Dukes v. U.S. Healthcare, Inc. , 57 F.3d 350 ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
6-19-1995
Dukes v US Healthcare
Precedential or Non-Precedential:
Docket 94-1373
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
N0. 94-1373
CECILIA DUKES, Trustee Ad Litem of the Estate of
Darryl Dukes, Deceased,
Appellant
v.
U.S. HEALTHCARE, INC.; GERMANTOWN HOSPITAL & MEDICAL CENTER;
WILLIAM W. BANKS, M.D.; CHARLES R. DREW MENTAL HEALTH CENTER;
EDWARD B. HOSTEN, M.D.
On Appeal From the United States District Court
For the Eastern District of Pennsylvania
(D.C. Civil Action No. 93-cv-00577)
N0. 94-1661
SERENA MARY VISCONTI, DECEASED, BY LINDA AND RONALD VISCONTI,
AS ADMINISTRATORS OF THE ESTATE OF SERENA MARY VISCONTI,
DECEASED; LINDA VISCONTI; RONALD VISCONTI, IN THEIR OWN RIGHT,
Appellants
v.
U.S. HEALTH CARE, a/k/a
THE HEALTH MAINTENANCE ORGANIZATION OF PENNSYLVANIA/NJ
On Appeal From the United States District Court
For the Eastern District of Pennsylvania
(D.C. Civil Action No. 93-cv-06495)
Argued December 5, 1994
BEFORE: STAPLETON, ROTH and LEWIS, Circuit Judges
(Opinion Filed June 19, l995 )
Attarah B. Feenane (Argued)
Stephen C. Josel
Stephen C. Josel & Associates, P.C.
2019 Walnut Street
Philadelphia, PA 19103
Attorneys for Appellant
in No. 94-1373
Edward S. Wardell (Argued)
Jeffrey S. Craig
Kelley, Wardell & Craig
41 Grove Street
Haddonfield, NJ 08033
and
David F. Simon
U.S. Healthcare, Inc.
P.O. Box 1180
980 Jolly Road
Blue Bell, PA 19422
Attorneys for Appellee
U.S. Healthcare, Inc.
in Nos. 94-1373 & 94-1661
Thomas S. Williamson, Jr.
Solicitor of Labor
Marc I. Machiz
Assistant Solicitor
Plan Benefits Security Division
Karen L. Handorf
Counsel for Special Litigation
G. William Scott (Argued)
Trial Attorney
U.S. Department of Labor
Office of the Solicitor
Plan Benefits Security Division
P.O. Box 1914
Washington, D.C. 20013
Attorneys for Amicus Curiae
U.S. Secretary of Labor
in Nos. 94-1373 & 94-1661
Jeremy D. Mishkin
Richard M. Simins
Montgomery, McCracken, Walker & Rhoads
Three Parkway - 20th Floor
Philadelphia, PA 19102
Attorneys for Amicus Curiae
New Jersey HMO Association
in No. 94-1661
OPINION OF THE COURT
STAPLETON, Circuit Judge:
The plaintiffs in these two cases filed suit in state
court against health maintenance organizations ("HMOs") organized
by U.S. Healthcare, Inc., claiming damages, under various
theories, for injuries arising from the medical malpractice of
HMO-affiliated hospitals and medical personnel. The defendant
HMOs removed both cases to federal court, arguing (1) that the
injured person in each case had obtained medical care as a
benefit from a welfare-benefit plan governed by the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C.
§ 1001-1461 (1988), (2) that removal is proper under the
Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58 (1987),
"complete preemption" exception to the "well-pleaded complaint
rule," and (3) that the plaintiffs' claims are preempted by
§ 514(a) of ERISA, 29 U.S.C. § 1144(a). The district courts
agreed with these contentions and dismissed the plaintiffs'
claims against the HMOs. The plaintiffs appeal those rulings and
ask that their claims against the HMOs be remanded to state
court.
We hold that on the record before us, the plaintiffs'
claims are not claims "to recover [plan] benefits due . . . under
the terms of [the] plan, to enforce . . . rights under the terms
of the plan, or to clarify . . . rights to future benefits under
the terms of the plan" as those phrases are used in
§ 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B). Accordingly,
we hold that Metropolitan Life's "complete preemption" exception
is inapplicable and that removal of these claims from state court
was improper. We will reverse the judgments of the district
courts and will remand each case to district court with
instructions to remand the cases to the state courts from which
they were removed.
I.
A.
Suffering from various ailments, Darryl Dukes visited
his primary care physician, defendant Dr. William W. Banks, M.D.,
who identified a problem with Darryl's ears. A few days later,
Banks performed surgery and prepared a prescription ordering that
blood studies be performed. Darryl presented that prescription
to the laboratory of Germantown Hospital and Medical Center but
the hospital refused to perform the tests. The record does not
reveal the reasons for the hospital's refusal.
The next day, Darryl sought treatment from defendant
Dr. Edward B. Hosten, M.D. at the Charles R. Drew Mental Health
Center, who also ordered a blood test. This time, the test was
performed. Darryl's condition nevertheless continued to worsen
and he died shortly thereafter. Darryl's blood sugar level was
extremely high at the time of his death. That condition
allegedly would have or could have been diagnosed through a
timely blood test.
Darryl received his medical treatment through the
United States Health Care Systems of Pennsylvania, Inc., a
federally qualified health maintenance organization organized by
U.S. Healthcare. As a qualified HMO under the federal Health
Maintenance Organization Act of 1973, 42 U.S.C. §§ 300e-300e-17
(1988), this U.S. Healthcare HMO provides basic and supplemental
health services to its members on a pre-paid basis.1 As is often
the case, Darryl received his membership in the HMO through his
participation in an ERISA-covered welfare plan sponsored by his
employer.
Darryl's wife, Cecilia Dukes, brought suit in state
court alleging medical malpractice and other negligence against
numerous defendants, including Banks, Hosten, the Germantown
Hospital, and the Drew Center. She also brought suit against the
HMO, alleging that as the organization through which Darryl
received his medical treatment, it was responsible, under a
1
. HMOs often contain costs through a strategy known as
"utilization review." See generally John D. Blum, An Analysis of
Legal Liability in Health Care Utilization Review and Case
Management, 26 Hous. L. Rev. 191, 192-93 (1989); Susan J. Stayn,
Note, Securing Access to Care in Health Maintenance
Organizations: Toward a Uniform Model of Grievance and Appeal
Procedures, 94 Colum. L. Rev. 1674, 1677-83 (1994). Unlike
traditional insurance policies, HMOs usually decide whether to
reimburse patients for medical care prospectively -- through
utilization or "pre-certification" review. The HMO may either
perform the utilization review itself or assign the task to a
third-party contractor. Id. at 1681; see also Corcoran v. United
Healthcare, Inc., 965 F.2d 1321, 1323 (5th Cir.), cert. denied,
113 S. Ct. 812 (1992).
Pennsylvania state law ostensible agency theory (the "agency
theory"), for the negligence of the various doctors and other
medical-service providers. See Boyd v. Albert Einstein Medical
Ctr., 547 A.2d 1229, 1234-35 (Pa. Super. Ct. 1988) (holding that
an HMO may be held liable for malpractice under an ostensible
agency theory where a patient looks to the HMO for care and the
HMO's conduct leads the patient to reasonably believe that he or
she is being treated by an employee of the HMO). She alleged
further that the HMO failed to exercise reasonable care in
selecting, retaining, screening, monitoring, and evaluating the
personnel who actually provided the medical services (the "direct
negligence theory").
The HMO removed the case to district court pursuant to
the Metropolitan Life complete-preemption exception to the "well-
pleaded complaint rule." In its notice of removal, it claimed
that the HMO is part of -- or at least plays a role in -- the
ERISA plan to provide health benefits and that Dukes' claims,
properly construed, "are directed to the structure and operation
of the employer benefit plan." (Dukes app. at 31.) In its view,
Dukes' claims therefore "relate to" the welfare plan and
accordingly are preempted under ERISA § 514(a), 29 U.S.C.
§ 1144(a).
Dukes moved for a remand and the HMO moved to dismiss.
The district court denied Dukes' motion and granted the HMO's,
explaining that Dukes' claims "related to" an ERISA plan -- and
thus were preempted -- because (1) "any ostensible agency claim
must be made on the basis of what the benefit plan provides and
is therefore 'related' to it" and (2) "the treatment received
must be measured against the benefit plan and is therefore also
'related' to it." Dukes v. United States Health Care Sys., Inc.,
848 F. Supp. 39, 42 (E.D. Pa. 1994). It remanded to state court
the remainder of Dukes' claims against the other defendants. Id.
at 43.
B.
Ronald and Linda Visconti are the biological parents of
Serena Visconti, who was stillborn. During the third trimester
of her pregnancy with Serena, Linda apparently developed symptoms
typical of preeclampsia. The Viscontis claim that Linda's
obstetrician, Dr. Wisniewski, negligently ignored these symptoms
and that this negligence caused Serena's death.
Like Darryl Dukes, Linda received her medical treatment
through a federally qualified HMO organized by U.S. Healthcare.
This HMO was called the Health Maintenance Organization of
Pennsylvania/New Jersey. The Viscontis received their membership
in the HMO through an ERISA-covered welfare plan.
Ronald Visconti, as administrator of Serena's estate,
and Ronald and Linda, in their own right (collectively, "the
Viscontis"), brought suit in the Philadelphia County Court of
Common Pleas. They attempted to hold the HMO liable for Dr.
Wisniewski's malpractice under ostensible and actual agency
theories, alleging that when Linda became pregnant, the HMO held
out Dr. Wisniewski as a competent and qualified participating
obstetrician/gynecologist. They also sued the HMO under a direct
negligence theory, claiming, among other things, that the HMO was
negligent in its selection, employment, and oversight of the
medical personnel who performed the actual medical treatment.
The HMO removed the case to federal court, asserting
that the Viscontis' claims were completely preempted by ERISA.
It then filed a motion to dismiss, and the Viscontis filed a
motion to remand, contending that removal was improper and that
ERISA did not preempt their state law claims. The district court
denied the Viscontis' motion but granted the HMO's motion to
dismiss. Visconti ex rel. Visconti v. U.S. Health Care, 857 F.
Supp. 1097, 1105 (E.D. Pa. 1994).
The Visconti and Dukes cases have been consolidated on
appeal.
II.
The HMOs removed these cases to federal court pursuant
to 28 U.S.C. § 1441, alleging that the district courts had
original jurisdiction over the claims, because the claims
"[arose] under the Constitution, treaties or laws of the United
States." § 1441(b); 28 U.S.C. § 1331. To determine whether a
claim "arises under" federal law -- and thus is removable -- we
begin with the "well-pleaded complaint rule." See Metropolitan
Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987); see also
Allstate Ins. Co. v. 65 Security Plan, 879 F.2d 90, 92-93 (3d
Cir. 1989).
Under the well-pleaded complaint rule, a cause of
action "arises under" federal law, and removal is proper, only if
a federal question is presented on the face of the plaintiff's
properly pleaded complaint. Franchise Tax Bd. v. Construction
Laborers Vacation Trust, 463 U.S. 1, 9-12 (1983). A federal
defense to a plaintiff's state law cause of action ordinarily
does not appear on the face of the well-pleaded complaint, and,
therefore, usually is insufficient to warrant removal to federal
court. Gully v. First Nat'l Bank, 299 U.S. 109, 115-18 (1936).
Thus, it is well-established that the defense of preemption
ordinarily is insufficient justification to permit removal to
federal court. Caterpillar, Inc. v. Williams, 482 U.S. 386, 398
(1987) ("The fact that a defendant might ultimately prove that a
plaintiff's claims are pre-empted under [a federal statute] does
not establish that they are removable to federal court.").
The Supreme Court has recognized an exception to the
well-pleaded complaint rule -- the "complete preemption"
exception -- under which "Congress may so completely pre-empt a
particular area that any civil complaint raising this select
group of claims is necessarily federal in character."
Metropolitan Life, 481 U.S. at 63-64; see generally Goepel v.
National Postal Mail Handlers Union, 36 F.3d 306, 309-13 (3d Cir.
1994) (discussing the Court's complete-preemption jurisprudence
and holding that the Federal Employees Health Benefits Act did
not completely preempt plaintiffs' state law claims), cert.
denied, 131 L. Ed. 2d. 555 (1995); Allstate, 879 F.2d at 93-94
(holding that the complete-preemption exception did not apply in
a situation where an insurance company plaintiff sought
contribution from an ERISA plan because § 502 of ERISA does not
provide an express cause of action vindicating the interest that
the suit sought to protect and enforce); Railway Labor Executives
Ass'n v. Pittsburgh & Lake Erie R.R. Co., 858 F.2d 936, 939-43
(3d Cir. 1988) (discussing the Court's complete-preemption
doctrine and holding that neither the Railway Labor Act nor the
Interstate Commerce Act completely preempted plaintiffs' state
law fraudulent conveyance claims against railroads and railroad
officials). The complete preemption doctrine applies when
the pre-emptive force of [the federal
statutory provision] is so powerful as to
displace entirely any state cause of action
[addressed by the federal statute]. Any such
suit is purely a creature of federal law,
notwithstanding the fact that state law would
provide a cause of action in the absence of
[the federal provision].
Franchise Tax Bd., 463 U.S. at 23. Claims to enforce a
collective-bargaining agreement under § 301 of the Labor
Management Relations Act of 1947, 29 U.S.C. § 185, present a
typical example of the complete-preemption doctrine at work: In
Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557 (1968), the Court
ruled that any claims to enforce a collective-bargaining
agreement -- even when phrased as a state law cause of action to
enforce a contract -- are removable to federal court.
The Supreme Court has determined that Congress intended
the complete-preemption doctrine to apply to state law causes of
action which fit within the scope of ERISA's civil-enforcement
provisions.2 Metropolitan Life, 481 U.S. at 66. It explained:
2
. ERISA's "six carefully integrated civil enforcement
provisions" are found in § 502. Massachusetts Mut. Life Ins. Co.
v. Russell, 473 U.S. 134, 146 (1985). The statutory provision
[T]he legislative history consistently sets
out [Congress's] clear intention to make
§ 502(a)(1)(B) suits brought by participants
or beneficiaries federal questions for the
purposes of federal court jurisdiction in
like manner as § 301 of [the Labor Management
Relations Act of 1947, 29 U.S.C. § 185.] For
example, Senator Williams, a sponsor of
ERISA, emphasized that the civil enforcement
section would enable participants and
beneficiaries to bring suit to recover
benefits denied contrary to the terms of the
plan and that when they did so "[i]t is
intended that such actions will be regarded
as arising under the laws of the United
States, in a similar fashion to those brought
under section 301 of the Labor Management
Relations Act."
481 U.S. at 66 (citations omitted). Thus, courts have found that
the Metropolitan Life complete-preemption doctrine permits
removal of state law causes of action in a host of different
ERISA-related circumstances. See id. at 63-67 (holding that
state common law causes of action asserting improper processing
of a claim for benefits under an employee benefit plan are
(..continued)
relevant for the purposes of this appeal, § 502(a)(1)(B), states
in pertinent part:
(a) Persons empowered to bring a civil action
A civil action may be brought --
(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 . . . .
removable to federal court); Anderson v. Electronic Data Sys.
Corp., 11 F.3d 1311, 1314 (5th Cir.) (holding that removal was
proper because state law claim alleging that plan fiduciary was
demoted and terminated for refusing to violate ERISA fell within
§ 502(a)(2) & (3)), cert. denied, 115 S. Ct. 55 (1994); Sofo v.
Pan-American Life Ins. Co., 13 F.3d 239, 240-41 (7th Cir. 1994)
(plaintiff's state court rescission claim against a group
insurance policy for the policy's refusal to reimburse plaintiff
for medical treatment received was properly removed because
plaintiff's claim was for a denial of benefits); Smith v. Dunham-
Bush, Inc., 959 F.2d 6, 8-12 (2d Cir. 1992) (common law claim for
breach of an oral promise to pay pension-related benefits
properly removed to federal court); Lister v. Stark, 890 F.2d
941, 943-44 (7th Cir. 1989) (plaintiff's state law claim
challenging the calculation of his time of "uninterrupted
service" for the purposes of calculating his pension benefits
held removable), cert. denied, 498 U.S. 1011 (1990).
That the Supreme Court has recognized a limited
exception to the well-pleaded complaint rule for state law claims
which fit within the scope of § 502 by no means implies that all
claims preempted by ERISA are subject to removal. Instead, as
the U. S. Court of Appeals for the Sixth Circuit wrote recently,
"[r]emoval and preemption are two distinct concepts." Warner v.
Ford Motor Co., 46 F.3d 531, 535 (6th Cir. 1995). Section 514 of
ERISA defines the scope of ERISA preemption, providing that ERISA
"supersede[s] any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan described in
[§ 4(a) of ERISA] and not exempt under [§ 4(b) of ERISA]."
(Emphasis added.) The Metropolitan Life complete-preemption
exception, on the other hand, is concerned with a more limited
set of state laws, those which fall within the scope of ERISA's
civil enforcement provision, § 502. State law claims which fall
outside of the scope of § 502, even if preempted by § 514(a), are
still governed by the well-pleaded complaint rule and, therefore,
are not removable under the complete-preemption principles
established in Metropolitan Life. See Franchise Tax Bd., 463
U.S. at 23-27 (holding that preemption under § 514(a) does not
permit a defendant to remove a suit brought in state court to
federal court when the plaintiff's state claim does not fall
within the scope of ERISA's civil remedy provisions);
Metropolitan Life, 481 U.S. at 64 (stating that ERISA preemption
under § 514(a) "without more, does not convert [a] state claim
into an action arising under federal law"); see also Allstate,
879 F.2d at 93-94 (holding that § 514(a) preemption defense will
not justify removal unless claim falls within the scope of
ERISA's civil enforcement provision, § 502); Warner, 46 F.3d at
535 (that a claim is preempted under § 514(a) does not
necessarily establish that the claim is removable); Lupo v. Human
Affairs Int'l, Inc., 28 F.3d 269, 272-73 (2d Cir. 1994) (state
law professional malpractice claim against company hired by
plaintiff's employer to provide psychotherapy services deemed
outside the scope of § 502(a)(1)(B) and therefore not removable).
The difference between preemption and complete
preemption is important. When the doctrine of complete
preemption does not apply, but the plaintiff's state claim is
arguably preempted under § 514(a), the district court, being
without removal jurisdiction, cannot resolve the dispute
regarding preemption. It lacks power to do anything other than
remand to the state court where the preemption issue can be
addressed and resolved. Franchise Tax Bd., 463 U.S. at 4, 27-28;
Allstate, 879 F.2d at 94; Warner, 46 F.3d at 533-35; Lupo, 28
F.3d at 274.
III.
The district courts in these cases found that the
plaintiffs' state law claims against the U.S. Healthcare HMOs
fall within the scope of § 502(a)(1)(B) and that the Metropolitan
Life complete-preemption doctrine therefore permits removal.3 We
disagree.
To determine whether the state law claims fall within
the scope of § 502(a)(1)(B), we must determine whether those
claims, properly construed, are "to recover benefits due . . .
under the terms of [the] plan, to enforce . . . rights under the
terms of the plan, or to clarify . . . rights to future benefits
under the terms of the plan." In making that determination, it
would be helpful to have a complete understanding in each case of
the relationships among the HMO, the employer, and the other
3
. There is no contention that the plaintiffs' state law claims
implicate any of ERISA's civil enforcement provisions other than
those set out in § 502(a)(1)(B). Accordingly, we direct our
discussion to whether the plaintiffs' claims fall within the
scope of § 502(a)(1)(B).
defendants, the nature of the plan benefits, and the rights of
participants and beneficiaries under the plan. We are somewhat
hampered here because these cases come to us on appeal from
orders granting motions to dismiss. Because of this procedural
status, the parties have had little chance to develop the records
and, accordingly, we know very little about the nature of the
plan benefits or about the role -- if any -- that U.S.
Healthcare's HMOs play in the respective ERISA welfare plans.
We recognize that there are issues in dispute. The
plaintiffs and the Department of Labor as amicus curie, for
example, claim that the U.S. Healthcare HMOs are separate from
the ERISA plans and that the sole benefit that participants and
beneficiaries receive from each plan is the plaintiffs'
membership in the HMOs. In their view, the plaintiffs' claims
thus have nothing at all to do with § 502(a)(1)(B) because no one
contests that the plaintiffs in fact have received their plan
benefits (their membership in the HMO). Instead, under their
view, the plaintiffs' claims merely attack the behavior of an
entity completely external to the ERISA plan.
U.S. Healthcare, on the other hand, claims that the
plan benefits are more than just the plan participants' or
beneficiaries' memberships in the respective HMOs; it argues that
the medical care received is itself the plan benefit. As a
corollary to that position, it also disagrees with the
plaintiffs' view that the HMOs are completely distinct from the
respective ERISA plans, arguing that the HMOs in fact play a role
in the delivery of plan benefits. It further maintains that
ERISA is implicated because both the plaintiffs' agency claims
and their direct negligence claims relate to the quality of the
plan benefits and the HMOs' role as the entity that arranges for
those benefits for the ERISA plans.
We need not here resolve these disputes about how to
characterize the plan benefits or the HMOs' role in the
respective ERISA plans. We will assume, without deciding, that
the medical care provided (and not merely the plaintiffs'
memberships in the respective HMOs) is the plan benefit for the
purposes of ERISA. We will also assume that the HMOs, either as
a part of or on behalf of the ERISA plans, arrange for the
delivery of those plan benefits. We thus assume, for example,
that removal jurisdiction would exist if the plaintiffs were
alleging that the HMOs refused to provide the services to which
membership entitled them.
Given those assumptions, we nevertheless conclude that
removal was improper. We are compelled to this conclusion
because the plaintiffs' claims, even when construed as U.S.
Healthcare suggests, merely attack the quality of the benefits
they received: The plaintiffs here simply do not claim that the
plans erroneously withheld benefits due. Nor do they ask the
state courts to enforce their rights under the terms of their
respective plans or to clarify their rights to future benefits.
As a result, the plaintiffs' claims fall outside of the scope of
§ 502(a)(1)(B) and these cases must be remanded to the state
courts from which they were removed.
A.
Nothing in the complaints indicates that the plaintiffs
are complaining about their ERISA welfare plans' failure to
provide benefits due under the plan. Dukes does not allege, for
example, that the Germantown Hospital refused to perform blood
studies on Darryl because the ERISA plan refused to pay for those
studies. Similarly, the Viscontis do not contend that Serena's
death was due to their welfare plan's refusal to pay for or
otherwise provide for medical services. Instead of claiming that
the welfare plans in any way withheld some quantum of plan
benefits due, the plaintiffs in both cases complain about the low
quality of the medical treatment that they actually received and
argue that the U.S. Healthcare HMO should be held liable under
agency and negligence principles.
We are confident that a claim about the quality of a
benefit received is not a claim under § 502(a)(1)(B) to "recover
benefits due . . . under the terms of [the] plan." To reach that
conclusion, "we begin as we do in any exercise of statutory
construction with the text of the provision in question, and move
on, as need be, to the structure and purpose of the Act in which
it occurs." New York State Conference of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., Nos. 93-1408, 93-1414, 93-
1415, 1995 WL 238409, at *6 (April 26, 1995).
The text lends no support to U.S. Healthcare's
argument. On its face, a suit "to recover benefits due . . .
under the terms of [the] plan" is concerned exclusively with
whether or not the benefits due under the plan were actually
provided. The statute simply says nothing about the quality of
benefits received.
Nor does anything in the legislative history,
structure, or purpose of ERISA suggest that Congress viewed
§ 502(a)(1)(B) as creating a remedy for a participant injured by
medical malpractice. When Congress enacted ERISA it was
concerned in large part with the various mechanisms and
institutions involved in the funding and payment of plan
benefits. That is, Congress was concerned "that owing to the
inadequacy of current minimum [financial and administrative]
standards, the soundness and stability of plans with respect to
adequate funds to pay promised benefits may be endangered." § 2,
29 U.S.C. § 1001(a). Thus, Congress sought to assure that
promised benefits would be available when plan participants had
need of them and § 502 was intended to provide each individual
participant with a remedy in the event that promises made by the
plan were not kept. We find nothing in the legislative history
suggesting that § 502 was intended as a part of a federal scheme
to control the quality of the benefits received by plan
participants. Quality control of benefits, such as the health
care benefits provided here, is a field traditionally occupied by
state regulation and we interpret the silence of Congress as
reflecting an intent that it remain such. See, e.g., Travelers
Ins. Co., 1995 WL 238409, at *7 (noting that while quality
standards and work place regulations in the context of hospital
services will indirectly affect the sorts of benefits an ERISA
plan can afford, they have traditionally been left to the states,
and there is no indication in ERISA that Congress chose to
displace general health care regulation by the states).
B.
We also reject the HMOs' attempts to characterize the
plaintiffs' state court complaints as attempts to enforce their
"rights under the terms of the [respective welfare] plan[s]."
That phrase is included, we believe, so as to provide a means of
enforcing any contract rights other than the right to benefits,
as for example the various plan-created rights of plan
participants to benefit-claim and benefit-eligibility procedures.
Just as § 502(a)(1)(B) provides the means by which a participant
can insist on the promised benefits, so too does it provide the
means for insisting on the plan-created rights other than plan
benefits.4
4
. ERISA ordinarily requires that welfare plans set out a
description of the rights of the participants and their
beneficiaries in a summary plan description ("SPD"). 29 U.S.C.
§ 1022(b); see also 29 C.F.R. § 2520.102-2(a) (the plan
description must "apprise the plan's participants and
beneficiaries of their rights and obligations under the plan");
29 C.F.R. § 2520.102-3(j)(2) (SPD for an ERISA welfare plan must
include "a statement of the conditions pertaining to eligibility
to receive benefits"); 29 C.F.R. § 250.102-3(l) (SPD must include
"a statement clearly identifying circumstances which may result
in disqualification, ineligibility, or denial, loss, forfeiture
or suspension of any benefits"); 29 C.F.R. § 102-3(s) (SPD must
include a statement describing "[t]he procedures to be followed
in presenting claims for benefits under the plan and the remedies
available under the plan for the redress of claims which are
denied in whole or in part"). That requirement is relaxed in
situations where the ERISA plan chooses to provide benefits
through a qualified HMO. Under 29 C.F.R. § 2520.102-5(a), if
health benefits are provided through an HMO, the SPD need not
contain the usual description of the rights of participants or
beneficiaries, provided the SPD contains a notice stating, among
The HMOs point to no plan-created right implicated by
the plaintiffs' state law medical malpractice claims. The best
they can do is assert that the plaintiffs' medical malpractice
claims "attempt to define a participant's rights under the plan."
(Appellee's bf. in Visconti, at 9.) We cannot accept that
characterization. The plaintiffs are not attempting to define
new "rights under the terms of the plan"; instead, they are
attempting to assert their already-existing rights under the
generally-applicable state law of agency and tort. Inherent in
the phrases "rights under the terms of the plan" and "benefits
due . . . under the terms of [the] plan" is the notion that the
plan participants and beneficiaries will receive something to
which they would not be otherwise entitled. But patients enjoy
the right to be free from medical malpractice regardless of
(..continued)
other things, that plan participants will receive membership "in
one or more qualified health maintenance organizations,"
§ 2520.102-5(b)(1), and that upon request each available HMO will
provide certain written information, namely
(i) the nature of services provided to
members; (ii) conditions pertaining to
eligibility to receive such services (other
than general conditions pertaining to
eligibility for participation in the plan)
and circumstances under which services may be
denied; and (iii) the procedures to be
followed in obtaining such services, and the
procedures available for the review of claims
for services which are denied in whole or in
part.
§ 2520.102-5(b)(3).
whether or not their medical care is provided through an ERISA
plan.
C.
Much of the above analysis also precludes us from
concluding that the plaintiffs are asking the state courts to
"clarify [their] rights to future benefits under the terms of the
plan." As noted, there is no allegation here that the HMOs have
withheld plan benefits due. Moreover, nothing in the complaints
remotely resembles a request that the court clarify a right to a
future benefit; instead, the plaintiffs' complaints center on
past events.
D.
We recognize that the distinction between the quantity
of benefits due under a welfare plan and the quality of those
benefits will not always be clear in situations like this where
the benefit contracted for is health care services rather than
money to pay for such services. There well may be cases in which
the quality of a patient's medical care or the skills of the
personnel provided to administer that care will be so low that
the treatment received simply will not qualify as health care at
all. In such a case, it well may be appropriate to conclude that
the plan participant or beneficiary has been denied benefits due
under the plan. This is not such a case, however. While the
Dukes complaint alleges that the Germantown Hospital committed
malpractice when it decided not to perform certain blood tests,
no one would conclude from that malpractice that Germantown
Hospital was not acting as a health care provider when it made
those decisions. Similarly, while the Viscontis claim that Dr.
Wisniewski was incompetent, there is no indication that he was
not performing health care services at the time he allegedly
committed the malpractice charged.
We also recognize the possibility that an ERISA plan
may describe a benefit in terms that can accurately be described
as related to the quality of the service. Thus, for example, a
plan might promise that all X-rays would be analyzed by
radiologists with a prescribed level of advanced training. A
plan participant whose X-ray was analyzed by a physician with
less than the prescribed training might well be entitled to
enforce the plan's promise through a suit under § 502(a)(1)(B) to
secure a denied benefit.
Much of the HMOs' argument in these cases is at root a
contention that the employer and the HMO impliedly contracted
that the health care services provided would be of acceptable
quality and, accordingly, that these damage suits rest on a
failure to provide services of acceptable quality. Since we do
not have before us the documents reflecting the agreements
between the employers and the HMOs, we are not in a position to
determine whether such a commitment was implicit in their
respective agreements. However, the burden of establishing
removal jurisdiction rests with the defendant. Abels v. State
Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir. 1985); see
generally 14A Charles A. Wright, et al., Federal Practice &
Procedure § 3721, at 209-10 (1985 & Supp. 1995). Accordingly,
the HMO is not in a position to press this argument.
Moreover, we hasten to add that while we have no doubt
that all concerned expected the medical services arranged for by
the HMOs to be of acceptable quality, this seems to us beside the
point. The relevant inquiry is not whether there was an
expectation of acceptably competent services, but rather whether
there was an agreement to displace the quality standard found in
the otherwise applicable law with a contract standard.
It may well be that an employer and an HMO could agree
that a quality of health care standard articulated in their
contract would replace the standards that would otherwise be
supplied by the applicable state law of tort. We express no view
on whether an ERISA plan sponsor may thus by contract opt out of
state tort law and into a federal law of ERISA contract. We will
reserve that issue until a case arises presenting it.5 Nothing
in this record suggests an agreement to displace the otherwise
applicable state laws of agency and tort.
IV.
5
. It would seem to Judge Roth that, if a plan were to adopt its
own standard of acceptable health care to be made available to
beneficiaries, the plan should provide concurrently, through
insurance or otherwise, an appropriate remedy to beneficiaries
for any failure of the plan care providers to meet that standard
or, in the alternative, should inform plan beneficiaries that
tort law remedies for medical malpratice would not be available
to them under the plan.
The HMOs take heart in a recent case, Corcoran v.
United Healthcare, Inc., 965 F.2d 1321 (5th Cir.), cert. denied,
113 S. Ct. 812 (1992), in which the U.S. Court of Appeals for the
Fifth Circuit held that ERISA preempts a medical malpractice
claim against a medical consulting company for decisions it made
as the third-party administrator of a welfare plan's "pre-
certification" review program. We agree with the HMOs that under
Corcoran, third-party private companies may, in some
circumstances, play a role in an ERISA plan and that claims
against such companies may fall within the scope of § 502(a). We
nevertheless find Corcoran inapposite on the facts and claims
alleged in this case.
Corcoran began as a state law wrongful death action
against Blue Cross and Blue Shield of Alabama ("Blue Cross") and
United Heathcare ("United"), in which Florence Corcoran charged
that the defendants were responsible for the death of her unborn
fetus. An employee at South Central Bell Telephone, Corcoran was
a member of Bell's Medical Assistance Plan ("the Bell Plan"), a
self-funded welfare-benefit plan which provides medical benefits
to eligible Bell employees. The Bell Plan was administered by
Blue Cross.
One provision of the plan, the "Quality Care Program"
("QCP") required plan participants and beneficiaries to obtain
advance approval for certain medical procedures and overnight
hospital visits. Such cost-containment programs typically are
known as "utilization review" or "pre-certification review"
programs. Under the QCP, once a patient's doctor recommended
surgery or hospitalization, the staff assigned to the QCP was
required to perform an independent review of the patient's
condition to determine both the need for the surgery and the
appropriate length of hospitalization. As is often the case, the
Bell Plan hired a third party -- United -- to perform the QCP for
the Plan. See generally Susan J. Stayn, Note, Securing Access to
Care in Health Maintenance Organizations: Toward a Uniform Model
of Grievance and Appeal Procedures, 94 Colum. L. Rev. 1694, 1677-
83 (1994).
Corcoran's doctor, in response to difficulties Corcoran
was experiencing with her pregnancy, recommended that Corcoran be
hospitalized. As a result, Corcoran applied to the Bell Plan for
disability benefits for the remainder of her pregnancy. Despite
the recommendation of Corcoran's doctor, United determined that
hospitalization was unnecessary, and instead authorized only 10
hours a day of home nursing care. The fetus went into distress
and died during a period of time when the nurse assigned to
Corcoran was not on duty. Corcoran subsequently filed suit in
Louisiana state court against Blue Cross and United.
United removed the case to federal district court,
claiming that Corcoran's claims were completely preempted by
ERISA. The district court then granted United's motion to
dismiss and Corcoran appealed.
The U.S. Court of Appeals for the Fifth Circuit ruled
that ERISA preempted Corcoran's claim against United and --
implicitly, at least -- that Corcoran's claims were completely
preempted. It explained that while United was in fact giving
medical advice, it gave that advice as part of its role of making
benefit determinations for the plan. 965 F.2d at 1331. Thus,
the court determined that plaintiffs were "attempting to recover
for a tort allegedly committed in the course of handling a
benefit determination," id. at 1332, and that such state law
claims are preempted by ERISA. See Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 48 (1987) (common law cause of action
arising from "improper processing of a claim for benefits"
preempted by ERISA); see also Kuhl v. Lincoln Nat'l Health Plan,
Inc., 999 F.2d 298, 303 (8th Cir. 1993) (medical malpractice
claim against plan administrator for delaying pre-certification
of heart surgery arose from administration of benefits and
therefore was preempted), cert. denied, 114 S. Ct. 694 (1994);
Berger v. Edgewater Steel Co., 911 F.2d 911, 923 (3d Cir. 1990)
(claim against plan sponsor for misrepresenting available
benefits preempted), cert. denied, 499 U.S. 920 (1991).
The HMOs argue that we should read Corcoran broadly to
hold that medical malpractice claims against an HMO should be
removable under Metropolitan Life whenever an HMO provides the
complained-about medical treatment as a benefit of an ERISA-
covered health plan. They note that several district courts have
adopted versions of their suggested approach. See, e.g., Ricci
v. Gooberman, 840 F. Supp. 316, 317-18 (D.N.J. 1993) (plaintiff's
attempt to hold an HMO liable under a vicarious liability claim
similar to the ones at bar held preempted); Butler v. Wu, 853 F.
Supp. 125, 129-30 (D.N.J. 1994) (same); Nealy v. U.S. Healthcare
HMO, 844 F. Supp. 966, 973 (S.D.N.Y. 1994) (plaintiff's attempts
to hold an HMO liable under several common law theories held
preempted); Altieri v. Cigna Dental Health, Inc., 753 F. Supp 61,
63-65 (D. Conn. 1990) (ERISA preempts plaintiff's negligent
supervision claim against an HMO). But see Independence HMO,
Inc. v. Smith, 733 F. Supp. 983, 987-89 (E.D. Pa. 1990) (ERISA
does not preempt medical malpractice-type claims brought against
HMOs under a vicarious liability theory); Elsesser v. Hospital of
the Philadelphia College of Osteopathic Medicine, 802 F. Supp.
1286, 1290-91 (E.D. Pa. 1992) (same for a claim against an HMO
for the HMO's negligence in selecting, retaining, and evaluating
plaintiff's primary-care physician). See also Kearney v. U.S.
Healthcare, Inc., 859 F. Supp. 182, 186-87 (E.D. Pa. 1994)
(holding in a case similar to those at bar that ERISA preempts
plaintiff's direct negligence claim, but not its vicarious
liability claim).
The HMOs' reliance on Corcoran is misplaced. Although
United's decisions in Corcoran were in part medical decisions,
United, unlike the HMOs here, did not provide, arrange for, or
supervise the doctors who provided the actual medical treatment
for plan participants. (Blue Cross played that role in
Corcoran.) Instead, United only performed an administrative
function inherent in the "utilization review." The difference
between the "utilization review" and the "arranging for medical
treatment" roles is crucial for the purposes of § 502(a)(1)(B)
because only in a utilization-review role is an entity in a
position to deny benefits due under an ERISA welfare plan.6 965
F.2d at 1333 n.16 (noting that ERISA is implicated in
"utilization review" decisions but not medical-treatment
decisions because only the former are "made in connection with a
cost containment plan"); see also Kuhl, 999 F.2d at 301-03
(malpractice claims against insurance company hired to perform a
"pre-certification review" held to fall within § 502(a)'s civil
enforcement provisions); Elsesser, 802 F. Supp. at 1290-91
(holding that the cause of action based on allegations that HMO
withheld benefits were preempted, while the claims against HMO
for its negligent selection, retention, and evaluation of a
primary-care physician were not preempted).
In these cases, the defendant HMOs play two roles, not
just one.7 In addition to the utilization-review role played by
United in Corcoran, the HMOs also arrange for the actual medical
treatment for plan participants. Only this second role is
relevant for this appeal, however: on the faces of these
complaints there is no allegation that the HMOs somehow should be
held liable for any decisions they might have made while acting
6
. As noted in Part III, we are assuming, without deciding, that
the medical care provided (and not merely the plaintiffs'
memberships in the respective HMOs) is the plan benefit for the
purposes of ERISA. So viewed, when acting in their utilization-
review role, the HMOs are making benefit determinations.
7
. There is nothing unusual about this. HMOs often arrange for
the medical treatment and perform the utilization review (instead
of hiring a third party). See, e.g., Elsesser, 802 F. Supp. at
1290-91 (HMO playing both roles); see also Stayn, supra, at 1677.
in their utilization-review roles.8 Stated another way, unlike
Corcoran, there is no allegation here that the HMOs denied anyone
any benefits that they were due under the plan. Instead, the
plaintiffs here are attempting to hold the HMOs liable for their
role as the arrangers of their decedents' medical treatment.
For this reason, these cases are more like Lupo v.
Human Affairs Int'l, Inc., 28 F.3d 269 (2d Cir. 1994). There, an
employer had contracted with a psychotherapy service group, Human
Affairs International, Inc. ("HAI"), to provide mental health
services to its employees in connection with an employee benefit
plan governed by ERISA. Lupo, an employee who received
psychotherapy services from HAI, sued HAI in a state court for
his therapist's professional malpractice, breach of fiduciary
duty, and intentional infliction of emotional distress. HAI,
like the HMOs here, removed the case to federal court, claiming
that ERISA completely preempted Lupo's claims. The district
court agreed with HAI, and, accordingly, dismissed Lupo's claim.
The U.S. Court of Appeals for the Second Circuit reversed,
holding that the district court lacked removal jurisdiction and
was thus obligated to remand to the state court. It reached this
conclusion because "[o]n their face, none of [Lupo's] claims
[bore] any significant resemblance to those described in
8
. The only possible exception is Dukes' allegation that the
Germantown Hospital refused to perform blood studies on Darryl.
Still, on the record before the court, there is no indication
that the hospital refused to perform those studies because of the
ERISA plan's refusal to pay.
[§ 502(a)(1)(B)]." 28 F.3d at 272. The situation in the cases
at bar is closely analogous. As in Lupo, the plaintiffs' claims
in these cases do not concern a denial of benefits due or a
denial of some other plan-created right. Thus, the claims here,
like those in Lupo, bear no significant resemblance to the claims
described in § 502(a)(1)(B).
V.
For the foregoing reasons, the district courts'
judgments in these cases will be reversed and remanded with
instructions to remand the cases to the state courts from which
they came. Our holding that the districts courts lack removal
jurisdiction, of course, leaves open for resolution by the state
courts the issue of whether the plaintiffs' claims are preempted
under § 514(a).