In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 07-3456

FRANCISCAN SKEMP HEALTHCARE, INCORPORATED,

Plaintiff-Appellant,

v.

CENTRAL STATES JOINT BOARD HEALTH AND

WELFARE TRUST FUND,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Western District of Wisconsin.

No. 07 C 387—John C. Shabaz, Judge.

____________

ARGUED MAY 9, 2008—DECIDED JULY 31, 2008

____________

Before FLAUM, KANNE, and TINDER, Circuit Judges.

TINDER, Circuit Judge. This is a case about ERISA preemption. The plaintiff-appellant, Franciscan Skemp

Healthcare, Inc. (“Franciscan Skemp”), is a healthcare

provider in La Crosse, Wisconsin. The defendant-appellee,

Central States Joint Board Health and Welfare Trust Fund

(“Central States”), is an employee benefit plan. Sherry

Romine, through her employment, was a Central States

plan participant. She came to Franciscan Skemp in

October 2003 seeking medical treatment. Before providing
2 No. 07-3456

services, Franciscan Skemp called Central States to verify

Central States’s coverage of Romine and the relevant

services. A Central States representative made oral representations that they were covered. Franciscan Skemp

treated Romine. Following unsuccessful efforts to receive

payment from Central States, after submitting a claim for

benefits, Franciscan Skemp learned that Central States

would not pay—it turns out that Romine lost her benefits,

effective September 30, 2003, for failing to pay COBRA

premiums. When Franciscan Skemp called in October

to verify coverage, the Central States representative

failed to disclose that Romine’s coverage was subject to

COBRA and that the coverage could be retroactively

canceled.

Franciscan Skemp brought suit against Central States

in Wisconsin state court in May 2007, alleging claims of

negligent misrepresentation and estoppel under the laws

of that state. Central States filed a notice purporting to

remove the case to federal court on the grounds that the

claims were subject to the Employee Retirement Income

Security Act (“ERISA”), conferring exclusive federal

jurisdiction, and then moved to dismiss in district court

for failure to state a claim under ERISA. Franciscan

Skemp opposed the motion to dismiss and brought its

own motion to remand to state court. The district court

concluded that the state-law claims were completely

preempted by ERISA, thus establishing exclusive federal

jurisdiction. After recharacterizing the claims as ones

arising under ERISA, the district court also dismissed

them for failure to state a claim. We are now presented

with Franciscan Skemp’s appeal. We review the legal

question of whether there was federal jurisdiction, and

proper removal, de novo. Alexander v. Mount Sinai Hosp.

Med. Ctr., 484 F.3d 889, 891 (7th Cir. 2007).
No. 07-3456 3

Complete preemption, really a jurisdictional rather

than a preemption doctrine, 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. ERISA is such an area: “[T]he

ERISA civil enforcement mechanism is one of those

provisions with such ‘extraordinary pre-emptive power’

that it ‘converts an ordinary state common law complaint into one stating a federal claim for purposes of the

well-pleaded complaint rule.’ ”Aetna Health Inc. v. Davila,

542 U.S. 200, 209 (2004) (quoting Metro. Life Ins. Co. v.

Taylor, 481 U.S. 58, 65-66 (1987)). Complete preemption,

therefore, creates an exception to the ordinary application of the well-pleaded-complaint rule—that a court

only looks to the complaint to determine whether there

is federal-question jurisdiction. Artful pleading on the

part of a plaintiff to disguise federal claims by cleverly

dressing them in the clothing of state-law theories will

not succeed in keeping the case in state court. In these

instances, the federal law has effectively displaced any

potential state-law claims. “ ‘When 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.’ ” Davila, 542 U.S. at 207-08 (quoting

Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 8 (2003)).

Accordingly, such claims are removable.

Of course the difficulty arises in drawing the line between what is completely preempted and what escapes the

cast of the federal net. The Supreme Court in Davila used

a two-part analysis for determining when a claim has

been completely preempted by ERISA:

[I]f an individual brings suit complaining of a denial

of coverage for medical care, where the individual is
4 No. 07-3456

1 The district court used the test from Jass v. Prudential Health

Care Plan, Inc., 88 F.3d 1482 (7th Cir. 1996). While the Jass

decision itself has not been called into question, we find that the

test outlined by the Supreme Court in Davila displaced the

similar three-prong Jass analysis previously used in this

circuit. Therefore, we are using the two-pronged analysis

from Davila rather than the three-part Jass test. Regardless,

the result would be the same.

2 We use the citation form “ERISA § 502(a)(1)(B)” because

that is the more common practice. The official U.S.C. cite is 29

U.S.C. § 1132(a)(1)(B).

entitled to such coverage only because of the terms of

an ERISA-regulated employee benefit plan, and

where no legal duty (state or federal) independent of

ERISA or the plan terms is violated, then the suit falls

“within the scope of” ERISA § 502(a)(1)(B) . . . . In other

words, if an individual, at some point in time, could

have brought his claim under ERISA § 502(a)(1)(B), and

where there is no other independent legal duty that

is implicated by a defendant’s actions, then the individual’s cause of action is completely pre-empted by

ERISA § 502(a)(1)(B).

Davila, 542 U.S. at 210.1

Under the district court’s and Central States’s reasoning,

Franciscan Skemp could have brought its state-law

claims of negligent misrepresentation and estoppel under

ERISA § 502(a)(1)(B).2

 Franciscan Skemp took an assignment of benefits from Romine and filed a claim form

with Central States. The filing of the form and the language

on the form demonstrate an assignment of benefits. Once

Romine’s assignee, Franciscan Skemp stands in her

shoes and is an ERISA beneficiary. As a beneficiary,
No. 07-3456 5

Franciscan Skemp was entitled to bring a claim under

ERISA. Franciscan Skemp requested that Central States

be “estopped from denying coverage benefits for the

Romine medical services” and that a “judgment [be

entered] against defendant for the services provided by

Franciscan Skemp as would otherwise be covered by

defendant’s plan.” The district court found that “[t]hese

requests establish that the gravamen of plaintiff’s cause

of action is a desire to recover benefits it believes are due

to it under the terms of the Plan.” Section 502(a)(1)(B) of

ERISA provides that a beneficiary can bring an action to

“recover benefits due to him under the terms of his

plan.” Therefore, the argument goes, Franciscan Skemp’s

claims are within ERISA § 502’s scope.

What the district court and Central States too easily

overlook, however, is that Franciscan Skemp is not bringing these claims as Romine’s assignee. Admittedly at

first glance it looks like a claim that would arise under

ERISA—a beneficiary’s assignee bringing an action to

recover plan benefits. But upon closer examination, that

is not at all what is happening here.

Franciscan Skemp is bringing these claims of negligent

misrepresentation and estoppel, not as Romine’s assignee,

but entirely in its own right. These claims arise not from

the plan or its terms, but from the alleged oral representations made by Central States to Franciscan Skemp. Franciscan Skemp could bring ERISA claims in Romine’s shoes

as a beneficiary for the denial of benefits under the plan;

but it has not. In fact, Franciscan Skemp does not at all

dispute Central States’s decision to deny Romine coverage.

Franciscan Skemp acknowledges that Romine is not

entitled to benefits, because she failed to make her COBRA

premium payments. It would be odd indeed, then, to
6 No. 07-3456

conclude that Franciscan Skemp is standing in Romine’s

shoes as a beneficiary seeking benefits when Franciscan

Skemp acknowledges that Romine is not actually entitled to any benefits. Franciscan Skemp is basing its

claims on a conversation to which Romine was not even a

party. Thus Franciscan Skemp is not and could not be

“standing in her shoes” or asserting her rights. Franciscan

Skemp is bringing its own independent claims, and these

claims are simply not claims to “enforce the rights under

the terms of the plan.” ERISA § 502(a)(1)(B).

What of the claim form then? We do not quarrel with the

determination below that the claim form evidences an

assignment of benefits; we just disagree with the import

of that determination. The claim form was filed before

Franciscan Skemp was aware that Romine hadn’t made

her payments and that Central States would deny coverage. At that point in time, it was perfectly logical for

Franciscan Skemp to file the form as Romine’s assignee.

Upon learning that Central States would not pay due to

Romine’s failure to pay COBRA premiums, Franciscan

Skemp then asserted its own rights by bringing this

lawsuit. Simply because at one point in time Franciscan

Skemp acknowledged an assignment from Romine does

not mean that it simultaneously and implicitly gave up

any claim(s) it had against Central States apart from that

assignment.

Central States also makes much of the references in

the complaint to the plan and the request that Central

States pay “to the extent said services would otherwise

have been covered.” These references, however, are

solely for the purpose of identifying a damages amount;

they do not convert the claims into ones for plan benefits.

Franciscan Skemp seeks damages, not wrongfully denied

benefits.
No. 07-3456 7

Therefore, under the first consideration from Davila,

the claims are not preempted because they could not

have been brought under ERISA § 502(a)(1)(B). This is not

a beneficiary’s claim—a beneficiary whom all agree is not

even entitled to benefits. Moreover, Franciscan Skemp is

not suing “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,” which is precisely all § 502(a)(1)(B)

provides. Franciscan Skemp is seeking damages arising

from alleged misrepresentations made by Central States

to Fransiscan Skemp in response to its inquiry—a wrong

not within § 502’s scope.

Analysis under the second step in the Davila

test—whether there is an independent legal duty implicated by the defendant’s actions—also undercuts finding

the claims completely preempted. The claims of negligent

misrepresentation and estoppel derive from duties imposed apart from ERISA and/or the plan terms; Wisconsin

state law defines those duties. For instance, Wisconsin’s

Civil Jury Instruction regarding Negligent Misrepresentation includes the following:

Representations of fact do not have to be in writing

or by word of mouth, but may be acts or conduct on

the part of (defendant), or even by silence if there is

a duty to speak. [A duty to speak may arise when

information is asked for; or where the circumstances

would call for a response in order that the parties may

be on equal footing; or where there is a relationship of

trust or confidence between the parties.]

Wis. Civil Jury Instructions 2403 (1993); cf. Kaloti Enters.,

Inc. v. Kellog Sales Co., 283 Wis. 2d 555, ¶¶ 13-20, 699

N.W.2d 205, ¶¶ 13-20 (Wis. 2005) (describing the duty to
8 No. 07-3456

disclose in misrepresentation-based torts); Tietsworth v.

Harley-Davidson, Inc., 270 Wis. 2d 146, ¶¶ 13-14, 677

N.W.2d 233, ¶¶ 13-14 (Wis. 2004) (explaining that “ ‘silence,

a failure to disclose a fact, is not an intentional misrepresentation unless the seller has a duty to disclose’ ” and

“[t]he existence and scope of a duty to disclose are questions of law for the court” (quoting and citing Ollerman

v. O’Rourke Co., 94 Wis. 2d 17, 26, 288 N.W.2d 95 (Wis.

1980))). See also, e.g., Milas v. Labor Ass’n of Wisconsin, Inc.,

214 Wis. 2d 1, ¶ 16, 571 N.W.2d 656, ¶ 16 (Wis. 1997), for

the elements of an estoppel claim. Whether Franciscan

Skemp can prevail on these claims is an issue for another

day and another court, but the relevant legal duties,

logically implicated by these facts, are entirely independent

from ERISA and any plan terms. Therefore, under both

Davila prongs in the test for complete preemption, Franciscan Skemp’s state-law claims survive.

Decisions from other circuits also support this outcome. The Eighth Circuit in In Home Health, Inc. v. Prudential Insurance Co. of America, 101 F.3d 600, 604-07 (8th Cir.

1997), found that ERISA did not preempt a state tort

claim against an administrator of an ERISA plan brought

by a healthcare provider “not as an assignee of an ERISA

beneficiary but as an independent entity claiming damages.” Id. at 604. The court also noted that “[a] majority [of

other circuits] have concluded [that] providers’ state

law claims are not preempted by ERISA.” Id.; see also

Meadows v. Employers Health Ins., 47 F.3d 1006 (9th Cir.

1995). In Meadows, a healthcare provider similarly received assurance of coverage and provided treatment, but

received no payment. The provider brought a claim

alleging negligent misrepresentation, estoppel, and

breach of contract. The action was removed on the basis
No. 07-3456 9

of ERISA preemption, and the court dismissed without

prejudice, explaining that because the healthcare provider

sued derivatively, ERISA preempted the state-law

claims. Meadows, 47 F.3d at 1008. The healthcare provider

then filed a new suit, but this time suing not as an assignee

or subrogee but as “a third-party health care provider

for claims that were non-derivative and independent

of those which the [patient] might have had.” Id. It was a

suit for damages, not for policy benefits. Id. On appeal,

the Ninth Circuit concluded that the claims were not

completely preempted, explaining, “[T]he claims arose

because there was not plan coverage for the [patient],

which was the very fact misrepresented . . . .” Id. at 1010. In

Hospice of Metro Denver v. Group Health Insurance of

Oklahoma, Inc., 944 F.2d 752 (10th Cir. 1991), the court

specifically pointed out that the references in the complaint to the ERISA plan did not automatically make the

claims ERISA claims. It concluded, “those references

provide a background factual explanation of Blue Cross’s

decision to deny benefits . . . . [The patient/beneficiary] is

not a party to this action, and his right to receive benefits

under the plan is not at issue.” Id. at 754. These cases,

and others, from our sister circuits bolster our conclusion in this case that Franciscan Skemp’s state-law

claims are not completely preempted by ERISA. See also

Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d

236, 243-50 (5th Cir. 1990).

These decisions were criticized by Central States in

part because they were pre-Davila. We do not find any

concrete reason to suppose that the conclusions reached

in these cases have been deemed incorrect by Davila.

Moreover, we cite these cases not for their analytical
10 No. 07-3456

3 Admittedly some of these cases apply, in whole or in part,

what we consider conflict preemption analysis rather than

complete preemption analysis. However, given the similar

underlying policy considerations and that conflict preemption

in a general sense (apart from its savings clause) is broader than

complete preemption, a finding that these state-law claims

survive even conflict preemption is informative to our discussion. See Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1281-82

(11th Cir. 2005). However, we explicitly note that by making

this observation we are not implying that the presence (or

absence) of either conflict or complete preemption is a prerequisite (or a bar) for finding the other. Cf. Davila, 542 U.S. at 214

n.4, 216-18.

4 At least one district court has reached the same result we

reach here post-Davila. See Children’s Hosp. Corp. v. Kindercare

Learning Ctrs., Inc., 360 F. Supp. 2d. 202 (D. Mass. 2005).

frameworks, where we might find disagreement3 and

where we opt for the method outlined in Davila, but for

the inherent logic of their outcomes, which supports

the notion that state-law claims brought by third-party

healthcare providers, in situations analogous to the one

with which we are now faced, are independent of ERISA

and not completely preempted.4

Central States does urge Cromwell v. Equicor-Equitable

HCA Corp., 944 F.2d 1272 (6th Cir. 1991), as support for

its position. However, as the Eighth Circuit noted, this

case is somewhat of an exception to the trend. See In

Home Health, 101 F.3d at 604-05. In Cromwell the Sixth

Circuit found that a healthcare provider’s state-law

claims of negligent misrepresentation and estoppel were

essentially claims for ERISA plan benefits and thus preempted. Cromwell is distinguishable at the outset because

the court found that the appellants “clearly claimed to be
No. 07-3456 11

entitled to benefits due them from the . . . plan as beneficiaries by virtue of the assignment of benefits clause.” Id. at

1278; see In Home Health, 101 F.3d at 605 (“Cromwell is

distinguishable from the present case because Home

Health is not seeking benefits as the assignee of an ERISA

beneficiary.”). In the instant case as in In Home Health

and unlike Cromwell, Franciscan Skemp is not seeking

benefits as Romine’s assignee or “by virtue of an assignment.”

Moreover, even aside from that facial difference, the

reasoning in Cromwell is simply not persuasive. As the

dissenting judge in Cromwell opined, in accord with our

analysis in this case, “[A] claim of promissory estoppel

raised by a third-party health care provider is asserted

precisely because that provider is not entitled to benefits

under the plan.” Cromwell, 944 F.2d at 1283 (Jones, J.

dissenting). He also criticized the majority’s focus on the

alleged “assignment,” id. at 1281-82, 1283-84, and concluded that “the Fifth Circuit’s analysis in Memorial

Hospital is correct, and [he] would follow it to find no

preemption of Cromwell’s promissory estoppel and

negligent misrepresentation claims.” Id. at 1284. The

dissenting judge also quoted a rather persuasive passage

from Memorial Hospital:

If a patient is not covered under an insurance policy,

despite the insurance company’s assurances to the

contrary, a provider’s subsequent civil recovery

against the insurer in no way expands the rights of

the patient to receive benefits under the terms of the

health care plan. If the patient is not covered under

the plan, he or she is individually obligated to pay

for the medical services received. The only question

is whether the risk of nonpayment should remain
12 No. 07-3456

with the provider or be shifted to the insurance company, which through its agents misrepresented to the

provider the patient’s coverage under the plan. A

provider’s state law action under these circumstances would not arise due to the patient’s coverage

under an ERISA plan, but precisely because there is

no ERISA plan coverage.

Mem’l Hosp., 904 F.2d at 246, quoted in Cromwell, 944 F.2d at

1284 (Jones, J. dissenting). The criticism of the Cromwell

reasoning found in its dissent and in other circuits’ cases

plus our own application of the Supreme Court’s Davila

test in this case compels us to conclude that Cromwell is a

poorly reasoned outlier in the face of the strong trend in

the bulk of the cases considering healthcare-provider

claims in contexts similar to the case currently before us.

In sum, proper analysis of Franciscan Skemp’s claims

against the broad reach of ERISA under the test outlined

by the Supreme Court in Davila leads to the conclusion

that ERISA does not completely preempt the claims at

issue in this case. Fransiscan Skemp is not bringing these

claims as a beneficiary, nor is it standing in the shoes of a

beneficiary. It is not arguing about plan terms. It is not

seeking to recover plan benefits and even acknowledges

that under the plan Romine is entitled to nothing.

Fransiscan Skemp is bringing state-law claims based on

the alleged shortcomings in the communications between

it and Central States. There are no grounds for removal.

This case belongs in state court.

We, of course, make no comment on the ultimate success or failure of these state-law claims, nor do we pass

judgment on any potential conflict, sometimes called

defensive, preemption argument. See ERISA § 514(a), 29

U.S.C. § 1144(a). Conflict preemption, unlike complete
No. 07-3456 13

preemption, actually is a true preemption doctrine and is

an issue left to the state court in this case, since conflict

preemption does not provide an independent basis for

federal jurisdiction/removal. See Ervast v. Flexible Prods.

Co., 346 F.3d 1007, 1012-15 (11th Cir. 2003) (“Whether

complete preemption applies is a jurisdictional issue,

which must be addressed first and is separate and distinct

from whether a defendant’s ERISA § 514 . . . preemption

defenses apply . . . .”); see also Jass, 88 F.3d at 1487-88 (“[W]e

noted that the state law claim may be susceptible to

‘conflict preemption’ under § 514(a), but merely as a

defense and not a basis for federal jurisdiction.”); Cotton,

402 F.3d at 1281 n.14 (“[A] federal court’s order

remanding a case to state court based on the inapplicability of the complete preemption doctrine leaves open

the question whether the plaintiff’s claims are nevertheless defensively preempted.”).

We REVERSE the denial of the motion to remand and

VACATE the order dismissing the claims as the trial court

lacked jurisdiction to enter that order. Upon return of this

case to the district court, it is to be remanded to the

state court from which it was removed.

USCA-02-C-0072—7-31-08