Regency Hosp. Co. v. United Healthcare of Georgia

• Decision Date: 21 November 2005
• Docket Number: No. 1:05-CV-1508-TWT.,1:05-CV-1508-TWT.
• Citation: 403 F.Supp.2d 1221
• Parties: REGENCY HOSPITAL COMPANY OF SOUTH ATLANTA, L.L.C., Plaintiff, v. UNITED HEALTHCARE OF GEORGIA, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

403 F.Supp.2d 1221

REGENCY HOSPITAL COMPANY OF SOUTH ATLANTA, L.L.C., Plaintiff, v. UNITED HEALTHCARE OF GEORGIA, INC., Defendant.

No. 1:05-CV-1508-TWT.

United States District Court, N.D. Georgia, Atlanta Division.

November 21, 2005.

COPYRIGHT MATERIAL OMITTED

Frank G. Goldman, Steven D. Henry, Womble Carlyle Sandridge & Rice, Atlanta, GA, for Plaintiff.

Cavender C. Kimble, Balch & Bingham, Birmingham, AL, Michelle M. Rothenberg-Williams, Balch & Bingham, Atlanta, GA, for Defendant.

OPINION AND ORDER

THRASH, District Judge.

This is an action seeking to recover benefits under a group health benefit plan. It is before the Court on the Plaintiff's Motion to Remand [Doc. 3]. For the reasons set forth below, the Plaintiff's motion is DENIED.

I. BACKGROUND

Plaintiff Regency Hospital Company of South Atlanta, L.L.C. ("Regency Hospital") operates a long-term acute care hospital located in East Point, Georgia. This action arises out of the hospitalization of Manyaka A. Chu at Regency Hospital from October 7, 2003, until his death on November 28, 2003. Mr. Chu was an employee of The Delmar Gardens Family ("DGF"). Mr. Chu's primary health insurance was provided under the Delmar Gardens Family Welfare Benefit Plan (the "Plan"). The Plan is a self-funded health benefits plan, meaning that DGF, as the plan sponsor, funds the cost of claims from its own assets rather than funding that cost by purchasing an insurance contract. (Snell Aff. ¶ 2.) Self-funded plans typically hire a third party, often an insurer, to administer claims and to provide access to networks of participating providers. In this case, DGF contracted with the Defendant¹ to serve as Claims Administrator. (Id.)

On October 7, 2003, the Plaintiff verified that Mr. Chu was medically insured under the DGF Plan and the Defendant precertified him for admission. Upon admission, Mr. Chu agreed to the "Conditions of Admission to Regency Hospital." As part of this agreement, Mr. Chu assigned his right to the payment of medical benefits to the Plaintiff. (Verified Compl., Exs. B, C.) In accordance with this assignment, the Plaintiff submitted a statement for payment to the Defendant in the amount of $402,768.48 in connection with services rendered to Mr. Chu for the period October 7, 2003, until November 28, 2003. The Plaintiff has received payment in the amount of $51,687.24. Presumably this payment covers services rendered during the period October 7, 2003, through October 13, 2003, the date on which Mr. Chu's insurance coverage under the DGF Plan was terminated. (See Verified Compl. ¶ 7.) The Plaintiff alleges, however, that it was never notified of this termination. Accordingly, the Plaintiff argues that the Defendant owes the remaining balance of $351,081.24 for services rendered to Mr. Chu.

The Plaintiff filed suit against the Defendant in the Superior Court of Gwinnett County, Georgia, asserting claims for breach of contract, suit on account, and negligent misrepresentation. On June 8 2005, the Defendant removed the action to this Court. The Defendant asserted two bases for jurisdiction in this Court. First, it alleged that the Court has federal question jurisdiction because the Plaintiff seeks to recover benefits under a group health benefit plan that is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Second, the Defendant alleged that diversity jurisdiction exists. In response, the Plaintiff moves to remand.

II. DISCUSSION

The Defendant removed this action from the Superior Court of Gwinnett County, Georgia, asserting federal question jurisdiction pursuant to ERISA, 29 U.S.C. § 1001 et seq. The Plaintiff contends, however, that this Court lacks subject matter jurisdiction and moves to remand the action. Under the removal statute, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by ... the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Federal district courts have original jurisdiction over, among other cases, "federal question" cases. Federal question cases are those "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A case "arises under" federal law "if federal law creates the cause of action or if a substantial disputed issue of federal law is a necessary element of a state law claim." Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1373 (11th Cir.1998) (citing Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 13, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). Ordinarily, when determining whether a federal question exists, the court applies the well-pleaded complaint rule. Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S.Ct. 2488, 2494, 159 L.Ed.2d 312 (2004). The well-pleaded complaint rule requires that the court look only to the face of the complaint to determine if the plaintiff has stated a claim arising under federal law. Id. The possibility or existence of a federal defense does not create federal question jurisdiction. Id.; Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987).

The Plaintiff argues that it has not asserted any federal cause of action and, thus, the well-pleaded complaint rule dictates that federal question jurisdiction is lacking. However, there are exceptions to the well-pleaded complaint rule. In particular, "when a federal statute wholly displaces the state-law cause of action through complete pre-emption, the state claim can be removed." Davila, 124 S.Ct. at 2495 (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003)). If a state law cause of action is completely preempted by a federal statute, the claim pled in terms of state law is in actuality based on the federal law. Id.; Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ("Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character."). In essence, the complete preemption doctrine "will convert state law claims into federal claims for the purposes of the well-pleaded complaint rule, allowing a defendant to remove the case to federal court." Kemp v. International Business Machines Corp., 109 F.3d 708, 712 (11th Cir.1997).

Complete preemption in the area of employee welfare benefit plans arises out of ERISA § 502(a), 29 U.S.C § 1132(a), a comprehensive remedial scheme that sets forth the exclusive cause of action for the recovery of benefits under an ERISA plan. Aetna Health Inc., 124 S.Ct. at 2495; Metropolitan Life Ins. Co., 481 U.S. at 65-67, 107 S.Ct. 1542. ERISA § 502(a) provides that:

A civil action may be brought — (1) by a participant or beneficiary — ... (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.

29 U.S.C. § 1132(a)(1)(B). The Supreme Court has determined that this civil enforcement mechanism has "extraordinary pre-emptive power." Davila, 124 S.Ct. at 2496. As such, if a state law claim is one seeking relief available under § 502(a), i.e., a claim for benefits, ERISA's complete preemption applies and the action is removable to federal court. Id.; see Cotton v. Massachusetts Mut. Life Ins. Co., 402 F.3d 1267, 1281 (11th Cir.2005) ("Congress has accomplished this `complete preemption' in ERISA § 502(a), which provides the exclusive cause of action for the recovery of benefits governed by an ERISA plan. State law claims seeking relief available under § 502(a) are recharacterized as ERISA claims and therefore `arise under' federal law."). In an ERISA case, complete preemption applies if the following elements are satisfied: (1) a relevant ERISA plan exists; (2) the plaintiff has standing to sue under the plan; (3) the defendant is an ERISA entity; and (4) the complaint seeks compensatory relief akin to what is available under 29 U.S.C. § 1132(a), which will often be a claim for benefits due under the plan.² Cotton, 402 F.3d at 1281; Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir.1999). Applying these four factors, the Court finds that the Plaintiff's state law claims are completely preempted by ERISA.

Employee benefit plans come within the scope of an "employee welfare benefit plan" for purposes of ERISA when five prerequisites are met: (1) a plan, fund, or program; (2) is established or maintained; (3) by an employer, employee organization, or both; (4) for the purpose of providing certain specified benefits in the event of sickness, accident, disability, or death; (5) to participants or beneficiaries. See 29 U.S.C. §§ 1002(1) & 1002(2)(A); Anderson v. UNUM Provident Corp., 369 F.3d 1257, 1263 (11th Cir. 2004). The Plan satisfies all five elements. An ERISA "plan" exists whenever there are "intended benefits, intended beneficiaries, a source of financing, and a procedure to apply for and collect benefits." Butero, 174 F.3d at 1214 (quoting Donovan v. Dillingham, 688 F.2d 1367, 1371 (11th Cir. 1982) (en banc)). The intended benefits under the Plan were those paid in the event that the employee, Mr. Chu, or his dependents incurred medical expenses. The intended beneficiaries were Mr. Chu and his dependents. Financing for the Plan was provided by DGF, and the procedures for applying for and collecting benefits were clearly set forth in the Plan. (Snell Aff., Ex. A, at 41-43.) "A plan is `established' when there has been some degree of implementation by the employer going beyond a mere intent to confer a benefit." Butero, 174 F.3d at 1214. Based on the conduct of DGF in arranging for the Plan, deciding eligibility, and funding the intended benefits, it is clear...