Court Opinion

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Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

9-22-1994

Goepel v. Nat'l Postal Mail Handlers Union
Precedential or Non-Precedential:

Docket 93-5657

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Recommended Citation
"Goepel v. Nat'l Postal Mail Handlers Union" (1994). 1994 Decisions. Paper 141.
http://digitalcommons.law.villanova.edu/thirdcircuit_1994/141

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          UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT

                     No. 93-5657

          MARILYN GOEPEL; RONALD GOEPEL,

                                   Appellants
                         v.

      NATIONAL POSTAL MAIL HANDLERS UNION,
         A DIVISION OF LIUNA, d/b/a MAIL
              HANDLERS BENEFIT PLAN

On Appeal from the United States District Court
        for the District of New Jersey
            (D.C. Civ. No. 93-03711)

              Argued August 2, 1994

BEFORE:   STAPLETON and GREENBERG, Circuit Judges,
            and ATKINS, District Judge*

           (Filed:   September 27, 1994)

                          Arlene G. Groch (argued)
                          321 Shore Road, P.O. Box 266
                          Somers Point, New Jersey 08244

                               Attorney for Appellants

                          Denis F. Gordon (argued)
                          Susan J. Pannell
                          Gordon & Barnett
                          1133 21st Street, N.W.
                          Suite 450
                          Washington, D.C. 20036

                                   Attorneys for Appellee
* Honorable C. Clyde Atkins, Senior United States District Judge
for the Southern District of Florida sitting by designation.

                      OPINION OF THE COURT

GREENBERG, Circuit Judge.

               I. FACTUAL AND PROCEDURAL HISTORY

                       A. Factual History

          Appellant Ronald Goepel is a civilian employee of the

United States Department of the Navy.   He and his wife, appellant

Marilyn Goepel, reside in Deptford, New Jersey, and have been

enrolled in the Mail Handlers Benefit Plan, a fee-for-service

health benefits plan, continuously since 1981.   The Mail Handlers

Benefit Plan is one of the health insurance plans available to

federal government employees and their families.   These

healthcare plans are established pursuant to the Federal
Employees Health Benefits Act (FEHBA), 5 U.S.C. § 8901 et seq.,

which authorizes the Office of Personnel Management (OPM) to

contract with carriers to provide health benefits plans to

federal employees and their families.

          OPM has contracted with the appellee, the National

Postal Mail Handlers Union, a division of the Laborers

International Union of North America, AFL-CIO, for the provision

of the Mail Handlers Benefit Plan, and the Union has

subcontracted with Continental Assurance Company to underwrite
and administer the Plan.    Each year OPM and the Union negotiate

the terms of the Plan and document these terms in the Plan

brochure, which is included as an appendix to the contract

between OPM and the Union.

           In January 1993, Marilyn Goepel learned that she had

metastatic breast cancer.    Thereafter, her consulting oncologist,

Dr. David L. Topolsky of Hahnemann University, recommended that

she undergo a treatment in which high doses of chemotherapy are

followed by a peripheral stem cell infusion (HDC/APCR).1    On July

14, 1993, Dr. Topolsky wrote to the Plan requesting a

determination of whether this treatment would be covered.

Subsequently, on August 5, 1993, one of the Plan's customer

service representatives stated in a telephone conversation that

the treatment would not be covered, and indicated that it would

take four to six weeks for Marilyn Goepel to receive an official

notice of the Plan's denial of coverage in the mail.

          The Goepels contacted Congressman Robert E. Andrews,

who then sent a letter dated August 6, 1993, to OPM on their
behalf.   Within a week, OPM responded to Congressman Andrews'

1
 . In a certification dated August 17, 1993, Dr. Topolsky
explained the treatment as follows: it "works on the principal
[sic] that the high doses of chemotherapy required to
substantially kill or eradicate a patient's tumor will, as a
side-effect, fatally destroy the patient's bone marrow.
Therefore, a sample of either bone marrow or bone marrow cells
which have been induced to enter the peripheral blood, are
removed and stored in a freezer prior to the high-dose
chemotherapy process. Following administration of the
chemotherapy to the patient, the previously stored marrow cells
are given back to the patient to protect them from an otherwise
fatal toxic-side-effect of the treatment." See app. at 94.
inquiry with a letter stating that page 19 of the 1993 Plan

brochure "explicitly excludes benefits for HDCT/ABMT for breast

cancer," and that therefore OPM had "no contractual basis to ask

the Plan to provide benefits for Mrs. Goepel."2   See app. at 445.

The Plan also sent a letter dated August 10, 1993, to Dr.

Topolsky, denying his request for pre-authorization of benefits

for HDC/APCR for Mrs. Goepel on the grounds that the terms of the

1993 Plan brochure did not cover the use of HDC/APCR for the

treatment of breast cancer.   The Goepels did not appeal the

Plan's denial of coverage to OPM.   However, the parties have

stipulated that "[i]f plaintiffs were required to exhaust any

right they had to seek review by OPM[,] . . . that exhaustion

requirement was satisfied" by Congressman Andrews' letter to the

OPM on Mrs. Goepel's behalf and OPM's response to that letter.

See app. at 26.

                      B. Procedural History

          On August 19, 1993, the Goepels filed a complaint in

the Superior Court of New Jersey, Law Division, alleging that:

(1) the Plan violated the New Jersey Law Against Discrimination,

N.J. Stat. Ann. § 10:5-1 et seq. (West 1993); (2) the Plan
breached its contract by refusing to certify her coverage for

HDC/APCR; (3) any exclusion of coverage for HDC/APCR in the Plan

2
 . In its letter the OPM referred to the coverage sought as
"high dosage chemotherapy/autologous bone marrow transplant
(HDCT/ABMT)." In view of our result we need not discuss the
significance, if any, of the distinction between HDC/APCR and
HDCT/ABMT.
brochure was unconscionable; and (4) the Plan's handling of Mrs.

Goepel's claim involved unfair claim settlement practices in

violation of N.J. Stat. Ann. § 17B:30-13.1 (West 1985).   See app.

at 1-10.   On these bases, the Goepels sought a declaratory

judgment, injunctive relief, damages, and counsel fees.   Id.

           The Plan immediately removed the case to the United

States District Court for the District of New Jersey.   In its

notice of removal, the Plan stated that the case was removable

pursuant to 28 U.S.C. §§ 1441(b) and (c), because the Goepels'

breach of contract claim "arises under the laws of the United

States," and their other state law claims were "inextricably

intertwined" with the breach of contract claim.   Subsequently,

the Goepels filed a motion to remand the case to the state court

on the grounds that their breach of contract claim did not raise

a federal question, as it was merely a private contractual

dispute between an insured and a health care insurer.   However,

the district court denied the motion to remand.   See Goepel v.

Mail Handlers Benefit Plan, No. 93-3711 (D.N.J. Sept. 10, 1993).

Subsequently, the district court tried the case on the merits

pursuant to a joint stipulation of the facts, and entered

judgment in favor of the Plan on all counts of the complaint.

See Goepel v. Mail Handlers Benefit Plan, No. 93-3711 (D.N.J.
Sept. 24, 1993).

                          II. DISCUSSION

           In denying the Goepels' motion to remand this case to

New Jersey Superior Court, the district court held that the case
was removable pursuant to 28 U.S.C. § 1441(b) because "the matter

[wa]s one 'arising under' the laws of the United States."     See

Goepel v. Mail Handlers Benefit Plan, No. 93-3711, at 2 (D.N.J.

Sept. 10, 1993). Section 1441(b) provides in relevant part that
          [a]ny civil action of which the district
          courts have original jurisdiction founded on
          a claim or right arising under the
          Constitution, treaties or laws of the United
          States shall be removable without regard to
          the citizenship or residence of the parties.

The Goepels argue that the Plan improperly removed the case

because they base their claims exclusively on state law, and thus

do not raise any "federal questions" over which the district

court would have original jurisdiction pursuant to 28 U.S.C. §

1331 and removal jurisdiction pursuant to 28 U.S.C. § 1441(b).

We confine our review of the district court's subject matter

jurisdiction to whether it had federal question removal

jurisdiction over the Goepels' claims, as the Plan removed the

case to district court on this basis alone, and it does not

contend that it could have removed the case on the basis of

diversity of citizenship.   See 28 U.S.C. §§ 1332, 1441(a);

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425,

2429 (1987) ("Absent diversity of citizenship, federal-question

jurisdiction is required [for removal].").

            "'[F]ederal question' cases . . . [are] those cases

'arising under the Constitution, laws, or treaties of the United

States.'"   Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63,

107 S. Ct. 1542, 1546 (1987) (quoting 28 U.S.C. § 1331).    "The

presence or absence of federal-question jurisdiction is governed
by the 'well-pleaded complaint rule,' which provides that federal

question jurisdiction exists only when a federal question is

presented on the face of the plaintiff's properly pleaded

complaint."    Caterpillar, Inc. v. Williams, 482 U.S. at 392, 107

S.Ct. at 2429 (citing Gully v. First Nat'l Bank, 299 U.S. 109,

112-13, 57 S. Ct. 96, 97-98 (1936)).    "'The rule makes the

plaintiff the master of the claim,'" as generally "'he or she may

avoid federal jurisdiction'" by drafting a complaint which relies

exclusively on state law.   Krashna v. Oliver Realty, Inc., 895
F.2d 111, 113 (3d Cir. 1990) (quoting Caterpillar, Inc. v.

Williams, 482 U.S. at 392, 107 S.Ct. at 2429).

          The Goepels' complaint does not purport to rely on

federal law.   Two of their its claims, namely the claims alleging

violations of New Jersey's Law Against Discrimination, N.J. Stat.

Ann. § 10:5-1 et seq., and New Jersey's law against unfair claim

settlement practices, N.J. Stat. Ann. § 17B:30-13.1, are based

expressly on New Jersey statutes.   See app. at 1-4, 8-10.

Moreover, although the Goepels' breach of contract and

unconscionability claims do not rely expressly on either state or

federal law, in the absence of any indication that the Goepels

intended to invoke federal common law, we conclude that "on their

face" these claims are grounded exclusively on New Jersey common

law.3

3
 . We do not reach the question of whether the Goepels could
have stated a cause of action under federal common law.
          Nevertheless, the Plan argues that the Goepels'

complaint "raises a federal question on its face" because it

"seeks to enforce rights under a contract made by OPM pursuant to

authority conferred by FEHBA," and "construction of that federal

contract is governed exclusively by federal law."   See br. at 32.

Although the nature of the contract that the Goepels are seeking

to enforce ultimately may lead a court to find that their state

claims are preempted, their complaint does not "raise a federal

question on its face" merely by virtue of the fact that it

alludes to a federal contract.4   Thus, if the "well-pleaded

complaint rule" were an unqualified bar to federal question

jurisdiction, our analysis would end here, as on its face the

Goepels' complaint does not raise a federal question.   However,

as we recognized in United Jersey Banks v. Parell, 783 F.2d 360,

366 (3d Cir.), cert. denied, 476 U.S. 1170, 106 S. Ct. 2892

(1986), "the issue is not as straightforward as the black letter

law appears."

          In Franchise Tax Bd. v. Construction Laborers Vacation

Trust, 463 U.S. 1, 103 S. Ct. 2841 (1983), the Supreme Court

"referred to two situations where federal jurisdiction could be

available even though plaintiff based its claim in state court on

state law: (1) when 'it appears that some substantial, disputed

question of federal law is a necessary element of one of the

4
 . See Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148,
152-54 (4th Cir. 1994) (holding that a complaint's reference to
federal environmental statutes as the basis for a claim alleging
negligence per se did not suffice to state a claim arising under
federal law).
well-pleaded state claims' or (2) when it appears that

plaintiff's claim 'is "really" one of federal law.'"     United

Jersey Banks v. Parell, 783 F.2d at 366 (quoting Franchise Tax

Bd., 463 U.S. at 13, 103 S.Ct. at 2848).   Subsequently, in United

Jersey Banks v. Parell, we concluded that "[c]areful examination

of the framework of the Court's analysis of the 'substantial,

disputed question of federal law' issue" in Franchise Tax Bd.

"manifests that the Court was not enunciating a new basis for

federal jurisdiction but instead was reaffirming the traditional

well-pleaded complaint test."   Id. (citing Franchise Tax Bd., 463
U.S. at 13-22, 103 S.Ct. at 2848-53).   Accordingly, unless we

determine that one of the Goepels' state claims "is 'really' one

of federal law," Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. at

2848, removal of the case to the district court was improper, and

we must order it remanded to the New Jersey Superior Court.

          A state claim which is "really one of federal law" may

be removed to federal court because "it is an independent

corollary of the well-pleaded complaint rule that a plaintiff may

not defeat removal by omitting to plead necessary federal

questions in a complaint."   Franchise Tax Bd., 463 U.S. at 22,
103 S.Ct. at 2853.   The Supreme Court has held that a state cause

of action is "really" a federal cause of action which may be

removed to federal court if the "federal cause of action

completely preempts . . . [the] state cause of action."

Franchise Tax Bd., 463 U.S. at 24, 103 S.Ct. at 2854.    This

principle is "known as the 'complete preemption' doctrine,"

Caterpillar, Inc. v. Williams, 482 U.S. at 393, 107 S.Ct. at
2430, and it is "a distinct concept from ordinary preemption,"

Railway Labor Excecutives Ass'n v. Pittsburgh & Lake Erie R. Co.,

858 F.2d 936, 941 (3d Cir. 1988).5   Thus, "'[t]he fact that a

defendant might ultimately prove that a plaintiff's claims are

pre-empted . . . does not establish that they are removable to

federal court.'"   Id. (quoting Caterpillar, Inc. v. Williams, 482
U.S. at 398, 107 S.Ct. at 2432).6

          As we stated in Railway Labor Executives Ass'n v.

Pittsburgh & Lake Erie R. Co., 858 F.2d at 939,
          [t]he complete preemption doctrine holds that
          'Congress may so completely preempt a
          particular area, that any civil complaint
          raising this select group of claims is
          necessarily federal in character.'
          Metropolitan Life Ins. Co. v. Taylor, 481
U.S. 58, 107 S. Ct. 1542, 1546, 95 L. Ed. 2d 55
          (1987). In such cases, 'any complaint that
          comes within the scope of the federal cause

5
 . "This same principle has been referred to elsewhere as the
'artful pleading' doctrine, under which a court will not allow a
plaintiff to deny a defendant a federal forum when the
plaintiff's complaint contains a federal claim 'artfully pled' as
a state law claim." United Jersey Banks v. Parell, 783 F.2d at
367 (citations omitted). See also Federated Dep't Stores, Inc.
v. Moitie, 452 U.S. 394, 397 n.2, 101 S. Ct. 2424, 2427 n.2 (1981)
("As one treatise puts it, courts 'will not permit plaintiff to
use artful pleading to close off defendant's right to a federal
forum . . . [and] occasionally the removal court will seek to
determine whether the real nature of the claim is federal,
regardless of plaintiff's characterization") (quoting 14 C.
Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §
3722 at 564-66 (1976) (citations omitted)).
6
 . "[I]t is now settled law that a case may not be removed to
federal court on the basis of a federal defense, including the
defense of pre-emption, even if the defense is anticipated in the
plaintiff's complaint, and even if both parties concede that the
federal defense is the only question truly at issue."
Caterpillar, Inc. v. Williams, 482 U.S. at 393, 107 S.Ct. at 2430
(citing Franchise Tax Bd., 463 U.S. at 12, 103 S.Ct. at 2847-48).
           of action [created by the federal statute]
           necessarily "arises under" federal law,'
           Franchise Tax Bd. v. Construction Laborers
           Vacation Trust, 463 U.S. 1, 24, 103 S. Ct.
2841, 2854 (1983), for purposes of removal
           based on federal question jurisdiction.

The Supreme Court has held that both the Labor Management

Relations Act (LMRA), and the Employee Retirement Income Security

Act (ERISA) "completely preempt" certain state causes of action.

The Supreme Court first applied the complete preemption doctrine

in Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S. Ct. 1235

(1968), holding that Section 301 of LMRA "is so powerful as to

displace entirely any state cause of action 'for violation of

contracts between an employer and a labor organization.'"

Franchise Tax Bd., 463 U.S. at 23, 103 S.Ct. at 2853 (citing Avco

Corp. v. Aero Lodge No. 735, 376 F.2d 337, 340 (6th Cir. 1967),

aff'd, 390 U.S. 557, 88 S. Ct. 1235).   Later, in Metropolitan Life

Ins. Co. v. Taylor, 481 U.S. at 63-67, 107 S.Ct. at 1546-48, the

Supreme Court held that ERISA completely preempted the common law

contract and tort claims brought by an ERISA plan beneficiary
asserting improper processing of a claim for benefits under the

plan.   However, in Franchise Tax Bd., an earlier case, the

Supreme Court held that ERISA did not completely preempt "a suit

by state tax authorities both to enforce . . . levies against

funds held in trust pursuant to an ERISA-covered employee benefit

plan, and to declare the validity of the levies notwithstanding

ERISA."   Franchise Tax Bd., 463 U.S. at 28, 103 S.Ct. at 2856.

           The Court in Franchise Tax Bd. based its determination

that ERISA did not preempt a state law action by state tax
authorities seeking to enforce a tax levy against an ERISA plan

in part on the fact that ERISA "d[id] not provide an alternative

cause of action in favor of the State to enforce its rights."

Id. at 26, 103 S.Ct. at 2855.   In contrast, section 301 of LMRA

"expressly supplied the plaintiff in Avco with a federal cause of

action to replace its pre-empted state contract claim," id., and

section 502(a) of ERISA expressly supplied the plaintiff in

Metropolitan with a federal cause of action to replace his

preempted state contract and tort claims, Metropolitan Life Ins.

Co. v. Taylor, 481 U.S. at 65, 107 S.Ct. at 1547.     Based on this

distinction between Franchise Tax Bd., on the one hand, and Avco

and Metropolitan, on the other hand, we have held that the

complete preemption doctrine applies only if "the statute relied

upon by the defendant as preemptive contains civil enforcement

provisions within the scope of which the plaintiff's state claim

falls."   Railway Labor, 858 F.2d at 942 (citing Franchise Tax

Bd., 463 U.S. at 24, 26, 103 S. Ct. at 2854-55).     We also have

identified a second prerequisite for the application of the

complete preemption doctrine: "a clear indication of a

Congressional intention to permit removal despite the plaintiff's

exclusive reliance on state law."    Id. (citing Metropolitan Life,
481 U.S. at 64-66, 107 S.Ct. at 1547-48).

          Thus, based on our construction of Franchise Tax Bd.,

"[t]he doctrine of complete preemption applies only when [these]

two circumstances are present."     Allstate Ins. Co. v. The 65
Security Plan, 879 F.2d 90, 93 (3d Cir. 1989).     See also Krashna

v. Oliver Realty, Inc., 895 F.2d at 114 (applying the two factors
identified in Railway and Allstate as prerequisites for the

application of the complete preemption doctrine).     We also have

held that the only state claims that are "really" federal claims

and thus removable to federal court, Franchise Tax Bd., 463 U.S.

at 13, 103 S.Ct. at 2848, are those that are preempted completely

by federal law.    Railway Labor, 858 F.2d at 942 ("If the federal

statute creates no federal cause of action vindicating the same

interest the plaintiff's state cause of action seeks to

vindicate, recharacterization as a federal claim is not possible

and there is no claim arising under federal law to be removed and

litigated in the federal court.") (citing Franchise Tax Bd., 463
U.S. at 24, 26, 103 S. Ct. at 2854-55) (footnote omitted).

             Without applying the two-part test for complete

preemption, which we have recognized as the only basis for

recharacterizing a state law claim as a federal claim removable

to a district court, the district court concluded that the

removal was proper because the Goepels' complaint was

"'necessarily federal in character by virtue of the clearly

manifested intent of Congress.'"     Goepel v. Mail Handlers Benefit
Plan, No. 93-3711, at 10 (D.N.J. Sept. 10, 1993) (quoting

Metropolitan, 481 U.S. at 67, 107 S.Ct at 1548).    The district

court cited FEHBA's language, its legislative history, and its

resemblance to ERISA as evidence of Congress's intent to displace

state law.

             With respect to preemption, FEHBA states that
             [t]he provisions of any contract under this
             chapter which relate to the nature or extent
             of coverage or benefits (including payments
            with respect to benefits) shall supersede and
            preempt any State or local law, or any
            regulation issued thereunder, which relates
            to health insurance or plans to the extent
            that such law or regulation is inconsistent
            with such contractual provisions.

5 U.S.C. § 8902(m)(1).   In some respects this provision does

resemble ERISA's preemption provision, which states that

"[e]xcept as provided in subsection (b) of this section, the

provisions of this subchapter and subchapter III of this chapter

shall supersede any and all State laws insofar as they may now or

hereafter relate to an employee benefit plan."    29 U.S.C. §

1144(a).7   Moreover, the district court noted that: "the

legislative history [of FEHBA] makes it clear that its intent was

to 'ensure that benefits and coverage under the program . . .

[would] be uniform.'"    Goepel v. Mail Handlers Benefit Plan, No.

93-3711, at 6 (D.N.J. Sept. 10, 1993) (quoting S. Rept. No. 903,

95th Cong. 2d Sess. 6, reprinted in 1978 U.S.C.C.A.N. 1413,

1417).

            However, ERISA contains a civil enforcement provision
expressly authorizing ERISA beneficiaries to bring actions to

recover benefits under an ERISA plan.    See 29 U.S.C. § 1132(a).

7
 . There is, of course, a distinction between the preemption
provisions of ERISA and FEHBA. The former preempts "any and all
state laws" having anything to do with employee benefit plans;
the latter preempts state law relating to FEHBA health insurance
or plans only "to the extent that such law . . . is inconsistent
with [a] contractual provision[]" of an FEHBA policy. ERISA thus
preempts all state law in a particular area. Under the FEHBA,
however, there is no preemption, even in the area of FEHBA health
insurance and plans, unless there is a conflict between the
particular state law being relied upon in the litigation and a
specific contractual provision in an FEHBA policy.
In contrast, FEHBA does not create a cause of action vindicating

a beneficiary's interest in recovering his or her benefits under

a plan.   FEHBA only provides that "[t]he district courts of the

United States have original jurisdiction, concurrent with the

United States Claims Court, of a civil action or claim against

the United States founded on this chapter."    5 U.S.C. § 8912.

But the United States is not a party to this action.    Moreover,

the regulations promulgated by OPM pursuant to FEHBA expressly

provide that "[a]n action to recover on a claim for health

benefits should be brought against the carrier of the health

benefits plan."   See 5 C.F.R. § 890.107.8   Although an enrollee

"may ask OPM to review" a carrier's decision to deny a claim

filed under a FEHBA plan, see 5 C.F.R. § 890.105(a), "an

enrollee's dispute of an OPM decision solely because it concurs

in a health plan carrier's denial of a claim is not a challenge

to the legality of OPM's decision," and "[t]herefore, any

subsequent litigation to recover on the claim should be brought

against the carrier, not against OPM,"   see 5 C.F.R. § 890.107.9

           Based on the language of FEHBA and the regulations

promulgated pursuant to it, it is clear that FEHBA does not

8
 . Congress authorized OPM to "prescribe regulations necessary
to carry out" the provisions of FEHBA. 5 U.S.C. § 8913(a).
9
 . "Under a well settled principle of deference, 'considerable
weight should be accorded to an executive department's
construction of a statutory scheme it is entrusted to
administer.'" Katsis v. INS, 997 F.2d 1067, 1069 (3d Cir. 1993)
(quoting Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 844, 104 S. Ct. 2778, 2782 (1984)),
cert. denied, 114 S. Ct. 902 (1994).
create a statutory cause of action vindicating the same interest

that the Goepels' state causes of action seek to vindicate,

namely the recovery of benefits from the Plan.10   Consequently,

we conclude that the complete preemption doctrine does not apply

to the Goepels' claims, and thus "recharacterization" of their

state claims as federal claims is "not possible" and "there is no

claim arising under federal law to be removed and litigated in

the federal court."   Railway Labor, 858 F.2d at 942 (citing

Franchise Tax Bd., 463 U.S. at 24, 26, 103 S. Ct. at 2854-55).

            We recognize that our decision is at odds with the

decision by the Court of Appeals for the Fourth Circuit in

Caudill v. Blue Cross and Blue Shield of North Carolina, 999 F.2d
74 (4th Cir. 1993).   Like this case, Caudill involved a breach of

contract claim brought in state court by a FEHBA plan enrollee

seeking to recover benefits from her insurer.   Caudill, 999 F.2d

at 76-77.   The insurer removed the case to the district court on

the ground that plaintiff's claim "arose under" federal law, and

the district court denied the enrollee's motion to remand.     Id.

at 77.   Subsequently, on appeal, the United States Court of

Appeals for the Fourth Circuit held that the removal was proper.

10
 . "There is currently a split of authority with respect to the
exhaustion requirements for plans governed by FEHBA." Kennedy v.
Empire Blue Cross and Blue Shield, 989 F.2d 588, 592 (2d Cir.
1993). We need not reach the question of whether a plaintiff
must seek OPM review of the denial of a benefits claim prior to
filing suit to recover benefits under a FEHBA plan or whether OPM
review is optional, because in our opinion, even mandatory OPM
review would not constitute a statutory federal cause of action
vindicating an insured's interest in recovering benefits under a
FEHBA plan.
Id. at 79.    According to the court in Caudill, "[i]n the area of

federal employee health benefits, federal common law entirely

replaces state contract law," and "[t]herefore, federal

jurisdiction existed over th[e] claim and removal was proper."

Id.   The Caudill court based its decision not on the complete

preemption doctrine, but on Boyle v. United Tech. Corp., 487 U.S.
500, 504, 108 S. Ct. 2510, 2514 (1988), a case which the district

court in this case cited as an alternative basis for its denial

of the Goepels' motion to remand.11    See Caudill, 999 F.2d at 77;

Goepel v. Mail Handlers Benefit Plan, No. 93-3711, at 10 (D.N.J.

Sept. 10, 1993).

             Boyle was a tort action brought by the father of a

United States marine killed in a helicopter crash during a

training exercise.    Boyle, 487 U.S. at 502-03, 108 S.Ct. at 2513.

The plaintiff alleged that the helicopter manufacturer was liable

under Virginia tort law because the defective repair and design

of the craft had caused the accident.     Id. at 503, 108 S.Ct. at

2513.   The jury returned a general verdict in the plaintiff's

favor, however, the court of appeals reversed, partially because

it concluded that federal law immunized the helicopter

manufacturer from state tort liability based on the allegedly

defective design of the helicopter.     Id. at 503, 108 S.Ct. at
2513-14.

11
 . The Caudill court concluded that in light of its holding, it
"need not answer the question whether the FEHBA completely
preempts state law claims under federal health insurance
contracts." Caudill, 999 F.2d at 77.
          The Supreme Court affirmed the court of appeals'

determination that in the circumstances in Boyle, federal law

displaced the "state law which holds Government contractors

liable for design defects in military equipment."   Id. at 512,

108 S.Ct. at 2518.   The Court based this holding on two grounds:

(1) that "the procurement of equipment by the United States is an

area of uniquely federal interest," id. at 507, 108 S.Ct. at

2516, and (2) that in the circumstances in Boyle, there was a

"'significant conflict' . . . between an identifiable 'federal

policy or interest and the [operation] of state law,'"   id.

(quoting Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68,

86 S. Ct. 1301, 1304 (1966)).

          The Court concluded that "the civil liabilities arising

out of the performance of federal procurement contracts" involve

a "uniquely federal interest," id. at 505-06, 108 S.Ct. at 2515,

because "[t]he imposition of liability on Government contractors

will directly affect the terms of Government contracts: either

the contractor will decline to manufacture the design specified

by the Government, or it will raise its price," id. at 507, 108

S.Ct. at 2515-16.    Moreover, the court concluded that in some

circumstances, state laws holding government contractors liable

for design defects "present[ed] a 'significant conflict' with

[the] federal policy," designed to insulate the government

against financial liability for the performance of discretionary

functions such as "the selection of the appropriate design for

military equipment to be used by our Armed Forces."    Id. at 511-
12, 108 S. Ct. at 2518 (citing 28 U.S.C. § 2680(a)).
          The Boyle court limited the scope of the displacement

of state laws holding government contractors liable for design

defects to the following circumstances: "(1) the United States

approved reasonably precise specifications; (2) the equipment

conformed to those specifications; and (3) the supplier warned

the United States about the dangers in the use of the equipment

that were known to the supplier but not to the United States."

Id. at 512, 108 S.Ct. at 2518.   However, the court indicated that

"[i]n some cases, . . . where the federal interest requires a

uniform rule, the entire body of state law applicable to the area

conflicts and is replaced by federal rules."   Id. at 508, 108

S.Ct. at 2516 (citations omitted).

          Based on the two-part test applied in Boyle, the court

in Caudill held that federal common law displaces state claims to

recover benefits from a FEHBA plan.   Like Boyle, Caudill was not

an action brought by or against the United States.   Nonetheless,

the Caudill court made the following determination:
          [t]he interest in this case is uniquely
          federal because it involves health benefits
          for federal employees. . . [and because the]
          imposition of state law liability here would
          seriously damage not only the government's
          ability to enter into contracts with health
          insurers, but also would affect the price
          paid for such contracts. Most importantly,
          the federal government is a party to this
          contract. Thus, a significant federal
          interest exists here that is even stronger
          than in Boyle.

Caudill, 999 F.2d at 78.   The court also concluded that the

application of state law to the construction of a contract under

FEHBA would present a "significant conflict" with the federal
interest in uniformity evidenced by FEHBA's preemption provision

and its provision authorizing OPM review of benefits decisions by

insurers.     Id. at 78-79. The court reasoned that
             [a]s an employer, the federal government has
             an overwhelming interest in ensuring that all
             of its employees subject to a particular
             health insurance policy are treated equally
             regardless of the state in which they live,
             and the application of state law interferes
             with this interest. . . . [Moreover,] the
             very application of state contract law would
             undermine the uniformity envisioned by
             Congress when it delegated the authority to
             interpret health benefit contracts to OPM.

Id. at 79.    Thus, based on the Supreme Court's decision in Boyle,

the Caudill court concluded that removal of the case was proper

because "[i]n the area of federal employee health benefits,

federal common law entirely replaces state contract law."        Id.

             Our decisions in Railway and Allstate require us to

reject the Caudill court's holding that Boyle authorizes the

removal of a state law contract claim to recover benefits from a

FEHBA plan.     First, Boyle is distinguishable from this case

because it did not involve the removal of "what purports to be a

state law claim" from state court to federal court on the basis

of federal question jurisdiction.     Railway, 858 F.2d at 942.

Instead, Boyle involved a state law claim initiated in federal

district court on the basis of diversity jurisdiction.       Boyle,
487 U.S. at 502, 108 S.Ct. at 2513.     Thus, Boyle merely deals

with a federal defense to a state claim and is therefore a

preemption rather than a complete preemption case.
          Second, in Railway and Allstate, we held that: (1) in a

case removed from state court, a federal court may not

recharacterize "what purports to be a state law claim as a claim

arising under a federal statute" unless the state claim is

completely preempted by federal law, Railway, 858 F.2d at 942,

and that (2) a state claim is not preempted completely by federal

law unless "the enforcement provisions of a federal statute

create a federal cause of action vindicating the same interest

that the plaintiff's cause of action seeks to vindicate,"

Allstate, 879 F.2d at 93.   Thus, although the Supreme Court has

stated that "the touchstone of the federal district court's

removal jurisdiction is not the 'obviousness' of the pre-emption

defense but the intent of Congress,"   Metropolitan, 481 U.S. at

66, 107 S. Ct. 1548, we have held that Congress must manifest its

intent to authorize the removal of a state claim by enacting a

federal statute containing an enforcement provision vindicating

the same interest as the state claim.12   Accordingly, we do not
12
 . Our holding that a state claim is not preempted completely
by federal law unless the enforcement provisions of a federal
statute create a federal cause of action vindicating the same
interest that the plaintiff's state cause of action seeks to
vindicate is at odds with the holding in Deford v. Soo Line R.
Co., 867 F.2d 1080, 1086 (8th Cir.), cert. denied, 492 U.S. 927,
109 S. Ct. 3265 (1989). The court in Deford explicitly rejected
our holding in Railway that because the Railway Labor Act lacked
a civil enforcement provision under which the plaintiff could
bring its state law claim, the Railway Labor Act did not preempt
completely the plaintiff's state law claim. The Deford court
stated that while our approach in Railway "sheds some light on
whether a federal statute 'pervasively occupies' a field of law,
it is unnecessarily narrow," as a court must look not only to
"affirmative congressional intent and civil enforcement
provisions, but . . . [also] to such factors as the history and
purpose of the statute." Deford, 867 F.2d at 1086.
view the Supreme Court's decision in Boyle as an expansion of the

complete preemption doctrine, and we reject the Caudill court's

construction of Boyle as a case establishing an alternative basis

for the removal of a state claim to federal court.

            Our outcome is consistent with that reached in Howard

v. Group Hosp. Serv., 739 F.2d 1508, 1510-12 (10th Cir. 1984), in

which the Court of Appeals for the Tenth Circuit held that the

removal of an insured's state law tort and contract claims to

recover benefits under a FEHBA plan was improper.    However,

unlike our decision, the decision in Howard did not rest on the

lack of a federal statutory cause of action vindicating the same

interests as the insured's state causes of action.    In fact, the

court in Howard made no reference to the complete preemption

doctrine.

            Instead, the Howard court based its decision on its

conclusion that the federal government had no "articulable

interest in the outcome," Howard, 739 F.2d at 1510, of what it

characterized as a "private controversy" between an insured and a

carrier, id. at 1512.   The court "fail[ed] to see how various

state court adjudications of [FEHBA] . . . benefits claims . . .

[would] frustrate the operation of that program or conflict with

a specific national policy," and determined that "[s]tate court

awards of monetary judgments in . . . [FEHBA] benefits actions do

not have a sufficiently direct effect on the federal treasury to

necessitate federal jurisdiction."   Id. at 1511.    On these

grounds, the court concluded that state law, not federal law,

controls actions to recover benefits under a FEHBA plan.     Id. at
1510-12.   Cf. Howard v. Group Hospital Service, 739 F.2d at 1513

(10th Cir. 1984) (concurring opinion) ("The majority opinion

correctly concludes that no federal question jurisdiction is

present in this case.   However, the conclusion is reached after a

lengthy and unnecessary discussion of whether federal law should

apply to the interpretation of the insurance policy.    Even if it

were true that federal law should control the interpretation of

the contract, that fact alone would be insufficient to establish

a federal question giving rise to federal jurisdiction over the

case. . . .   Because the arguable federal question appears in

this case by way of a defense to simple state law contract

claims, there is no basis for the exercise of federal question

removal jurisdiction.").

           We need not reach the question of whether the Goepels'

state law claims are preempted by FEHBA, and thus are governed by

federal common law.   The courts are divided on the extent to

which FEHBA preempts state law.   As we noted, the court in Howard

held that FEHBA does not preempt state law claims to recover

benefits under a FEHBA plan.   Nevertheless, "'[t]he weight of

authority . . . supports the position that state law claims are

preempted,'" Burkey v. Government Employees Hosp. Ass'n, 983 F.2d
656, 659 (5th Cir. 1993) (holding that FEHBA preempts the

application of Louisiana statute authorizing the imposition of

penalties on plaintiff's insurer) (quoting Federal Plaza Medical

Assocs. v. Palermino, 1991 WL 29201 (S.D.N.Y. 1991)).    See, e.g.,

Caudill, 999 F.2d at 79 (holding that "[i]n the area of federal
employee health benefits, federal common law entirely replaces
state contract law"); Nesseim v. Mail Handlers Benefit Plan, 995
F.2d 804, 806 (8th Cir. 1993) ("[t]o ensure uniformity in the

administration of benefits under the Act (and thus control

costs), section 8902(m)(1) mandates that once the OPM enters into

a benefits contract, that contract has the preemptive force of

federal law") (citing 5 U.S.C. § 8902(m)(1)); Harris v. Mutual of

Omaha Companies, 992 F.2d 706, 711-12 n.1 (7th Cir. 1993)

(holding that federal common law of contracts governs the

interpretation of government health insurance contracts)

(citation omitted); Hayes v. Prudential Ins. Co., 819 F.2d 921,

926 (9th Cir. 1987) (holding that FEHBA preempts all state law

claims relating to a FEHBA plan), cert. denied, 484 U.S. 1060,

108 S. Ct. 1014 (1988); Tackitt v. Prudential Ins. Co,, 758 F.2d
1572, 1575 (11th Cir. 1985) ("the interpretation of government

health insurance contracts is controlled by federal, not state,

law"); Fink v. Delaware Valley HMO, 612 A.2d 485, 492-93 (Pa.

Super. Ct. 1992) (holding that state tort claims brought by

federal employee against HMO were preempted by FEHBA).13    But see

Howard v. Group Hosp. Serv., 739 F.2d at 1512 (holding that

removal of state law claims to recover benefits under a FEHBA

13
 . With the exception of Caudill, none of these federal cases
holding that FEHBA preempts state law claims for benefits deals
expressly with the question of whether in the absence of
diversity jurisdiction, FEHBA authorizes the removal of claims
grounded exclusively on state law. It seems that Nesseim,
Harris, Burkey, and Tackitt involved actions initiated in federal
district court. The action in Hayes was initiated in state court
and then removed to federal district court, Hayes, 819 F.2d at
923, but the Hayes court's opinion does not address the grounds
for removal.
plan was improper, as state law, not federal law governed the

claims); Mooney v. Blue Cross of Western Pennsylvania, 678 F.

Supp. 565, 566-67 (W.D. Pa. 1988) (following Howard, and holding

that removal of state law claims to recover benefits under FEHBA

plan was improper as "[t]here are no 'preempting' provisions in .

. . [FEHBA], and absent an explicit instruction, we do not

believe Congress intended the federal courts to fashion a federal

common law of contracts to govern private disputes between plan

participants and providers"); Eidler v. Blue Cross Blue Shield

United of Wisconsin, 671 F. Supp. 1213, 1216-17 (E.D. Wis. 1987)

(holding that insured's state law tort claim for bad faith was

not preempted by FEHBA, as it was "not clear that the tort [wa]s

inconsistent with any specific contractual provision").

           The Plan is free to raise preemption as a defense in

state court, and our holding that FEHBA does not completely

preempt the Goepels' state law claims so as to permit removal of

this action does not prejudge the merits of such a claim.    "State

courts are competent to determine whether state law has been

preempted by federal law," Railway, 858 F.2d at 942, and absent

complete preemption, "they must be permitted to perform that

function" with regard to state law claims brought before them,

id.   Thus, based on our conclusion that the district court lacked

subject matter jurisdiction over this case, we will reverse the

order of September 10, 1993, denying the motion to remand, will

vacate the order of September 24, 1993, entering judgment for the

Plan on the merits, and will remand the matter to the district
court so that it may remand the case to the Superior Court of New

Jersey.
MARILYN GOEPEL; RONALD GOEPEL v. NATIONAL POSTAL MAIL HANDLERS
UNION - No. 93-5657

Stapleton, J., Concurring:

           I agree with all that is said in the opinion of the

court.   I write separately only to emphasize the importance, in

my view, of the distinction noted by the court in footnote 7.

Unlike the preemption provision of ERISA, the FEHBA preempts

state law only "to the extent such law . . . is inconsistent with

[a] contractual provision" of a FEHBA policy.   5 U.S.C.

§ 8902(m)(1).   I believe the fact that Congress chose to so limit

the preemptive effect of the FEHBA is inconsistent with the

notion that Congress intended to "completely" preempt state law.