United States District Court, E.D. Pennsylvania
HEATHER DUFFY PLUNKETT, et al.
NATIONWIDE MUTUAL INSURANCE CO
THOMAS N. O'NEILL, Jr., District Judge.
Plaintiffs Heather Duffy Plunkett and Francis McCaffery bring this action against defendant Nationwide Mutual Insurance Co. alleging claims for breach of contract and bad faith under Pennsylvania law. Presently before me are plaintiffs' motion to remand and for an award of costs and attorney's fees (Dkt. No. 2), defendant's response (Dkt. No. 3) and the parties' replies (Dkt. Nos. 4, 5). For the following reasons I will grant plaintiffs' motion to remand and deny plaintiffs' request for costs and attorney's fees.
On October 15, 2014, this case was filed in the Court of Common Pleas for Philadelphia County. The complaint alleges that Plunkett was involved in a motor vehicle accident on November 28, 2011 and was defendant's insured under an automobile insurance policy. See Dkt. No. 1 at 14. As a result of the accident, Plunkett obtained chiropractic treatment from McCaffery. Pursuant to Pennsylvania's Motor Vehicle Financial Responsibility Law (PMVFRL), McCaffery submitted his requests for reimbursement directly to defendant, which then submitted those claims to peer review in order to determine their medical necessity. Defendant declined to reimburse McCaffery for treatments provided to Plunkett pursuant to the peer review's finding that McCaffery's services were medically unnecessary.
This action encompasses two claims separately asserted by McCaffery and Plunkett arising from defendant's denial of reimbursement for McCaffery's medical services. McCaffery brings a claim for breach of contract against defendant seeking payment for the services he provided to Plunkett. McCaffery's ad damnum clause alleges damages not in excess of fifty thousand dollars and not in excess of the amount requiring compulsory arbitration under Pennsylvania law. Plunkett brings a separate claim alleging defendant engaged in bad faith under her insurance policy pursuant to 42 Pa. C. S. A. § 8371. Plunkett's ad damnum clause also states that she does not seek damages in excess of fifty thousand dollars and not in excess of the amount required for compulsory arbitration. On November 13, 2014, defendant removed the case to federal court pursuant to 27 U.S.C. § 1441. See Dkt. No. 1. On November 26, 2014, plaintiff filed the motion to remand presently before me. See Dkt. No. 2.
STANDARD OF REVIEW
A civil action may be removed from state court to federal district court where there is federal jurisdiction over the action. See 28 U.S.C. § 1441. Federal courts have jurisdiction over a removed action where there is diversity of citizenship and where the amount in controversy exceeds $75, 000.00. See id.; 28 U.S.C. § 1332(a). Remand to state court is proper if a federal court lacks jurisdiction over a removed action. See 28 U.S.C. § 1447(c). The Court of Appeals has held that "[t]he party asserting jurisdiction bears the burden of showing the action is properly before the federal court" and that "[t]he statute governing removal, 28 U.S.C. § 1441, must be strictly construed against removal." Sikirica v. Nationwide Ins. Co. , 416 F.3d 214, 219 (3d Cir. 2005). In particular, "where the complaint specifically limits the amount in controversy to less than the jurisdictional minimum" then the removing party "must prove to a legal certainty that the amount in controversy exceeds the statutory threshold." Dunfee v. Allstate Ins. Co., No. 08-01425 , 2008 WL 2579799, at *5 (E.D. Pa. June 26, 2008), citing Frederico v. Home Depot , 507 F.3d 188, 195-97 (3d Cir. 2007). Legal certainty "falls somewhere below absolute certainty and above preponderance of the evidence." Hoffman v. DSE Healthcare Solutions, LLC, No. 13-07582, 2014 WL 1155472, at *2 (D.N.J. Mar. 21, 2014) (citations omitted). Here, plaintiffs each expressly limit their claims to less than the jurisdictional minimum of $75, 000.00. Thus, defendant has the burden of showing to a legal certainty that the amount in controversy exceeds $75, 000.00 in order to establish federal jurisdiction.
Plaintiffs move to remand this action on two grounds. First, plaintiffs contend that there is not diversity of citizenship in this action because McCaffery brings a direct action against defendant, which pursuant to 1332(c) confers the citizenship of Plunkett as defendant's insured upon defendant itself. I do not reach this question because I will remand on alternative grounds.
Plaintiffs' second contention is that defendant has not established to a legal certainty that plaintiffs' claims exceed the amount in controversy requirement for diversity jurisdiction. In response, defendant argues that this action exceeds the amount in controversy requirement because McCaffery and Plunkett's claims should be aggregated. On this issue, I agree with plaintiffs.
I. Aggregation of Claims
Generally, multiple plaintiffs may not aggregate separate and distinct claims to reach the amount in controversy required for diversity jurisdiction. See Huber v. Taylor , 532 F.3d 237, 244 (3d Cir. 2008). Multiple plaintiffs' claims may be considered separate and distinct where the adjudication of their claims could be accomplished in separate actions. See Pohl v. NGK Metals Corp. , 117 F.Supp.2d 474, 477 (E.D. Pa. 2000); Augustine v. Chubb Grp. of Ins. Cos., No. 05-2073, 2005 WL 1869186, at *3 (E.D. Pa. July 27, 2005).
Under Pennsylvania law, a bad faith action under § 8371 is considered "a separate and distinct cause of action from the underlying contract claim against the insurer." Nelson v. State Farm Mut. Auto. Ins. Co. , 988 F.Supp. 527, 529-30 (E.D. Pa. 1997) (citing state cases); see also Waldman v. Pediatric Servs. of Am., Inc., No. 97-7257, 1998 WL 770629, at *9 (E.D. Pa. Nov. 5, 1998) (same). The PMVFRL provides for insurance companies to challenge medical provider services for medical necessity by submitting them for peer review. See Herd Chiropractic Clinic, P.C. v. State Farm Mut. Auto. Ins. Co. , 64 A.3d 1058, 1060 (Pa. 2013). If the peer review ultimately finds the disputed services medically unnecessary, then the insurer is not responsible for payment of the services and the provider may not recover from the insured for the unreimbursed services. See Taylor v. Nationwide Ins. Co. , 35 Pa. D. & C. 4th 101, 113 (Pa. Ct. Com. Pl. Allegheny Cty. 1997). Instead, "[t]he medical provider is permitted to sue the insurance company if its bill is not paid." Id . Defendant concedes, as it must, that McCaffery can file an independent action against defendant for reimbursement of the medical services he provided to Plunkett. See Dkt. No. 3 at 18. Thus, plaintiffs' claims are separate and distinct for purposes of determining the amount in controversy.
However, "[a]ggregation has been permitted... in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest." Snyder v. Harris , 394 U.S. 332, 335 (1969). Defendant essentially contends that McCaffery and Plunkett are seeking to enforce a right to unreimbursed medical expenses in which they have a common interest. The paradigm cases allowing aggregation of multiple plaintiffs' claims are matters that cannot be adjudicated without implicating the rights of everyone with an interest in a common and indivisible res such as an estate, property or an insurance policy. See Gilman v. BHC Sec., Inc. , 104 F.3d 1418, 1423 (2d Cir. 1997). In New Jersey Welfare Rights Organization v. Cahill , 483 F.2d 723 (3d Cir. 1973), the Court of Appeals considered whether a class of federal welfare program recipients could aggregate their individual claims to establish the amount in controversy for diversity jurisdiction in order to challenge the government's calculation of benefits under the program. The Court found that aggregation would be allowed if the plaintiffs' claims satisfied the following elements: (1) the adversary of the class had no interest in how the claim is to be distributed among members of the class, (2) none of the class members could ...