is removable to a federal court only if it might have been brought there originally. 28 U.S.C. § 1441(a). Defendants assert that ERISA confers jurisdiction over this action under 28 U.S.C. § 1446(a) and that therefore removal was proper.
With the exception of Dr. Rest, who bases his motion to dismiss on the plaintiffs' failure to adequately allege state law claims, the defendants contend that all the actions complained of were taken in the context of administering benefits under an employee benefit plan and are preempted by ERISA. The Roesserts maintain that their complaint is based on the quality of medical care provided by defendants, is unrelated to their right to benefits under the plan and that the action should therefore be removed to state court.
The question before this court is whether the state law causes of action pled in the complaint are based purely on medical decisions made by defendants which do not invoke federal jurisdiction or whether defendants' actions, as alleged, relate to benefit determinations and should be recharacterized as federal claims and subject to ERISA preemption.
I. Motion to Remand
A. Analytical Framework
The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq., provides a unique federal framework for the regulation of employee pension and benefit plans. In order to ensure that pension and benefit plans would be an exclusively federal concern, Congress included a "deliberately expansive" preemption provision as part of ERISA. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987); see also General American Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1521 (9th Cir. 1993) (noting that ERISA's preemption is one of the broadest ever enacted by Congress).
Section 514(a) of ERISA broadly preempts all state laws which "relate to" any employee benefit plan. 29 U.S.C. § 1144(a).
A law "relates to" an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 77 L. Ed. 2d 490, 103 S. Ct. 2890 (1983). The Supreme Court has given expansive effect to section 514(a), holding that a state law need not explicitly refer to employee benefit plans in order to be preempted; it also need not be specifically designed to affect benefit plans. Pilot Life, 481 U.S. at 47-48. State law claims which arise either directly or indirectly from the administration of the plan are preempted. Gibson v. Prudential Ins. Co. of America, 915 F.2d 414, 416 (9th Cir. 1990); see also Pilot Life, 481 U.S. at 57 (ERISA preempts all common law causes of action arising from improper handling of claim for benefits under ERISA plan).
Preemption, however, is not the same thing as jurisdiction. Cases that raise a federal question are removable to federal court on the basis of the district court's original jurisdiction. 28 U.S. § 1441(a). The availability of removal is limited by the well-pleaded complaint rule, which permits removal only when a federal question is presented on the face of a properly pleaded complaint. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983) (citing Taylor v. Anderson, 234 U.S. 74, 75-76, 58 L. Ed. 1218, 34 S. Ct. 724 (1914)). Because federal preemption is normally a defense and as such would not appear on the face of plaintiff's complaint, it is generally not sufficient to allow removal to federal court. Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 63, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987) (citing Gully v. First Natl. Bank, 299 U.S. 109, 81 L. Ed. 70, 57 S. Ct. 96 (1936)).
However, Congress can so completely preempt a given area of law that any action that comes within it, even though couched as state law claims, must be characterized as federal and may be removed to federal court notwithstanding the well-pleaded complaint rule. Metropolitan Life, 481 U.S. at 63-64. The Supreme Court has concluded that section 502 of ERISA is such an area of sweeping preemption. Id. at 67. This does not mean, however, that all claims which are subject to ERISA preemption are automatically removable. The Supreme Court, citing its earlier opinion in Franchise Tax Board, noted in Metropolitan Life that "ERISA pre-emption, without more, does not convert a state law claim into an action arising under federal law." Id. at 64. Furthermore, the Franchise Tax Board Court found that section 514 of ERISA, unlike the civil enforcement provisions of section 502, decidedly did not preempt all state causes of action relating to ERISA plans. Franchise Tax Board, 463 U.S. at 25. Therefore, while section 514 may provide a defense of federal preemption, it is still subject to the well-pleaded complaint rule and does not necessarily confer federal jurisdiction. Conversely, claims that come within the scope of section 502 are subject to complete preemption and automatically removable to federal court. The circuit courts appear to be in accord that the defensive preemption available under section 514 is alone insufficient for removal to federal court. See e.g., Rice v. Panchal, 65 F.3d 637, 639-42 (7th Cir. 1995) (exhaustively analyzing the difference between "conflict preemption" under section 514(a) and "complete preemption" under section 502(a) and noting that complete preemption creates federal question jurisdiction while conflict preemption does not); Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir. 1995); Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269, 272-73 (2d Cir. 1994). As the Third Circuit concluded in Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3rd Cir.), cert. denied, 133 L. Ed. 2d 489, 116 S. Ct. 564 (1995), "when the doctrine of complete preemption does not apply, but the plaintiff's state claim is arguably preempt under § 514(a), the district court, being without removal jurisdiction, cannot resolve the dispute regarding preemption." Id. at 355. Therefore, this court must first consider plaintiff's motion to remand as it determines whether removal was proper and whether this court has jurisdiction.
Defendant Hill, in its opposition to plaintiff's motion to remand, objects to using the present amended complaint as the basis on which to judge the existence of removal jurisdiction. However, while generally removal jurisdiction is based on the complaint as originally filed, see O'Halloran v. University of Wash., 856 F.2d 1375, 1379 (9th Cir. 1988) (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1065 (9th Cir. 1979)), in this case the original complaint was prepared pro se without the benefit of any legal advice and it was unclear whether jurisdiction was proper. It was under the direction of this court that plaintiffs amended the complaint eventually with the assistance of counsel. Given the unique circumstances that led to the amended complaint and the leniency afforded to plaintiffs in their position, the motion to remand will be determined according to the amended complaint. Furthermore, even if jurisdiction had been proper at the time of removal based on the original complaint, subject matter jurisdiction can always be raised before judgment is entered. If at any point prior to final judgment the court determines that it lacks subject matter jurisdiction, it must remand the action to state court. 28 U.S.C. § 1447(c). The issues raised in the present motions go to subject matter jurisdiction.
In deciding whether state law claims come within the scope of section 502(a), and are therefore completely preempted by ERISA, the court must consider whether the claims are "to recover benefits due . . . under the terms of the plan, to enforce . . . rights under terms of the plan, or to clarify . . . rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Recently the Third Circuit, in Dukes, found that a claim about the quality of a benefit was not a claim under section 502(a), noting that nothing "in the legislative history, structure, or purpose of ERISA suggest that Congress viewed § 502(a)(1)(B) as creating a remedy for a participant injured by medical malpractice." Dukes, 57 F.3d at 357. In confronting a similar issue, the Fifth Circuit held that the medical decisions made by an HMO were preempted by ERISA because they were made in the context of a benefits determination under the plan. Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1331 (5th Cir.), cert. denied, 506 U.S. 1033, 113 S. Ct. 812, 121 L. Ed. 2d 684 (1992). In Corcoran, a woman brought a wrongful death action for the loss of her fetus after the plaintiff's HMO determined that the recommended hospitalization of plaintiff was unnecessary under a cost containment program known as utilization review. The Dukes court distinguished Corcoran on the ground that the medical decisions made by the HMO in that case were purely a function of its administrative role, while the HMO in Dukes not only performed an administrative role, but also arranged for the medical treatment of plan participants. According to the Third Circuit, to the extent a complaint alleges liability for actions taken solely in this latter role, ERISA does not apply and the court lacks removal jurisdiction. Dukes, 57 F.3d at 361. In the absence of Ninth Circuit authority on point, this court finds Dukes persuasive and applies it to the instant action.
1. Health Net