United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
case is before the Court on the Motion to Remand (the
“Motion”) [Doc. # 7] filed by Plaintiff Texas
Oral and Facial Surgery, PA (“TXOS” or
“Plaintiff”), to which Defendants United
Healthcare Dental, Inc. (“United”) and Shell Oil
Company (“Shell”) filed a Response [Doc. #
Based on the full record and governing legal authorities, the
Court is unpersuaded that the Employee Retirement Income
Security Act (“ERISA”) completely preempts any of
Plaintiff TXOS's claims. As a result, the Court may not
exercise subject matter jurisdiction over this dispute and
the Motion is granted.
TXOS offers oral surgery services to patients in Texas,
including to Shell employees who enjoy insurance benefits
pursuant to an ERISA-governed benefit plan (the
“Plan”). According to Plaintiff TXOS, United
provides dental insurance to Shell employees covered by the
Plan. Plaintiff alleges that Shell represented in writing to
both its employees and third-party medical providers such as
itself that “any cutting procedure done in a dental
office setting is 100% covered” under the Plan. Fourth
Amended Petition [Doc. # 6], p. 2. TXOS also asserts that
United separately represented to it orally during the
insurance preapproval process for Shell employees that any
“cutting procedure” would be 100% covered.
Id. TXOS alleges that it performed dental surgery
for many Shell employees for whom Defendant United
subsequently denied total coverage.
filed this lawsuit in Texas state court in early-June 2017
alleging that Shell negligently misrepresented the insurance
coverage it provides its employees, and that United's
false representation that it would provide 100% coverage for
the services TXOS had preapproved for Shell employees
constituted fraud and breach of contract. Defendants
unsuccessfully attempted to remove Plaintiff's First
Amended Petition to federal court on the grounds that
Plaintiff's claims were preempted by ERISA (the
“Initial Removal”). In deciding the merits of the
Initial Removal, this Court concluded that Defendants failed
to demonstrate satisfaction of the first element of the
two-part test for “complete preemption” under
ERISA established by the Supreme Court in Aetna Health
Inc. v. Davila
(“Davila”). Specifically, in
connection with the Initial Removal, Defendants were unable
to demonstrate that Plaintiff could have asserted its state
law claims under ERISA, either directly or by virtue of an
assignment of benefits from the Shell employees it treated.
remand, the parties engaged in discovery. During the
discovery process, it was established that at least some of
the Shell employees that received treatment from Plaintiff
TXOS had assigned their benefits under the Plan to Plaintiff.
Plaintiff also amended its petition two additional times. In
its state court Third Amended Petition filed November 27,
2017, Plaintiff not only continued to assert the same
negligent misrepresentation claim against Shell and fraud and
breach of contract claims against United that had been the
subject of the Initial Removal, but also included a fourth
claim for “statutory violations.” In the new
claim, Plaintiff alleged numerous violations of the Texas
Administrative Code, Texas Insurance Code, and Texas Business
and Commerce Code (the “Statutory Claims”).
March 26, 2018, Defendants filed a timely Notice of Removal
[Doc. # 1]. Defendants assert in the Notice of Removal that
at least one of Plaintiff's state law claims is subject
to “complete preemption” under Davila,
and thus the Court has subject matter jurisdiction over this
dispute. In response, Plaintiff filed the pending Motion and
also moved for leave to file a Fourth Amended
Petition.The proposed Fourth Amended Petition
abandons the Statutory Claims, but in all other respects is
substantively identical to the Third Amended
Petition. The Court grants
Plaintiff's Motion for Leave [Doc. # 8], and deems the
Fourth Amended Complaint [Doc. # 6] Plaintiff's operative
pleading for purposes of deciding the merits of the Motion.
Court concludes that none of Plaintiff's state law claims
in the Fourth Amended Petition are subject to “complete
preemption” under Davila, and subject matter
jurisdiction is lacking as a result. This case accordingly
must be remanded to Texas state court.6"
LEGAL STANDARD FOR COMPLETE PREEMPTION UNDER
jurisdiction is limited. The party invoking this Court's
removal jurisdiction bears the burden of establishing federal
jurisdiction. See Manguno v. Prudential Property and Cas.
Ins. Co., 6 F.3d 720');">276 F.3d 720, 723 (5th Cir. 2002); Miller
v. Diamond Shamrock Co., 275 F.3d 414, 417 (5th Cir.
2001); Frank v. Bear Stearns & Co., 128 F.3d
919, 921-22 (5th Cir. 1997) (citation omitted). The removal
statute “is subject to strict construction because a
defendant's use of that statute deprives a state court of
a case properly before it and thereby implicates important
federalism concerns.” Frank, 128 F.3d at 922;
Manguno, 276 F.3d at 723. In evaluating the
propriety of removal, this Court must evaluate all factual
allegations in the light most favorable to Plaintiff, must
resolve all contested issues of fact in favor of Plaintiff,
and must resolve all ambiguities of controlling state law in
favor of Plaintiff. See Burden v. General Dynamics
Corp., 60 F.3d 213');">60 F.3d 213, 216 (5th Cir. 1995) (citations
is proper if the federal district court has original
jurisdiction over an action brought in state court.
See 28 U.S.C. § 1441(a). In order to determine
whether a case was properly removed to federal court on the
basis of federal question jurisdiction, a court must normally
examine the plaintiff's claims under the well-pleaded
complaint rule. Rivet v. Regions Bank of Louisiana,
522 U.S. 470, 475 (1998). Under the well-pleaded complaint
rule, “a defendant may not [generally] remove a case to
federal court unless the plaintiff's complaint
establishes that the case ‘arises under' federal
law.” Aetna Health Inc. v. Davila Davila, 542
U.S. 200, 207 (2004) (quoting Franchise Tax Bd. of Cal.
v. Construction Laborers Vacation Trust for Southern
Cal., 63 U.S. 1');">463 U.S. 1, 10 (emphasis in Davila)).
“The existence of a federal defense normally does not
create statutory ‘arising under'
jurisdiction.” Id. Thus, “federal
jurisdiction exists only when a federal question is presented
on the face of the plaintiff's properly pleaded
complaint.” Rivet, 522 U.S. at 475. Even if
the factual predicate underlying a plaintiff's complaint
could have served as the basis for a federal claim, the
plaintiff has the prerogative to forgo the federal claim and
assert only state law claims in order to prevent removal. The
well-pleaded complaint rule makes the plaintiff the master of
the claim; the plaintiff may avoid federal jurisdiction by
exclusive reliance on state law. Caterpillar, Inc. v.
Williams, 6');">482 U.S. 386, 392 (1987).
certain areas of the law, however, a federal statute may
wholly displace and therefore completely preempt a
plaintiff's state law claim, rendering an action
removable despite the plaintiff's efforts to keep the
action in state court. See Davila, 542 U.S. at 208.
Under the complete preemption doctrine, Congress may so
completely preempt a particular field that any complaint
raising claims in that field is necessarily federal in
nature. Rivet, 522 U.S. at 475 (“Once an area
of state law has been completely pre-empted, any claim
purportedly based on that preempted state-law claim is
considered, from its inception, a federal claim, and
therefore arises under federal law.”).
Section 502(a) of ERISA, 29 U.S.C. § 11');">1132(a), is one
[T]he ERISA civil enforcement mechanism is one of those
provisions with such ‘extraordinary pre-emptive
power' that it converts an ordinary state common law
complaint into one stating a federal claim for purposes of
the well-pleaded complaint rule. Hence, causes of action
within the scope of the civil enforcement provisions of
§ 502(a) are removable to federal court.
Davila, 542 U.S. at 209 (citations omitted) (holding
that state law claims brought by beneficiaries and
participants in ERISA-regulated employee benefit plans for
failure to exercise ordinary care in handling coverage for
medical treatments were completely preempted). In
Davila, the Supreme Court stated the test for
complete preemption of claims under § 502 of ERISA:
[I]f an individual brings suit complaining of a denial of
coverage for medical care, where the individual is entitled
to such coverage only because of the terms of an
ERISA-regulated employee benefit plan, and where no legal
duty (state or federal) independent of ERISA or the plan
terms is violated, then the suit falls “within the
scope of” ERISA § 502(a)(1)(B). In other words, if
an individual, at some point in time, could have brought his
claim under ERISA § 502(a)(1)(B), and where there is no
other independent legal duty that is implicated by a
defendant's actions, then the individual's cause of
action is completely pre-empted by ERISA § 502(a)(1)(B).
Id. at 210 (citation omitted).
under the Davila analysis, this case is removable
only if: (1) Plaintiffs TXOS could have brought any of its
state-law claims under ERISA § 502, and (2) no other
independent legal duty supports the claim(s). Id.;
Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579
F.3d 525, 530 (5th Cir. 2009).
Davila's First Prong
first question under Davila's complete
preemption test is whether Plaintiff is an “individual
bring[ing] suit complaining of a denial of coverage for
medical care, where the individual is entitled to such
coverage only because of the terms of an ERISA-regulated
employee benefit plan, ” or “an individual [who]
at some point in time, could have brought his claim under
ERISA § 502(a)(1)(B).” Davila, 542 U.S.
at 210. The Fifth Circuit has held that a third-party medical
provider has standing to sue under § 502(a) as an
assignee of a participant or beneficiary in order to claim
plan benefits. See N. Cypress Med. Ctr. Operating Co. v.
Cigna Healthcare, 781 F.3d 182, 195 (5th Cir. 2015)
(“It is well established that a healthcare provider,
though not a statutorily designated ERISA beneficiary, may
obtain standing to sue derivatively to enforce an ERISA plan
beneficiary's claim.”) (quoting Harris
Methodist Fort Worth v. Sales Support Servs., Inc. Employee
Health Care Plan, 6 F.3d 330');">426 F.3d 330, 333-34 (5th Cir. 2005)).
It is undisputed that Plaintiff received an assignment of
benefits from at least some of the Shell employees it treated
as to whom United denied 100% coverage. However, the parties
disagree whether Plaintiff's receipt of benefit
assignments, in of itself, is sufficient to satisfy
Davila's first prong. It is not necessary to
decide this issue. For the reasons stated in section III.B
infra, the Court concludes that none of
Plaintiff's state law claims satisfy
Davila's second prong. Accordingly, the Court
assumes, without deciding, that Plaintiff's status as an
assignee of Shell's employee's benefits under the
Plan suffices for purposes of Davila's first
prong and turns to analysis of Plaintiff's claims under
Davila's second prong.
Davila's Second Prong
second question in the Davila complete preemption
analysis is whether, for purposes of determining the
Court's subject matter jurisdiction, Defendants'
actions implicate a legal duty that is entirely independent
of ERISA. McAteer v. Silverleaf Resorts, Inc., 514
F.3d 411');">11, 418 (5th Cir. 2008); Innova Hosp. San Antonio,
L.P. v. Humana Ins. Co., 25 F.Supp.3d 951, 961 (W.D.
Tex. 2014). This question asks whether a plaintiff is in fact
suing under obligations created by the ERISA plan itself, or
under obligations independent of the plan and the plan
member. The overarching “crucial question” for a
complete preemption analysis “is whether [a plaintiff
is] in fact seeking benefits under the terms of the plan, or
rights that derive from” an independent source, such as
separate contract. Lone Star OB/GYN Associates, 579
F.3d at 529 n.3. A legal duty is not independent of ERISA if
it “derives entirely from the particular rights and
obligations established by [ERISA] benefit plans.”
Davila, 542 U.S. at 210; accord Ambulatory
Infusion Therapy Specialists, Inc. v. Aetna Life
Ins. Co., 2006 WL 1663752, at *7 (S.D. Tex. June 13,
2006). The Court evaluates seriatim Plaintiff's
state law claims for negligent misrepresentation against
Shell, and breach of contract and fraud against United, under
Davila's second prong.