Boyd v. Baptist Health Systems Inc et al
MEMORANDUM OPINION Signed by Judge Karon O Bowdre on 1/11/13. (SAC )
2013 Jan-11 PM 01:26
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
BAPTIST HEALTH SYSTEM, INC.;
LIFE INSURANCE COMPANY OF
NORTH AMERICA; ADVANTAGE
This matter is before the court on “Plaintiff’s Motion to Remand” (doc. 8). This issue has
received thorough briefing, with Defendants LINA and Advantage 2000 filing briefs (docs. 13 &
14, respectively) setting forth the reasons for their opposition to the Plaintiff’s motion and
supporting brief (doc. 9), followed by Plaintiff’s reply brief (doc. 16) and LINA’s sur-reply (doc.
20). The court has entered a stay of all proceedings pending a ruling on the motion to remand
and the determination of the jurisdictional issue. After reviewing those filings, the evidentiary
submissions, and the applicable law, for the reasons stated in this Memorandum Opinion, the
court FINDS that the motion to remand is due to be DENIED.
I. PROCEDURAL HISTORY
In the first incarnation of this matter, Plaintiff Deborah Boyd filed a case in the Circuit
Court of St. Clair County in May of 2011 against Defendants Baptist Health System, Inc
(“BHS”), Life Insurance Company of North America (“LINA”), and Advantage 2000, alleging
state law claims arising out of the failure to provide disability benefits. Defendants removed the
case to this court, alleging federal question jurisdiction under 28 U.S.C. § 1331 based upon
preemption under the Employment Retirement Income Security Act, 29 U.S.C. § 1001-1461
(1974) (“ERISA”). Boyd filed a motion to remand, primarily on the grounds that she was
employed by BHS, an employer without an ERISA-preempted LTD plan because of its “church
plan” status. Defendants did not dispute that BHS is exempt from ERISA but contended that
Baptist Health Centers (“BHC”), not BHS, employed Boyd, and that BHC is an ERISA-covered
employer. In that case, CV-11-BE-1962-M, this court, noting a factual dispute among the parties
about the identity of Boyd’s employer, and found that Defendants had not met their burden to
prove that ERISA preempted Boyd’s state law claims. It explained:
Simply put, to trigger federal jurisdiction, Defendants must prove that BHC, the
ERISA-covered employer, was in fact Ms. Boyd’s employer. While Defendants
provided a number of documents suggesting BHC was Ms. Boyd’s employer, the
parties’ ample submissions only raise legitimate uncertainty regarding Ms. Boyd’s
actual employer. . . .Thus, Defendants have failed to sufficiently establish that BHC,
rather than BHS, employed Ms. Boyd for ERISA preemption and federal question
jurisdiction under 28 U.S.C. § 1331.
(Doc. 20, at 2-4). Therefore, the court remanded the case to the Circuit Court of St. Clair County
by an order dated July 29, 2011. (Doc. 21).
On February 1, 2012, Boyd filed a First Amended Complaint in the Circuit Court of St.
Clair County against the same Defendants. In contrast to the original Complaint, however,
Boyd’s Amended Complaint acknowledges that she “was employed by Baptist Health Centers,
Inc.” as opposed to BHS, although it claims that she “was provided disability Plan benefits
through Baptist Health Systems, Inc.’s disability Plan.” (Doc. 1-1, at 2, ¶ 2).
In this Amended
Complaint, Boyd asserts the following state law claims: Count I - Fraud against LINA and BHS
in misrepresenting material facts regarding her eligibility for disability insurance benefits; Count
II - Fraudulent Suppression of Material Facts against LINA and BHS regarding modification of
the disability Plan contract and the conditions precedent to her disability claim’s approval; Count
III - Unjust Enrichment against BHS; Count IV - Breach of Contract against LINA by failing to
provide disability insurance benefits to Boyd pursuant to the contract; Count V - Bad Faith
failure to pay insurance against LINA; Count VI - Fraud against Advantage 2000 based on
Ronald Morovitz of Advantage 2000’s representation to Boyd that he was her attorney when he
was not licensed to practice law in Alabama and based on his failure to disclose to Boyd the
conflict of interest of Advantage 2000 based on its confidential and proprietary relationship with
LINA; Count VII - Fraudulent Suppression against Advantage 2000 based upon Morovitz’s
concealing that he was not licensed to practice law in Alabama and that Advantage 2000 had a
conflict of interest; Count VIII - Breach of Fiduciary Duty against Advantage 2000 based on its
conflict of interest; Count IX - Violation of Alabama Legal Services Liability Act, Ala. Code § 65-570 et seq., against Advantage 2000.
On February 23, 2012, Defendants removed the case to federal court a second time based
upon Boyd’s acknowledgment, stating that “[t]his is the first paper provided by Plaintiff in this
litigation in which she has taken the position that BHC employed her.” Because Defendants have
always taken the position that BHC is an employer with an ERISA-preempted employee
disability plan, Defendants assert that “[h]aving for the first time pled herself out of this material
factual dispute, Plaintiff’s filing of the First Amended Complaint triggered this Court’s original
jurisdiction.” (Doc. 1, at 4). Defendants’ removal petition also referenced Plaintiff’s responses
to discovery requests in which Boyd admitted that BHC was her employer and produced W-2s
from 2008 and 2009 confirming that BHC was her employer.
On March 16, 2012, Boyd filed the motion to remand presently before this court. In
response to the motion, LINA filed a brief attaching the affidavit of Tracy Hill (doc. 13-1), which
attached several exhibits, including policy LK 960527 (doc. 13-1, at 5-35); the January 1, 2007
amendment to the group policy (doc. 13-1, at 36-46); the January 1, 2008 amendment to the
group policy (doc. 13-1, at 47-58); the Summary Plan for Group Policy LK960527 available on
the company intranet from January 1, 2008 through 2010 (doc. 13-1, at 59-93); and the Form
5500 filings for 2008 and 2009 that BHC files with the IRS regarding the employee benefit plan
in question (doc. 13-1, at 94-134).
On March 30, 2012, BHS filed a “Motion to Stay the Trial of this Action and to Compel
Arbitration,” requesting that this court stay the trial of this action until the arbitration of all
claims and issues raised in the suit (doc. 12). The court deferred ruling on BHS’s motion but sua
sponte stayed the case pending a determination of jurisdiction. BHS subsequently filed a similar
motion to keep the case “on hold” pending binding arbitration (doc. 17) and a notice, filed by
BHS, that arbitration is proceeding (doc. 21).
The court notes that some of the facts listed emanate from the affidavit of Tracy Hill and
its attachments, filed on April 2, 2012, after the removal of this matter. Jurisdictional facts must
be judged at the time of removal; however, this court may consider such post-removal evidence
in assessing its jurisdiction if that evidence is relevant to the period of time up to and including
the time of removal. See, e.g., Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 755-56 (11th
Boyd was an employee of BHC from March 24, 1994 to February 7, 2009. Prior to
January 1, 2007, Boyd participated in a Group Long-Term Disability Plan that LINA
administered and insured. The policyholder of that plan was originally Baptist Health System,
Inc., and when the policy was first issued in 2005, Group Policy LK-960527, eligible employees
of both BHC and BHS could participate in the plan under that group policy.
Significant changes occurred in 2007 and 2008. Effective January 1, 2007, the plan was
amended to separate eligible employees of BHC and BHS into classes. Effective January 1,
2008, a further amendment divided the plan into two separate plans, one for BHS employees and
one for BHC employees. From the 2008 amendment forward, eligible employees of BHC
remained insured under Group Policy LK-960527 but the policy no longer covered BHS
employees, who were insured under a separate plan with a different policy number. From the
2008 amendment onward, only BHC employees were eligible to enroll in this plan under Group
Policy LK-960527; BHC employees who submit claims for long-term disability benefits must do
so under Group Policy LK-960527; and the policyholder’s name for Group Policy LK-960527
was changed to “Baptist Health Centers, Inc.” (Doc. 31-1, at 3 & 48). Boyd acknowledges that,
“for the purposes of determining ERISA jurisdiction in this case” the insurance policy under
which she claims benefits, Group Policy LK-960527, and the Plan in force at the relevant period
is the document LINA filed with the Notice of Removal. (Pl.’s Reply Br. Doc. 16, at 6; Policy
Doc. 1-3, at 42 Amend. 1/1/8). That amended policy under which Boyd claims benefits, Group
Policy LK-960527, identifies BHC as its policyholder, and has done so since the amendment
effective January 1, 2008.
BHC is a for-profit entity that is not exempt from tax under Section 501 of Title 26 of the
United States Code, and it files an Annual Return/Report of Employee Benefit Plan with the IRS
on form 550 regarding the Group LTD Plan, including a schedule for disability benefits provided
under Group Policy LK-960527. BHC has not elected and could not elect for any BHC plan to
be a church plan as that term is defined by ERISA.
From January 1, 2008 through 2010, BHC was responsible for distributing Summary Plan
Descriptions to BHC employees regarding its Plan, and it claims to have fulfilled that
responsibility by making a Summary Plan Description (doc. 13-1, at 59-93) available to eligible
participants on BHC’s company intranet. Boyd claims that neither BHS nor BHC issued to her
any notice and/or summary of the change emanating from the 2008 amendment.
After January 1, 2008, Boyd remained enrolled in Group Policy LK-96-527 and was still
enrolled in that policy when she stopped working for BHC on or about February 7, 2009. She
filed a disability claim under that Group Policy with LINA, and LINA initially paid benefits from
May 8, 2009 to May 10, 2010. During the period that LINA paid benefits, it required Boyd to
apply for Social Security Disability benefits and referred her to Advantage 2000. Boyd contacted
Advantage 2000 and understood that Advantage 2000 would provide her with a Social Security
lawyer to represent her and to assist with that application. With the assistance of Ronald
Morovitz, an employee at Advantage 2000, she timely applied for Social Security benefits, and
on September 23, 2009, she received a favorable finding from the Social Security Administration
of total disability. Boyd has subsequently learned that Morovitz is not licensed to practice law in
the State of Alabama.
On May 3, 2010, LINA notified Boyd that it was terminating her disability insurance.
She appealed that denial, and on September 14, 2010, LINA confirmed its decision to terminate
her disability insurance benefits.
Boyd subsequently requested that Advantage 2000 deliver to her the file regarding her
application for Social Security benefits. On or about February 17, 2011, Advantage 2000 refused
to deliver Boyd’s file to her, advising her that the correspondence between Advantage 2000 and
LINA about her case was “confidential” and “proprietary.”
III. LEGAL STANDARD
“It is axiomatic that the jurisdiction of the federal courts is limited, with its scope defined
by the Constitution and by statute.” B., Inc. v. Miller Brewing Co., 663 F.2d 545, 548 (5th Cir.
1981). The “burden of showing the existence of federal subject matter jurisdiction” rests upon
the party removing the case to federal court. Conn. State Dental Ass’n v. Anthem Health Plans,
Inc., 591 F.3d 1337, 1343 (11th Cir. 2009). The removing party meets its burden by proving by a
preponderance of the evidence the facts supporting federal jurisdiction. McCormick v. Aderholt,
293 F.3d 1254, 1257 (11th Cir. 2002). “Because removal jurisdiction raises significant
federalism concerns, federal courts are directed to construe removal statutes strictly.” Univ. of S.
Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999). “Indeed, all doubts about
jurisdiction should be resolved in favor of remand to state court.” Id. Therefore, the federal
district court “must be certain of its jurisdiction before embarking upon a safari in search of
judgment on the merits.” Miller Brewing, 663 F.2d at 548-49.
“The test ordinarily applied for determining whether a claim arises under federal law is
whether a federal question appears on the face of the plaintiff’s well-pleaded complaint ....
Complete preemption is a narrow exception to the well-pleaded complaint rule and exists where
the preemptive force of a federal statute is so extraordinary that it converts an ordinary state law
claim into a statutory federal claim.” Conn. State Dental Ass’n, 591 F.3d at 1343. ERISA’s civil
enforcement provision, Section 502(a), has such “extraordinary” preemptive power that it
“converts an ordinary state common law complaint into one stating a federal claim for purposes
of the well-pleaded complaint rule.” Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65-66
(1987). Any “cause of action within the scope of the civil enforcement provisions of § 502(a)
[is] removable to federal court.” Id. at 66.
What a difference a year makes. A year ago, the parties spilled much ink arguing over
the final letter of the acronym of Boyd’s employer: was it BHC or BHS? Boyd then claimed that
her employer was BHS, an entity enjoying ERISA exemption, and this court found that although
Defendants had raised a factual dispute on the issue of her employer’s identity, they had failed to
establish that Boyd was mistaken. Because BHS was not covered by ERISA and because Boyd
had asserted only state law claims, the court found that Defendants had not met their burden to
establish ERISA preemption, and thus, that the case was due to be remanded.
In 2012, Boyd has apparently discovered and acknowledged her alphabetical mistake; she
filed an Amended Complaint in state court stating with confidence—and without so much as a
footnote explaining the reason for her about-face—that her employer was BHC after all.
Defendants removed the case for the second time, having received confirmation that they had
been right all along, but undoubtedly scratching their collective heads about why Boyd is now
admitting the very fact that she hotly disputed a year ago. In any case, after a time-consuming
dance back and forth between state and federal jurisdictions, the parties find themselves once
more in front of this court, still arguing whether this case falls within ERISA’s preemption and
whether it was properly removed: deja vu all over again.
With the issue over the identify of Boyd’s employer resolved, Boyd now claims that even
though her employer is not ERISA-exempt, this case nevertheless falls outside ERISA
preemption because (1) the entity that sponsored her long-term disability policy, BHS, is exempt
from ERISA governance and preemption; (2) the long-term disability policy and Plan contain no
"ERISA language;" and (3) Advantage 2000 is not an entity subject to ERISA governance and
preemption. To the extent that the phrasing of these issues reveals a potential misunderstanding
of the ERISA statute and what it governs, the court will provide a prefatory explanation of that
ERISA governs any “employee benefit plan,” which is defined as either an “employee
pension plan,” or an “employee welfare benefit plan.” 29 U.S.C. § 1002(3). An “employee
welfare benefit plan” is
any plan, fund, or program which was heretofore or is hereafter established or
maintained by an employer or by an employee organization, or by both, to the extent
that such plan, fund, or program was established or is maintained for the purpose of
providing for its participants or their beneficiaries, through the purchase of insurance
or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the
event of sickness, accident, disability, death, or unemployment . . . .
29 U.S.C. § 1002(1). As both parties acknowledge, the Eleventh Circuit has interpreted this
definition as requiring five elements: “(1) a ‘plan, fund, or program’ (2) established or
maintained (3) by an employer or by an employee organization, or by both, (4) for the purpose of
providing  benefits (5) to participants or their beneficiaries.” Donovan v. Dillingham, 688 F.2d
1367, 1371 (11th Cir. 1982). The Defendants’ affidavits establish most if not all of these
elements, and the only Donovan factors that the Plaintiff disputes are the second and third: the
identity of the entity that now maintains and sponsors the Plan.
A. Whether ERISA Governs Claims against LINA
1. The identity of the entity that sponsors the Plan
As discussed above, if LINA establishes that the entity sponsoring the Plan is Boyd’s
employer, BSC, an entity that all parties acknowledge is not exempt from ERISA, then LINA has
established all of the Donovan elements. The court notes that the confusion over which entity
sponsored the Plan arose because BHS was the original policyholder/sponsor of the Plan but,
after the establishment of the Plan, the entities involved made changes. As part of the changes,
the entities divided what was once one BHS-sponsored plan into two: a plan for BHS employees
and a separate plan for BHC employees. The parties now disagree over whether the Plan sponsor
changed as to Boyd’s benefits.
In her brief, Boyd states that although her employer is BHC, a copy of the employee
disability insurance summary provided to her identifies BHS as the Plan sponsor, not BHC. She
asserts that BHS is attempting to invoke ERISA merely by changing the name on the policy from
BHS to BHC as of January 1, 2008, when the sponsor in fact remains BHS. Attached as Exhibit
A to Boyd’s original brief filed in opposition to the motion to remand is an undated Plan
summary with the title “Long-Term Disability Insurance” on the cover and with the following
words printed on the cover’s right hand corner: “Developed for the employees of Baptist Health
System, Inc.” (Doc. 9-1, at 2) (bold in original). Attached to Boyd’s brief as Exhibit B is an
undated document entitled “Long Term Disability Insurance Cigna1” with the following sentence
at the bottom of the page: “Note: While BHC does not sponsor this plan, the BHC HR
department can supply you with information about this plan.” (Doc. 9-2, at 2). The parties later
identified Exhibit B as the “Total Rewards 2009 Enrollment Guide” summary of benefits. Boyd
points to this language in the two documents provided to her as evidence that, even though BHS
is not her employer, BHS is the Plan sponsor of her employee benefits Plan. Her argument
proceeds that because the Plan sponsor is a church-plan exempt from ERISA, any claims brought
for failure to pay under the plan are similarly exempt from ERISA.
On the other hand, Defendant LINA asserts that Boyd is failing to recognize the change in
Plan sponsor that occurred in January of 2008. As of that date, the policy identified BHC as the
policyholder and Plan Sponsor. Thus, a year later in February of 2009, the date Boyd first
claimed disability benefits, she was insured under the BHC Policy with BHC as the Plan
Administrator and Sponsor over that Plan.
The court agrees with Defendant LINA. LINA has established that the policy under
which Boyd claims benefits identifies BHC as the policyholder and Plan Sponsor as of the date
Boyd first claimed disability benefits. The BHC Booklet/Certificate, with a certificate effective
date of January 1, 2008, similarly identifies BHC as the Plan Administrator and states that the
“Plan is established and maintained by Baptist Health Centers, Inc. Insured Benefit Plans, the
Plan Sponsor.” (Doc. 13-1, at 70 & 86). It defines the “Policyholder” as the “Employer,” which
Boyd now acknowledges is BHC. (Doc. 13-1, at 83). Boyd has produced no Plan documents
The court notes that the briefs and documents use Cigna and LINA interchangeably, and
the parties appear to agree that although many of the documents list the name “Cigna,” LINA is
the proper party Defendant.
that establish otherwise; the documents upon which she relies, Exhibits A & B, certainly do not
alter those Plan documents. Exhibit A is undated, and all parties acknowledge that the Plan
Sponsor was originally BHS. Although Exhibit B, the “Total Rewards 2009 Enrollment Guide,”
was apparently generated after the January 1, 2008 change, it was not a Plan document. Exhibit
B simply shows that BHC failed to catch all of the language on information provided to
employees that should have been changed or removed as part of the transition to two policies.
The Plan documents consistently reflect that BHC was the policyholder and Plan Sponsor as of
January 1, 2008; a notation that inadvertently remained on a non-Plan document cannot and does
not render those Plan documents ambiguous nor does it alter the identity of the policyholder and
LINA has also established that BHC is a for-profit entity that is not exempt from tax
under Section 501. For example, it has presented to the court copies of BHC’s Form 5500 tax
return filings with the IRS for the years 2008 and 2009 regarding the Group LTD Plan in
question. Boyd has presented no evidence to counter that evidence of BHC’s for-profit status.
The court acknowledges the Plaintiff’s objection in her Reply brief that the tax returns for 2008
were signed in 2009; however, as Defendant points out in its Sur-Reply brief, all tax returns for a
particular year are filed the following year. Having established that the Plan sponsor was BHC,
a non-exempt entity, LINA has established all elements of the test for ERISA governance.
Further, the court finds that Boyd has not established that the Plan falls within any exceptions to
ERISA coverage. As a result, the court finds that ERISA governs this suit and the ERISA
preemption applies, supporting federal jurisdiction.
2. Failure to notify
Boyd asserts that if the Plan Sponsor did indeed change to BHC, Boyd did not receive
notification of that change. If Boyd is arguing that the alleged failure to notify Boyd of the
change somehow destroys ERISA’s governance and preemption, she provides no statutory or
case law support for that position, and the court is aware of none.
3. Lack of ERISA language
Boyd further argues that ERISA does not govern because the Plan documents contain no
ERISA language. This argument is misplaced. The court looks to the ERISA statute to
determine whether ERISA governs. As discussed above, the Eleventh Circuit has interpreted that
statute’s definition of plans falling under ERISA based on the Donovan factors, not based upon
whether the plan documents contain any magic words referencing ERISA. Indeed, the “test is
not whether an employer intended the plan to be governed by ERISA, but rather on whether an
employer intended to establish or maintain a plan to provide benefits to its employees as part of
the employment relationship.” Shipley v. Provident Life & Accident Ins. Co., 352 F. Supp. 2d
1213, 1217 (S.D. Ala. 2004) (holding that the plan at issue was an ERISA plan because it was
established or maintained as an employee welfare benefits plan, and the fact that the plan never
mentioned ERISA did not prevent ERISA’s governance of it). The court has found that the Plan
meets that test in the instant case. Further, the court notes that the Booklet Certificate does
contain ERISA language.
4. Alleged Contradictory Documents
Finally, in her Reply brief, Boyd maintains that LINA is presenting two different
documents as Policy #LK-960527. The two documents that she references are (1) the 51-page
Policy as amended, attached to the Notice of Removal as Document 1-3; and (2) the 21-page
BHC Booklet Certificate (the Summary Plan Description for the BHC Plan), filed as Attachment
D to Tracy Hill’s Affidavit (doc. 13-1, at 59-93). The court does not agree that these documents
are contradictory. One is a policy, and one is a certificate/summary plan description for that
policy that is written “in a manner calculated to be understood by the average plan participant,”
as the ERISA code section regarding summary plan descriptions requires. See 29 U.S.C. §
1022(a). The court would not expect both documents to be identical and finds no relevant,
material conflict between them as of the relevant period. As discussed previously, the third
document to which Boyd refers is the “Total Rewards 2009 Enrollment Guide,” which is not a
policy or a Plan document.
For all of the above reasons, the court finds that ERISA governs the Plan in question and
that the court has jurisdiction over the claims against LINA. The court notes that, in addition to
asserting against LINA a breach of disability contract claim (Count IV) and a claim of bad faith
failure to pay disability insurance benefits (Count V), the Plaintiff also asserts claims against
LINA for fraud regarding representations made about disability insurance coverage (Count I);
suppression of material facts concerning her disability Plan and/or disability insurance coverage
(Count II); and bad faith failure to pay disability insurance benefits. However, ERISA case law
is clear that such claims fall within ERISA preemption. See Anderson v. UNUM Provident
Corp., 369 F.3d 1257, 1268-69 (11th Cir. 2004) (affirming district court’s grant of summary
judgment, finding that state law claims of fraud, suppression, bad faith and breach of contract are
preempted by ERISA). At this point, the court need not address how the Complaint needs to be
revised and/or which claims need to be dismissed.
B. Claims against BHS
The court notes that BHS has not filed an Answer, a Motion to Dismiss, or a response to
the motion to remand. Rather, it filed a motion to compel arbitration and to stay these
proceedings, and a separate motion to keep the case “on hold” pending binding arbitration of the
ERISA issue. However, the discussion and rulings above apply to the jurisdiction over claims
against BHS. The court will enter a separate order on these motions.
C. Claims against Advantage 2000 Consultants, Inc.
The court has previously dismissed with prejudice all claims asserted against Defendant
Advantage 2000 Consultants. (Doc. 23).
Accordingly, although this matter was a case of deja vu for this court, the court does not
send it back to St. Clair County for a second look and start the cycle encore une fois; the case
remains where it is – at least until the court addresses the motion to compel arbitration, and c’est
Dated this 11th day of January, 2013.
KARON OWEN BOWDRE
UNITED STATES DISTRICT JUDGE
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