Louisiana Health Service and Indemnity Company v. Gupta

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

HMO LOUISIANA INC., ET AL. CIVIL ACTION

VERSUS NO. 21-522

NARINDER M. GUPTA SECTION “R” (1)

ORDER AND REASONS

Plaintiff, Louisiana Health Service and Indemnity Company and HMO

Louisiana, d/b/a Blue Cross and Blue Shield of Louisiana (“BCBSLA”),

moves to remand this matter to state court.1 Defendant, Narinder M. Gupta,

M.D., opposes the motion to remand,2 and separately moves for leave to

conduct jurisdictional discovery.3 Because the Court finds that neither

ERISA nor FEHBA completely preempts BCBSLA’s claims, and because the

discovery defendant seeks would not affect the result, the Court grants

BCBSLA’s motion to remand, and denies defendant’s motion for

jurisdictional discovery.

1 R. Doc. 7.

2 R. Doc. 10.

3 R. Doc. 12

I. BACKGROUND

This case arises from Dr. Gupta’s allegedly improper billing practices

for medical services he performed. BCBSLA alleges that Louisiana Health

Service & Indemnity Company is a non-profit mutual insurance company,

and that HMO Louisiana is a health maintenance organization (“HMO”).4

Plaintiff alleges that Dr. Gupta, a medical service provider entered into a

“Physician Agreement” with BCBSLA.5 Among other terms, plaintiff

contends that Dr. Gupta agreed to comply with certain record-keeping

procedures, provide only “medically necessary” services to patients, and

refund BCBSLA for any payments based on erroneous or incomplete

information, or for services that were not “medically necessary.”6

On August 25, 2017 and December 13, 2017, BCBSLA allegedly

performed an audit on Dr. Gupta’s facility.7 Plaintiff states that it identified

numerous issues with Dr. Gupta’s practices, including that his records were

inadequate, and that he rendered services that were not “medically

necessary.”8 Accordingly, on August 15, 2018, pursuant to a provision in the

Physician Agreement, BCBSLA alleges that it sent Dr. Gupta a written

4 R. Doc. 1-1 at 2, ¶ 1.

5 Id. at 2-3, ¶¶ 2-3, 5.

6 Id.at 3, ¶ 6.

7 Id.at 4, ¶ 9.

8 Id. at 4-5, ¶¶ 10-11.

recoupment request, seeking a refund for overpayments totaling

$240,222.31.9 Dr. Gupta allegedly failed to appeal the request within the

time allowed under the Physician Agreement.10 Nevertheless, plaintiff states

that Dr. Gupta has failed to tender the full amount owed.11 Specifically,

plaintiff alleges that $226,562.62 remains unpaid.12

On January 15, 2021, BCBSLA filed suit in Louisiana state court,

asserting claims for: (1) breach of contract,13 (2) violation of La. Rev. Stat.

§ 22:1838,14 (3) detrimental reliance,15 (4) unjust enrichment,16 and (5)

declaratory relief.17 On March 12, 2021, Dr. Gupta removed to federal court,

contending that the Employer Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1001, et seq., and the Federal Employees Health

Benefits Act (“FEHBA”), 5 U.S.C. § 8901, et seq., completely preempt

plaintiff’s claims.18 Defendant argues that, under ERISA complete

9 Id. at 5, ¶ 12.

10 Id. at ¶ 17.

11 Id. at 5-6, ¶¶ 19-20.

12 Id. at 6, ¶ 20.

13 Id.at 6, ¶¶ 21-26.

14 Id. at 6-7, ¶¶ 27-32.

15 Id. at 7, ¶¶ 33-37.

16 Id. at 7-8, ¶¶ 38-39.

17 Id. at 8, ¶¶ 40-41.

18 R. Doc. 1 at 3-4, ¶¶ 8-9.

preemption doctrine, the Court has federal question jurisdiction under 28

U.S.C. § 1331.

Plaintiff moves to remand on the grounds that neither ERISA nor

FEHBA completely preempts its claims, and that the Court therefore lacks

jurisdiction.19 Defendant opposes the motion,20 and seeks jurisdictional

discovery to determine whether plaintiff’s claims involve benefit plans

covered by ERISA or FEHBA.21 The Court considers the parties’ arguments

below.

II. LEGAL STANDARD

A defendant may generally remove a civil action filed in state court if

the federal court has original jurisdiction over the action. See 28 U.S.C.

§ 1441(a). The removing party bears the burden of showing that federal

jurisdiction exists. See Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th

Cir. 1995). Federal district courts have original jurisdiction over cases

“arising under the Constitution, laws, or treaties of the United States.” 28

U.S.C. § 1331.

19 R. Doc. 7.

20 R. Doc. 10.

21 R. Doc. 12.

Whether a claim arises under federal law must be determined by

referring to the “well-pleaded complaint.” Merrell Dow Pharm., Inc. v.

Thompson, 478 U.S. 804, 808 (1986) (citing Franchise Tax Bd. v. Constr.

Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983)); see also Howery v.

Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). Under the well-pleaded

complaint rule, the federal question must appear on the face of the

complaint. See Torres v. Southern Peru Copper Corp., 113 F.3d 540, 542

(5th Cir. 1997). Because a defendant may remove a case to federal court only

if the plaintiff could have brought the action in federal court from the outset,

“the question of removal jurisdiction must also be determined by reference

to the ‘well-pleaded complaint.’” Merrell Dow, 478 U.S. at 808 (citation

omitted). “[A] defendant may not remove a case to federal court unless the

plaintiff's complaint establishes that the case ‘arises under’ federal law.”

Franchise Tax Bd., 463 U .S. at 10 (emphasis in original). The mere presence

of “[a] defense that raises a federal question is inadequate to confer federal

jurisdiction.” Merrell Dow, 478 U.S. at 808 (citing Louisville & Nashville R.

Co. v. Mottley, 211 U.S. 149 (1908)); Franchise Tax Bd., 463 U.S. at 12, 13-

14. Therefore, federal question jurisdiction does not exist unless the

“vindication of a right under state law necessarily turn[s] on some

construction of federal law.” Merrell Dow, 478 U.S. at 809.

There is an exception to the well-pleaded complaint rule “when a

federal statute wholly displaces the state-law cause of action through

complete preemption.” Aetna Health Inc. v. Davila, 542 U.S. 200, 207

(2004) (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003)

(internal quotation marks omitted)). Removal of such a claim is appropriate

because, “‘[w]hen the federal statute completely [preempts] the state law

cause of action, a claim which comes within the scope of that cause of action,

even if pleaded in terms of state law, is in reality based on federal law.’” Id.

(quoting Beneficial Nat'l Bank, 539 U.S. at 8); see also Met. Life Ins. Co. v.

Taylor, 481 U.S. 58 (1987) (“Congress may so completely preempt a

particular area that any civil complaint raising this select group of claims is

necessarily federal in character.”). Even if a complaint does not refer to

federal law, a federal statute that completely preempts a field effectively

“‘recharacterizes’ preempted state law claims as ‘arising under’ federal law

for the purposes of making removal available to the defendant.” McClelland,

155 F.3d at 516; see also Giles v. NYLCare Health Plans, Inc., 172 F.3d 332,

337 n.7 (5th Cir. 1999).

III. DISCUSSION

A. ERISA Preemption

ERISA may preempt state law claims in one of two ways. See Giles, 172

F.3d at 336 (citing McClelland, 155 F.3d at 507), overruled in part on other

grounds by Arana v. Ochsner Health Plan, 338 F.3d 433, 440 n.11 (5th Cir.

2003). First, it may “occupy a particular field, resulting in complete

preemption under [ERISA] § 502(a), 29 U.S.C. § 1132(a).” Giles, 172 F.3d at

336 (citing Met. Life Ins., 481 U.S. at 58; McClelland, 155 F.3d at 516-17); see

also Arana, 338 F.3d at 437. “[C]omplete preemption exists when a remedy

falls within the scope of or is in direct conflict with ERISA § 502(a), and

therefore is within the jurisdiction of federal court.” McGowin v. Man Power

Int'l, Inc., 363 F.3d 556, 559 (5th Cir. 2004). ERISA § 502(a) provides

several causes of action that may be brought by an ERISA plan beneficiary,

participant, the Secretary of Labor, or plan administrator or fiduciary. Any

state cause of action that seeks the same relief as a cause of action authorized

by ERISA § 502(a), “regardless of how artfully pleaded as a state action,” is

completely preempted. Giles, 172 F.3d at 337. But only when ERISA § 502(a)

completely preempts a state law claim does it raise a federal question

providing a basis for removal jurisdiction. Giles, 172 F.3d at 336-37.

The second form of ERISA preemption is known as “ordinary” or

“conflict” preemption. It exists when ERISA provides an affirmative defense

to state law claims and involves ERISA § 514(a), 29 U.S.C. § 1144(a). Giles,

172 F.3d at 337. Section 514(a) provides that ERISA “shall supersede any

and all State laws insofar as they may now or hereafter relate to any employer

benefit plan.” The Fifth Circuit in Giles made clear that the existence of

conflict preemption under § 514 of ERISA does not create an exception to the

well-pleaded complaint rule. “‘State law claims [that] fall outside the scope

of ERISA's civil enforcement provision § 502, even if preempted by § 514(a),

are still governed by the well-pleaded complaint rule and, therefore, are not

removable under the complete-preemption principles established in

Metropolitan Life.’” Id. (quoting Dukes v. U.S. Healthcare, Inc., 57 F.3d 350,

355 (3d Cir. 1995)); see also Franchise Tax Board, 463 U.S. at 23-27

(explaining that even though ERISA § 514(a) may preclude enforcement of a

state law claim, removal of a claim that falls outside the scope of ERISA §

502(a) is inappropriate). Thus, the mere presence of conflict preemption

does not raise a federal question. Instead of “transmogrifying a state cause

of action into a federal one—as occurs with complete preemption—conflict

preemption serves as a defense to a state action.” Giles, 172 F.3d at 337

(citing Soley v. First Nat'l Bank of Commerce, 923 F.2d 406, 407-08 (5th

Cir. 1991)).

In order for a district court to exercise removal jurisdiction, complete

preemption must exist. “When the doctrine of complete preemption does

not apply, but the plaintiff's state claim is arguably preempted under

§ 514(a), the district court, being without removal jurisdiction, cannot

resolve the dispute regarding preemption.” Id. State law causes of action are

completely preempted by ERISA when: (1) an individual, at some point in

time, could have brought the claim under ERISA, and (2) there is no legal

duty independent of ERISA or the plan terms that is implicated by the

defendant's actions. Davila, 542 U.S. at 209-210.

1. ERISA § 502(a)(1)(B)

Defendant relies primarily on § 502(a)(1)(B) in support of complete

preemption. That section states that a “participant” or “beneficiary” may

bring a civil action “to recover benefits due to him under the terms of his

plan, to enforce his rights under the terms of the plan, or to clarify his rights

to future benefits under the terms of the plan . . . .” 29 U.S.C. § 1132(a)(1)(B).

To have standing to bring a claim under § 502(a)(1)(B) a plaintiff must be a

“participant” or “beneficiary” of an ERISA plan. 29 U.S.C. § 1132(a)(1)(B).

Additionally, the Fifth Circuit has held that a medical provider may have

standing to bring a claim under § 502(a)(1)(B)—as a “participant” or

“beneficiary”—by virtue of a valid assignment. Dallas Cty. Hosp. Dist. v.

Associates’ Health & Welfare Plan, 293 F.3d 282, 285 (5th Cir. 2002).

ERISA defines a “participant” as “any employee or former employee of an

employer, or any member or former member of an employee organization,

who is or may become eligible to receive a benefit of any type from an

employee benefit plan which covers employees of such employer or members

of such organization, or whose beneficiaries may be eligible to receive any

such benefit.” 29 U.S.C. § 1002(7). “Beneficiary” means “a person

designated by a participant, or by the terms of an employee benefit plan, who

is or may become entitled to a benefit thereunder.” 29 U.S.C. § 1002(8).

BCBSLA’s complaint makes no mention of an ERISA plan. Even

assuming, as defendant contends, that some of the medical claims at issue in

this suit were made under ERISA plans, it is apparent that BCBSLA is neither

a “participant” nor a “beneficiary” of such plans. Instead, BCBSLA states,

and defendant does not contest, that it is an insurer that processes,

administers, and pays medical claims. Further, defendant does not argue

that BCBSLA has standing as the assignee of a participant’s or beneficiary’s

rights.22 Because § 502(a)(1)(B) confers a cause of action only on

“participants” or “beneficiaries,” plaintiff’s claims do not fall within the scope

of that provision. See United Healthcare Servs., Inc. v. Sanctuary Surgical

Ctr., Inc., 5 F. Supp. 3d 1350, 1357 (S.D. Fla. 2014) (stating that “it is

apparent that [the insurance company plaintiffs’] claims [seeking

recoupment for alleged overpayments] could not originate under Section

502(a)(1)” because the plaintiffs were not participants or beneficiaries);

Horizon Blue Cross Blue Shield of New Jersey v. E. Brunswick Surgery Ctr.,

623 F. Supp. 2d 568, 574 (D.N.J. 2009) (noting that an insurance company’s

claims—seeking recoupment of allegedly fraudulently induced payments—

“would not originate under section 502(a)(1) of ERISA” because the plaintiff

was not a participant nor beneficiary).

2. ERISA § 502(a)(3)

Defendant also argues that plaintiff’s claims fall within the scope of

ERISA § 502(a)(3). Section 502(a)(3) provides that a “participant,

beneficiary, or fiduciary” may bring a cause of action “(A) to enjoin any act

22 Dr. Gupta argues that he submitted the medical claims at issue in this

suit pursuant to an assignment from patients, some of whom may be

participants or beneficiaries of an ERISA plan. But whether defendant may

or may not have standing to bring a hypothetical claim for benefits under

ERISA based on those assigned rights is irrelevant. Here, the Court’s inquiry

is focused on whether plaintiff’s claims fall within the scope of ERISA’s civil

enforcement scheme.

or practice which violates any provision of this subchapter or the terms of the

plan, or (B) to obtain other appropriate equitable relief (i) to redress such

violations or (ii) to enforce any provisions of this subchapter or the terms of

the plan.” The Fifth Circuit describes § 502(a)(3) as ERISA’s “catchall”

provision, as it creates a cause of action in equity for violations of ERISA not

addressed by the other causes of actions permitted under the statute.

Manuel v. Turner Indus. Grp., L.L.C., 905 F.3d 859, 864-65 (5th Cir. 2018).

The Supreme Court in Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S.

356, 361 (2006), stated that § 502(a)(3) authorizes “only those categories of

relief that were typically available in equity.” (quoting Mertens v. Hewitt

Assocs., 508 U.S. 248, 255-56 (1993)) (internal quotation marks omitted).

Section 502(a)(3) does not permit claims that seek “nothing other than

compensatory damages.” Id. The Sereboff Court found that a plaintiff may

bring a claim for “equitable restitution,” i.e., claims in which a plaintiff seeks

“to impose a constructive trust or equitable lien on particular funds or

property in the defendant’s possession[,]” under § 502(a)(3). Id. (emphasis

added) (internal quotation marks omitted). But when a plaintiff seeks to

recover from a defendant’s “assets generally,” the claim is not equitable, but

legal in nature. Id.; see also Coan v. Kaufman, 457 F.3d 250, 263 (2d Cir.

2006) (“[T]he [Supreme] Court [in Sereboff] reaffirmed the holding of

Knudson that money damages are unavailable under section 502(a)(3) when

the plaintiff does ‘not seek to recover a particular fund from the

defendant.’”).

In United Healthcare Servs., Inc. v. Sanctuary Surgical Ctr., 5

F. Supp. 3d 1350 (S.D. Fla. 2014), the plaintiffs—insurance providers and

plan administrators—sought to recover fraudulently induced overpayments

from medical service providers. The defendants moved to dismiss, arguing

that the claims were preempted by ERISA. But, following Sereboff, the court

found that the plaintiffs’ claims fell outside the scope of ERISA § 502(a)(3)

because they did “not seek to recover against a particular fund in possession

of the defendants . . . .” Id. at 1160. The Sanctuary Surgical court ultimately

held that ERISA did not completely preempt the plaintiffs’ claims. Id. at

1161.

Here, plaintiff seeks damages in the amount of $226,562.62, which it

contends make up the unpaid balance of overpayments to Dr. Gupta.23

23 R. Doc. 1-1 at 8, ¶ 42. Although plaintiff also states in its complaint

that it seeks declaratory relief and “all other equitable relief to which

BCBSLA is entitled, whether pled or not,” the Court finds that the relief

plaintiff seeks—monetary compensation—is legal in nature. Id.; see also

Cent. States, Se. & Sw. Areas Health & Welfare Fund ex rel. Bunte v. Health

Special Risk, Inc., 756 F.3d 356, 361 (5th Cir. 2014) (“Simply framing a claim

as equitable relief is insufficient to escape a determination that the relief

sought is legal.”); see also Great-W. Life & Annuity Ins. Co. v. Knudson, 534

U.S. 204, 210 (2002) (“Almost invariably . . . suits seeking (whether by

BCBSLA’s complaint does not seek a constructive trust or an equitable lien

on particular funds. Rather, it seeks to recover from Dr. Gupta’s assets

generally. Thus, the Court finds that plaintiff’s claims are not equitable in

nature, and are outside the scope of ERISA § 502(a)(3).

In sum, the Court finds that neither ERISA § 502(a)(1), nor § 502(a)(3),

completely preempts plaintiff’s claims. The Court finds that defendant has

failed to show that the Court has removal jurisdiction over this matter based

on ERISA complete preemption.

B. FEHBA Preemption

FEHBA, like ERISA, contains a preemption provision. See 5 U.S.C.

§ 8902(m)(1). In Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S.

677, 697 (2006), the Supreme Court considered whether FEHBA’s

preemption provision conferred jurisdiction on the federal district courts for

judgment, injunction, or declaration) to compel the defendant to pay a sum

of money to the plaintiff are suits for ‘money damages,’ as that phrase has

traditionally been applied, since they seek no more than compensation for

loss resulting from the defendant's breach of legal duty.” (citation omitted));

Coan, 457 F.3d at 264 (holding that ERISA § 502(a)(3) did not provide a

remedy when “the alternative relief [plaintiff sought],” an injunction

requiring defendants to restore funds to a defunct plan, “does not transform

what is effectively a money damages request into equitable relief” (citation

omitted)).

“contract-based reimbursement claims.” The Court found that, even if

FEHBA’s preemption provision applied to the plaintiff’s claims, “that

provision is not sufficiently broad to confer federal jurisdiction.” Id. at 698.

The Court noted that, “if Congress intends a preemption instruction

completely to displace ordinarily applicable state law, and to confer federal

jurisdiction thereby, it may be expected to make that atypical intention

clear.” Id. But, regarding FEHBA, the Court held that “Congress has not

done so . . . .” Id.

Following Empire Healthchoice, the First and Fourth Circuits have

held that FEHBA does not confer removal jurisdiction because the statute

does not completely preempt state law. Lopez-Munoz v. Triple-S Salud, Inc.,

754 F.3d 1, 8 (1st Cir. 2014); Pollitt v. Health Care Serv. Corp., 558 F.3d 615,

616 (7th Cir. 2009). Consistent with this authority, including binding

Supreme Court precedent, the Court finds that FEHBA does not create

removal jurisdiction over this matter.

C. Federal Officer Removal

In opposition to the motion to remand, Dr. Gupta argues that federal

officer removal jurisdiction under 28 U.S.C. § 1442(a)(1) exists in this case.

To remove an action under § 1442(a), a defendant must show:

(1) it has asserted a colorable federal defense, (2) it is a ‘person’

within the meaning of the statute, (3) that has acted pursuant to

a federal officer's directions, and (4) the charged conduct is

connected or associated with an act pursuant to a federal officer's

directions.

Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286, 296 (5th Cir. 2020).

Defendant argues that, if FEHBA-governed benefit plans are at issue in this

case, plaintiff was likely acting pursuant to a federal officer’s directions.24

But the federal officer removal statute is concerned with whether the

defendant, here Dr. Gupta, was acting under a federal officer’s directives.

Defendant makes no showing to that effect. Thus, the Court finds that Dr.

Gupta has failed to show that removal jurisdiction exists under § 1442(a).

D. Motion for Jurisdictional Discovery

Finally, defendant requests leave to conduct jurisdictional discovery.25

Specifically, Dr. Gupta seeks information from plaintiff as to whether the

claims on which it seeks recoupment were initially made under benefit plans

covered by ERISA or FEHBA. The Court “has broad discretion in all

discovery matters.” Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982).

Jurisdictional discovery may be warranted when “the issue of subject matter

jurisdiction turns on a disputed fact.” In re MPF Holdings US LLC, 701 F.3d

449, 457 (5th Cir. 2012) (citing In re Eckstein Marine Serv. L.L.C., 672 F.3d

24 R. Doc. 10 at 14.

25 R. Doc. 12.

310, 319-20 (5th Cir. 2012)). “The party seeking discovery bears the burden

of showing its necessity.” Freeman v. United States, 556 F.3d 326, 341 (5th

Cir. 2009).

Defendant has failed to show that jurisdictional discovery is necessary.

Even assuming that BCBSLA originally paid Dr. Gupta pursuant to an ERISA

or FEHBA plan, that would not change the Court’s conclusion that plaintiff

is not a “beneficiary” or “participant” for the purposes of ERISA

§ 502(a)(1)(B), or that the relief sought is legal in nature for the purposes of

ERISA § 502(a)(3). Nor would it change the Court’s conclusion that FEHBA

does not confer removal jurisdiction, or that the federal officer removal

statute is not satisfied. Accordingly, the Court denies defendant’s motion for

jurisdictional discovery.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS plaintiffs motion to

remand. The Court DENIES defendant’s motion for leave to conduct

jurisdictional discovery.

New Orleans, Louisiana, this _30th__ day of June, 2021.

UNITED STATES DISTRICT JUDGE

17