Simon v. Express Scripts Inc et al

Filing 33

MEMORANDUM RULING denying 22 Motion to Remand. Evaluating subject-matter jurisdiction as of the time of removal, the undersigned concludes that the plaintiffs ERISA claim against Tower Life provided this Court with subject-matter jurisdiction base d on a federal question. Although the plaintiffs claims against Tower Life were dismissed, this Court continues to havesubject-matter jurisdiction over this action. Exercising permissible discretion, the undersigned declines to remand the action to state court. Signed by Magistrate Judge Patrick J Hanna on 5/1/13. (crt,Kennedy, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
AMELIA SIMON

CIVIL ACTION NO. 6:13-cv-00187

VERSUS

JUDGE DOHERTY

EXPRESS SCRIPTS, INC. AND
MAGISTRATE JUDGE HANNA
TOWER LIFE INSURANCE COMPANY

MEMORANDUM RULING

Currently pending before the Court is plaintiff Amelia Simon’s motion to
remand. (Rec. Doc. 22). The motion is opposed. (Rec. Doc. 25). Oral argument was
held before the undersigned on April 30, 2013. For the reasons set forth below, the
motion is denied.
BACKGROUND
This lawsuit was originally filed in the 15th Judicial District Court, Lafayette
Parish, Louisiana. (Rec. Doc. 1-2 at 2-5). In her complaint, the plaintiff alleges that,
from 2008 through 2011, she was covered by a health insurance policy issued by
Tower Life Insurance Company and provided by her husband’s employer, Smith
International, Inc. (Rec. Doc. 1-2 at ¶¶ 2, 13). Defendant Express Scripts, Inc.
(“ESI”) showed that Smith International established a self-funded group medical plan
and acted as both the sponsor and administrator of the plan. (Rec. Doc. 13-2 at 5).

Defendant Tower Life was the plan’s claims administrator (Rec. Doc. 13-2 at 5), and
ESI served as the plan’s pharmacy benefit manager. (Rec. Doc. 13-2 at 65).
The plaintiff alleges that, in 2006, she was diagnosed with a thyroid disease as
well as with manic depression and schizophrenia bipolar disorders. (Rec. Doc. 1-2
at ¶ 3). She further alleges that, in 2011, ESI began to deny her requests that valid
prescriptions be filled. (Rec. Doc. 1-2 at ¶ 4). She claims that ESI was negligent in
failing to fill her prescriptions (Rec. Doc. 1-2 at ¶ 8); she claims that ESI breached a
contract with her by failing to timely fill her prescriptions (Rec. Doc. 1-2 at ¶ 12); and
she claims that she was damaged by ESI’s failure to fill her prescriptions (Rec. Doc.
1-2 at ¶¶ 9-11, 15).
The defendants removed the action to this forum, alleging that this court has
subject matter jurisdiction because there is a federal question under the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and
alternatively, because the parties are diverse in citizenship and the amount in
controversy exceeds the statutory threshold. (Rec. Doc. 1). Both defendants then
filed motions to dismiss, arguing that the plaintiff’s claims are preempted by ERISA.
(Rec. Docs. 13 and 14). The plaintiff then filed a motion to voluntarily dismiss her
claims against Tower Life (Rec. Doc. 20), which was granted (Rec. Doc. 24). The
plaintiff then filed the instant motion to remand, arguing that the dismissal of her
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claims against defendant Tower Life precluded federal question jurisdiction and also
arguing that the amount in controversy was less than necessary to support diversity
jurisdiction. (Rec. Doc. 22).
ANALYSIS
Federal district courts are courts of limited jurisdiction, possessing only the
power authorized by the Constitution and by statute.1 Accordingly, federal courts
have subject matter jurisdiction only over civil actions presenting a federal question2
and those in which the amount in controversy exceeds $75,000 exclusive of interest
and costs and the parties are citizens of different states.3 For that reason, a suit is
presumed to lie outside a federal court's jurisdiction until the party invoking federalcourt jurisdiction establishes otherwise.4 Because “the effect of removal is to deprive
the state court of an action properly before it, removal raises significant federalism
concerns.”5 The removal statute is therefore to be strictly construed, and any doubt
about the propriety of removal must be resolved in favor of remand and against
1

See, e.g., Griffin v. Lee, 621 F.3d 380, 388 (5th Cir. 2010); Halmekangas v. State
Farm Fire and Cas. Co., 603 F.3d 290, 292 (5th Cir. 2010); Howery v. Allstate Ins., Co., 243 F.3d
912, 916 (5th Cir. 2001).
2

28 U.S.C. § 1331.

3

28 U.S.C. § 1332.

4

Howery v. Allstate, 243 F.3d at 916.

5

Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365 (5th Cir. 1995).
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federal-court jurisdiction.6 The party invoking subject-matter jurisdiction in federal
court has the burden of establishing the court’s jurisdiction by a preponderance of the
evidence.7 When an action is removed from state court, as this suit was, the removing
party bears the burden of proving that federal jurisdiction exists.8 Accordingly, ESI,
the removing party, has the burden of establishing that this court has jurisdiction over
this matter.
Upon removal, ESI asserted that this court has both federal question
jurisdiction and, alternatively, diversity jurisdiction. Whether a claim arises under
federal law is typically determined by the well-pleaded complaint rule.9 Under that
rule, federal jurisdiction exists only when a federal question is presented on the face
of plaintiff's properly pleaded complaint.10 In this case, the plaintiff’s complaint

6

Carpenter v. Wichita Falls, 44 F.3d at 366; Acuna v. Brown & Root Inc., 200 F.3d
335, 339 (5 Cir. 2000).
th

7

Howery v. Allstate Ins. Co., 243 F.3d at 919; St. Paul Reinsurance Co., Ltd. v.
Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998).
8

Shearer v. Southwest Service Life Ins. Co., 516 F.3d 276, 278 (5th Cir. 2008); Boone
v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005); Manguno v. Prudential Property and Cas. Ins.
Co., 276 F.3d 720, 723 (5th Cir. 2002); De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995).
9

McAteer v. Silverleaf Resorts, Inc., 514 F.3d 411, 416 (5th Cir. 2008); PCI Transp.,
Inc. v. Fort Worth & W. R.R. Co., 418 F.3d 535, 543 (5th Cir. 2005).
10

PCI v. Fort Worth, 418 F.3d at 543.
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contains no reference to any federal statute. Therefore, no federal question is
presented on the face of her complaint.
However, the Supreme Court has recognized two exceptions to this rule.
Under these exceptions, federal-question jurisdiction exists when Congress expressly
provides for removal and when a federal statute wholly displaces a state-law cause
of action through complete preemption.11 Complete preemption is jurisdictional in
nature and consequently authorizes removal to federal court even if the complaint
solely asserts state-law claims.12 Significantly with regard to this lawsuit, “ERISA
provides one such area of complete preemption.”13
There are two types of ERISA preemption.14

First, ERISA's express

preemption clause states that with certain exceptions, ERISA “shall supercede any
and all State laws insofar as they may now or hereafter relate to any employee benefit
plan. . . .”15

Second, ERISA's civil enforcement provision establishes a

comprehensive civil enforcement scheme that would be completely undermined if

11

PCI v. Fort Worth, 418 F.3d at 543.

12

PCI v. Fort Worth, 418 F.3d at 543.

13

McAteer v. Silverleaf Resorts, Inc., 514 F.3d at 416. See also, Woods v. Texas
Aggregates, L.L.C., 459 F.3d 600, 602 (5th Cir. 2006).
14

Woods v. Texas Aggregates, 459 F.3d at 602.

15

29 U.S.C. § 1144(a).
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ERISA-plan participants and beneficiaries were free to obtain remedies under state
law that Congress rejected in ERISA.16 Accordingly, a state-law cause of action that
duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts
with Congress’s intent to make ERISA exclusive and is, for that reason, preempted.17
In this case, the plaintiff contends that she has presented only state-law claims.
She also contends that her dismissal of her claims against Tower Life leave only
state-law claims pending against ESI. ESI contends that the plaintiff’s employee
benefit plan is covered by ERISA, and the plaintiff made no attempt to refute that
contention until her reply brief, where she argues that “ESI’s failure to fill
prescriptions was in no way related to her plan benefits.” (Rec. Doc. 29 at 5).
Further, she states: “Simon’s claim does not seek to recover ERISA benefits, to
enforce her rights under the terms of the plan, or to clarify her rights to future benefits
under the terms of the plan; instead, Simon’s claims seek damages for a pharmacy,
ESI’s, negligent failure to timely fill a prescription upon presentment.” (Rec. Doc.
29 at 6). The plaintiff’s reply brief makes no reference to her breach of contract claim

16

29 U.S.C. § 1132(a), E.I. DuPont de Nemours & Co. v. Sawyer, 517 F.3d 785, 797

th

(5 Cir. 2008); Aetna Health Inc. v. Davila, 542 U.S. 200, 208-09 (2004); Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 54 (1987).
17

DuPont v. Sawyer, 517 F.3d at 797.
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against ESI, arguing that “her cause of action derives solely from ESI’s negligent
breach of duty.” (Rec. Doc. 29 at 6).
Whether a particular plan is an ERISA plan is a factual issue.18 ERISA defines
an employee benefit plan as “any plan, fund, or program. . . established or maintained
by an employer . . . for the purpose of providing for its participants or their
beneficiaries, through the purchase of insurance or otherwise, . . . medical, surgical,
or hospital care or benefits, or benefits in the event of sickness, accident, disability,
. . . .”19 A particular plan qualifies as an ERISA plan if the plan (1) exists, (2) does
not fall within the safe harbor exclusion established by the Department of Labor, and
(3) meets the ERISA requirement of establishment or maintenance by an employer
for the purpose of benefitting the plan participants.20
First, this plan clearly exists. (Rec. Doc. 13-2). Second, it does not fall within
the safe harbor provision. To be exempt from ERISA under the safe harbor provision,
all of the following criteria must be met: (1) the employer does not contribute to the
plan; (2) participation is voluntary; (3) the employer's role is limited to collecting
premiums and remitting them to the insurer; and (4) the employer received no profit
18

McNeil v. Time Ins. Co., 205 F.3d 179, 189 (5th Cir. 2000).

19

29 U.S.C. § 1002(1).

20

McNeil v. Time Ins. Co., 205 F.3d at 189, citing Meredith v. Time Ins. Co., 980 F.2d
352, 355 (5th Cir. 1993).
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from the plan.21 Here, Smith International established a self-funded group medical
plan and acted as both the sponsor and administrator of the plan. (Rec. Doc. 13-2 at
5). Tower Life was the plan’s claims administrator (Rec. Doc. 13-2 at 5), and
defendant Express Scripts, Inc. (“ESI”) served as the plan’s pharmacy benefit
manager. (Rec. Doc. 13-2 at 65). Thus, this plan does not fit within the safe harbor
exemption. Third, Smith International is an employer that established the plan for the
purpose of benefitting the plan’s participants. Finally, the plan expressly states that
it is an ERISA plan, declaring that “[i]t is intended that the Plan will conform to the
requirements of ERISA, as it applies to employee welfare plan.”22 Therefore, the
undersigned finds that the plan at issue in this lawsuit is an ERISA plan.
The United States Supreme Court, in Metropolitan Life Ins. Co. v. Taylor,23
held that when a lawsuit relates to an employee benefit plan and is based upon a law
of general application that is not a law regulating insurance, the suit is preempted by
ERISA. That decision also held that a suit by a beneficiary to recover benefits from
a covered plan falls directly under § 502(a)(1)(B) of ERISA, which provides an

21

Meredith v. Time Ins. Co., 980 F.2d at 355.

22

Rec. Doc. 25-1 at 105, 107.

23

Pilot Life v. Dedeaux, 481 U.S. at 62.
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exclusive federal cause of action for the resolution of such disputes.24 When such a
claim is stated in a state-court petition, complete preemption occurs and the action
may be removed to federal court.25 “If complete preemption exists. . . a plaintiff's
state claims are subject to removal under federal question jurisdiction, and ERISA
offers the sole framework for relief.”26
Here, the plaintiff’s petition contains claims against Tower Life and ESI that
can easily be interpreted as claims by a beneficiary to recover benefits under a
covered plan. Therefore, the undersigned finds that, at the time of removal, this Court
had subject-matter jurisdiction over this action because the petition implicitly stated
a federal question. Having found subject-matter jurisdiction based upon a federal
question, there is no need to analyze whether there might also be subject-matter
jurisdiction based upon diversity of citizenship. Further discussion of diversity
jurisdiction is, therefore, pretermitted.
The plaintiff’s post-removal dismissal of her claim against Tower Life did not
relieve this Court of subject-matter jurisdiction. “The existence of subject matter

24

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. at 62-63.

25

Degan v. Ford Motor Co., 869 F.2d 889, 893 (5th Cir. 1989); Posey v. Standard Ins.
Co., 584 F.Supp.2d 903, 904 (W.D. La. 2008).
26

Nixon v. Vaughn, No. 2:12-CV-00308, 2012 WL 4961461, at *4 (W.D. La. Oct. 16,

2012).
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jurisdiction is determined at the time of removal.”27 Consistently, the jurisprudence
is clear that most events that occur after removal will not defeat jurisdiction.28
Jurisdiction is evaluated “by looking at the complaint at the time the petition for
removal is filed. . . . [W]hen there is a subsequent narrowing of the issues such that
the federal claims are eliminated and only pendent state claims remain, federal
jurisdiction is not extinguished.”29 Even a plaintiff’s amending his complaint to omit
all federal-law claims will not defeat a federal court's jurisdiction over a properly
removed case.30 Instead, the question then becomes whether the federal court should
retain the pendant claims or remand the action to state court, and that question is left
to the court’s discretion. “A federal district court has discretion to remand a properly
removed case to state court when all federal-law claims have been eliminated and
only pendent state-law claims remain.”31 Therefore, even if the plaintiff in this case
had not asserted an ERISA claim against ESI, which has not yet been determined, this

27

In re Bissonnet Investments LLC, 320 F.3d 520, 525 (5th Cir. 2003).

28

Hensgens v. Deere & Co., 833 F.2d 1179, 1181 (5th Cir. 1987).

29

Brown v. Southwestern Bell Telephone Co., 901 F.2d 1250, 1254 (5th Cir. 1990).

30

Hook v. Morrison Milling Co., 38 F.3d 776, 780 (5th Cir. 1994); Jones v. Houston
Independent School District, 979 F.2d 1004, 1007 (5th Cir. 1992).
31

Jones v. Roadway Express, Inc., 936 F.2d 789, 792 (5th Cir.1991). See also, Brown
v. Southwestern Bell, 901 F.2d at 1254.
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Court would have discretion to retain jurisdiction over the remaining state-law claims
or to remand the action to state court.
In this case, ESI filed a motion to dismiss that has not yet been ruled upon.
Contemporaneously with resolving this motion to remand, the undersigned is
permitting additional briefing with regard to the merits of the motion to dismiss.
Accordingly, the undersigned will exercise his discretion, retain the claims against
ESI, and deny the plaintiff’s motion to remand.
CONCLUSION
Evaluating subject-matter jurisdiction as of the time of removal, the
undersigned concludes that the plaintiff’s ERISA claim against Tower Life provided
this Court with subject-matter jurisdiction based on a federal question. Although the
plaintiff’s claims against Tower Life were dismissed, this Court continues to have
subject-matter jurisdiction over this action. Exercising permissible discretion, the
undersigned declines to remand the action to state court. For these reasons, the
plaintiff’s motion to remand (Rec. Doc. 22) is DENIED.
Signed at Lafayette, Louisiana on May 1, 2013.

____________________________________
PATRICK J. HANNA
UNITED STATES MAGISTRATE JUDGE
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