Court Opinion

ID: 3002681
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:32:23.852646+00
Date Added: 2024-06-11T11:45:50.561205
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

No. 08-3509

JULI A. P OLLITT and M ICHAEL A. N ASH ,

                                                Plaintiffs-Appellants,
                                  v.

H EALTH C ARE S ERVICE C ORPORATION,

                                                 Defendant-Appellee.

             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
             No. 07 C 5961—Robert W. Gettleman, Judge.

   S UBMITTED F EBRUARY 25, 2009—D ECIDED M ARCH 10, 2009

  Before E ASTERBROOK, Chief Judge, and R OVNER and
E VANS, Circuit Judges.
  P ER C URIAM. Juli Pollitt, a federal employee, has health
insurance as one of her job’s fringe benefits. Health
Care Service Corporation administers that coverage. In
July 2007 HCSC stopped paying claims submitted on
behalf of Pollitt’s son Michael, and it also began trying to
collect from health-care providers any payments made
on Michael’s behalf since 2003. According to HCSC, it did
2                                               No. 08-3509

this because the Department of Labor, which tells HCSC
which federal employees have what coverage, instructed
HCSC that Pollitt’s coverage is for herself only, rather
than for herself and her family. According to Pollitt’s
complaint in this suit, however, HCSC reached this con-
clusion on its own, because the Department of Labor
had failed to pay the appropriate premium into a fund
that covers the expense of the medical benefits. Instead
of checking with the Department or with her, Pollitt’s
complaint alleges, HCSC abruptly stopped covering
Michael’s medical expenses and made demands for
reimbursement that subjected her family to humiliation
and expense until, just as abruptly, HCSC changed course
in October 2007 and started paying the claims again—but
even then, Pollitt asserts, HCSC did not inform medical
providers, who continued trying to collect from Pollitt
the back payments they thought HCSC was dunning
them for.
  The complaint, filed in state court, seeks to recover
from HCSC under state-law theories of bad-faith conduct
by insurers. HCSC removed the proceeding to federal
district court, where it was dismissed as preempted by
the Federal Employees Health Benefits Act, 5 U.S.C.
§§ 8901–14.
  Preemption is a defense, and a federal defense does not
allow removal. Metropolitan Life Insurance Co. v. Taylor, 481
U.S. 58 (1987); Gully v. First National Bank, 299 U.S. 109
(1936); Bennett v. Southwest Airlines Co., 484 F.3d 907,
rehearing denied, 493 F.3d 762 (7th Cir. 2007). Things
are otherwise for “complete preemption,” the mis-
No. 08-3509                                              3

leadingly named doctrine that applies when federal law
has occupied a field, leaving no room for any claim
under state law. See Franchise Tax Board of California v.
Construction Laborers Vacation Trust, 463 U.S. 1 (1983).
“Complete preemption” is not a defense; instead it repre-
sents a conclusion that all claims on the topic arise
under federal law, so that 28 U.S.C. §1441 permits re-
moval. But Empire HealthChoice Assurance, Inc. v.
McVeigh, 547 U.S. 677 (2006), holds that federal law does
not completely occupy the field of health-insurance
coverage for federal workers. Empire HealthChoice shows
that the district court erred in allowing removal under
§1441 and dismissing the suit as completely preempted.
  The only possible source of authority to remove is 28
U.S.C. §1442(a)(1), which says that “any person acting
under” a federal officer may remove a suit that depends
on the defendant’s following the directions issued by that
federal officer. See Watson v. Philip Morris Cos., 551 U.S.
142 (2007). HCSC insists that it did nothing but carry out
the Department of Labor’s instructions. Yet Pollitt main-
tains that HCSC acted unilaterally in concluding that
her coverage was for self only rather than self and
family—that HCSC drew an unwarranted inference
from the Department of Labor’s failure to remit the self-
and-family premium. What is more, Pollitt contends, the
Department did not direct HCSC to recoup four years’
worth of benefits, the step that induced medical providers
to demand that Pollitt reimburse them (and, she adds,
to refuse to provide Michael with needed care unless
she paid cash in advance for those services).
4                                                No. 08-3509

  Because the parties are at odds about what (if any)
directions the Department of Labor issued to HCSC, a
district judge cannot accept HCSC’s say-so and use that
as the basis of removal. Disputes about jurisdictional
facts must be resolved after a hearing under Fed. R. Civ. P.
12(b)(1). The district court must receive evidence, make
appropriate findings, and then either retain or remand
the case as the facts require.
  To the extent that HCSC was doing nothing but follow-
ing the agency’s orders, the case belongs in federal court
and must be dismissed—not because of “complete pre-
emption” but because suits related to a federal agency’s
health-benefits-coverage decisions must name as the
defendant the Office of Personnel Management or the
employing agency rather than the insurance carrier.
5 U.S.C. §8902(d); 5 C.F.R. §§ 890.104(a), 890.107(a), (c).
See also Boyle v. United Technologies Corp., 487 U.S. 500
(1988) (government contractor that strictly follows
agency’s directions is not liable under state law). But if the
Department of Labor did not direct HCSC to change
Pollitt’s coverage, and just paid too little into the fund,
then this case must be remanded to state court. There is
no relevant federal “directive,” just an agency’s mistake
to which the carrier overreacted. Whether 5 U.S.C.
§8902(m)(1), which provides that the terms of a federal
insurance contract supersede state law, affects the suit,
would be a subject for the state court’s consideration.
Finally, if the Department directed HCSC to curtail
future coverage, but did not direct it to recover
past benefits from medical providers, then the claim for
precipitate, mistaken recoupment should be remanded.
28 U.S.C. §1367(c)(3).
No. 08-3509                                          5

  The judgment is vacated, and the case is remanded for
further proceedings consistent with this order.

                        3-10-09