St. Charles Surgical Hosp., LLC v. La. Health Serv. & Indem. Co.

• Court: U.S. District Court — Eastern District of Louisiana
• Writing for the Court: SUSIE MORGAN UNITED STATES DISTRICT JUDGE
• Decision Date: 11 February 2020
• Docket Number: CIVIL ACTION NO. 19-13497 SECTION: "E" (5)
• Citation: St. Charles Surgical Hosp., LLC v. La. Health Serv. & Indem. Co., CIVIL ACTION NO. 19-13497 SECTION: "E" (5) (E.D. La. Feb 11, 2020)
• Parties: ST. CHARLES SURGICAL HOSPITAL, LLC, ET AL., Plaintiffs v. LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY, ET AL., Defendants

ST. CHARLES SURGICAL HOSPITAL, LLC, ET AL., Plaintiffs v. LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY, ET AL., Defendants

CIVIL ACTION NO. 19-13497 SECTION: "E" (5)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

February 11, 2020

ORDER AND REASONS

Before the Court is a Motion to Remand and for Just Costs and Actual Expenses filed by Plaintiffs, the Center for Restorative Breast Surgery, L.L.C. (the "Center") and St. Charles Surgical Hospital ("Hospital").¹ Defendants, Louisiana Health Service & Indemnity Company d/b/a Blue Cross Blue Shield of Louisiana ("Blue Cross Blue Shield of Louisiana"), Blue Cross & Blue Shield of Louisiana, Inc.,² and HMO Louisiana, Inc. (collectively, "Blue Cross Louisiana Defendants"), oppose the motion.³ The Center and the Hospital filed a reply.⁴ Oral argument on the motion was held on January 16, 2020.⁵ For the following reasons, the motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND

This Court's lengthy history with this matter began when, on April 6, 2010, the Center for Restorative Breast Surgery, L.L.C. and St. Charles Surgical Hospital, filed suit in the Civil District Court for the Parish of Orleans, State of Louisiana. Louisiana Health Service & Indemnity Company d/b/a Blue Cross Blue Shield of Louisiana removed thecase to this Court on April 12, 2011 ("Blue Cross I") based on federal question jurisdiction and the federal officer removal statute.⁶ The Blue Cross I defendants were numerous Blue Cross entities from across the country.

The members of the Center are surgeons who perform post-mastectomy breast reconstruction medical services.⁷ The Hospital is a specialty surgical center where the physicians affiliated with the Center perform the surgeries.⁸ The Center and the Hospital are out-of-network healthcare providers with respect to all Blue Cross I defendants, including Defendant Blue Cross Blue Shield of Louisiana in this case. The Center and the Hospital provided services to patients covered under insurance policies issued or administered by various Blue Cross I defendants.⁹

Final judgment was entered in Blue Cross I on March 31, 2017,¹⁰ and the Center and the Hospital filed an appeal on April 21, 2017.¹¹ On August 16, 2017, the appeal was dismissed pursuant to the appellants' motion.¹²

On February 3, 2017, the Center and the Hospital filed suit in the Civil District Court for the Parish of Orleans, State of Louisiana, against Blue Cross Blue Shield of Louisiana, Blue Cross & Blue Shield of Louisiana, Inc., and HMO Louisiana, Inc. (Blue Cross II").¹³ The Center and the Hospital made claims in Blue Cross II on four counts: (1) breach of contract; (2) detrimental reliance; (3) negligent misrepresentation; and (4)fraud. In their answer, Blue Cross Blue Shield of Louisiana and HMO Louisiana, Inc. alleged the Center and the Hospital were asserting the same claims previously alleged and decided in federal court.¹⁴ As a result, the Center and the Hospital amended their state court petition "to make it more abundantly clear that the claims made in the Petition are separate and distinct claims from those allegedly made in federal court."¹⁵

On April 28, 2017, Blue Cross Louisiana and HMO Louisiana, Inc. filed suit in this Court ("Blue Cross III")¹⁶ against the Center and the Hospital under the All Writs Act¹⁷ and the Anti-Injunction Act.¹⁸ Blue Cross Louisiana sought an injunction against the litigation filed in state court by the Center and the Hospital in Blue Cross II. On May 23, 2017, this Court granted in part and denied in part the motion for preliminary and permanent injunctive relief.¹⁹ Specifically, the Court enjoined the Center and the Hospital from making the following claims:

1. Any claim for breach of oral contract the value of which exceeds $500 in which they allege an oral contract existed by virtue of telecommunication and/or accessing the iLinkBlue web portal;

2. Any claim under the theory of detrimental reliance for which: (1) there was no attempt to verify the patient's eligibility and benefits through a verification telephone call or iLinkBlue; (2) there was an attempt to verify the patient's eligibility and benefits through iLinkBlue, but the verification page did not provide the amount the insurer will pay for a specific procedure; or (3) there was an attempt to verify the patient's eligibility and benefits through a verification telephone call, but a disclaimer stating there was "no guarantee of payment" was played at the beginning of the call, and the [Center and the Hospital] did not request further assurance or clarification about the amount of the allowable charge; and

3. Any claim under the theory of negligent misrepresentation for which: (1) therewas no attempt to verify the patient's eligibility and benefits through a verification telephone call or iLinkBlue; (2) there was an attempt to verify the patient's eligibility and benefits through iLinkBlue but the coverage summaries did not state the allowable amount or any other procedure-specific information; or (3) there was an attempt to verify the patient's eligibility and benefits through a verification telephone call, but the [Center and the Hospital] did not ask Blue Cross Louisiana for the allowable amount.²⁰

The Court did not enjoin the Center and the Hospital from pursuing their fraud claim, explaining:

The [Center and the Hospital] voluntarily dismissed with prejudice their fraud claim in Blue Cross I on October 22, 2015. Voluntary dismissals with prejudice ordinarily are deemed a final adjudication on the merits for res judicata purposes on the claims asserted or which could have been asserted in the suit. To have a preclusive effect on specific issues or facts, however, a voluntary dismissal also must be accompanied by specific findings sufficient for a subsequent court to conclude that certain matters are actually decided.

The Court did not issue findings when it granted the [Center and the Hospital's] motion to voluntarily dismiss the Plaintiff's fraud claim. As a result, the [Center and the Hospital's] voluntary dismissal of their fraud claim has no preclusive effect, and the Court will not enjoin the [Center and the Hospital] from pursuing a fraud claim in Blue Cross II.²¹

On June 19, 2017, the Center and the Hospital amended their state court petition in Blue Cross II for the second time to assert only fraud and abuse of rights claims under Louisiana law.²² Over the next two years, the parties engaged in "extensive discovery and procedural challenges by Defendants" as well as requests for intermediate review in state court.²³ On October 10, 2019, the Center and the Hospital moved for leave to file a third amended petition, which the state court granted on November 7, 2019.²⁴ According to the Center and the Hospital, the third amended petition "was filed out of an abundance of caution and in order to ensure Plaintiffs' allegations of fraud were pled 'withparticularity.'"²⁵

Shortly thereafter, on November 7, 2019, Blue Cross Louisiana Defendants removed the case to federal court, arguing federal subject matter jurisdiction exists because (1) the Center and the Hospital's claims are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. and the Federal Employees Health Benefits Act ("FEHBA"), 5 U.S.C. § 8901 et seq., and (2) removal is proper under the Federal Officer Removal Statute, 28 U.S.C. § 1442(a)(1).²⁶

On December 5, 2019, the Center and the Hospital filed the instant Motion to Remand and for Just Costs and Actual Expenses.²⁷ The Center and the Hospital argue (1) the Court lacks subject matter jurisdiction over this matter because the claims are not preempted and the federal officer removal statute is inapplicable, and (2) Blue Cross Louisiana Defendants' removal was untimely. The Center and the Hospital also seek an award of just costs and actual expenses, including attorney's fees, pursuant to 28 U.S.C. § 1447(c).

LAW AND ANALYSIS

I. Is There Complete Preemption Under ERISA?

"Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claims."²⁸ The party seeking removal bears the burden of showing that federal jurisdiction is proper.²⁹ "Ambiguities are construed against removal and in favor of remand because removal statutes are to be strictlyconstrued."³⁰

Pursuant to 28 U.S.C. § 1331, district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."³¹ "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."³² "The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law."³³ "There does exist, however, an independent corollary to the well-pleaded complaint rule known as the 'complete pre-emption doctrine.'"³⁴ "Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law."³⁵

In this case, Blue Cross Louisiana Defendants contend the Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 because the claims of the Center and the Hospital's are completely preempted by (1) ERISA and (2) FEHBA.

ERISA is a federal statute that "completely pre-empts [a] state-law cause of action," thereby making a "claim which comes within the scope of that cause of action,even if pleaded in terms of state law," removable to federal court.³⁶ "[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy . . . is therefore pre-empted."³⁷ The ERISA civil enforcement remedy is contained in ERISA § 502(a).³⁸ "Hence, 'causes of action within the...