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United States District Court, Northern District of Illinois, Eastern Division

March 8, 1999


The opinion of the court was delivered by: Moran, Senior District Judge.


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 proper here.


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 claims 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 proper.

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 pleading:

  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
  assert rights.

(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.

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