United States District Court, D. South Carolina, Beaufort Division
DANIEL E. SPEIGHTS, individually and on behalf of others similarly situated Plaintiff,
BLUECROSS BLUESHIED OF SOUTH CAROLINA Defendants.
C. NORTON, UNITED STATES DISTRICT JUDGE.
matter comes before the court on plaintiff Daniel E.
Speights's (“Speights”) motion to remand, ECF
No. 6. For the reasons set forth below, the court denies the
motion without prejudice.
is a law partner in the Speights & Runyon Attorneys at
Law law firm, and has been insured under the group account,
Speights & Runyan Attorneys at Law, Group Number
05-43967-00 (“the Plan”). On February 3, 2014
Speights was diagnosed with cancer that was life threatening
and referred to treatment at M.D. Anderson Cancer Center in
Houston, Texas, an approved provider under the Plan. Speights
was at M.D. Anderson Cancer Center from early February 2014
until June 2014, and then from July 2014 until September
2014. On April 24, 2014, M.D. Anderson Cancer Center
authorized a plan of treatment that was particularly
time-sensitive, given the advanced stage of cancer that
Speights was in. Speights contacted BlueCross about coverage
for the treatment plan, but received no approval from April
24-27. On August 28, 2014 BlueCross denied coverage for the
treatment plan, stating that the treatment plan involved
“proton radiation” of the cancer that was an
“experimental treatment” under the Plan. Speights
wired $74, 100 from his own bank account to M.D. Anderson
Cancer Center to proceed with the treatment.
filed this case in the Court of Common Pleas for Hampton
County, alleging a number of claims, including claims for
breach of contract and bad faith refusal to pay health
insurance benefits against defendant BlueCross BlueShield of
South Carolina (“BlueCross”). Namely, Speights
alleges claims for: (1) declaratory judgment that the Plan is
ambiguous and BlueCross has interpreted it in a manner that
is inconsistent with the language of the Plan and public
policy considerations; (2) that BlueCross was negligent in
selling a Plan which is ambiguous and vague and in promoting
and selling health care coverage that contradicts the
“purpose of procuring a health care policy”; (3)
breach of contract because BlueCross interpreted the Plan in
contravention of South Carolina law; (4) breach of express
warranty because the Plan warrants to provide payment for
health care that is medically necessary, which BlueCross did
not provide; (5) unfair trade practices because he has been
injured by BlueCross's unfair and deceptive actions in
interpreting the Plan; (6) unjust enrichment because
BlueCross used the ambiguous contract language in the Plan to
reduce the scope of the coverage provided for in the Plan;
and (7) outrage, because BlueCross's actions against
Speights arose out of a business relationship and that
BlueCross's actions were made in “callous disregard
to insureds who have contracted for insurance.”
Speights files the complaint as a proposed class action,
asserting claims on behalf of a class of consumers defined as
“all consumers who have purchased and/or been insured
and [BlueCross] has denied requests to pay for healthcare
approved and/or requested by treating physicians.”
BlueCross removed the case on March 3, 2017, alleging that
all of Speights's claims are preempted by the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA) 29 U.S.C. §1001 et seq. because
all of the claims arise out of the denial of health insurance
benefits under the Plan. Speights then filed the instant
motion to remand on April 3, 2017, to which BlueCross
responded on April 14, 2017. Speights replied on May 5, 2017.
The motion has been fully briefed and is now ripe for the
parties seeking to invoke the court's jurisdiction,
defendants have the burden of proving jurisdiction upon
motion to remand. Dixon v. Coburg Dairy, Inc., 369
F.3d 811, 816 (4th Cir. 2004) (citing Mulcahy v. Columbia
Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994)).
In deciding the motion, the federal court should construe
removal jurisdiction strictly in favor of state court
jurisdiction. Id. “If federal jurisdiction is
doubtful, a remand is necessary.” Mulcahy, 29
F.3d at 151 (citations omitted).
issue before the court is whether Speights's claims are
preempted by ERISA. BlueCross contends that Speights's
claims are preempted because they all arise out of
BlueCross's alleged denial of health insurance benefits
under the Speights & Runyan Attorneys at Law group health
care plan. ECF No. 1 at 2. BlueCross concedes that
the complaint does not present questions of federal law
“on its face” but argues that Speights's
claims for breach of contract and bad faith refusal to pay
under the Plan are both governed by ERISA, and so while the
complaint is inarticulately pleaded it is ultimately governed
by ERISA. ECF No. 1 at 2.
initial matter, although the breach of contract claim
certainly seems to incorporate allegations of bad faith it
does not appear that the complaint asserts a separate bad
faith claim. The complaint does, however, assert a claim for
breach of contract. Specifically, the complaint states that
BlueCross breached the Plan by failing to pay for proton
radiation treatment at M.D. Anderson Cancer Center, even
though a team of five oncologists at M.D. Anderson included
the proton radiation treatment in Speights's
“medically necessary” treatment plan. Speights
alleges that the denial of coverage for the proton radiation
under the “experimental services” provision of
the Plan is a breach of contract. BlueCross contends that
this claim is preempted by ERISA. As the court explains
below, the breach of contract claim seeks to enforce the
provisions of the Plan and so is preempted by ERISA's
civil enforcement plan.
Preemption of Breach of Contract Claim under ERISA
Fourth Circuit has held that parties cannot “avoid
ERISA's preemptive reach by recasting otherwise preempted
claims as state-law contract and tort claims.”
Wilmington Shipping Co. v. New England Life Ins.
Co., 496 F.3d 326, 341 (4th Cir. 2007) (citing Aetna
Health Inc. v. Davila, 542 U.S. 200, 214 (2004)).
Section 514 of ERISA defines the scope of ERISA's
preemption of conflicting state laws. It states that state laws
are superseded if they “relate to” an ERISA plan.
29 U.S.C. § 1144(a). In Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41 (1987), the U.S. Supreme Court held
that state common law cause of actions based on the alleged
improper processing of a benefit claim under an employee
benefit plan fell under ERISA's preemption clause, §
514(a). The breach of contract claims in the complaint
certainly “relate to” ERISA, as the claim is
about benefits denied under the Plan. However, “ERISA
pre-emption [of a state claim], without more, does not
convert a state claim into an action arising under federal
law.” Darcangelo v. Verizon Commc'ns,
Inc., 292 F.3d 181, 187 (4th Cir. 2002). The Fourth
Circuit has held that the “only state law claims
properly removable to federal court are those that are
“completely preempted” by ERISA's civil
enforcement provision, § 502(a).” Sonoco Prod.
Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 371
(4th Cir. 2003). Therefore, the court must also determine
whether Speights's breach of contract claim “fits
within” the scope of § 502(1), and if it is
properly “converted into [a federal claim].”
Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d
181, 186 (4th Cir. 2002). While the jurisprudence about
whether a claim is preempted under ERISA under the doctrines
of conflict and complete preemption is somewhat convoluted,
it is clear that a court addressing preemption of a state law
claim under ERISA should determine whether the claim is
subject to conflict preemption under § 514, and
therefore barred. The court must then also determine whether
the claim is subject to complete preemption under § 502
and therefore should be converted to a federal claim.
Gross v. St. Agnes Health Care, Inc., 2013 WL
4925374, at *9 (D. Md. Sept. 12, 2013) (citing Marks v.
Watters, 322 F.3d 316, 323 (4th Cir. 2003)).
Preemption under ...