Opposition Brief — U. S. Healthcare, Inc. v. Dukes

Ba

a \ Supreme Court, U.S.

No. 95-442 rit 2 0

= 86

In The

CLERK

:

Supreme Court of the Unitéd-States—

October Term, 1995

&

U.S. HEALTHCARE, INC.,

Petitioner,

V.

CECILIA DUKES, Trustee Ad Litem of the

Estate of Darryl Dukes, Deceased,

Respondent.

¢

U.S. HEALTHCARE, a/k/a THE HEALTH

MAINTENANCE ORGANIZATION

OF PENNSYLVANIA/NJ,

Petitioner,

Vv.

SERENA MARY VISCONTI, DECEASED, BY LINDA

AND RONALD VISCONTI, AS ADMINISTRATORS

OF THE ESTATE OF SERENA MARY VISCONTI,

DECEASED; LINDA VISCONTI; RONALD VISCONTI,

IN THEIR OWN RIGHT,

Respondents.

o

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Third Circuit

e

BRIEF FOR RESPONDENT CECILIA DUKES

+

STEPHEN C. JoseL, Esquire ATTARAH B. FEENANE,

Counsel for Respondent Esquire

STEPHEN C. JOSEL Counsel of Record

& ASSOCIATES for Respondent

2019 Walnut Street STEPHEN C. JOSEL

Philadelphia, PA 19103 & ASSOCIATES

(215) 864-9300 2019 Walnut Street

Philadelphia, PA 19103

(215) 864-9300

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

Page

IE ig ici ds ke cn koe eb asin tans 45558 i

Se de re seers Prey saree ee ii

NE OO I OE eb eck as ence verde Wh adeee-s 1

Peer Te One ee eer 2

Pa oe 5 iho iL os ANU A dekh s Sead dpeensnse 2

GS Gi ede, Eee Sine Be RENE tpaeo puma Garam Dy SUM get sre te eet 10

ii

TABLE OF AUTHORITIES

Page

CASES

Allstate Insurance Co. v. 65 Sec. Plan, 879 F.2d 90

(34 Che. WORD) ccc rctacs eet a 8, 9

Alexander v. Electronic Data Systems Corp., 13 F.3d

GOD Gtr Cie. TIO ac 6.0 eee TEES ea ta eee’ 5

Avco Corporation v. Aero Lodge No. 735, Int'l. Assoc.

of Machinists and Aerospace Workers, 390 U.S. 557,

rehearing denied, 391 U.S. 929 (1968)............. 9, 10

Barker v. Pick n’ Pull Auto Dismantlers, 819 F. Supp.

BOP (B.D. Cal, BOGS) s sivdace ccs Wines Se tev eked es 9

Boyd v. Albert Einstein Medical Center, 377 Pa.

Super. Ct. 609, 547 A.2d 1229 (1988) ............... 1

Bryant v. Blue Cross and Blue Shield of Alabama, 751

F. Supp. 966. (210i Cle TH ois cece ie cete eae ad 9

Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987) ....... 3

Corcoran v. United Healthcare, Inc., 965 F.2d 1321

(5th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 812

CTSGDD oon on ces eae a a es een ek 8

Dukes v. U.S. Healthcare, Inc., 848 F. Supp. 39 (E.D.

Pa. 1994), rev’d., 57 F.3d 350 (3d Cir. 1995)....5, 6, 8

Franchise Tax Bd. of Cal. v. Construction Laborers

Vacation Trust for Southern Cal., 463 U.S. 1 (1983) ..... 3

Hubbard v. Blue Cross & Blue Shield Assoc., 42 F.3d

942 (5th Cir.), cert. denied, _ U.S. __, 115 S. Ct.

SAFE CRO ion 6 nin 66RaU ea a Eek ake wa 6

Ingersoll-Rand v. McClendon, 498 U.S. 133 (1990) ...... 4

Mackey v. Lanier Collection Agency & Service, Inc.,

BOG Ue Re CEs ia os 6 hv cn coe Gees cr vaaben es 3

iii

TABLE OF AUTHORITIES - Continued

Page

Medical College of Wisconsin Faculty Physicians v.

Pitsch, 776 F. Supp. 437 (E.D. Wis. 1991)........... 9

Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58

SMS SENDA cviaace ness daccauy cca Vac 3, 4, 5, 6, 8

Olson v. General Dynamics Corp., 960 F.2d 1418 (9th

Cir.), cert. denied, 504 U.S. 986 (1992)............... 7

Railway Labor Executives Ass‘n. v. Pittsburgh & Lake

Erie Railroad Co., 858 F.2d 936 (3d Cir. 1988) ....9, 10

Rodriguez v. Pacificare of Texas, Inc., 980 F.2d 1014

(Sth Cir.), cert. denied, __ U.S. __, 113 S. Ct.

EE EMCEE ie ee 7

Shiffler v. Equitable Life Assurance Society of U.S.,

en OO occa nvecs nieces 7

Stevens v. Employe>-Teamsters Joint Counsel No. 84

Pension Fund, 979 F.2d 444 (6th Cir. 1992).......... 7

Warner v. Ford Motor Co., 46 F.3d 531 (6th Cir.

ESS ESTAS ees ae Te eS :

WPO v. Human Affairs International, Inc., 28 F.2d

eB Pee res Pereee 5

Zuniga v. Blue Cross & Blue Shield of Michigan, 52

EE SN SoM, NIN in a 4s ons ce cha vay s« to'ces 5

Respondent Cecilia Dukes, Trustee Ad Litem of the

Estate of Darryl Dukes, Deceased, hereby respectfully

prays this Honorable Court deny Petitioner’s prayer for

the issuance of a writ of certiorari to review the judgment

of the United States Court of Appeals entered in these

consolidated appeals on June 19, 1995. Respondent

asserts that removal of these actions from state court was

improper, and that the Third Circuit correctly remanded

the actions to state court.

STATEMENT OF THE CASE

Respondent Cecilia Dukes brought an action in state

court on behalf of the Estate of Darryl Dukes, alleging

that the negligence and malpractice of various medical

providers led to the death of Darryl Dukes. It was further

alleged that these providers were all the ostensible agents

of U.S. Healthcare, the HMO through which Mr. Dukes

received his care, and that U.S. Healthcare was liable to

the estate for direct negligence and pursuant to state law

agency theories (wherewnder an HMO may be liable for

malpractice committed by providers who are its

“employees”). See Boyd v. Albert Einstein Medical Center,

377 Pa. Super Ct. 609, 547 A.2d 1229, 1234-35 (1988).

U.S. Healthcare removed the case to the United States

District Court for the Eastern District, claiming that the

Dukes’ claims against it are preempted by ERISA, and

further moved to dismiss the claims against it upon that

preemption. The District Court dismissed the claims

against U.S. Healthcare and remanded the remaining

claims against the providers to the state court. On appeal,

the Third Circuit reversed, and held that the claims

against U.S. Healthcare were not completely preempted

by ERISA, and remanded the entire action to state court.

S

SUMMARY OF ARGUMENT

The claims brought by the Dukes against U.S. Health-

care are not completely preempted by ERISA. Accord-

ingly, the entire case was properly remanded by the Third

Circuit to state court.

ARGUMENT

“Removal and preemption are two distinct concepts.”

Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir. 1995).

The only matter properly before this court is whether

removal by U.S. Healthcare was proper. In order to make

this determination, one looks first to § 514(a) of ERISA, 29

U.S.C. § 1144(a), which states that ERISA “shall super-

sede any and all state laws insofar as they may now or

hereafter relate to any employee benefit plan.” U.S.

Healthcare cites this statute in support of its contention

that because Mr. Dukes received his healthcare benefits

through an HMO, which has a remote connection to an

ERISA plan, the claims against the HMO “arise under”

federal law, giving the federal courts original jurisdiction,

creating the grounds for removal.

However, removal is not so simple. It is well-settled

that a cause of action arises under federal law only when

plaintiff's well-pleaded complaint raises issues of federal

law. Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58

(1987). This doctrine, known as the well-pleaded com-

plaint rule, is “the basic principle marking the boundaries

of the federal question jurisdiction of the federal district

court.” Franchise Tax Bd. of Cal. v. Construction Laborers’

Vacation Trust for Southern Cal., 463 U.S. 1 (1983).

Plaintiff’s complaint herein does not raise issues of

federal law. Rather, negligence, malpractice and agency

theories are asserted, all state law theories. Preemption

was raised by U.S. Healthcare as a defense, and “the fact

that a defendant might ultimately prove that a plaintiff's

claims are preempted . . . does not prove that they are

removable to federal court.” Caterpillar, Inc. v. Williams,

482 U.S. 386, 398 (1987).

The Supreme Court in Metropolitan Life recognized an

exception to the well-pleaded complaint rule, under

which “Congress may so completely preempt a particular

area that any civil complaint raising this select group of

claims is necessarily federal in character.” Metropolitan

Life, 481 U.S. at 63-64. This exception, known as “com-

plete preemption”, applies only when “the preemptive

force of the (statute in question) is so powerful as to

displace entirely any state cause of action. ... ” Franchise

Tax Bd., 463 U.S. at 23.

ERISA’s preemptive force, while broad, is clearly not

so powerful. There are numerous types of claims which

are remotely related to ERISA but not preempted thereby.

“ ... [RJun-of-the-mill state law claims, such as unpaid

rent, failure to pay creditors, or even torts committed by

an ERISA plan - are all relatively common” and not

preempted. Mackey v. Lanier Collection Agency & Service,

Inc., 486 U.S. 825, 833 (1988); see also Ingersoll-Rand v.

McClendon, 498 U.S. 133 (1990). ON

In order to decide what claims are completely pre-

empted under ERISA and what claims are not, the

Court’s analysis of the claims in Metropolitan Life can be

followed. Therein, an employee who had been ill was

examined by employer’s physician, who pronounced him

recovered. Employee’s benefits were thereby terminated,

and when employee refused to return to work, he was

fired. Employee filed an action in state court to enforce

the payment of benefits to him; employer removed the

action to federal court, and ultimately the Supreme Court

found that because employee’s claims fell directly under

§502(a)(1)(b) of ERISA - specifically, to recover benefits

and rights, both past and future, due him under a plan -

the claims were completely preempted.

The Supreme Court found that §502(a)(1)(b) “lies at

the heart of a statute with the unique preemptive force of

ERISA”, 481 U.S. at 66. Claims under §502 are necessarily

completely preempted. The court’s rationale was that

“Congress has clearly manifested an intent to make

causes of action within the scope of the civil enforcement

provisions of §502(a) removable to federal court.” 481

U.S. at 66.

However, the Supreme Court cautioned that it would

be “reluctant to find that extraordinary preemptive pow-

er ... that converts an ordinary state common law

complaint into one stating a federal claim for the purpose

of the well-pleaded complaint rule.” 481 U.S. at 66.

The Dukes’ claims are ordinary state law claims

which sound in negligence, malpractice and agency theo-

ries. The preemptive powers of ERISA are not so sweep-

ing as to preempt such claims, under Metropolitan Life.

The claims of the Dukes fall outside the scope of the

enforcement provisions of §502. While ultimately the

state could decide those claims are preempted, they are

not completely preempted, under Metropolitan Life, and

were properly remanded.

It is not correct for U.S. Healthcare to assert that

there are conflicts in the circuits as to the scope of

removal jurisdiction. U.S. Healthcare first cites several

circuit court opinions holding, like the Third Circuit

below, see Dukes v. U.S. Healthcare, Inc., 848 F. Supp. 39

(E.D. Pa. 1994), rev’d., 57 F.3d 350 (3d Cir. 1995), that

claims which may ultimately be preempted are not

removable unless they fall under the civil enforcement

provisions of §502. See Alexander v. Electronic Data Systems

Corp., 13 F.3d 940 (6th Cir. 1994); Zuniga v. Blue Cross and

Blue Shield of Michigan, 52 F.3d 1359, 1398 (6th Cir. 1995);

Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995);

WPO v. Human Affairs International, Inc., 28 F.3d 269, 272

(2d Cir. 1994).

Then, U.S. Healthcare cites a variety of cases from the

various circuits, and claims that these cases are in conflict

with Dukes. Contrary to U.S. Healthcare’s assertions, the

various cases are not in conflict and are all distinguish-

able from Dukes in the most important way: they each

concern a denial of benefits by the entity in question, and

are clearly claims that fall squarely under §502. They are

thus distinguishable from the Dukes’ claims in the very

way the Third Circuit in Dukes explained. The Dukes’

claim falls outside the scope of §502(a)(1)(b), while the

claims of the plaintiffs in the cases cited by defendant all

fall directly under and pursuant to §502(a)(1)(B).

Specifically, Hubbard v. Blue Cross & Blue Shield Assoc.,

42 F.3d 942 (5th Cir. 1995), cert. denied, ___ U.S. __, 115 S.

Ct. 2276 (1995), cited by defendant, is distinguishable.

Therein, a participant was diagnosed with cancer, and

had certain medical treatments recommended to her for

which her health insurer refused to pay. She sued on two

grounds, alleging first that the carrier had secret, undis-

closed guidelines which it followed when making bene-

fits determinations, and, second, that she had been

fraudulently induced by the insurer’s advertisements to

become a participant. The Fifth Circuit determined, with

regard to the first claim, that “the essence of the Hub-

bard’s claim is that her benefits under the plan were

improperly denied.” Interestingly, the Fifth Circuit found

that the second claim, fraudulent inducement, was not

preempted by ERISA, because that claim “does not impli-

cate the plan’s administration of benefits or affect the

relations among the principal ERISA entities.” 42 F.3d at

947. This holding is entirely consistent with Dukes; in fact,

it demonstrates the correctness of the Dukes holding, in

light of Metropolitan Life, in distinguishing claims for

benefits under §502, which are completely preempted,

and claims which do not fall under 502(a) and do not

implicate the plan’s administration of benefits or affect

relations among principal ERISA entities, which are not

completely preempted.

The other cases cited by defendant are all distin-

guishable from Dukes and are not in conflict in any way,

because, in each, plaintiff sought to recover or enforce

some right or benefit due under a plan. In Stevens v.

Employer-Teamsters Joint Council No. 84 Pension Fund, 979

F.2d 444 (6th Cir. 1992), the plaintiff was a truck driver

who worked for a variety of affiliated companies and

sought to recover retirement benefits. The issue was,

what periods of time had he worked for which company,

as it affected the benefits available. But, clearly, an action

by a participant to clarify benefits due falls squarely .

under §502. In Shiffler v. Equitable Life Assurance Society of

U.S., 838 F.2d 444 (6th Cir. 1992), a widow sued for

accidental death benefits which were denied by hus-

band’s employer. The Court said: “no matter how her

action is characterized, her goal is to recover the proceeds

claimed under the policies.” 838 F.2d at 81. No similar

goal is sought by the Dukes.

In Olson v. General Dynamics Corp., 960 F.2d 1418 (9th

Cir.), cert. denied, 504 U.S. 986 (1992), plaintiff employee

went from one company to another as the result of a

corporate buy-out. His boss assured him he would have

no change at all in benefits due; however, he alleged that

his retirement benefits had been reduced as a result of the

buy-out. He sued upon the promise by his employer,

alleging that he had: been fraudulently induced to go

along with the new company. After a lengthy analysis,

the court determined that Mr. Olson could have brought

his action under §502(a)(1)(B), and that it was accordingly

completely preempted.

Finally, in Rodriguez v. Pacificare of Texas, Inc., 980 F.2d

1014 (5th Cir.), cert. denied, __ U.S. __, 113 S. Ct. 2456

(1993), plaintiff was injured in an auto accident and

treated with his primary care physician under his HMO.

Although the primary care physician did not refer him,

he also sought treatment with a specialist, then sued to

recover money paid for the specialist. Clearly, as the

court found, the civil enforcement provisions of §502

preempt this type of claim.

Nor is it correct, as U.S. Healthcare asserts, that the

decision by the Third Circuit in Dukes conflicts with the

decision of the Fifth Circuit in Corcoran v. United Health-

care, Inc., 965 F.2d 1321 (5th Cir.), cert. denied, _. U.S. __,

113 S. Ct. 812 (1992). In Corcoran, there was a denial of

benefits; in Dukes, there was not. That distinction is pre-

cisely the one drawn by the Third Circuit in its opinion

below. Because the claims in Corcoran arose from the

denial of a benefit, those claims arose pursuant to §502.

As such, they are completely preempted. No other pre-

emption discussion should be heard before this Court,

because the case herein was properly remanded to the

state court. The distinction drawn by the Corcoran court,

explained in the Dukes decision below, is precisely the

distinction drawn by the Supreme Court in Metropolitan

Life. Corcoran’s claims fell under §502 and were thus

intended by Congress to be completely pre-empted; in all

other cases, the Court has been and should continue to be

“reluctant” to find that ordinary state law claims, like the

Dukes’, which fall outside the scope of §502(a), are pre-

empted.

In fact, contrary to U.S. Healthcare’s assertions,

numerous courts of various circuits are in agreement with

the Third Circuit and have followed Allstate Insurance Co.

v. 65 Sec. Plan, 879 F.2d 90 (3d Cir. 1989), wherein a

2-prong test for complete preemption was laid out, as

follows:

9

The doctrine of complete preemption applies

only when two circumstances are present: when

the enforcement provisions of a federal statute

create a federal cause of action vindicating the

same interest that the plaintiff’s cause of action

seeks to vindicate[,] and when there is affirma-

tive evidence of a congressional intent to permit

removal despite the plaintiff's exclusive reliance

on state law. 879 F.2d at 93.

See Bryant v. Blue Cross and Blue Shield of Alabama, 751

F.Supp. 968, 972 (11th Cir. 1990); Barker v. Pick n’ Pull Auto

Dismantlers, 819 F. Supp. 889 (E.D. Cal. 1993); Medical

College of Wisconsin Faculty Physicians & Surgeons v. Pitsch,

776 F. Supp. 437, 439 (E.D. Wis. 1991).

In Allstate, the Third Circuit relied upon Railway

Labor Executives Ass’n. v. Pittsburgh & Lake Erie Railroad

Co., 858 F.2d 936 (3d Cir. 1988), which in turn relied upon

two Supreme Court decisions, for the development of the

two-prong test:

There is a very limited area in which a federal

court in a case removed from a state court is

authorized to recharacterize what purports to be

a state law claim as a claim arising under a

federal statute. In order to determine whether it

possesses this authority to recharacterize, the

federal court must first ask whether the statute

relied upon by the defendant . . . contains civil

enforcement provisions within the scope of

which the plaintiff's state claim falls. Railway

Labor, 858 F.2d at 942, citing Franchise Tax Bd.,

463 U.S. at 24, 26.

The Railway Labor court went on to quote Avco Corpo-

ration v. Aero Lodge No. 735, Int'l. Assoc. of Machinists and

Aerospace Workers, 390 U.S. 557, 562, rehearing denied, 391

10

U.S. 929 (1968), as follows: “the issue is not whether the

federal law provides the same remedy available to the

plaintiff under state law, but rather whether there is some

vindication for the same interest.” See Railway Labor, 858

F.2d at 942, footnote 2, citing Avco, 390 U.S. at 562.

4

v

CONCLUSION

Because the Dukes’ claims fall outside the scope of

§502(a), they were not intended by Congress to be com-

pletely preempted by ERISA. Because they are not com-

pletely preempted, the claims should not have been

removed to federal court in the first place, and were

properly remanded by the Court below.

Respectfully submitted,

ATTARAH B. FEENANE, Esquire

Attorney of Record for Respondent

STEPHEN C. JoseL, Esquire

Attorney for Respondent

STEPHEN C. JOSEL

& ASSOCIATES

2019 Walnut Street

Philadelphia, PA 19103

(215) 864-9300