Marsh v. DakotaCare, 2001 DSD 37
and PESCHKE TRUCKING, INC.,
AND ORDER OF REMAND
Mark E. Salter, Cutler, Donahoe & Mickelson, Sioux Falls, SD
Attorney for Plaintiff
Dennis L. Duncan, Frieberg, Zimmer, Duncan & Nelson, Parker, SD
Attorney for Defendants
Karen E. Schreier, U. S. District Judge
[¶1] Four motions are pending before the court. Plaintiff, Cynthia Marsh, moves to: (1) remand to state court; (2) remand to state court for lack of subject matter jurisdiction; and (3) for leave to amend. Defendant DAKOTACARE moves to dismiss.
[¶2] Cynthia Marsh was a part-time employee at Peschke Trucking, Inc., from June 5, 2000, through September 22, 2000. During this time, Peschke and DAKOTACARE were parties to a health maintenance contract that allowed Peschke employees to obtain healthcare benefits through DAKOTACARE. On September 21, 2000, Marsh became ill and left work early. She was fired the next day.
[¶3] Marsh claims that when she was terminated Peschke promised her health benefits would continue through October, 2000. Peschke used Marsh's final paycheck, with her agreement, to pay her portion of the October, 2000, premium payment. Peschke remitted Marsh's final paycheck to DAKOTACARE for the October, 2000, premium. DAKOTACARE contends it did not receive the premium payment for October, 2000.
[¶4] After pre-certification by DAKOTACARE, Marsh underwent hysterectomy surgery on October 3, 2000. Marsh was hospitalized again from October 24, 2000, through October 27, 2000, for complications associated with her surgery. This subsequent hospital stay was authorized by DAKOTACARE and her eligibility was confirmed by various healthcare providers. On October 30, 2000, Marsh contacted DAKOTACARE and was told her eligibility had been terminated on September 30, 2000, and that DAKOTACARE would not pay for any medical expenses she incurred during the month of October, 2000.
[¶5] After intervention by the Department of Labor, Peschke returned Marsh's final paycheck and the amount of premiums she overpaid during her employment. DAKOTACARE and Peschke refused to pay any of Marsh's medical expenses for the month of October, 2000. Marsh filed suit in state court alleging DAKOTACARE violated a state statute that requires thirty days notice of cancellation or nonrenewal, engaged in bad faith, fraud, deceit, fraudulent misrepresentation, and negligent misrepresentation. Marsh also alleges that Peschke engaged in fraud, deceit, fraudulent misrepresentation, negligent misrepresentation, breach of contract and promissory estoppel. DAKOTACARE removed the case to this court and Marsh filed the pending motion to remand.
[¶6] Removal of Marsh's complaint from state to federal court is only proper if at least one of her claims arise under federal law. See 28 USC. § 1441(a) and § 1332. Generally, an action arises under federal law only if issues of federal law are raised in the plaintiff's well-pleaded complaint. See Metropolitan Life Ins. Co. v. Taylor, 481 US 58, 63, 107 SCt 1542, 1546 95 LEd2d 55 (1987). The complaint in this case alleges only causes of action actions arising under the laws of South Dakota. DAKOTACARE asserts that although Marsh raises only state-law claims, this action must be removed to federal court because the Employment Retirement Income Security Act of 1974 (ERISA) completely preempts the state laws on which Marsh's claims are based.
[¶7] Complete preemption is an exception to the well-pleaded complaint rule. See Hull v. Fallon, 188 F3d 939, 942 (8th Cir. 1999). The complete preemption doctrine is invoked when Congress has so completely legislated an area of the law that any civil complaint arising from that area of the law is necessarily federal in character and may be removed to federal court. See Taylor, 481 US at 63, 107 SCt at 1546. The federal law, in effect, displaces the state-law claims and the complaint is recharacterized as arising under federal law. See Hull v. Fallon, 188 F3d at 942. The Supreme Court has determined that suits brought by plan participants or beneficiaries to enforce benefit rights under section 502(a) of ERISA present a federal question for purposes of federal court jurisdiction. See Taylor, 481 US at 66, 107 SCt at 1542. "Causes of action within the scope of, or that relate to, the civil enforcement provisions of 502(a) are removable to federal court despite the fact the claims are couched in terms of state law." Hull v. Fallon, 188 F3d at 942.
[¶8] Section 502(a) authorizes a plan "participant" or a "beneficiary" to bring a civil action to recover benefits due under a plan, to enforce rights under the plan, or to clarify rights under the plan. See 29 USC § 1132(a). A "participant" or "beneficiary" is defined as a person "who is or may become eligible to receive a benefit of any type from an employee benefit plan." See 29 USC §§ 1002(7), (8). The Supreme Court held that a former employee who does not have a reasonable expectation of returning to covered employment does not fit within the phrase "may become eligible." See Firestone Tire & Rubber Co. v. Bruch, 489 US 101, 116, 109 SCt 948, 957, 103 LEd2d 80 (1989). Whether a person is a participant is determined at the time the civil action was commenced. See, e.g., Adamson v. Armco, 44 F3d 650, 654 (8th Cir. 1995).
[¶9] Marsh asserts she is not an ERISA plan participant. The facts support this assertion. Marsh was not a participant at the time this action was commenced. Additionally, she does not have a reasonable expectation of returning to covered employment with Peschke. The benefits at issue are simply health insurance benefits that Marsh had for less than four months; they are not the vested retirement or termination benefits the Supreme Court indicated may be recoverable in Firestone. Because Marsh is a former employee who has neither a reasonable expectation of returning to work nor a colorable claim to vested benefits, she does not fit within the phrase "may become eligible." Firestone at 118, 109 SCt at 958. Marsh, therefore, is not a plan participant as defined in § 502, and the doctrine of complete preemption does not apply.
[¶10] DAKOTACARE asserts that Marsh's state-law claims were preempted by § 514(a), 20 USC § 1144(a). Section 514 may provide a federal defense of ERISA preemption to a plaintiff's state-law claims. See Pilot Life Ins. Co., v. Dedeaux, 481 US 41, 48, 107 SCt 1549, 1552, 95 LEd2d 39 (1987). An ERISA preemption defense, however, without more, does not create removal jurisdiction. See Franchise Tax Board of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 US 1, 25-27, 103 SCt 2841, 2854-56, 77 LEd2d 420 (1983). Removal jurisdiction is created under the "complete preemption doctrine" only when state-law claims are displaced by federal law and those claims are recharacterized as an action arising as a federal claim for purposes of the well-pleaded complaint rule. See Taylor, 481 US at 63-64, 107 SCt at 1546-47. The language of the jurisdictional subsection of ERISA's civil enforcement provisions and its legislative history consistently sets out a clear intention to make § 502(a) suits brought by participants or beneficiaries federal questions for purposes of federal court jurisdiction. See Taylor, 481 US at 66, 107 SCt at 1547. Similar language does not appear in § 514, and therefore, removal jurisdiction is not created under the complete preemption doctrine. Whether Marsh's state-law claims are preempted by § 514 as a substantive defense is a matter for a court of competent jurisdiction, in this case the state court, to determine on remand.
[¶11] Accordingly, it is hereby
[¶12] ORDERED that plaintiff's motion for remand based on lack of subject matter jurisdiction (Docket 12) is GRANTED and this case is remanded pursuant to 28 USC § 1447(c) to the Second Judicial Circuit, Minnehaha County, South Dakota. Having found that it lacks jurisdiction in this case, the court will not address plaintiff's motion for remand (Docket 9), plaintiff's motion for leave to amend (Docket 13), and defendant DAKOTACARE's motion for summary judgment (Docket 7).