Soileau & Assocs., LLC v. La. Health Serv. & Indem. Co.
| Decision Date | 15 August 2018 |
| Docket Number | CIVIL ACTION CASE NO. 18-710 SECTION: "G"(3) |
| Parties | SOILEAU & ASSOCIATES, LLC, et al. v. LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY d/b/a BLUE CROSS AND BLUE SHIELD OF LOUISIANA |
| Court | U.S. District Court — Eastern District of Louisiana |
Pending before the Court is Plaintiffs Soileau & Associates, LLC, Karen S. Kovach, and Isaac H. Soileau, Jr.'s (collectively, "Plaintiffs") "Motion to Remand."1 Having considered the motion, the memoranda in support and in opposition, the record, and the applicable law, the Court will deny the motion.
On December 22, 2017, Plaintiffs filed a Petition for Damages in the Civil District Court for the Parish of Orleans, State of Louisiana.2 In the petition, Plaintiffs allege that Soileau & Associates, LLC had a policy of medical and hospitalization coverage ("the policy") insured through Defendant Louisiana Health Service & Indemnity Company, d/b/a Blue Cross Blue Shield of Louisiana ("Defendant").3 Plaintiffs allege that the policy provided coverage for K.S., their minor child, who was previously diagnosed with "traumatic brain injury, fetal alcohol syndrome,autism, pervasive developmental delays, ADHD-severe, PTSD, anxiety, and several other neurological conditions."4
According to the petition, "[i]n November and December of 2014, K.S.'s condition became so unsafe that both parents were essentially required to stay with her continually, almost 24 hours a day."5 Plaintiffs allege that K.S.'s physicians referred her for inpatient treatment at Cumberland Hospital for Children and Adolescents in New Kent, Virginia, and Defendant authorized inpatient treatment for K.S. on January 6, 2015.6 Plaintiffs assert that K.S. was admitted to Cumberland Hospital for inpatient treatment on January 7, 2015 through August 11, 2015, when Defendant "arbitrarily denied further authority for inpatient treatment."7
After her premature discharge from Cumberland Hospital, Plaintiffs allege that K.S.'s condition deteriorated, resulting in several voluntary and involuntary emergency department admissions between August 2015 and March 2016.8 According to the petition, Cumberland Hospital admitted K.S. for inpatient care again on April 8, 2016, but after approximately a year of treatment, Defendant denied further inpatient treatment on April 18, 2017.9 Plaintiffs assert that they appealed the decision to deny further treatment.10 Plaintiffs allege that on June 23, 2017Defendant upheld the appeal finding that the treatment was medically necessary but asserted a policy exclusion for "Custodial Care" to deny impatient treatment effective April 19, 2017.11
Plaintiffs assert that Defendant required them to prepay all charges to Cumberland Hospital at a rate of $1,192.00 per day, even though the policy does not state that prepayment of preauthorized services is required.12 Plaintiffs allege that Defendant repeatedly delayed reimbursing Plaintiffs.13 At the time the petition was filed, Plaintiffs allege that K.S. was still being treated at Cumberland Hospital and Plaintiffs were paying the expenses at a rate of $1,192.00 per day, even though Defendant "has denied further coverage for this inpatient treatment by retroactively misapplying a policy exception over a year after the claim had been authorized."14 Plaintiffs "make demand for authorization of treatment and payment for same, as well as for all penalties associated with any additional payments for treatment by Plaintiffs that [Defendant] failed to make or reimburse to Plaintiffs within 30 days of the demand for same."15 Plaintiffs bring claims for breach of contract, bad faith adjusting, and failure to timely pay claims in violation of Louisiana Revised Statute § 22:1821(A) and (D).16
On January 23, 2018, Defendant removed the action to this Court.17 In the Notice ofRemoval, Defendant asserts that this Court has original jurisdiction over this matter under 28 U.S.C. § 1331.18 Specifically, Defendant contends that the policy is an employee welfare benefit plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974 ("ERISA") and that Plaintiffs' claim for benefits arises under Section 502(a)(1)(B) of ERISA and is completely preempted by ERISA.19
On February 22, 2018, Plaintiffs filed the instant "Motion to Remand."20 On March 6, 2018, Defendant filed an opposition.21 On March 13, 2018, with leave of Court, Defendant filed a reply brief in further support of the motion.22
In the motion to remand, Plaintiffs first argue that remand is proper because Defendant has failed to meet its burden of proving that removal is proper.23 Plaintiffs contend that Defendant simply alleged that the Court has jurisdiction but did not come forward with any evidence to support the claim that ERISA preempts Plaintiffs' claims.24 Because any doubts regarding removal must be resolved in favor of remand and Plaintiffs deny that ERISA applies to the claims,Plaintiffs contend that this matter must be remanded.25
Second, Plaintiffs argue that Defendant has waived the right to remove claims arising out of the policy at issue here.26 Plaintiffs cite the "ERISA Rights" section of the policy, which provides that "[i]f the Member has a claim for Benefits, which is denied or ignored, in whole or in part, he may file suit in a state or Federal court."27 Plaintiff asserts that a party may waive its removal rights by giving the other party the right to choose venue or by establishing an exclusive venue within the policy.28 Because the policy allows the insured party to file the case in "state or federal court," Plaintiffs assert that Defendant has unequivocally waived the right to remove this case.29
Third, Plaintiffs argue that there is no federal-question jurisdiction over this case because the policy is not subject to ERISA.30 Plaintiffs contend that they have retained an insurance industry expert, Wayne Citron ("Citron"), who has reviewed the policy and opined that it is not the sort of policy that is covered by ERISA and fails to incorporate the necessary components of Title I, Part 7 of ERISA.31 Plaintiffs also note that Citron points out "a fundamental set of ambiguities in the policy as to whether it is covered by the ERISA," notably that the policyequivocates on the issue of whether federal or state law applies and the time limits in which a claim may be filed are not compliant with ERISA.32 Plaintiffs also contend that Defendant has tacitly admitted that the policy is not covered by the ERISA by: (1) repeatedly interacting with the Louisiana Department of Insurance in complaints regarding the handling of the claims at issue without raising ERISA as an issue; (2) sending correspondence to Plaintiffs that does not identify the policy or claim as arising under ERISA; and (3) using an internal appeal process in the handling of this claim different from the ERISA appeal process described in the policy.33 Plaintiffs assert that these actions serve to estop Defendant from now claiming ERISA coverage.34
Next, Plaintiffs assert that ERISA is not applicable because there is no "plan."35 Plaintiffs note that pursuant to Fifth Circuit law "[i]n determining whether a plan, fund or program (pursuant to a writing or not) is a reality a court must determine whether from the surrounding circumstances a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits."36 Plaintiffs assert that Defendant is unable to prove the existence of a plan because "the claims at issue in this case arise out of defendant's unilateral imposition of an individualized, non-contractual reimbursement process on plaintiffs, through a third party intermediary," which Plaintiffs argue is not part of the normal claims handlingprocess.37 Plaintiffs also argue that Defendant has replaced the claims handling process established in the policy with "an indeterminate and capricious extraordinary 'process' . . . to suit defendant's desire to avoid responsibility under the insurance agreement."38 Moreover, Plaintiffs assert that "[t]he extraordinary process that defendant has created in its efforts to evade plaintiffs' claims are so egregious that no reasonable person can possibly determine what benefits are due, what process to use, who might be a beneficiary of the policy, the source of the funding, and so forth because of the defendant's indeterminate reimbursement process through BCBS of Virginia."39 Plaintiffs assert that Defendant is not acting as an "administrator" of the plan because it has ceded administrator duties to BCBS of Virginia.40
Even if the policy and the instant claims are covered by ERISA, Plaintiffs assert that it falls within the Department of Labor's "safe harbor" exemption.41 Specifically, Plaintiffs assert that Soileau & Associates LLC has not endorsed the policy and receives no profit from it; participation in the insurance contract is voluntary; and Soileau & Associates makes no contributions to a plan with the exception of premiums collected through payroll deductions, which Plaintiffs contend are not "contributions."42
Finally, Plaintiffs "briefly note several other problems that they identify with the removalin this matter, but which they reserve for later argument, if warranted, and preserve for later review, if necessary."43 Specifically, Plaintiffs argue that they have an insurance policy, which Plaintiffs contend is insufficient to show that they have "established or maintained" an employee benefits welfare plan.44 Plaintiffs also contend that as the owners of Soileau & Associates, LLC, they are not employees subject to ERISA.45 Plaintiffs further argue that their claims are within the ERISA savings clause.46 Alternatively, even if ERISA applies to certain claims, Plaintiffs contend that their detrimental reliance claim is not preempted.47 For these reasons, Plaintiffs assert...
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