111 F. Supp. 3d 731
E.D. Va.2015Background
- Dominion Pathology Laboratories (three-physician practice) participated in Anthem Health Plans of Virginia’s provider network and was reimbursed by CPT codes.
- Anthem reduced Dominion’s reimbursement rates twice (Jan 1, 2014 ~18% cut; later notice to cut nearly 60% effective Feb 2, 2015).
- Dominion sued in Virginia state court asserting breach of contract and seeking declarations under 42 U.S.C. § 300gg‑5(a) (ACA §2706) and Virginia Code § 38.2‑3407.
- Anthem removed the case to federal court, asserting federal-question jurisdiction because the complaint implicates the ACA; Dominion moved to remand.
- The district court analyzed Grable/Gunn factors for federal-question jurisdiction over state-law claims and concluded federal issues were neither necessarily raised nor substantial and that federal jurisdiction would disrupt the federal‑state balance.
- Court granted Dominion’s motion and remanded the action to the Circuit Court for the City of Norfolk; Anthem’s federal motion to dismiss was rendered moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction exists under §1331 for state-law breach claim that references ACA §2706 | Dominion: breach claim can be resolved under state law (Va. Code §38.2‑3407) without deciding federal law; enforcement of §2706 is left to states | Anthem: state claims necessarily raise a federal issue under ACA §2706 (definition of “discriminate”) so removal is proper | Remand granted — no federal‑question jurisdiction because federal issue is not necessarily raised |
| Whether state-law claim “necessarily raise[s]” a federal issue under Grable/Gunn | Dominion: plaintiff can prevail on state-law theories that do not require resolving §2706, so federal law is not essential | Anthem: contractual compliance incorporated federal law; interpretation of §2706 is required to resolve discrimination issue | Court: plaintiff pleaded alternative state remedies; presence of a non-federal theory defeats necessity prong |
| Whether the federal issue is “substantial” to the federal system as a whole | Dominion: discrete ACA provision enforcement is delegated to states; issue lacks national importance | Anthem: meaning of “discriminate” under §2706 is an important federal issue that could control other cases | Court: federal issue is not substantial — factbound, not dispositive for many cases, and no strong federal interest shown |
| Whether exercising federal jurisdiction would disrupt the federal‑state balance | Dominion: Congress left enforcement to states and insurance matters are traditionally state concerns | Anthem: enforcement in Virginia delegated to State Corp. Commission but federal forum still appropriate | Court: exercising jurisdiction would disrupt the balance; remand appropriate |
Key Cases Cited
- United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337 (4th Cir.) (federal courts are courts of limited jurisdiction)
- Mulcahey v. Columbia Organic Chems. Co., Inc., 29 F.3d 148 (4th Cir.) (removal jurisdiction strictly construed; burden on removing party)
- Dixon v. Coburg Dairy, Inc., 369 F.3d 811 (4th Cir.) (plaintiff’s claim does not arise under federal law if supported by any non-federal theory)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (federal jurisdiction for state claims that implicate substantial federal issues)
- Gunn v. Minton, 568 U.S. 251 (federal jurisdiction requires federal issue be substantial to federal system as a whole)
- Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (state-law claims invoking federal statutes comprise a small category for federal jurisdiction)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (mere presence of federal issue in state cause does not confer federal-question jurisdiction)
- Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (cases arising under federal law when federal law creates the cause of action)