Cardiovascular Specialty Care Center of Baton Rouge, LLC v. United Healthcare of Louisiana, Inc.

Filing 23

RULING and ORDER Adopting 18 Report and Recommendation of the U.S. Magistrate Judge and denying 6 Motion to Remand. Signed by Chief Judge Brian A. Jackson on 03/04/2015. (BCL) Modified replace document on 3/4/2015 (BCL).

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

CARDIOVASCULAR SPECIALTY CARE
CENTER OF BATON ROUGE, LLC

CIVIL ACTION

VERSUS
NO.:14-235-BAJ-RLB

UNITED HEALTHCARE OF
LOUISIANA, INC.
RULING AND ORDER

On January 7, 2015, the United States Magistrate Judge issued a Report and
Recommendation, pursuant to 28 U.S.C. § 636(b)(1), recommending that Plaintiff
Cardiovascular Specialty Care Center of Baton Rouge, LLC’s (“Cardiovascular”)
Motion to Remand (Doc. 6) be denied. (Doc. 18).
The Magistrate Judge’s Report and Recommendation specifically notified
Cardiovascular that, pursuant to 28 U.S.C. § 636(b)(1), it had fourteen (14) days
from the date it received the Report and Recommendation to file written objections
to the proposed findings of fact, conclusions of law, and recommendations therein.
(Doc. 18 at p. 1). A review of the record indicates that Cardiovascular timely filed
objections on January 21, 2015.

(Doc. 19).

Defendant United Healthcare of

Louisiana, Inc. (“United”) timely filed a response to Cardiovascular’s objections on
February 2, 2015. (Doc. 22). Each of Cardiovascular’s objections will be considered
in turn.
In Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), the United States

Supreme Court set forth a two-part test to determine whether claims are completely
preempted by ERISA, which would permit removal. The Court stated:
If an individual, at some point in time, could have brought his claim
under ERISA § 502(a)(1)(B) [the civil enforcement provision], 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).
Id. at 210 (emphasis added).

Cardiovascular argues that the Magistrate Judge

misapplied the Davila test because United owed an independent legal duty to it,
which precludes complete preemption under the Employee Retirement Income
Security Act (“ERISA”).

(Doc. 19 at p. 5).

In opposition, United asserts that

Cardiovascular “has not asserted any independent legal duty owed by United in its
Petition.” (Doc. 22 at p. 3).
As an initial matter, the Court recognizes that Cardiovascular’s Petition
alleges that United owed a duty independent of any ERISA-regulated plan because
United made representations via telephone, prior to Cardiovascular rendering
services, that Cardiovascular would be reimbursed by United, and Cardiovascular
then reasonably and justifiably relied on this preauthorization in providing medical
services.

(Doc. 1-1 at ¶¶ 8, 9).

However, this is not dispositive under the

circumstances. To support its independent duty contention, Cardiovascular cites
Center for Restorative Breast Surgery, L.L.C. v. Humana Health Benefit Plan of
Louisiana, Inc., No. 10-4346, 2011 WL 1103760 (E.D. La. Mar. 22, 2011), but that
case belies Cardiovascular’s point. In it, the court stated:

2

The propriety of removal . . . depends on the nature of Plaintiffs' causes
of action. If Plaintiffs allege only claims arising out of a breach of an
independent legal duty assumed by Defendants when Defendants
allegedly verified a specific degree of reimbursement, that claim is not
completely preempted and there is no federal question jurisdiction for
removal. But if Plaintiffs also derivatively assert their patients' claims
for benefits under the Plans pursuant to an assignment, those claims
are completely preempted and provide a jurisdictional hook that
appears on the face of the petition.
Id. at *2 (emphasis added). The court’s analysis then went on to note that the
plaintiffs were conflating two distinct concepts: the assignment of rights and preprocedure verification by the defendants. Id. Thus, although the plaintiffs brought
direct claims and derivative claims, the jurisdictional question was easily resolved
by the existence of the derivative claims. Id. at 3.
Similarly, although Cardiovascular’s Petition does appear to assert a direct
claim, (See Doc. 1 at ¶¶ 8, 9), the bulk of Cardiovascular’s claims require
Cardiovascular to step into the shoes of the fifty-five patients insured by United
(“United Insureds”), and assert the duty to reimburse pursuant to those fifty-five
patients’ plans – not a duty to reimburse pursuant to a separate agreement. (Id. at
¶¶ 10, 28, 37). Thus, Cardiovascular’s Petition confirms that it has made claims in
a derivative capacity in addition to asserting direct claims arising out of United’s
alleged preauthorization. Id. Though it is unclear whether Cardiovascular’s
derivative claims are pled as an alternative to, or in addition to its direct claim, the
fact that they have articulated the derivative claims as a means of obtaining
reimbursement confers jurisdiction upon this Court.

3

See Center for Restorative

Breast Surgery, L.L.C., 2011 WL 1103760, *2 (citing Conn. State Dental Ass’n v.
Anthem Health Plans, Inc., 591 F.3d 1337, 1346-47 (11th Cir. 2009)).
Having established jurisdiction through that claim, this Court is permitted to
exercise supplemental jurisdiction over any remaining claims.

See Giles v.

NYLCare Health Plans, Inc., 172 F. 3d 332, 337 (5th Cir. 1999) (“once the court has
proper removal jurisdiction over a federal claim, it may exercise supplemental
jurisdiction over state law claims”) (citing 28 U.S.C. § 1367). This Court need only
find, for the purpose of establishing subject matter jurisdiction, that one cause of
action is completely preempted.

Id.

Here, Cardiovascular’s breach of contract

claim, which, pursuant to its Petition, is premised upon its assignment of rights, is
completely

preempted.1

Therefore,

even

if

the

claims

for

negligent

misrepresentation and detrimental reliance2 are obligations independent of
insurance policies, this Court may still exercise supplemental jurisdiction over those
claims because at least one cause of action is completely preempted.
In its second objection, Cardiovascular argues that this Court may not
consider post-removal evidence after the filing of the notice of removal. (Doc. 19 at
p. 8). In opposition, United argues that “[i]t is the facts at the time the case is

The Magistrate Judge’s Report also found that other claims alleged in the Petition (open account,
failure to investigate, and bad faith) are completely preempted because they are based on the
contractual rights for benefits assigned to Cardiovascular by the United Insured. (Doc. 18).
1

United contends that Cardiovascular has not asserted claims of detrimental reliance and negligent
misrepresentation. (Doc. 22 at pp. 3-4). For purposes of this motion, the Court need not decide this
issue, because as discussed above, the Court is satisfied that at least one, if not multiple claims, are
completely preempted.
2

4

removed that are critical,” and United clearly indicated that the plans at issue were
subject to ERISA. (Doc. 2 at p 2; Doc. 22 at p. 7) (citing Gebbia v. Walmart Stores,
Inc., 233 F.3d 880, 883 (5th Cir. 2000)).
Cardiovascular is correct that “[t]he law is quite clear that whether removal
jurisdiction is present depends on the claims as they are stated ‘at the time of
removal.’” Perritt v. Westlake Vinyls Co., LP, 986 F. Supp.2d 726, 732 (M.D. La.
2013) (emphasis added) (citing Cavallini v. State Farm Mutual Auto Insurance Co.,
44 F. 3d 256, 264 (5th Cir. 1995). Further, “[i]f removal is based on the assertion
that the plaintiff's claims are completely preempted and fall within ERISA's civil
enforcement provision, then the defendant also has the burden of establishing the
existence of an ERISA plan.” No. 12-151, 2012 WL 3028036, at *3 (M.D. La. June
13, 2012), report and recommendation adopted by 2012 WL 302807 (M.D. La. July
24, 2012) (citing Shearer v. Southwest Service Life Insurance Co., 516 F. 3d 276,
278−79 (5th Cir. 2008)).

Here, United did not submit any plan documents or

affidavits with its Notice of Removal to establish that any of the claims were
governed by ERISA. Rather, United simply alleged in the Notice of Removal that,
“[p]laintiff’s claims, as stated in the Petition, relate to employee welfare benefit
plans and accordingly are subject to federal law pursuant to [ERISA].” (Doc. 2 at ¶
4).

After the filing of its Notice of Removal, United then supplemented its

Opposition to Cardiovascular’s Motion to Remand with plan documents and an
affidavit by a legal case information analyst that the plans were governed by ERISA
(Docs. 9-14).
5

Cardiovascular argues that United failed to meet its burden of proving
subject matter jurisdiction under ERISA because it failed to establish the existence
of an ERISA plan at the time of removal. Although Cardiovascular asserts that the
plan documents were necessary to make this determination,3 United’s brief
statement in its Notice of Removal that the plans were governed my ERISA, is
sufficient to establish federal question jurisdiction.4 When determining jurisdiction,
courts may rely on submissions filed after removal “so long as the post-removal
filing sets forth facts developed at the time of removal.” Dixon v. Nan Ya Plastics
Corp., 2007 WL 4561136 at *4 (M.D. La. 2007) (citing Simon v. Wal-Mart Stores,
Inc., 193 F. 3d 848, 851 n. 10 (5th Cir. 1993)). At the time of removal, United
Cardiovascular cites to Lowery v. Alabama Power Co., 483 F. 3d 1184 (11th Cir. 2007) to support its
contention. See id. at 1213−15 (“In assessing whether removal was proper in such a case, the district
court has before it only the limited universe of evidence available when the motion to remand is
filed—i.e., the notice of removal and accompanying documents. If that evidence is insufficient to
establish that removal was proper or that jurisdiction was present, neither the defendants nor the
court may speculate in an attempt to make up for the notice's failings.”). However, Lowery is clearly
distinguishable from the instant case because the defendant in Lowery asserted no factual basis to
support federal jurisdiction in its removal. Instead, the defendant requested that the court reserve
ruling so that it could conduct discovery to obtain information from the plaintiffs that would
establish jurisdiction. This request, the court found, was “tantamount to an admission that the
defendants [did] not have a factual basis for believing that jurisdiction exist[ed].” Id. at 1217. Here,
United clearly articulated the basis for jurisdiction at the time of removal. They then supplemented
that claim with documentation confirming the veracity of that fact. Accordingly, Cardiovascular’s
reference to Lowery is unavailing.
3

Cardiovascular’s reliance on Donelon v. Distribution by Datagen, No. 12-151, 2012 WL 3028036
(M.D. La. June 13, 2012), report and recommendation adopted by 2012 WL 302807 (M.D. La. July 24,
2012) for the proposition that United has not met its burden of establishing the existence of an
ERISA plan is unwarranted. First, the court in Donelon did not rely on a finding that the
defendants failed to prove the existence of an ERISA plan. See id. at *4 (“[I]t is unnecessary to . . .
decide whether there is an ERISA plan to determine whether this court has subject matter
jurisdiction under ERISA. Defendants have totally failed to argue or demonstrate that this suit could
have been brought by the plaintiff under ERISA.”). Second, the Donelon court found that the
defendants’ arguments regarding the existence of an ERISA plan were “conclusory and unsupported”
because the defendants’ arguments relied upon exhibits that were not filed into the record. Id. at *4
n.14. Here, United filed evidence of an ERISA plan into the record, and raised the applicability of
ERISA in its Notice of Removal. (Docs. 2, 9-2, 10-14).
6
4

alleged that the plans were subject to ERISA.

(Doc. 2 at ¶ 4).

Therefore,

consideration of the post-removal documents is appropriate because the key fact -that the plans were subject to ERISA -- had already been stated in the Notice of
Removal.
Cardiovascular also avers that case law addressing post-removal documents
in potential diversity cases where the amount in controversy is at issue is not
applicable to the instant situation (Doc. 19 at pp. 8-10), yet Cardiovascular cites no
authority to support this position.

In fact, the only authority cited by

Cardiovascular is a case from this Court regarding an amount in controversy issue
in a diversity case. (Id. at p. 10) (citing Perritt v. Westlake Vinyls Co., LP, 986 F.
Supp.2d 726 (M.D. La. 2013). Moreover, the Court finds that the facts of Perritt are
sufficiently distinguishable because the defendant in Perritt sought to introduce
“new exhibits [and] factual representations” because the Notice of Removal did not
set forth any additional facts to support a conclusion that the jurisdictional amount
was satisfied. Id. at 731-32. In other words, the defendant relied purely on the
facts as stated in the petition. Id. The defendant then sought to provide additional
exhibits, including affidavits in its opposition to the plaintiffs’ motions to remand.
Id. at 732. Here, as discussed previously, United stated the pertinent fact -- the
applicability of ERISA -- in its Notice of Removal. (Doc. 2 at ¶ 4). United later
supplemented this assertion with specific plan information. (See Docs. 9-14). No
new

factual

representations

were

made.

Cardiovascular’s contention to be without merit.
7

Accordingly,

the

Court

finds

Cardiovascular next argues that this is a rate of payment and not a right of
payment case, and thus, is not subject to complete preemption under ERISA. (Doc.
19 at pp. 15-16). In short, Cardiovascular avers that because the United Insureds
are in fact covered as insureds of United, only the rate of payment is left to be
determined. The Court disagrees.
Cardiovascular is correct that a claim that “implicates the rate of payment . .
. rather than the right to payment under the terms of the benefit plan, does not run
afoul of Davila and is not preempted by ERISA.” Lone Star OB/GYN Associates v.
Aetna Health, Inc. 579 F. 3d 525, 529 (5th Cir. 2009). Further, where “a medical
service is determined to be covered and the only remaining issue is the proper
contractual rate of payment, coverage and benefit determinations are not implicated
and the claims are not preempted.”

Id. at 532.

However, this is not a

straightforward “rate of payment” case. As Cardiovascular makes clear, a claim
brought pursuant to a separate provider agreement implicating the rate of payment
set forth in the agreement would not be completely preempted by ERISA. Lone
Star, 579 F. 3d at 530. Here, however, Cardiovascular does not allege it entered
into a provider agreement with United that established a contractual rate of
services

separate

from

the

United

health

insurance

policies.

Instead,

Cardiovascular seeks to recover “the Usual and Customary Rates pursuant to the
United health insurance policies issued to the United Insureds.” (Doc. 1 at ¶ 13).
As a result, the issue here is indeed the “right to payment” pursuant to the

8

insurance policies, not the rate of payment pursuant to a provider agreement.5
Thus, this objection is also without merit.
Cardiovascular’s final contention is that the Magistrate Judge erred in
exercising supplemental jurisdiction over the non-ERISA plans. (Doc. 19 at pp.1718). Again, this Court disagrees. Under 28 U.S.C. § 1367(c)(2), a district court
“may decline to exercise supplemental jurisdiction over a claim . . . if the claim
substantially predominates over the claim or claims over which the district court
has original jurisdiction.”

Cardiovascular argues that the Magistrate Judge’s

Report concludes only that the breach of contract claim is subject to this Court’s
original jurisdiction based upon ERISA preemption. Cardiovascular then contends
that the remaining claims (negligent representation, detrimental reliance, failure to
investigate, open account, and bad faith) substantially predominate over this single
claim such that the exercise of supplemental jurisdiction would be inappropriate.
However, the specific mention of the breach of contract claim in the
Magistrate Judge’s report is merely an illustration of how the other claims could
also be completely preempted under ERISA. For similar reasons, Cardiovascular’s
claim for open account could also be completely preempted by ERISA because any
state law cause of action that “duplicates, supplements or supplants” the civil
enforcement remedies of ERISA conflicts with Congress’s intent to make the ERISA
remedy exclusive, and is completely preempted. Davila, 542 U.S. at 209. Even if all
See Memorial Hermann Hospital System v. Aetna Health Inc., No. H-11-267, 2011 WL 3703770 at
*3 (S.D. Tex. 2011) (“When the question is the right of payment, as opposed to the rate of payment,
ERISA complete preemption is triggered.”) (citing Lone Star, 579 F.3d at 530−31).
9
5

of the claims do not duplicate the civil enforcement provisions of ERISA, such as the
negligent misrepresentation and detrimental reliance claims, this Court can
comfortably exercise supplemental jurisdiction over any remaining state claims
because those claims all arise out of the same set of operative facts. See Exxon
Mobil Corp. v. Allapattah Services Inc., 545 U.S. 546, 588 (2005).

Although

Cardiovascular further argues that only one of the insured’s plans was subject to
ERISA preemption, the Spalinski Declaration (Doc. 9-1 at ¶ 4) makes clear that all
but two of the plans are governed by ERISA.
Having carefully considered Cardiovascular’s motion, complaint and related
filings, the Court approves the Magistrate Judge’s Report, and hereby adopts its
findings of fact, conclusions of law, and recommendation.
Accordingly,
IT

IS

ORDERED

that

the

Magistrate

Judge’s

Report

and

Recommendation (Doc. 18) is ADOPTED as the Court’s opinion herein.
IT IS FURTHER ORDERED that Plaintiff’s Motion to Remand (Doc. 6)
is DENIED.

Baton Rouge, Louisiana, this 4th day of March, 2015.

______________________________________
BRIAN A. JACKSON, CHIEF JUDGE
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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