Mitchell-Hollingsworth Nursing & Rehabilitation Center, LLC v. Blue Cross and Blue Shield of Michigan et al
MEMORANDUM OPINION. Signed by Judge C Lynwood Smith, Jr on 1/17/2012. (AHI)
2013 Jan-17 AM 11:12
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NURSING & REHABILITATION,
BLUE CROSS AND BLUE SHIELD )
OF MICHIGAN and BLUE CROSS )
AND BLUE SHIELD OF
Civil Action No. CV-12-S-3558-NW
This case is before the court on the motion to remand to state court filed by
plaintiff, Mitchell-Hollingsworth Nursing & Rehabilitation Center (“MitchellHollingsworth” or “plaintiff”);1 the motion to dismiss the non-ERISA claims in
plaintiff’s original complaint filed by defendant Blue Cross-Blue Shield of Michigan
(“BCBS-Michigan”);2 and the motion to dismiss the non-ERISA claims in plaintiff’s
amended complaint, also filed by BCBS-Michigan.3 Upon consideration of these
motions, the pleadings, and the parties’ briefs, the court concludes that the motion to
Doc. no. 7.
Doc. no. 5.
Doc. no. 17.
remand should be granted, and this case should be remanded to state court. The
motions to dismiss will be denied.
I. STANDARD OF REVIEW
Federal district courts are tribunals of limited jurisdiction, “‘empowered to hear
only those cases within the judicial power of the United States as defined by Article
III of the Constitution,’ and which have been entrusted to them by a jurisdictional
grant authorized by Congress.” University of South Alabama v. The American
Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30
F.3d 1365, 1367 (11th Cir. 1994)). Accordingly, an “Article III court must be sure
of its own jurisdiction before getting to the merits” of any action. Ortiz v. Fiberboard
Corp., 527 U.S. 815, 831 (1999) (citing Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83, 88-89 (1998)). A removing defendant bears the burden
of proving that federal jurisdiction exists. See, e.g., Leonard v. Enterprise Rent A
Car, 279 F.3d 967, 972 (11th Cir. 2002); Williams v. Best Buy Co., 269 F.3d 1316,
1319-20 (11th Cir. 2001)); Kirkland v. Midland Mortgage Co., 243 F.3d 1277, 1281
n.5 (11th Cir. 2001) (“[T]he burden is on the party who sought removal to
demonstrate that federal jurisdiction exists.”) (citing Tapscott v. MS Dealer Service
Corp., 77 F.3d 1353, 1356 (11th Cir. 1996), overruled on other grounds by Cohen v.
Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000)). Accordingly, removal statutes
must be construed narrowly, and “all uncertainties as to removal jurisdiction are to be
resolved in favor of remand.” Russell Corp. v. American Home Assurance Co., 264
F.3d 1040, 1050 (11th Cir. 2001) (citing Burns v. Windsor Insurance Co., 31 F.3d
1092, 1095 (11th Cir. 1994)). Further, the court must focus upon jurisdictional facts
alleged on the date the case was removed from state court. See, e.g., Burns, 31 F.3d
at 1097 n.13 (“Jurisdictional facts are assessed on the basis of plaintiff’s complaint
as of the time of removal.”) (emphasis in original) (citations omitted); see also, e.g.,
Leonard, 279 F.3d at 972 (same).
II. PROCEDURAL HISTORY
Plaintiff, Mitchell-Hollingsworth Nursing & Rehabilitation Center, LLC
(“Mitchell-Hollingsworth” or “plaintiff”) originally filed this case in the Circuit Court
of Lauderdale County, Alabama, on June 21, 2012, against defendants Blue Cross and
Blue Shield of Michigan (“BCBS-Michigan”) and Blue Cross and Blue Shield of
Alabama (“BCBS-Alabama”).4 Plaintiff’s complaint contained state law claims for
breach of express contract, breach of implied contract, negligence/wantonness,
equitable/promissory estoppel, quantum meruit, unjust enrichment, conspiracy, and
conversion — all based upon BCBS-Michigan’s alleged denial of coverage for health
See Complaint, appended to Notice of Removal (doc. no. 1). Plaintiff also named eight
fictitious defendants. See id.
care services plaintiff provided to a beneficiary under a health benefits plan
administered by BCBS-Michigan. BCBS-Alabama removed the case to this court on
October 9, 2012, asserting federal jurisdiction under 28 U.S.C. § 1331 on the basis
that plaintiff’s state law claims are completely pre-empted by the comprehensive
statutory scheme of the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq.5 BCBS-Michigan joined in the Notice of
Removal.6 BCBS-Michigan also filed a motion to dismiss all non-ERISA claims in
plaintiff’s complaint on October 16, 2012.7 Plaintiff filed an amended complaint on
November 2, 2012,8 and BCBS-Michigan filed a motion to dismiss all non-ERISA
claims asserted in the amended complaint on November 16, 2012.9
III. ALLEGATIONS OF PLAINTIFF’S COMPLAINT
The following allegations are taken from plaintiff’s original complaint, filed
in the Circuit Court of Lauderdale County, Alabama, on June 21, 2012. The
allegations of plaintiff’s amended complaint are irrelevant to the determination of
whether the removal was proper. As discussed above, in the removal and remand
context, all jurisdictional facts are assessed as of the date of removal, and subsequent
Doc. no. 1 (Notice of Removal).
Id. ¶ 6.
Doc. no. 5.
Doc. no. 13.
Doc. no. 17.
events, including the filing of an amended complaint, do not alter the jurisdictional
analysis. See, e.g., Burns, 31 F.3d at 1097 n.13
Mitchell-Hollingsworth is a skilled nursing facility located in Florence,
Alabama.10 BCBS-Michigan allegedly provided insurance coverage to an individual
named Jean Beauchamp, who became a resident at the Mitchell-Hollingsworth
facility in 2007.11 On or about June 4, 2007, Mitchell-Hollingsworth allegedly placed
a telephone call to BCBS-Michigan prior to admitting Ms. Beauchamp in order to
inquire about the limits of the coverage available to her.12 During that telephone call,
BCBS-Michigan allegedly informed Mitchell-Hollingsworth that Ms. Beauchamp
was covered for 730 days of skilled nursing care, and it did not mention any
limitation that might reduce the amount of skilled nursing coverage available to her.13
BCBS-Michigan allegedly made the same representation to Mitchell-Hollingsworth
after a second inquiry on October 16, 2008.14
Allegedly in reliance on the information it received from BCBS-Michigan,
Mitchell-Hollingsworth admitted Ms. Beauchamp as a patient on June 5, 2007, and
it treated her until her death on September 27, 2009. Ms. Beauchamp received a total
Complaint ¶ 8.
Id. ¶¶ 9-10.
Id. ¶ 11.
Id. ¶ 12.
Id. ¶ 13.
of 774 days of skilled nursing care at Mitchell-Hollingsworth,15 and MitchellHollingsworth received a total of $539,200 in compensation from BCBS-Michigan.16
On June 21, 2010, Mitchell-Hollingsworth allegedly received written
correspondence from BCBS-Alabama, purportedly on behalf of BCBS-Michigan,
stating that BCBS-Alabama would being recouping payments BCBS-Michigan had
made for Ms. Beauchamp’s care, because some of those payments were made for noncovered services.17 BCBS-Alabama allegedly began recouping a total of $145,600
from Mitchell-Hollingsworth on or about October 22, 2010, for amounts paid to
Mitchell-Hollingsworth for 182 days of skilled nursing care that BCBS-Michigan
claimed were not covered by Ms. Beauchamp’s insurance plan.18
Hollingsworth allegedly began contacting the customer service departments of both
BCBS-Michigan and BCBS-Alabama to inquire about the recoupment.
customer service departments described the terms of Ms. Beauchamp’s coverage as
being materially different than those described when Mitchell-Hollingsworth made
its pre-admission inquires into Ms. Beauchamp’s coverage.19
Mitchell-Hollingsworth allegedly filed internal appeals with both BCBS15
Complaint ¶ 14.
Id. ¶ 15.
Id. ¶ 16.
Id. ¶ 17.
Id. ¶¶ 18-22.
Michigan and BCBS-Alabama in October and November of 2010, disputing the
recoupment and requesting an audit of all claims related to the care of Ms.
Beauchamp.20 On April 28, 2011, Mitchell-Hollingsworth also allegedly submitted
a letter, through counsel, to BCBS-Alabama, describing the situation and requesting
review of all records associated with the representations allegedly made by BCBSMichigan.21 BCBS-Michigan denied Mitchell-Hollingsworth’s appeal on June 6,
2011.22 In summary, Mitchell-Hollingsworth alleges that it
admitted and treated Jean Beauchamp based upon BCBSMI’s repeated
representations that she was covered for 730 days of skilled nursing
care. Later, after that care had been provided and without informing
Mitchell-Hollingsworth, BCBSMI ordered BCBSAL to recoup
$145,600 in alleged overpayments for the care Mitchell-Hollingsworth
had already provided to Jean Beauchamp. In spite of MitchellHollingsworth’s correspondence and appeals, BCBSAL complied with
BCBSMI’s direction and withheld $145,600 from MitchellHollingsworth.23
Mitchell-Hollingsworth asserted ten state law causes of action in its original
To support its claim for breach of express contract, Mitchell-
29. BCBSAL entered into contracts with MitchellHollingsworth to compensate Mitchell-Hollingsworth for covered
Complaint ¶ 23-24.
Id. ¶ 25.
Id. ¶ 26.
Id. ¶ 27.
services Mitchell-Hollingsworth rendered to BCBSAL’s insureds.
30. In accordance with these contracts, Mitchell-Hollingsworth
provided care to BCBSAL’s insureds and expected compensation from
BCBSAL in return.
31. BCBSAL breached its agreement with MitchellHollingsworth by withholding funds from Mitchell-Hollingsworth it was
obligated to pay under the contracts to compensate Mitchell-Hollingsworth for the provisi
32. Mitchell-Hollingsworth was injured as a proximate result
of the breach of the agreements by BCBSAL.24
To support its claim for breach of implied contract, Mitchell-Hollingsworth
asserts that it entered into an implied contract with BCBS-Michigan to compensate
Mitchell-Hollingsworth for covered services it rendered to Ms. Beauchamp; that it
provided care to Ms. Beauchamp in reliance on the terms of that contract; that BCBSMichigan breached the implied contract by failing to compensate MitchellHollingsworth for the provision of care to Ms. Beauchamp; and that it was injured as
a proximate result of BCBS-Michigan’s breach of the contract.25
To support its claim for negligence and/or wantonness, Mitchell-Hollingsworth
asserts that both defendants owed it a duty to provide accurate information regarding
benefits and payments, a duty to pay for services rendered to defendants’ insureds,
and a duty to refrain from improperly withholding or recouping payments, but that
Id. ¶¶ 29-32.
Complaint ¶¶ 34-37.
defendants negligently, recklessly, wantonly, and intentionally breached those duties,
resulting in damages to Mitchell-Hollingsworth.26
To support its claim for fraud, misrepresentation, and/or suppression, MitchellHollingsworth alleges that both defendants knowingly, intentionally, and/or
recklessly “misrepresented material facts and suppressed material information from
Mitchell-Hollingsworth to induce Mitchell-Hollingsworth to act or refrain from
Plaintiff also alleges that both defendants intentionally suppressed
information from it, despite being under a duty to disclose that information.28 Finally,
plaintiff alleges that it relied upon defendants’ misrepresentations and suppressions
to its detriment, and it suffered damages as a proximate result.29
To support its claim for promissory fraud, Mitchell-Hollingsworth alleges that
BCBS-Michigan “intentionally, willfully, wantonly, recklessly and/or negligently
misrepresented material facts to and suppressed information from MitchellHollingsworth” in an effort to induce Mitchell-Hollingsworth to treat Ms.
Beauchamp.30 In reliance upon those misrepresentations and suppressions, MitchellHollingsworth expended time, money, and other resources caring for Ms.
Id. ¶¶ 39-40.
Id. ¶¶ 42-43, 45.
Id. ¶ 44.
Id. ¶¶ 46-47.
Complaint ¶ 49.
To support its claim for equitable or promissory estoppel, MitchellHollingsworth alleges that it relied upon promises made by representatives of BCBSMichigan, and that “[p]reventing injustice and fraud can only be accomplished by
estopping BCBSMI from now repudiating the promises and representations it made
to Mitchell-Hollingsworth . . . .”32
To support its claim for quantum meruit, Mitchell-Hollingsworth alleges that
“[d]efendants are liable to Mitchell-Hollingsworth for the valuable services
performed by Mitchell-Hollingsworth which were rendered to and accepted by
Defendants’ insured on behalf of Defendants.”33
To support its claim for unjust enrichment, Mitchell-Hollingsworth alleges that
both defendants have “knowingly accepted, obtained and withheld money from
compensation.”34 Therefore, defendants were “enriched in an unjust manner and
equity and good conscience mandate that Defendants not be allowed to retain their
improper gains and benefits.”35 Stated differently, defendants “should be required to
Id. ¶ 51.
Id. ¶¶ 54-55 (alterations supplied).
Id. ¶ 57 (alteration supplied).
Id. ¶ 59.
Complaint ¶ 60.
compensate Mitchell-Hollingsworth the amounts by which they have been unjustly
For its conspiracy claim, Mitchell-Hollingsworth alleges that both defendants
“conspired to commit the unlawful and fraudulent conduct alleged herein by the acts
and/or omission in the manner described above and otherwise conspired and
combined for the sole purpose of causing harm to Mitchell-Hollingsworth,” and that
it did indeed suffer damages as a proximate result of defendants’ alleged conspiracy.37
To support its claim for conversion, Mitchell-Hollingsworth states that both
defendants “wrongfully took, withheld and interfered with the possession of payments
which rightfully belonged to Mitchell-Hollingsworth,” resulting in damages.38
As plaintiff’s motion to remand challenges this court’s subject matter
jurisdiction, it must be addressed, and subject matter jurisdiction must be established,
before the court can rule on the motions to dismiss.
Defendants’ removal of the case to this court was based upon the alleged
complete pre-emption of all of plaintiff’s state law claims by ERISA.
Ordinarily, determining whether a particular case arises under
Id. ¶ 61.
Id. ¶ 63-64.
Id. ¶ 66-67.
federal law turns on the “‘well-pleaded complaint’” rule. Franchise Tax
Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal.,
463 U.S. 1, 9–10, 103 S. Ct. 2841, 77 L. Ed. 2d 420 (1983). The Court
has explained that
“whether a case is one arising under the Constitution or a
law or treaty of the United States, in the sense of the
jurisdictional statute[,] . . . must be determined from what
necessarily appears in the plaintiff’s statement of his own
claim in the bill or declaration, unaided by anything alleged
in anticipation of avoidance of defenses which it is thought
the defendant may interpose.” Taylor v. Anderson, 234
U.S. 74, 75–76, 34 S. Ct. 724, 58 L. Ed. 1218 (1914).
In particular, the existence of a federal defense normally does not
create statutory “arising under” jurisdiction, Louisville & Nashville R.
Co. v. Mottley, 211 U.S. 149, 29 S. Ct. 42, 53 L. Ed. 126 (1908), and “a
defendant may not [generally] remove a case to federal court unless the
plaintiff’s complaint establishes that the case ‘arises under’ federal law,”
Franchise Tax Bd., supra, at 10, 103 S. Ct. 2841. There is an exception,
however, 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. Beneficial Nat. Bank v.
Anderson, 539 U.S. 1, 8, 123 S. Ct. 2058, 156 L. Ed. 2d 1 (2003). This
is so because “[w]hen the federal statute completely pre-empts the
state-law cause of action, a claim which comes within the scope of that
cause of action, even if pleaded in terms of state law, is in reality based
on federal law.” Ibid. ERISA is one of these statutes.
Aetna Health Inc. v. Davila, 542 U.S. 200, 207-08 (2004) (alterations in original).
In Davila, the Supreme Court provided the following guidance about how to
determine whether a state law claim is pre-empted by ERISA:
ERISA § 502(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 plan.” 29 U.S.C. §
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 benefits. Any dispute over the precise terms of the plan is
resolved by a court under a de novo review standard, unless the terms of
the plan “giv[e] the administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms of the plan.”
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct.
948, 103 L. Ed. 2d 80 (1989).
It follows that if an individual brings suit complaining of a denial
of coverage for medical care, where the individual is entitled to such
coverage only because of the terms of an ERISA-regulated employee
benefit plan, and where no legal duty (state or federal) independent of
ERISA or the plan terms is violated, then the suit falls “within the scope
of” ERISA § 502(a)(1)(B). Metropolitan Life[ Insurance Co. v. Taylor,
481 U.S. 58, 66 (1987)]. In other words, if 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, 542 U.S. at 210 (alterations and emphasis in original).
The Eleventh Circuit has characterized Davila as establishing a two-part test:
i.e., “(1) whether the plaintiff could have brought its claim under § 502(a); and (2)
whether no other legal duty supports the plaintiff’s claim.” Connecticut State Dental
Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1345 (11th Cir. 2009) (citing
Davila, 542 U.S. at 210). The first “part of the test is satisfied if two requirements are
met: (1) the plaintiff’s claim must fall within the scope of ERISA; and (2) the
plaintiff must have standing to sue under ERISA.” Connecticut State Dental Ass’n,
591 F.3d at 1350 (citing Davila, 542 U.S. at 211-12). The court should “first consider
whether the claims are within the scope of § 502(a)(1)(B), because if they are not,
standing to assert them is irrelevant.” Id.
It also must be noted that
healthcare provider claims are usually not subject to complete
preemption because “[h]ealthcare providers . . . generally are not
considered ‘beneficiaries’ or ‘participants’ under ERISA.” Hobbs v.
Blue Cross Blue Shield of Ala., 276 F.3d 1236, 1241 (11th Cir. 2001)
(citing Cagle v. Bruner, 112 F.3d 1510, 1514 (11th Cir. 1997)); see also
Pascack Valley Hosp.[, Inc. v. Local 464A UFCW Welfare
Reimbursement Plan,] 388 F.3d [393,] 400 [(3rd Cir. 2004)] (“We
conclude that the Hospital could not have brought its claims under §
502(a) because the Hospital does not have standing to sue under that
statute.”); In re Managed Care Litig., 298 F. Supp. 2d 1259 (S.D. Fla.
2003) (noting that only two categories of individuals — participants and
beneficiaries — are authorized to sue for benefits under § 502(a)(1)(B)).
Moreover, such claims often are not the type of claims that could be
brought under § 502(a) because they do not “duplicate[ ], supplement [
], or supplant[ ] the ERISA civil enforcement remedy.” Davila, 542 U.S.
at 209, 124 S. Ct. at 2495. For example, a healthcare provider’s claims
of negligent misrepresentation and estoppel based on a plan’s oral
misrepresentations are not ERISA claims because they do not arise from
the plan or its terms. Franciscan Skemp[ Healthcare, Inc. v. Central
States Joint Board Health and Welfare Trust Fund], 538 F.3d [594,]
597[ (7th Cir. 2008)].
Connecticut State Dental Ass’n, 591 F.3d at 1346-47 (alterations in original,
emphasis supplied, footnotes omitted). In the Connecticut State Dental Ass’n case,
the Eleventh Circuit
discussed two types of claims that can be made by providers against
insurers: those challenging the “rate of payment” pursuant to the
provider-insurer agreement, and those challenging the “right to
payment” under the terms of an ERISA beneficiary’s plan. [Connecticut
State Dental Ass’n, 591 F.3d] at 1349-50; see also Lone Star OB/GYN
Assocs. v. Aetna Health, Inc., 579 F.3d 525, 530 (5th Cir. 2009);
Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare
Reimbursement Plan, 388 F.3d 393, 402-03 (3d Cir. 2004). We
indicated that a “rate of payment” challenge does not necessarily
implicate an ERISA plan, but a challenge to the “right to payment”
under an ERISA plan does. Connecticut State Dental, 591 F.3d at
Borrero v. United Healthcare of New York, 610 F.3d 1296, 1302 (11th Cir. 2010)
(alteration supplied). It must therefore be determined whether plaintiff’s claims in
this case are more like a challenge to the “right to payment” claim that falls under the
scope of ERISA, or more like a “rate of payment” challenge that does not.
Plaintiff relies primarily on the Seventh Circuit’s decision in Franciscan Skemp
Healthcare, Inc. v. Central States Joint Board Health and Welfare Trust Fund, 538
F.3d 594 (7th Cir. 2008), to support its argument that its claims fall outside ERISA.
The Seventh Circuit described the relevant facts of that case as follows:
The plaintiff-appellant, Franciscan Skemp Healthcare, Inc. (“Franciscan
Skemp”), is a healthcare provider in La Crosse, Wisconsin. The
defendant-appellee, Central States Joint Board Health and Welfare Trust
Fund (“Central States”), is an employee benefit plan. Sherry Romine,
through her employment, was a Central States plan participant. She
came to Franciscan Skemp in October 2003 seeking medical treatment.
Before providing services, Franciscan Skemp called Central States to
verify Central States’s coverage of Romine and the relevant services.
A Central States representative made oral representations that they were
covered. Franciscan Skemp treated Romine. Following unsuccessful
efforts to receive payment from Central States, after submitting a claim
for benefits, Franciscan Skemp learned that Central States would not pay
— it turns out that Romine lost her benefits, effective September 30,
2003, for failing to pay COBRA premiums. When Franciscan Skemp
called in October to verify coverage, the Central States representative
failed to disclose that Romine’s coverage was subject to COBRA and
that the coverage could be retroactively canceled.
Franciscan Skemp, 538 F.3d at 595-96. Franciscan Skemp sued Central States in a
Wisconsin state court, alleging claims of negligent misrepresentation and estoppel
under Wisconsin law. Id. at 596. Central States removed the case to federal court,
on the basis that Franciscan Skemp’s state law claims were pre-empted by ERISA,
but the Seventh Circuit disagreed and ordered that the case be remanded to the state
court. Id. at 596, 601.
Despite the fact that Franciscan Skemp had received an assignment of benefits
from Romine and filed a claim on her behalf with Central States, the Eleventh Circuit
concluded that Franciscan Skemp had asserted the claims contained within its state
court complaint on its own right, not as Romine’s representative. Id. at 597. In other
words, Franciscan Skemp’s claims arose “not from the plan or its terms, but from the
alleged oral representations made by Central States to Franciscan Skemp.” Id. In
fact, both parties acknowledged that Franciscan Skemp could not have successfully
asserted claims as Romine’s assignee, because Romine undisputedly was not entitled
to coverage due to her failure to pay COBRA premiums. Franciscan Skemp, 538
F.3d at 598. “Simply because at one point in time Franciscan Skemp acknowledged
an assignment from Romine does not mean that it simultaneously and implicitly gave
up any claim(s) it had against Central States apart from that assignment.” Id.
This court finds the Seventh Circuit’s reasoning in Franciscan Skemp to be
persuasive, and the facts of that case to be materially similar to those of the present
This is particularly true with regard to Counts II-X of Mitchell-
Hollingsworth’s complaint. Like Franciscan Skemp, Mitchell-Hollingsworth is
asserting those claims based upon an independent agreement between it and
defendants, or based upon independent activities engaged in by defendants, not based
upon the original agreement between Ms. Beauchamp and BCBS-Michigan. The fact
that Ms. Beauchamp executed an assignment of benefits in favor of BCBS-Michigan
Moreover, the Franciscan Skemp decision was cited approvingly by the Eleventh Circuit
in Connecticut State Dental Ass’n as supporting the proposition that “a healthcare provider’s claims
of negligent misrepresentation and estoppel based upon a plan’s oral misrepresentations are not
ERISA claims because they do not arise from the plan or its terms.” Connecticut State Dental Ass’n,
591 F.3d at 1347 (citing Franciscan Skemp, 538 F.3d at 597).
does not alter this court’s conclusion.40 The mere existence of an assignment does not
change the nature of Mitchell-Hollingsworth’s claims, which are independent of any
ERISA plan. Deciding Counts II through X of Mitchell-Hollingsworth’s complaint
will not require the court to construe any ERISA plan terms, or to determine whether
Ms. Beauchamp was entitled to coverage under the plan. Instead, the court will only
be called upon to determine whether either defendant misrepresented the extent of
Ms. Beauchamp’s benefits, or breached an independent agreement with MitchellHollingsworth to provide coverage for Ms. Beauchamp’s care.
BCBS-Michigan asserts that the Franciscan Skemp decision should not control
because that decision “departs from the Eleventh Circuit’s Davila-based
framework.”41 This court does not agree. BCBS-Michigan makes much of the
Franciscan Skemp court’s statement that “Franciscan Skemp could bring ERISA
claims in Romine’s shoes as a beneficiary for the denial of benefits under the plan;
but it has not.”
Franciscan Skemp, 538 F.3d at 598 (emphasis in original).
According to BCBS-Michigan, that statement is inconsistent with the Eleventh
Circuit’s recognition that, in determining whether a health care provider is asserting
a claim on behalf of an ERISA beneficiary, the court ultimately must “ask whether
See doc. no. 14, Exhibit 1 (Declaration of Karen Gilliland), at Exhibits A & B.
Doc. no. 15 (brief of BCBS-Michigan), at 4.
the [provider] ‘could have brought his claim under ERISA § 502(a)(1)(B).’” Borrero
v. United Healthcare of New York, Inc., 610 F.3d 1296, 1303-04 (11th Cir. 2010)
(quoting Davila, 542 U.S. at 210) (emphasis in Borrero). The implication is, of
course, that as long as the provider could have brought its claim(s) under ERISA, then
ERISA pre-emption applies, regardless of how the plaintiff actually stated its claims.
Stated differently, according to BCBS-Michigan,
a plaintiff does not have a choice about whether to bring a claim under
ERISA Section 502(a)(1)(B). Rather, if the plaintiff “could” bring such
a claim, then any state law claim that plaintiff pleads will be “completely
preempted” if the second Borrero condition is also met — namely, that
there is “no other independent legal duty that is implicated by a
This court does not agree that Borerro stands for the proposition that a health
care provider who has received an assignment of benefits from an ERISA beneficiary
is incapable of asserting a claim against the insurance company administering the
health care plan that is independent of the claims the beneficiary might have asserted
on her own behalf. To the contrary, the Borrero court emphasized that “‘the plaintiff
is the master of the complaint.’ . . . But when the plaintiff chooses to plead a cause
of action completely preempted by federal law, the plaintiff is not always master of
the forum.” Borrero, 610 F.3d at 1303 (quoting Caterpillar, Inc. v. Williams, 482
U.S. 386, 398-99 (1987)). The plaintiffs in Borrero did not assert “exclusively state
Doc. no. 15, at 5 (quoting Borrero, 610 F.3d at 1301) (emphasis in original).
law claims, but instead have cast their pleadings in a way that implicates federal law
as well.” Borrero, 610 F.3d at 1303. It was because the plaintiffs’ claims, as they
were pled in the complaint, were “‘substantially dependent upon interpretation’ of
ERISA plans” that the court asked the question of whether the plaintiffs could have
brought their claims under ERISA. Id. at 1303-04.
This portion of the Borrero decision is consistent with the Seventh Circuit’s
decision in Franciscan Skemp. Both the Seventh Circuit and the Eleventh Circuit
acknowledge that the nature of the claims pled in the plaintiff’s complaint controls
the ERISA pre-emption analysis, regardless of the existence of an assignment of
Here, the claims asserted in Counts II through X of Mitchell-
Hollingsworth’s complaint do not implicate the terms of Ms. Beauchamp’s ERISA
plan; instead, all of those claims arise either out of Mitchell-Hollingsworth’s
independent agreement with defendants, or out of independent actions taken by
BCBS-Michigan also makes the assertion in a footnote that Franciscan Skemp is factually
distinguishable because the plaintiff in Franciscan Skemp “conceded that its patient was not entitled
to any benefits under the terms of the applicable ERISA plan.” Doc. no. 15, at 4 n.1 (emphasis in
original). That is undeniably a factual difference between this case and Franciscan Skemp, but the
distinction is not material. The Seventh Circuit did not ground its decision in Romine’s ineligibility
for benefits under the plan. While that fact likely added clarity to the Seventh Circuit’s decision
making process, the central point of the Franciscan Skemp decision is that the pre-emption analysis
will turn on whether the plaintiff’s claims arise out of an ERISA plan or an independent agreement,
not whether the beneficiary actually is entitled to benefits under a plan. In other words, even if
Romine had not allowed her COBRA payments to lapse, the Seventh Circuit likely would have
reached the same conclusion about pre-emption, simply based upon the nature of the claims asserted
The analysis for Mitchell-Hollingsworth’s claim against BCBS-Alabama for
breach of express contract is slightly different.
In its reply brief, Mitchell-
Hollingsworth acknowledges that the breach of express contract claim “is different
from the claims made against both defendants that arise from BCBSMI’s
misrepresentation. Mitchell-Hollingsworth filed the breach of express contract claim
against BCBSAL for withholding money BCBSAL owes Mitchell-Hollingsworth for
care rendered to other insureds — not Ms. Beauchamp. That claim does not have a
relationship to Ms. Beauchamp’s plan.”44 So characterized, the breach of express
contract claim is an anomaly in Mitchell-Hollingsworth’s complaint. Who are these
other insureds Mitchell-Hollingsworth is referencing? Were they subject to ERISA
plans? What were the circumstances under which BCBS-Alabama refused to pay
Mitchell-Hollingsworth for services rendered? The complaint is devoid of any
factual statements that might answer these questions. In fact, the only factual
statements in the complaint that even mention BCBS-Alabama relate to BCBSAlabama’s attempts to recover, on behalf of BCBS-Michigan, amounts paid to
Mitchell-Hollingsworth for Ms. Beauchamp’s care. If the breach of express contract
claim does not relate to Ms. Beauchamp, then the court struggles to understand how
in the plaintiffs’ complaint.
Doc. no. 20 (plaintiff’s reply brief), at 9-10 (emphasis supplied).
there could be sufficient facts to support the claim in light of the standards for
dismissal under Federal Rule of Civil Procedure 12(b)(6). The same pleading
deficiencies also make it impossible to determine whether the court has subject matter
jurisdiction over the express contract claim. There is no way to determine whether
the claim should be subject to ERISA pre-emption because there is no way of
knowing whether the unknown insureds referenced in the claim were even ERISA
participants. BCBS-Alabama, the removing defendant, has failed to satisfy its burden
of establishing that federal jurisdiction exists over this claim. See, e.g., Leonard, 279
F.3d at 972. Without more facts, the question of jurisdiction is uncertain, and that
uncertainty must be resolved in favor of remand. See Russell Corp., 264 F.3d at
Even setting aside the problems of uncertainty in the pleading and BCBSAlabama’s failure to satisfy its burden of establishing federal jurisdiction, BCBSAlabama’s more substantive arguments in favor of federal jurisdiction also are not
persuasive. Despite BCBS-Alabama’s suggestion, the mere mention of “covered
services” in Mitchell-Hollingsworth’s breach of express contract claim does not
necessarily implicate ERISA. Mitchell-Hollingsworth alleged that “BCBSAL entered
into contracts with Mitchell-Hollingsworth to compensate Mitchell-Hollingsworth for
covered services Mitchell-Hollingsworth rendered to BCBSAL’s insureds,”45 and that
BCBS-Alabama breached those contracts by failing to compensate MitchellHollingsworth for services it rendered to BCBS-Alabama’s insureds.46 Despite the
reference to services covered under the plan, it is clear that the breach of express
contract claim is not based upon an ERISA beneficiary’s plan, but on some
independent agreement entered into between Mitchell-Hollingsworth and BCBSAlabama. The Seventh Circuit confronted a similar argument in Franciscan Skemp.
Central States also makes much of the references in the complaint
to the plan and the request that Central States pay “to the extent said
services would otherwise have been covered.” These references,
however, are solely for the purpose of identifying a damages amount;
they do not convert the claims into ones for plan benefits. Franciscan
Skemp seeks damages, not wrongfully denied benefits.
Franciscan Skemp, 538 F.3d at 598 (emphasis supplied). This court once again is
persuaded by the Seventh Circuit’s reasoning, and concludes that the mention of
“covered services” in Mitchell-Hollingsworth’s complaint does not convert its breach
of contract claim into one for denial of plan benefits.
In summary, Michell-Hollingsworth has not asked this court to determine its
“right to payment” under an ERISA benefits plan.
Complaint ¶ 29 (emphasis supplied).
Id. ¶¶ 30-32.
Hollingsworth’s claims do not fall under the scope of ERISA, and the doctrine of
complete pre-emption does not apply.
Because plaintiff’s state-law claims are not pre-empted by ERISA, and no other
basis for federal subject matter jurisdiction has been asserted, plaintiff’s motion to
remand is due to be granted. As this court lacks subject matter jurisdiction over
plaintiff’s claims, BCBS-Michigan’s motions to dismiss will be denied, but without
prejudice to BCBS-Michigan’s right to reassert them in a court with proper
jurisdiction. An order consistent with this memorandum opinion will be entered
DONE this 17th day of January, 2013.
United States District Judge
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