Opinion
Case No. 00-CV-72327-DT
January 31, 2002
MEMORANDUM OPINION AND ORDER
I. BACKGROUND/FACTS
Plaintiff filed the instant lawsuit on October 8, 1999 with the Wayne County Circuit Court against Defendant claiming that Defendant violated certain Michigan statutes and breached its contracts with its members. On November 2, 1999, Defendant filed a Motion for Summary Disposition with the State Court. Responses were filed and a hearing held on the motion. The State Court granted in part and denied in part Defendant's Summary Disposition motion on April 21, 2000. On November 29, 1999, Plaintiff filed his Motion for Class Certification. Responses were filed and a hearing held on the motion. The State court granted Plaintiff's Motion for Class Certification on April 21, 2000.
On May 22, 2000, Defendant removed this matter to this Court claiming federal question jurisdiction based on ERISA. Plaintiff filed a Motion to remand the case on June 16, 2000 arguing that the removal was untimely because it was filed more than 30 days from when the Defendant was served with the Complaint. On September 22, 2000, the Court issued a Memorandum Opinion and Order denying Plaintiff's Motion to Remand. Specifically, the Court noted,
Defendant claims it could not initially remove the case because the only plaintiff was Plaintiff Tzvih Tinman who did not possess a group health insurance plan which would be governed by ERISA. The case initially was not removable. It was only after the State Court issued its Order granting Plaintiff's Motion for Certification of the Class could the case be removed. The Class consisted of other plaintiffs who were beneficiaries of certain group insurance governed by ERISA. Even though Plaintiff argues that Defendant had notice of who the potential members of the class would be based on the Complaint, Defendant claims that because the class was not certified until the State Court so ruled in April 2000, there was no basis for jurisdiction. Plaintiff was the only real plaintiff initially and the case was not removable because Plaintiff did not have an insurance governed by ERISA. Until a case is certified as a class action, the only claims pending are those of the named plaintiff Baxter v. Palmigiano, 425 U.S. 308, n. 1 (1976). Plaintiff, a minor, has health care coverage through his father who operates a business as a sole proprietor. ERISA only applies to employee group health plans under 29 U.S.C. § 1003, 29 C.F.R. § 2510.3-3. Now that the class has been certified, the case has become removable because some of the beneficiaries in the class hold coverage through an employee group health plan. Individuals who are enrolled in employee group health plans governed by ERISA, are federal claims which are removable as of right to federal court. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987); Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995).
September 22, 2000 Memorandum Opinion and Order. The Court found that based on 28 U.S.C. § 1446(b), which allows for removal of a case 30 days after a defendant receives a copy of an "initial pleading setting forth the claim for relief upon which such action or proceeding is based," the removal was timely because Defendant removed the case within 30 days of the state court's order allowing class status to plaintiffs who have health plans that are governed by ERISA.
The matter has proceeded to discovery and this matter is now before the Court on Defendant's Motion for Summary Judgment, Plaintiff's Motion for Partial Summary Judgment, and Defendant's Motion to Decertify the Class. Responses and replies have been filed.
II. ANALYSIS A. Standard of Review
Rule 56(c) provides that summary judgment should be entered only where "the pleadings, depositions, answers to the interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The presence of factual disputes will preclude granting of summary judgment only if the disputes are genuine and concern material facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Although the Court must view the motion in the light most favorable to the nonmoving party, where "the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Celotex Corp., 477 U.S. at 322-23. A court must look to the substantive law to identify which facts are material. Anderson, 477 U.S. at 248.
B. Defendant's Motion for Summary Judgment 1. Grounds for Summary Judgment
Defendant sets forth four grounds in support of its summary judgment motion. First, Defendant argues that Plaintiff's breach of contract claim should be dismissed because he did not pursue the claims procedure required by the Blue Cross Blue Shield of Michigan ("BCBSM") Certificate. Second, Defendant argues that Michigan's Administrative Procedures Act (the "APA") requires the exhaustion of administrative remedies before an action covered by an administrative agency's procedure may be brought before a court. Third, Defendant argues that any claims that are governed by ERISA should be dismissed if class members did not exhaust their administrative remedies. Finally, Defendant argues that public policy mandates enforcement of the contractual and statutory administrative remedies prerequisite. Essentially, Defendant argues that because Plaintiff failed to pursue his administrative remedies, Plaintiff's Complaint should be dismissed.
Because the basis of the Court's jurisdiction over this matter is federal question under ERISA, the Court will first address the third argument, that the claims governed by ERISA must be dismissed for failure to exhaust administrative remedies.
2. ERISA
ERISA completely preempts the state law claims of class members whose health care coverage is through self-funded employee benefit plans. FMC Corp. v. Holliday, 498 U.S. 52, 61 (1990); Livingston v. Central States, Southeast Southwest Areas Health Welfare Fund, 900 F. Supp. 108 (E.D. Mich. 1995). ERISA requires claimants to exhaust all administrative remedies before initiating a lawsuit. Ravencraft v. Unum Life Ins. Co., 212 F.3d 341, 343 (6th Cir. 2000).
Plaintiff argues that the State Court has already ruled on the exhaustion issue holding that Plaintiff did not have to exhaust his state remedies prior to filing the lawsuit. However, the issue of whether exhaustion was required on those class members whose insurance coverage was governed by ERISA was not before the State Court. Plaintiff also appears to argue that because this Court has not ruled on whether ERISA preempted any claims of the class members when the Court denied Plaintiff's motion for remand, this motion is legally and procedurally deficient. However, when the motion to remand was before the Court, the issue raised by Plaintiff in that motion was whether Defendant timely removed the matter. The Court ruled that the matter was properly removed. The issue of whether the state law claims of those class members whose insurance coverage is governed by ERISA should be preempted by ERISA has not been brought before the Court. The issues of whether the claims governed by ERISA are required to be administrative exhausted and whether ERISA preempts state law claims are now properly before the Court.
Plaintiff also argues that because Defendant did not notify the Court at the October 29, 2001 Status Conference that it was going to file a dispositive motion, Defendant should be precluded from filing such a motion. It is noted that the Court's Amended Pretrial Scheduling Order entered on August 17, 2001 set a deadline for filing of motions, December 12, 2001. The Amended Pretrial Scheduling Order entered on November 7, 2001 scheduling Defendant's Motion to Decertify Class and Plaintiff's Motion for Partial Summary Judgment did not expressly preclude the filing of a summary judgment motion by Defendant. The Civil Rules of Procedure encourage and allow parties to file dispositive motions in order to narrow issues for trial. See Fed.R.Civ.P. 56.
The claims governed by ERISA are preempted by ERISA. The case law in the Sixth Circuit, as noted above, clearly states that ERISA requires exhaustion of administrative remedies before bringing suit. Plaintiff has not rebutted these two arguments other than stating that the State Court has already addressed the exhaustion requirements. As noted above, the State Court did not address the exhaustion requirements as it relates to claims governed by ERISA since the only claims before the State Court were the breach of contract and statutory violation claims which are governed by State law. A review of the State Court's opinion on this issue clearly shows that the ERISA issue was not before that Court. Any state law claims by class members with claims governed by ERISA are therefore preempted by ERISA. Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995). The state law claims of breach of contract and statutory violation under M.C.L. 550.1402 and 550.1418 are therefore dismissed as to the class members whose insurance plans are governed by ERISA. SeeFoster v. BCBSM, 969 F. Supp. 1020, 1028 (E.D. Mich. 1997) (ERISA preempts claims under M.C.L. 550.1402 since that statute relates to an ERISA plan and does not regulate insurance). Plaintiff argues that Foster did not address § 418, and, is therefore not applicable, is without merit. A fair reading of M.C.L. 550.1418(1) shows that it implicates an ERISA plan because it involves a subjective analysis of what a health care corporation determines as an "emergency health services up to the point of stabilization" and the benefits the corporation must provide to an insured based on that determination. Section 418 clearly affects the Plan Administrator's authority to determine whether an emergency room benefit should or should not be paid. A class member's claim under § 418 is preempted by ERISA if the class member is insured by an ERISA plan.
The only remaining claim for those class members, if any, would be an ERISA claim for failure to provide benefits. See 11 U.S.C. § 1132(a)(1)(B). Class members who seek benefits under ERISA must then be required to first exhaust their administrative remedies as to their claims. Plaintiff has not provided any evidence that the class members whose insurance plans are subject to ERISA have in fact exhausted their administrative remedies and are properly before this Court.
3. State law claims/Remaining Class Members
The remaining class members are those members who do not have plans that are governed by ERISA and who only have breach of contract and statute violation claims against Defendant. The Court has no original subject matter jurisdiction over those claims, given Defendant's own admission in its response to Plaintiff's motion for remand that federal question jurisdiction did not arise until the State Court certified the class to include those class members and that prior to that ruling, there was no subject matter jurisdiction by the federal court.
This matter must be remanded to State Court. "Where an action in federal court includes both federal and pendent state claims and the court dismisses the federal claims before trial on a motion for summary judgment, the pendent state claims are ordinarily dismissed as well."Williams v. City of River Rouge, 909 F.2d 151, 157 (6th Cir. 1990). The Court remands the matter back to State Court now that the federal ERISA claims have been dismissed. The only remaining class members as noted above are those class members whose insurance plans are not governed by ERISA.
4. Remaining Claims/Motions
In any event, as to the state law claims of breach of contract and statutory violation, the State Court has already addressed the exhaustion issue as it applies to those state law claims. Defendant's Motion to Decertify the Class is MOOT. Defendant may renew its motion as to the decertification issue before the State Court judge. Plaintiff's Motion for Partial Summary Judgment is MOOT and can be renewed before the State Court judge. Defendant's Motion for Leave to File Supplemental Authority is also MOOT. Defendant's Motion to maintain documents and objections under seal is GRANTED. The parties may renew any motions relating to the sealed documents before the State Court judge.
III. CONCLUSION
For the reasons set forth above,
IT IS ORDERED that Defendant's Motion for Summary Judgment (Docket No. 86, filed 4 November 29, 2001) is GRANTED in part for the reasons set forth above.
IT IS FURTHER ORDERED that Plaintiff's Motion for Partial Summary Judgment (Docket 3 No. 91, filed December 3, 2001) is MOOT.
IT IS FURTHER ORDERED that Defendant's Motion to Decertify Class ( Docket No. 72, 7 filed October 23, 2001) is MOOT.
IT IS FURTHER ORDERED that Defendant's Motion for Leave to File Supplemental 2 Authority (Docket no. 103, filed December 21, 2001) is MOOT.
IT IS FURTHER ORDERED that Defendant's Motion to maintain documents under seal designated as confidential and submitted by Plaintiff as exhibits to his motion for partial summary judgment (Docket No. 106, filed December 21, 2001) is GRANTED. Within five (5) days of the 1 date of this Order, Defendant must to identify to the CLERK the documents to be filed under seal and submit the necessary envelopes in order for the documents to be filed under seal. Once the documents have been identified, the CLERK is directed to seal those documents.
IT IS FURTHER ORDERED that as soon as the CLERK has sealed the documents as noted above, the CLERK REMAND the matter FORTHWITH. It is directed that the Clerk prepare the necessary paperwork to effect the remand of this matter forthwith.