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Kearney v. Blue Cross and Blue Shield of North Carolina

United States District Court, M.D. North Carolina

February 9, 2017

BOBBY P. KEARNEY, MD, PLLC, Plaintiff,
v.
BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, an Independent Licensee of the Blue Cross Blue Shield Association, Defendant.

          MEMORANDUM OPINION AND ORDER

          Loretta C. Biggs United States District Judge.

         Bobby P. Kearney, MD, PLLC (“Plaintiff”) initiated this action in state court against Blue Cross and Blue Shield of North Carolina (“BCBSNC” or “Defendant”), alleging various violations of North Carolina law and seeking declaratory and injunctive relief. Defendant removed the action to this Court, on the basis of federal question jurisdiction. Before the Court is Plaintiff's Motion for Preliminary Mandatory Injunction (ECF No. 11) and Defendant's Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (ECF No. 15). For the reasons that follow, the Court grants in part and denies in part Defendant's motion to dismiss and denies as moot Plaintiff's motion for preliminary injunction.

         I. BACKGROUND[1]

         Plaintiff is a medical practice located in Iredell County, North Carolina, devoted solely and exclusively to treating patients with substance abuse and drug addiction issues. (ECF No. 6 at 1, 3.) BCBSNC is an administrator of health plans. (ECF No. 16 at 1; ECF No. 6 at 3.) In 2011, Plaintiff and BCBSNC entered into a Network Participation Agreement (“Provider Agreement”), under which Plaintiff “agree[d] to render Medically Necessary Covered Services” to BCBSNC insureds. (ECF No. 16-1 § 2.1.1.)

         In February 2016, Plaintiff filed this action, alleging that BCBSNC improperly denied claims submitted for payment by Plaintiff and failed to pay Plaintiff for certain “medically necessary” services Plaintiff provided to persons insured by BCBSNC. (ECF No. 6 at 2, 9- 10.) The Complaint alleges five causes of action:[2] (1) “Breach of Contract Suit for Monetary Damages”; (2) “Claim for Interest Under N.C. Gen. Stat. § 58-3-225(e)”; (3) “Duty to Inform Third Parties”; (4) “Duty of Defendant to comply with N.C. Gen. Stat. § 58-3-225”; and (5) “Mandatory Injunction.” (ECF No. 6 at 12-14; ECF No. 8 at 3.)

         On March 10, 2016, Defendant removed the action to this Court, contending that federal question jurisdiction was present because “one or more of Plaintiff's claims are completely preempted by the Employee Retirement Income Security Act of 1974 (‘ERISA').” (ECF No. 1 ¶ 8.) Following removal, on March 25, 2016, Plaintiff filed a motion for preliminary injunction, seeking a mandatory injunction to compel BCBSNC to make payment to Plaintiff for “medically necessary” services rendered by Plaintiff to Defendant's insureds.[3](ECF No. 11 at 1.) Defendant then, on April 11, 2016, moved to dismiss all five claims in whole or in part under Rule 12(b)(6). (ECF No. 15; ECF No. 16 at 4.)

         II. SUBJECT MATTER JURISDICTION AND ERISA PREEMPTION

         Plaintiff, in its Complaint, asserts only state law claims, and thus this Court must assess, as a threshold matter, its subject matter jurisdiction.[4] In general, an action filed in state court may be removed to federal court “only ‘if it might have been brought in [federal court] originally.'” Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 370 (4th Cir. 2003) (alteration in original) (quoting Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 186 (4th Cir. 2002)). Here, the case was removed to this Court on the basis that the Court has federal question jurisdiction under ERISA. (ECF No. 1 ¶¶ 8-10.) Federal jurisdiction would therefore depend on whether one or more of Plaintiff's claims are completely preempted by ERISA. Salzer v. SSM Health Care of Okla. Inc., 762 F.3d 1130, 1138 (10th Cir. 2014) (“Although we have concluded that most of [plaintiff's] claims are not preempted, federal jurisdiction over any one claim is sufficient to support removal.”). If none of Plaintiff's claims is completely preempted, then there is no subject matter jurisdiction, and this Court must remand the matter to state court. See Marks v. Watters, 322 F.3d 316, 323 (4th Cir. 2003). Further, Defendant contends that Plaintiff's claims are subject to dismissal on grounds that they are preempted by ERISA. (ECF No. 16 at 4-5.) Because this matter presents issues involving ERISA preemption that are so intertwined with this Court's subject matter jurisdiction and Defendant's motion to dismiss, the Court starts with a review of ERISA.

         A. ERISA Overview

         “The United States Constitution gives Congress the power to preempt state law.” America's Health Ins. Plans v. Hudgens, 742 F.3d 1319, 1329 (11th Cir. 2014). “Congress enacted ERISA to ‘protect . . . the interests of participants in employee benefit plans and their beneficiaries' by setting out substantive regulatory requirements for employee benefit plans and to ‘provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.'” Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004) (alteration in original) (quoting 29 U.S.C. § 1001(b)). The United States Supreme Court explained that “[t]he purpose of ERISA is to provide a uniform regulatory regime over employee benefit plans.” Id. For this reason, “ERISA includes expansive pre-emption provisions, which are intended to ensure that employee benefit plan regulation would be ‘exclusively a federal concern.'” Id. (citation and quotation omitted). Courts recognize two types of ERISA preemption: complete preemption under § 502(a), 29 U.S.C. § 1132(a), and conflict preemption under § 514, 29 U.S.C. § 1144(a). See, e.g., Sonoco, 338 F.3d at 370-71; Darcangelo, 292 F.3d at 186-87.

         1. Complete Preemption

         Complete preemption is a jurisdictional doctrine that transforms a claim into one arising under federal law “even if pleaded in terms of state law.” Aetna, 542 U.S. at 208; Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 65, 67 (1987). The claim then can be brought originally in, or removed to, federal court. King v. Marriott Int'l, Inc., 337 F.3d 421, 425 (4th Cir. 2003). To determine whether a claim has such preemptive force, courts analyze whether the claim falls within the scope of ERISA's civil enforcement scheme, § 502(a), which provides the exclusive remedies for plans governed by ERISA. Aetna, 542 U.S. at 208-09. “A claim falls within the scope of § 502 when a ‘plan participant or beneficiary' brings suit ‘to, among other things, recover benefits, enforce rights conferred by an ERISA plan, remedy breaches of fiduciary duty, clarify rights to benefits, and enjoin violations of ERISA.'” Rollins v. Kjellstrom & Lee, Inc., 109 F.Supp.3d 869, 878 (E.D. Va. 2015) (quoting Marks, 322 F.3d at 323). The Fourth Circuit has made clear that when a state law claim is completely preempted under § 502(a) and has been removed to federal court, dismissal of the claim is inappropriate. See Darcangelo, 292 F.3d at 195 (“[W]hen a claim under state law is completely preempted and is removed to federal court because it falls within the scope of § 502, the federal court should not dismiss the claim as preempted, but should treat it as a federal claim under § 502.”). Rather, the court “may choose to grant plaintiff leave to amend her complaint in order to clarify the exact scope of relief requested under § 502(a).” Singh v. Prudential Health Care Plan, Inc., 335 F.3d 278, 292 (4th Cir. 2003).

         2. Conflict Preemption

         Under conflict preemption, “state laws that conflict with federal laws are preempted, and preemption is asserted as ‘a federal defense to the plaintiff's suit.'” Darcangelo, 292 F.3d at 186-87 (quoting Taylor, 481 U.S. at 63). Conflict preemption, however, does not authorize removal to federal court. Id. at 187. State laws are superseded under ERISA § 514 if they “relate to” an ERISA plan. Id. (quoting 29 U.S.C. § 1144(a)). According to the Supreme Court, a state law “‘relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). “‘State law' includes all laws, decisions, rules, regulations or other State action having the effect of law, of any State.” 29 U.S.C. § 1144(c); see Gresham v. Lumbermen's Mut. Cas. Co., 404 F.3d 253, 258 (4th Cir. 2005). Further, “[t]he Supreme Court has repeatedly emphasized that ERISA's preemptive scope is not limited to ‘state laws specifically designed to affect employee benefit plans.'” Wilmington Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 341 (4th Cir. 2007) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987)). “[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 pre-empted.” Aetna, 542 U.S. at 209. Unlike complete preemption, a state law claim that is conflict preempted under § 514 must be dismissed. See Marks, 322 F.3d at 323.

         3. Existence of an ERISA Plan A threshold question that must be resolved before a determination that ERISA preemption applies in a given case is whether the case involves an “employee benefit plan” as defined by ERISA. House v. Am. United Life Ins. Co., 499 F.3d 443, 448 (5th Cir. 2007); see also Searls v. Sandia Corp., 50 F.Supp.3d 737, 743 n.5 (E.D. Va. 2014). Plaintiff's Complaint does not identify a specific benefit plan governed by ERISA. Defendant contends, and Plaintiff does not dispute, that it is “‘overwhelmingly likely' that some of BCBSNC's Members are participants in ERISA-governed plans.” (ECF No. 16 at 8 n.4 (quotation omitted).) In addition, Defendant, as part of its Notice of Removal, submitted evidence that at least some of Plaintiff's patients for whom Plaintiff is seeking payment are covered by ERISA plans. (See ECF No. 2 ¶¶ 4-5 (stating that at least 115 members for which Plaintiff submitted claims were covered by 32 group health benefits plans governed by ERISA).) The Court concludes that there is sufficient evidence to satisfy this threshold prerequisite that this action involves a health care plan governed by ERISA.

         B. Plaintiff's Breach of Contract Claim is Completely Preempted

         As earlier stated, at least one of Plaintiff's claims must be completely preempted by ERISA for this Court to have subject matter jurisdiction. Plaintiff alleges in its first claim that BCBSNC owes it for “medically necessary” services provided to BCBSNC members. (See ECF No. 6 at 2, 12.) Defendant argues, among other things, that Plaintiff's claim should be dismissed as conflict preempted, contending that a determination of whether Plaintiff is entitled to payment involves interpretation of the ERISA plans. (See ECF No. 16 at 5 & n.3.) The Court agrees with Defendant that the claim may be conflict preempted; however, dismissal would be improper because the Court concludes that the claim is also completely preempted and, thus, affords a basis for the exercise of federal jurisdiction in this case. See Darcangelo, 292 F.3d at 195 (holding that, while an action to enforce the terms of an ERISA plan necessarily “relates to” an ERISA plan and is conflict preempted by § 514, such an action is also completely preempted § 502 and gives rise to federal jurisdiction).

         For a claim to be completely preempted by ERISA, it must fall within the ambit of § 502(a)'s civil enforcement provision. This provision provides, in relevant part:

(a) Persons empowered to bring a civil action A civil action ...

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