Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_07-cv-02226/USCOURTS-alnd-2_07-cv-02226-0/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 NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

MARK KING, D.M.D., on behalf of

himself and as representative of a class

and KEVIN J. ALEXANDER, on behalf

of himself and as representative of a class

as to Defendant Guardian Life Insurance

Company of American

 Plaintiff,

vs.

GUARDIAN LIFE INSURANCE

COMPANY OF AMERICA; UNITED

HEALTHCARE INSURANCE

COMPANY; and DELTA DENTAL

INSURANCE COMPANY,

Defendants.

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Civil Action Number

 2:07-cv-2226-UWC

MEMORANDUM OPINION ON THE COURT’S JURISDICTION

On December 10, 2007, Defendants removed the present action from the Jefferson

County Circuit Court. According to Defendants, this Court has jurisdiction pursuant to

Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. For the reasons

explained below, the Court finds that it does not have jurisdiction. Accordingly, the case

will be remanded to state court once again.

I. FACTS:

On August 31, 2007, this Court remanded Plaintiff King’s action to the Circuit Court

FILED

 2007 Dec-27 AM 09:29

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:07-cv-02226-UWC Document 8 Filed 12/27/07 Page 1 of 7
 Alexander filed his initial complaint in federal court. Upon remand of King’s lawsuit,

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the instant Court dismissed Alexander’s claims, without prejudice. Apparently, Alexander joined

King as a named Plaintiff in the state court action prior to this second removal.

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of Jefferson County, Alabama, (King v. Guardian Life Ins. Co.: 2:06-cv-270-UWC), and

dismissed, without prejudice Plaintiff Alexander’s action (Alexander v. Guardian Life Ins.

Co.: 2:06-cv-2061-UWC). In the Memorandum Opinion accompanying the remand and

dismissal orders, this Court determined that it lacked subject matter jurisdiction pursuant to

the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d), and ERISA. The Court based

this determination on the claims asserted in Plaintiff King’s Fourth Amended Complaint, and

Plaintiff Alexander’s First Complaint. In those complaints, Plaintiffs (who are both 1

Alabama dentists), alleged that the Defendant insurance companies engaged in payment

practices that violated the Alabama Insurance Code. See Ala. Code §§ 27-1-19; 27-19A-3.

Specifically, physicians like Plaintiffs, who do not have contracts with the insurance

companies, receive lower payment rates for the same services provided by physicians that

have contracts with the insurance companies. Additionally, in some instances, the insurance

companies have assigned higher deductibles and co-pays for non-contract dentists such as

Plaintiffs. In their complaints, Plaintiffs sought purely equitable relief in the form of an

injunction and reformation of the contracts with the insurance companies. 

Relying on the same Alabama Insurance Code provisions, the Plaintiffs on remand

amended their complaint to include a claim for compensatory damages. This amendment

prompted Defendants to remove the present action again asserting complete preemption

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pursuant to ERISA.

II. ERISA

In the remand opinion, this Court rejected the ERISA complete preemption argument

for the following reasons:

Defendants contend that Plaintiffs’ state law claims are completely

preempted by ERISA. This “complete preemption [or super-preemption]

exists only when the plaintiff is seeking relief that is available under ERISA

Section 502(a).” Cotton v. Massachusetts Mut. Life Ins. Co., 402 F.3d 1267,

1281 (11th Cir. 2005) (citing 29 U.S.C. § 1132(a); Butero v. Royal

Maccabees Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir. 1999) (internal

quotations omitted). Section 502(a) provides that a civil action may be

brought, inter alia, 

(1) by a participant or beneficiary . . . .

(B) to recover benefits due to him

under the terms of his plan, to

enforce his rights under the terms

of the plan, or to clarify his rights

to future benefits under the terms of

the plan. . . . 

(3) by a participant, beneficiary, or fiduciary

(A) to enjoin any act or practice which violates

any provision of this title or the terms of the plan,

or

(B) to obtain other appropriate equitable relief (I)

redress such violations or (ii) to enforce any

provisions of this title or the terms of the plan; .

. . .

29 U.S.C. § 1132(a)(1)(B); 1132(a)(3) (emphasis added).

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When a Plaintiff asserts state law claims that essentially seek the same

type of relief that is available under ERISA Section 502(a), the state law

claims are “completely preempted.” Cotton, 402 F.3d at 1281. In other words,

the state law claims are recharacterized as ERISA claims and a Plaintiff may

proceed to the extent ERISA provides the relief sought. Moreover, the

recharacterized claims provide the basis for federal jurisdiction when the

following four elements are satisfied:

First there must be a relevant ERISA plan. Second, the plaintiff

must have standing to sue under the plan. Third, the defendant

must be an ERISA entity. Finally, the complaint must seek

compensatory relief akin to that available under § 502(a); often

this will be a claim for benefits due under the plan.

Cotton, 402 F.3d at 1281 (citing Butero, 174 F.3d at 1212). 

In the present case, the first three elements are clearly met. In the

complaint, Plaintiffs admit that the Defendants provide coverage to employer

groups and there is nothing in the record to indicate that these group plans are

anything other than relevant ERISA plans. Second, as assignees of the

benefits due to the insured patients, Plaintiffs have standing to sue. See Cagle

v. Bruner, 112 F.3d 1510, 1514-15 (11th Cir. 1997) (finding “derivative

standing based upon an assignment of rights” in ERISA cases). With respect

to the third element, there is no question that defendants are ERISA entities.

See Cotton, 402 F.3d at 1282 (noting that an insurer is a fiduciary and,

therefore, an ERISA entity). 

For purposes of the instant case, the key to the complete preemption

question is whether Plaintiffs “seek compensatory relief akin to that available

under § 502(a) . . . .” See Cotton, 402 F.3d at 1281 (citing Butero, 174 F.3d

at 1212). Defendants contend that Plaintiffs’ claims are essentially claims for

benefits pursuant to Section 502(a). In support of their argument, Defendants

primarily rely on Aetna Health Incorporated v. Davila, 542 U.S. 200, 208-9

(2004). The Plaintiffs in Davila sued their HMOs after Plaintiffs’ claims for

benefit coverage were denied. In their complaints, Plaintiffs alleged that the

denial of benefits violated a state health care liability act that “imposed a duty

on managed care entities to ‘exercise ordinary care when making health care

treatment decisions.’” Davila, 542 U.S. at 212. Finding that Plaintiffs’ claims

were preempted, the United States Supreme Court first noted:

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Congress enacted ERISA to “protect the interests of participants

in employee benefit plans and their beneficiaries” by setting out

substantive regulatory requirements for employee benefit plans

and to “provid[e] for appropriate remedies, sanctions, and ready

access to the Federal courts.” 29 U.S.C. § 1001(b). The purpose

of ERISA is to provide a uniform regulatory regime over

employee benefit plans. To this end, ERISA includes expansive

pre-emption provisions . . . which are intended to ensure that

employee benefit plan regulation would be “exclusively a

federal concern.” 

. . . .

Therefore, any 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. 

Davila, 542 U.S. at 208-9 (citations omitted). Keeping these principles in

mind, the Court found that the Plaintiffs’ claims were preempted because:

It is clear, then, that respondents complain only about denials of

coverage promised under the terms of ERISA-regulated

employee benefit plans.

. . . .

Thus, interpretation of the terms of respondents’ benefit plans

forms an essential part of their [state law] claim . . . .

Petitioners’ potential liability . . . derives entirely from the

particular rights and obligations established by the benefit plans

. . . not entirely independent of the federally regulated contract

itself.

. . . .

[Plaintiffs] do not attempt to remedy any violation of a legal duty

independent of ERISA.” 

Davila, 542 U.S. at 211, 213, 214 (citations omitted).

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Unlike Davila, Plaintiffs in the instant litigation are not attempting to

seek remedies that duplicate or supplant those remedies available under

ERISA. In other words, Plaintiffs do not contend they were wrongly denied

reimbursement based upon the terms of any ERISA agreements. As such,

Plaintiffs’ quarrel is not with Defendants in their role as ERISA entities.

Rather, Plaintiffs contend that Defendants, as insurance companies, had an

obligation to include equal reimbursement schedules in the contracts they

negotiated with both employers and individuals. This obligation arises from

a state law, independent of any rights or obligations associated with ERISA.

Because Plaintiffs’ claims derive from a duty independent of the ERISA

enforcement mechanism, their claims do not conflict with the goals behind

enactment of ERISA. Accordingly, Plaintiffs’ claims are not completely

preempted.

Inasmuch as “complete” preemption provides federal jurisdiction and

there is no “complete” preemption here, some independent basis for federal

jurisdiction must exist before this Court can reach the remaining issues raised

by the parties.

(King Doc. 120 at 5-15; Alexander Doc. 23 at 5-1) (footnotes omitted). 

III. ANALYSIS

The Court is of the opinion that Plaintiffs’ demand for compensatory damages does

not change the above analysis. Like the Plaintiffs’ claims for equitable relief, the current

demand for compensatory damage is not premised upon the terms of an ERISA-regulated

benefit plan. Instead, Plaintiffs “attempt to remedy a[ ] violation of a legal duty independent

of ERISA.” See Davila, 542 U.S. at 214. Here that legal duty arises out of Alabama

common law. As such, complete preemption does not apply. 

Without complete preemption, Defendants’ cannot rely on ERISA as a basis for

removal. Accordingly, the Court will once again remand this action to the Circuit Court of

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Jefferson County, Alabama.

Done this 27th day of December, 2007.

______________________________

 U.W. Clemon

 United States District Judge

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