Tennessee Medical Ass'n v. Bluecross

• Decision Date: 09 January 2007
• Docket Number: No. M2005-01278-COA-R3-CV.,M2005-01278-COA-R3-CV.
• Citation: 229 S.W.3d 304
• Parties: TENNESSEE MEDICAL ASSOCIATION v. BLUECROSS BLUESHIELD OF TENNESSEE, INC., et al.
• Court: Tennessee Court of Appeals

229 S.W.3d 304

TENNESSEE MEDICAL ASSOCIATION v. BLUECROSS BLUESHIELD OF TENNESSEE, INC., et al.

No. M2005-01278-COA-R3-CV.

Court of Appeals of Tennessee, at Nashville.

April 28, 2006 Session.

January 9, 2007.

Permission to Appeal Denied by Supreme Court June 25, 2007.

David L. Steed, Nashville, Tennessee; Edith M. Kallas, New York, New York, for the appellant, Tennessee Medical Association.

Gary C. Shockley, John S. Hicks, Mary Ann Miranda, Nashville, Tennessee, for the appellees BlueCross BlueShield of Tennessee, Inc., and Tennessee Health Care Network, Inc.

OPINION

WILLIAM B. CAIN, J., delivered the opinion of the court, in which WILLIAM C. KOCH, JR., P.J., M.S., and JERRY SCOTT, SR. J., joined.

Tennessee Medical Association filed this action against BlueCross BlueShield of Tennessee limiting its alleged case specifically to violations of the Tennessee Consumer Protection Act. The trial court held that Tennessee Medical Association was bound by the compulsory arbitration provisions in the contracts between the member providers of the Association and BlueCross BlueShield of Tennessee. The trial court granted a Motion to Dismiss the Complaint on the basis that Tennessee Medical Association was not "affected" by the Tennessee Consumer Protection Act since it had no contract with BlueCross BlueShield and further that the Association alleged no "trade, commerce or consumer transaction" within the meaning of Tennessee Code Annotated sections 47-18-103(11), -104(a), -109(a)(1). We affirm the action of the trial court.

On April 25, 2002, Tennessee Medical Association ("TMA") filed the case at bar in the Chancery Court of Davidson County and simultaneously filed essentially the same complaint in a separate action against CIGNA Healthcare of Tennessee, Inc. ("CIGNA") and others (civil action No. 02-____-III) and then in yet another action filed on the same date made essentially the same allegations in a complaint against United Health Group, Inc. and United Healthcare of Tennessee, Inc. (civil action No. 02-1245-III).

Also on April 25, 2002, the same attorneys representing TMA filed a class action complaint involving the same allegations as are made in the case at bar on behalf of Zachary Rosenberg, M.D. and Dewayne P. Darby, M.D. versus BlueCross BlueShield of Tennessee ("BCBST") and Tennessee Healthcare Network, Inc. (civil action No. 02-1237-III) which action was dismissed by the trial court with the judgment of the trial court affirmed by this Court on November 29, 2006 (No. M2005-01070-COA-R9-CV).

These court actions by TMA are consistent with a nationwide attack on the actions of managed care entities. (See In re Humana Inc. Managed Care Litig., No. 1334, 2000 U.S.Dist Lexis 5099 (J.P.M.L. Apr. 13, 2000), same being multi-district litigation, centralized in the Southern District of Florida.) The simultaneous complaints by TMA against United Healthcare Group, Inc., et al. and against CIGNA Healthcare of Tennessee, et al. were timely removed to federal court and, by the United States District Court of the Middle District of Tennessee, transferred to the Southern District of Florida to become part of multi-district litigation No. 1334 pending in the Florida Court. While the same attorneys representing BCBST in the case at bar also represent CIGNA in civil action No. 02-____-III, this case was not removed to federal court.

The procedural posture of the case at bar presents an interesting twist to what otherwise might be a rather simple disposition. The claims presented in the Complaint may well be preempted by federal law. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 62-63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (U.S.1987); Tolton v. Am. Biodyne, Inc., 48 F.3d 937, 941 (6th Cir.1995); Parrino v. F.H.P., Inc., 146 F.3d 699, 704 (9th Cir.1998); 14B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure Jurisprudence § 3722 (3d ed.1998).

It has long been held, however that a plaintiff is "master of the claim" when it comes to choosing his forum. Caterpillar, Inc. v. Williams, 482 U.S. 386, 387, 107 S.Ct. 2425, 96 L.Ed.2d 318 (U.S.1987). Just as clearly, a defendant is "master of removal" in determining whether or not to litigate the case in a state forum or attempt to remove it federal court. Am. Int'l Underwriters, Inc. v. Cont'l Ins. Co., 843 F.2d 1253, 1260-61 (9th Cir.1988).

Only "complete preemption" under the "independent corollary rule" asserted in Caterpillar or what the Eleventh Circuit Court of Appeals subcategorizes as "super preemption," Whitt v. Sherman Int'l Corp., 147 F.3d 1325, 1329 (11th Cir.1998); Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1211-13 (11th Cir.1999); Kemp v. Int'l Bus. Mach. Corp., 109 F.3d 708, 712 (11th Cir.1997); Ervast v. Flexible Products Co., 346 F.3d 1007, 1012 (11th Cir.2003) deprives a state court of subject matter jurisdiction and mandates dismissal. See MEBA Med. Benefits Plan v. Lago, 867 So.2d 1184 (Fla.Dist.Ct.App. 2004); Middleton v. Russell Group, Ltd., 126 N.C.App. 1, 483 S.E.2d 727 (1997); Murphy v. Cmty. Health Network of La., Inc., 712 So.2d 296 (La.Ct.App.1998); Garcia v. Kaiser Found. Hospitals, 90 Hawai`i 425, 978 P.2d 863 (1999); Puget Sound Elec. Workers Health and Welfare Trust Fund v. Merit Co., 123 Wash.2d 565, 870 P.2d 960 (1994).

While Tennessee Rule of Appellate Procedure 13(b) permits this Court to address subject matter jurisdiction issues, even when not raised by the parties, it is significant to note that neither party has chosen to assert the issue which is an extremely complex one demanding intense judicial scrutiny. Under these circumstances and in the interest of judicial economy, we choose not to further delve into the jurisdictional question or the extensive parallel proceedings in the multi-district managed care litigation.

Those motivated by academic curiosity are referred to In re Managed Care Litig., 143 F.Supp.2d 1371 (S.D.Fla.2001); In re Managed Care Litig., 150 F.Supp.2d 1330 (S.D.Fla.2001); In re Managed Care Litig., 185 F.Supp.2d 1310 (S.D.Fla.2002); In re Managed Care Litig., Nos. MDL 1334, 00-1334MDMORENO, 2002 WL 1359736 (S.D.Fla. Mar. 25, 2002); In re Managed Care Litig., Nos. MDL 1334, 00-1334MDMORENO, 2002 WL 1359734 (S.D.Fla. Jun. 11, 2002); In re Managed Care Litig., 236 F.Supp.2d 1336 (S.D.Fla. 2002); In re: Managed Care Litig., No. 00-1334-MD-Moreno, 2003 WL 22218324 (S.D.Fla. May 30, 2003); In re Managed Care Litig., No. 00-MD-1334, 2003 WL 22410373 (S.D.Fla. Sept. 15, 2003); In re: Managed Care Litig., No. 00-1334-MD-Moreno, 2003 WL 22850070 (S.D.Fla. Oct. 24, 2003); In re Managed Care Litig., 415 F.Supp.2d 1378 (S.D.Fla.2006); In re Managed Care Litig., 430 F.Supp.2d 1336 (S.D.Fla.2006).

By the express provisions of the Complaint, this case is limited to an action by TMA against Defendants under the provisions of the Tennessee Consumer Protection Act. The allegations of the Complaint are practically a carbon copy of complaints filed in the multi-district litigation cases and the Complaint filed in Rosenberg v. BlueCross BlueShield of Tennessee, M2005-01070-COA-R9-CV, 219 S.W.3d 892, decided by this Court on November 29, 2006.

Defendants filed a Motion to Compel Arbitration or Dismiss the Case. On April 25, 2005, the trial court ruled:

The court grants the motion of the defendants to dismiss the complaint of the plaintiff, Tennessee Medical Association ("TMA"), for the following reasons:

1. TMA's breach of contract claim is dismissed because on the face of the pleadings TMA has no contractual relationship with the defendants.

2 To the extent TMA asserts a breach of contract claim derivative of its physician members' contracts with the defendants, the Court dismisses that claim. The pleadings establish that TMA has no contractual relationship with the defendants, and there are no allegations in the pleadings to state a claim that TMA is an intended third-party beneficiary of the agreements between its physician members and the defendants. Accordingly, absent contractual or third-party beneficiary status, TMA cannot legally assert a derivative breach of contract claim. Additionally, even if TMA did have a derivative contract claim, the Court has determined that TMA's member physicians are required to arbitrate such claims. As a derivative, TMA's claim of breach of contract would also have to be arbitrated.

3. The Court dismisses TMA's claim that the defendants have violated Tennessee Code Annotated section 56-7-109, the Tennessee Prompt Pay Act. On the face of the pleadings, TMA is neither a provider nor a submitter of claims, the status required by the Act. If the TMA claim is derivative of a Prompt Pay Act Claim by its members, like the derivative breach of contract claim, it is subject to arbitration.

4. The Court dismisses TMA's claim of a violation of the Tennessee Consumer Protection Act. A nonprofit corporation, such as TMA, is entitled to the protections of the Tennessee Consumer Protection Act if the corporation can show that it has been injured by a violation of the statute. ATS Southeast v. Carrier Corp., 18 S.W.3d 616 [626] (Tenn.2000). But the corporation must, nevertheless, fulfill the other requirements of the statute and allege violations in connection with some "trade, commerce, or consumer transaction." TENN.CODE ANN. §§ 47-18-103(11), -104(a), -109(a)(1). TMA's pleadings fail to identify any consumer transaction or other exchange between itself and the defendants which fits within the terms of the Tennessee Consumer Protection Act. The pleadings establish that physicians and other providers contract with the defendants to provide medical services to the defendants' insureds. The TMA's members, who are physicians, sell their services to the defendants for the benefit of the defendants' members who consume those professional services. But TMA is not a party to this arrangement, and it does not perform services nor consume services. It is neither...