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HARTENBOWER v. DENT

May 7, 1997

MILTON F. HARTENBOWER, individually and as guardian of JOHN HARTENBOWER, a Minor, and CATHERINE HARTENBOWER, Plaintiffs,
v.
CAROLINE DENT, ELECTRICAL SPECIALTIES CO. HEALTH BENEFIT PLAN, and OSF HEALTHCARE SYSTEM, Defendants.



The opinion of the court was delivered by: ALESIA

 Before the court is plaintiffs Milton F. Hartenbower, individually and as guardian of John Hartenbower, a minor, and Catherine Hartenbower's motion to remand their case to state court pursuant to 28 U.S.C. § 1447 for lack of subject matter jurisdiction. For the following reasons, the court denies the motion to remand.

 I. BACKGROUND

 On November 13, 1992, defendant Caroline Dent's vehicle struck John Hartenbower, causing him to suffer multiple injuries. John's parents, Milton and Catherine Hartenbower, filed a negligence action against Dent. Subsequently, State Farm Insurance Company, the auto insurance carrier for Dent, offered to settle the suit for $ 50,000, the full amount of the available coverage, in exchange for a full release of all other causes of action against Dent. On October 22, 1996, the Hartenbowers filed a petition for settlement of a minor's cause of action, adjudication of liens, and other relief.

 At the time of the accident, Milton Hartenbower was an employee of Electrical Specialties Company and was a participant in its employee benefit plan ("the Plan"). Although the Hartenbowers have made claims against the Plan for payment of the medical expenses arising from John's accident, the Plan has denied liability, asserting that the language of the Plan only holds the Plan liable to the extent that the medical expenses exceed the relief available through other insurance or settlement proceeds. The issue of whether the Plan is liable for all or a portion of John's medical expenses currently is pending in this judicial district before Judge Williams, in Hartenbower v. Electrical Specialties Co. Health Benefit Plan, 1996 U.S. Dist. LEXIS 2565, Case No. 95 C 1638.

 Because the Plan's potential subrogation and reimbursement rights could be at issue in the settlement of the Hartenbowers' negligence action and the adjudication of liens, the Plan sought to intervene in the underlying negligence action. On January 3, 1997, after having been granted permission to intervene, the Plan removed the negligence case to this court pursuant to 28 U.S.C. § 1441(c). The Plan asserts that the resolution of the Hartenbowers' petition requires the court to construe or interpret the terms of the Plan; and because section 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. § 1132(a)(1)(B), completely preempts state actions by plan participants that involve construing or interpreting the terms of an ERISA plan, the case belongs in federal court. The Hartenbowers seek to remand the case to the Circuit Court of LaSalle County, Illinois, Thirteenth Judicial Circuit, from which it was removed, asserting that the action is solely a common law negligence action. The Hartenbowers also argue that because the Plan has not yet disbursed any funds for the payment of their medical expenses, the Plan's subrogation rights are not at issue.

 II. DISCUSSION

 The "well-pleaded complaint rule" mandates that the federal district court only has subject matter jurisdiction if the suit, as the plaintiff originally framed it or could have framed it, would have been within the district court's original jurisdiction at the time of removal. Federal Deposit Ins. Corp. v. Elefant, 790 F.2d 661, 667 (7th Cir. 1986); Fravel v. Stankus, 936 F. Supp. 474, 476 (N.D. Ill. 1996). A mere defense of federal preemption does not confer federal question jurisdiction. See Rice v. Panchal, 65 F.3d 637, 639 (7th Cir. 1995). However, under the doctrine of complete preemption, state common law claims falling within the scope of ERISA's civil enforcement provision, section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), are "displaced," and thus removable to federal court. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 60, 66, 107 S. Ct. 1542, 1544, 1548, 95 L. Ed. 2d 55 (1987); Fravel, 936 F. Supp. at 477. Because Congress has manifested an intent to make a cause of action falling within ERISA section 502(a) removable to federal court, the doctrine of complete preemption applies to such an action, and a plaintiff's complaint in such an action can be recharacterized as a complaint arising under federal law. See Taylor, 481 U.S. at 66-67, 107 S. Ct. at 1548.

 Section 502(a)(1)(B) of ERISA allows a plan participant or beneficiary "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). The Seventh Circuit has held that an action by an ERISA plan participant is an action to "enforce his rights under the terms of the plan" within the scope of section 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, 108 S. Ct. 1877, 1882, 100 L. Ed. 2d 410 (1988)). Relying on Rice, district courts have found that a plaintiff's motion to adjudicate liens requires construction and interpretation of an ERISA plan, and can be considered to be within the scope of ERISA section 502(a)(1)(B). See Musinski v. Staudacher, 928 F. Supp. 739 (N.D. Ill. 1996); Fravel v. Stankus, 936 F. Supp. 474 (N.D. Ill. 1996); Speciale v. Seybold, 951 F. Supp. 740 (N.D. Ill. 1996).

 For example, in Musinski, the plaintiff had sued the defendant for medical expenses resulting from an automobile accident. After settling with the defendant, the plaintiff moved for adjudication of the lien asserted by his employee benefit plan. 928 F. Supp. at 740. The plaintiff already had received full payment of his medical expenses from the plan, but hoped to limit the amount of expenses that the plan was seeking to capture pursuant to its subrogation/indemnification provision. Id. The plan removed the case to federal court, and the plaintiff moved to remand. Id. The court denied the plaintiff's motion to remand, holding that removal was proper because the plaintiff's motion to adjudicate the lien fell within the scope of ERISA section 502(a)(1)(B) by requiring construction of the ERISA plan. Id. at 743. The court stated:

 
In ERISA § 502(a)(1)(B) terms, Musinski's claim may perhaps not be one "to recover benefits," and perhaps he might not 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 ... require[s] construing [the ERISA plan.]"

 Id. See also Fravel, 936 F. Supp. at 476-78 (following Rice and Musinski in upholding removal).

 Rice and the subsequent Northern District of Illinois cases following it dictate that to the extent the Hartenbowers' petition for settlement and adjudication of liens requires construction of the Plan's ERISA subrogation and indemnification provisions, the Hartenbowers' action is completely preempted by section 502(a) of ERISA. Like the plaintiff in Musinski, the Hartenbowers are not seeking to recover benefits under the plan, enforce their rights under the Plan, or secure their right to future benefits under the Plan. In fact, those issues are currently pending in motions for summary judgment in Hartenbower v. Electrical Specialties Co. Health Benefit Plan, 1996 U.S. Dist. LEXIS 2565, Case No. 95 C 1638. However, because the Plan's potential right to subrogation and reimbursement would be implicated by the court's adjudication of liens, the court necessarily would have to construe and interpret the terms of the ERISA plan in deciding the ...


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