Stevenson v. Aetna Health of California, Inc. et al

Filing 11

ORDER on Motion to Dismiss and Motion to Remand [Doc. Nos. 3 , 6 ]. Signed by Judge Cathy Ann Bencivengo on 4/10/2017. (jjg)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9
10

SOUTHERN DISTRICT OF CALIFORNIA
JESSE STEVENSON,

Case No.: 3:17-cv-0107-CAB-KSC
Plaintiff,

11
12

v.

13

ORDER ON MOTION TO DISMISS
AND MOTION TO REMAND
[Doc. Nos. 3, 6]

AETNA HEALTH OF CALIFORNIA,
INC.; SHARP REES STEALY
MEDICAL GROUP; and DOES 1 to 10,
Inclusive,

14
15

Defendants.

16
17
18

This matter comes before the Court on Defendant Aetna Health of California Inc.’s

19

(“Aetna”) motion to dismiss [Doc No. 3] and Plaintiff’s motion to remand [Doc. No. 6].

20

The motions have been fully briefed, and the Court finds them suitable for submission

21

without oral arguments. For the following reasons, Defendant’s motion is granted and

22

Plaintiff’s motion is denied.

23

I.

Background

24

On November 28, 2016, Plaintiff brought suit in the Superior Court of the State of

25

California against Sharp Rees Stealy Medical Group (“Sharp”) and Aetna (collectively

26

“Defendants”) for “unreasonable denial of benefits” in violation of Civil Code § 3428.

27

[Doc No. 1 at 5-12 (“the complaint”).] His factual allegations, accepted as true, are as

28

follows.
1
3:17-cv-0107-CAB-KSC

1

Plaintiff was a subscriber to Defendants’ health care plan. [Doc No. 1 at 10 ¶ 25. 1]

2

In April 2015, Plaintiff was a victim of a preventable medical error at the hands of a Sharp

3

affiliated physician, Wilifred Kearse, MD. [Id. at 7 ¶ 11.] As a consequence of the error,

4

Plaintiff developed Complex Regional Pain Syndrome (“CRPS”) that “has manifested as

5

intractable, 24/7, burning, searing, life-altering pain primarily centered in Plaintiff’s groin

6

region.” [Id. at ¶ 12.] For patients who suffer from CRPS in these areas, the FDA approved

7

Dorsal Root Ganglion (“DRG”) stimulation is considered a breakthrough technology. [Id.

8

at 8 ¶ 16.]

9

Since the Spring of 2016, Plaintiff has attempted to obtain approval from Defendants

10

for a DRG stimulator2 but Defendants have continued to “refuse to coordinate this

11

provision of reasonably necessary medical care.” [Id. at 9 ¶ 18.] After filing multiple

12

appeals and exhausting administrative remedies, on September 30, 2016, Plaintiff was

13

informed by an unidentified Sharp representative that he would be provided with “whatever

14

care [he] needed.” [Id. at ¶ 19.] The offer was recanted three days later and Plaintiff was

15

encouraged to seek the opinion of a pain specialist who performed DRG stimulation. [Id.]

16

Plaintiff sought such an opinion, and the pain specialist confirmed that Plaintiff was an

17

ideal candidate for DRG stimulation. [Id.]

18

Upon receiving confirmation of Plaintiff’s candidacy, Defendants referred Plaintiff

19

to an in-network provider to assess if DRG stimulation was an appropriate treatment

20

option. [Id. at ¶ 20.] The in-network physician recognized that the procedure he could

21

provide was not as effective or targeted as DRG stimulation and that Plaintiff was an ideal

22

candidate for the DRG procedure. [Id.]

23

Defendants refused to approve the DRG stimulation as a “reasonably necessary

24

medical treatment” for Plaintiff based on the purported experimental nature of the

25
26
1

27
28

Document numbers and page references are to those assigned by CM/ECF for the docket entry.
In his complaint, Plaintiff asserts that conventional spinal cord stimulation treatment has proven to be
largely ineffective for those who suffer from CRPS in the pelvic and lower extremities regions. [Doc. No.
1 at 8 ¶ 15.]
2

2
3:17-cv-0107-CAB-KSC

1

procedure. [Id. at 9-10 ¶ 21.] Denial on these grounds is “directly contrary to how

2

‘experimental’ procedures are defined in Plaintiff’s health insurance agreement with

3

Defendants.” [Id. at 10:8-9.]

4

Based on these allegations Plaintiff sued Defendants, pursuant to Civil Code section

5

3428, for failure “to timely provide medically necessary health care to Plaintiff by failing

6

to exercise ordinary care in addressing Plaintiff’s medical condition.” [Id. at 10 ¶ 27.]

7

Further, Plaintiff complains that the failure to approve and provide DRG stimulation

8

treatment was made in bad faith and predicated upon a scheme to retaliate against Plaintiff

9

for filing a medical malpractice suit against Dr. Kearse. [Id. at 11 ¶ 29-30.] Plaintiff seeks

10

damages for pain, medical expenses, earnings losses, along with punitive damages. [Id. at

11

11.]

12

On January 20, 2017, Aetna removed the action to this Court pursuant to the

13

provisions of 28 U.S.C. § 1441(a) [Doc. No. 1] and filed a motion to dismiss on January

14

26, 2017 pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) [Doc. No. 3].

15

On February 16, 2017, Plaintiff filed both his opposition to the motion to dismiss [Doc.

16

No. 5] and a motion to remand [Doc. No. 6]. In light of the commonality of arguments to

17

both the motion to dismiss and the motion to remand, the Court will consider them together.

18

II.

19

A defendant may remove any civil action from state court to federal district court if

Legal Standard

20

the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a).

“The

21

party invoking the removal statute bears the burden of establishing federal jurisdiction.”

22

Etheridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citation omitted).

23

See also Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 944 (9th Cir.

24

2009) (the burden of establishing federal subject matter jurisdiction falls on the party

25

invoking removal). In rare circumstances a federal law that completely preempts state law

26

will support removal, irrespective of whether or not a federal question exists on the face of

27

the complaint. ARCO Envtl. Remediation, LLC. v. Dep’t of Health and Envtl. Quality of

28

Montana, 213 F.3d 1108, 1114 (9th Cir. 2000).
3
3:17-cv-0107-CAB-KSC

1

But, if federal jurisdiction is absent from the commencement of a case, [a case] is

2

not “properly removed” – and therefore need not “stay [] removed.”” Polo v. Innoventions

3

Int’l., LLC, 833 F.3d 1193, 1197 (9th Cir. 2016) (citing United Steel, Paper & Forestry,

4

Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union v. Shell Oil Co., 602 F.3d

5

1087, 1091, 1092 n.3 (9th Cir. 2010)). See also 28 U.S.C § 1447(c).3

6

correct remedy when subject matter jurisdiction is absent because “[s]tate courts are not

7

bound by the constraints of Article III.” Polo, 833 F.3d at 1196.4

Remand is the

8

Under Rule 12(b)(6), a party may bring a motion to dismiss based on the failure to

9

state a claim upon which relief may be granted.5 A Rule 12(b)(6) motion challenges the

10

sufficiency of a complaint as failing to allege “enough facts to state a claim to relief that is

11

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). For purposes

12

of ruling on a Rule 12(b)(6) motion, the court “accept[s] factual allegations in the complaint

13

as true and construe[s] the pleadings in the light most favorable to the non-moving party.”

14

Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But, a

15

“pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of

16

a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

17

Twombly, 550 U.S. at 555).

18

III.

19

In its notice of removal, Defendant Aetna attested that this Court “has original

20

jurisdiction under 28 U.S.C. § 1331, and is one which may be removed to this Court by

Discussion

21
22

28 U.S.C. § 1447(c) specifically provides that “[i]f at any time before final judgment it appears that the
district court lacks subject matter jurisdiction, the case shall be remanded.”
4
The “irreducible constitutional minimum” of Article III requires that: “(1) plaintiff suffered an injury in
fact, (2) the injury is fairly traceable to the challenged conduct, and (3) the injury is likely to be redressed
by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (quotation marks
and citation omitted). The question of constitutional standing is a “threshold matter central to [the Court’s]
subject matter jurisdiction, and the Court must assure itself that the constitutional standing requirements
are satisfied before proceeding to the merits.” Fulfillment Svcs Inc. v. United Parcel Svc., Inc., 528 F.3d
614, 618 (9th Cir. 2008).
5
Defendant also moves to dismiss under Federal Rule of Civil Procedure 12(b)(1) The rule allows a
party to move to dismiss based on the court’s lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1).
3

23
24
25
26
27
28

4
3:17-cv-0107-CAB-KSC

1

Aetna pursuant to the provisions of 28 U.S.C. § 1441(a) in that it arises under the

2

Employment Retirement Income Security Act of 19746 (“ERISA”).” [Doc. No. 1 at 2: 5-

3

8.] Subsequently, Aetna has moved for dismissal under Rules 12(b)(1) and 12(b)(6) on the

4

grounds that Plaintiff’s claim is completely preempted by the Employment Retirement

5

Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq. [Doc. No. 3.] In its dismissal

6

motion Aetna argues that sections 502(a) and 514(a) of ERISA provide two separate

7

reasons for preemption and support dismissal with prejudice.7

8

Plaintiff counters that his state law claim is outside the ambit of complete preemption

9

under § 502(a). He asserts that he has pled an independent legal duty owed by Defendants

10

and that Aetna overlooks the fact that both it and Sharp, “its Independent Practice

11

Association co-defendant,” are “inextricably intertwined” in Plaintiff’s claim of bad faith

12

denial of care, and that his claim is a “mixed eligibility decision” that is not fiduciary in

13

nature. [Doc. No. 5.] In his motion for remand Plaintiff asserts that, notwithstanding

14

Defendant Aetna’s defense of conflict preemption, the absence of complete preemption

15

leaves this Court without subject matter jurisdiction. [Doc. No. 6.]

16

The fundamental question related to both motions is whether Plaintiff’s state-law

17

claim is completely preempted under ERISA § 502(a)(1)(B) and thus whether the case was

18

properly removed from state to federal court. Removal was proper only if Plaintiff’s claim

19

is completely pre-empted. Should Plaintiff establish that ERISA is not applicable it would

20

necessitate a remand and would demonstrate that Aetna’s motion to dismiss is without

21
22
23
ERISA was enacted to “protect . . . the interests of participants in employee benefit plans and their
beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and
other information with respect thereto, by establishing standards of conduct, responsibility, and obligation
for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready
access to the Federal courts.” 29 U.S.C. § 1001(b)
7
In support of its position Defendant requested the Court take judicial notice that Plaintiff’s health care
plan is sponsored by his employer ADP Total Source Services, Inc., and is therefore an ERISA plan. [Doc.
No 3-1 at 3 n.1.] Plaintiff does not dispute that his insurance plan is an employee benefit plan under
ERISA.
6

24
25
26
27
28

5
3:17-cv-0107-CAB-KSC

1

merit. Conversely, if Aetna establishes that Plaintiff’s claim is preempted, then they have

2

established that this Court has jurisdiction over the matter.

3

A. Motion to Remand

4

A party seeking removal from state court based on federal jurisdiction must show

5

either that the state law causes of action are completely preempted by §502(a) of ERISA,

6

or that some other basis exists for federal question jurisdiction.” Marin, 581 F.3d at 945.

7

See also Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8 (2003) (“explaining that a state

8

claim can be removed “when a federal statute wholly displaces the state-law cause of action

9

through complete pre-emption.”). “This is so because when the federal statute completely

10

preempts the state-law cause of action, a claim which comes within the scope of that cause

11

of action, even if pleaded in terms of state law, is in reality based on federal law.” Aetna

12

Health Inc. v. Davila, 542 U.S. 200, 207-208 (2004) (internal quotation and citation

13

omitted). However, “if the doctrine of complete preemption does not apply, . . . the district

14

court [is] without subject matter jurisdiction.” Marin, 581 F.3d at 944.

15

In enacting ERISA, Congress intended to create a uniform regulatory regime over

16

employee benefit plans. Davila, 542 U.S. at 208. In order to accomplish its goal, § 502(A)

17

was carefully crafted and provides a detailed and comprehensive civil enforcement scheme

18

that includes certain remedies and precludes others. See 29 U.S.C. §1132(a); Davila, 542

19

U.S. at 208-210; Mass. Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985).

20

Therefore, “any state-law cause of action that duplicates, supplements, or supplants the

21

ERISA civil enforcement remedy conflicts with the clear congressional intent to make the

22

ERISA remedy exclusive and is therefore pre-empted.” Davila, 542 U.S. at 209.

23

A suit complaining of a denial of coverage of medical care falls within the scope of

24

ERISA § 502(a)(1)(B), “where the individual is entitled to such coverage only because of

25

the terms of an ERISA-regulated employee benefit plan, and where no legal duty (state or

26

federal) independent of ERISA or the plan terms is violated.”

27

If the state law claims are entirely encompassed by § 502(a) the complaint is then converted

28

into “one stating a federal claim for purposed of the well-pleaded complaint rule.” Metro.

Davila, 542 U.S. at 210.

6
3:17-cv-0107-CAB-KSC

1

Life Ins. Co. v. Taylor, 481 U.S. 59, 65-66 (1987). Whereas a defense of conflict

2

preemption under § 514(a)8 of ERISA is commonly found to be “an insufficient basis for

3

original federal question jurisdiction under 1331(a) and removal jurisdiction under §

4

1441(a).” Marin, 581 F.3d at 945. See also Metro. Life, 481 U.S. at 64 (“ERISA

5

preemption [under §514], without more, does not convert a state claim into an action

6

arising under federal law.”). Regardless of whether or not a defendant has a ‘conflict

7

preemption’ defense within the meaning of § 514(a) because plaintiff’s claims relate to the

8

ERISA plan, if complete preemption is inapplicable then the district court is without

9

subject matter jurisdiction. Marin, 581 F.3d at 945. Thus, a defendant seeking to justify

10

removal on ERISA grounds must show that at least one of the state law causes of action is

11

completely preempted by § 502(a). Id.9

12

Defendant argues that Plaintiff’s state law cause of action falls within the scope of §

13

502 and is therefore completely preempted. ERISA § 502(a)(1)(B) provides that a plan

14

participant or beneficiary may bring a civil action “to recover benefits due to him under the

15

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

16

future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). If Plaintiff’s state-

17

law cause of action comes within the scope of § 502(a)(1)(B) then it is completely

18

preempted, and the only possible cause of action is under § 502(a)(1)(B). Marin, 581 F.3d

19
20
21
22
23
24
25
26
27
28

§ 514(a) provides that the relevant provisions of ERISA “shall supersede any and all State laws insofar
as they may . . . relate to any employee benefit plan described in section 1003(a) of the title and not
exempt under section 1003(b).” 29 U.S.C. § 1144(a).
9
Since “complete preemption under § 502(a) is really a jurisdictional rather than a preemption doctrine,
[as it] confers exclusive federal jurisdiction in certain instances where Congress intended the scope of a
federal law to be so broad as to entirely replace any state-law claim,” the Court will apply Defendant’s
arguments under that provision to its analysis of whether the case has been properly removed. Marin, 581
F.3d at 945. But, the Court will not consider Defendant’s § 514 arguments in its initial inquiry into
whether removal was proper because, as the Court of Appeals explained “[d]efendant[] [is] free to assert
in state court a defense of conflict preemption under § 514(a), but [it] cannot rely on that defense to
establish federal question jurisdiction.” Marin, 581 F.3d 941. See also Franchise Tax Bd. Of Cal v.
Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 14 (1983) (“[S]ince 1887 it has been well settled
law that a case may not be removed to federal court on the basis of a federal defense, including the defense
of preemption…”)
8

7
3:17-cv-0107-CAB-KSC

1

at 946. In order to determine if Defendant’s assertion is correct the Court needs to apply

2

the two part test formulated by the Supreme Court in Davila.

3

A state-law cause of action is completely preempted if (1) “an individual, at some

4

point in time could have brought [the] claim under ERISA § 502(a)(1)(B),” and (2) “where

5

there is no other independent legal duty that is implicated by a defendant’s actions.”

6

Davila, 542 U.S. at 210. “Because this ‘two-prong test . . . is in the conjunctive[,] [a] state-

7

law cause of action is preempted by § 502(a)(1)(B) only if both prongs of the test are

8

satisfied.” Marin, 581 F.3d at 947.

9

Here, after asking the necessary question under the first prong of the Davila test, the

10

Court finds that Plaintiff could have brought his unreasonable denial of benefits claim

11

under ERISA § 502(a)(1)(B). In pleading his claim Plaintiff alleges that the Defendants

12

are a “health care service plan or managed care entity’ and that he was a “subscriber to

13

Defendants’ health care plan.” [Doc. No. 1 at 10 ¶¶ 24, 25.] Further, he complains that

14

“Defendants failed to timely provide medically necessary health care to Plaintiff by failing

15

to exercise ordinary care in addressing Plaintiff’s medical condition.” [Id. at ¶ 27.] Not

16

surprisingly, neither party disputes that Plaintiff’s claim falls within the provision of

17

§502(a)(1)(B).10

18

The second prong of the Davila test requires the Court to “determine whether the

19

state-law claims ‘arise independently of ERISA or the plan terms.’” Fossen v. Blue Cross

20

and Blue Shield of Montana, Inc., 660 F.3d 1102, 1110 (9th Cir. 2011) (quoting Davila,

21

542 U.S at 212). This determination “requires a practical, rather than a formalistic, analysis

22

because [c]laimants simply cannot obtain relief by dressing up an ERISA benefits claim in

23

the garb of a state law tort.’” Fossen, 660 F.3d at 1110-1111 (internal quotations and

24

citation omitted). See also Davila, 542 U.S at 214 (“distinguishing between pre-empted

25
26
27
28

Specifically, in his opposition to the motion to dismiss Plaintiff states that Defendant’s argument that
his claims “could have - and perhaps should - have been brought under § 502(a)(1)(B),” “may be true as
far as it goes.” [Doc. No. 5 at 5:25-28.]
10

8
3:17-cv-0107-CAB-KSC

1

and non-pre-empted claims based on the particular label affixed to them would elevate

2

form over substance and allow parties to evade the pre-emptive scope of ERISA simply by

3

relabeling their . . . claims.”); Marin, 581 F.3d at 950 (reasoning that since the “state-law

4

claims asserted in this case are in no way based on an obligation under an ERISA plan, and

5

since they would exist whether or not an ERISA plan existed, they are based on ‘other

6

independent legal dut[ies]’ within the meaning of Davila.”) (alteration in original).11

7

Here, since both Sharp and Aetna’s obligations to Plaintiff are based on an obligation

8

under an ERISA plan and would not exist in the absence of the ERISA plan, the state-law

9

claim is not based on other independent legal duties. Plaintiff’s endeavor to characterize

10

the allegations in the complaint regarding phone calls between himself and a Sharp

11

representative as “express and implied promises and inducements” that resulted in

12

authorization for necessary medical care is unavailing.12 [Doc. No. 5 at 7:11-13.] In the

13

complaint, Plaintiff alleges that Defendants were all acting as “health care service plans”

14
15
11

16
17
18
19
20
21
22
23
24
25
26
27
28

See also Wicken v. Blue Cross of Cal., Inc., No. 15cv834-GPC (JMA), 2015 WL 4255129, at 3 (S.D.
Cal. July 14, 2015) (“No independent legal duty exists where interpretation of the terms of the ERISAregulated benefits plan forms an essential part of the claim and where the defendant’s liability exists only
due to its administration of the ERISA-regulated plan.”) (citation omitted).
12
Relatedly, Plaintiff argues that since Sharp, an individualized practice association, is a co-defendant
complete preemption cannot lie because the decision to deny benefits was “inextricably intertwined”
between Aetna and Sharp. But, while ERISA defines the persons empowered to bring a civil action in §
1132(a) “there are no limits stated anywhere in § 1132(a) about who can be sued.” Cyr v. Reliance
Standard Life Ins. Co., 642 F.3d 1202, 1205 (9th Cir. 2011) (finding that potential defendants in actions
brought under § 1132(a)(1)(B) should not be limited to plans and plan administrators). See also Spindex
Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1297 (9th Cir. 2014)
(clarifying that post Cyr “proper defendants under § 1132(a)(1)(B) for improper denial of benefits at least
include ERISA plans, formally designated plan administrators, insurers or other entities responsible for
payment of benefits, and de facto plan administrators that improperly deny or cause improper denial of
benefits.”); Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 246 (2000)) (the Court
rejected the suggestion that § 1132(a)(3) contained a limitation on who could be a proper defendant under
that specific subsection, concluding that § 1132(a)(3) “makes no mention at all of which parties may be
proper defendants-the focus instead, is on redressing the act or practice which violates any provision of
ERISA Title 1.”) (emphasis in original). Here, Aetna has been identified as the managed care organization
and Sharp has been identified as an Individual Practice Association. Both are logical defendants in an
“action by [Plaintiff] to recover benefits due to [him] under the terms of the plan and to enforce [his] rights
under the terms of the plan, which is precisely the civil action authorized by § 1132(a)(1)(B).” Cyr, 642
F.3d at 1207.
9
3:17-cv-0107-CAB-KSC

1

that had, in exchange for collecting premiums, entered into an “arrangement” with Plaintiff

2

to provide “medically necessary health care services.” [Doc. No. 1 at 6 ¶¶ 5, 6.] Plaintiff

3

complains that, pursuant to California Civil Code section 3428(a), “Defendants had a duty

4

of ordinary care to arrange for the timely provision of medically necessary health care

5

services” to him and that they failed in this regard by “delaying or denying medically

6

necessary medical care including . . . failing to approve and provide DRG stimulation

7

despite repeated recommendation from Defendant-affiliated physicians.” [Id. at 10 ¶¶ 26,

8

27; see also id. at 9 ¶ 21.] Further, Plaintiff’s allegation that denial based on the

9

experimental nature of the procedure is “directly contrary to how ‘experimental’

10

procedures are defined in Plaintiff’s health insurance agreement.” [Id. at 10:7-9].

11

In light of these allegations, the Court concludes that Plaintiff’s claim does not

12

implicate legal duties that arise independently of ERISA because, although Plaintiff has

13

sued under a state statute, “interpretation of the terms of [his] benefit plans forms an

14

essential part of [his state law] claim, and [state law] liability would exist here only because

15

of [the Defendants]’ administration of ERISA-regulated benefit plans.” Davila, 542 U.S.

16

at 213-214.] See also Peralta v. Hispanic Bus., Inc., 419 F.3d 1064, 1069 (9th Cir. 2005)

17

(claims requiring construction of plan terms are preempted). Plaintiff could have, and

18

should have, brought suit under § 502(a)(1)(B).

19

Accordingly the Court finds that, because Plaintiff’s unreasonable denial of benefits

20

claim is completely preempted by ERISA, it has original jurisdiction over the case pursuant

21

to 28 U.S.C. § 1331. Therefore, Plaintiff’s motion to remand is DENIED.

22

B. Motion to Dismiss

23

Having established that the case is properly before it, the Court will now turn to

24

whether Defendant’s motion to dismiss Plaintiff’s claim should be granted. See, e.g., Lodi

25

Mem’l Hosp. Ass’n v. Tiger Lines, LLC, No. 2:15-cv-00319-MCE, 2015 WL 5009093, at

26

5 (E.D. Cal. Aug. 20, 2015) (citing 29 U.S.C. § 1144(a)) (“If complete preemption is

27

present under a Davila analysis, and the case is properly in federal court, the next step is to

28

determine whether the state law claims upon which federal jurisdiction has been conferred
10
3:17-cv-0107-CAB-KSC

1

survive so-called ‘conflict preemption’ under ERISA § 514(a).”); Heldt v. Guardian Life

2

Insurance Company of America, Case No. 16-cv-00885-BAS-NLS, 2017 WL 980181, at

3

8 (S.D. Cal. Mar. 13, 2017) (after concluding that remand was not appropriate because of

4

the existence of complete preemption, the court went on to consider defendant’s section

5

514(a) motion to dismiss arguments.).13

6

Defendant argues that Plaintiff’s claim is precisely the sort of claim that is preempted

7

by ERISA § 514(a) because the relationship between Aetna and Plaintiff only exists

8

because Aetna administers Plaintiff’s health care coverage under an ERISA-governed

9

health benefits plan. [Doc. No. 3-1 at 6-9.] Choosing instead to focus on Defendant’s §

10

502(a) complete preemption arguments, Plaintiff’s opposition discounts Defendant’s

11

§514(a) conflict preemption argument by summarily stating that “little need be said here,

12

considering that conflict preemption defense under §514(a) is exactly that, a defense.”

13

[Doc. No. 5 at 5:5-6.]

14

Both Section 502(a) and Section 514(a) preemption doctrines defeat state-law causes

15

of action on the merits. Fossen, 660 F.3d at 1107. Section 514(a) expressly provides that

16

ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate

17

to any employee benefit plan. . . .” 29 U.S.C. § 1144(a). Thus, any state law claim that

18

“would fall within the scope of [ERISA’s] scheme of remedies is preempted as conflicting

19

with the intended exclusivity of the ERISA remedial scheme.” Paulsen v. CNF Inc., 559

20

F.3d 1061, 1084 (9th Cir. 2009). See also Davila, 542 U.S. at 209 (“[A]ny state-law cause

21

of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy

22

conflicts with the clear congressional intent to make the ERISA remedy exclusive and is

23

therefore pre-empted.”). Under ERISA’s civil enforcement provision a participant or

24

beneficiary may bring an action to recover benefits due under the plan, an action for breach

25

of fiduciary duty, and a suit to enjoin violations of ERISA or the Plan, or to obtain other

26
27
13

28

See also Sikiyan v. Morris, Case No. CV16-1699 PSG (JCx), 2016 WL 3131022, at 4 (C.D. Cal. May
31, 2016).
11
3:17-cv-0107-CAB-KSC

1

equitable relief. 29 U.S.C § 1132. Consequently, any claim that can be characterized as

2

“an action to recover benefits under the plan” under §502(a)(1)(B) “would likely be conflict

3

preempted because ERISA would provide both a cause of action and an enforcement

4

remedy.” Paulson, 599 F.3d at 1084

5

In order to determine if the state law is conflict preempted “[t]he Supreme Court has

6

instructed that a law relates to an employee benefit plan if it has either a “connection with”

7

or “reference to” such a plan. This is a two-part inquiry.” Paulsen 559 F.3d at 1082

8

(citations omitted). The first part of the inquiry is to determine whether a law has a

9

forbidden reference to ERISA plans. Id. This requires the court to consider “whether (1)

10

the law ‘acts immediately and exclusively upon ERISA plans,’ or (2) ‘the existence of

11

ERISA plans is essential to the law’s operation.’” Id. (quoting Golden Gate Rest. Ass’n v.

12

City & Cnty of S.F., 546 F.3d 639, 657 (9th Cir. 2008). Within the Ninth Circuit, the

13

second part of the inquiry involves employing a “‘relationship test’ that focuses whether

14

the ‘claim bears on an ERISA regulated relationship, e.g., the relationship between plan

15

and plan member, between plan and employer, between employer and employee.’” Oregon

16

Teamster Emp’rs Trust v. Hillsboro Garbage Disposal, Inc., 800 F.3d 1141 (9th Cir. 2015)

17

(quoting Paulson, 559 F.3d at 1082).

18

Here, not only is Plaintiff’s unreasonable denial of benefits claim completely pre-

19

empted by ERISA, it is also conflict preempted. See supra III.A.1. California Civil Code

20

section 3428 imposes liability against health care service plans or manage care entities,

21

while expressly excluding employers or an employer group from liability.14 Plaintiff’s

22
23
14

24
25
26
27
28

California Civil Code section 3428(a) provides that a health care service plan or managed care entity
“shall have a duty of ordinary care to arrange for the provision of medically necessary health care service
to its subscribers and enrollees, where the health care service is a benefit provided under the plan, and
shall be liable to any and all harm legally caused by its failure to exercise that ordinary care . . . .” CAL.
CIV. CODE § 3428(a). A health care service plan is defined as: “(1) [a]ny person who undertakes to
arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse
any part of the cost of those services, in return for a prepaid or periodic charge paid by or on behalf of the
subscribers or enrollees. (2) Any person, whether located within or outside of this state, who solicits or
contracts with a subscriber or enrollee in this state to pay for or reimburse any part of the cost of, or who
12
3:17-cv-0107-CAB-KSC

1

unreasonable denial of benefits claims directly relate to the denial of benefits due under an

2

ERISA plan and therefore depend on the existence of the plan. The claim alleges that

3

Defendants failed to provide Plaintiff with necessary medical care and that the denial of

4

the DRG stimulation therapy because of its experimental nature directly contradicted how

5

experimental procedures are defined in Plaintiff’s health insurance agreement. See Bui v.

6

American Tel. & Tel. Co. Inc., 310 F.3d 1143, 1147-48 (9th Cir. 2002) (“If a claim alleges

7

a denial of benefits ERISA preempts it. A denial of benefits involves an administrative

8

decision regarding coverage.”) Undoubtedly, this claim will require analysis of the

9

agreement’s terms. Moreover, the claim bears on an ERISA regulated relationship – here

10

the relationship between Plaintiff, a plan member, and Defendants were responsible for

11

providing health care services. Thus, because of its forbidden connection with an ERISA

12

plan, Plaintiff’s claim is preempted.

13

As a result of the preemption, Plaintiff’s claim fails to state a claim upon which relief

14

can be granted. Accordingly, the Court GRANTS Defendant’s motion to dismiss the state

15

law claim, but will grant Plaintiff leave to amend the complaint to include only a claim

16

under ERISA.

17

IV.

18

For the forgoing reasons, Plaintiff’s motion to remand [Doc No. 6] is DENIED and

19

Defendant’s motion to dismiss [Doc. No. 3] is GRANTED. If Plaintiff chooses to file a

20

First Amended Complaint to re-plead his state law claim as an ERISA claim he must do so

21

no later than April 24, 2017. Defendants shall file a response to the First Amended

CONCLUSION

22
23
24
25
26
27
28

undertakes to arrange or arranges for, the provision of health care services that are to be provided wholly
or in party in a foreign country in return for a prepaid or periodic charge paid by or on behalf of the
subscriber or enrollee.” CAL. HEALTH & SAFETY CODE § 1345(f)
Section 3428(e) expressly states that “[t]his section does not create any liability on the part of an employer
or an employer group purchasing organization that purchases coverage or assumes risk on behalf of its
employees or on behalf of self-funded employee benefit plans.” CAL. CIV. CODE § 3428(e).
13
3:17-cv-0107-CAB-KSC

1
2
3

Complaint within the time limits provided by the Federal Rules of Civil Procedure.
It is SO ORDERED.
Dated: April 10, 2017

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
14
3:17-cv-0107-CAB-KSC