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MHA, LLC v. Unitedhealth Group, Inc.

United States District Court, Third Circuit

January 21, 2014

MHA, LLC, D/B/A

REPORT AND RECOMMENDATION

MARK FALK, Magistrate Judge.

Before the Court is Plaintiff's motion to remand this case to state court. [CM/ECF No. 5.] Defendants oppose the motion. No argument was heard. Fed.R.Civ.P. 78(b). For the reasons that follow, it is respectfully recommended that the motion be GRANTED.

BACKGROUND[1]

Plaintiff, MHA, is the current owner of Meadowlands Hospital Medical Center. It contends that from December 7, 2010, through November 1, 2011, MHA, through Meadowlands Hospital, provided services to many thousands of members of the various Defendants' health benefit plans as an out-of-network provider. Effective November 1, 2011, MHA entered into two Facility Participation Agreements with Defendants, one governing the services offered to Defendants' Medicaid members and the other covering services provided to patients who had health benefits through commercial, Medicare, or individual plans.

On August 30, 2013, MHA filed a six-count complaint in New Jersey state court, seeking millions of dollars in alleged damages due to, among other things, Defendants' alleged improper denial and underpayment of claims. The Complaint contains purely state law claims for: violations of certain sections of the New Jersey Administrative Code; violations of the New Jersey Healthcare Information Networks and Technologies Act; fraudulent and negligent misrepresentation; equitable and promissory estoppel; unjust enrichment; quantum meruit; and unfair claim settlement practices.[2]

On October 15, 2013, Defendants removed the case to this Court alleging the existence of federal question jurisdiction pursuant to 28 U.S.C. § 1331. Despite the Complaint containing only state law claims, Defendants contend that Plaintiff's claims are actually federal, and removal is thus appropriate, on two grounds: (1) complete preemption of the state law claims by the Employee Retirement Security and Income Act of 1974, ("ERISA"), 29 U.S.C. § 1001, et seq.; and (2) embedded federal question jurisdiction pursuant to the Supreme Court's decision in Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg. Co. , 545 U.S. 308 (2005).

Plaintiff has now moved to remand to state court. It claims that ERISA preemption does not apply in this case because the mere reference to assignments of benefits from its patients is not sufficient, standing alone, to support ERISA standing. It also claims that there is no embedded Grable jurisdiction because its claims do not present substantial and disputed questions of federal law that require interpretation.

Defendants oppose remand, arguing that the general existence of assignments is sufficient to establish ERISA standing and preemption. They also contend that Grable jurisdiction is present because Plaintiff's state law claims implicate the payment provisions of certain federal laws, e.g., the Social Security Act, § 1923(b)(2), 42 U.S.C. § 1396u-2(b)(2).

ANALYSIS

A. Removal Generally

The federal removal statute provides that "[e]xcept as otherwise provided by Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed... to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "[T]he party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, that the case is properly before the federal court." Frederico v. Home Depot , 507 F.3d 188, 193 (3d Cir. 2007). Removal is strictly construed and all doubts are resolved in favor of remand. See Samuel-Bassett v. Kia Motors Am., Inc. , 357 F.3d 392, 396 (3d Cir. 2004).

B. ERISA Preemption

1. Legal Standard

Federal courts have original jurisdiction over cases that "arise under" federal law. See 28 U.S.C. § 1331, 1441(a). Pursuant to the "well-pleaded complaint" rule, a plaintiff is ordinarily entitled to remain in state court so long as its complaint does not allege a federal claim on its face. See Caterpillar, Inc. v. Williams , 482 U.S. 386, 392 (1987); Franchise Tax Bd. of Cal. v. Contr. Laborers Vacation Tr. for S. Ca. , 463 U.S. 1, 10 (1983) ("[A] defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case arises under federal law."). However, the doctrine of complete preemption serves as an exception to the "well-pleaded complaint" rule. See, e.g., Lazorko v. Pa. Hosp. , 237 F.3d 242, 248 (3d Cir. 2000) ("One exception to [the well-pleaded complaint rule] is for matters that Congress has so completely preempted that any civil complaint that falls within this category is necessarily federal in character.").

The doctrine of complete preemption "creates removal jurisdiction even though no federal question appears on the face of the plaintiff's complaint." Id . Claims which fall within the scope of ERISA §502(a) have been deemed to be completely preempted. See Aetna Health, Inc. v. Davila , 542 U.S. 200, 209 (2004); Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan , 388 F.3d 393, 398 (3d Cir. 2004) ("State law causes of action that are within the scope of... §502(a) are completely preempted...."); Vaimakis v. United Healthcare/Oxford, No. 07-5184, 2008 WL 3413853, at * 3 (D.N.J. Aug. 8, 2008) ("ERISA's civil enforcement provision falls within the doctrine of complete preemption."). Therefore, such claims are removable to federal court. See, e.g., Pryzbowski v. U.S. Healthcare, Inc. , 245 F.3d 266, 271 (3d Cir. 2001) ("Following the decision in Metropolitan Life, there can be no question that causes of action within the scope of the civil enforcement provisions of § 502(a) [are] removable to federal court.'") (quoting Metro. Life Ins. Co. v. Taylor , 481 U.S. 58, 62 (1987)).

The Third Circuit has set forth two conditions that must be met for a claim to be completely preempted under §502(a) and, therefore, subject to removal: (1) that the plaintiff could have brought the claim under §502(a); and (2) that "no other legal duty supports" plaintiff's claim. See Pascack , 388 F.3d at 400. Both conditions must be met in order for the claim to be completely preempted. See, e.g., N.J. Spinal Med. & Surgery, PA ...


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