Medical Administrative Services, LLC et al v. American United Life Insurance Company et al
MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Plaintiffs Motion and Brief in Support of Remand (ECF No. 13) is DENIED. 13 Signed by District Judge Jean C. Hamilton on 10/29/15. (CLA)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI
SERVICES, LLC and PAUL P. BOCCI,
AMERICAN UNITED LIFE
INSURANCE COMPANY and JOHN
Case No. 4:15-cv-01289-JCH
MEMORANDUM AND ORDER
This matter is before the Court on Plaintiffs Paul P. Bocci’s and Medical Administrative
Services, LLC’s (“MAS”) Motion and Brief in Support of Remand, filed September 16, 2015.
(ECF No. 13.) The Motion has been briefed and is ready for disposition.
On May 12, 2015, Plaintiffs filed suit in the Circuit Court of St. Louis County against
Defendants John Shigemura1 and American United Life Insurance Company (“AUL”), asserting
claims of negligence under Missouri law. (Complaint, ECF No. 1.4.) In their Complaint,
Plaintiffs allege the following facts.
In December 2012, Bocci and his business associate Jordan Balter, who is now deceased,
created MAS. As part of Bocci’s and Mr. Balter’s business agreement, Mr. Balter was required
to obtain a life insurance policy that designated MAS or Bocci as the beneficiary, so that MAS
could continue operations in the event of Mr. Balter’s death. From October through mid1
In the Complaint, Plaintiffs incorrectly name Shigemura as “John Sigumura.”
November 2013, Bocci consulted with Shigemura, a Missouri insurance broker and AUL’s
agent, regarding the purchase of life insurance for Mr. Balter. During their consultations, Bocci
informed Shigemura of Bocci’s and Mr. Balter’s business agreement, and of MAS’s reasons for
procuring insurance. In November 2013, MAS, as the group policy holder, purchased a life
insurance policy from AUL through Shigemura. On September 22, 2014, following the death of
Mr. Balter, Bocci filed a claim under the policy to collect $150,000 in plan benefits. On
December 4, 2014, AUL informed Bocci that on November 14, 2013, it had received two
beneficiary designations for Mr. Balter: one which designated Bocci as his primary beneficiary,
and another that designated the Estate of Mr. Balter as his primary beneficiary (hereinafter, the
Prior to AUL’s notification, Bocci was unaware that the Estate
Designation existed. AUL subsequently informed Bocci that unless he and the Estate reached an
accommodation, AUL would file a federal interpleader. Id. ¶¶ 1-18, 24.
Plaintiffs contend that Shigemura prepared the Estate Designation, and that he acted
negligently in doing so, as he knew or should have known that it was contrary to Bocci and Mr.
Balter’s business agreement and would cause MAS financial harm. Id. ¶¶ 25-28. Plaintiffs
further contend that AUL is responsible for Shigemura’s negligent acts under a theory of agency
liability, and that AUL also acted negligently in failing to notify Plaintiffs of the conflicting
beneficiary designations. Id. ¶¶ 30-33. For relief, Plaintiffs seek “immediate payment to [Bocci]
of the policy proceeds in the amount of $150,000.00, as and for liquidated damages”; “additional
damages for vexatious delay”; pre-judgment and post-judgment interest; “consequential damages
resulting from the vexatious delay of paying policy proceeds”; punitive damages; and attorney’s
fees and costs. Id. at 14-15.
On August 20, 2015, AUL removed the action to federal court on the basis of federal
question jurisdiction. AUL asserts that Plaintiffs’ “attempt to recover benefits under the group
policy is a claim for benefits that is exclusively governed and completely preempted by” the
Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., and that
Plaintiffs have attempted to “circumvent ERISA by couching their claim as one of negligence.”
(Notice of Removal, ECF No. 1 at 2.) Shigemura has consented to removal. (ECF No. 15.)
On September 16, 2015, Plaintiffs moved to remand the matter to state court. (ECF No.
13.) Plaintiffs argue that their Complaint alleges a “pure negligence action,” which has “an
insufficient connection to any employee benefit plan,” and that their request for relief “does not
nullify or affect the ERISA regulatory scheme.” Id. at 4-5. As relevant, Plaintiffs allege in their
Motion that AUL did not follow the “AUL policy” requirements regarding beneficiary
designation changes. Id. at 3. In response, Defendants assert that Plaintiffs’ “arguments are
belied by their pleadings,” and that, because Plaintiffs “seek payment of plan benefits” and “rely
on plan terms to argue that AUL failed to follow proper plan procedures,” ERISA completely
preempts their claims. (ECF No. 14 at 2.) The parties do not dispute that the insurance policy at
issue is an ERISA-governed plan.
Defendants, as the parties seeking removal and opposing remand, bear the burden of
establishing federal subject matter jurisdiction. See In re Business Men’s Assur. Co. of Am., 992
F.2d 181, 183 (8th Cir. 1993) (per curiam). “[F]ederal question jurisdiction extends only to civil
actions arising under the Constitution, laws, or treaties of the United States.”
Andersen Corp., 567 F.3d 956, 963 (8th Cir. 2009) (quotations and citation omitted). “Removal
based on federal question jurisdiction is governed by the well pleaded complaint rule:
jurisdiction is established only if a federal question is presented on the face of the plaintiff’s
properly pleaded complaint.”
Id. (quotation and citation omitted). There is an exception,
however, to the well-pleaded complaint rule. Id. at 964. “When a federal statute wholly
displaces the state-law cause of action through complete pre-emption, the state claim can be
removed.” Id. (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 207-08 (2004)). “Once an
area of state law has been completely pre-empted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under
federal law.” Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987).
Congress enacted ERISA to protect “the interests of participants in employee benefit
plans and their beneficiaries,” and to provide “for appropriate remedies, sanctions, and ready
access to the Federal Courts.” Davila, 542 U.S. at 208 (quotations and citations omitted).
ERISA comprehensively regulates employee benefit plans, and it includes expansive preemption
provisions, which were intended to ensure that employee benefit plan regulation would be
“exclusively a federal concern.” Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981).
“There are two types of ERISA preemption: complete preemption under ERISA § 502, 29
U.S.C. § 1132, and express preemption under ERISA § 514, 29 U.S.C. § 1144.” Prudential Ins.
Co. of Am. v. Nat. Park Med. Ctr., Inc., 413 F.3d 897, 907 (8th Cir. 2005) (quotations and
Complete preemption exists when a cause of action arises under the “civil enforcement”
provision of ERISA, which provides in pertinent part:
A civil action may be brought—
(1) by a participant or beneficiary—
(B) to recover benefits due to him under the terms of his plan, to enforce his rights
under the terms of the plan, or to clarify his rights to future benefits under the
terms of the plan…
29 U.S.C. § 1132(a)(1)(B). “[A]ny state-law cause of action that duplicates, supplements, or
supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to
make the ERISA remedy exclusive and is therefore preempted.” Davila, 542 U.S. at 208-09. In
other words, “any claim filed by a plan participant for the same relief provided under ERISA’s
civil enforcement provision, even a claim purportedly raising only a state-law cause of action,
arises under federal law and is removable to federal court.” Prudential Ins. Co., 413 F.3d at 907.
Thus, “[i]f an individual, at some point in time, could have brought his claim under ERISA §
502(a)(1)(B), 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).” Davila, 542 U.S. at 210.
Here, the Court concludes that ERISA preempts Plaintiffs’ negligence claims. Although
Plaintiffs’ Complaint, on its face, does not arise under ERISA, the essence of Plaintiffs’ claims is
that Defendants failed to properly administer an ERISA-regulated plan. In addition, Plaintiffs
seek “immediate payment” of the benefit proceeds under the plan, and damages related to AUL’s
alleged delay in payment. See Fink v. Dakotacare, 324 F.3d 685, 689 (8th Cir. 2003) (“state law
causes of action are completely preempted by ERISA when they arise from the administration of
benefits”) (quotation and citations omitted); cf. Ibson v. United Healthcare Servs., Inc., 776 F.3d
941, 945-46 (8th Cir. 2014) (where plaintiff asserted, inter alia, negligence claim and argued that
“state-law claims concern[ed] [provider’s] improper cancellation of her insurance policy,” court
held that plaintiff’s argument “ignore[d] the essence of her claim—that [the provider] should
have paid medical benefits under the ERISA-regulated plan and failed to do so—a claim that
could be brought under ERISA”). Furthermore, Plaintiffs would not have a claim against either
Defendant but for the existence of the ERISA plan, and they do not attempt to remedy any
violation of a legal duty independent of ERISA. See Davila, 542 U.S. at 214.
Therefore, Plaintiffs’ state-law claims, which could have been brought under ERISA §
502, provide Plaintiffs with a “separate vehicle” to assert a claim for benefits “outside of, or in
addition to, ERISA’s remedial scheme,” and are thus preempted. Prudential Ins. Co., 413 F.3d
IT IS HEREBY ORDERED that Plaintiffs’ Motion and Brief in Support of Remand
(ECF No. 13) is DENIED.
Dated this 29th day of October, 2015.
/s/ Jean C. Hamilton
UNITED STATES DISTRICT JUDGE
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