Sharp v. Wellmark Inc. D/B/A/ Wellmark Blue Cross

• Decision Date: 12 October 2010
• Docket Number: Case No. 10–CV–2430–SAC.
• Citation: 744 F.Supp.2d 1191
• Parties: Lori R. SHARP and Rex A. Sharp, Plaintiffs,v.WELLMARK, INC. d/b/a/ Wellmark Blue Cross and Blue Shield of Iowa, Defendant.
• Court: U.S. District Court — District of Kansas

744 F.Supp.2d 1191

Lori R. SHARP and Rex A. Sharp, Plaintiffs,

v.WELLMARK, INC. d/b/a/ Wellmark Blue Cross and Blue Shield of Iowa, Defendant.

Case No. 10–CV–2430–SAC.

United States District Court, D. Kansas.

Oct. 12, 2010.

Barbara C. Frankland, Rex A. Sharp, Gunderson Sharp & Walke, LLP, Prairie Village, KS, for Plaintiffs.Richard N. Bien, Robyn Lyn Anderson, Lathrop & Gage LLP, Kansas City, MO, for Defendant.

MEMORANDUM AND ORDER

SAM A. CROW, Senior District Judge.

This removed case, which seeks only interest, comes before the court on the Sharps' motion to remand the case to state court. The Sharps believe the court lacks federal jurisdiction over their case, which seeks interest under Kansas law on Employee Retirement Income Security Act (ERISA) benefits which Wellmark previously paid to the Sharps pursuant to the parties' settlement agreement in a previous case.

Background

Several prior cases have been filed relating to this matter. The Sharps filed the underlying case seeking ERISA benefits from Wellmark in May of 2008, in the United States District Court for the District of Kansas, and that case was assigned to Judge Lungstrum. (No 08–2230). Wellmark filed an unopposed motion to transfer venue to the Southern District of Iowa, which the court granted. Thereafter, the parties settled that case and filed a stipulation of dismissal with prejudice in December of 2009. (No. 08–0294). Wellmark subsequently paid the agreed-upon benefits without entry of a judgment, but paid no interest.

In June of 2010, Wellmark filed a declaratory judgment action in the Southern District of Iowa, citing ERISA, and asking for a determination whether Wellmark owes the Sharps interest. That case is pending. (No. 10–cv–297). The Sharps have moved to dismiss that case because, they contend, it is an anticipatory declaratory judgment action. That motion to dismiss is pending.

In July of 2010, the Sharps filed a state court case in Johnson County, Kansas (No. 10–cv–06141) seeking interest on the previously-paid benefits, and citing only Kansas law. Wellmark removed the state case to this court premised solely on a specific jurisdictional grant under ERISA, 29 U.S.C. § 1132(e)(1).¹ See Dk. 1, p. 2, 3. The Sharps then filed the present motion to remand.

Remand standard

“[A]ny action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant ... 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). However, “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). “Those who seek to invoke federal jurisdiction must establish its prerequisites.” McPhail v. Deere & Co., 529 F.3d 947, 953 (10th Cir.2008). Federal removal jurisdiction is statutory in nature and is to be strictly construed. Archuleta v. Lacuesta, 131 F.3d 1359, 1370 (10th Cir.1997), citing Sheets v. Shamrock Oil & Gas, 115 F.2d 880 (5th Cir.1940), affirmed, 313 U.S 100, 108, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). Doubtful cases must be resolved in favor of remand. Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir.), cert. denied, 516 U.S. 863, 116 S.Ct. 174, 133 L.Ed.2d 114 (1995) (noting presumption against removal jurisdiction).

Because only state court actions that originally could have been filed in federal court may be removed to federal court, federal-question jurisdiction is required, absent diversity of citizenship. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). The well-pleaded complaint rule usually governs the determination of federal question jurisdiction.

“The presence or absence of federal question jurisdiction is governed by the ‘well-pleaded complaint rule,’ which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Id. “The rule makes the plaintiff the master of his claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.” Id. The general rule is that a federal defense, even one relying on the preclusive effect of a federal statute, is not enough to authorize removal to federal court. Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003).

Felix v. Lucent Technologies, Inc., 387 F.3d 1146, 1154 (10th Cir.2004). ERISA preemption is ordinarily a defense to state law claims, so will not appear on the face of a well-pleaded complaint and therefore will not authorize removal to federal court.

The face of the Sharps' complaint states a claim only under Kansas law for interest. Wellmark, however, invokes the complete preemption exception to the well-pleaded complaint rule. Under that exception, “when a federal statute wholly displaces the state-law cause of action through complete pre-emption,” the state claim can be removed. Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). For the reasons set forth below, the Court finds this to be such a case.

Complete preemption exception

There are two types of preemption under ERISA: conflict preemption under § 514, which is merely “a federal defense that cannot provide the basis for removal jurisdiction,” Felix, 387 F.3d at 1158; and complete preemption under § 502(a), which can support removal. Id. at 1156. The complete preemption doctrine asserted by Wellmark is an exception to the well-pleaded complaint rule. See Felix, 387 F.3d at 1154.

A completely preempted claim “becomes a federal claim and can be the basis for removal jurisdiction.” Coldesina v. Estate of Simper, 407 F.3d 1126, 1137 (10th Cir.2005). “[A] state law claim is only ‘completely preempted’ under Taylor if it can be recharacterized as a claim under [federal law].” See Felix v. Lucent Tech., Inc., 387 F.3d 1146, 1156 (10th Cir.2004); accord Schmeling [ v. NORDAM ], 97 F.3d [1336] at 1342 [ (10th Cir.1996) ] (holding that tension in Supreme Court cases can be resolved by reading “complete preemption” as a term of art—“a description of the specific situation in which a federal law not only preempts a state law to some degree but also substitutes a federal cause of action for the state cause of action, thereby manifesting Congress's intent to permit removal”).

Turgeau v. Administrative Review Bd., 446 F.3d 1052, 1061 (10th Cir.2006).

The Supreme Court has determined that Congress intended the complete preemption doctrine to apply to state law causes of action which fit within the scope of ERISA's civil enforcement provisions. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). ERISA's “civil enforcement provisions are of such extraordinarily preemptive power that they override even the “well-pleaded complaint” rule for establishing the conditions under which a cause of action may be removed to a federal forum.” Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 376, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002), quoting Metropolitan Life, 481 U.S. at 63–63, 107 S.Ct. 1542. “A state law claim will convert to a federal claim only if the claim is preempted by ERISA and within the scope of ERISA's civil enforcement provisions.” Carland v. Metropolitan Life Ins. Co., 935 F.2d 1114, 1118–1119 (10th Cir.1991), cert. denied, 502 U.S. 1020, 112 S.Ct. 670, 116 L.Ed.2d 761 (1991), citing Metropolitan Life, 481 U.S. at 64, 107 S.Ct. 1542.

The state court petition

The court thus determines whether the plaintiff's state court petition which was removed to this court is completely preempted. The Sharps' state court petition is short and makes no mention of ERISA. Instead, it identifies the parties, and alleges the following:

Defendant wrongfully failed to pay for health insurance coverage on Plaintiff's minor child so that Plaintiffs had to pay and then sue BCBS for recovery. When BCBS lost, it paid the liquidated amount under its health insurance agreement. But BCBS failed and refused to pay the interest owed under K.S.A. 16–201 and Lightcap v. Mobil Oil Corp., 221 Kan. 448, 468–69, 562 P.2d 1, cert. denied, 434 U.S. 876 [98 S.Ct. 228, 54 L.Ed.2d 156] (1977). This suit seeks to recover that interest.

Dk. 1, Exh. 2, p. 1. The petition then alleges that “Defendant BCBS, under breach of contract, unjust enrichment, and accounting, owes the Plaintiffs $23,390.14, as of July 1, 2010.” Id., p. 2.

That the Sharps have pleaded solely in terms of state law is not dispositive of the issue before this court. “When the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law.” Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004).

Complete preemption

The Tenth Circuit has noted the extraordinary pre-emptive sweep of ERISA, in stating:

The Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, can be a fruitless and thorny ground for plaintiffs, and many seek to avoid it entirely by bringing their insurance claims under state law. The Supreme Court has increasingly circumscribed such state-law claims, however, finding the pre-emptive sweep of ERISA to be so “extraordinary” that it bars all claims of close relation. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

Moffett v. Halliburton Energy Services, Inc., 291 F.3d 1227, 1237 (10th Cir.2002). The ERISA preemption clause provides in pertinent part: “[T]he provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan....” 29 U.S.C. § 1144(a). This clause establishes a broad area of exclusively federal concern preempting state law claims that “relate...