Konig et al v. Yeshiva Imrei Chaim Viznitz of Boro Park Inc. et al

Filing 10

ORDER granting 6 Motion to Remand: For the reasons set forth in the attached Memorandum and Order, the 6 Motion to Remand is granted. The Clerk is respectfully directed to remand the case to the Supreme Court of the State of New York, Kings County. Ordered by Judge John Gleeson on 3/30/2012. (Sheketoff, Julia)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

FOR ONLINE PUBLICATION ONLY

JOSEPH KONIG,
Plaintiff,
- versus -

MEMORANDUM
AND ORDER
12-CV-467

YESHIVA IMREI CHAIM VIZNITZ OF BORO
PARK INC. and OHR HACHAIM HALL,
Defendants,
- and RAWLINGS COMPANY, LLC and OXFORD
HEALTH PLANS, LLC,
Third-Party Claimants to
Settlement Proceeds.

APPEARANCES
SUBIN ASSOCIATES LLP
150 Broadway, 23rd Floor
New York, New York 10038
By:
Gregory T. Cerchione
Attorney for Plaintiff
ROBINSON & COLE LLP
885 Third Avenue, Suite 2800
New York, New York 10022
By:
Joseph L. Clasen
Brian James Wheelin
Attorneys for Rawlings Company, LLC and Oxford Health Plans, LLC

JOHN GLEESON, United States District Judge:
On January 31, 2012, Rawlings Company, LLC (“Rawlings”) and Oxford Health
Plans, LLC (“Oxford”) filed a notice to remove this case from state court. Upon a motion by
Joseph Konig, I now remand the action to state court because this Court lacks subject matter
jurisdiction to hear it.

BACKGROUND
In October 2008, Konig brought an action for damages in the Supreme Court of
the State of New York, Kings County, against Yeshiva Imrei Chaim Viznitz of Boro Park, Inc.
(“Yeshiva”) and Ohr Hachaim Hall (“Ohr”). The suit alleged that Konig was physically injured
in a September 2008 incident (“the incident”) on negligently maintained property that was
owned and managed by Yeshiva and Ohr. The parties settled the negligence action on March 14,
2011.
While the action was pending, Rawlings – on behalf of Oxford – informed Konig
that Oxford asserted a claim against any settlement that Konig obtained in the action. According
to Rawlings, Oxford had paid approximately $24,000 for medical care necessitated by the
incident, pursuant to its health insurance policy with Konig. Rawlings demanded that Konig use
any sums collected through the negligence suit to reimburse Oxford for the cost of these medical
benefits.
Rather than agree to Rawlings’ demands, Konig sought and obtained in the state
court an order to show cause why “an Order should not be granted restoring [the negligence
action] to active status and upon restoration . . . extinguish[ing] . . . any purported lien/claim
and/or subrogation right asserted by the RAWLINGS COMPANY LLC. on behalf of their [sic]
client OXFORD HEALTH PLAN.” Notice of Removal 6, Jan. 31, 2012, ECF No. 1. Rawlings
and Oxford timely filed a notice of removal, asserting that this Court had federal-question
jurisdiction under 28 U.S.C. § 1331. Konig thereafter moved to remand.
DISCUSSION
Unless an Act of Congress provides otherwise, “any civil action brought in a State
court of which the district courts of the United States have original jurisdiction, may be removed

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by the defendant or the defendants.” 28 U.S.C. § 1441(a). Oxford and Rawlings assert that
although they were not defendants in Konig’s negligence action originally, they became
defendants when the state court issued the order to show cause, which they cast as a state law
claim seeking to extinguish Oxford’s subrogation rights. They argue that, as defendants in this
claim, they may remove the state court action because this Court has original federal-question
jurisdiction over the action. See 28 U.S.C. § 1331. Oxford and Rawlings contend that because
Oxford’s health insurance policy with Konig was a Medicare policy – specifically, a Medicare
Advantage Policy (“MAP”), which is Medicare insurance provided by a private insurance
company that is offered as an alternative to Medicare insurance provided directly by the
government – Konig’s state law claim is completely preempted. According to them, because the
Medicare laws provide subrogation rights to MAP providers, any claim that might extinguish
those subrogation rights – even if styled under only state law – is transformed into a claim under
federal law and therefore properly removable.
Even assuming the state court’s order to show cause rendered Rawlings and
Oxford “defendants” to a “claim” asserted in a “civil action” with respect to which the unanimity
requirement of 28 U.S.C. § 1446(b) is either satisfied or inapplicable, 1 I find that removal was
inappropriate here because no basis for federal jurisdiction exists to hear any claims in the state
court action. Complete preemption is a basis for removal when “a federal statute wholly
displaces the state-law cause of action.” Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 8
(2003). Under this doctrine, “[w]hen the federal statute completely pre-empts the state-law
cause of action, a claim which comes within the scope of that cause of action, even if pleaded in

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Although this may be a reasonable assumption with respect to Oxford, it is unclear how Rawlings
– which has no interest at stake in the state lawsuit – could be properly considered a “defendant” in a “civil action”
for purposes of removal. See Chicago, R.I. & P.R. Co. v. Stude, 346 U.S. 574, 580 (1954).

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terms of state law, is in reality based on federal law” and is therefore removable as a federalquestion case. Id.
The thrust of the complete preemption doctrine is that in certain areas of law,
Congress intended for a federal statute to “provide the exclusive cause of action for the claim
asserted.” Id. (emphasis added). Thus, for example, in the context of the Labor Management
Relations Act, the Supreme Court has held that the Act’s express cause of action for challenging
the breach of a collective bargaining agreement has such “powerful” preemptive force that it
“displace[s] entirely any state cause of action ‘for violation of contracts between an employer
and a labor organization.’” Franchise Tax Bd. of the State of Cal. v. Constr. Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 23 (1983) (quoting Labor Management Relations Act § 301(a), 29
U.S.C. § 185(a)). Similarly, in the context of disability benefits plans covered by the Employee
Retirement Income Security Act of 1974 (“ERISA”), the Court has found that the cause of action
expressly provided by ERISA to resolve disputes regarding the termination of benefits under
covered plans has such “extraordinary pre-emptive power” that it constitutes the exclusive
manner of redress for such disputes. Met. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987); see
also Beneficial Nat’l Bank, 539 U.S. at 9 (holding that Congress intended for §§ 85 and 86 of the
National Bank Act, which expressly create a cause of action for violations of federal usury laws,
to “provide the exclusive cause of action for usury claims against national banks”). But where a
federal statute confers no right of action to assert a particular claim, it goes without saying that
Congress did not intend to create a federal right to relief that is so powerfully preemptive that it
entirely displaces all state causes of action on that claim.
Here, Oxford and Rawlings ask me to find that the state court order to show cause
constitutes a claim to extinguish Oxford’s subrogation rights with respect to Konig’s settlement

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proceeds, and that such a claim – because it seeks a determination with respect to the subrogation
rights of a MAP provider – is completely preempted by the federal Medicare laws. But no such
claim may be brought under the Medicare laws. Even if the Medicare laws could be read to
create a right to subrogation for MAP providers – an interpretation rejected by many courts, who
have instead held that the Medicare statute simply authorizes MAP providers to contractually
create subrogation rights, see, e.g., Nott v. Aetna U.S. Healthcare, Inc., 303 F. Supp. 2d 565, 567
(E.D. Pa. 2004); Ferlazzo v. 18th Avenue Hardware, Inc., 929 N.Y.S.2d 690, 692 (N.Y. Sup. Ct.
2011) – no provision expressly extends such providers a private right of action to sue upon their
subrogation rights. Although the Medicare statute clearly authorizes the government to bring an
action to enforce its subrogation rights under its own Medicare insurance contracts, see 42
U.S.C. § 1395y(b)(2)(B)(iii), the statute does not expressly accord private MAP providers the
same right. 2 Every court to address the issue has found that the laws also fail to create an
implied cause of action. See Care Choices HMO v. Engstrom, 330 F.3d 786 (6th Cir. 2003);
Parra v. PacifiCare of Ariz., No. 10 Civ. 8, 2011 WL 1119736 (D. Ariz. Mar. 28, 2011); Nott,
303 F. Supp. 2d 565; Ferlazzo, 929 N.Y.S.2d 690. I agree and conclude that the Medicare laws
offer no private right of action – express or implied – to MAP providers to enforce any claimed
subrogation rights. Accordingly, the Medicare laws do not completely preempt any claims
raised in the order to show cause.

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Oxford and Rawlings argue that 42 C.F.R. § 422.108(f), which provides that MAP providers “will
exercise the same rights to recover from a primary plan, entity, or individual that the Secretary exercises,” places
MAP providers in the same shoes as the government, thereby granting them the power to bring a private right of
action. This reasoning is faulty. “Language in a regulation may invoke a private right of action that Congress
through statutory text created, but it may not create a right that Congress has not.” Alexander v. Sandoval, 532 U.S.
275, 291 (2001). Nothing in the Medicare statute itself creates a cause of action, and the parties cannot fashion one
by invoking the regulations.

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CONCLUSION
For the reasons set forth herein, the motion to remand is granted. The Clerk is
respectfully directed to remand the case to the Supreme Court of the State of New York, Kings
County.

So ordered.

John Gleeson, U.S.D.J.
Dated: March 30, 2012
Brooklyn, New York

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