United States District Court, S.D. New York
January 6, 2005.
NYU HOSPITALS CENTER-TISCH, Plaintiff,
LOCAL 348 HEALTH AND WELFARE FUND, Defendant.
The opinion of the court was delivered by: ALVIN HELLERSTEIN, District Judge
MEMORANDUM AND ORDER GRANTING REMAND
Plaintiff NYU Hospitals Center-Tisch moves to remand to New
York City Civil Court. The action seeks to recover $5,076.00 plus
interest from defendant Local 348 Health and Welfare Fund, and
costs and attorney's fees. For the reasons stated below, I grant
plaintiff's motion to remand and I deny plaintiff's motion for
costs and attorney's fees.
This dispute arises from hospital services given by plaintiff
to patient Lily Chan during August 30-31, 2003. Plaintiff, a New
York corporation, provides hospital services under contract with
MultiPlan, Inc. ("MultiPlan"), a preferred provider organization,
to employees of MultiPlan's clients, at discounted rates. If,
however, payment is not made to plaintiff within a specified
period of time, plaintiff may claim the full, undiscounted
Plaintiff alleges that defendant did not pay the discounted
charge within the specified time for services plaintiff provided
to Lily Chan, a participant of defendant, and claims that
defendant is therefore liable for the total, undiscounted charges
less amounts paid. Plaintiff filed suit in the Civil Court of the
City of New York, County of New York. Defendant removed to this court on August 26, 2004 on the grounds that the claim
arises under the Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff now moves to
Ordinarily, a defendant in a state court civil action is
permitted to remove the action to federal district court if the
latter court has original jurisdiction, 28 U.S.C. § 1441(a),
which includes any action arising under federal law,
28 U.S.C. § 1331. Generally, "[t]he presence or absence of federal-question
jurisdiction is governed by the `well-pleaded complaint rule,'
which provides that federal jurisdiction exists only when a
federal question is presented on the face of the plaintiff's
properly pleaded complaint." Caterpillar Inc. v. Williams,
482 U.S. 386, 392 (1987). Therefore, "it is now 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, even if
the defense is anticipated in the plaintiff's complaint, and even
if both parties concede that the federal defense is the only
question truly at issue." Id. at 393 (citing Franchise Tax
Board of Cal. v. Construction Laborers Vacation Trust for
Southern Cal., 463 U.S. 1, 12 (1983)). Whether or not plaintiff
in this case anticipated a defense of preemption, plaintiff
nowhere in its complaint purports to bring its case under ERISA.
However, the Supreme Court has identified an exception to the
well-pleaded complaint rule. "`[W]hen a federal statute wholly
displaces the state-law cause of action through complete
pre-emption,' the state claim can be removed." Aetna Health Inc.
v. Davila, 542 U.S. ___, 124 S. Ct. 2488, 2495 (2004) (quoting
Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8 (2003)); see
also Plumbing Industry Bd. v. Howell Co., Inc., 126 F.3d 61, 66
(2d Cir. 1997) ("[W]hen Congress mandates `complete preemption'
in a specific area of the law, any civil complaint raising a state law claim in that area is of necessity so federal
in character that it arises under federal law for purposes of
28 U.S.C. § 1331 and permits removal to federal court under
28 U.S.C. § 1441." (citing Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 63-67 (1987)).
The Supreme Court has held that "ERISA is one of these
statutes." Davila, 124 S.Ct. at 2495. Clearly stated, then, the
Court has held that ERISA exerts a preemptive force. Id.
("[A]ny state-law cause of action that duplicates, supplements,
or supplants the ERISA civil enforcement remedy conflicts with
the clear congressional intent to make the ERISA remedy exclusive
and is therefore pre-empted." (citing Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 54-56 (1987); Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 143-145 (1990))). Furthermore, the
Court has made plain that "the ERISA civil enforcement mechanism
is one of those provisions with such `extraordinary pre-emptive
power' that it `converts an ordinary state common law complaint
into one stating a federal claim for purposes of the well-pleaded
complaint rule.'" Id. at 2496 (quoting Taylor,
481 U.S. at 65-66). Accordingly, "causes of action within the scope of the
civil enforcement provisions of § 502(a) [29 USCA § 1132(a)]
[are] removable to federal court." Id. (second alteration in
original) (quoting Taylor, 481 U.S. at 66).
Traditionally, the Second Circuit has outlined a two-step
examination for determining when ERISA preemption permits a valid
basis for removal jurisdiction: "(1) the state law cause of
action is preempted by ERISA, and (2) that cause of action is
`within the scope' of the civil enforcement provisions of ERISA §
502(a), 29 U.S.C. § 1132(a)." Howell Co., Inc., 126 F.3d at 66
(citing Taylor, 481 U.S. at 63-67; Greenblatt v. Delta
Plumbing & Heating Corp., 68 F.3d 561, 573 (2d Cir. 1995)).
Recently, the Supreme Court has reformulated the inquiry: "[I]f
an individual, at some point in time, could have brought his
claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is
implicated by a defendant's actions, then the individual's cause
of action is completely pre-empted by ERISA § 502(a)(1)(B)."
Davila, 124 S. Ct. at 2496.
Defendant in this case claims in its Notice of Removal that
"[t]his matter arises under ERISA Section 502(a)(1)(B),
29 U.S.C. § 1132(a)(1)(B)." But this is not so. Plaintiff is not one of
those authorized by ERISA to bring a lawsuit like this. Section
502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B) 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 under the terms of the plan, or to clarify his
rights to future benefits under the terms of the
The Supreme Court analyzed this statutory provision in Davila,
This provision is relatively straightforward. 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 benefits. 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
124 S.Ct. at 2496; see Gerosa v. Savasta & Co., Inc.,
329 F.3d 317
(2d Cir. 2003), rev'g 189 F.Supp.2d 137
cert. denied, 540 U.S. 967 & 1074 (2003).
Clearly, plaintiff's claim in this case is not covered by the
civil enforcement mechanism permitted in
29 U.S.C. § 1132(a)(1)(B). Plaintiff is a provider of hospital services, and
is neither a "participant," defined as "any employee or former
employee of an employer, or any member of former member of an
employee organization, who is or may become eligible to receive a
benefit of any type from an employee benefit plan which covers
employees of such employer or members of such organization, or
whose beneficiaries may be eligible to receive any such benefit";
nor a "beneficiary," defined as "a person designated by a
participant, or by the terms of an employee benefit plan, who is or may become entitled
to a benefit thereunder." 29 U.S.C. § 1002(7) & (8).
It is true that in the Second Circuit, "the assignees of
beneficiaries to an ERISA-governed insurance plan have standing
to sue under ERISA." I.V. Services of America, Inc. v. Trustees
of American Consulting Engineers Council Ins. Trust Fund,
136 F.3d 114, 117 n. 2 (2d Cir. 1998). The Court of Appeals has
recently elaborated on this issue as it pertains to
29 U.S.C. § 1132(a)(1)(B): "We have previously held that assignees have
standing to sue under 29 U.S.C. § 1132(a) in some circumstances.
For example, we have held that healthcare providers to whom a
beneficiary has assigned his or her claim in exchange for
healthcare have standing to sue under ERISA to recover for
medical expenses incurred." Connecticut v. Physicians Health
Services of Connecticut, Inc., 287 F.3d 110, 115 n. 4 (2d Cir.
2002) (citing I.V. Servs. of Am., Inc.); see also Simon v.
General Elec. Co., 263 F.3d 176, 178 (2d Cir. 2001) ("This
narrow exception grants standing only to healthcare providers to
whom a beneficiary has assigned his claim in exchange for health
care.") The defendant in this case, however, has made no showing
of assignment in the case before me, and I decline to conjure one
up sua sponte. Accord Pascack Valley Hosp. v. Local 464A
UFCW Welfare Reimbursement Plan, 388 F.3d 393, 401 (3d Cir.
2004) ("As the party seeking removal, the Plan bore the burden of
proving that the Hospital's claim is an ERISA claim. Accordingly,
the Plan bore the burden of establishing the existence of an
assignment." (citations omitted)). Accordingly, upon the facts
before me, I cannot find that plaintiff "could have brought [its]
claim under ERISA § 502(a)(1)(B)," and thus plaintiff's claim
fails the Supreme Court's test for complete preemption, and hence
removal by defendant on that basis. Davila, 124 S. Ct. at 2496. As stated by the Supreme Court, "the detailed provisions of §
502(a) set forth a comprehensive civil enforcement scheme that
represents a careful balancing of the need for prompt and fair
claims settlement procedures against the public interest in
encouraging the formation of employee benefit plans." Pilot Life
Ins. Co., 481 U.S. at 54. I hold, as did Judge Koeltl under
similar facts, that "it is plain that the claims asserted by the
plaintiffs are not among those enumerated in § 502(a)." Grunwald
v. Physicians Health Services of New York, Inc., No. 97 Civ.
5654, 1998 WL 146226, at *7 (S.D.N.Y. March 25, 1998); see
also Atlantis Health Plan, Inc. v. Local 713, I.B.O.T.U.,
258 F.Supp.2d 284, 295 (S.D.N.Y. 2003) (Marrero, J.) (holding, under
similar facts that "[n]one of the civil actions enumerated in §
1132 contemplates an ordinary common law contract dispute such as
that presented here for collection of premiums and/or damages
between parties of the kind involved in the matter at hand.
[Plaintiff's] state law claims do not seek to redress, by means
of that litigation, violations of rules that ERISA's civil
enforcement provisions were designed to remedy").
Holding, as I do, that remand is proper because the
requirements of the first half of Davila's test for complete
preemption have not been met, it is unnecessary for me to perform
a protracted analysis of the facts before me to determine whether
"there is no other independent legal duty that is implicated by . . .
defendant's actions," 124 S.Ct. at 2496, or whether, under
Howell Co., Inc., "the state law cause of action is preempted
by ERISA," 126 F.3d at 66. I leave that analysis to the state
Plaintiff is entitled to judgment for its costs, to be taxed by
the Clerk. Plaintiff's motion for attorney's fees, see
28 U.S.C. § 1447(c), is denied. There was a good faith basis for the
jurisdictional contest, given the complexity of ERISA, and no
particular reason has been advanced to change the general rule that each party should absorb
its own expenses for attorneys.
The oral argument scheduled for January 6, 2005 is hereby
cancelled, as is the conference scheduled for January 7, 2005.
The Clerk of the Court shall mark this case as closed.
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