WILLIAM D. QUARLES, JR., District Judge.
Feldman's Medical Center Pharmacy, Inc. ("FMCP") sued CareFirst, Inc. for breach of contract, unjust enrichment and bad faith in the Circuit Court for Baltimore County. CareFirst removed to this Court on the ground that one of FMCP's claims was completely preempted by § 502(a) of the Employee Retirement Income Security Act of 1974 ("ERISA"), thus providing federal question jurisdiction. For the following reasons, FMCP's motion to remand will be denied.
FMCP is a Maryland specialty pharmacy that dispenses drugs used to treat hemophilia, von Willebrand's disease,
On June 1, 2009, FMCP sued CareFirst in the Circuit Court for Baltimore County for breach of contract, unjust enrichment, and bad faith. The Complaint alleged that CareFirst had failed "to correctly and timely pay $1,588,127.77 in legitimate claims submitted by [FMCP]." Id. ¶ 9. The "services" for which FMCP claims reimbursement appear to involve FMCP's provision of "factor," a blood-clotting substance used in the treatment of hemophilia. See Compl. ¶ 6; Mot. to Remand 3.
In Counts I and II (breach of contract and unjust enrichment), FMCP pled alternative theories of recovery. See Compl. ¶¶ 29, 35. The Complaint alleges that CareFirst is in breach of contract and was unjustly enriched because "[FMCP] properly provided Covered Services to patients pursuant to the PPP Agreement and is entitled to be paid thereunder"; "alternative[ly], [FMCP] is entitled to be reimbursed as an out-of-network provider for the Covered Services it provided to CareFirst's insureds." Id.
The Complaint focused on the PPP, under which FMCP became an "in-network" or "participating" provider for covered services provided to CareFirst Members. See ¶¶ 8-9, 13-16. The Complaint does not state the basis of FMCP's alternative claim that it is entitled to reimbursement as an "out-of-network provider." Id. ¶¶ 29, 35.
CareFirst then filed a Third-Party Complaint and Counter-Complaint for Interpleader, naming FMCP patients "John Does 1 and 2" ("the Does") as third-party defendants. Paper No. 17 [hereinafter "Third-Party Compl."]. The Interpleader Complaint alleged that FMCP was a "non-participating provider" of factor because the PPP did not cover that treatment. See Third-Party Compl. ¶¶ 8-11. Because FMCP was a "non-participating provider," any CareFirst member who obtained factor at FMCP was required to submit a claim to CareFirst, which would reimburse the member—not FMCP. Id. ¶ 14. FMCP could then seek payment from the member. Id.
CareFirst alleged that the Does were members who had obtained factor from FMCP, and asserted that the interpleader
On January 4, 2010 FMCP moved for summary judgment on the FMCP's Third-Party Complaint and opposed the interpleader.
Id. 7-8 (internal citation and quotation marks omitted). FMCP attached to its motion the Service Agreements/Assignments of Benefits (the "Assignments") from the Does. Id., Exs. A, B. These Assignments stated that "[u]nder no circumstances" was the insured to retain any payment from his insurer for FMCP products and authorized FMCP "to bill for services and receive payment directly from [the patient's] private health Insurance." Id.
On January 25, 2010, FMCP served answers to a second set of interrogatories. See Opp., Ex. 4. Interrogatory No. 22 asked: "If you contend that you are entitled to payment of the claims identified in the Complaint as a non-participating provider, specify the basis or bases on which you allege such entitlement." Id. FMCP responded:
Id. On February 1, 2010, CareFirst removed to this Court. Paper No. 2. On March 3, 2010, FMCP moved to remand. Paper No. 46.
FMCP argues that remand is required because the Court lacks subject matter jurisdiction, and CareFirst's removal was untimely. CareFirst responds that to the extent FMCP is suing as the assignee of John Does 1 and 2, its breach of contract and unjust enrichment claims are preempted by ERISA's civil enforcement provision, thus providing federal question jurisdiction. CareFirst contends that the February 1, 2010 removal was timely because FMCP's December 31, 2010 opposition to the interpleader revealed for the first time that some of FMCP's claims were preempted.
Under 28 U.S.C. § 1441(a), "any civil action brought in a State court of which
If the case stated by the initial pleading is not removable, the defendant may remove within 30 days of receiving "an amended pleading, motion or other paper from which it may first be ascertained that the case is one which is or has become removable." Id. § 1446(b). The removing party has the burden of proving subject matter jurisdiction. Md. Stadium Auth. v. Ellerbe Becket, Inc., 407 F.3d 255, 260 (4th Cir.2005). Because removal raises "significant federalism concerns," the removal statutes must be strictly construed, and all doubts must be resolved in favor of remanding the case to state court. Id.
CareFirst's Notice of Removal alleged federal question jurisdiction on the ground that at least some of FMCP's state law claims are "completely preempted" by § 502 of ERISA. Generally, removal on the basis of federal question jurisdiction is appropriate only if the plaintiff's "well-pleaded complaint" raises issues of federal law. Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir.2005). Thus, "state law complaints usually must stay in state court when they assert what appear to be state law claims." Id. at 440. The complete preemption doctrine is a "narrow exception" to this rule. See id. at 439-40. Under this doctrine, "if the subject matter of a putative state law claim has been totally subsumed by federal law ... then removal is appropriate." Id.
"ERISA's civil enforcement provision, § 502(a), completely preempts state law claims that come within its scope and converts these state claims into federal claims under § 502." Darcangelo v. Verizon Commc'ns., Inc., 292 F.3d 181, 187 (4th Cir.2002) (internal citations and quotation marks omitted).
Under § 502(a)(1)(B), "[a] civil action may be brought ... by a participant or beneficiary ... to recover benefits due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). It is undisputed that the Does obtained their health insurance from CareFirst through an employer-sponsored plan that is governed by ERISA. See Not. of Removal ¶ 5. Thus, they were beneficiaries under § 502(a) and would have standing to sue CareFirst for an improper denial of benefits. See Davila, 542 U.S. at 211, 124 S.Ct. 2488.
CareFirst argues that FMCP has derivative standing as the assignee of the Does' rights. Although the Fourth Circuit has "never addressed the question of derivative standing for ERISA benefits," Brown v. Sikora & Assocs., 311 Fed. Appx. 568, 570 (4th Cir.2008), other circuits "have consistently recognized such standing when based on the valid assignment of ERISA ... benefits by participants and beneficiaries," id.
That a provider has derivative standing from an assignment is not sufficient for complete preemption; the provider must actually assert a claim under that assignment. See id. ("[T]he existence of the assignment is irrelevant to complete preemption if the provider asserts no claim under the assignment."); Anesthesia Care Assocs., 187 F.3d at 1052. The parties appear to correctly agree that to the extent that FMCP is suing as the Does' assignee, its claims are preempted. See Anesthesia Care Assocs., 187 F.3d at 1051 ("ERISA preempts the state law claims of
The parties dispute whether FMCP's claims rely on the assignments. CareFirst cites FMCP's: (1) complaint, which alleged that FMCP was entitled to payment under the PPP Agreement and "in the alternative,... as an out-of-network provider for the Covered Services it provided to CareFirst's insureds," Compl. ¶¶ 29, 35; (2) opposition to the inter-pleader, in which FMCP stated that "If [FMCP] is a non-participating provider, then the Service Agreement/Assignment of Benefits and the affidavits of John DOES 1 and 2 conclusively prove that FMCP is the party entitled to receive payment from CareFirst," Paper No. 46-7; and (3) answer to Interrogatory No. 22, which reiterated that "[t]he bases for ... its entitlement [as a non-participating provider] are the relevant statutes and member and other contracts, as well as the Assignment of Benefits executed by each of those CareFirst members who received factor products from [FMCP]," Opp., Ex. 4 (emphasis added).
FMCP contends that, notwithstanding these statements, it is not pursuing relief under the assignments. See Reply 8. FMCP maintains that although "at some future date, [it] may exercise the right the Assignments yield it and sue [CareFirst] under ERISA § 502(a)(1)(B)... it has not proceeded as such in the instant case." Mot. to Remand 19.
FMCP also notes that it may seek recovery as an out-of-network provider on bases other than the assignments, such as constructive or implied contract. Thus, its alternative claim is not necessarily predicated on an ERISA right.
To the extent that FMCP's claims are based on the Does' assignments of benefits, those claims will require interpretation of the Does' ERISA plans. The parties dispute whether an insured's right to payment for services depends on the provider's licensure in the jurisdiction where the services are provided. See Mot. to Remand 22; Opp. 11-12. This dispute about the coverage of the Does' plans will require their interpretation.
CareFirst has shown that (1) FMCP has standing under § 502, (2) some of its claims are within § 502, and (3) resolving those claims will require interpretation of ERISA plans. Accordingly, FMCP's assignment-based claims are completely preempted by ERISA. Because those claims are preempted, the Court has jurisdiction over all FMCP's claims. "[W]he[n] removal jurisdiction exists over a completely preempted claim, the district court has jurisdiction over any claims joined with the preempted claim." Conn. State Dental Ass'n, 591 F.3d at 1353; see also 28 U.S.C. § 1441(c).
FMCP argues that even if some of its claims are preempted by ERISA, the removal was untimely because CareFirst was aware that FMCP intended to sue on the assignments more than 30 days before filing the notice of removal. CareFirst responds that the February 1, 2010 removal was timely because FMCP's January 4, 2010 opposition to the interpleader revealed for the first time that some of FMCP's claims were preempted—i.e., that (1) FMCP had assignments from the Does and (2) planned to rely on those assignments in pursuing its claims for breach of contract and unjust enrichment.
The 30-day period for removal under 28 U.S.C. § 1446(b) runs from the "receipt by the defendant, through service or otherwise, of [the paper] from which it may first be ascertained that the case is or has become removable." CareFirst contends that the removal period began on December 31, 2009 when it was served with the opposition to the interpleader; thus, the February 1, 2010 removal was timely.
FMCP argues that CareFirst had notice of its intention to sue on the assignments (1) on June 1, 2009, when FMCP filed its complaint on June 1, 2009, (2) on November 25, 2009, when CareFirst filed its Third-Party Complaint and Counter-Complaint for Interpleader, and (3) on December 4, 2009, when CareFirst deposed FMCP's CEO, Jarrett Bostwick, and asked questions that implied it was aware that FMCP had assignments from CareFirst members. If the removal period began on any of these dates, the notice of removal is untimely.
The grounds for removal only appeared when FMCP filed its opposition to the interpleader, attached the Does' assignments, and asserted an entitlement to recovery under them. Because CareFirst removed within 30 days of receiving this paper, the removal was timely.
For the reasons stated above, FMCP's motion to remand will be denied.
The parties note that some courts of appeals have read the Supreme Court's Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) as establishing a two-part test for preemption under § 502. See, e.g., Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 946-47 (9th Cir.2009) ("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 implicated by a defendant's actions."). Since Davila, the Fourth Circuit and courts in this district have continued to apply the three-part test of Sonoco Products. See, e.g., Deem, 279 Fed.Appx. at 284; Hewett, 2009 WL 3048675, at *2-3, 2009 U.S. Dist. LEXIS 95054, at *6.
Although this Court follows the Sonoco Products test, FMCP's assignment-based claims are also preempted under the two-part test that has been used in other circuits. FMCP acknowledges that it could sue CareFirst under ERISA by virtue of the Does' assignments. See Mot. to Remand 19. Further, although FMCP has identified a number of legal duties implicated by CareFirst's actions vis-à-vis FMCP (e.g., breach of the PPP, breach of implied contract, etc.), FMCP has identified no other independent legal duty that is implicated by CareFirst's denial of benefits to the Does. To the extent FMCP's claims arise under the assignments, those claims are exclusively within the scope of ERISA § 502(a)(1)(B).