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Galileo Surgery Center, Lp v. Aetna Health and Life Insurance Co.

United States District Court, C.D. California

March 3, 2015



OTIS D. WRIGHT, II, District Judge.


Plaintiff Galileo Surgery Center, L.P. moves to remand this case for lack of subject matter jurisdiction. Defendant Aetna Health and Life Insurance Company argues that Plaintiff's state law claims are completely preempted by the Employee Retirement Income Security Act ("ERISA") thereby providing the Court with original jurisdiction. For the reasons discussed below, the Court GRANTS Plaintiff's Motion to Remand.[1] (ECF No. 18.)


On October 28, 2014, Plaintiff filed a small claims action in the San Luis Obispo Superior Court to collect unpaid medical services from Defendant in the amount of $2, 500.00. (Mot. 3.) Plaintiff's claims are "ostensibly" outlined as causes of action for Breach of Oral Contract, Breach of Written Contract, Services Rendered, Labor Performed, Promissory Estoppel, and Unjust Enrichment. ( Id. ) Plaintiff is a medical services provider who treated two of Defendant's insured. (Connell Decl., Ex. A.) Prior to Plaintiff providing medical services and facilities, the Defendant's insureds executed an Assignment of Benefits form assigning all of their health insurance benefits under Defendant's health insurance policies to Plaintiff. ( Id. ) In addition, Plaintiff alleges that before treatment, it verified with Defendant that the health insurance plans were in effect, the medical procedures and related services were covered, and Plaintiff would be reimbursed its "usual and customary costs for the medical procedures and related services." ( Id. )

Plaintiff further alleges that after rendering medical services and facilities to the insured, Defendant made unreasonably low claim payments, which did not comply with the terms of the health insurance policies. ( Id. ) As a result of Defendants not fully performing under its insurance policies, Plaintiff suffers damages in the amount of $2, 828.04. ( Id. ) Plaintiff will accept $2, 500.00 from the Defendant as full satisfaction to Plaintiff's claim. ( Id. )

Defendant removed this action on December 19, 2014. (ECF No. 1.) On January 16, 2015, Plaintiff filed this present Motion to Remand. Defendant timely opposed and Plaintiff replied. (ECF Nos. 19, 20.) That Motion is now before the Court for consideration.


There are two grounds for federal subject matter jurisdiction: (1) federal question jurisdiction under 28 U.S.C. § 1331; and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court has federal question jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States." Id. at § 1331. A district court has diversity jurisdiction "where the matter in controversy exceeds the sum or value of $75, 000, ... and is between citizens of different states, or citizens of a State and citizens or subjects of a foreign state...." Id. at § 1332(a)(1)-(2).

A defendant may remove any civil action from state court to federal district court if the district court has original jurisdiction over the matter. 28 U.S.C.A. § 1441(a). "The party invoking the removal statute bears the burden of establishing federal jurisdiction." Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Courts "strictly construe the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (internal citations omitted). "[I]f there is any doubt as to the right of removal in the first instance, " the motion for remand must be granted. Id.

The district court determines whether removal is proper by first determining whether a federal question exists on the face of the plaintiff's well-pleaded complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). However, an exception to the well-pleaded complaint rule is "when a federal statute wholly displaces the state-law cause of action through complete pre-emption." Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003). In other words, "[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." Id. In such circumstances, "the state claim can be removed" to federal court. Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004). On the other hand, if the state law claims are not completely preempted, the district court lacks subject matter jurisdiction to hear the action. Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th Cir. 2009). If the "district lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C.A. § 1447(c).

If the district court determines that removal was improper, then the court may also award the plaintiff costs and attorney fees "incurred as a result of the removal." Id. The court has broad discretion to award costs and fees whenever it finds that removal was wrong as a matter of law. Balcorta v. Twentieth-Century Fox Film Corp., 208 F.3d 1102, 1106 n. 6 (9th Cir. 2000).


Defendants contend that removal is proper based on federal question jurisdiction because Plaintiff's state law claims actually arise under ERISA, which is a federal law. Defendants provide evidence that the group health insurance plans at issue are ERISA regulated plans under 29 U.S.C. § 1002. ( See ECF No. 4, Adinolfi Decl., Exs. 1, 2.) A "party seeking removal based on federal question jurisdiction must show either that the state-law causes of action are completely preempted by § 502(a) of ERISA, or that some other basis exists for federal question jurisdiction." Marin Gen. Hosp., 581 F.3d at 945. Neither Plaintiff nor ...

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