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Horizon Blue Cross Blue Shield of New Jersey v. East Brunswick Surgery Center

April 23, 2009


The opinion of the court was delivered by: Wolfson, United States District Judge


Presently before the Court is a Motion by Plaintiff Horizon Blue Cross Blue Shield of New Jersey ("Plaintiff") to Remand the above-captioned matter. Defendants East Brunswick Surgery Center ("EBSC"), LLC, USP Central New Jersey, Inc. ("USP"), Brunswick ASC Investment, LLC ("ASC"), and David Kirschenbaum (collectively "Defendants") removed Plaintiff's Complaint to this Court, claiming that Plaintiff's state law claims are effectively preempted by the Employee Retirement Income Security Act's ("ERISA") enforcement provisions under section 502(a). In its Complaint, Plaintif alleges that: (1) Defendants fraudulently submitted claims forms, in violation of the New Jersey Insurance Fraud Prevention Act ("NJIFPA"); (2) common law fraud; (3) negligent misrepresentation; and (4) tortious interference with Plaintiff's in-network provider contracts. For the reasons that follow, the Court grants Plaintiff's Motion to Remand, and remands the matter back to New Jersey Superior Court, Chancery Division, Camden Vicinage. However, the Court denies Plaintiff's request for fees.


Plaintiff is a not-for-profit health services corporation established under the Health Service Corporation Act ("HSCA") and provides comprehensive health care benefits and insurance to its subscribers. Pl.'s Compl. ¶¶ 10-11. Plaintiff offers these services through employer-sponsored, government-sponsored, or individual health benefit plans. Id. ¶ 12. EBSC is a licensed ambulatory surgical center with five operating rooms located at 561 Cranbury Road, East Brunswick, New Jersey. A licensed ambulatory surgical center provides physicians and other licensed providers a facility at which to perform outpatient surgical procedures. USP is the owner and operator of EBSC and responsible for submitting health insurance claims to Plaintiff on behalf of EBSC. Doctor Kirschenbaum, a licensed physician, is the owner of Brunswick ASC Investment and operates EBSC.

Plaintiff provides "in-network" health care benefits to subscribers through "participating" medical providers, those medical providers who have entered into contracts with Plaintiff to render services to subscribers in return for fees set by the terms of the contract. Id. ¶ 13. Pursuant to these contracts with "participating" providers, the providers must accept negotiated payment for services as payment in full. This provision does not affect the subscriber, who normally must pay a co-payment for the provider's services. Plaintiff also offers health benefit plans and polices that include "out-of-network" or "non-participating" providers, those providers who have not entered into separate agreements with Plaintiff. In accordance with these plans and polices, non-participating providers set their own fees for services rendered to the subscriber. Ordinarily, a subscriber who wishes to use a "non-participating" provider may be required to contribute to the cost of care rendered by these providers. As set forth in the provisions of these health benefit plans, a subscriber who seeks "out-of-network" care may be responsible for coinsurance, deductibles, or other amounts. Plaintiff asserts that the distinction between "in-network" and "out-of-work" "protect[s] the integrity of Horizon's network of medical providers, require[s] subscribers to consider and share in the cost of health care services, affect[s] Horizon's ability to control the costs of the medical care, and encourage[s] participation in [Horizon's] network of health care providers." Id. ¶ 24.

Up until May 17, 2007, EBSC was a participating provider in Plaintiff's "in-network" system, thus obligating EBSC to accept negotiated fees as payment in full for services rendered. On May 17, 2007, EBSC terminated its agreement with Plaintiff, making it a "non-participating" provider. Plaintiff alleges that soon after the contract was terminated, EBSC dramatically increased its charges for services rendered to Plaintiff's subscribers. In addition, EBSC allegedly waived payment of coinsurance, deductibles and other subscriber financial responsibilities in order to induce Plaintiff's subscribers to use its services, effectively circumventing the Plaintiff's "in-network" contractual obligations. In support of this allegation, Plaintiff quotes the following language placed on EBSC's claim forms: "ALERT: This facility will accept usual and customary payment as ful assignment. We will honor your members in-network deductible and waive the co-insurance." Pl.'s Compl., Exh. B (emphasis in original). To induce Plaintiff's subscribers to use EBSC's "out-of-network" services, Defendants allegedly waived nearly $315,000 in patient coinsurance and deductibles on the subscribers' claims and over $3,400,000 of its stated charges for services. In sum, Plaintiff alleges that Defendants, collectively, fraudulently and tortiously interfered with Plaintiff's "in-network" health benefit plans which resulted in over $5,700,000 in charges to Defendants through health insurance claims. Thus, Plaintiff proceeds on various state law claims, including (1) insurance fraud under the NJIFPA; (2) common law fraud; (3) negligent misrepresentation; and (4) tortious interference.

Plaintiff initiated this action in New Jersey Superior Court, Chancery Division, Camden Vicinage on June 19, 2008. Thereafter, Defendants removed the matter to the United States District Court for the District of New Jersey on August 18, 2008. Pursuant to 28 U.S.C. § 1441, Defendants argue removal is proper because Plaintiff's state law claims are effectively preempted by ERISA's exhaustive remedial measures. On October 8, 2008, Plaintiff filed this Motion to Remand the above-captioned matter. In addition, Plaintiff seeks payment of costs and expenses incurred due to the removal pursuant to 28 U.S.C. § 1447(c). For the reasons that follow, Plaintiff's Motion to Remand is granted. Further, Plaintiff's request for fees is denied.


A. Standard of Review - Motion to Remand

A defendant who seeks to remove a matter to federal court bears the burden of demonstrating jurisdiction. Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir.2004).Pursuant to 28 U.S.C. §1441, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants to the district court." On a motion to remand, the court must resolve factual disputes in favor of remand. Entrekin v. Fisher Scientific, Inc., 146 F.Supp.2d 594, 604 (3d Cir. 2001).Generally, a party seeking removal faces an uphill battle as section 1441 must be strictly construed against removal. In re Notice of Removal Filed by William Einhorn, 481 F.Supp.2d 345(D.N.J. 2007) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108 (1941)).

Whether removal is proper is to be determined by a review of the plaintiff's complaint. Under the well-pleaded complaint rule, a defendant may not remove a case unless a federal question appears on the face of the plaintiff's complaint, or stated another way, "'[a] right or immunity created by the Constitution or laws of the United States must be an element, and an essential one of the plaintiff's cause of action.'"Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003); Ry. Labor Executives Association v. Pittsburgh & Lake Erie R.R., 858 F.3d 936 (3d Cir. 1988).

Thus, removal may not be premised on the basis of a federal defense, underscoring the principle that "the plaintiff [is] the master of the claim" and may avoid litigation in federal court by asserting claims only arising under state law. Catepillar Inc. v. Williams, 482 U.S. 386, 392 (1987).

In the present case, a gleaning of Plaintiff's Complaint reveals no federal claims. Indeed, Plaintiff's claims arise exclusively under state law, specifically the NJIFPA, common law fraud and tortious interference. See Pl.'s Compl. Thus, the Court must determine whether Plaintiff's state claims are ...

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