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COUGHLIN v. HEALTH CARE SERVICE CORP.

October 2, 2002

CANDICE COUGHLIN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
V.
HEALTH CARE SERVICE CORPORATION, A MUTUAL LEGAL RESERVE COMPANY, D/B/A BLUE CROSS BLUE SHIELD OF ILLINOIS, DEFENDANT



The opinion of the court was delivered by: St. Eve, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Candice Coughlin originally filed her Complaint in state court on behalf of herself and a putative class of similarly situated plaintiffs. Defendant Health Care Service Corporation ("HCSC") removed the action to federal court, alleging that the Employment Retirement Income Security Act of 1974 (ERISA) completely preempted the lawsuit and allowed for removal. (R. 1-1, Notice of Removal.) Coughlin now moves to remand the case to state court. (R. 12-1, Mot. to Remand.) Because this Court finds Coughlin's claims to be completely preempted by § 502(a), Coughlin's Motion to Remand is denied.

BACKGROUND

Coughlin brought her complaint in state court seeking a declaration of unjust enrichment, the establishment of a constructive trust, judgments of breach of covenants and contracts, and judgment of a violation of Illinois' Consumer Fraud Act and similar statutes enacted by other states. (R. 1-1, Compl.) Coughlin filed the lawsuit on behalf of herself and "all persons similarly situated" and sought class certification. (Id. at 1.) Defendant removed the action to federal court, claiming the state law claims were completely preempted by § 502(a) of ERISA. (R. 1-1, Notice of Removal.) Plaintiff then filed a Motion to Remand, arguing that her causes of action are only state law claims that are not completely preempted by ERISA. (R. 12-1, Mot. to Remand.)

Plaintiff's Complaint broadly alleges that HCSC realizes unfair and illegal profits by failing to adjust claimed reimbursement liens to reflect actual costs to the company. (R. 1-1, Compl. ¶ 1.) Plaintiff contends that, as the administrator of plans, HCSC enters into agreements with health care providers to provide services to HCSC members. (Id. ¶ 9.) According to the Complaint, HCSC "negotiates significant discounts" for those services. (Id.) Plaintiff claims that these discounts can come in various forms, including "up-front" reductions in the amount charged or billed by the providers and "back-end" refunds to HCSC. (Id.) Presumably, these discounts are not passed onto the participants in the HCSC plans.

The allegations specific to plaintiff Coughlin provide more context. Coughlin was injured in a fall outside of her apartment on February 2, 2000. (R. 1-1, Compl. ¶ 6.) At the time, she was insured under an HMO plan (the "Plan") that HCSC administered. (Id. ¶ 7.) Coughlin received benefits from the Plan for medical treatment related to her injuries. (Id.) According to the Complaint, HCSC claimed to cover and pay $23,632.85 of the $23,761.60 in health care provider charges. (Id. ¶ 12.) Coughlin was only required to pay $128.75. (Id.)

Meanwhile, Coughlin pursued tort claims against a third-party and its insurer for the injuries and damages she sustained in her fall. (R. 1-1, Compl. ¶ 10.) HCSC asserted a lien for $23,632.85 — the same amount as the purported benefits it claimed it paid related to the accident. (Id. ¶ 12.) Coughlin eventually settled the personal injury case for $150,000. (Id. ¶ 11.) HCSC agreed to comply with Illinois' common fund doctrine by reducing its claimed lien by one-third to pay its share of the attorney's contingency fee. (Id. ¶ 15.)

Over this period of time, HCSC sent Coughlin an itemization of services provided to Coughlin that it claimed to have paid. (R. 1-1, Compl. ¶ 13.) Suspecting that HCSC was not providing its actual out of pocket costs related to Coughlin's medical treatment — and believing that HCSC only had the right to collect on the lien what it paid for those services — Coughlin requested further documentation from HCSC. (Id. ¶ 14.) Specifically, Coughlin asked to see the contracts that HCSC had with the health care providers and documentation that would demonstrate whether HCSC received discounts or refunds not otherwise evidenced by its itemization of services. (Id.) HCSC refused Coughlin's demand and re-sent her the itemization. (Id.)

The reimbursement provision in the applicable HCSC Plan states:

If you or one of your covered dependents are injured by the act of omission of another person and benefits have been provided for that injury under this Certificate, you agree:
— to immediately reimburse the Plan for any payments received, whether by action at law, settlement or otherwise, to the extent that the Plan has provided benefits to you or your covered dependents; and
— that the Plan will have a lien to the extent of benefits provided. Such lien may be filed with the person whose act caused the injury, the person's agent or a court having jurisdiction in the matter.
For purposes of this provision, the cost of benefits provided will be the charges that would have been billed if you had not been ...

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