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Roche v. Aetna Health Inc.

United States District Court, D. New Jersey

March 31, 2014

MICHELLE ROCHE, Individually, and as Class Representative, Plaintiff,


JOSEPH H. RODRIGUEZ, District Judge.

These matters come before the Court on Plaintiff's Motion for Remand or, in the alternative, for jurisdictional discovery [Dkt. No. 7], Defendants' Motion for Summary Judgment pursuant to Fed.R.Civ.P. 56, or in the alternative Motion to Dismiss pursuant to Fed.R.Civ.P. 12 (b) (6) [Dkt. No. 12], and Plaintiff's Motion to Stay Proceedings [Dkt. No. 19]. The Court has considered the written submissions of the parties and the arguments advanced at the hearing on January 30, 2014.[1] For the reasons expressed on the record that day, as well as those set forth below, Plaintiff's Motion for Remand is granted in part. The Court will permit jurisdictional discovery related to the home state exception to the Class Action Fairness Act, 28 U.S.C. § 1332(d). In addition, the Court will dismiss Plaintiff's Motion to Stay Proceedings as moot and will dismiss, without prejudice, Defendants' Motion for Summary Judgment, or in the alternative Motion to Dismiss. Defendants may refile this motion by way of letter upon such time as the Court resolves Plaintiff's Motion for Remand.

I. Background

This is a proposed class action against five insurance Defendants, Aetna Inc., Aetna Health Inc., Aetna Health Insurance Co., Aetna Life Insurance Co., and The Rawlings Company, LLC ("Defendants"). Plaintiff Michelle Roche ("Plaintiff") claims that Defendants are prohibited from pursuing subrogation or reimbursement claims with respect to New Jersey-regulated health benefit plans. Plaintiff is a New Jersey citizen who was injured in a motor vehicle accident on or about January 19, 2007. (Compl. ¶ 13.) Plaintiff's medical treatment for the injuries she sustained in the accident was paid for by two health insurance plans. The first plan was issued through Roche's husband's employment and is sponsored by the New Jersey State Health Benefits Program. (Id.¶ 14.) The second plan is sponsored by Bank of America. (Id.) Defendant Aetna Life Insurance Company administered both of Plaintiff's plans. (Goodrich Decl. ¶¶ 3-4.)

Plaintiff sued the other driver involved in her car accident and the other driver's excess liability insurer. (Id. at ¶ 15.) She was successful and was awarded damages. (Id. at ¶ 16.) Then, Defendant Rawlings Company LLC ("Rawlings"), which is Aetna Life Insurance Company's subrogation recovery vendor, sent her a letter asserting a lien, subrogation claim, and/or demand for reimbursement of the benefits paid as a result of the accident. (Id. at ¶17.) In response to the letter, Plaintiff made payment to Defendants in the amount of $88, 075.29. (Id. at ¶ 18.)

Shortly thereafter on January 25, 2013, Plaintiff, along with Tim Singleton and Jay Minerly, filed a complaint in the Singleton action against the Defendants in the Atlantic County Vicinage of the New Jersey Superior Court, Law Division. Then on May 28, 2013, Plaintiff, individually and as class representative, commenced this action in the Atlantic County Superior Court Law Division against the same five Defendants.[2] The proposed class is defined as "individuals who had health insurance coverage through non-ERISA governmental health plans issued by Aetna in, and subject to the laws of the State of New Jersey, and against whom Aetna directly, or indirectly through its agent Rawlings, has asserted liens, subrogation, demands and/or demands for repayment for their personal injury recoveries." (Id. at 22.) The Complaint alleges that Defendants' subrogation and reimbursement efforts violate N.J.S.A. 2A:15-97 and N.J.A.C.11:4-42.10, and New Jersey common law. The Complaint seeks compensation for Plaintiff and a class defined as "all similarly situated individuals who are covered by non-ERISA governmental health insurance policies' and have had liens subrogation and/or repayment demands asserted by Defendants." (Id.)

Defendants removed both Singleton and Roche to the District Court of New Jersey on June 25, 2013. Jurisdiction in the present case is predicated upon diversity jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. §§ 1332(d), 1446 and 1453, and federal question jurisdiction arising under the Employment Retirement and Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. Defendants allege that Plaintiff's claims are completely preempted by "ERISA" and also fall within the purview of CAFA. Plaintiff argues that the Court is without jurisdiction because her claims derive from a governmental health insurance policy which is exempt from ERISA pursuant to 29 U.S.C. § 1003 (b) (1) and because two exceptions to CAFA diversity jurisdiction compel remand: the home state exception and the local controversy exception. The Court agrees that federal question jurisdiction under ERISA is lacking because Plaintiff's Complaint raises non-ERISA claims related to her New Jersey State Health Benefits Program. See 29 U.S.C. § 1003 (b) (1) (excluding governmental plans from ERISA; see also 29 U.S.C. § 1002(32) (defining governmental plans). Although the local controversy doctrine does not apply to Plaintiff's claims, the Court will permit limited jurisdictional discovery because it is unable to discern from the present record whether remand is proper under the home state exception. As a result, the Court will permit jurisdictional discovery and stay the determination of the pending summary judgment motions until such time that it can be determined whether or not the Court has jurisdiction.

II. Standard of Review for Remand

At all times, the burden of establishing federal jurisdiction lies with the removing Defendants. See 28 U.S.C. § 1441 (a); Morgan v. Gay , 471 F.3d 469 (3d Cir. 2006); see also Dukes v. U.S. Healthcare, Inc. , 57 F.3d 350, 359 (3d Cir. 1995). For removal to be proper, a District Court of the United States must have original jurisdiction over the action. See 28 U.S.C. § 1441 (a)[3]. Section 1441 states that only state court actions over which the "district courts of the United States have original jurisdiction" may be removed by the defendant. See Ry. Labor Executives' Ass'n v. Pittsburgh & Lake Erie R. Co. , 858 F.2d 936, 939 (1988). Federal question jurisdiction applies to "all civil actions arising under the Constitution, laws, or treatises of the United States." 28 U.S.C. § 1331. A claim "arises under" federal law if "a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." See Metropolitan Life Ins. Co. v. Taylor , 481 U.S. 58, 63 (1987) (citing Gully v. First National Bank , 299 U.S. 109 (1936); Louisville & Nashville R. Co. v. Mottley , 211 U.S. 149 (1908)).

The well pleaded complaint rule "makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." See Caterpillar, Inc. v. Williams , 482 U.S. 386, 392 (1987) (footnote omitted). In addition, the well-pleaded complaint rule bars federal jurisdiction where a plaintiff's complaint facially pleads only state law causes of action, even though issues of federal law are implicated. Carrington v. RCA Global Communications, Inc. , 762 F.Supp. 632, 636 (D.N.J. 1991). Although federal jurisdiction may lie when a federal question is embedded in a state law claim, that circumstance is not present here. See Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg. , 545 U.S. 308, 312, 125 S.Ct. 2363 (2005). Here, federal question jurisdiction lies only where the complaint pleads a federal cause of action or diversity jurisdiction under CAFA is established. See Merrell Dow Pharm. Inc. v. Thompson , 478 U.S. 804, 808, 106 S.Ct. 3229 (1986).

III. Analysis

Plaintiff's Complaint sets forth a cause of action centered upon a governmental health benefit plan that is exempt from ERISA. See 29 U.S.C. § 1003 (b) (1) (excluding governmental plans from ERISA; see also 29 U.S.C. § 1002(32) (defining governmental plans). Plaintiff's "well pleaded complaint" does not implicate the Bank of America policy and Defendants agree that the New Jersey State Health Benefits Program plan is a non-ERISA plan. (Def. Opp. Br. at 5, n. 6.) As a result, federal question jurisdiction is lacking because Plaintiff's complaint does not arise under federal law and exclusively implicates State law. Caterpillar , 482 U.S. at 392.

However, the Court finds that diversity jurisdiction lies under CAFA, 28 U.S.C. § 1332(d)(2). CAFA relaxes the traditional complete diversity requirement and permits federal jurisdiction over class actions when three threshold elements are satisfied. See Vodenichar v. Halcon Energy Properties, Inc. , 733 F.3d 497, 503 (3d Cir. 2013). First, under CAFA's minimal diversity requirements, at least one class member must be a citizen of a different state than at least one defendant. See id. (citing 28 U.S.C. § 1332(d)(5)(b)). Second, in addition to partial diversity, a class must comprise of more than 100 members. 28 U.S.C. § 1332 (d)(2)(A). Third, the amount in controversy must exceed five million dollars. 28 U.S.C. § 1332 (d)(2). Plaintiff has not meaningfully contested the existence of CAFA jurisdiction and the Court finds that Defendants establish CAFA jurisdiction.[4]

However, Plaintiff argues that remand is appropriate because her claims fall within two exceptions to CAFA, the "local controversy" and "home state" exceptions, because the controversy is uniquely connected to New Jersey, the state in which the action was originally filed. See Vodenichar , 733 F.3d at 503 (citing 28 U.S.C. § 1332(d)(4)(A)-(B)). It is Plaintiff's burden to prove each element of the CAFA exceptions. Id . In this regard, Plaintiff must do more than attempt to evade federal jurisdiction with vague class definitions and obscure references to the citizenship of class members. See Hart v. FedEx Ground Package System, Inc. , 457 F.3d 675, 681 (7th Cir. 2006); see also Anthony v. Small Tube Mfg. Corp. , 535 F.Supp.2d 506, 514 (E.D.Pa. 2007) (Bare assertions are insufficient to establish citizenship of class members.). Although the Court finds, as explained below, that the "local controversy" exception does not apply, the class as plead may fall within the "home state" exception. However, the Court cannot make that determination on the basis of the current record and finds that Plaintiff's inability to provide more specific information related to the ...

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