Williams v. UnitedHealthcare of Texas, Inc. et al
Filing
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ORDER ADOPTING 19 Memorandum and Recommendations, DENYING 7 MOTION to Remand.(Signed by Judge Gray H. Miller) Parties notified.(rkonieczny, 4)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ELIZABETH WILLIAMS,
Plaintiff,
v.
UNITEDHEALTHCARE OF TEXAS, INC., et al.,
Defendants.
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March 17, 2016
David J. Bradley, Clerk
CIVIL ACTION H-15-2553
ORDER ADOPTING MEMORANDUM & RECOMMENDATION
Pending before the court is the Magistrate Judge’s Memorandum & Recommendation
(the “M&R”) (Dkt. 19), recommending that plaintiff Elizabeth Williams’s (“Williams”) motion to
remand (Dkt. 7) be denied. Williams filed objections (Dkt. 20), to which UnitedHealthcare of Texas,
Inc. and UMR, Inc. (collectively, “Defendants”) responded (Dkt. 21). Having reviewed the M&R,
the objections to the M&R, the response, and the applicable law, the court OVERRULES Williams’s
objections and ADOPTS the M&R. Williams’s motion to remand (Dkt. 7) is DENIED.
I. BACKGROUND
From January 1, 2014, to December 31, 2014, Williams had medical coverage under the
Eaton Corporation Plan for Retirees and Other Eligible Individuals (“the Plan”) with
UnitedHealthcare of Texas, Inc. and administered through UMR, Inc. Dkt. 1, Ex. 4 at 1. Williams
suffered from serious acid reflux pain and was diagnosed with esophageal diverticulum and hiatal
hernia. Id. Williams’s doctors determined that her condition would require surgery. Id. On
September 8, 2014, Williams entered the Memorial Hermann Hospital System—the Woodlands and
was released the following day. Id. at 1–2. Five days later, Williams suffered complications from
surgery and returned to the hospital. Id. at 2. Williams remained under doctor’s care from
September 13, 2014, to October 13, 2014. Id. On September 17, 2014, and October 3, 2014,
Williams received confirmation from Defendants that additional surgery was medically necessary.
Id. Williams was later transferred to the Memorial Hermann Hospital—Texas Medical Center in
Houston. Id. On November 3, 2014, Williams received correspondence from Defendants
authorizing the additional medical procedures in Houston. Id. Williams alleges that Defendants
later denied her coverage under the Plan despite authorizing the treatment on multiple occasions. Id.
On July 20, 2015, Williams filed suit in state court, asserting a variety of state law claims.
See Dkt. 1, Ex. 4. On September 3, 2015, Defendants removed the case to this court. See Dkt. 1.
On October 1, 2015, Williams filed a motion to remand. Dkt. 7. On December 17, 2015, the court
referred the motion to the Magistrate Judge. Dkt. 18. On January 13, 2016, the Magistrate Judge
issued the M&R, finding that Williams’s claims were completely preempted by ERISA and
recommending denial of Williams’s motion to remand. Dkt. 19. On January 27, 2016, Williams
filed objections. Dkt. 20. On February 8, 2016, Defendants responded. Dkt. 21.
II. OBJECTIONS
A.
The Magistrate Judge Applied an Incorrect Standard
Williams argues that the Magistrate Judge applied an incorrect standard in determining
whether ERISA applies. Dkt. 20 at 3. Williams asserts that the Magistrate Judge based her
recommendation on whether a reasonable person could find that an ERISA plan existed. Id.
Williams contends that the correct standard is whether a reasonable person could “ascertain the
intended benefits, beneficiaries, sources of financing, and procedures for receiving benefits.” Id. at
4. Because the Magistrate Judge applied the wrong standard, Williams argues, the Magistrate Judge
ignored the fact that Defendants have never produced the ERISA plan that they contend applies. Id.
Williams maintains that a reasonable person could not “ascertain the intended benefits, beneficiaries,
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sources of financing, and procedures for receiving benefits” where the Defendants have not even
produced the Plan. Id. at 5. Williams also argues that Defendants have caused confusion about
which plan applies to her and who administers the Plan. Id. at 5–6.
The court finds that the Magistrate Judge applied the correct standard. To determine whether
a particular plan qualifies as an “employee welfare benefit plan” under ERISA, the court asks
“whether a plan: (1) exists; (2) falls within the safe-harbor provision established by the Department
of Labor; and (3) satisfies the primary elements of an ERISA ‘employee benefit
plan’—establishment or maintenance by an employer intending to benefit employees. If any part of
the inquiry is answered in the negative, the submission is not an ERISA plan.” Meredith v. Time Ins.
Co., 980 F.2d 352, 355 (5th Cir. 1993). As Williams points out, “[t]o determine whether a plan
exists, ‘a court must determine whether from the surrounding circumstances a reasonable person
could ascertain the intended benefits, beneficiaries, sources of financing, and procedures for
receiving benefits.’” Graham v. Metro. Life Ins. Co., 349 F. App’x 957, 960 (5th Cir. 2009) (quoting
Meredith, 980 F.2d at 355). This is the exact standard quoted and applied by the Magistrate Judge
in reaching her conclusion that a plan exists. See Dkt. 19 at 7. Further, the court agrees that a
reasonable person could “ascertain the intended benefits, beneficiaries, sources of financing, and
procedures for receiving benefits” based on the Summary Plan Description (“SPD”) provided by
Defendants. See Dkt. 1, Ex. 1. The SPD provides a sufficient basis for the court to make this
determination and to identify which plan applies and who administers the Plan. The Defendants
were not required to produce the Plan itself. See Graham, 349 F. App’x at 960 (“A reasonable
person could make this determination by reviewing Georgia-Pacific’s LifeChoices Summary Plan
Description (‘SPD’) and the MetLife certificate of insurance for group term life benefits issued to
Georgia-Pacific and distributed to its employees.”); McNeil v. Time Ins. Co., 205 F.3d 179, 189 (5th
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Cir. 2000) (finding that a brochure describing an insurance policy’s benefits and costs was sufficient
evidence that a plan existed); Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 241 (5th
Cir. 1990) (“A formal document designated as ‘the Plan’ is not required to establish that an ERISA
plan exists; otherwise, employers could avoid federal regulation merely by failing to memorialize
their employee benefit programs in a separate document so designated.”); Campbell v. Chevron
Phillips Chem. Co., L.P., 587 F. Supp. 2d 773, 781 (E.D. Tex. 2006) (“In this case, a reasonable
person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for
receiving benefits from the SPD.”). Williams’s objection is OVERRULED.
B.
The Magistrate Judge Wrongly Assumed that Williams Did Not Dispute Critical Issues
Williams also argues that the Magistrate Judge erred in her determination that the Plan is an
ERISA plan because she assumed that Williams did not contest certain elements critical to the
court’s jurisdiction. Dkt. 20 at 7. Further, Williams argues that the Magistrate Judge’s focus on what
Williams “did not contest” effectively flips the burden of proof. Id. at 10. Because Defendants have
the burden of proving federal jurisdiction, Williams explains, the court should focus on what points
Defendants can prove, not what points Williams has contested. Id. at 7–11.
1.
Safe Harbor
Williams asserts that the Magistrate Judge assumed that Williams did not contest that the
plan sponsor made contributions to the Plan. Id. at 8–9. Therefore, Williams concludes, the
Magistrate Judge incorrectly decided that the ERISA safe harbor did not apply.
A plan is not an ERISA plan if it falls within the safe-harbor provision promulgated by the
Department of Labor. Meredith, 980 F.2d at 355. Under the safe harbor, a plan is not an ERISA
plan if: “(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
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employer received no profit from the plan. The plan must meet all four criteria to be exempt.” Id.
The court acknowledges that Williams did contest whether her employer contributed to the plan, and
any assumption to the contrary is incorrect. Nonetheless, the court agrees with the Magistrate
Judge’s determination that the safe harbor does not apply in this case. As the Magistrate Judge
pointed out, the Eaton Corporation paid the full cost of the plan for participants over sixty-five and
a portion of the plan for participants under sixty-five. Dkt. 19 at 8–9; see Dkt. 1, Ex. 1 at
UMR000011. Therefore, Williams’s employer contributed to the Plan, and Defendants have
disproved the first element of the safe harbor. Because all four elements of the safe harbor must be
met for the plan to be exempt from ERISA, Defendants were not required to disprove the other three
elements. Williams’s objection is OVERRULED.
2.
Intent to Benefit Employees
Williams argues that the Magistrate Judge wrongly assumed that Williams did not dispute
that the Plan was intended to benefit employees. Dkt. 20 at 8–9. The court acknowledges that
Williams disputed this point. However, the court agrees with the Magistrate Judge that “it is clear
from the employer’s plan selection, administration, and maintenance that it intended the Plan to
benefit its employees.” Dkt. 19 at 9. Williams’s objection is OVERRULED.
C.
The Magistrate Judge Failed to Address Williams’s Waiver Argument
Williams argues that the Magistrate Judge failed to address the argument that Defendants
waived their right to assert a preemption defense. Dkt. 20 at 11–12. Williams argues that
Defendants failed to plead preemption as a defense in this case; therefore, this defense is waived. Id.
Defendants clearly alleged preemption in their notice of removal. Dkt. 1. More importantly,
the Magistrate Judge found that Williams’s state law claims were completely preempted by ERISA.
Dkt. 19 at 11. Unlike conflict preemption, complete preemption is jurisdictional in nature and is not
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an affirmative defense. Conn. State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1344
(11th Cir. 2009) (“Complete preemption, also known as super preemption, is a judicially-recognized
exception to the well-pleaded complaint rule. It differs from defensive preemption because it is
jurisdictional in nature rather than an affirmative defense.”). Therefore, Williams’s waiver argument
is inapplicable and her objection is OVERRULED.
D.
The Magistrate Judge Misapplied Concurrent Jurisdiction
Williams notes that the Magistrate Judge acknowledged that concurrent jurisdiction exists
between federal and state courts but failed to apprehend its significance. Dkt. 20 at 12. Williams
argues that, where concurrent jurisdiction exists, preemption does not require removal. Id.
The court agrees with the Magistrate Judge that the issue of concurrent jurisdiction is
irrelevant to Williams’s motion. Dkt. 19 at 11. The question before the Magistrate Judge was
whether Defendants had properly removed the case to this court. Cases in which concurrent
jurisdiction exists are removable. Baldwin v. Sears, Roebuck & Co., 667 F.2d 458, 460 (5th Cir.
1982) (“Unless, therefore, there is an express declaration by Congress to the contrary, all types of
civil actions, in which there is concurrent original jurisdiction in both federal and state courts, are
removable.”). Therefore, the existence of concurrent jurisdiction has no bearing on the propriety of
removal. Williams’s objection is OVERRULED.
E.
The Magistrate Judge Should Have Granted an Oral Hearing
Williams argues that she requested an oral hearing and should have been granted one.
Dkt. 20 at 11. Further, Williams contends that the Magistrate Judge failed to consider that Williams
opposed the additional briefing filed by Defendants and that the additional briefing was filed in
violation of the court’s procedures. Id.
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The Magistrate Judge was not required to grant Williams an oral hearing. The Magistrate
Judge considered additional sur-replies from both parties and was well within her discretion to do
so. Williams’s objections are OVERRULED.
III. CONCLUSION
Williams’s objections (Dkt. 20) are OVERRULED, and the M&R (Dkt. 19) is ADOPTED.
Williams’s motion to remand (Dkt. 7) is DENIED.
Signed at Houston, Texas on March 17, 2016.
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Gray H. Miller
United States District Judge
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