The opinion of the court was delivered by: JOYNER
Plaintiff Michael Byard ("Plaintiff") instituted this action against Defendants QualMed Plans for Health, Inc., f/k/a Greater Atlantic Health Service, Inc., QualMed Plans for Health of PA, Inc., f/k/a Greater Atlantic Health Service, Inc., and Greater Atlantic Health Service, Inc. (collectively "Defendant" or "Greater Atlantic") on November 7, 1996 in the Court of Common Pleas for Philadelphia County. The Complaint seeks damages under Pennsylvania law for Defendant's alleged failure to timely precertify Plaintiff for surgery. Defendant removed the case to this Court pursuant to a Notice of Removal filed December 16, 1996. Defendant contends that Plaintiff asserts a claim for benefits under an employee welfare benefit plan governed by the Employee Retirement Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). Before the Court is Plaintiff's Motion to Remand this matter to the Court of Common Pleas for Philadelphia County. For the following reasons, the Motion is granted.
Plaintiff suffers from a skin condition known as dissecting cellulitis. He alleges that in the summer of 1994 he was advised that surgical treatment of his condition was medically necessary, but that his HMO, Defendant Greater Atlantic, refused to precertify the surgery. Despite repeated confirmations of this diagnosis, Greater Atlantic allegedly did not approve treatment until the fall of 1995. Plaintiff contends that because of the delay, the surgery was more serious, less effective, and had more disfiguring consequences than would have occurred had Greater Atlantic approved the surgery in the summer of 1994. Plaintiff brought this action in the Court of Common Pleas for Philadelphia County seeking compensatory and punitive damages under Pennsylvania tort law. Defendant removed the case to federal court claiming jurisdiction under ERISA, but Plaintiff challenges this contention in the instant Motion to Remand. The fact-intensive inquiry called for by Plaintiff's Motion requires a thorough examination of the funding and administration of program under which Plaintiff was insured. We therefore begin by reciting our factual findings in this case.
In 1992, Plaintiff, an electrician and electrical equipment operator, went into the electrical contracting business with his brothers Jeffrey, Chris, Marlon and Kevin.
Byard Signal and Lighting ("Byard Signal") was formed, with Jeffrey and Chris as its shareholders and Jeffrey as its president. The business was not successful. Byard Signal collected no revenue in either 1992 or 1993 and did only "several small little jobs" in 1994. 1/28/97 Dep. of Jeffrey Byard at 52. Business picked up in 1995, but ground to a halt again by the end of 1996. In short, Byard Signal was a "part-time venture that never ... got off and going." Id. at 67.
Shortly after forming Byard Signal in the summer of 1992, the Byard brothers decided to purchase health insurance at group rates through the company. The Byards were familiar with Greater Atlantic because it was the company by which employees of their father's business were insured. Jeffrey contacted Greater Atlantic, obtained information on the available plans, presented the information to his brothers, and they agreed very quickly on Greater Atlantic's cheapest option, the Partnership Plan (the "Plan"). On August 26, 1993, Jeffrey signed a Group Master Contract with Greater Atlantic enrolling Byard Signal's employees in the Plan for one year effective September 1, 1993. The Plan was renewed for two subsequent annual terms.
Jeffrey Byard handled administrative tasks in connection with the Plan. He distributed the Greater Atlantic enrollment packages to employees. He prepared, circulated to employees and forwarded to Greater Atlantic the following paperwork: enrollment change forms, the Plan's small group profile documentation, employee W-4 forms, and terminations of coverage. When Plaintiff was dropped from the Plan in 1993, Jeffrey contacted Greater Atlantic to discuss his status and remitted the payment required to reinstate Plaintiff on the Plan. Jeffrey also forwarded documentation to Greater Atlantic for Plaintiff, in order for Plaintiff to receive prescription reimbursement benefits.
Jeffrey was also responsible for remitting the premium payments to Greater Atlantic. Jeffrey Byard described "the arrangement for the purchase of insurance worked as follows: my employees would provide monthly cash payments, in the amount of Greater Atlantic HMO membership premiums. I would then remit the premium payments to Greater Atlantic." Aff. of Jeffrey Byard at P 3. This statement clearly oversimplifies the premium payment process, however. The deposition testimony and documentary evidence reveals the following: Jeffrey Byard would collect cash from his brothers for their premium payments on a monthly basis, deposit the cash in Byard Signal's lone checking account, and then send a check drawn on that account to Greater Atlantic for the total amount due. The brothers would rarely pay Jeffrey the exact amount due, but some amount that was close. For example, he testified that "if the guy's premium is $ 145 and he comes to give you $ 140, you know, that's sufficient" and "if the premiums were 156.65, they would give $ 160." 1/28/97 Dep. of Jeffrey Byard at 88, 153. Shortfalls in a given month for a particular employee would be made up with the surplus from that employee's past payments, surplus from other employees' contributions, or from the funds contributed by the brothers to cover Byard Signal's general expenses (e.g., telephone, postage, and other costs of preparing bids).
According to Jeffrey Byard, his brothers' monthly cash payments exceeded the total amount due to Greater Atlantic each month "more times than not." Id. at 89, 153. This statement is difficult to verify because no effort was made to document employees' specific contributions towards their premium payments. Defendants were able to identify, however, only a single payment made by Byard Signal to Greater Atlantic that was made before adequate funds had been collected in advance. This payment, made in September 1993, was for $ 627.84, $ 47.84 more than the $ 580.00 that had been deposited earlier that month. Generally, the record indicates that if Jeffrey failed to collect sufficient funds from his brothers for a given month, either the delinquent brother was dropped from the Plan or Byard Signal simply paid nothing for the month. Any funds that had been contributed would then be used to cover other corporate expenses until sufficient cash had been collected to pay the premiums. In fact, Jeffrey Byard appears occasionally to have used the cash collected for premium payments on other corporate expenses even in months when all brothers made their payments. The check eventually sent to Greater Atlantic would be drawn on general corporate funds. Such practices caused Byard to be behind in its payments to Greater Atlantic "for quite some time." Id. at 165.
With these facts in mind, we begin our analysis.
Plaintiff argues that we lack subject matter jurisdiction over this action because the Plan is not an ERISA employee welfare benefit plan and, even if it were, Plaintiff is not asserting state law claims that fall within ERISA's civil enforcement provisions. See Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 354 (3d Cir.), cert. denied, 133 L. Ed. 2d 489, 116 S. Ct. 564 (1995); 29 ...