United States District Court, E.D. Pennsylvania
February 09, 2004.
JONATHAN WIRTH, individually and on behalf of all others similarly situated
AETNA U.S. HEALTHCARE
The opinion of the court was delivered by: HARVEY BARTLE, III, District Judge
The issue presented concerns the propriety of the defendant's removal
to this court of an action alleging illegal practices under
Pennsylvania's Motor Vehicle Financial Responsibility Law ("MVFRL") where
defendant relies on the doctrine of complete preemption under the
Employee Retirement Income Security Act ("ERISA") as the basis for
Plaintiff Jonathan Wirth, a citizen of Pennsylvania, originally brought
this purported class action against Aetna U.S. Healthcare ("Aetna") in
the Court of Common Pleas of Bucks County. Aetna, whose correct legal
name is Aetna Health, Inc., is a health maintenance organization and a
Pennsylvania corporation. At all times relevant to this case, Wirth was
covered by a healthcare agreement issued by Aetna to his father's
employer. He claims that he and his fellow class members have suffered
personal injuries in motor vehicle accidents that took place in the
Commonwealth and have obtained, or are in the
process of obtaining, recoveries against third party tortfeasors.
According to Wirth, Aetna has asserted liens against these tort
recoveries for the medical benefits it has provided and is doing so
pursuant to the indemnification and subrogation clauses in its healthcare
agreements.*fn1 Plaintiff asserts that the liens are prohibited by §
1720 of Pennsylvania's MVFRL, a statute which among other things governs
the insurance requirements for motor vehicle owners in the Commonwealth.
Section 1720 reads as follows:
In actions arising out of the maintenance or use of a
motor vehicle, there shall be no right of subrogation
or reimbursement from a claimant's tort recovery with
respect to workers' compensation benefits, benefits
available under section 1711 (relating to required
benefits), 1712 (relating to availability of benefits)
or 1715 (relating to availability of adequate limits)
or benefits paid or payable by a program, group
contract or other arrangement whether primary
or excess under section 1719 (relating to coordination
75 Pa. Cons. Stat. Ann. § 1720. In addition to seeking damages under §
1720 of the MVFRL, plaintiff asserts claims on behalf of the class for
breach of contract, unjust enrichment, and bad faith insurance practices
under 42 Pa. Cons. Stat. Ann. § 8371. The plaintiff also requests
declaratory and injunctive relief. The complaint on its face does not
plead a federal claim for relief.
Aetna timely removed the action to this court, pursuant to
28 U.S.C. § 1441(a), on the ground that the plaintiff's claims are
completely preempted by ERISA, 29 U.S.C. § 1001 et seq. Plaintiff has now
moved to remand and seeks attorney's fees and costs pursuant to
28 U.S.C. § 1447 (c). Aetna, as the removing party, bears the burden of
proving subject matter jurisdiction. Dukes v. U.S. Healthcare, 57 F.3d 350,
359 (3d Cir. 1995).
Section 502(a)(1)(B) of ERISA states that "[a] civil action may be
brought by a participant or beneficiary . . . to recover benefits due
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." 29 U.S.C.
§ 1132(a)(1)(B). A "plan" under ERISA includes an "employee benefit
plan," that is, one " . . . established or maintained by an employer
. . . for the purpose of providing for its participants or their
beneficiaries, through the purchase of insurance or
otherwise . . . medical, surgical, in hospital care or benefits . . . ."
29 U.S.C. § 1002(1) and (3).
ERISA contains sections that deal expressly with preemption. These
provisions are known as the "preemption clause," the "savings clause,"
and the "deemer clause." The "preemption clause" provides:
Except as provided in subsection (b) of this section
[the saving clause], the provisions of this subchapter
and subchapter III of this chapter shall supersede any
and all State laws insofar as they may now or
hereafter relate to any employee benefit plan . . .
ERISA § 514(a), as set forth in 29 U.S.C. § 1144(a). The "savings
Except as provided in subparagraph (B) [the deemer
clause], nothing in this subchapter shall be construed
to exempt or relieve any person from any law of any
State which regulates insurance, banking, or
ERISA § 514(b)(2)(A), as set forth in 29 U.S.C. § 1144(b)(2)(A).
Finally, there is the "deemer clause":
Neither an employee benefit plan . . . nor any trust
established under such a plan, shall be deemed to be
an insurance company or other insurer, bank, trust
company, or investment company or to be engaged in the
business of insurance or banking for the purposes of
any law of any State purporting to regulate insurance
companies, insurance contracts, banks, trust
companies, or investment companies.
ERISA § 514(b)(2)(B), as set forth in 29 U.S.C. § 1144(b)(2)(B).
As the Supreme Court has observed, these three clauses "are not a model
of legislative drafting," but "[t]heir operation is nevertheless
discernible." FMC Corp. v. Holliday,
498 U.S. 52, 58 (1990). In FMC, the Supreme Court described the
interaction of these various clauses as follows:
The pre-emption clause is conspicuous for its
breadth. It establishes as an area of exclusive
federal concern the subject of every state law that
"relate[s] to" an employee benefit plan governed by
ERISA. The savings clause returns to the States the
power to enforce those state laws that "regulate
insurance," except as provided in the deemer clause.
Under the deemer clause, an employee benefit plan
governed by ERISA shall not be "deemed" an insurance
company, an insurer, or engaged in the business of
insurance for purposes of state laws "purporting to
regulate" insurance companies or insurance contracts.
Id. It is against this statutory background that we must decide the issue
As we have noted, the complaint alleges exclusively state law causes of
action. Under the well-pleaded complaint rule, an action may be removed
to this court based on federal question jurisdiction only if the federal
claim appears on the face of the complaint. The fact that the defendant
may have a defense under federal law is ordinarily not sufficient to
allow removal. See Franchise Tax Bd. v. Constr. Laborers Vacation Trust,
463 U.S. 1, 10 (1983); Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266,
271 (3d Cir. 2001). However, the complete preemption doctrine is an
exception to the well-pleaded complaint rule. Ry. Labor Executives Ass'n
v. Pittsburgh & Lake Erie R.R. Co., 858 F.2d 936, 939 (3d Cir. 1998).
Complete preemption exists when Congress has so thoroughly addressed an
area of law that any claim brought within its scope is removable to the
federal court. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64
(1987). A claim that has been completely preempted is removable
regardless of whether a federal claim appears from a reading of the
complaint. Id. The Supreme Court has determined that claims falling
within the scope of § 502(a)(1)(B) of ERISA are subject to complete
preemption. Metro. Life, 481 U.S. at 66; Pryzbowski, 245 F.3d at 271.
In arguing that removal was improper, plaintiff suggests that his claim
under § 1720 of the MVFRL is not within the terms of § 502(a)(1)(B)
because it is not actually one for "benefits due to him under the terms
of his plan." 29 U.S.C. § 1132(a)(1)(B). Plaintiff reasons that his claim
directly relates to the amount of his tort recovery and is only
"distantly related" to the health care benefits previously granted by
Aetna. We disagree.
While plaintiff may be correct that his claims arose as a result of his
tort recovery, there is an inextricable connection between Aetna's lien
and the amount he is due under his healthcare agreement. The lien, if
collected, not only reduces the net amount of his recovery from the
tortfeasor but also has the effect of reducing the net amount of the
benefit obtained from Aetna under the healthcare agreement.*fn2 We
that plaintiff's claims directly relate to the net amount of the benefits
due to him under his Aetna healthcare agreement. Consequently, they fall
within § 502(a)(I)(B) of ERISA and are completely preempted. See Singh
v. Prudential Health Care Plan, 335 F.3d 278, 291 (4th Cir. 2003).
In Pryzbowski, 245 F.3d at 273, our Court of Appeals described the test
for complete preemption by ERISA:
Regardless of the language used, the ultimate
distinction to make for purposes of complete
preemption is whether the claim challenges the
administration of or eligibility for benefits, which
falls within the scope of
§ 502(a) and is completely preempted, or the quality
of the medical treatment performed, which may be the
subject of a state action.
Here the claims are more nearly akin to administration of or eligibility
for benefits than to the quality of health care.
Our determination that plaintiff's claim is one for benefits is
consistent with other federal courts confronted with the same issue. For
example, in a case similar to the one at bar, the Court of Appeals for
the Fourth Circuit recently held that:
[Plaintiff's] claim to recover the portion of her
benefit that was diminished by her payment to
Prudential under the unlawful subrogation term of the
plan is no less a claim for recovery of a plan benefit
under [ERISA] § 502(a) than if she were seeking
recovery of a plan benefit that was denied in the
first instance. . . . ERISA's complete dominion over a
plan participant's claim to recover a benefit due
under a lawful application of plan terms is not
affected by the fortuity of when a plan term was
misapplied to diminish the benefit.
Singh, 335 F.3d at 291 (emphasis in original). See also Arana v. Ochsner
Health Plan, 338 F.3d 433, 438 (5th Cir. 2003) (en bane); Carducci v.
Aetna U.S. Healthcare, 204 F. Supp.2d 796 (D.N.J. 2002); Franks v.
Prudential Health Care Plan, Inc., 164 F. Supp.2d 865, 873 (W.D. Tex.
2001); Riemer v. Columbia Medical Plan, Inc., No. Civ. L-96-2544, 1997 WL
33126252, at *1 (D. Md. Mar. 28, 1997).
In sum, plaintiff is seeking benefits from a plan enforceable under
§ 502(a)(I)(B) of ERISA.
Plaintiff further argues that the savings clause of
§ 514(b)(2)(A) of ERISA trumps complete preemption and thus requires
remand, even assuming that his claims are or would otherwise be
encompassed by § 502(a)(1)(B). As noted above,
§ 514(b)(2)(A) provides that "nothing in this subchapter shall be
construed to exempt or relieve any person from any law of any State which
regulates insurance, banking, or securities." The Supreme Court has held
that § 1720 of the MVFRL falls within the terms of § 514(b)(2)(A), since
it "regulates insurance" for motor vehicle owners in Pennsylvania. FMC
Corp. v. Holliday, 498 U.S. 52, 61 (1990). Aetna, however, contends that
even if the plaintiff's state law claims are preserved by §
514(b)(2)(A), this does not defeat complete preemption. According to
Aetna, once complete preemption is demonstrated, the action is
removable. Under this analysis, the federal court will retain
jurisdiction and apply state law if the circumstances outlined in the
savings clause of § 514(b)(2)(A) are satisfied. See Lazorko v.
Pennsylvania Hosp., 237 F.3d 242, 248 (3d Cir. 2000).
The Court of Appeals for this circuit has not had the occasion directly
to address the issue before us. However, two very recent Supreme Court
decisions support the principle that
§ 514(b)(2)(A) does not override complete preemption under
§ 502(a)(1)(B). In a 1999 ruling, the Court affirmed the
determination of the Court of Appeals that a California state law
regulated insurance and therefore fell under ERISA's savings clause.
Nonetheless, it did not question federal subject matter jurisdiction over
the claim. UNUM Life Ins. Co. of America v. Ward, 526 U.S. 358
(1999). Likewise, more recently, the Supreme Court determined that the
Illinois HMO Act regulated insurance but affirmed the decision of the
Court of Appeals below which had exercised subject matter jurisdiction
§ 502(a)(1)(B) of ERISA. Rush Prudential HMO, Inc. v. Moran,
536 U.S. 355, 363-87 (2002). See Arana v. Ochsner Health Plan,
338 F.3d 433, 439-40 (5th Cir. 2003); Carducci, supra, 204 F. Supp.2d at
798 n.2. Thus, federal jurisdiction exists as a result of complete
preemption if plaintiff's claims are encompassed within the terms of §
502(a)(1)(B) even though it may turn out that the savings clause of §
514(b)(2)(A) will require the application of state insurance law.
In summary, we hold that the defendant's removal of this purported
class action to federal court was proper. The gravamen of plaintiff's
complaint seeks "to recover benefits due . . . under the terms of his
plan." ERISA § 502(a)(1)(B). This claim and the others dependent on it
are completely preempted by ERISA and we have subject matter jurisdiction
over them. That we may ultimately apply § 1720 of Pennsylvania's MVFRL
because of the savings clause of § 514(b)(2)(A) of ERISA does not affect
The motion of the plaintiff to remand this action to the Court of
Common Pleas of Bucks County and his motion for attorney's fees and costs
will be denied.
AND NOW, this day of February, 2004, for the reasons set forth in the
accompanying Memorandum, it is hereby ORDERED that motion of plaintiff
Jonathan Wirth for remand to the Court of Common Pleas of Bucks County,
Pennsylvania and for attorney's fees and costs is DENIED.