as a third party beneficiary. Such claims, as in Einstein and Friends Hospital, are independent of the Fund's actual obligations under the plan. Despite the broad preemptive effect of ERISA, I believe that plaintiffs' non-third party beneficiary claims are not preempted by its provisions. Although plaintiffs' non-third party beneficiary claims might well be vulnerable at the summary judgment stage if plaintiffs cannot aver facts which show they are entitled to payment without reference to the plan and independent from what plaintiffs are due under the plan, I cannot at this point conclude that these counts as set forth in the complaint are preempted by ERISA.
My reconsideration of the removal jurisdiction question must begin with the "well-pleaded complaint" rule. In deciding whether this action was properly removed from state court pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1331 ("federal question" jurisdiction), the well-pleaded complaint rule requires that the federal question be presented on the face of the plaintiffs' properly pleaded complaint. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S. Ct. 1542, 1546, 95 L. Ed. 2d 55 (1987); Allstate Ins. Co. v. 65 Security Plan, 879 F.2d 90, 93 (3d Cir. 1989).
It is clear that plaintiffs' complaint does not present, on its face, any questions of federal law. All five counts are brought under state common-law theories, and make no reference to federal law. Defendant, however, argues that because the third party beneficiary claims "assert claims based upon the Plan of the National Benefit Fund," see defendant's supplemental memorandum in support of removal jurisdiction, at 1 (Supplemental Memorandum), and because plaintiffs attach as an exhibit and incorporate into their complaint the plan SPD, which makes reference to ERISA, plaintiffs' complaint presents questions of federal law on its face.
I disagree. It is well settled that for a case to present a federal question, "the statute, . . . right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action." Gully v. First Nat'l Bank of Meridian, 299 U.S. 109, 112, 81 L. Ed. 70, 57 S. Ct. 96 (1936). Mere reference to ERISA in an exhibit to the complaint does not make ERISA an "essential element" of plaintiffs' third party beneficiary claim.
At best, the ERISA reference in the SPD signals that ERISA may preempt the third part beneficiary claim, and I have so held. However, ERISA preemption of plaintiffs' claims alone cannot make this action removable. Federal preemption is ordinarily a defense to a plaintiffs' suit and as such does not appear on the face of a well-pleaded complaint. Therefore, the mere fact that federal law preempts a claim or claims in plaintiffs' complaint does not authorize removal to federal court. See Metropolitan Life, 107 S. Ct. at 1546; Allstate, 879 F.2d at 93.
Even though I find that no removal jurisdiction exists under the well-pleaded complaint rule, removal jurisdiction exists in this action under the doctrine of "complete preemption." Under this "independent corollary" to the well-pleaded complaint rule, removal jurisdiction may exist where "'Congress . . . so completely preempts a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'" Allstate, 879 F.2d at 93 (quoting Metropolitan Life, 107 S. Ct. at 1546). Once an area of state law has been completely preempted, any claim purportedly based on that preempted state law is considered from its inception a federal claim. Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S. Ct. 2425, 2430, 96 L. Ed. 2d 318 (1987).
The Third Circuit in Allstate stated that the doctrine "applies only when two circumstances are present: when the enforcement provisions of a federal statute create a federal cause of action vindicating the same interest that the plaintiff's cause of action seeks to vindicate and when there is affirmative evidence of a congressional intent to permit removal despite the plaintiff's exclusive reliance on state law." Id. (citing Railway Labor Executives Ass'n v. Pittsburgh & Lake Erie R.R., 858 F.2d 936, 939 (3d Cir. 1988)). In my earlier opinion in this action, I found that plaintiffs' third party beneficiary cause of action failed the first prong of the two-prong Allstate because I believed that under Allstate and an earlier case, Northeast Dep't ILGWU v. Teamsters Local Un. No. 229, 764 F.2d 147 (3d Cir. 1985), the plaintiff hospitals did not have standing to pursue an ERISA claim under ERISA's civil enforcement provision, 29 U.S.C. § 1132 (a) (1) (B). That section provides that a participant or beneficiary of an ERISA plan may bring a civil action under ERISA to recover benefits or enforce or clarify rights to future benefits under the plan. Id.
It is clear that the hospitals in the present case do not qualify as "participants" under the ERISA statutory definition. See 29 U.S.C. § 1002 (1982). Nor do they qualify as "beneficiaries" in their own right. See id.; Cameron Motor, Inc. v. United Mine Workers, 575 F. Supp. 1243, 1246 (W.D. Pa. 1983). However, I believe plaintiff's do have standing as third beneficiaries of the Fund Participants.
Neither Allstate nor Northeast Dep't specifically held that a hospital which provided health care services to fund participants cannot maintain a suit under ERISA as a third party beneficiary. The Third Circuit in Allstate merely held that an insurance company could not maintain a declaratory judgment action against an ERISA plan under 29 U.S.C. § 1132(a) (1) (B) as a subrogee to the beneficiary's claim. 879 F.2d at 94. Similarly, the court in Northeast Dep't held that "the express jurisdictional provisions of ERISA, found in 29 U.S.C. § 1132, do not authorize federal jurisdiction over a suit . . . brought by a pension fund and its trustee against another pension fund." 764 F.2d at 154. The Northeast Dep't court, in a footnote, rejected Judge Fullam's suggestion in his concurrence that jurisdiction existed because the ILGWU Fund was an "assignee or subrogee" of a Fund Participant. Id. at 154 n.6. The court noted that no assignment had been made in that case, and left open the possibility that an actual assignee of a fund participant's claim might have standing to bring an ERISA claim, although the court expressed "serious doubts whether [the fund participant] could assign along with her substantive rights [to ERISA benefits] her right to sue in federal court." Id.
An expansive reading at Allstate and Northeast Dep't, as I gave these cases in my first opinion, might preclude a third-party beneficiary from pursuing an ERISA claim. However, upon reconsideration, I believe that a narrower interpretation of these cases is warranted, and they should not be read so as to preclude an actual third-party beneficiary of fund participants' claims under an ERISA plan from pursuing an ERISA claim in federal court.
Since the Court of Appeals for the third Circuit has not yet directly spoken on the issue of whether a third-party beneficiary has standing to sue under ERISA, I find persuasive the analysis of the United States Court of Appeals for the Ninth Circuit in Misic v. Building Service Employees Health and Welfare Trust, 789 F.2d 1374 (9th Cir. 1986).
The Misic court first held that ERISA benefits are assignable. Id. at 1377. The court noted that ERISA does not contain a clause prohibiting assignment of health and welfare benefits, which becomes significant in light of ERISA's "complex and extensive provision prohibiting assignment of pension benefits." Id. at 1376 (emphasis added). Moreover, the court noted that allowing assignment of ERISA health care benefits to health care providers is consistent with the goals of ERISA. Id. at 1375. The court thus held that "ERISA does not forbid assignment by a beneficiary of his right to reimbursement under a health care plan to the health care provider." Id. For these same reasons, I believe that ERISA does not forbid assignment by a beneficiary of his right to reimbursement to a health care provider nor does it forbid an ERISA plan from reimbursing the health care provider directly.
The Misic court also held that an assignee of ERISA plan benefits may sue derivatively, based on the premise that a valid assignment confers upon the assignee standing to sue in place of the assignor. 789 F.2d at 1378. This holding has been adopted by other courts as well. See Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988); St. Mary Medical Center v. Cristiano, 724 F. Supp. 732 (C.D. Ca. 1989); Kennedy v. Deere & Co., 118 Ill. 2d 69, 514 N.E.2d 171, 112 Ill. Dec. 705, 514 N.E.2d 171 (1987), cert. denied, 484 U.S. 1064, 108 S. Ct. 1024, 98 L. Ed. 2d 989 (1988). I find this reasoning persuasive, and conclude that the plaintiffs in the present action have standing to sue under 29 U.S.C. § 1132 (a) (1) (B) as third-party beneficiaries of benefits due Fund Participants under the plan. Having so concluded, I also conclude that the first prong of the two-prong test set forth in Allstate for complete preemption is satisfied. ERISA's enforcement provision creates a federal cause of action vindicating the same interest the plaintiffs' cause of action seeks to vindicate because plaintiffs' third-party beneficiary claims come within the scope of 29 U.S.C. § 1132 (A) (1) (B).
The second prong of the two-prong Allstate test - the presence of affirmative evidence of a congressional intent to permit removal despite the plaintiff's exclusive reliance on state law - is also satisfied, under the reasoning of Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S. Ct. 1542, 95 L. Ed. 2d 55 (1987). In Metropolitan Life, the Supreme Court held that the legislative history of section 1132 (a) (1)(B) makes clear that Congress clearly intended to make suits within the scope of this section exclusive federal questions for purposes of federal court jurisdiction. 107 S. Ct. at 1547-48. Thus, plaintiffs' preempted third-party beneficiary claims in the present case are claims that "arise under the . . . laws . . . of the United States," 28 U.S.C. 1331, and are removable to federal court by the defendant under 28 U.S.C. § 1441(b). Metropolitan Life, 107 S. Ct. at 1548. Therefore, although the fact that plaintiffs' third-party beneficiary claims are preempted by ERISA in and of itself does not confer this court with removal jurisdiction, removal jurisdiction is authorized under the doctrine of complete preemption under ERISA.
FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
Defendant argues that once a determination has been made that plaintiffs' third party beneficiary claims are preempted by ERISA, then ERISA requires that this claim be dismissed. See Defendant's Motion, at 8-13. Specifically, defendant argues that, under ERISA, the terms of the Fund Plan itself govern plaintiffs' rights under the plan. See id at 9. Defendant argues that the Fund trustees "complied with the terms of the SPD by paying only those charges which they deemed reasonable," and properly exercised their discretion in deciding to pay plaintiffs for their past services only at the rates set forth in the 1985 Philadelphia Blue Cross Agreement. Id. at 10-11. Therefore, defendant argues, since "plaintiffs have no legitimate basis for claiming that they have not been compensated for the reasonable costs of the hospital services rendered to Fund Participants," then they have stated no claim upon which relief can be granted. Id. at 13.
I agree. For purposes of a 12 (b) (6) motion to dismiss, I must accept as true all of plaintiffs' well-pleaded allegations, Jenkins v. McKeithen, 395 U.S. 411, 421-22, 23 L. Ed. 2d 404, 89 S. Ct. 1843 (1969), and construe them in a light most favorable to the plaintiffs. Scheuer v. Rhodes, 416 U.S. 232, 237, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974). I may dismiss the complaint only if it appears that plaintiffs cannot establish any set of facts in support of their claim which would entitle them to relief. Id. at 236.
It is clear that a court has no power to review the reasonableness of the provisions of an ERISA plan, as long as they do not violate federal law or policy. See United Mine Workers of America v. Helen Mining Co., 762 F.2d 1155 (3d Cir. 1985), cert. denied, 474 U.S. 1006, 88 L. Ed. 2d 459, 106 S. Ct. 527 (1985). Moreover, the court has no power to review de novo a plan trustee's interpretation of a provision of a plan when the trustee has discretion to interpret doubtful provisions of the plan. See Gaines v. Amalgamated Ins. Fund, 753 F.2d 288, 289 (3d Cir. (1985). Since it seems clear in this case that the Fund trustees have the power to interpret provisions of the SPD and the plan itself,
this court has no power to make a de novo review of the trustees' interpretation of the "reasonableness" of the hospitals' billed charges, if in fact such an interpretation was made.
Plaintiffs can recover on their preempted third-party beneficiary claim only if they can prove that the Fund trustees lacked the discretion to determine the "reasonableness" of the plaintiffs billed charges in this instance; or, assuming the trustees had this discretion, that they acted arbitrarily and capriciously in deciding to reimburse the plaintiff hospitals at only the rate specified in the 1985 Philadelphia Blue Cross Agreement. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S. Ct. 948, 956, 103 L. Ed. 2d 80 ("arbitrary and capricious" standard of review is appropriate when reviewing a trustee's exercise of discretion when Plan gives administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe terms of Plan). See also Armbruster v. Benefit Trust Life Ins. Co., 687 F. Supp. 403, 406 (N.D. Ill. 1988) ("In any action challenging a decision to deny ERISA plan benefits, the plaintiff must plead and prove that the decision was arbitrary and capricious, unsupported by substantial evidence or founded on an erroneous interpretation of law." (citing Brown v. Retirement Comm. of Briggs & Stratton, 797 F.2d 521, 525-26 (7th Cir. 1986), cert. denied, 479 U.S. 1094, 107 S. Ct. 1311, 94 L. Ed. 2d 165 (1987))).
Plaintiffs make no such averments. In each third-party beneficiary count, they aver only that "by not paying [plaintiffs'] charges for hospital service rendered to Fund Participants between January 1, 1987 and May 1, 1987, defendant has breached its obligation to Fund Participants." Complaint, at 44. This simple averment of a breach of contract is insufficient to support a valid claim for benefits under ERISA. Because plaintiffs in their preempted third-party beneficiary claims have failed to plead that the Fund trustees lacked the discretion under the plan to determine the reasonableness of the Blue Cross rates;
or in the alternative, that they acted arbitrarily and capriciously in deciding to pay plaintiffs only in accordance with the Blue Cross rates, plaintiffs have failed to state a claim upon which relief can be granted under 29 U.S.C. § 1132 (a) (1) (B). Accordingly, these claims must be dismissed under Federal Rule of Civil Procedure 12(b) (6). However, if plaintiffs can in good faith and in keeping with the requirements of Federal Rule of Civil Procedure 11 make one or both of the above averments, they may file an amended complaint to that effect within thirty days.
Although plaintiffs' unpreempted state-law claims would appear to state valid causes of action, I will at present decline to exercise pendent jurisdiction over these claims, pending the filing of an amended complaint as to plaintiff's ERISA-preempted third-party beneficiary claims.
An order follows.
For the reasons stated in the foregoing Memorandum Opinion, it is Ordered:
1. My opinion in this matter, dated September 28, 1987, is vacated;
2. Defendant National Benefit Fund for Hospital and Health Care Employees' motion to dismiss is granted; and
3. Plaintiffs' complaint is dismissed. Plaintiffs are given until January 19, 1990, to amend their complaint to state a valid claim under ERISA.