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Marin General Hosp v. Modesto & Empire, 07-16518 (2009)

Court: Court of Appeals for the Ninth Circuit Number: 07-16518 Visitors: 20
Filed: Sep. 10, 2009
Latest Update: Mar. 02, 2020
Summary: FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT MARIN GENERAL HOSPITAL, a non- profit California corporation, Plaintiff-Appellant, v. No. 07-16518 MODESTO & EMPIRE TRACTION COMPANY, a California corporation; D.C. No. CV-07-01027-SI MEDICAL BENEFITS OPINION ADMINISTRATORS OF MD., INC., a Maryland corporation; RONALD J. WILSON, Defendants-Appellees. Appeal from the United States District Court for the Northern District of California Susan Yvonne Illston, District Judge,
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                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MARIN GENERAL HOSPITAL, a non-          
profit California corporation,
                 Plaintiff-Appellant,
                  v.                         No. 07-16518
MODESTO & EMPIRE TRACTION
COMPANY, a California corporation;            D.C. No.
                                            CV-07-01027-SI
MEDICAL BENEFITS
                                              OPINION
ADMINISTRATORS OF MD., INC., a
Maryland corporation; RONALD J.
WILSON,
              Defendants-Appellees.
                                        
        Appeal from the United States District Court
           for the Northern District of California
       Susan Yvonne Illston, District Judge, Presiding

                  Argued and Submitted
       February 10, 2009—San Francisco, California

                  Filed September 10, 2009

    Before: Dorothy W. Nelson, William A. Fletcher and
            Richard C. Tallman, Circuit Judges.

           Opinion by Judge William A. Fletcher




                            13169
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION    13173




                           COUNSEL

Viola Rita Brown, Gregory C. Lehman, Joy Young Stephen-
son, Barry Sullivan, STEPHENSON ACQUISTO & COL-
MAN, Burbank, California, for the appellant.

Bradley Alan Post, BORTON PETRINI LLP, Fresno, Califor-
nia, Christopher H. White, ROSS DIXON & BELL, Chicago,
Illinois, Daniel J. Zollner, DYKEMA GOSSETT, PLLC, Chi-
cago, Illinois, for the appellees.


                           OPINION

W. FLETCHER, Circuit Judge:

   We consider in this case whether § 502(a)(1)(B) of the
Employee Retirement Income Security Act (“ERISA”), 29
U.S.C. § 1132(a)(1)(B), completely preempts a state-law
action for breach of contract, negligent misrepresentation,
quantum meruit and estoppel. Because the state-law claims
could not be pursued under § 502(a)(1)(B), and because they
rely on legal duties that are independent from duties under
any benefit plan established under ERISA, we hold that they
are not completely preempted. Because the claims are not
completely preempted under § 502(a)(1)(B), there is no fed-
eral question subject matter jurisdiction in federal court.
Removal from state court was therefore improper.

                      I.    Background

  According to its complaint, Marin General Hospital (“the
Hospital”) telephoned the Medical Benefits Administrators of
13174   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
M.D., Inc., (“MBAMD”) on April 8, 2004, to confirm that a
prospective patient had health insurance through an ERISA
plan provided by his employer, Modesto & Empire Traction
Co. (“Modesto”). MBAMD was the administrator of Modes-
to’s plan. According to the complaint, MBAMD orally veri-
fied the patient’s coverage, authorized treatment, and agreed
to cover 90% of the patient’s medical expenses at the Hospi-
tal.

   Between April 19 and April 24, 2004, the Hospital per-
formed a lumbar fusion procedure on the patient. The Hospi-
tal then submitted a bill to MBAMD for $178,926.54.
MBAMD paid the Hospital $46,655.54 and stated in a letter
that the Hospital was not entitled to further payment. The
Hospital sent MBAMD a letter stating that “[p]er your con-
tract this claim should be paid at 90% of total charges.”
MBAMD denied that it had such a contract with the Hospital
and refused to make additional payment.

   On December 8, 2006, the Hospital filed suit in California
state court against Modesto, MBAMD, and MBAMD’s CEO
and Chairman Ronald Wilson (collectively “defendants”) for
breach of an implied contract, breach of an oral contract, neg-
ligent misrepresentation, quantum meruit, and estoppel.
Defendants removed the suit to federal district court on the
ground that ERISA completely preempted the Hospital’s
claims. The Hospital moved to remand to state court, arguing
that it alleged only state-law claims in its complaint, and that
these claims were not completely preempted under ERISA.
Defendants moved to dismiss, arguing that ERISA preempted
the Hospital’s state-law claims and that the Hospital failed to
allege any cognizable claims under ERISA.

   The court denied the Hospital’s motion to remand and dis-
missed its complaint. The court concluded that the Hospital’s
only remedy was under § 502(a)(1)(B), a subsection of
ERISA’s civil remedy provision for plan participants and ben-
eficiaries, and that the Hospital’s complaint failed to suffi-
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION        13175
ciently allege a cause of action under that subsection. The
court granted the Hospital leave to amend. The Hospital’s
amended complaint, like its first complaint, alleged only state-
law claims. The Hospital again moved for remand to state
court, and defendants moved to dismiss. The court dismissed
without leave to amend and entered judgment in favor of
defendants. The Hospital timely appealed.

                   II.   Standard of Review

   The question in this case is whether the Hospital’s state-law
claims are completely preempted under § 502(a)(1)(B) of
ERISA, 29 U.S.C. § 1132(a)(1)(B), and thus whether the case
was properly removed from state to federal court. Removal
was proper only if the Hospital’s claims are completely pre-
empted. The existence of subject matter jurisdiction is a ques-
tion of law that we review de novo. Nike, Inc. v. Comercial
Iberica de Exclusivas Deportivas, S.A., 
20 F.3d 987
, 990 (9th
Cir. 1994). The burden of establishing federal subject matter
jurisdiction falls on the party invoking removal. Toumajian v.
Frailey, 
135 F.3d 648
, 652 (9th Cir. 1998).

                         III.   Discussion

   [1] Defendants removed the Hospital’s state court action to
federal court based on federal question jurisdiction. 28 U.S.C.
§§ 1331(a), 1441(a). Generally speaking, “[a] cause of action
arises under federal law only when the plaintiff ’s well-
pleaded complaint raises issues of federal law.” Hansen v.
Blue Cross of Cal., 
891 F.2d 1384
, 1386 (9th Cir. 1989). “The
well-pleaded complaint rule is the basic principle marking the
boundaries of the federal question jurisdiction of the federal
district courts.” Metro. Life Ins. Co. v. Taylor, 
481 U.S. 58
,
63 (1987) (internal quotation marks omitted). The Hospital’s
complaint asserts only state-law causes of action, and defen-
dants’ preemption defense would appear in its answer if it
ever filed one. But defendants argue that the Hospital’s suit
comes within the exception to the well-pleaded complaint rule
13176   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
for state-law causes of action that are completely preempted
by § 502(a) of ERISA. We agree with defendants that there is
an exception to the well-pleaded complaint rule for state-law
causes of action that are completely preempted by § 502(a).
However, for the reasons that follow, we disagree with defen-
dants’ contention that the Hospital’s causes of action are com-
pletely preempted.

          A.   Complete Preemption under ERISA

   The parties in this case have not clearly understood the dif-
ference between complete preemption under ERISA § 502(a),
29 U.S.C. § 1132(a), and conflict preemption under ERISA
§ 514(a), 29 U.S.C. § 1144(a). We take this opportunity to
make clear the difference between the two kinds of preemp-
tion, and to make clear the different jurisdictional conse-
quences that result from these two kinds of preemption.

   [2] Complete preemption under § 502(a) is “really a juris-
dictional rather than a preemption doctrine, [as it] confers
exclusive federal jurisdiction in certain instances where Con-
gress intended the scope of a federal law to be so broad as to
entirely replace any state-law claim.” Franciscan Skemp
Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare
Trust Fund, 
538 F.3d 594
, 596 (7th Cir. 2008). The Supreme
Court first articulated, indeed created, the doctrine of com-
plete preemption under § 502(a) of ERISA as a basis for fed-
eral question removal jurisdiction under 28 U.S.C. § 1441(a)
in Metropolitan Life Insurance Co. v. Taylor, 
481 U.S. 58
(1987). The Court held that § 502(a) reflected Congress’s
intent to “so completely pre-empt a particular area that any
civil complaint raising this select group of claims is necessar-
ily federal in character.” 
Id. at 63
64. The Court explained that
while “[f]ederal pre-emption is ordinarily a federal defense to
the plaintiff ’s suit,” 
id. at 63,
Congress had “clearly mani-
fested an intent to make causes of action within the scope of
the civil enforcement provisions of § 502(a) removable to fed-
eral court.” 
Id. at 66.
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION        13177
   Complete preemption removal is an exception to the other-
wise applicable rule that a “plaintiff is ordinarily entitled to
remain in state court so long as its complaint does not, on its
face, affirmatively allege a federal claim.” Pascack Valley
Hosp. v. Local 464A UFCW Welfare Reimbursement Plan,
388 F.3d 393
, 398 (3d Cir. 2004). The general rule is that a
defense of federal preemption of a state-law claim, even con-
flict preemption under § 514(a) of ERISA, is an insufficient
basis for original federal question jurisdiction under § 1331(a)
and removal jurisdiction under § 1441(a). A provision of state
law may “relate to” an ERISA benefit plan, and may therefore
be preempted under § 514(a). See 29 U.S.C. § 1144(a) (the
relevant provisions of ERISA “shall supersede any and all
State laws insofar as they may . . . relate to any employee
benefit plan described in section 1003(a) of this title and not
exempt under section 1003(b)” (emphasis added)). But a
defense of conflict preemption under § 514(a) does not confer
federal question jurisdiction on a federal district court.

   [3] A party seeking removal based on federal question
jurisdiction must show either that the state-law causes of
action are completely preempted by § 502(a) of ERISA, or
that some other basis exists for federal question jurisdiction.
If a complaint alleges only state-law claims, and if these
claims are entirely encompassed by § 502(a), that complaint
is converted from “an ordinary state common law complaint
into one stating a federal claim for purposes of the well-
pleaded complaint rule.” Metro. 
Life, 481 U.S. at 65
66. But
“if the doctrine of complete preemption does not apply, even
if the defendant has a defense of ‘conflict preemption’ within
the meaning of [§ 514(a)] because the plaintiff ’s claims
‘relate to’ an ERISA plan, the district court [is] without sub-
ject matter jurisdiction[.]” 
Toumajian, 135 F.3d at 655
.

   We may have been partially responsible for the parties’
confusion between complete preemption under § 502(a),
which provides a basis for federal question removal jurisdic-
tion, and conflict preemption under § 514(a), which does not.
13178   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
Some of our prior opinions dealing with complete preemption
under § 502(a) have used the terminology “relate to” even
though that terminology is relevant to conflict preemption
under § 514(a) rather than complete preemption under
§ 502(a). See, e.g., The Meadows v. Employers Health Ins., 
47 F.3d 1006
, 1009 (9th Cir. 1995) (“We hold that the district
court correctly concluded that the independent state law
claims . . . lie outside the bounds of the ERISA ‘relates to
standard’ . . . .”). However, some of our more recent decisions
have made clear the distinction between complete preemption
and conflict preemption. See, e.g., Cleghorn v. Blue Shield of
Cal., 
408 F.3d 1222
, 1225-27 (9th Cir. 2005) (observing that
a court need not consider whether a state statute “relates to”
ERISA under § 514(a) when considering § 502(a) complete
preemption); 
Toumajian, 135 F.3d at 654
(contrasting
§ 514(a) and § 502(a)).

   The Supreme Court’s recent opinion in Aetna Health Inc.
v. Davila, 
542 U.S. 200
(2004), is instructive. In Davila, a
participant in and a beneficiary of ERISA-regulated employee
benefit plans (collectively, “plaintiffs”) brought separate
state-law suits in state court arising out of injuries sustained
as a consequence of their plans’ denials of coverage. 
Id. at 204-05.
Plaintiffs alleged that their plans’ “refusal to cover
the requested services violated their duty to exercise ordinary
care when making health care treatment decisions, and that
these refusals ‘proximately caused’ their injuries.” 
Id. at 205
(quotations omitted). The plans removed plaintiffs’ suits to
federal district courts, contending that their claims “fit within
the scope of, and were therefore completely pre-empted by,
ERISA § 502(a).” 
Id. The Court
began its analysis in Davila by quoting
§ 502(a)(1)(B). That section provides:

    A civil action may be brought—(1) by a participant
    or beneficiary— . . . (B) to recover benefits due to
    him under the terms of his plan, to enforce his rights
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION         13179
    under the terms of the plan, or to clarify his rights to
    future benefits under the terms of the plan.

The Court wrote, “If a participant or beneficiary believes that
benefits promised to him under the terms of the plan are not
provided, he can bring suit seeking provision of those bene-
fits.” 542 U.S. at 210
. Under § 502(a)(1)(B), a “participant or
beneficiary can also bring suit generically to ‘enforce his
rights’ under the plan, or to clarify any of his rights to future
benefits.” 
Id. [4] If
state-law causes of action come within the scope of
§ 502(a)(1)(B), those causes of action are completely pre-
empted, and the only possible cause of action is under
§ 502(a)(1)(B). In that event, a federal district court has fed-
eral question jurisdiction, either original jurisdiction under
§ 1331(a) or removal jurisdiction under § 1441(a), to decide
whether the plaintiff has stated a cause of action under
§ 502(a)(1)(B). In order to determine whether an asserted
state-law cause of action comes within the scope of
§ 502(a)(1)(B), the Court formulated a two-prong test. Under
Davila, a state-law cause of action is completely preempted
if (1) “an individual, at some point in time, could have
brought [the] claim under ERISA § 502(a)(1)(B),” and (2)
“where there is no other independent legal duty that is impli-
cated by a defendant’s actions.” 
Id. The Court
in Davila concluded that the plaintiffs’ state-law
causes of action were completely preempted and that removal
to federal court under § 1441(a) was therefore proper. The
Court noted, under the first prong of its test, that the plain-
tiffs’ only legal claims were “about denials of coverage prom-
ised under the terms of ERISA-regulated employee benefit
plans.” 
Id. at 211.
“Upon the denial of benefits, [plaintiffs]
could have paid for the treatment themselves and then sought
reimbursement through a § 502(a)(1)(B) action, or sought a
preliminary injunction.” 
Id. (citation omitted).
Therefore,
13180   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
according to the Court, plaintiffs could have brought suit
under § 502(a)(1)(B).

   Under the second prong, plaintiffs argued that an indepen-
dent state statute constituted “an independent legal duty,” and
that their state-law claims under the statute were therefore not
preempted. 
Id. at 212.
The Supreme Court disagreed, conclud-
ing that the duties imposed by the state statute “do not arise
independently of ERISA or the plan terms.” 
Id. This was
so
because the standards set forth in the state statute at issue
“ ‘create no obligation on the part of the health insurance car-
rier . . . to provide to an insured or enrollee treatment which
is not covered by the health care plan of the entity.’ ” 
Id. at 213
(quoting Tex. Civ. Prac. & Rem. Code Ann. § 88.002(d)).
There was thus no independent liability under the state statute
because the plan denied coverage for treatment not covered
by the plan. The plaintiffs’ action was therefore “only to rec-
tify a wrongful denial of benefits promised under [an]
ERISA-regulated plan[ ], and [did] not attempt to remedy any
violation of a legal duty independent of ERISA.” 
Id. at 214.
                  B.   Application of Davila

   The two-prong test of Davila is in the conjunctive. A state-
law cause of action is preempted by § 502(a)(1)(B) only if
both prongs of the test are satisfied. In the case before us, nei-
ther is satisfied. First, the Hospital could not have brought its
state-law claim under § 502(a)(1)(B) of ERISA. Second, the
Hospital seeks to remedy violations of legal duties that are
independent of ERISA. The Hospital’s state court suit is
therefore not completely preempted by § 502(a)(1)(B).

                    1. Davila’s First Prong

   The question under the first prong of Davila is whether a
plaintiff seeking to assert a state-law claim “at some point in
time, could have brought [the] claim under ERISA
§ 
502(a)(1)(B).” 542 U.S. at 210
. For the reasons that follow,
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION        13181
we conclude that the Hospital could not have brought its state-
law claims under § 502(a)(1)(B).

   [5] The Hospital’s complaint relies on California state law
to allege breach of an implied contract, breach of an oral con-
tract, negligent misrepresentation, quantum meruit, and estop-
pel. All of these claims arise out of the telephone conversation
in which MBAMD allegedly agreed to pay 90% of the
patient’s hospital charges. MBAMD has already paid the Hos-
pital part of the patient’s charges. That payment was made to
the Hospital in its capacity as an assignee of the patient’s
rights under his ERISA plan. The Hospital is now seeking
additional payment, in an amount necessary to bring the total
payment up to 90% of its charges.

   The Hospital does not contend that it is owed this addi-
tional amount because it is owed under the patient’s ERISA
plan. Quite the opposite. The Hospital is claiming this amount
precisely because it is not owed under the patient’s ERISA
plan. The Hospital is contending that this additional amount
is owed based on its alleged oral contract with MBAMD.

   The Hospital’s state-law claims in this case thus are unlike
those in Davila, where plaintiffs “complain[ed] only about
denials of coverage promised under the terms of ERISA-
regulated employee benefit 
plans.” 542 U.S. at 211
. Plaintiffs’
state-law claims for payment under the ERISA plans dupli-
cated those that were available under § 502(a)(1)(B). Plain-
tiffs in Davila therefore could have, and should have, brought
suit under § 502(a)(1)(B).

   Blue Cross of California v. Anesthesia Care Associates
Medical Group, Inc., 
187 F.3d 1045
(9th Cir. 1999), is analyt-
ically similar to the case now before us. Though decided ear-
lier, Blue Cross is consistent with the Supreme Court’s
decision in Davila. In Blue Cross, we decided “whether the
claims of medical providers against a health care plan for
breach of their provider agreements are preempted by
13182   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
[ERISA].” 
Id. at 1047.
Providers of medical services
(“Providers”) sued Blue Cross for breach of contract, alleging
that Blue Cross had improperly changed the fee schedule
according to which providers were to be compensated. 
Id. at 1048.
Blue Cross argued that the “Providers’ right to receive
reimbursement from Blue Cross depends upon the assignment
of the right to benefits for payment for medical services from
their patients, some of whom are beneficiaries of ERISA-
covered health plans.” 
Id. at 1050.
Therefore, Blue Cross
argued, the Providers’ claims were unavoidably “claims for
benefits under the terms of ERISA benefit plans and fall
within § 502(a)(1)(B).” 
Id. We disagreed.
We wrote that the Providers did not contend
that Blue Cross had violated the terms of an ERISA plan, but
rather that it had breached a separate contract. 
Id. at 1051.
We
explained that “the Providers are asserting contractual
breaches . . . that their patient-assignors could not assert: the
patients simply are not parties to the provider agreements
between the Providers and Blue Cross.” 
Id. The patients
in
Blue Cross had assigned their ERISA rights to Providers, so
Providers would have had standing to pursue those rights
under § 502(a)(1)(B) had they wished to do so. 
Id. (discussing Ninth
Circuit cases and explaining that a “provider-assignee
stands in the shoes of the beneficiary, [and hence] has stand-
ing to sue under § 502(a)(1)(B) to recover benefits due under
the plan”). But the court in Blue Cross explained that Provid-
ers were suing based upon different asserted legal obligations,
namely the terms of the “executed provider agreements.” 
Id. The mere
fact that Providers could have brought suit against
Blue Cross under § 502(a)(1)(B) did not automatically mean
that Providers could not bring some other suit against Blue
Cross based on some other legal obligation.

   [6] As in Blue Cross, in the case before us the patient
assigned to the Hospital any claim he had under his ERISA
plan. Pursuant to that assignment, the Hospital was paid the
money owed to the patient under the ERISA plan. The Hospi-
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION        13183
tal now seeks more money based upon a different obligation.
The obligation to pay this additional money does not stem
from the ERISA plan, and the Hospital is therefore not suing
as the assignee of an ERISA plan participant or beneficiary
under § 502(a)(1)(B). Rather, the asserted obligation to make
the additional payment stems from the alleged oral contract
between the Hospital and MBAMD. As in Blue Cross, the
Hospital is not suing defendants based on any assignment
from the patient of his rights under his ERISA plan pursuant
to § 502(a)(1)(B); rather, it is suing in its own right pursuant
to an independent obligation.

   Defendants make two arguments, both of which fail. First,
they argue that since the claims brought by the Hospital “re-
late to” the patient’s ERISA plan, they come within the scope
of § 502(a)(1)(B). Second, they argue that because the Hospi-
tal had a right to sue under § 502(a)(1)(B) by virtue of its
assignment from the patient, it could only bring suit under
§ 502(a)(1)(B). We address these arguments in turn.

   [7] First, defendants contend that because the state action
“relates to” the patient’s ERISA plan, it is completely pre-
empted. This argument is based on a misunderstanding of
complete preemption under § 502(a)(1)(B). As we explain
above, the question whether a law or claim “relates to” an
ERISA plan is not the test for complete preemption under
§ 502(a)(1)(B). Rather, it is the test for conflict preemption
under § 514(a).

   [8] A defense of conflict preemption under § 514(a) does
not provide a basis for federal question jurisdiction under
either § 1331(a) or § 1441(a). The Supreme Court has
explained that, in cases such as this one,

    federal law becomes relevant only by way of a
    defense to an obligation created entirely by state law,
    and then only if [the Hospital] has made out a valid
    claim for relief under state law. The well-pleaded
13184   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
    complaint rule was framed to deal with precisely this
    situation.
    . . . [S]ince 1887 it has been settled law that a case
    may not be removed to federal court on the basis of
    a federal defense including the defense of pre-
    emption . . . .

Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust
for S. Cal., 
463 U.S. 1
, 13 14 (1983) (citations omitted). See
also Met. Life Ins. 
Co., 481 U.S. at 64
(“ERISA preemption
[under § 514], without more, does not convert a state claim
into an action arising under federal law.”). Defendants are
free to assert in state court a defense of conflict preemption
under § 514(a), but they cannot rely on that defense to estab-
lish federal question jurisdiction.

   Second, defendants argue that because the Hospital was
assigned the patient’s rights to payment under his ERISA
plan, it was prevented from seeking additional payment under
state law. That is, they argue that because the Hospital could
have brought a suit under § 502(a)(1)(B) for payments owed
to the patient by virtue of the terms of the ERISA plan, this
is the only suit the Hospital could bring. This argument is
inconsistent with our analysis in Blue Cross. There we con-
cluded that, even though the Providers had received an assign-
ment of the patient’s medical rights and hence could have
brought a suit under ERISA, there was “no basis to conclude
that the mere fact of assignment converts the Providers’
claims [in this case] into claims to recover benefits under the
terms of an ERISA 
plan.” 187 F.3d at 1052
.

   [9] We conclude that the Hospital’s state-law claims based
on its alleged oral contract with MBAMD were not brought,
and could not have been brought, under § 502(a)(1)(B).
Therefore, the Hospital’s state-law claims do not satisfy the
first prong of Davila.
        MARIN GENERAL v. MODESTO & EMPIRE TRACTION         13185
                 2.   Davila’s Second Prong

   The question under the second prong of Davila is whether
“there is no other independent legal duty that is implicated by
a defendant’s 
actions.” 542 U.S. at 210
. If there is some other
independent legal duty beyond that imposed by an ERISA
plan, a claim based on that duty is not completely preempted
under § 502(a)(1)(B). For the reasons that follow, we con-
clude that the Hospital’s claims in this suit are based on inde-
pendent legal duties.

   In this suit now before us, the Hospital asserts state-law
claims. These claims do not rely on, and are independent of,
any duty under an ERISA plan. In Davila, plaintiffs argued
that a state statute created an independent legal duty. But the
Court noted that the statute did not create any legal duty
where, as had occurred in Davila, there had been a denial of
coverage under the terms of an ERISA plan. The state statute
imposed only an obligation to make the payments required
under the plan. Thus, in Davila, there was no independent
legal duty imposed under state law. In this case, by contrast,
the Hospital contends that MBAMD entered into an indepen-
dent oral contract during the April 8 telephone call. The vari-
ous state-law claims asserted by the Hospital all arise out
what was allegedly said during that call.

   [10] Defendants contend that since the remedy the Hospital
seeks — the payment of money — is the same as a possible
remedy under § 502(a)(1)(B), the Hospital’s suit amounts to
a claim under § 502(a)(1)(B). This misunderstands the nature
of the second prong of the Davila test. Under this prong, we
ask only whether “there is no other independent legal duty
that is implicated” by a defendant’s actions. We do not ask
whether that legal duty provides for a similar remedy, such as
the payment of money. Defendants also continue to confuse
conflict preemption under § 514(a) with complete preemption
under § 502(a)(1)(B). It is not enough for complete preemp-
tion that the contract and tort claims “relate to” the underlying
13186   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
ERISA plan, or that ERISA § 502(a)(1)(B) may provide a
similar remedy. The question under the second prong of
Davila is whether the complaint relies on a legal duty that
arises independently of ERISA. Since the state-law claims
asserted in this case are in no way based on an obligation
under an ERISA plan, and since they would exist whether or
not an ERISA plan existed, they are based on “other indepen-
dent legal dut[ies]” within the meaning of Davila.

   [11] We conclude that the Hospital’s state-law claims based
on its alleged oral contract with EBAMD were based on an
independent legal duty, and that the Hospital’s claims there-
fore do not satisfy the second prong of Davila.

            C.    Related Ninth Circuit precedent

   Our conclusion that the Hospital’s state law claims are not
completely preempted by § 502(a)(1)(B) is supported by our
recent decision in Cedars-Sinai Medical Center v. National
League of Postmasters of the United States, 
497 F.3d 972
(9th
Cir. 2007). In that case, the Cedars-Sinai Medical Center
(“Cedars-Sinai”) brought a state-law action against the admin-
istrator of a federal employees’ benefit plan alleging, inter
alia, breach of contract and negligent misrepresentation in
connection with partial reimbursement of claims for medical
treatment. The administrator removed the suit to federal dis-
trict court. 
Id. at 974.
The district court dismissed the suit on
the ground that Cedars-Sinai’s claims were preempted by the
Federal Employee Health Benefits Act (“FEHBA”), 5 U.S.C.
§ 8901.

   FEHBA and ERISA are different federal statutes, but their
preemption provisions are analytically similar. See, e.g., Bots-
ford v. Blue Cross & Blue Shield of Mont., Inc., 
314 F.3d 390
,
393-94 (9th Cir. 2002) (holding that FEHBA’s complete pre-
emption provision “closely resembles ERISA’s express pre-
emption provision, and precedent interpreting the ERISA
provision thus provides authority for cases involving the
         MARIN GENERAL v. MODESTO & EMPIRE TRACTION          13187
FEHBA provision”). Indeed, our opinion in Cedars-Sinai was
based almost entirely on cases decided under ERISA. See
Cedars-Sinai, 497 F.3d at 977
n.2 (“Because there is no Ninth
Circuit authority discussing FEHBA pre-emption issues
involving the claims of a third-party health care provider, we
may look to analogous cases involving the application of
ERISA’s pre-emption provision.”).

   We reversed the decision of the district court, holding that
Cedars-Sinai’s state-law claims were not completely pre-
empted. We noted that “Cedars-Sinai is suing as a third-party
claiming damages, and not as an assignee of rights to bene-
fits.” 
Id. at 978.
We cited to The Meadows v. Employers
Health Ins., 
47 F.3d 1006
(9th Cir. 1995), where a medical
services provider was permitted to pursue a state-law cause of
action against an ERISA plan. As in Cedars-Sinai and in this
case, the plaintiff brought suit in state court relying, inter alia,
on state-law claims of breach of contract and negligent mis-
representation. 
Id. at 974.
Since those claims were pursued
“not as an assignee of a purported ERISA beneficiary, but as
an independent entity claiming damages,” 
Cedars-Sinai, 497 F.3d at 978
(quotations omitted), we held that they were not
completely preempted.

                           Conclusion

   [12] For the foregoing reasons, we hold that the Hospital’s
state-law claims are not completely preempted by
§ 502(a)(1)(B). They could not be brought under
502(a)(1)(B), and they rely on independent legal obligations.
Because the Hospital’s claims are not completely preempted,
there is no federal question removal jurisdiction under 28
U.S.C. § 1441(a), and the district court should have remanded
to the state court for the Hospital’s suit to proceed. Defen-
dants may assert in state court their defense of conflict pre-
emption under § 514(a), as well as any other defenses they
might have.
13188   MARIN GENERAL v. MODESTO & EMPIRE TRACTION
  REVERSED and REMANDED with instructions to
REMAND to state court.

Source:  CourtListener

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