169 F. Supp. 3d 1058
S.D. Cal.
2016
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Background

  • Plaintiff Yrijesh S. Tantuwaya MD, Inc., an emergency physician/provider with no contract with defendants, sued in state court for unpaid reimbursement (UCL and quantum meruit) for emergency services to several patients, including one (B.G.) enrolled in a FEHBA Service Benefit Plan administered by Blue Shield.
  • Defendants removed under the federal-officer removal statute, 28 U.S.C. § 1442(a)(1), asserting they administer FEHBA plans under OPM oversight; Blue Shield also moved to dismiss under Fed. R. Civ. P. 12(b)(1) and (6).
  • Plaintiff moved to remand; removal was opposed on grounds that FEHBA oversight supplies the necessary causal nexus and federal defenses.
  • Court took judicial notice of certain public documents (consent agreement and amicus brief) but found they did not alter the outcome.
  • The court denied remand, finding a causal nexus to OPM administration and that defendants had colorable federal defenses (including FEHBA preemption and sovereign-immunity-related arguments).
  • The court granted Blue Shield’s motion to dismiss with prejudice, concluding plaintiff’s state-law claims were preempted by FEHBA and ERISA (for another patient’s ERISA-plan claim) and that sovereign immunity barred relief tied to federal treasury funds.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether removal under 28 U.S.C. § 1442(a)(1) was proper (acting "under" a federal officer; causal nexus) Blue Shield did not act under federal direction when it paid enrollees and not providers; removal improper Blue Shield administers the FEHBA Service Benefit Plan under OPM’s supervision; actions in administering/payments are acts pursuant to federal direction Removal proper: preponderance shows causal nexus to OPM supervision and defendants are persons acting under federal officer
Whether defendants have colorable federal defenses to defeat remand No colorable federal defense; state-law claims control FEHBA preemption, sovereign-immunity/treasury exposure, and displacement by federal common law are plausible defenses Colorable federal defenses exist — FEHBA preemption at minimum; remand denied
Whether plaintiff’s state-law claims are preempted by FEHBA § 8902(m)(1) Plaintiff (non-enrollee, non-contracted provider) contends claims don’t "relate to" FEHBA benefits and thus not preempted Claims arise from processing/payment of benefits under the Service Benefit Plan and thus relate to FEHBA-covered benefits Claims preempted by FEHBA: state-law claims relate to plan benefits/payments and are displaced
Whether plaintiff’s claims are barred by sovereign immunity or ERISA preemption (for other patient) Treasury not liable because Blue Shield already determined amount owed; plaintiff seeks provider recovery, not suit against U.S. Funds for uncashed checks flow back to federal treasury; recovery would implicate federal treasury; ERISA governs self-funded Starbucks plan and preempts state-law claims Suits barred for lack of jurisdiction under sovereign immunity insofar as recovery would implicate federal treasury; ERISA preempts claims tied to self-funded ERISA plan; dismissal granted with prejudice

Key Cases Cited

  • Watson v. Philip Morris Cos., 551 U.S. 142 (Sup. Ct. 2007) (explains "acting under" federal officer requires subjection, guidance, or control and helping carry out federal duties)
  • Leite v. Crane Co., 749 F.3d 1117 (9th Cir. 2014) (federal-officer removal elements and burden of proof)
  • Jacks v. Meridian Res. Co., LLC, 701 F.3d 1224 (8th Cir. 2012) (FEHBA carriers administering plans can be "acting under" federal officer for removal)
  • Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677 (Sup. Ct. 2006) (FEHBA preemption construed to displace state law on coverage/benefits)
  • Hayes v. Prudential Ins. Co. of Am., 819 F.2d 921 (9th Cir. 1987) (FEHBA preemption supports displacement of state-law claims that refer to plan)
  • Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972 (9th Cir. 2007) (distinguishes non-contract provider claims not premised on FEHBA plan)
  • Botsford v. Blue Cross & Blue Shield of Mont., 314 F.3d 390 (9th Cir. 2002) (state law "relates to" plan if it has connection with or reference to plan)
  • Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009) (discusses analytical similarity of FEHBA and ERISA preemption doctrines)
  • Willingham v. Morgan, 395 U.S. 402 (Sup. Ct. 1969) (removal under federal-officer statute requires only colorable federal defense)
  • Boyle v. United Techs. Corp., 487 U.S. 500 (Sup. Ct. 1988) (federal-law defenses in contractor context)
  • FMC Corp. v. Holliday, 498 U.S. 52 (Sup. Ct. 1990) (ERISA deemer clause interpretation removing self-funded plans from state-insurance regulation)
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