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Estate of Fromherz v. Huston-Kmiec

United States District Court, N.D. Illinois, Eastern Division

September 18, 2014

ESTATE OF KIM FROMHERZ, by its Special Administrator, TOM FROMHERZ, Individually, Plaintiffs,


CHARLES P. KOCORAS, District Judge.

This matter comes before the Court for ruling on: (1) the motion of Plaintiff Estate of Kim Fromherz, by its Special Administrator, Tom Fromherz, and Plaintiff Tom Fromherz, individually, (collectively "Plaintiffs") to remand the removal of this case back to state court pursuant to 28 U.S.C. § 1447(c); and (2) the motion of the United States, as a representative of the Department of Health and Human Services ("DHHS"), the overseer of Medicare benefits, to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). For the reasons set forth below, Plaintiffs' motion to remand is denied and the United States' motion to dismiss is granted. Accordingly, this case is remanded back to state court to proceed in accordance with this ruling.


On May 3, 2006, Plaintiffs commenced a medical malpractice/wrongful death action against various health care administrators and a medical facility in the Circuit Court of Kane County, Illinois, stemming from the death of Kim Fromherz. Fromherz v. Marcia Huston-Kmiec et al., No. 06 LK 229 (Kane County, Ill.). Throughout the course of Kim Fromherz's hospitalization, Medicare paid $338, 537.29 in conditional payments for medical expenses. After eight years of litigation, Plaintiffs entered into a preliminary settlement agreement with remaining Defendants Marcia Huston-Kmiec M.D., Jon R. Doud, M.D., William O'Brien M.D., and Dreyer Medical Group (collectively "State Court Defendants"). Under the preliminary settlement agreement, the State Court Defendants would pay a total of $750, 000, with $500, 000 to be paid for the wrongful death of Kim Fromherz and $250, 000 to be paid for the loss of consortium to Tom Fromherz. As part of the settlement agreement, Plaintiffs moved the Kane County Court for leave to file a third amended complaint, dismissing the existing survivorship claim for medical expenses.

On June 20, 2014, Plaintiffs served a Verified Petition to Apportion and Approve Distribution and Attorney Fees ("Motion to Apportion") to the DHHS indicating that Medicare did not have a right to recover any proceeds of the settlements. Upon receipt of the Motion to Apportion, DHHS sought to remove the state court action to this Court based on the federal removal statute for governmental entities, 28 U.S.C. § 1442(a)(1). On July 22, 2014, the United States moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). On July 23, 2014, Plaintiffs moved to remand the case back to state court on the basis that removal was improper.


Federal Rule of Civil Procedure 12(b)(1) permits the court to dismiss an action for lack of jurisdiction over the subject matter. Fed.R.Civ.P. 12(b)(1). When a party moves for dismissal under Rule 12(b)(1) challenging the factual basis for jurisdiction, the nonmoving party must support its allegations with competent proof of jurisdictional facts. Thomson v. Gaskill, 315 U.S. 442, 446 (1942); Kontos v U.S. Dept. of Labor, 826 F.2d 573, 576 (7th Cir. 1987). "If a plaintiff cannot establish standing to sue, relief from this court is not possible, and dismissal under 12(b)(1) is the appropriate disposition." Am. Federation of Government Employees v. Cohen, 171 F.3d 460, 465 (7th Cir. 1999). Affidavits and other relevant evidence may be used to resolve the factual dispute regarding the court's jurisdiction. Kontos, 826 F.2d at 576.


Both Plaintiffs and the United States ultimately seek the remand of this case back to state court, however on a different basis. The Plaintiffs have moved to remand the case, without dismissing the state court Motion to Apportion. On the other hand, the United States initially seeks to establish that the removal was proper under the federal agency removal statute 28 U.S.C. § 1442. If this case is deemed to be properly before this Court, the United States seeks the dismissal of Plaintiffs' Motion to Apportion, which seeks to eliminate Medicare's claims. Only after the Motion to Apportion has been denied, does the United States asks this Court to remand the case back to state court for the resolution of Plaintiffs' state law claims not involving a federal Medicare interest.

A. Plaintiffs' Motion to Remand

Before determining the merits of the United States' motion to dismiss, we must first determine if the removal of this case from Illinois state court was proper. Plaintiffs object to the removal of the case on two grounds. First, Plaintiffs contend that the underlying medical malpractice cause of action does not meet the requirement that the action is "directed" against the United States as required by the removal statute, 28 U.S.C. § 1442(a). Additionally, even if this requirement is met, Plaintiffs argue that the proposed Motion to Apportion is not an action to collect revenue by a federal official as required by 28 U.S.C. § 1442(a)(1). We will discuss each issue in turn.

The federal agency removal statute permits the removal of a civil action brought in state court which is "against or directed" to the "United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity for any act under color of such office... or the collection of the revenue." 28 U.S.C. § 1442(a)(1). The removal provision is an exception to the "well-pleaded complaint" rule, which provides that for non-diversity cases to be removed, the complaint must establish that the case arises under federal law. Kircher v. Putnam Funds Trust, 547 U.S. 633, 644 n. 12 (2006).

Plaintiffs argue that the United States was not a named party to the state court action, and therefore the Plaintiffs' case cannot be "directed" to the United States. However, as the Seventh Circuit applies §1442, if a federal agency has a federal interest at stake in the state court proceeding, the case is properly removed. See Rodas v. Seidlin, 656 F.3d 610 (7th Cir. 2011); see also Law Offices La Ley Con John H. Ruiz v. John Doe Borrowers, 13 CV 22476, 2013 WL 4502313 (S.D. Fla. Aug. 23, 2013) (recognizing officers have a federal interest in the disposition of federal funds, whether or not they are named in the underlying action). Therefore, the United States not being named is not fatal to the propriety of the remand.

Plaintiffs assert that their Motion to Apportion settlement funds in state court was not an action "directed" to the United States, as required by analogous to the case at bar, however upon closer inspection, an essential component was present in Morgan and is absent here. In Morgan, the beneficiary of the settlement funds acknowledged and promised to repay Medicare for its conditional payment of medical expenses. In the case at bar, there is no indication of any acknowledgement of the debt or a promise to repay Medicare for the conditional expenses that were paid in the course of treating Kim Fromherz, thus imperiling any potential compensation. In remanding the case back to state court, the court in Morgan found ...

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