MARK E. FULLER, Chief Judge.
Plaintiff Main & Associates, Inc., a corporation which does business as Southern Springs Healthcare Facility ("Southern Springs") brought this action in the Circuit Court of Bullock County, Alabama. Southern Springs alleged a number of claims all purporting to be pursuant to the laws of the State of Alabama arising out of the decisions made by Defendant Blue Cross and Blue Shield of Alabama ("BCBS") regarding coverage and benefits determinations for enrollees in BCBS's Medicare Advantage plans. Invoking this Court's subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1441(b) under a variety of theories, BCBS removed the case to this Court. Now pending before the Court is the Plaintiff's Motion to Remand (Doc. # 7). For the reasons set forth below, the motion is due to be GRANTED.
Medicare is a social security program that provides federally subsidized health insurance for the aged and disabled. The Department of Health and Human Services, acting through, the Centers for Medicare and Medicaid Services administers the Medicare program. Benefits available through Medicare are prescribed by law and divided into four "parts." Part A provides hospital care, skilled nursing care, home health care, and hospice care benefits. Part B provides coverage for services of physicians and out-patient services. Part D provides benefits for prescription drugs. Part C gives Medicare beneficiaries the option to contract with private health insurance plans to obtain the benefits normally available under Parts A and B, as well as other coverage. Such privately administered plans are known as Medicare Advantage Plans.
BCBS is a private health insurance company. In addition to its regular health insurance plans and products, BCBS offers a Medicare Advantage Plan specifically tailored for Medicare beneficiaries seeking insurance under Part C. At issue in this lawsuit is a BCBS Medicare Advantage Plan known as Blue Advantage. When Medicare recipients enroll in Blue Advantage, Medicare no longer pays providers of covered services directly when the recipients receive covered medical treatment. Medicare pays BCBS a set monthly fee called a capitation rate to administer and manage the enrollee's healthcare insurance. In order to obtain medical treatment, the enrollee must visit and use health care providers who are willing to accept the Blue Advantage's terms of payment or health care providers who have contracted with the insurer to accept Blue Advantage's terms or who are a part of the Blue Advantage's network of healthcare providers.
Southern Springs operates offers skilled nursing services at a nursing home healthcare facility that treats and cares for patients. In August of 2008, Southern Springs and BCBS entered into a contract. Under the terms of the contract, Southern Springs was to provide healthcare services to Blue Advantage enrollees seeking treatment at its facilities and BCBS would compensate Southern Springs for providing these services. Because the enrollees in the Blue Advantage plan are Medicare beneficiaries, the contract between Southern Springs and BCBS provided that BCBS was to provide the same basic benefits
Southern Springs alleges that BCBS has wrongfully and tortiously failed to provide coverage and benefits for Medicare-covered services it has performed for Blue Advantage enrolled patients despite having a legal and contractual duty to do so. Specifically, Southern Springs alleges that BCBS refuses to follow the RUG Guidelines and instead uses a different system to determine whether claims are covered. BCBS allegedly does this to reduce costs and boost profits. According to Southern Springs, this means that BCBS has not been providing the same coverage to Blue Advantage enrollees as they would have received under Medicare Part A. Because BCBS allegedly breached its legal and contractual duties to Southern Springs, it has suffered lost income and revenue.
Southern Springs brings claims on its own behalf and on behalf of proposed, as-yet-uncertified class. Southern Springs's Complaint against BCBS contained the following "counts": breach of contract, intentional interference with business relations, negligence and wantonness, unjust enrichment, and injunctive relief. At the end of the Complaint, Southern Springs sets forth the following:
Doc. 1-1 at p. 16 (emphasis in original).
Within thirty days after being served with the Complaint, BCBS filed a Notice of Removal invoking this Court's subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Specifically, BCBS advanced three arguments. First, BCBS contends that the unjust enrichment claim set forth in Count IV of the Complaint is in substance a claim under the False Claims Act, 31 U.S.C. §§ 3729 and 3732. Second, BCBS contends that all of Southern Springs's claims are claims for Medicare benefits or are inextricably intertwined with claims for Medicare benefits and therefore the claims "arise under" the Medicare Act and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA"). Finally, BCBS alleges that the Medicare Act, as amended by the MMA, completely preempts Southern Springs's claims. Just over a week after removing the action, BCBS filed an Amended Notice of Removal correcting an error in one of the paragraphs.
On April 28, 2010, Southern Springs filed a motion to remand. By this motion, Southern Springs argues that the Court does not have subject matter jurisdiction under any of the theories BCBS advances. The motion to remand has been extensively brief and is ready for disposition.
Federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377,
Removal of a case from state to federal court is proper if the case could have been brought originally in federal court. See 28 U.S.C. § 1441(a). A defendant seeking to invoke a federal court's subject matter jurisdiction by removing the action bears the burden of proving that federal jurisdiction exists. See Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir.2002). Because federal court jurisdiction is limited, the Eleventh Circuit favors remand of removed cases when federal jurisdiction is not absolutely clear. See Burns, 31 F.3d at 1095. A civil action filed in state court may be removed to federal court under § 1441(b) if the claim is one "arising under" federal law.
Pursuant to 28 U.S.C. § 1331, federal courts have subject matter jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." To determine whether a claim arises under federal law, a court must examine the "well-pleaded" allegations of the complaint to determine whether those allegations present a federal question. Id. Thus, a suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon federal law or the Constitution. Id. Because the plaintiff is master of the claim, he may avoid federal jurisdiction by relying exclusively on state law even where a federal claim is also available. See, e.g., Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Dunlap v. G & L Holding Group, Inc., 381 F.3d 1285, 1290 (11th Cir.2004). Consequently, as a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim. Id. Ordinarily, this requires the claim for relief to be a federal claim in which federal law creates the cause of action.
The Supreme Court has long recognized an exception to the well-pleaded complaint rule by which a case can be found to "arise under" federal law even when the complaint contains only claims pursuant to state law. See, e.g., Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312-14, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) (outlining the development of this doctrine through Supreme Court case law). Unfortunately, the articulation of these narrow exceptions has varied over time which makes a coherent application of the case law difficult. Indeed, the United States Supreme Court, itself acknowledged this by explaining that it had not stated
Grable, 545 U.S. at 314, 125 S.Ct. 2363. Indeed, commentators, such as Wright and Miller, have noted that the problem of deciding when a case brought pursuant to state law but which involves issues of federal law which are sufficiently central as to find that the case nevertheless arises under federal law, is one which has received significant attention in judicial opinions, but nevertheless that attention has failed to produce a single rationalizing principle which can explain all the decisions which exist. See 13D Charles Alan Wright, Arthur R. Miller, Edward H. Cooper & Richard D. Freer, Federal Practice and Procedure § 3562 (3d ed. 2008). Thus, in some instances, "even when a plaintiff has pled only state-law causes of action, he may not avoid federal jurisdiction if either (1) his state-law claims raise substantial questions of federal law or (2) federal law completely preempts his state-law claims." Dunlap, 381 F.3d at 1290 (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 13, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)).
In order for the first of these exceptions to apply such that a court could find that a state-law claim raises substantial questions of federal law,
Dunlap, 381 F.3d at 1290. The second of these exceptions, is complete preemption.
Due to the variety of grounds urged for subject matter jurisdiction in the removal papers, this case requires the Court to explore several different variations on the aforementioned avenues to a judicial determination that a case "arises under" federal law. First, BCBS contends that one of the claims in Southern Springs's complaint actually states a claim under a federal statute known as the False Claims Act. This contention invokes the case law concerning what it means to "arise under" federal law in its most straightforward meaning, namely stating a claim for relief pursuant to a federal statute. Second, BCBS contends that all of the claims in the complaint "arise under" the Medicare Act as amended by the MMA. This contention invokes case law finding that claims arise under federal law either because they are "inextricably intertwined" with federal law or because the state law claims present "substantial questions" of federal law. Finally, BCBS contends that all of the claims in the complaint "arise under" federal law in that the Medicare Act as amended by the MMA completely preempts state law claims. The Court will address each of these contentions in turn.
BCBS contends that at least Count IV of the Complaint states a claim which, in substance, arises under the False Claims Act, a federal law. If this is correct, the Court could have original subject matter jurisdiction over this claim and could exercise supplement jurisdiction over the remaining claims in the lawsuit pursuant to 28 U.S.C. § 1367. The Complaint does not explicitly refer to or invoke any federal law for the relief Southern Springs seeks. To the contrary, the allegations of the Complaint specifically disavow any intention to seek a claim pursuant to any federal law. Of course, the labels a plaintiff applies to the claims in the complaint are not dispositive. See Smith v. Local 25, Sheet Metal Workers Int'l Ass'n, 500 F.2d 741, 748-49 n. 6 (5th Cir.1974)
The relevant sections of the False Claims Act "prohibit the presentment of false claims to the government and the use of false records or statements to get a false claim paid or approved." Hopper v.
Next, BCBS argues that Southern Springs claims "arise under" the Medicare Act and the MMA. In both the Notice of Removal and the Amended Notice of Removal, BCBS contends that Southern Springs's claims are founded upon and arise under federal law in that they are claims for Medicare benefits or are "inextricably intertwined" with claims for Medicare benefits. See Doc. # 1 at ¶¶ 11 & 12; Doc. # 5 at ¶¶ 11 & 12. Indeed, in making this contention in the Notices of Removal, BCBS invokes the authority of Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984), a Supreme Court case which recognized an action arising under the Medicare Act although it was not a direct claim for benefits. Specifically, BCBS contends that Southern Springs's claims are ultimately based upon a determination of what skilled nursing facilities coverage or benefits are due to enrollees in Blue Advantage. Despite having framed the question in this way in its removal papers, BCBS argues the issue somewhat differently in its opposition to Southern Springs's motion to remand. Rather than invoking Heckler, BCBS now invokes the test for whether a case "arises under" a federal law set forth in Grable and its progeny.
Southern Springs contends this Grable-based ground for removal was not properly raised in the notice of removal. After an examination of the removal papers and the applicable case law, the Court disagrees. The Court acknowledges that this Court has held that a party may not assert a new and different basis for removal more than thirty days after the case has become removable. See American Educators Finan. Corp. v. Bennett, 928 F.Supp. 1113, 1115 (M.D.Ala.1996) (Albritton, J.) (holding that a defendant, who had initially filed a notice of removal contending that the court had subject matter jurisdiction over the action because one of the claims in the case arose under federal copyright law, could not amend its ground for removal later to try to argue a different basis for federal question jurisdiction). Simply put, a removing defendant is stuck with the grounds for removal articulated in the notice of removal or any amendment to it made within the thirty-day period allowed for removal. "After that time, however, the notice may be amended only to set forth more specifically grounds for removal which were imperfectly stated in the original petition." Id. Here, BCBS has not changed the grounds for removal. It
Southern Springs also contends that this case does not arise under the Medicare Act or the MMA. The Court will address this issue under both the Heckler-type analysis and the Grable-based approach in turn.
In the Heckler, the Supreme Court held that a claim may arise under the Medicare Act when "both the standing and the substantive basis for the presentation" of the claim is the Medicare Act, or if the claim is "inextricably intertwined" with a claim for Medicare benefits. Heckler, 466 U.S. at 615, 104 S.Ct. 2013. Initially, BCBS claimed that the claims in this suit were inextricably intertwined with claims for Medicare benefits and consequently the Court had subject matter jurisdiction under Heckler. The Court disagrees.
In analyzing whether this case fits in the Heckler paradigm as BCBS contends, the Court finds RenCare, Ltd. v. Humana Health Plan of Texas, Inc.,
BCBS's attempts to meaningfully distinguish RenCare are simply not persuasive.
Southern Springs argues that its state law claims do not raise a substantial federal issue. In so arguing, it relies nearly exclusively on several cases decided before Grable. Consequently, they are of little assistance in determining whether the case presents a substantial federal issue as that term is understood after Grable. Only one of the cases on which Southern Springs bases its argument, Adventure Outdoors, Inc. v. Bloomberg, 552 F.3d 1290 (11th Cir.2008), actually applies a post-Grable analysis.
As articulated in Grable and its progeny, in this small class of cases "the question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable, 545 U.S. at 314, 125 S.Ct. 2363. Though federal law does not create the cause of action in this small class of cases, an essential, necessary elements of the plaintiff's right to recover still must be founded on federal law. Id. at 315, 125 S.Ct. 2363. Since deciding Grable, the Supreme Court has emphasized that this doctrine applies in only a "special and small" category of cases. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). Indeed, Empire emphasized that the key factors in Grable which made the exercise of federal court jurisdiction appropriate included the fact that the dispute in Grable centered on the action of a federal agency and the compatibility of that action with federal law. Empire, 547 U.S. at 700, 126 S.Ct. 2121. See also, Adventure Outdoors, 552 F.3d at 1296-97. Moreover, the Grable case involved the resolution of a nearly pure issue of law. Id. This made it more appropriate for federal jurisdiction than a case that was fact-bound and situation specific especially where the dispute was between private parties. Id.
In addition to the previously discussed grounds for federal subject matter jurisdiction, BCBS also contends that the Medicare Act, which contains an express preemption provision and an exclusive federal remedy, completely preempts claims pursuant to state law such that the only avenue for judicial review is to bring a claim under the Medicare Act itself, rather than under federal law. Simply put, BCBS contends that the remedial scheme in the Medicare Act is the exclusive remedial scheme for claims such as those Southern Springs would bring. Complete preemption applies where "the pre-emptive force of a statute is so `extraordinary' that it `converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'" Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425 (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). Complete preemption is a "narrow" exception to the well-pleaded
The statutory provisions which BCBS cites
For the reasons set forth above, it is hereby ORDERED that:
(1) Plaintiff's Motion to Remand (Doc. # 7) is GRANTED;
(2) This case is REMANDED to the Circuit Court for Bullock County, Alabama;
(3) The Clerk is DIRECTED to take appropriate steps to promptly effect the remand.