federal question. The District Court heard oral argument on the parties' motions on September 25, 2003. The next day, on September 26, 2003, the District Court issued an Opinion and Order granting the Plan's motion for summary judgment, denying the Hospital's cross-motion to remand, and dismissing the complaint without prejudice. The District Court's two-page Opinion and Order states in relevant part:

Defendant believing that Plaintiff's state law claims are completely preempted by [ERISA] in that Plaintiff now stands in the shoes of the Plan's beneficiaries as assignee, and therefore Defendant believes the facts show it is entitled to judgment as a matter of law; and

Plaintiff believing the action is not preempted by ERISA since Plaintiff is not a participant or beneficiary under ERISA and therefore there is no federal law claim, and therefore the matter should be remanded to the state court; and

This Court being in agreement with and adopts the reasoning of counsel for Defendant as stated on the record, and further rejects the arguments put forth by counsel for Plaintiff; and

This Court agrees with and adopts the analysis and holding as set forth in Charter Fairmount Institute, Inc. v. Alta Health Strategies, 835 F.Supp. 233; and

This Court being satisfied that [the doctrine of complete preemption] having been met in this case; and

As this case falls within the "complete preemption" exception to the well pleaded complaint doctrine, removal to federal court was proper, and remand to state court would be inappropriate....

(Footnote omitted). The Hospital filed a timely notice of appeal on October 22, 2003.

II.

Before turning to the District Court's removal jurisdiction, we must first address our own appellate jurisdiction. Although the District Court purported to grant summary judgment in favor of the Plan, the District Court actually dismissed the Hospital's complaint without prejudice. That disposition allowed the Hospital, which emphatically disavows an ERISA claim for benefits, to replead its complaint under ERISA's civil enforcement provision. The Hospital declined to do so and instead filed this appeal.

28 U.S.C. § 1291 provides this Court with jurisdiction over a final order dismissing a complaint as completely pre-empted. DiFelice v. Aetna U.S. Healthcare, 346 F.3d 442, 445 (3d Cir.2003). "Generally, an order which dismisses a complaint without prejudice is neither final nor appealable because the deficiency may be corrected by the plaintiff without affecting the cause of action." Borelli v. City of Reading, 532 F.2d 950, 951 (3d Cir.1976) (per curiam).3 If the plaintiff elects to stand on the dismissed complaint, however, the order of dismissal is final and appealable. Id. at 951-52. At oral argument, counsel for the Hospital declared the Hospital's intention to forego any ERISA claim it may have and to stand on its complaint. Counsel's declaration is sufficient to render the District Court's order final and appealable. Remick v. Manfredy, 238 F.3d 248, 254 (3d Cir.2001). This Court exercises plenary review over a district court's exercise of jurisdiction and order of dismissal. DiFelice, 346 F.3d at 445; Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 268 (3d Cir.2001).

III.

A civil action filed in a state court may be removed to federal court if the claim is one "arising under" federal law. 28 U.S.C. §§ 1331, 1441(a). Under the "well-pleaded complaint" rule, the plaintiff is ordinarily entitled to remain in state court so long as its complaint does not, on its face, affirmatively allege a federal claim. Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). To support...

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