Orthopedic Specialists of New Jersey PA v. Horizon Blue Cross/Blue ShieldOrthopedic Specialists of New Jersey PA v. Horizon Blue Cross/Blue Shield
OPINION and ORDER
This matter is before the Court on the Court’s own motion to consider subject matter jurisdiction. On August 16, 2007 Defendant Horizon Blue Cross/Blue Shield of New Jersey (“Horizon”) filed a Notice of Removal from New Jersey Superior Court, Bergen County pursuant to
I. Background
The Federal Employees Health Benefits Act (“FEHBA” or “Act”),
Plaintiff Orthopedic Specialists of New Jersey (“Orthopedic Specialists”) is a medical services provider. On September 12, 2005 Plaintiff Orthopedic Specialists performed surgery on Emily Diguglielmo. Ms. Diguglielmo was an enrollee of the
Subsequently, Defendant determined that Ms. Diguglielmo’s primary coverage was provided by Medicare. Based on this determination, Defendant declared that its previous payment of $24,279 to Plaintiff on Ms. Diguglielmo’s behalf was a mistake. Defendant then sought to recover the allegedly mistaken payment from Plaintiff pursuant to Defendant’s understanding of section 2.3(g) of the Master Contract between OPM and the Association. 1 In a letter sent August 15, 2006, Plaintiff demanded a total refund from Defendant in the amount of $24,279. When Plaintiff refused to refund the cost of the procedure, Defendant deducted $24,279 from amounts owing to Plaintiff for other reimbursable procedures.
Plaintiff filed suit in the Superior Court of New Jersey, Bergen County, on July 17, 2007 on a theory of promissory estoppel. (See Notice of Removal Ex. 1 (Complaint).) Plaintiff alleges in its complaint that “ORTHOPEDIC would not have performed the surgery but for its reliance on HORIZON’S representations.” (Id. ¶ 6.) Defendant filed a notice of removal on August 16, 2007. On August 21, 2007 this Court ordered additional briefing on jurisdiction. The Court has considered the parties’ additional submissions and concludes that it lacks subject matter jurisdiction to proceed.
II. Analysis
A. Standard
“[T]he general rule that federal courts have an ever-present obligation to satisfy themselves of their subject matter jurisdiction and to decide the issue sua
sponte
applies equally in removal cases.”
See Liberty Mut. Ins. Co. v. Ward Trucking Corp.,
Generally, when a party moves “[p]ursuant to [Federal] Rule [of Civil Pro
The facts as alleged in Plaintiffs complaint are not in dispute. Therefore the Court will use the same standard applicable to a facial subject matter jurisdiction challenge under
B. Federal Officer Removal Jurisdiction
Defendant argues that the Court has jurisdiction over this case pursuant to
A civil action ... commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending: (1) The United States or any agency thereof or any officer (or any person acting under that officer) of the UnitedStates or of any agency thereof, sued in an official or individual capacity for any act under color of such office....
“The federal officer removal statute is designed to protect officers of the federal government, who[,] when acting pursuant to authority granted them under federal law, run afoul of the laws of a state.”
Transitional Hosps. Corp. of La., Inc. v. La. Health Serv.,
No. Civ.A 02-354,
Defendant bears the burden of demonstrating the existence of jurisdiction in this Court under
At the outset it should be noted that there is a split of authority on the question of
As noted above,
Feidt
identifies four prongs that must be satisfied before a district court may exercise subject matter jurisdiction under
I. Defendant’s Status as a “Person”
Plaintiffs do not challenge Defendant’s status as a “person” for purposes of
ii. Whether Defendant “Acted Under” a Federal Offiee
The second prong of the test outlined in
Feidt
focuses on the level of control exercised by the federal agency or officer over the act in question. Under the second prong, a Court must determine whether “the plaintiffs claims are based upon the defendant’s conduct ‘acting under’ a federal office.... ”
Feidt,
Removal must be predicated upon a showing that the acts forming the basis of the state suit were performed pursuant to an officer’s direct orders or comprehensive and detailed regulations. By-contrast, if the corporation establishes only that the relevant acts occurred under the general auspices of federal direction then it is not entitled to [section] 1442(a)(1) removal.
Id.
(quoting
Good v. Armstrong World Indus., Inc.,
Defendant contends that it may r.emove to federal court under
In arguing that Defendant acted under the “direct and detailed control” of a federal agency or officer, Defendant relies heavily on the Eleventh Circuit’s unpublished decision in
Anesthesiology Associates v. Blue Cross,
Anesthesiology Associates is binding neither on this Court nor within the Eleventh Circuit. As another district court noted when faced with a similar argument:
According to the Eleventh Circuit’s Internal Operating Procedures, the panel designates a case as ‘unpublished’ when it believes that the case has no prece-dential value. The Eleventh Circuit permits courts in its jurisdiction to cite unpublished decisions as persuasive authority but reliance on them is not favored. Unpublished Eleventh Circuit decisions are not binding precedent.
Transitional Hosps. Corp. of La., Inc.,
More importantly, however, the Court finds the analysis in
Anesthesiology
Asso
ciates
impersuasive. The Eleventh Circuit stated its holding in broad terms: “A health plan insurer contracting with a government agency under a federal benefits program is a ‘person acting under’ a federal officer.”
Anesthesiology Assocs.,
As the Fifth Circuit recently noted, “the governing statutes [for Medicare and the provision of health care under FEHBA] differ in a significant respect.”
Houston Cmty. Hosp.,
Intermediaries and carriers act on behalf of CMS in carrying out certain administrative responsibilities that the law imposes. Accordingly, their agreements and contracts contain clauses providing for indemnification with respect to actions taken on behalf of CMS and CMS is the real party of interest in any litigation involving the administration of the program.
By contrast, Plaintiffs promissory estoppel claim in the instant case is unrelated to the provision of benefits under the terms of the plan. Rather, Plaintiffs claim arises from Defendant’s purportedly erroneous pre-authorization of Ms. Diguglielmo’s surgery and Plaintiffs subsequent reliance on this promise. It is
this
act of purportedly erroneous pre-authori-zation over which a federal agency or officer must have exercised “direct and detailed” control if this Court is to exercise jurisdiction over Defendant under the federal officer removal statute.
Cf. Arnold,
Defendant attempts to avoid this issue by recasting Plaintiffs claim as one concerning the provision of benefits and the extent of coverage under the Master Contract, to make it appear similar to the claim in
Anesthesiology Associates. (See
Def. Supp. Br. at 12.) However, Plaintiffs claim neither concerns the terms of the
In short, Defendant “has given the Court nothing upon which to conclude that its employees were acting pursuant to any federal direction when they allegedly misrepresented coverage to [Plaintiff].”
Transitional Hosps. Corp. of La.,
claims arise out of a contract that it alleges was created as a result of representations made by [Defendant’s] employees when [Plaintiff] attempted to verify coverage. The claims do not arise out of any of the procedures dictated by the OPM. Accordingly, [Plaintiff] could not have been acting pursuant to federal authority when it allegedly mishandled the coverage inquiry.
Id. 8
III. Conclusion
Defendant has failed to demonstrate that this Court has subject matter jurisdiction over this claim pursuant to
IT IS on this 2nd day of October, 2007, thereby
ORDERED that the instant action is hereby REMANDED to the Superior Court of New Jersey, Bergen County; and it is further
ORDERED that the Plaintiffs October 1, 2007 Motion to Dismiss is dismissed without prejudice, because the Court lacks subject matter jurisdiction to consider the motion; and it is further
ORDERED that the Clerk of the Court close this case.
. Defendant cites several other cases in support of its position, all of which are equally unavailing.
Thompson v. Cmty. Ins. Co.,
No. C-3-98-323,
In
Alabama Dental Association,
the court did not consider the issue of "direct and detailed control.”
Notes
. Section 2.3(g) concerns erroneous payments in both the 2002 and 2006 Master Contract. The sections are not materially different in the two contracts. Section 2.3(g) reads in relevant part:
(g) Overpayments. If the Carrier or OPM determines that a Member's claim has been paid in error for any reason, the Carrier shall make a diligent effort to recover an overpayment to the member from the member or, if to the provider, from the provider. The Carrier shall follow general business practices and procedures in collecting debts owed under Federal Employees Health Benefits Program. Diligent effort to recover overpayments means that upon discovering that an overpayment exists ...
(3) The Carrier may off-set future benefits payable to the member of to a provider on behalf of the member to satisfy a debt due under the FEHBP if the debt remains unpaid and undisputed for 120 days after the first notice.
Def. Supp. Br. Ex. Al, § 2.3(g) (2002 Master Contract).
.
Both parties appear to be citizens of New Jersey and the amount in controversy is less than $75,000. As a result Defendant does not claim that this court has diversity jurisdiction pursuant to
Finally, Defendant does not suggest that this court may exercise jurisdiction over this case under the doctrine of "complete preemption.” Complete preemption is an “ 'independent corollary’ to the well-pleaded complaint rule” that applies in cases where "the Court has concluded that tire pre-emptive force of a statute is so 'extraordinary' that it 'converts an ordinary state common law complaint' into one stating a federal claim for purposes of the well-pleaded complaint rule.”
Caterpillar, Inc. v. Williams,
FEHBA’s preemptive force does have limits, however. "[Fjederal jurisdiction cannot be maintained where the plaintiff’s complaint seeks relief under state law and is based on an independent legal duty of the health care plan.”
Id.
at *6 (finding complete preemption over contract-based claims, but rejecting complete preemption over state law claims);
see also Transitional Hosps. Corp. of La., Inc. v. La. Health Service & Indemnity Co.,
No. 02-CV-0354,
. Courts often consider the second (or "control”) prong together with the fourth (or "nexus”) prong.
See e.g., N.J. Dept. of Envtl. Protection v. Viacom, Inc.,
Civ. No. 06-1753,
. Even if the Court were to agree that Defendant's claim concerned “what benefit payments should be made,” it is not clear that this would alter the Court's analysis. Other courts have noted that a provider’s duty to abide by contract terms does not necessarily amount to “control” over the Plan provider. As one court noted, “OPM does not unilaterally determine what benefits are included in the ... service plan. Instead OPM and Blue Cross together
contract
to determine what benefits will be included.”
Arnold,
has offered no evidence to show that its contact negotiations with OPM involve anything other than arms-length bilateral give- and-take... .OPM negotiates with various insurance carriers to obtain the best benefits coverage packages for federal employees.... OPM contracts with approximately 400 health benefits plans throughout the country, and all federal employees can choose among at least seven plans in which to enroll____[differences among plans result from the fact that OPM enters separate negotiations with each carrier.
Id.
at 741. Relatedly, the 5th Circuit noted that FEHBA providers "freely enter[] the market, in which ... carriers 'compete vigorously' with other providers within the pool of federal employees”.
Houston Community Hospital,
. The Eleventh Circuit acknowledged that Peterson concerned a Medicare provider, characterizing the case as "finding [section] 1442(a)(1) jurisdiction over a claim by a physician against a health insurer operating under Medicare,” Anesthesiology Associates, at 4, but did not consider the relevance of the differences in the provision of Medicare and the provision of health care under FEHBA.
. In
Houston Community Hospital,
the Fifth Circuit made this observation about federal control over Medicare in the course of considering Defendant’s immunity argument. The court ultimately concluded that “FEHBA carriers [are] not exercising any governmental function because 'it is not apparent that [the carriers] themselves perform any functions that OPM is itself charged with performing.’ "
Although not dispositive, the Fifth Circuit’s immunity analysis is relevant to this Court’s present inquiry because of the close relationship between the "government function" analysis for purposes of immunity, and the “direct and detailed control” analysis for purposes of
This Court recognizes that the Fifth Circuit's resolution of the "government function” test for immunity does not necessarily resolve the question of "control” under the second prong of Feidt. Nevertheless, because both tests require the court to investigate the relationship between the actor, the action, and the government’s involvement with both, the Fifth Circuit’s discussion of FEBFIA-related immunity is relevant to this Court’s present inquiry.
. Nor could Defendant allege that OPM directed them to take this action. It is worth noting in this regard that the terms of the Master Contract appear to prohibit the action taken by Defendant. As Defendant notes, ”[t]he contract adds that '[t]he Carrier shall not pay benefits under the contract until it has determined whether it is the primary carrier....’” (See Def. Supp. Br. at 4) (citing Master Contract § 2.6(b).) Pursuant to this provision of the Master Contract, Defendant was apparently required to determine whether it was Ms. Diguglielmo’s primary carrier before paying benefits for her procedure. Here, however, it appears that Defendant failed to make the relevant primary carrier determination until nearly a year after paying benefits to Plaintiff. It was this error by Defendant upon which Plaintiff’s claim of promissory estoppel relies. Thus, it appears that Defendant did not act in accordance with the Master Contract, which undermines Defendant's position that it was acting under the direct control of OPM.