390 F. Supp. 3d 1176
N.D. Cal.2019Background
- State of California (via the California Insurance Commissioner) and relator Lazaro Suarez sued AbbVie in Alameda Superior Court under the California Insurance Frauds Prevention Act (IFPA), alleging AbbVie's Humira "Ambassador Program" used nurse "ambassadors" to steer insured patients and generate insurance claims for Humira.
- Suarez is a former AbbVie nurse-educator and relator in a qui tam-style action; the Commissioner intervened and has primary responsibility for prosecution under the IFPA.
- Plaintiffs allege widespread California harm: insurers paid roughly $1.29 billion on Humira claims (2013–2018) and AbbVie derived massive Humira revenues; IFPA penalties and assessments are payable to the State and earmarked for fraud enforcement.
- AbbVie removed to federal court asserting complete diversity (Suarez domiciled in Florida; AbbVie in Illinois/Delaware) and that California is a nominal party for jurisdictional purposes.
- Plaintiffs moved to remand, arguing the State is a real party in interest because the IFPA vests the State (through the Commissioner) with enforceable monetary and enforcement interests.
- The district court found the IFPA confers substantial, tangible state interests (monetary recovery, statutory control over prosecution, and public enforcement aims) and remanded the case for lack of federal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether diversity jurisdiction exists given State of California's participation | California is a real party in interest under the IFPA because it has statutory control and will receive monetary recovery | California is a nominal party; its general governmental interest is insufficient to defeat diversity | State is a real party; removal improper; remand ordered |
| Whether IFPA qui tam structure makes the State a substantive stakeholder | IFPA vests the Commissioner with primary prosecutorial control and mandates allocation of penalties to the State; relator is subordinate | Qui tam features do not necessarily make the State a real party in every case; relator's role can be primary | IFPA's text and scheme show the State has substantial, tangible interests here; State is not nominal |
| Applicability of FCA-derived removal jurisprudence | Plaintiffs distinguish FCA cases because FCA targets government loss, while IFPA targets private insurers; state interest differs | AbbVie relies on FCA and other qui tam precedents to argue removal is proper when relator is party | Court held FCA analogies are only approximate; statutory differences favor finding State a real party under IFPA |
| Precedential support from prior IFPA/FCA decisions (e.g., Culpepper, Lucent, Bates) | State relied on California IFPA history and cases showing state enforcement interest in insurance fraud | AbbVie relied on Lucent, Missouri Railway, Bates, and Culpepper to argue general governmental interest or prior IFPA removals support diversity | Court distinguished Lucent and Missouri Railway as involving only general interests or absent state stake; Culpepper unpublished and not controlling; Bates distinguishable; holdings favor remand |
Key Cases Cited
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir.) (strong presumption against removal jurisdiction)
- Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941) (removal statute strictly construed; federalism concerns)
- Hansen v. Group Health Coop., 902 F.3d 1051 (9th Cir.) (defendant bears burden to prove removal jurisdiction)
- Geographic Expeditions, Inc. v. Estate of Lhotka, 599 F.3d 1102 (9th Cir.) (removal jurisdiction standards)
- Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., 761 F.3d 1027 (9th Cir.) (doubt about removal favors remand)
- Nevada v. Bank of Am. Corp., 672 F.3d 661 (9th Cir.) (real-party-in-interest inquiry under state law)
- Bates v. Mortgage Electronic Registration Sys., Inc., 694 F.3d 1076 (9th Cir.) (qui tam/state participation distinctions)
- State ex rel. Allstate Ins. Co. v. Weitzman, 107 Cal. App. 4th 534 (Cal. Ct. App.) (history and purpose of IFPA and State enforcement interests)
- Mo., Kan. & Tex. Ry. Co. of Kansas v. Hickman, 183 U.S. 53 (1901) (limitations on treating general government interest as creating non-diversity)