The opinion of the court was delivered by: LOUIS H. POLLAK
Eric B. Fountain was admitted to the Albert Einstein Medical Center on or about January 22, 1990, as a result of a stab wound. He remained there for two months, during which time he purportedly incurred a hospital bill in the amount of $ 291,233.05. Fountain died in September 1990. Seeking to be reimbursed for the hospital bills, Samuel A. Russo, the administrator of Fountain's estate, filed this action against the defendants -- Fountain's former employer and the health maintenance organization ("HMO") in which Fountain allegedly was enrolled -- in the Court of Common Pleas of Philadelphia County, Pennsylvania. The defendant HMO, United States Health Care Systems of Pennsylvania, Inc., ("U.S. Healthcare")
filed a timely notice of removal, to which the defendant employer, Abington Memorial Hospital ("Abington"), consented.
U.S. Healthcare then filed a motion to dismiss the two counts of the complaint that run against it, and, shortly thereafter, Russo filed a timely motion to remand the case to state court. Because the law and facts underlying these two motions are intertwined -- and because resolution of these motions might well moot certain other pending motions -- I shall take them up first before addressing the remaining motions.
THE MOTION TO REMAND and THE MOTION TO DISMISS
The gravamen of Russo's complaint is that as an employee of Abington, Fountain was allegedly enrolled in Abington's group health care plan, which is administered by U.S. Healthcare, on January 1, 1990. According to the complaint, U.S. Healthcare denied coverage for the nearly $ 300,000 in hospital bills, asserting that Abington had failed to enroll Fountain in the health care plan. Complaint P 10. The first count of the complaint alleges Abington breached its employment contract with Fountain by failing to enroll him in the plan; the second and third counts run against U.S. Healthcare, asserting that it breached the health benefit contract and that it is estopped from denying payment of benefits on behalf of Fountain. See Complaint PP 11, 21, 31. As stated, these claims arise under state, rather than federal, law -- presumably the law of Pennsylvania.
The basis for U.S. Healthcare's petition to remove this case from state court, and of its motion to dismiss, is the preemption provision found in the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1144(a). 28 U.S.C. § 1441(a) provides the authority by which defendants may remove actions from state court to federal court, but, by its very text, the reach of § 1441(a) is limited to "civil actions . . . of which the district courts of the United States have original jurisdiction." Because preemption is an affirmative defense, the well-pleaded complaint rule
generally precludes a defendant from relying on preemption as a basis for removal jurisdiction. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 393, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987). Under what is known as the "complete preemption" doctrine, id., however, "a state cause of action [that] is 'really' a federal cause of action . . . may be removed to federal court if the 'federal cause of action completely preempts . . . [the] state cause of action.'" Goepel v. National Postal Mail Handlers Union, 36 F.3d 306, 310 (3d Cir. 1994) (quoting Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 24, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983) (emendation in Goepel)), petition for cert. filed, January 23, 1995 (No. 94-1258).
One of the few statutory contexts in which the Supreme Court has applied the complete preemption doctrine is that of ERISA. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987). In Metropolitan Life, the Court held that, because "Congress has clearly manifested an intent to make causes of action within the scope of the civil enforcement provisions of § 502(a) [of ERISA, 29 U.S.C. § 1132(a),] removable to federal court," id. at 66, actions under state law that fall within the scope of § 1132(a) are "necessarily federal in character" and therefore arise under the laws of the United States, making them removable to federal court under 28 U.S.C. § 1441. Id. at 67.
Section 1132(a)(1)(B) authorizes civil actions to be brought "by a participant or beneficiary . . . 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." So, the next questions are (1) was there a "plan" in place, as that term is defined by ERISA, and, if so, (2) was Fountain a "participant"?
The existence of an "employee benefit plan" and Fountain's status under ERISA
U.S. Healthcare asserts that because the health insurance agreement under which Russo makes his claims was a condition of Fountain's employment, it is ipso facto an "employee benefit plan" as that phrase is defined by ERISA. Russo responds by asserting that there was no "employee benefit plan" in place, so ERISA is inapplicable, and therefore removal was inappropriate. Russo's argument is essentially a legal one. He acknowledges that Abington purchased health insurance for its employees, but he argues that the mere purchase of insurance does not constitute the creation of an "employee benefit plan" for purposes of ERISA. In support, he cites an early decision by the Fifth Circuit that is, according to the defendants, no longer good law. See Taggart Corp. v. Life and Health Benefits Administration, Inc., 617 F.2d 1208 (5th Cir. 1980), cert. denied, 450 U.S. 1030 (1981).
29 U.S.C. § 1002(3) defines the terms "'employee benefit plan' or 'plan'" as follows: "an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan." Section 1002(1)(A) defines the term "employee welfare benefit plan" to mean, in relevant part,
any plan, fund, or program . . . established or maintained by an employer . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, . . . medical, surgical or hospital care benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, ...