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SPECIALE v. SEYBOLD

December 19, 1996

KIMBERLY SPECIALE, Plaintiff,
v.
KATHERINE SEYBOLD, Defendant.



The opinion of the court was delivered by: HART

 This matter arises on plaintiff Kimberly Speciale's motion to remand this action to state court for lack of subject matter jurisdiction and the motion of respondent Administrative Committee of Wal-Mart Stores, Inc. Associates Health and Welfare Fund ("Wal-Mart") for summary judgment.

 I. MOTION TO REMAND

 After plaintiff suffered injuries in an automobile accident, she filed this action in the Circuit Court of the Sixteenth Judicial Circuit, Kane County against defendant Katherine Seybold. Plaintiff is a participant in Wal-Mart Stores, Inc. Associates Health and Welfare Fund (the "Plan"). The Plan is a self-funded employee welfare benefit plan sponsored and maintained by Wal-Mart Stores, Inc. and governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). The Plan paid a total of $ 54,015.07 for plaintiff's medical expenses. After plaintiff agreed to settle her claims against defendant for $ 45,000.000, Wal-Mart sent plaintiff a notice that, pursuant to the terms of the Plan, it was entitled to the settlement funds as reimbursement for the medical expenses it had paid on behalf of plaintiff. Plaintiff filed a motion to adjudicate liens, seeking a declaration as to numerous liens asserted in the action, including the subrogation lien asserted by Wal-Mart and the liens of other health care providers. Wal-Mart then removed the action to federal court. Plaintiff moves to remand this action to state court for lack of federal subject matter jurisdiction.

 Under 28 U.S.C. § 1441, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction may be removed by the defendant or the defendants, to the district court of the United States." Wal-Mart asserts that this cases raises a federal question under 28 U.S.C. § 1331, which confers jurisdiction over cases that "arise under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. In the ordinary case, "a court determines whether there is federal question jurisdiction by examining the plaintiff's well-pleaded complaint, 'for it is long settled law that a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law.'" Rice v. Panchal, 65 F.3d 637, 639 (7th Cir. 1995) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987)). A defendant, therefore, cannot remove a case to federal court merely by asserting a federal question in his responsive pleading. Id. "The issues raised in the plaintiff's complaint, not those added in the defendant's response, control the litigation." Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1486 (7th Cir. 1996).

 The Supreme Court, however, has created an exception to the general rule that the plaintiff's complaint controls. The "complete preemption" doctrine holds that "to the extent that Congress has displaced a plaintiff's state law claim, that intent informs the well-pleaded complaint rule, and a plaintiff's attempt to utilize the displaced state law is properly 'recharacterized' as a complaint arising under federal law." Rice, 65 F.3d at 640 n.2 (citing Taylor, 481 U.S. at 64). In Taylor, the Supreme Court held that the "complete preemption" exception applied to ERISA cases, explaining that in such cases "Congress has clearly manifested an intent to make causes of action within the scope of the civil enforcement provisions of § 502(a) removable to federal court." Taylor, 481 U.S. at 66-67. "[A] suit by a beneficiary to recover benefits from a covered plan . . . falls directly under § 502(a)(1)(B) of ERISA, which provides an exclusive federal cause of action for resolution of such disputes." Id. at 62-63.

 Wal-Mart asserts that federal jurisdiction exists because plaintiff, an ERISA plan participant, seeks adjudication of a lien asserted by an ERISA plan to enforce the Plan's reimbursement provision. Wal-Mart argues that this pattern of facts falls within Section 502(a)(1)(B) of ERISA, which provides that a participant may bring an action 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)(3).

 In Rice, the Seventh Circuit addressed complete preemption in the ERISA context, holding that "a suit brought by an ERISA plan participant is an action to 'enforce his rights under the terms of a plan' within the scope of § 502 (a)(1)(B) where the claim rests upon the terms of the plan or the 'resolution of the [plaintiff's] state law claim . . . require[s] construing [the ERISA plan].'" Rice, 65 F.3d at 644-45 (quoting Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 407, 100 L. Ed. 2d 410, 108 S. Ct. 1877 (1988)). Although the Seventh Circuit has not addressed the precise question of whether a plaintiff's motion to adjudicate a lien asserted by an ERISA plan gives rise to federal question jurisdiction, several courts in this district have analyzed this issue subsequent to Rice. At least three district courts have found that federal question jurisdiction existed over the plaintiff's motion for adjudication. Musinski v. Staudacher, 928 F. Supp. 739, 743-44 (N.D. Ill. 1996); Fravel v. Stankus, 936 F. Supp. 474, 477 (N.D. Ill. 1996); Cavanaugh v. Great Lakes Pet Supply, Inc., 1995 U.S. Dist. LEXIS 19187, 1995 WL 765287, *3 (N.D. Ill. Dec. 23, 1995). Prior to Rice, at least one district court had found that no jurisdiction existed over a motion to adjudicate. Washington v. Humana Health Plan, Inc., 883 F. Supp. 264 (N.D. Ill. 1995).

 Musinski v. Staudacher involved a factual situation nearly identical to this case. The plaintiff, a participant under an ERISA employee benefit plan, received benefits from the plan for medical expenses resulting from an automobile accident. After settling with the tortfeasor who caused his injuries, the plaintiff moved in the state court for adjudication of a lien asserted by the plan under the contractual subrogation/indemnification provision contained in the plan. The defendant then removed the case to federal district court. The court applied the analysis of Rice and concluded as follows:

 
In ERISA § 502(a)(1)(B) terms, Musinski's claim may perhaps not be one "to recover benefits," and perhaps he might be characterized as resisting Blue Cross' effort to enforce its rights under the Plan rather than seeking to enforce his own, but it is surely the case that in the language Rice adapted from Lingle, the "resolution of the [plaintiff's] state law claim . . . requires construing [the ERISA plan]."

 Musinski, 928 F. Supp. at 743-44. The court therefore held that removal of the action to federal court had been proper.

 Plaintiff asserts that Musinski's rationale should be rejected because court's analysis did not consider the Supreme Court's recent holding in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 131 L. Ed. 2d 695, 115 S. Ct. 1671 (1995) in applying Rice. New York State Conference, however, addressed conflict preemption under Section 514 of ERISA, rather than complete preemption under Section 502(a) and hence is inapplicable to the analysis of plaintiff's motion to adjudicate. Plaintiff also urges that the Illinois Supreme Court decision Scholtens v. Schneider, 173 Ill. 2d 375, 671 N.E.2d 657, 219 Ill. Dec. 490 (1996), which applied New York State Conference, demonstrates that federal jurisdiction does not exist over this case. Scholtens, however, similarly addressed conflict preemption under ERISA in determining whether Section 514 preempts application of the common fund doctrine to self-funded employee benefit plans. 671 N.E.2d at 660. Moreover, even if Scholtens were binding on federal courts, it would not help plaintiff's argument because the court specifically noted that the trial court "did not adjudicate the Trustees' rights under the terms of either the ERISA plan or the subrogation agreement, but simply applied the common fund doctrine to the facts before it." Id. Unlike the facts of Scholtens, jurisdiction exists in this case because adjudication of Wal-Mart's subrogation lien "require[s] construing [the ERISA plan]."

 Similar to Musinski, plaintiff's motion to adjudicate does not appear to literally seek enforcement of her rights under the Plan. What plaintiff really seeks is a judicial determination of who is entitled to what part of her settlement. In essence, she is asserting her right not to pay back the Plan for expenses it paid on her behalf. A component of the analysis of plaintiff's motion to adjudicate will involve construction of the Plan's ...


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