Goncalves Ex Rel. Goncalves v. Rady Children's Hospital San Diego
2017 U.S. App. LEXIS 14149
| 9th Cir. | 2017Background
- Minor Lucas Goncalves suffered alleged birth-related injuries; his father’s FEHBA plan administered by Blue Cross entities (the “Blues”) paid $459,483.57 for treatment and asserted a contractual subrogation right to recover from any tort recovery.
- Goncalves (through a guardian ad litem) sued for medical malpractice in California state court; the Blues filed a lien on potential settlement proceeds to secure subrogation.
- Goncalves moved in state court to expunge the Blues’ lien arguing FEHBA does not preempt California anti‑subrogation law; the Blues removed the motion to federal court under the federal officer removal statute, 28 U.S.C. § 1442(a)(1).
- The district court found removal proper under § 1442(a)(1) but remanded the case, concluding the probate exception (and related prior‑exclusive‑jurisdiction principles) barred federal jurisdiction.
- The Ninth Circuit majority reversed: it held that (1) FEHBA carriers act "under" a federal officer when pursuing subrogation, so § 1442 removal was proper; (2) a colorable federal defense (FEHBA preemption per Nevils) exists; and (3) neither the probate exception nor the prior exclusive jurisdiction doctrine prevented federal adjudication of the lien’s validity.
- Judge Wardlaw dissented, arguing the state court had already assumed quasi in rem control over settlement funds during the minor‑compromise process, so the prior exclusive jurisdiction doctrine should bar federal intervention.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Blues could remove lien‑expungement proceeding under 28 U.S.C. § 1442(a)(1) | Goncalves: removal improper because Blues are private and not "acting under" a federal officer; also question whether the removed proceeding was "against or directed to" Blues | Blues: as FEHBA carriers they act under OPM (a federal officer) when pursuing subrogation; the expunge motion is a proceeding directed to Blues | Held: Removal proper — Blues are a "person," acted under a federal officer, causal nexus satisfied, and have a colorable federal defense (FEHBA preemption) |
| Whether FEHBA preempts state anti‑subrogation law (colorable defense for removal) | Goncalves: FEHBA does not preempt state anti‑subrogation laws | Blues: FEHBA’s preemption clause supports federal preemption over state anti‑subrogation provisions | Held: Blues’ preemption defense is colorable (Nevils controls), satisfying § 1442 removal requirement |
| Whether the probate exception bars federal jurisdiction over the expungement motion | Goncalves: probate exception applies because settlement approval for a minor is governed by the California Probate Code and the state court supervises the funds | Blues: this is not a probate matter (no will or decedent), and federal court can adjudicate rights to property so long as it does not probate a will or administer an estate | Held: Probate exception does not apply — it is limited to probating wills, administering estates, or disposing of property in custody of a probate court |
| Whether prior exclusive jurisdiction (or in rem/quasi in rem conflict) precludes federal adjudication | Goncalves/Wardlaw dissent: state court had custody/control over settlement funds (special needs trust, trust account) — thus federal court would interfere with state’s control | Blues/majority: the removed action seeks an in personam determination of subrogation rights (not enforcement), and the state had not exercised exclusive in rem jurisdiction over the res when removal occurred | Held: Prior exclusive jurisdiction does not bar federal adjudication because the federal action is in personam (seeking rights determination) and the state court had not taken exclusive in rem control of the res at removal time |
Key Cases Cited
- Arizona v. Manypenny, 451 U.S. 232 (1981) (purpose of federal officer removal is to protect federal officials’ ability to assert defenses arising from official duties)
- Willingham v. Morgan, 395 U.S. 402 (1969) (removal under § 1442 should not be narrowly construed)
- Watson v. Philip Morris Cos., 551 U.S. 142 (2007) (defining scope of "acting under" federal officer for private contractors)
- Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) (describing FEHBA framework and OPM’s role)
- Coventry Health Care of Mo., Inc. v. Nevils, 137 S. Ct. 1190 (2017) (FEHBA preemption applies to state anti‑subrogation laws)
- Durham v. Lockheed Martin Corp., 445 F.3d 1247 (9th Cir. 2006) (three‑part test for § 1442 removal: person, causal nexus, colorable federal defense)
- Jacks v. Meridian Res. Co., LLC, 701 F.3d 1224 (8th Cir. 2012) (FEHBA carrier acts under federal officer when pursuing subrogation)
- Marshall v. Marshall, 547 U.S. 293 (2006) (clarifying narrow scope of probate exception)
- United States v. Bank of N.Y. & Tr. Co., 296 U.S. 463 (1936) (prior exclusive jurisdiction/quasi in rem principles where court control of property is essential to jurisdiction)
- State Eng’r v. S. Fork Band of Te‑Ma-Coy Tribe of W. Shoshone Indians, 339 F.3d 804 (9th Cir. 2003) (analysis for in rem vs. in personam and prior exclusive jurisdiction)