United States District Court, N.D. Illinois, Eastern Division
October 14, 2004.
EUGENE McCOY, Plaintiff,
UNICARE LIFE AND HEALTH INSURANCE COMPANY, a corporation; DAVID S. DEMOREST, M.D.; OAK WEST PRIMARY PHYSICIAN ASSOCIATION, INC., a corporation; WESTLAKE COMMUNITY HOSPITAL, Defendants.
The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Plaintiff Eugene McCoy's
("McCoy") motion for remand For the reasons stated below, we
deny the motion to remand
Defendant Unicare Life and Health Insurance Company
("Unicare"), is an Independent Physician Association model HMO
Plan that contracted with the United States Office of Personal
Management. McCoy was enrolled apparently as the spouse or dependent of a federal employee in a Federal Employee
Health Benefits Act of 1998 ("FEHBA"), 5 U.S.C. § 8901 et seq.,
HMO plan provided by Unicare. Defendant Oak West Primary
Physician Association, Inc. ("Oak West") is an Independent
Physician Association that has a network of contracting health
care service providers who render care and services under medical
plans, including McCoy's HMO plan.
In November of 2001, McCoy suffered first, second, and third
degree burns on his right arm and torso. Physicians at the Loyola
University Medical Center performed graft surgery on McCoy. McCoy
was released from the hospital on November 27, 2001, and his
treating physician ordered McCoy to undergo occupational therapy
for the skin graft. McCoy alleges in his amended complaint that
Defendant Dr. David Demorest ("Demorest"), acting as an agent and
employee for Unicare and Oak West, determined that McCoy could
only receive the occupational therapy if he sought the therapy at
Defendant Westlake Community Hospital in Melrose Park, Illinois
("Westlake"). McCoy alleges that Westlake "did not possess the
requisite skill or knowledge to properly perform occupational
therapy on a skin graft patient" (A Compl. Count IV, Par. 9) and
as a result he suffered personal and pecuniary injury. (A Compl.
Count IV, Par. 10). McCoy brought the instant action in Illinois
state court alleging malpractice claims against Unicare, Oak
West, Demorest, and Westlake. The action was subsequently removed
to federal court. McCoy has now filed a motion to remand LEGAL STANDARDS
A party may file a motion to remand a case for improper removal
based on lack of subject matter jurisdiction pursuant to
28 U.S.C. § 1447(c). The party seeking removal bears the burden of
establishing federal jurisdiction. Doe v. Allied-Signal, Inc.,
985 F.2d 908, 911 (7th Cir. 1993). Any doubt regarding
jurisdiction should be resolved in favor of remanding to the
state. Id. Furthermore, removal is only proper where the
state-court claims could have originally been brought in federal
court. 28 U.S.C. § 1441; Caterpillar Inc. v. Williams,
482 U.S. 386, 392 (1987).
I. Mixed Plan Eligibility and Treatment Issues
McCoy argues that his claim involves "mixed plan eligibility
and treatment issues" and that his claim is therefore the type of
claim envisioned in Pegram v. Herdrich, 530 U.S. 211 (U.S.
2000). However, in Aetna Health Inc. v. Davila, 124 S.Ct. 2488
(2004) the court limited the holding of Pegram stating that a
"mixed issues" claim referred to in Pegram is only applicable
to situations where a treating physician is making treatment
decisions while simultaneously owning or operating the health
plan for the patient and making eligibility determinations. Id.
at 2500-01. Also, the court in Pegram did not specifically
address FEHBA. Rather it addressed "mixed issues" claims in the
context of ERISA. 530 U.S. at 2153-54. Oak West argues that it is distinct from Demorest. Oak West
claims that it never treated McCoy and never employed Demorest.
McCoy alleges in his amended complaint that Demorest was an
employee or agent of Unicare and Oak West. (A Compl. Count I,
Par. 5, Count II, Par. 3, Count IV, Par. 2). However, it is clear
from the other allegations in McCoy's amended complaint that the
essential facts concerning Demorest's relationship with Oak West
is not contested. McCoy does not, for instance, argue that
Demorest received a salary directly from Oak West. Rather, it is
apparent that McCoy seeks to have the court infer from the agreed
upon set of facts that the relationship was such that Demorest
should be deemed an employee or agent of Oak West. McCoy fails
however, to cite any case law to support his novel theory that
such a connection may be inferred in this instance. Neither does
McCoy allege facts that would indicate that Demorest was involved
in treatment issues and eligibility issues. Clearly the facts in
this action are not the type of facts envisioned in Pegram when
addressing ERISA. McCoy contends that Demorest treated him,
however, there is no indication whatsoever, that Demorest made
treatment decisions for Unicare or Oak West and was
simultaneously the administrator of McCoy's plan or owned or
operated the plan. The facts in this action indicate that the two
types of decisions remained separate and distinct. Also, we would
be reluctant to simply infer that a new type of mixed issue
action has been created in the FEHBA context because a similar
type of claim was recognized in the ERISA context. Also as will
be discussed below, Aetna Health Inc. v. Davila, 124 S.Ct. 2488 (2004) is instructive in the ERISA context regarding
the complete preemption of claims.
II. Complete Preemption
Unicare and Oak West removed the instant action to federal
court on the basis that McCoy's claims are "fully pre-empted and
displaced by FEHBA. . . ." (Rem. Par. 4). Federal courts have
federal question subject matter jurisdiction for cases that arise
"under the Constitution, laws, or treaties of the United States."
28 U.S.C. § 1331. A claim arises "under the laws of the United
States if the plaintiff's complaint raises a federal issue."
Lister v. Stark, 890 F.2d 941, 943 (7th Cir. 1989).
Generally, "[f]ederal pre-emption is ordinarily a federal
defense to the plaintiff's suit . . . [,] does not appear on the
face of a well-pleaded complaint, and, therefore, does not
authorize removal to federal court." Metropolitan Life Ins. Co.
v. Taylor, 481 U.S. 58, 63 (1987). However, a removal may be
warranted under the doctrine of complete preemption, which is an
"`independent corollary' to the well-pleaded complaint rule."
Caterpillar Inc., 482 U.S. at 393. The complete preemption
doctrine allows removal only where Congress has so completely
preempted a particular area that no room remains for any state
regulation and the complaint would be `necessarily federal in
character.'" Bastien v. AT&T Wireless Servs., Inc.,
205 F.3d 983, 986-87 (7th Cir. 2000); See also Rogers v. Tyson Foods,
Inc., 308 F.3d 785, 788 (7th Cir. 2002) (stating that there
is complete preemption if there is a "congressional intent in the enactment of a federal
statute not just to provide a federal defense to a state created
cause of action but to grant a defendant the ability to remove
the adjudication of the cause of action to a federal court by
transforming the state cause of action into a federal cause of
There are two alternative approaches in case law for the
complete preemption doctrine which are referred to as the
complete preemption model and the replacement model. See
McQuerry v. American Medical Systems, Inc., 899 F.Supp. 366, 369
(N.D. Ill. 1995) (delineating approaches into complete preemption
model and replacement model). See also Rogers, 308 F.3d at 788
(indicating that replacement model is an approach under complete
preemption doctrine). But see Bastien, 205 F.3d at 986
(indicating that the applicable standard for the complete
preemption doctrine is whether Congress intended to completely
preempt an area and not leave room for state claims); Franczyk
v. Cingular Wireless, LLC, 2004 WL 178395, at *1 (N.D. Ill.
2004) (stating that "[i]n some instances, Congress has completely
preempted a particular area where there is no room for any state
regulation and the complaint is `necessarily federal in
Under the replacement model "removal is appropriate only if
federal law not only preempts the state claim but also replaces
it with a federal remedy." McQuerry, 899 F.Supp. at 369.
According to this line of cases, the "ability to bring suit under
[federal law] is an element of `complete preemption.'" Rogers,
308 F.3d at 788. The doctrine of complete preemption is not
applicable "if a federal remedy did not exist in the alternative . . . [because] [o]therwise, a plaintiff would
be forced into federal court with no relief available for
`vindicating the same interest.'" Id. Federal preemption trumps
state law, "but the foundation for removal is the creation of
federal law to replace state law." Id. Thus, "unless the
federal law has created a federal remedy no matter how limited
the federal law, of necessity, will only arise as a defense to
a state law action' and will thus not give rise to federal
question jurisdiction underlying complete preemption." Id.
In the instant action the main thrust of Defendants' argument
is that McCoy's claims are preempted by federal law. Defendants'
arguments are mainly limited to the complete preemption model and
Defendants fail to provide any arguments regarding the
Defendants rely upon Aetna Health Inc. v. Davila,
124 S.Ct. 2488 (2004). In Davila the court addressed the applicability of
the complete preemption doctrine to the Employee Retirement
Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.,
completely preempted certain claims. Id. at 2499. Although a
comparison between ERISA and FEHBA is instructive, we must also
analyze FEHBA itself and Congressional intent.
In 1998 Congress amended FEHBA and broadened the scope of the
preemption provision to read as follows:
The terms of any contract under this chapter which
relate to the nature, provision, or extent of
coverage or benefits (including payments with respect
to benefits) shall supersede and preempt any State or
local law, or any regulation issued thereunder, which
relates to health insurance or plans. 5 U.S.C. § 8902. The lower federal courts are split
on the issue of the applicability of the complete
preemption doctrine to FEHBA. See Haller v. Kaiser
Found. Health Plan of the Northwest,
184 F.Supp.2d 1040, 1046-48 (D. Or. 2001) (explaining that there is
a split among the district courts).
We agree with the reasoning set forth in Doyle v. Blue Cross
Blue Shield of Illinois, 149 F.Supp.2d 427
(N.D. Ill. 2001) and
Rievley v. Blue Cross Blue Shield of Tennessee,
69 F.Supp.2d 1028
(E.D. Tenn. 1999). The courts in both cases examined the
expansive language included in FEHBA stating that the provisions
"shall supersede and preempt any State or local law,"
5 U.S.C. § 8902, and the courts noted that in 1998 Congress expanded the
scope of preemption farther by removing language that limited
preemption to circumstances where state law was "inconsistent
with" health insurance contracts. 149 F.Supp.2d at 432;
69 F.Supp.2d at 1033-34. The courts also referred to the legislative
history regarding the 1998 amendment in which Congress indicated
the intent behind the amendment was to "broaden the preemption of
State and local laws" to the degree that "FEHB program contract
terms which relate to the nature or extent of coverage or
benefits (including payments with respect to benefits)
completely displace State or local law relating to health
insurance or plans. . . ."). H.R.Rep. No. 105-374, at 16 (1997)
(emphasis added); 149 F.Supp.2d at 432; 69 F.Supp.2d at 1034. We
agree with the court in Rievley that Congress has "clearly
manifested an intent to preempt state law regarding the terms and benefits of FEHBA plans." Id. at 1034
(quoting Kight v. Kaiser Found. Health Plan of Mid-Atlantic
States, Inc, 34 F.Supp.2d 334
, 339 (E.D.Va. 1999)). As the court
indicated in Doyle, the doctrine of complete preemption is not
barred simply because Congress has not specifically stated that
the FEHBA area is "completely preempted." 149 F.Supp.2d at 433.
Such a requirement of an express statement from Congress is not
logical considering the courts' instructions to consider evidence
of Congressional intent in addressing the applicability of the
complete preemption doctrine. We conclude that there is
sufficient evidence that Congress intended to completely preempt
claims connected to FEHBA.
We also note that we do not find the opposing case law on this
issue to be persuasive. For example, in State Farm Indemnity v.
Fornaro, 227 F.Supp.2d 229, 239 (D.N.J. 2002) the court held
that the doctrine of complete preemption is not applicable to
FEHBA. However, the court in making its ruling, relied upon
Goepel v. National Postal Mail Handlers Union, a Div. of LIUNA,
36 F.3d 306 (3rd Cir. 1994), stating that "Goepel is
controlling." Id. The problem with such reliance on Goepel is
that the ruling was made prior to the 1998 amendment to FEHBA and
the legislative history mentioned above. Thus, the court in
State Farm Indemnity failed to consider the effect of the 1998
amendment and the legislative history.
Likewise in Haller v. Kaiser Foundation Health Plan of the
Northwest, 184 F.Supp.2d 1040 (D.Or. 2001) the court noted that
the district courts are split on the issue, but concluded that there is not complete preemption. Id.
at 1046-47. However, in coming to such a conclusion the court in
Haller initially relies upon a 1996 case and a 1987 case which
were ruled upon prior to the 1998 amendments to FEHBA. Id. The
court in Haller also relied upon Pegram, the holding of which
has recently been limited in Aetna Health Inc. v. Davila,
124 S.Ct. 2488 (2004). Id. at 1046. The court in Haller also
places a great emphasis on case law pertaining to ERISA in
concluding that complete preemption is not applicable. Id.
ERISA and FEHBA are not redundant acts. They serve different
purposes and whether or not Congress intended to take the step
towards complete preemption in regards to one act or the other
act ultimately must be analyzed in accordance with the specific
act and Congressional intent of the act. Simply because Congress
did or did not intend complete preemption in regards to one of
the acts does not dictate a like intention in regards to the
other statute. As indicated above, ERISA case law may be
instructive, but should not be given too much consideration.
Thus, the over reliance in Haller on ERISA case law is
misplaced. We also disagree with the finding in Haller that
since there is no provision in the FEHBA providing a remedy for
malpractice, that it is a foregone conclusion that any
malpractice claims cannot be the subject of complete preemption.
Id. at 1047-48. A plaintiff cannot circumvent the clear intent
of Congress to completely preempt an area of law by phrasing
allegations so that they appear to be malpractice allegations and
by omitting any reference to the FEHBA. Regardless of the titles
and jargon included in a complaint, if it is clear from the facts in the action that the allegations are essentially
contesting the eligibility of benefits rather than treatment
decisions, then the claims should properly be deemed what they
truly are and the court should not proceed under the pretense
that the allegations are legitimate malpractice claims.
We also find that the claims in the instant action fit within
the remedy provisions of FEHBA and the scope of the preemption.
In the instant action, McCoy attempts to portray Unicare and Oak
West's involvement in his medical care as malpractice. However,
McCoy's claims against Unicare and Oak West are in essence
complaints in regards to the administration of benefits and his
dissatisfaction with the administration of his benefits when he
was referred to Westlake. There is no indication that Unicare or
Oak West had any role in the treatment of McCoy and McCoy cannot
artfully attempt to plead around FEHBA, particularly when, as in
this instance, Congress has indicated that the complete
preemption doctrine is applicable. Therefore, we deny the motion
Based on the foregoing analysis, we deny the motion to remand
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