FEMINO-DUCEY-QUELER ORTHOPEDIC GROUP v. BLUE CROSS BLUE SHIELD OF MINNESOTA
2:17-cv-12025
D.N.J.Dec 23, 2020Background
- Plaintiff Femino-Ducey-Queler Orthopedic Group, a New Jersey out-of-network provider, performed emergency surgery on L.Z., an employee covered by a Travelers self-insured plan administered by defendants Blue Cross Blue Shield of Minnesota (BCBSM) and The Travelers Companies, Inc.
- Plaintiff billed $68,470 for surgeon charges; defendants paid $8,904.18. Plaintiff sued in New Jersey state court for breach of contract, promissory estoppel, account stated, fraudulent inducement, and violation of NJ rules for out-of-network emergency care, seeking compensatory damages and $100,000 in punitive damages.
- Defendants removed the case to federal court asserting diversity (and federal-question) jurisdiction; plaintiff initially moved to remand but later withdrew that motion.
- Defendants moved to dismiss arguing ERISA preemption, lack of personal jurisdiction, and failure to state a claim; the court sua sponte ordered the parties to show cause on subject-matter jurisdiction.
- The Court found diversity jurisdiction exists because the complaint’s demand (including punitive damages) was made in good faith and, as pled at filing, put the amount in controversy over $75,000; the court therefore retained the case.
- On personal jurisdiction, the Court held plaintiff failed to make a prima facie showing of general jurisdiction over defendants based on the record, but permitted limited jurisdictional discovery rather than dismissing; the Court reserved decision on the dismissal motion pending that discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Amount in controversy / subject-matter jurisdiction | Amount sought (compensatory + $100,000 punitive) establishes diversity jurisdiction | Removal was proper; amount in controversy satisfied at time of removal | Court: Amount in controversy assessed at filing; punitive demand not shown to be made in bad faith, so diversity jurisdiction exists |
| Availability/support for punitive damages | Plaintiff alleged fraudulent inducement and initially sought $100,000 punitive; later moved to abandon punitive claim | Defendants contended punitive claim must meet NJ pleading standards but did not prove it frivolous | Court: Punitive damages available for fraud under NJ law; failure to plead malice does not render demand patently frivolous; punitive figure counts toward amount in controversy |
| Personal jurisdiction (general jurisdiction) | Defendants have continuous/systematic contacts in NJ (offices, conduct business, administer plan) | Defendants submitted declarations negating significant NJ presence; not incorporated/principal place in NJ | Court: Plaintiff failed to make prima facie showing of general jurisdiction; alleged contacts are too sporadic to render defendants "at home" in NJ |
| Jurisdictional discovery / disposition of motion to dismiss | Plaintiff sought discovery to prove contacts and jurisdiction | Defendants moved to dismiss now for lack of personal jurisdiction | Court: Denied dismissal on jurisdictional grounds; allowed limited jurisdictional discovery and reserved ruling on dismissal motion pending that discovery |
Key Cases Cited
- Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2014) (defendant’s amount-in-controversy allegation accepted unless contested; plaintiff may challenge and court decides by preponderance)
- St. Paul Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938) (jurisdictional amount alleged in good faith is controlling unless legal certainty shows otherwise)
- Packard v. Provident Nat. Bank, 994 F.2d 1039 (3d Cir. 1993) (punitive damages demand cannot support jurisdiction if patently frivolous or unavailable as a matter of law)
- International Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts due process standard for personal jurisdiction)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general jurisdiction requires affiliations so continuous and systematic as to render corporation at home)
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (paradigm bases for general jurisdiction are place of incorporation and principal place of business; agency relationships do not widely expand general jurisdiction)
- Miller Yacht Sales v. Smith, 384 F.3d 93 (3d Cir. 2004) (prima facie burden for jurisdictional facts; plaintiff must produce competent evidence)
- Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3d Cir. 2003) (courts should allow jurisdictional discovery where plaintiff makes threshold showing)
- Massachusetts School of Law v. American Bar Ass'n, 107 F.3d 1026 (3d Cir. 1997) (jurisdictional discovery appropriate unless claim is clearly frivolous)
- Eash v. Riggins Trucking Inc., 757 F.2d 557 (3d Cir. 1985) (district court’s authority to manage docket and fashion tools to decide cases)