The opinion of the court was delivered by: TIMOTHY SAVAGE, District Judge
In this putative class action removed from the state court, the
plaintiff challenges defendant Aetna U.S. Healthcare, Inc.'s ("Aetna")
right to enforce its contractual subrogation claim against plaintiffs
tort recovery, contending that it violates the Pennsylvania Motor Vehicle
Financial Responsibility Law's ("MVFRL") bar against subrogation. Aetna
argues that the action is completely preempted because it arises under
the Medicare Act, which permits private Medicare-substitute HMO insurance
carriers to recoup medical expenses paid on behalf of an insured who
later recovers those expenses from another source. In requesting remand,
the plaintiff asserts that her complaint raises only state based claims
and does not present any federal cause of action giving rise to federal
question removal jurisdiction. In short, contrary to the defendant's
position, the plaintiff maintains that her state court action is not
completely preempted by federal law and, hence, was improperly removed.
At the heart of the case is the collision of two statutes, one federal
and the other state. The Medicare Act allows a health insurer providing
replacement coverage for
Medicare-eligible persons to include in its insurance contract a right of
subrogation against an insured's recovery from a third party for money
previously paid for the insured's medical care.
42 U.S.C. § 1395w-22(a)(4), 1395mm(e)(4). In direct conflict with the
federal statute, the Pennsylvania Motor Vehicle Financial Responsibility
Law prohibits subrogation from an insured's recovery from a tortfeasor in
a motor vehicle accident case. 75 PA. CONS. STAT. § 1720.
Our task is not to decide which statute will ultimately prevail.
Rather, we must determine whether the federal or the state court has
jurisdiction to resolve the conflict between the two statutes. Stated
differently, we must decide whether the federal statute, the Medicare
Act, completely preempts the state statute, the MVFRL, depriving the
state court of jurisdiction. Thus, our inquiry is focused on jurisdiction
and not on the merits of the plaintiff's claim.
We conclude that the Medicare Act does not completely preempt the
plaintiff's state causes of action. Therefore, we shall remand this case
to the state court for resolution of the statutory conflict, a task it is
competent to perform.
Under its "Golden Medicare Plan," Aetna paid a portion of Arlene Nott's
("Nott") medical costs for treatment of injuries she had sustained in a
motor vehicle accident. After Nott settled her personal injury claim
against the tortfeasor, Aetna asserted a subrogation lien against her
tort recovery, seeking reimbursement of the medical expenses it had
previously paid. Aetna's insurance contract gave it "the right to
repayment of the full costs of all benefits provided by HMO on behalf of
the Member that are associated with the injury or illness for which the
third party is or may be responsible," which includes "payments
made by a third-party tortfeasor or any insurance company on behalf
of the third-party tortfeasor." Notice of Removal, Exh. A (Compl. Exh. A
("Evidence of Coverage"), at 53). Aetna later released the lien in
consideration of Nott's $1,000 payment.
Nott then filed this action in the Pennsylvania Court of Common Pleas
for Bucks County.*fn1 Alleging various state law causes of action
against Aetna, Nott seeks the recovery of money paid to Aetna to satisfy
its subrogation lien, a permanent injunction enjoining Aetna from placing
subrogation liens on its insureds' third party motor vehicle accident
recoveries, and a declaratory judgment declaring all pending subrogation
liens void and unenforceable. Aetna removed this action under
28 U.S.C. § 1441, and then filed a motion to dismiss based on
preemption grounds. Nott seeks remand.
II. The Statutes in Conflict
The competing statutes are in direct conflict. The federal law permits
Aetna to recoup medical expenses from an insured's third party recovery.
The state law prohibits such recoupment in motor vehicle accident cases.
Both sections of the Medicare Act cited by Aetna,
42 U.S.C. § 1395w-22(a)(4) and 1395 mm(e)(4),*fn2 authorize, but do
a Medicare HMO insurer to include in its contract a provision for
reimbursement of money paid on behalf of its insured from the insured's
recovery under another insurance policy or plan, including an automobile
or liability insurance plan. Under the Pennsylvania MVFRL, 75 PA. CONS.
STAT. § 1720, insurance companies may not subrogate against
recoveries in claims arising out of motor vehicle accidents.*fn3
III. Removal and Preemption
The removal inquiry begins with the well-pleaded complaint rule.
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987); Dukes v. U.S.
Healthcare, Inc., 57 F.3d 350, 353-54 (3d Cir. 1995). A federal court
does not have subject matter jurisdiction over a case removed from state
court unless an issue of federal law appears on the face of the
plaintiff's properly pleaded state court complaint. Metro. Life Ins. Co.,
481 U.S. at 63; In re U.S.Healthcare, Inc., 193 F.3d 151, 160 (3d Cir.
A narrow exception to the well-pleaded complaint rule is the doctrine
preemption, which transforms state law causes of action into exclusively
federal claims because Congress intended that the statute completely
supplant all state law causes of action. Caterpillar, Inc. v. Williams,
482 U.S. 386, 393 (1987); Metro. Life Ins. Co., 481 U.S. at 63-66; In re
U.S. Healthcare, Inc., 193 F.3d at 160. Accordingly, regardless of a
plaintiffs asserting only causes of action under state law in her
complaint, any claim based on the preempted state law is considered a
federal claim arising under federal law. Caterpillar, Inc., 482 U.S. at
The complete preemption doctrine is stringently applied. Ry. Labor
Executives Ass'n v. Pittsburgh & Lake Erie R.R. Co., 858 F.2d 936,
942 (3d Cir. 1988). Even if federal preemption is the only real issue in
the case, there is no jurisdiction unless the preemption is complete.
Caterpillar, Inc., 482 U.S. at 393; Franchise Tax Bd. v. Constr. Laborers
Vacation Trust, 463 U.S. 1, 12-14 (1983); Gully v. First Nat'l Bank,
299 U.S. 109, 113, 116 (1936). The fact that a state law cause of action
requires reference to federal law is insufficient to establish complete
preemption. Smith v. Indus. Valley Title Ins. Co., 957 F.2d 90, 93 (3d
Cir. 1992). "[A] defendant cannot, merely by injecting a federal question
into an action that asserts what is plainly a state-law claim, transform
the action into one arising under federal law, thereby selecting the
forum in which the claim shall be litigated." Caterpillar, Inc., 482
U.S. at 399; see also Dukes, 57 F.3d at 353-54; Goepelv. Nat'l Postal
Mail Handlers Union, 36 F.3d 306, 310 n.6 (3d Cir. 1994). Hence, absent
complete preemption, the fact that a ...