United States District Court, Northern District of Illinois, Eastern Division
March 8, 1999
ROSA SCIANNA, AND GIOVANNI URSB AND MARIO URSO, MINORS, BY THEIR FATHER AND NEXT FRIEND, CECILIO URSO, PLAINTIFFS,
CARA M. FURLONG, AND TRUSTMARK INSURANCE COMPANY (MUTUAL), DEFENDANTS.
The opinion of the court was delivered by: Moran, Senior District Judge.
MEMORANDUM AND ORDER
Plaintiffs filed this suit in state court on July 2, 1998, to recover
damages for personal injuries sustained by 3-year old Giovanni Urso
(Giovanni) and his brother Mario (Mario) when their mother's car was hit
as she pulled out of a grocery store parking lot. On September 21, 1998,
pursuant to Circuit Court of Cook County Rule 6.4, the boys' father,
Cecilio Urso (Urso), filed a "Petition to Approve Minor's Settlement and
Adjudicate Purported Lien" (petition).*fn1 Trustmark Insurance Company
(Trustmark), the purported issuer of the lien in question, has removed
the action to federal court, claiming that resolution of the dispute will
require interpretation of the Ursos' benefits and obligations under an
employee benefits plan (plan) governed by the Employee Retirement Income
Security Act of 1974, 29 U.S.C. § 1001 et seq. (ERISA). Plaintiffs
contend that this court does not have federal question jurisdiction over
the action because the petition is not a claim for relief seeking
benefits under the plan and therefore the state cause of action is not
preempted by ERISA. We agree with Trustmark that federal jurisdiction is
Under 28 U.S.C. § 1441 (c), "Whenever a separate and independent
claim or cause of action within the jurisdiction conferred by section
1331 of this title is joined with one or more otherwise non-removable
or causes of action, the entire case may be removed and the district
court may determine all issues therein, or, in its discretion, may remand
all matters in which State law predominates." Section 1331, of course,
provides federal jurisdiction over all civil actions arising under the
Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331.
Thus, if Urso's petition is a "separate and independent claim" that has
been joined' with the otherwise nonremovable action against Carla
Furlong, and the claim falls within the scope of "federal question"
jurisdiction under § 1331, then removal of the entire action is
a. Is the petition a separate and independent claim?
Trustmark contends that "The Petition . . . is actually a complaint
seeking to recover benefits from an employee benefit plan. . . . [I]t
seeks to declare the rights of the father and injured son. . . regarding
an obligation imposed by the terms and conditions of the Plan. . . ."
(Notice of Removal at ¶ 3). Urso vigorously denies that the petition
is a "complaint" and intimates that its filing was merely pro forma
compliance with state rules. He directs our attention to the format of
The PETITION is entitled "Petition to Approve Minor's
Settlement and Adjudicate Purported Lien" and as the
title indicates is asking the State Court for approval
of the settlement and to adjudicate the lien, all of
which is mandated by Cook County Circuit Court Rule.
6.4. Nowhere in the PETITION does the Plaintiff
GIOVANNI URSO, seek to clarify the rights under the
plan, nor does he use the PETITION as a Complaint to
(Reply at 1-2).
Cecilio's protestation mistakenly elevates form over substance. The
title of the pleading does not change the fact that Urso is seeking first
to compel Trustmark to pay benefits to which he feels his son is entitled
(petition at ¶ 11), and, second, to prevent Trustmark from asserting
any subrogation rights against Giovanni's recovery under the settlement
agreement (id. at ¶ 13). The prayer for relief in the petition asks,
inter alia, for "an Order denying Trustmark Insurance Company any right
to Reimbursement as to funds received for injuries sustained by the
minor, GIOVANNI URSO, a minor [sic]*fn2 and further ordering Trustmark
Insurance Company to pay all medical bills incurred by CECILIO URSO, for
injuries sustained by his minor son, GIOVANNI URSO." Notice of the
petition was forwarded to Trustmark, accompanied by a summons addressed
"To each Defendant." Clearly, Urso views Trustmark as the defendant to a
legal claim which is distinct from the negligence action against
Furlong. It is not the facts that the court focuses upon to determine
whether the claims are "separate and independent," but rather the legal
rights involved. See American Fire & Cas. Co. v. Finn, 341 U.S. 6, 13, 71
S.Ct. 534, 95 L.Ed. 702 (1951) (superseded by statute on other grounds).
We conclude that the petition represents a separate and independent claim
for the purpose of determining removal jurisdiction under
28 U.S.C. § 1441 (c).
b. Does the claim fall within the federal question jurisdiction?
Ordinarily, a court determines whether there is federal question
jurisdiction by examining the plaintiffs well-pleaded complaint.
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95
L.Ed.2d 55 (1987), citing Louisville & Nashville R. Co. v. Mottley,
211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908); Rice v.
Panchal, 65 F.3d 637, 639 (7th Cir. 1995). If the plaintiffs claim arises
under state law, the mere assertion of federal preemption as a defensive
argument—sometimes called "conflict preemption"—will not
confer federal question jurisdiction. Taylor, 481 U.S. at 63-64, 107
S.Ct. 1542; Franchise Tax Bd. of Cal. v. Construction Laborers Vacation
Trust for Southern Cal., 463 U.S. 1, 9-12, 25-27, 103 S.Ct. 2841, 77
L.Ed.2d 420 (1983). "Complete preemption," on the other hand, is the
doctrine which recognizes that federal law may sometimes so completely
preempt a particular area that any civil complaint raising this select
group of claims is necessarily federal in character. Taylor, 481 U.S. at
63-64, 107 S.Ct. 1542. The Supreme Court has found that Congress intended
to make causes of action within the scope of ERISA's § 502(a)
removable to federal court under the doctrine of complete preemption.
Id. at 64, 107 S.Ct. 1542; Rice, 65 F.3d at 639; Kaszula v. Parker, 1997
WL 106267, *2 (N.D.Ill.). "If a state law claim has been `displaced,' .
. . and therefore completely preempted by § 502(a), then a
plaintiffs state law claim is properly `recharacterized' as one arising
under federal law." Rice, 65 F.3d at 640 (citations omitted); see also
Ingersoll-Rand v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474
(1990) (concluding that there is also complete preemption whenever a
plaintiffs cause of action falls within the scope of an ERISA provision
that he or she can enforce via § 502(a)). According to the 7th
Circuit, Franchise Tax and Taylor establish that ERISA § 502(a)
provides the basis for complete preemption, whereas § 514(a) provides
the basis for conflict preemption. Rice, 65 F.3d at 639-640. We must
decide, therefore, whether Cecilio's claim against Trustmark is
completely preempted, or whether Trustmark's defensive arguments are
merely an assertion of conflict preemption under ERISA § 514(a),*fn3
in which case remand would be appropriate.
Section 502(a)(1)(B)*fn4 of ERISA provides that "(a) A civil action
may be brought—(1) by a participant or beneficiary—(B) 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." Whether a state claim falls within
the scope of § 502(a) must be determined on a case-by-case basis.
See Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 220, 105 S.Ct. 1904, 85
L.Ed.2d 206 (1985). On hard cases, the Court has indicated that we should
look to the case law interpreting the preemptive force of § 301 of
the Labor Management Relations Act, on which the ERISA provision is
modeled. Taylor, 481 U.S. at 64-66, 107 S.Ct. 1542; Rice, 65 F.3d at
643. The Seventh Circuit has gleaned several guiding principles from
those cases. Rice, 65 F.3d at 643-644. First, if resolving the state law
claim involves a purely factual inquiry that does not require any
interpretation of the contract, then the state law remedy is
"independent" for preemption purposes. A need to simply refer to the
contract will not kick in preemption, but a need to interpret a contract
term will. Second, if the plaintiffs "right" is rooted in the contract,
then resolution of a claim based on that right would require
interpretation of contract and preemption is appropriate. Third, where
state law creates a qualitative standard by which the performance of the
contract is evaluated, then that state law is completely preempted.
By the express language of Urso's pleading, the petition is a claim to
recover benefits due to him or his covered dependents under the terms of
his plan. Urso's assignment of rights to Giovanni does not change this.
Moreover, the issue at the heart of the petition is whether the language
of the plan's reimbursement provision should be read through the lens of
Illinois' Family Expense Act, 750 ILCS § 65/15. Under the Act,
parents are liable for medical expenses incurred by their minor children.
Courts interpreting the Act have concluded that a health insurance
company that pays for the medical care of a dependent of a subscriber
parent has no right of subrogation or reimbursement against the minor's
estate. See Estate of Hammond v. Aetna Casualty, 141 Ill. App.3d 963, 96
Ill.Dec. 270, 491 N.E.2d 84, 85-86 (1986). Here, the adjudicating court
will have to interpret the plan's subrogation provisions and determine
whether the Illinois Family Expense Act renders those provisions invalid
such that the plan must pay out benefits without first securing its right
to reimbursement from Giovanni's settlement award. This is clearly a
claim a that Congress intended ¶ 6 federalize under § 502(a).
Urso suggests that the Seventh Circuit's decision to remand in Speciale
v. Seybold, 147 F.3d 612 (7th Cir.), cert. denied, Administrative
Committee, Walmart Stores, Inc. v. Speciale, ___ U.S. ___, 119 S.Ct.
542, 142 L.Ed.2d 450 (1998), is on point because Speciale, like Urso,
filed a motion to adjudicate liens as an integral part of her state
personal injury action. The posture of the case when Speciale's motion was
filed, however, makes the court's holding inapposite here. Speciale, an
adult employed participant in Wal-Mart's ERISA-governed plan, was injured
in an automobile accident. The plan paid the major portion of her medical
expenses, $54,051.07, and the remaining providers filed medical liens to
recover the unpaid $16,512.84. When Speciale settled for $45,000, she
filed a motion to adjudicate requesting that the court apportion the
settlement proceeds among the plan and the fifteen providers asserting
claims. Wal-Mart removed the case to federal court, where the district
judge denied remand and awarded the plan the entire settlement fund. The
Seventh Circuit held that the district court had erroneously relied on
conflict preemption under § 514(a) to find federal jurisdiction and
remanded the case back to state court. The court highlighted its earlier
decision in Blackburn v. Sundstrand Corp., 115 F.3d 493 (7th Cir.),
cert. denied, ___ U.S. ___, 118 S.Ct. 562, 139 L.Ed.2d 403 (1997), which
held that § 502 is "irrelevant" when "neither the original tort
action nor the petition to adjudicate adverse claims to the settlement
fund sought a payment from the plan." Blackburn, 115 F.3d at 494. The
court in Speciale concluded by noting that "Plaintiffs personal injury
case has been settled. Wal-Mart's subrogation right has not been
questioned. What remains is simply a determination on the apportionment
of the funds under state law." Speciale, 147 F.3d at 617.
The Ursos' petition against Trustmark does not represent the final
chapter of the dispute in which the only thing left to do is distribute
the award money. Quite the contrary, the petition is the opening legal
salvo in the Ursos' battle for full compensation. When Cecilio Urso would
not sign the reimbursement agreement required by the terms of the plan,
Trustmark refused to pay any of the submitted claims. Now, relying on the
Family Expense Act, the petition seeks to compel Trustmark to pay the
benefits without the prerequisite subrogation pledge. That claim for
payment of benefits is, however, completely preempted by ERISA §
502(a).*fn5 The petition
is appropriately recharacterized as a federal claim which has been joined
with the separate and independent claim against Furlong, making removal
proper under § 1441(c). We thus deny plaintiffs' motion to remand the
entire matter to state court, deny plaintiffs' motion to strike
Trustmark's answer, and order that the caption of the case be revised to
reflect Trustmark's status as a defendant to the action. We also exercise
our discretion under § 1441(c) to sever those matters in which state
law predominates and hereby remand the negligence action against
Furlong, the question of good faith settlement, and the resolution of any
outstanding liens other than those issued by Trustmark. We retain
jurisdiction over all questions concerning the parties' rights, benefits
and obligations under the plan.