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District Council 16 Northern California Health and Welfare Trust Fund v. Sutter Health

United States District Court, N.D. California

May 19, 2015

SUTTER HEALTH, et al., Defendants.



This matter is before the Court on Plaintiff's motion to remand. The Court has carefully considered the arguments of the parties in the papers submitted, and finds this matter suitable for resolution without oral argument, pursuant to Civil Local Rule 7-1(b). Plaintiff's motion to remand is hereby GRANTED, for the reasons set forth below.


Plaintiff is a health and welfare trust fund responsible for the payment of medical expenses incurred by members of its ERISA-regulated benefit plan. Compl. ¶¶ 42-43 (Docket No. 1). Defendants are a non-profit network of hospitals, physicians, and other medical providers. Opp'n at 2 (Docket No. 19). On January 6, 2015, Plaintiff filed suit against Defendants in Alameda County Superior Court on behalf of itself and all self-funded benefit plans that paid Defendants for anesthesia services that were allegedly (1) not provided, (2) separately billed by a third-party anesthesiologist, or (3) reimbursed through other charges on the hospitals' bills. Compl. ¶ 1. Plaintiff claims that these actions constituted a violation of California's Unfair Competition Law ("UCL"), codified as Business and Professions Code §§ 7200, et seq. Id.

Defendants timely removed this action to federal court on the basis that Plaintiff's claims are completely preempted by the Employment Retirement Income Security Act of 1974 ("ERISA"). Notice of Removal (Docket No. 1). On March 19, 2015, Plaintiff filed the present motion to remand. (Docket No. 18). Defendants filed a timely opposition and Plaintiff replied. (Docket Nos. 19, 20).


When a case "of which the district courts of the United States have original jurisdiction" is initially brought in state court, a defendant may remove it to federal court under 28 U.S.C. § 1441(a). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). The party invoking the federal court's removal jurisdiction has the burden of establishing federal jurisdiction. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) ( citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921)). To protect the jurisdiction of state courts, removal jurisdiction is strictly construed in favor of remand. Harris v. Bankers Life and Cas. Co., 425 F.3d 689 (9th Cir. 2005). Any doubt as to the right of removal must be resolved in favor of remand to state court. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992).


In enacting ERISA, Congress set out to "protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts." 29 U.S.C. § 1001(b). To further ERISA's purpose to "provide a uniform regulatory regime over employee benefit plans... ERISA includes expansive pre-emption provisions that are intended to ensure that employee benefit plan regulation would be exclusively a federal concern." Aetna Health v. Davila, 542 U.S. 200, 208 (2004) (citations omitted). Specifically, ERISA's "comprehensive legislative scheme" includes "an integrated system of procedures for enforcement" under ERISA Section 502(a), codified as 29 U.S.C. § 1132(a). Id. at 208. "[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted." Id. at 209.

I. Complete Preemption

Importantly, the law distinguishes between partial and complete preemption under ERISA. Ordinarily, federal preemption is merely an affirmative defense to the enforcement of state law claims, displacing state law but not providing federal question jurisdiction. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1973). ERISA offers this type of partial preemption in § 514(a), which displaces state laws that "relate to" ERISA-regulated employee benefit plans. ERISA § 514(a). Importantly, however, § 514(a) does not confer federal jurisdiction and is therefore not a basis for removal. Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th Cir. 2009).

Conversely, ERISA § 502(a) provides for the complete preemption of certain claims that fall within the scope of ERISA's remedial scheme. Id. Unlike conflict preemption, complete preemption is "really a jurisdictional rather than a preemption doctrine, [as it] confers exclusive federal jurisdiction in certain instances where Congress intended the scope of a federal law to be so broad as to entirely replace any state-law claim." Franciscan Skemp Healthcare, Inc. v. Cent. States Joint Bd. Health & Welfare Trust Fund, 538 F.3d 594, 596 (7th Cir. 2008). In Metropolitan Life Insurance Co., the Supreme Court articulated the nature of complete preemption under § 502(a), explaining that Congress intended to "so completely pre-empt" this particular area of law, "that any civil complaint raising this select group of claims is necessarily federal in character." 481 U.S. at 63-64. Accordingly, complete preemption renders facially state-law based claims removable to federal court. Id. at 66.

The analytical framework for complete ERISA preemption was provided by the Supreme Court in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004). In order to determine whether an asserted state-law cause of action comes within the scope of ERISA's complete preemption provision, Davila devised a two-prong test. Id. A state-law cause of action is completely preempted if: (1) "an individual at some point in time, could have brought [the] claim" under ERISA section 502(a); and (2) "where there is no other independent legal duty that is implicated by a ...

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