Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00925/USCOURTS-almd-2_07-cv-00925-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

DAVID ALLEN TEBBETTS, et al., )

)

Plaintiffs, )

)

v. ) CASE NO. 2:07-cv-925-MEF

)

BLUE CROSS BLUE SHIELD OF ) (WO)

ALABAMA, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This is a civil action in which Plaintiffs seek damages from Defendant insurance

companies for their alleged wrongful denial of benefits under Plaintiffs’ health insurance

plan. The action was removed from the Circuit Court of Montgomery County, Alabama on

October 15, 2007 pursuant to 28 U.S.C. § 1441 on the basis that Defendants argue the

Plaintiffs’ health insurance plan is governed by the Employee Retirement Income Security

Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461, and, therefore, that this Court has

jurisdiction under the doctrine of complete preemption. This cause is before the Court on

Plaintiffs’ Motion to Remand (Doc. # 9), filed October 24, 2007, and Defendants’ Motion

to Strike Jury Demand (Doc. # 5), filed October 22, 2007. For the reasons stated below, the

Plaintiffs’ Motion to Remand is due to be DENIED and the Defendants’ Motion to Strike

Jury Demand is due to be GRANTED.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff Cynthia Ingram Tebbetts (“Mrs. Tebbetts”) is an employee of Montgomery

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Imaging, LLC. Mrs. Tebbetts purchased a Blue Cross Blue Shield family health insurance

plan entitled “Medical Association of the State of Alabama Group Health Care Plan”

(“MASA”). This plan provided coverage to Mrs. Tebbetts and her husband, Plaintiff David

Tebbetts (“Mr. Tebbetts”). The MASA policy was issued by Defendant Blue Cross Blue

Shield (“Blue Cross”) and administered in part by Defendant CareCore National, LLC

(“CareCore”).

Montgomery Imaging chose MASA as the sole health insurance plan offered to its

employees. Montgomery Imaging established eligibility requirements its employees must

meet in order to qualify to purchase the plan, including working at least thirty-two hours per

week and having worked for Montgomery Imaging for at least sixty days. In addition,

Montgomery Imaging pays 100% of the employee’s individual premium. If an employee

elects family coverage, the employee pays the incremental premium for that additional

coverage through payroll deduction. Montgomery Imaging also distributes enrollment forms

and plan descriptions, which are provided by Blue Cross, to its employees. Blue Cross

invoices Montgomery Imaging for all of its employees’ premiums each month, and

Montgomery Imaging remits a check to Blue Cross each month to pay the premiums.

On September 13, 2006, Mr. Tebbetts consulted with a doctor because he was

experiencing pain in his abdomen, and the doctor ordered a CT scan of Mr. Tebbetts’

abdomen. The doctor sought pre-approval from Defendants of the CT scan, but Defendants

declined coverage. Several days later, Mr. Tebbetts was taken to the hospital where a CT

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scan and ultrasound revealed that Mr. Tebbetts had a cyst on his pancreas that had caused his

spleen to rupture. Mr. Tebbetts’ spleen was removed.

Plaintiffs filed the Complaint in the Circuit Court for Montgomery County, Alabama

on September 10, 2007 for damages arising out of Defendants’ failure to approve the original

request for a CT scan. Blue Cross filed its Notice of Removal in this Court on October 15,

2007. Plaintiff has moved for remand on the grounds that the MASA group health insurance

policy is not an “employee benefit plan” within the meaning of ERISA, and that Defendants’

removal was procedurally defective.

II. DISCUSSION

A. Motion to Remand

1. Subject Matter Jurisdiction

Federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. Guardian Life

Ins. Co. of Am., 511 U.S. 375, 377 (1994); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095

(11th Cir. 1994). As such, they may only hear cases that they have been authorized to hear

by the Constitution or the Congress of the United States. Kokkonen, 511 U.S. at 377. The

burden of establishing that subject matter jurisdiction exists rests upon the party asserting

jurisdiction. Id. Defendants therefore bear the burden of proving federal jurisdiction in this

case. See, e.g., Leonard v. Enterprise Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002).

Defendants argue that federal jurisdiction exists in this case because the health insurance plan

at issue is governed by ERISA, which they argue completely preempts Plaintiffs’ state law

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claims. See, e.g., Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1211-12 (11th

Cir. 1999).

A civil action filed in a state court may be removed to federal court if the claim is one

“arising under” federal law. Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6 (2003). In

order to determine whether a complaint “arises under” federal law, a court must examine the

“well pleaded” allegations of the complaint and ignore potential defenses. Id. A suit arises

under the Constitution and laws of the United States only when the plaintiffs statement of his

own cause of action shows that it is based upon federal law or the Constitution. Id. As a

general rule, absent diversity jurisdiction, a case will not be removable if the complaint does

not affirmatively allege a federal claim. Id. However, a state claim may be removed to

federal court under two narrow exceptions to the well pleaded complaint rule: (1) when

Congress expressly provides for removal, or (2) when a federal statute wholly displaces the

state-law cause of action through complete preemption. Id. at 8.

The parties do not dispute that, if ERISA governs the health insurance policy in this

case, then the doctrine of complete preemption applies. See Butero, 174 F.3d at 1211

(“Superpreemption [or complete preemption] arises from Congress’s creation of a

comprehensive remedial scheme in 29 U.S.C. § 1132 for loss or denial of employee

benefits.”). The only dispute in this case related to the governance of ERISA is whether the

MASA plan is an “employee welfare benefit plan” within the definition of 29 U.S.C.

§ 1002(1).

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2. ERISA

Plaintiffs argue that the MASA plan is not an “employee welfare benefit plan” as

required to be governed by ERISA because it is not a plan “established or maintained by an

employer or by an employee organization, or by both.” 29 U.S.C. § 1002(1); Donovan v.

Dillingham, 688 F.2d 1367, 1371 (11th Cir. 1982). Plaintiffs argue that the plan is

established or maintained by MASA and that Montgomery Imaging, Mrs. Tebbets’ employer,

does not establish or maintain the plan.

In this case, it is clear that Mongomery Imaging has “established or maintained” the

MASA plan. Montgomery Imaging selected MASA as the sole health insurance plan offered

to its employees. Montgomery Imaging established eligibility requirements its employees

must meet in order to qualify to purchase the plan. Montgomery Imaging pays 100% of the

employee’s individual premium; the employee is only responsible for the premiums of family

members. Montgomery Imaging also distributes enrollment forms and plan descriptions.

Finally, Montgomery Imaging collects employees’ premiums via payroll deduction. Blue

Cross invoices Montgomery Imaging directly for the premiums of its employees, and

Montgomery Imaging remits a check to Blue Cross each month to pay the premiums.

These actions taken by Montgomery Imaging are more than sufficient to establish or

maintain an ERISA plan. See Butero, 174 F.3d at 1214 (holding employer “established or

maintained” an ERISA plan where the employer had “consulted an insurance agent, selected

the terms of the group policy it wished to purchase for its employees, completed an

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application form for the policy, solicited enrollments from its employees, collected money

through payroll deductions, and remitted premium checks”); McDonald v. Provident

Indemnity Life Ins. Co., 60 F.3d 234, 236 (5th Cir. 1995) (finding employer had established

or maintained an ERISA plan by “purchasing the insurance, selecting the benefits, identifying

the employee-participants, and distributing enrollment and claim forms”). Accordingly,

ERISA completely preempts Plaintiffs’ claims and this Court has subject matter jurisdiciton

to hear the case. The only jurisdictional issue left for resolution by this Court is whether

Defendants’ removal was procedurally defective.

3. Procedural Issues Related to Removal

Plaintiffs claim that Defendants’ removal wasimproper because they failed to include

copies of the return on service for either Defendant. The procedure for removal is set forth

in 28 U.S.C. § 1446, which provides:

A defendant or defendants desiring to remove any civil action or criminal

prosecution from a State court shall file in the district court of the United

States for the district and division within which such action is pending a notice

of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure

and containing a short and plain statement of the grounds for removal, together

with a copy of all process, pleadings, and orders served upon such defendant

or defendants in such action.

(emphasis added). Plaintiff cites Kisor v. Collins, 338 F. Supp. 2d 1279 (N.D. Ala. 2004)

in support of their argument that the failure to file returns on service with a notice of removal

violates § 1446. However, Kisor is not on point because in that case the defendants failed

to file both the returns on service and the summons. Summons are served upon a defendant,

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whereas returns on service are not.

More on point is Usatorres v. Marina Mercante Nicaraguenses, S.A., 768 F.2d 1285

(11th Cir. 1985), which held that § 1446 does not require the removing party to file

documents that were not served upon him. See id. at 1286-87 (“The removal statute requires

only that the removing party file copies of all process, pleadings and orders served upon him

or them in such action. Because the motion was not served upon him, there was no

requirement that the defendant file it with the district court.”). Accordingly, Defendants’

failure to file returns on service, which were not served upon them, does not violate § 1446.

Consequently, Defendants’ removal was not procedurally defective.

B. Motion to Strike Jury Demand

Defendants have moved to strike Plaintiffs’ demand for a jury trial. Because relief

under ERISA is equitable in nature, Plaintiffs have no right to a jury trial. See Chilton v.

Savannah Foods & Indus., 814 F.2d 620, 623 (11th Cir. 1987). Therefore, Defendants’

motion to strike is due to be GRANTED.

III. CONCLUSION

For the reasons set for above, it is hereby ORDERED that

(1) Plaintiffs’ Motion to Remand (Doc. # 9) is DENIED.

(2) Defendants’ Motion to Strike Jury Demand (Doc. # 5) is GRANTED.

DONE this the 2 day of September, 2008. nd

 /s/ Mark E. Fuller 

CHIEF UNITED STATES DISTRICT JUDGE

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