The opinion of the court was delivered by: SEAN McLAUGHLIN, District Judge
This case comes before the Court having been removed from the
Court of Common Pleas of Allegheny County, Pennsylvania.
Plaintiff's complaint asserts common law breach of contract
claims against Defendants Whirley Industries, Inc. ("Whirley")
and Benefits Services, Inc. ("BSI") arising from Plaintiff's
efforts to recoup certain medical expenses incurred in connection
with the treatment of one of Whirley's employees. Defendants
filed a motion to dismiss the complaint, and Plaintiff has moved
to remand the matter to the Court of Common Pleas. For the
reasons that follow, Defendants' motion to dismiss will be denied
and Plaintiff's motion to remand will be granted.
Plaintiff, UPMC Presby Shadyside ("UPMC"), is a Pennsylvania
corporation operating as a hospital in Pittsburgh. Whirley is a
Pennsylvania corporation which operates out of Warren,
Pennsylvania and provides traditional health insurance coverage
or self insured health care coverage for its employees. BSI acts
as the agent and third party administrator on behalf of Whirley
for purposes of processing and administering health care coverage
to Whirley's employees.
During the time period from November 30 through December 23,
2003, one of Whirley's employees sought medical treatment at UPMC. The
employee in question was a participant in the "Whirley
Industries, Inc. Employee Benefit Plan" prepared and administered
by BSI. On December 23, 2003, UPMC mailed claims to BSI in the
amount of $226,732.75 relative to the employee's treatment.
Partial payments of $70,000.00 and $50,059.92 were made to UPMC
on January 30, 2004 and March 12, 2004, respectively.
In total, UPMC claims that Defendants improperly discounted
some $106,672.83 from the payments due. According to UPMC, the
deficiency results from a combination of two types of discounts,
both of which UPMC contends were improperly taken, to wit: (i)
discounts taken for timely payment (which payments, according to
UPMC, were in fact untimely) and (ii) discounts taken based upon
Defendants' own conclusion, following an independent audit, that
certain of UPMC's charges exceeded that which is "reasonable and
UPMC contends that, in taking the allegedly improper discounts,
Defendants breached the terms of a "Memorandum of Understanding"
("MOU") to which UPMC and Crawford Health Plan/Vantage
("Vantage"), a Preferred Provider Organization ("PPO") are
signatories. (See Ex. A to Pl.'s Br. in Supp. of Remand [Doc. #
6].) UPMC represents that it commonly offers prompt payment
discounts through PPOs, which then enter into repricing contracts
and negotiate volume-based discounts on behalf their clients
(presumably, companies like Whirley) who generally lack the
patient volume to be able to negotiate discounts independently.
According to UPMC, the negotiated discounts are typically leased
by the PPO to its client base. (See Pl.'s Br. in Supp. of
Remand and in Opp. to Removal [Doc. # 6] at unnumbered p. 2.)
By its terms, the MOU applies to "[Vantage's] self-funded
employer groups" for "covered services" received at UPMC and
allows for a 20% discount of UPMC's billed charges if payment is
received within thirty (30) days after billing. (Id.) In
relevant part, the MOU states as follows:
Effective March 1, 2000, this Memorandum of
Understanding (MOU) is entered into between UPMC
Presbyterian and UPMC Shadyside (herein referred to
as "provider") and Crawford Health Plan/Vantage
(herein referred to as "PPO") and confirms our
intention of formalizing a signed contract.
The terms of this MOU shall apply to PPO's
self-funded employer groups for covered services
received at Provider.
1. Inpatient and outpatient claims will [be] paid at
80% of Provider's billed charges.
2. PPO shall remit payment on clean claims to
Provider within thirty (30) calendar days of the
receipt of the billing statement, including all
interim bills. Interim bills are produced every
fourteen (14) days or upon the accumulation of
$75,000 in posted charges. If payment is not made
within the thirty (30) calendar day period, all
discount arrangements will be considered null and
void and Provider's customary charges shall be due.
* * *
4. PPO agrees to comply with Provider's Chart Audit
Policies, attached as Exhibit I and Exhibit II.
5. Neither Provider nor PPO may assign, transfer or
subcontract its obligations under this MOU to another
party without the written consent of both parties.
6. Provider agrees to send Claims to:
Vantage Health Care Network
* * *
This MOU shall be in effect until such time as PPO
and Provider enter into the Definitive Agreement;
provided however, that either party may terminate
this MOU at any time upon not less than thirty (30)
days prior written notice to the other party. * * *
On February 8, 2005 UPMC sued Whirley and BSI in the Allegheny
County Court of Common Pleas, asserting one claim against each
Defendant for alleged breach of contract. Defendants then removed
the action to this Court on the theory that UPMC's claims are
subject to complete preemption under the civil enforcement
provision of ERISA, 29 U.S.C. § 1132. Defendants now argue that
UPMC's claims must be dismissed due to its failure to have
exhausted its administrative remedies under ERISA. UPMC denies
that complete preemption applies and moves to remand the action
back to state court. II. DISCUSSION
A civil action filed in state court is removable to federal
court if the claim is one "arising under" federal law.
28 U.S.C. §§ 1331, 1441(a). See Pascack Valley Hospital, Inc. v. Local
464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 398 (2004),
petition for cert. filed, 73 USLW 3661 (Apr. 29, 2005) (NO.
04-1452). Under the "well-pleaded complaint" rule, the plaintiff
is generally entitled to remain in state court provided the
complaint does not affirmatively allege a federal claim on its
face. Id. (citing Beneficial Nat'l Bank v. Anderson,
539 U.S. 1, 6 (2003)). To support removal, a right or immunity created by
the Constitution or federal law must be an essential element of
the plaintiff's cause of action. Id. (quoting Franchise Tax
Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal.,
463 U.S. 1, 10-11 (1983)).
Because federal preemption is normally considered a defense to
suit, it is not construed as appearing on the face of a
well-pleaded complaint, and therefore does not generally
authorize removal to federal court. Metropolitan Life Ins. co.
v. Taylor, 481 U.S. 58, 63 (1987); Pascask Valley Hosp.,
388 F.3d at 398. However, an exception supporting removal exists if
the civil action "falls within the narrow class of cases to which
the doctrine of `complete preemption' applies." Pascask Valley
Hosp., at 399 (citing Aetna Health Inc. v. Davila,
542 U.S. 200, 124 S. Ct. 2488, 2494 (2004); Metro Life Ins. Co. v.
Taylor, 481 U.S. 58, 63-64 (1987)). This doctrine recognizes
that "Congress may so completely pre-empt a particular area that
any civil complaint raising this select group of claims is
necessarily federal in character." Id. (quoting Taylor,
481 U.S. at 63-64). That is because "[w]hen the federal statute
completely pre-empts the state-law cause of action, a claim which
comes within the scope of that cause of action, even if pleaded
in terms of state law, is in reality based on federal law."
Anderson, 539 U.S. at 8.
Section 502(a) of ERISA the statute's civil enforcement
provision is one such provision "with such `extraordinary pre-emptive power' that it
`converts an ordinary state common law complaint into one stating
a federal claim for purposes of the well-pleaded complaint
rule.'" Pascask Valley Hosp., 388 F.3d at 399-400 (quoting
Davila, 124 S. Ct. at 2495). In relevant part, § 502(a) allows
an ERISA plan "participant" or "beneficiary" to file a civil
action "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." 29 U.S.C. § 1132(a)(1)(B). Thus, state law actions that
are within the scope of § 502(a) are removable to federal court.
Pascack, 388 F.3d at 399-400 (citations omitted).
The question for this Court is whether Plaintiff has asserted
claims falling within ERISA's civil enforcement provision such
that the doctrine of complete preemption applies. In determining
whether a plaintiff has artfully pled his suit so as to couch a
federal claim in terms of state law, we are permitted to look
beyond the face of the complaint. Pascack, 388 F.3d at 400
(citing Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 268,
274 (3d Cir. 2001)). See also AETNA Health, Inc. v. Davila,
542 U.S. 200, ___, 124 S. Ct. 2488, 2496 (2004) (to determine
whether a cause of action falls within the scope of §
502(a)(1)(B), courts must examine the complaint, the statute on
which the state law claims are based, and the various plan
Recently, the Supreme Court revisited the topic of complete
preemption in AETNA Health Inc. v. Davila, supra. Davila
involved consolidated cases in which two individuals, Juan Davila
and Ruby Calad, sued their respective HMOs for alleged failures
to exercise ordinary care in the handling of coverage decisions,
thereby allegedly violating the Texas Health Care Liability Act
(THCLA). Davila's claim arose out of his HMO's refusal to pay for
Vioxx after it was prescribed by his treating physician. Calad's
claim arose from her HMO's refusal to pay for an extended
hospital stay despite her physician's recommendation that she
remain hospitalized for an extended period following ...