Summary
holding that the plaintiffs’ claims were not preempted by ERISA because they were not seeking plan benefits, but instead were seeking to recover for detrimental reliance and breach of contact for failure to pay after verifying services
Summary of this case from Sadeghi v. Aetna Life Ins. Co.Opinion
Civil Action No. 04-2621, Section "A"(4).
May 5, 2005
ORDER AND REASONS
Before the Court is a Motion to Remand and Request for Sanctions (Rec. Doc. 5), filed by plaintiffs, Intra-Operative Monitoring Services, Inc., and Physicians Analytical Services, Inc. Defendant, Humana Health Benefit Plan of Louisiana, Inc. (hereinafter "Humana"), opposes the motion, which is now before the Court on the briefs without oral argument.
Also before the Court is a Motion to Stay Proceedings (Rec. Doc. 4) filed by Humana. Plaintiffs oppose this motion, which is also before the Court on the briefs without oral argument. For the reasons stated herein, Plaintiff's Motion to Remand and Request for Sanctions is GRANTED in part and DENIED in part. Furthermore, Defendant's Motion to Stay Proceedings is DENIED as moot.
Background
Plaintiffs, Intra-Operative Monitoring Services, Inc. and Physicians Analytical Services, Inc., allege that they contacted the Defendant, Humana, to verify the availability of payment prior to providing intended services to six Humana members. On each occasion, Plaintiffs contend that Humana, who was acting as the insurer/underwriter/administrator for the patients in question, assured payment for the proposed procedures. After Plaintiffs completed the medical and administrative procedures, Defendant failed to compensate Plaintiffs in accordance with their prior coverage verification.Plaintiffs originally filed this lawsuit in the 22nd Judicial District Court for the Parish of St. Tammany, exclusively asserting causes of action under Louisiana law. Plaintiffs allege that they are entitled to recover costs for services rendered and for damages arising out of the Defendant's verification and subsequent denial of benefits, which the Plaintiffs detrimentally relied upon. Additionally, Plaintiffs seek damages for an alleged breach of contract alleging that Humana failed to pay for services rendered after verification of payment coverage. See Attachment to Rec. Doc. 1, Plaintiffs' Original State Court Petition.
Humana removed the matter to this Court, and alleges that Plaintiffs' claims arise under the Employee Retirement Income Security Act of 1974 (ERISA) by virtue of assignments of benefits that the plaintiff-physicians received from the participants of an employee welfare benefit plan. Humana alleges that plaintiffs are seeking to recover the cost of benefits allegedly due under the terms of certain ERISA qualified health benefit plans. See Rec. Doc. 1.
Law and Analysis
Federal courts have limited subject matter jurisdiction and cannot entertain cases unless authorized by the Constitution and legislation. Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996). The parties can never consent to federal subject matter jurisdiction, and lack of such jurisdiction is a defense that cannot be waived. Id. ( citing Fed.R.Civ.P. 12(h)(3); City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 76, (1941)). Accordingly, there is a presumption against subject matter jurisdiction in federal court. Id. ( citing Strain v. Harrelson Rubber Co., 742 F.2d 888, 889 (5th Cir. 1984); 1 J. Moore,Moore's Federal Practice § 0.71[5.-1] (1996)). In support of their Motion to Remand, Plaintiffs argue that state contract claims brought by a third party medical provider do not "arise under" ERISA, do not "relate to" an ERISA plan, and are not claims for employee welfare benefits within the meaning of ERISA.Plaintiffs cite a host of cases that support this position. For instance in Jefferson Parish Hospital Service v. State of Louisiana, 934 F. Supp. 206 (E.D. La. 1996), a case strikingly similar to this one, Judge Fallon found that plaintiff's state law detrimental reliance claims were not preempted by ERISA thereby precluding removal. Id. at 208-09. Applying the test discussed by the Fifth Circuit in Hubbard v. Blue Cross Blue Shield, 42 F.3d 942 (5th Cir. 1995), he found that preemption did not apply. Relying on Memorial Hospital System v. Northbrook Life Insurance Co., 904 F.2d 236 (5th Cir. 1990), he then concluded that the patient's assignment of rights to benefits under the plan had no bearing on the preemption issue. Jefferson Parish, 934 F. Supp. at 208. Other cases have reached the same conclusions. See, e.g., Jefferson Parish Hospital District No. 2 v. Central States Southeast Southwest Area Health Welfare Fund, 814 F. Supp. 25 (E.D. La. 1993).
This Court has reviewed the authorities cited by Plaintiffs and the cases decided by other judges of this Court and finds their reasoning persuasive. That Humana happens to be an ERISA plan is insufficient to create removal jurisdiction. Defendant asserts that the present case is distinguishable from those cited by Plaintiffs by asserting "that the Plaintiffs have specifically pled that they are proceeding under a cause of action for payment of the claims which contain assignment of benefit language." See Opposition to Motion to Remand, p. 7. This Court is not persuaded that this distinction is sufficient to create subject matter jurisdiction. A careful reading of the language fails to indicate that the Plaintiffs' claims are related to an assignment of rights. Furthermore, the fact that Plaintiffs are seeking full value of the claims submitted does not support Defendant's argument, because reimbursement is the foundation of the Plaintiffs' detrimental reliance claim. Simply speaking, the Plaintiffs are not plan participants or beneficiaries seeking plan benefits, but, rather, are third party providers seeking to recover on a detrimental reliance contract claim. Considering the presumption against subject matter jurisdiction, this Court declines to read Defendant's interpretations into the Plaintiffs' state court petition. Accordingly, having concluded that Plaintiffs' claims do not raise a federal question, this Court holds that removal was improper.
Paragraph V of the petition provides:
Further, OHP/Humana established, by course of dealings with the Petitioners, and with other healthcare providers, that it uses, and requires petitioners to use the CPT Code Book, and that all parties in the industry rely upon the CPT Code Book for pre-verification, submission, and payment of all health insurance claims. Petitions rendered treatment in good faith to the defendant's insureds. Petitioners timely submitted these claims to OHP/Humana and/or its agent, via a uniform claim form, and OHP/Humana subsequently partially or fully failed to pay these same claims without good case.
Paragraph VI of the petition provides:
OHP/Humana is without just and reasonable grounds in failing to pay claims to Petitioners and OHP/Humana, by virtue of its actions and claims handling, has, in bad faith, violated Louisiana Insurance Code Unfair Trade Practices Provisions, La.R.S. 22:1214, the Louisiana Insurance Code's Non-Electronic Claim Submission Provisions, La.R.S. 22:250.32, the Louisiana Insurance Code's Clean Claim Regulations related to non-contracted providers, La. ADC: T. 37, Pt. XIII, § 6007(B), and La.R.S. 40:2203.1
Additional language refers to alternative causes of action and the prayer, which seeks full value of the claims submitted.
Award of Attorney's Fees and Costs
The determining factor in a request for attorney's fees and costs is whether the defendant had objectively reasonable grounds to believe the removal was legally proper. Valdes v. Wal-Mart, 199 F.3d 293 (2000). This Court finds that the Defendant's argument was objectively reasonable; therefore, Plaintiffs' request for sanctions is DENIED.
ACCORDINGLY;
Plaintiffs' Motion to Remand (Rec. Doc. 5) is GRANTED and Civil Action 04-2621 is remanded to state court pursuant to 28 U.S.C. § 1447(c). Moreover, Defendant's Motion to Stay Proceedings (Rec. Doc. 4) is DENIED as moot.