Coast Plaza Doctors Hospital v. Arkansas Blue Cross and Blue Shield et al

Filing 34

ORDER by Judge Dean D. Pregerson GRANTING 21 Plaintiff's Motion to Remand: For the reasons stated above, Plaintiff's motion to remand is GRANTED. Each party shall bear its own costs. In addition, the Motions to Dismiss (docket numbers 7, 10 and 13) are vacated. (see document for further details) MD JS-6. Case Terminated. (Attachments: # 1 CV-103 - Letter of Transmittal - Remand to Superior Court) (bm)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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COAST PLAZA DOCTORS
HOSPITAL, a California
limited partnership,

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Plaintiff,
v.
ARKANSAS BLUE CROSS AND BLUE
SHIELD, an Arkansas
corporation; BLUE CROSS BLUE
SHIELD OF GEORGIA, INC., a
Georgia corporation; HEALTH
CARE SERVICE CORPORATION,
d/b/a BLUE CROSS BLUE SHIELD
OF TEXAS and d/b/a BLUE
CROSS BLUE SHIELD OF
ILLINOIS, an Illinois
corporation; COMMUNITY
INSURANCE COMPANY d/b/a/
ANTHEM BLUE CROSS AND BLUE
SHIELD FO OHIO, an Ohio
corporation,
Defendants.
___________________________

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Case No. CV 10-06927 DDP (JEMx)
ORDER GRANTING PLAINTIFF’S MOTION
TO REMAND

[Motion filed on 10/25/10]

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Presently before the court is Plaintiff Coast Plaza Doctors

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Hospital (Coast Plaza)’s Motion to Remand to state court.

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reviewing the parties’ moving papers and hearing oral argument, the

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court grants the motion and adopts the following order.

After

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I.

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Background
Defendants are insurance companies organized in Arkansas,

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Georgia, Illinois, Texas, and Ohio.

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Defendants are members of “BlueCard,” a nationwide network of

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locally operated Blue Cross Blue Shield companies.

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Under the “BlueCard” program, Defendants’ insureds can receive

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healthcare services in any BlueCard network member’s service area.

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(Id. ¶ 15.)

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submit claims for payment directly to the local Blue Cross Blue

(Complaint ¶¶ 4-7.)

(Id. ¶ 14.)

Medical providers who treat Defendants’ insureds

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Shield plan.

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Blue Cross Blue Shield insurance plan could receive treatment from

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a medical provider within Georgia Blue Cross Blue Shields’s service

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area.

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Cross Blue Shield.

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(Id. ¶ 16.)

For example, a member of an Arkansas

The Georgia medical provider would then bill Arkansas Blue
(See, e.g., id. ¶ 25.)

Local BlueCard members, including BlueCard members in

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California, are responsible for authorizing and pricing services to

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BlueCard members’ insureds. (Id. ¶¶ 10, 12, 19.)

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entities negotiate prices for services with “in-network” medical

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providers.

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“in-network” contract rates negotiated by the local entity.

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example, when an “in-network” Georgia provider treats a member of

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an Arkansas Blue Cross Blue Shield plan, the Georgia provider bills

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Arkansas Blue Cross Blue Shield at the “in-network” rate negotiated

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by Georgia Blue Cross Blue Shield.

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(Id. 17.)

Local BlueCard

Out-of-state BlueCard members enjoy the low
For

Many medical providers, however, choose to remain “out-of-

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network.”

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with BlueCard entities, and charge BlueCard entities more than “in-

(Id. ¶ 18.)

“Out-of-network” providers do not contract

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network” providers do.

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“out-of network” provider.

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(Id. ¶ 19.)

Plaintiff Coast Plaza is an

(Id. ¶ 18.)

Coast Plaza provided medical treatment to Defendants’

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insureds.

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insurance companies, Defendants, pay Coast Plaza directly.

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22).

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benefits to Coast Plaza.

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medical services to Coast Plaza, however, Defendants issued checks

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to the BlueCard insureds who received treatment at Coast Plaza.

(Id. ¶ 1.)

The insureds all agreed to have their

Defendants’ insureds therefore all assigned their BlueCard
(Id.)

Instead of issuing payment for

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(Id. at 23.)

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payments from Defendants’ insureds.

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(Id. ¶

Coast Plaza is typically unable to collect those
(Id. ¶ 23.)

Coast Plaza filed suit against Defendants in California state

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court for breach of contract, violations of various state statutes,

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services rendered, and declaratory relief.

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that Defendants intentionally paid patients, rather than Coast

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Plaza, in retaliation for Coast Plaza’s refusal to become an in-

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network provider.

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this court, and Coast Plaza now moves to remand to state court.

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II.

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(Id. ¶ 20.)

Coast Plaza alleges

Defendants removed the matter to

Legal Standard
A defendant removing on diversity grounds bears the burden of

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establishing that the amount in controversy exceeds $75,000.

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Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir.

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2007).

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jurisdiction or for “any defect in removal procedure.”

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1447(c). Generally, there is a strong presumption in favor of

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remand. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398,

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403-04 (9th Cir. 1996).

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restrictively, and doubts about removability are resolved in favor

Remand may also be ordered for lack of subject matter
28 U.S.C. §

The removal statutes are construed

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of remand.

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,

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108-09 (1941); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.

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1992).

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III. Discussion

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A. Amount in Controversy

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Coast Plaza first argues that there is no diversity

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jurisdiction because the amount in controversy is less than

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$75,000.

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the amount in controversy with respect to each defendant.

(Motion at 3.)

As an initial matter, the court looks to
Claims

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against multiple defendants may only be aggregated to satisfy the

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amount in controversy requirement if the defendants are jointly and

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severally liable.

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676, 683 (9th Cir. 1976).

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United States v. S. Pac. Transp. Co., 543 F.2d
That is not the case here.

The complaint does not clearly describe the amount sought from

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each defendant.

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defendant, two different amounts: the amount billed for medical

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services and the amount actually paid out to patients.

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difference is substantial.

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one bill for $11,951.10, of which only $704.81 was paid to the

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patient.

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many claims are at issue, let alone the total value of those

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claims.

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The complaint refers, with respect to each

The

For example, the complaint describes

(Complaint ¶ 25(d).)

The complaint does not specify how

Nevertheless, Defendants bear the burden of showing, by a

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preponderance of the evidence, that the amount in controversy

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exceeds $75,000.

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failed to meet this burden.

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references to “payments” and “checks.”

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that Coast Plaza seeks amounts paid out to patients, rather than

Guglielmino, 506 F.3d at 699.

Defendants have

First, the complaint makes numerous

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These references suggest

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the total amount billed.

More tellingly, Coast Plaza has submitted

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evidence that it indeed seeks only the amounts actually paid out to

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Defendants’ insureds, and not the total amount billed.1

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Declaration of Katherine R. Miller ¶ 6).

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The preponderance of the evidence, therefore, establishes that

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Coast Plaza seeks less than $75,000 from each defendant.

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Accordingly, this court does not have diversity jurisdiction.

(Corrected

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B.

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Defendants also argue that this court has jurisdiction because

ERISA Preemption

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Coast Plaza’s state law claims are preempted by Section 502(a) of

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the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.

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1132(a).

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(1) an individual, at some point in time, could have brought the

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claim under ERISA § 502(a)(1)(B) and (2) where there is no other

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independent legal duty that is implicated by a defendant’s

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actions.”

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F.3d 941, 946 (9th Cir. 2009) (citing Aetna Health Inc. v. Davila,

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542 U.S. 200, 210 (2004).

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or beneficiaries to bring an action “to recover benefits due to him

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under the terms of his plan, to enforce his rights under the terms

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of the plan, or to clarify his rights to future benefits under the

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terms of the plan.”

(Opp. at 7.)

A state claim “is completely preempted if

Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581

Section 502(a)(1)(B) allows participants

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The court rejects Defendants’ argument that Coast Plaza’s
refusal to sign a sworn affidavit that it seeks less than $75,000
proves that the amount in controversy requirement has been met.
(Opp’n at 1 n.1). Defendants fail to mention that their proposed
stipulation included attorneys fees. (Miller Dec. ¶ 8.) While
attorneys fees may be considered when an underlying statute
authorizes such fees, Defendants point to no statutory basis for
the grant of attorneys fees. See Galt v. JSS Scandinavia, 142 F.3d
1150, 1155-56 (9th Cir. 1998).
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It is well established that “ERISA preempts the state law

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claims of a provider suing as an assignee of a beneficiary’s rights

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to benefits under an ERISA plan.”

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Anesthesia Care Associates Medical Group, Inc., 187 F.3d 1045, 1051

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(9th Cir. 1999) (citing The Meadows v. Employers Health Ins., 47

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F.3d 1006, 1008 (9th Cir. 1995) (internal quotation omitted). Here,

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the parties do not dispute that ERISA plan beneficiaries assigned

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their rights to Plaintiff.

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provider has received an assignment and can potentially bring an

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ERISA suit “provides no basis to conclude that the mere fact of

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assignment converts the Providers’ [non-ERISA] claims into claims

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to recover benefits under the terms of an ERISA plan.”

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Hosp., 581 F.3d at 949 (internal quotation and alteration

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omitted).

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Plaintiff’s complaint implicates “some other legal duty beyond that

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imposed by an ERISA plan.” Id.

Blue Cross of California v.

However, the fact that a medical

Marin Gen.

The court’s task, therefore, is to determine whether

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The Ninth Circuit has held that ERISA does not preempt claims
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founded upon a contractual relationship between an insurer and a
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medical provider. In Blue Cross, “in-network” medical providers who
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had entered into agreements directly with the insurer challenged
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the insurer’s changes to reimbursement rates.

Blue Cross, 1087

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F.3d at 1049.

The insurer argued that ERISA preempted the

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providers’ claims because the providers’ right to payment were
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dependent on assignments of ERISA plan beneficiaries. Id. at 1050.
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The court disagreed, holding that the providers’ claims arose not
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from the ERISA plan, but from the providers’ independent
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contractual relationship with the insurer. Id. at 1051.
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In so

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holding, the court observed that “the bare fact that the [ERISA]

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Plan may be consulted in the course of litigating a state-law claim

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does not require that the claim be extinguished by ERISA’s

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enforcement provision.” Id.; See also Catholic Healthcare West-Bay

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Area v. Seafarers Health Benefit Plan, 321 Fed.Appx. 563, 564 (9th

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Cir. 2008) (“[W]here a third-party medical provider sues an ERISA

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plan based on contractual obligations arising directly between the

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provider and the ERISA plan (or for misrepresentations of coverage

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made by the ERISA plan to the provider), no ERISA-governed

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relationship is implicated and the claim is not preempted”); Hoag

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Mem’l Hosp. v. Managed Care Administrators, 820 F.Supp. 1232 (C.D.

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Cal. 1993) (concluding that ERISA did not preempt provider’s

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negligent misrepresentation claim against an insurer); Doctors Med.

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Center of Modesto, Inc. v. The Guardian Life Insurance Co. of

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America, 2009 WL 179681 (E.D. Cal. 2009) (concluding ERISA did not

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preempt provider’s intentional interference with contractual

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relations claim against insurer).

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Defendants argue that these ERISA preemption cases do not

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control here in light of Cleghorn v. Blue Shield of California, 408

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F.3d 1222 (9th Cir. 2005). (Opp. at 10).

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Circuit held that a plaintiff’s claim for reimbursement for medical

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care was preempted by ERISA because “[a]ny duty or liability that

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Blue Shield had to reimburse him would exist here only because of

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Blue Shield’s administration of ERISA-regulated benefit plans.”

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In Cleghorn, the Ninth

Cleghorn, 408 F.3d 1222, 1226 (internal quotation and alteration

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omitted).

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case.

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claim for medical benefits under an ERISA plan was denied by the

Cleghorn, however, is distinguishable from the instant

Critically, Cleghorn involved an individual plaintiff whose

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insurer.

Cleghorn, 408 F.3d at 1223.

The court found that,

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despite the plaintiff’s artful pleading, the “only factual basis

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for relief pleaded in [the individual plaintiff’s] complaint is the

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refusal of Blue Shield to reimburse him for the emergency medical

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care he received,” and that such a claim “cannot be regarded as

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independent of ERISA.” Id. at 1226.

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Here, in contrast, Plaintiff, has implicated an independent

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legal relationship; namely, an implied-in-law contract between a

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medical provider and insurers.

Defendants assert that such a

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relationship does not constitute a “direct” contractual

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relationship of the same nature as those present in “in network”

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provider agreements or oral contracts of the type at issue in

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Hoag.

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and insurers are directly linked by an implied contract. Bell v.

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Blue Cross of California, 131 Cal.App.4th 211, 218 (2005).

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Bell court explained that medical providers must render emergency

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services without regard to a patient’s ability to pay. Bell, 131

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Cal.App.4th at 220.

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1371.4, an insurer must “reimburse providers for emergency serves

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and care provided to its enrollees.”

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1371.4(b); Bell, 131 Cal.App.4th at 220.

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concluded that medical providers have an “implied-in-law right to

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recover for the reasonable value of their services.” Bell, 131

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Cal.Appp.4th at 221; See also Prospect Med. Group, Inc. v.

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Northridge Emergency Med. Group, 45 Cal. 4th 497, 507-508 (2009)

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([D]octors may directly sue [insurers] to resolve billing disputes

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. . . ”) (emphasis added).

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Breach of Implied-In-Law contract implicates a legal duty owed by

California courts, however, have held that medical providers

The

Under California Health & Safety Code Sec.

Cal. Health & Safety Sec.
The court therefore

Plaintiff’s Second Cause of Action for

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Defendants-insurers that is independent of any ERISA-governed

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plan.

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state law claims.

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IV.

ERISA does not, therefore, completely preempt Plaintiff’s

Conclusion

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For the reasons stated above, Plaintiff’s motion to remand is
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GRANTED.

Each party shall bear its own costs.

In addition, the

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Motions to Dismiss (docket numbers 7, 10 and 13) are vacated.
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IT IS SO ORDERED.

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Dated: August 25, 2011
DEAN D. PREGERSON
United States District Judge

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