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Avrum M. Baum, As Parent and Guardian of Chaya Baum v. Keystone Mercy Health Plan

October 4, 2011

AVRUM M. BAUM, AS PARENT AND GUARDIAN OF CHAYA BAUM, PLAINTIFF,
v.
KEYSTONE MERCY HEALTH PLAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Anita B. Brody, J.

MEMORANDUM

I. INTRODUCTION

On January 28, 2011, Plaintiff Avrum Baum, as the parent of C.B., ("Baum") originally filed this action in the Court of Common Pleas for Philadelphia County on behalf of himself and all other similarly situated individuals against Defendant Keystone Mercy Health Plan and its affiliate Defendant Amerihealth Mercy Health Plan (collectively "Keystone"). On February 23, 2011, Defendants filed their Notice of Removal under federal question jurisdiction (Doc. # 1). On March 11, 2011, Plaintiff filed a Motion to Remand to State Court (Doc. # 8).

II. BACKGROUND

Baum, a resident of Philadelphia, Pennsylvania, is the parent and guardian of Chaya Baum, who has a health insurance policy with Keystone. Keystone, an alleged Pennsylvania corporation headquartered in Philadelphia, serves more than 300,000 Medicaid recipients in the state. AmeriHealth, an affiliate of Keystone, is an alleged Pennsylvania corporation headquartered in Harrisburg and serves more than 100,000 Medicaid recipients in the state. *fn1

According to the complaint, on September 20, 2010, a portable USB flash drive containing personal health information of Baum and more than 280,000 other children insured by Keystone "went missing" from Key Stone's corporate offices. The specific nature of that health information has not been identified, but Baum believes that it included names, addresses, phone numbers, policy identification numbers, full and partial social security numbers, customer financial information and health histories. Pl.'s Compl. ¶ 26; Defs.' Notice of Removal ¶ 8. On October 29, 2010, following a report by the Philadelphia Inquirer , Keystone informed Baum via letter: "The drive was lost within our office on September 20, 2010, and we have not been able to find it." Compl. ¶ 24. Keystone expressed "deep[] regret that [customer] information may have been shared" and explained that it was taking extra precaution and had: (1) investigated the matter; (2) implemented additional safety measures; and (3) retrained employees on the significance of customer privacy and information security. Compl. ¶ 24; Notice of Removal ¶ 7.

Baum alleges Keystone was negligent by permitting its employees to routinely transport the flash drive to community health fairs, not encrypting or otherwise protecting the health information on the flash drive, failing to restrict access to the data on the flash drive by person or scope, and generally failing to secure the contents of the flash drive. Compl. ¶¶ 27-28; Notice of Removal ¶ 8.

In so doing, Baum claims:

1) Keystone violated Pennsylvania's Unfair Trade Practices and Consumer Protection Law when it failed to adhere to its express privacy policy's guarantee that it will "set up ways to make sure that all personal health information is used correctly." Compl.¶ 33.

2) Keystone was negligent when it failed to exercise reasonable care with its customers' personal health information and failed to give sufficient notice that its information was compromised.

3) Keystone was per se negligent when it failed to adhere to Pennsylvania law and federal regulations issued pursuant to the Health Insurance Portability and Accountability Act ("HIPAA") requiring health plans to have in place appropriate safeguards to protect personal information.

III. DISCUSSION

Removal of a state action to a federal district court is proper only when the action could have originally been filed in that court. 28 U.S.C. § 1441(a). Keystone alleges that federal question jurisdiction exists-and therefore this action could have originally been filed in this court-because Baum's claims necessarily involve the interpretation of HIPAA, a federal statute. Baum opposes removal arguing that its complaint asserts purely factual claims that "do not turn on a substantial question of federal law." *fn2 Pl.'s Mot. Remand 5. When considering a motion to remand, a district court must look at the complaint at the time the petition for removal was filed. Abels v. State Farm Fire & Casualty Co., 770 F.2d 26, 29 (3d Cir. 1985). Removal jurisdiction can only "be determined by reference to the 'well-pleaded complaint."' Merrell Dow Pharmaceuticals Inc. V. Thompson, 478 U.S. 804, 808 (1986). The defendant seeking removal to federal court, moreover, bears the burden of demonstrating the existence of federal jurisdiction, and "all doubts should be resolved in favor of remand" to state court. Id.

A federal district court has original jurisdiction over an action "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Although a complaint clearly creates federal-question jurisdiction when it pleads a federal cause of action, this "arising under" provision is also implicated when "a state-law claim necessarily raise[s] a stated federal issue, actually disputed and substantial . . . ." Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308, 314 (2005); see also Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 27-28 (1983) ("[A] well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law."). Yet as compared ...


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