Lourdes Specialty Hospital of Southern New Jersey v. Aetna, Inc. et al

MOTION to Dismiss for Lack of Jurisdiction

D.N.J.May 12, 2017

WILLIAM E. FITZPATRICK Acting United States Attorney BY: DAVID BOBER Assistant United States Attorney 402 E. State St., Room 430 Trenton, NJ 08608 Tel. (609) 989-0564 email: david.bober@usdoj.gov UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY Lourdes Specialty Hospital of Southern New Jersey, Plaintiff, v. Aetna, Inc.; Tricare for Life, Defendants. Hon. Noel L. Hillman Civil No. 16-9538 (NLH)(KMW) Notice of Motion Please take notice that on June 5, 2017, or as soon thereafter as counsel may be heard, David Bober, Assistant U.S. Attorney, as attorney for defendant Tricare for Life/the United States of America, will move this Court pursuant to Fed. R. Civ. P. 12(b)(1) for an order dismissing the complaint for lack of subject-matter jurisdiction. The Government respectfully refers the Court to the memorandum of law filed in support of the motion. A proposed order is submitted with this notice of motion. Dated: May 12, 2017 WILLIAM E. FITZPATRICK Acting United States Attorney By: /s/ David Bober DAVID BOBER Assistant U.S. Attorney Case 1:16-cv-09538-NLH-KMW Document 27 Filed 05/12/17 Page 1 of 1 PageID: 269 WILLIAM E. FITZPATRICK Acting United States Attorney BY: DAVID BOBER Assistant United States Attorney 402 E. State St., Room 430 Trenton, NJ 08608 Tel. (609) 989-0564 email: david.bober@usdoj.gov UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY Lourdes Specialty Hospital of Southern New Jersey, Plaintiff, v. Aetna, Inc.; Tricare for Life, Defendants. Hon. Noel L. Hillman Civil No. 16-9538 (NLH)(KMW) Memorandum of Law in Support of Defendant Tricare for Life’s Motion to Dismiss the Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) for Lack of Subject-Matter Jurisdiction Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 1 of 23 PageID: 270 Contents I. Preliminary Statement ........................................................................................... 1 II. Statement of Facts ............................................................................................... 4 A. Background on Tricare ..................................................................................... 4 B. Allegations in the complaint ............................................................................ 5 C. Procedural history ............................................................................................ 5 III. Argument ............................................................................................................. 6 A. Standard of review ............................................................................................ 6 B. The United States is the real party in interest and should be substituted for Tricare for Life. ......................................................... 6 C. The Court lacks subject-matter jurisdiction because the Court of Federal Claims has exclusive jurisdiction over breach-of-contract claims against the United States that exceed $10,000...................................... 8 D. The Superior Court had no jurisdiction to proceed on Lourdes’s tort claim against the United States and this Court has acquired none on removal. Under the doctrine of derivative jurisdiction, the case must be dismissed. .............................................................................. 12 1. The United States cannot be sued for breach of contract in state court ...... 12 2. This Court did not acquire jurisdiction upon removal. ................................. 13 IV. Conclusion .......................................................................................................... 16 Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 2 of 23 PageID: 271 Authorities Cases Albrecht v. Comm. on Employee Benefits of Fed. Reserve Employee Benefits Sys., 357 F.3d 62 (D.C. Cir. 2004) ..................................................................................... 11 Areskog v. United States, 396 F. Supp. 834 (D. Conn. 1975) ............................................................................ 13 Arizona v. Manypenny, 451 U.S. 232 (1981) .................................................................................................. 14 Baig v. Nuclear Regulator Commission, No. 10-0842, 2011 WL 2214660 (D.N.J. 2011) .......................................................... 9 Bradshaw v. General Motors Corp., 805 F.2d 110 (3d Cir. 1986) ...................................................................................... 15 Christman v. Grays, No. 05-192, 2005 WL 3088529 (S.D. Ohio Nov. 17, 2005) ......................................... 8 Clinton v. Goldsmith, 526 U.S. 529 (1999) .............................................................................................. 9, 13 Copley v. U.S. Department of Energy, 2012 WL 1111568 (S.D.W.Va. Mar. 30, 2012) ......................................................... 14 Dempsey v. United States, No. 15-2847, 2015 WL 6561217 (D.N.J. Oct. 29, 2015) ............................................. 6 Dugan v. Rank, 372 U.S. 609 (1963) .................................................................................................... 7 Gould Elecs. Inc. v. United States, 220 F.3d 169 (3d Cir. 2000) ........................................................................................ 6 Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 3 of 23 PageID: 272 ii Green Hosp. v. United States, 23 Cl. Ct. 393 (1991) ............................................................................................. 2, 10 Greene v. Life Care Centers of Am., Inc., No. 07-1648, 2008 WL 5378259 (D.S.C. Dec. 23, 2008) ............................................ 2 Hahn v. United States, 757 F.2d 581 (3d Cir. 1985) ........................................................................................ 9 Hairston v. United States, 99 Fed. Cl. 695 (2011) ............................................................................................... 12 Hofmann v. Hammack, 82 F. Supp. 2d 898 (N.D. Ill. 2000) ............................................................................ 7 Holton v. Blue Cross & Blue Shield of S.C., 56 F. Supp. 2d 1347 (M.D. Ala. 1999) ........................................................................ 7 In re Elko County Grand Jury, 109 F.3d 554 (9th Cir. 1997) .................................................................................... 15 Ingham Reg’l Med. Ctr. v. United States, 126 Fed. Cl. 1 (2016) ............................................................................................... 2, 4 Jacobson v. United States, 422 N.J. Super. 561 .................................................................................................. 13 Kalick v. United States, 35 F. Supp. 3d 639 (D.N.J. 2014) ............................................................................... 6 Leddy v. U.S. Postal Serv., 525 F. Supp. 1053 (E.D. Pa. 1981) ............................................................................. 3 Mays v. United States, 806 F.2d 976 (10th Cir. 1986) ................................................................................ 4, 7 McGee v. Funderburg, 17 F.3d 1122 (8th Cir. 1994) .................................................................................... 12 Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 4 of 23 PageID: 273 iii Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982) ................................................................................... 11 Michigan Hosps., Inc. v. Health Net Fed. Servs., LLC, No. 07-039, 2008 WL 2233964 (D. Del. May 30, 2008) ............................................. 2 Orff v. United States, 545 U.S. 596 (2005) .................................................................................................. 12 Palmer v. City National Bank of W. Va., 498 F.3d 236 (4th Cir. 2007) .................................................................................... 15 Pleasant Gardens Realty Corp. v. H. Kohnstamm & Company, Inc., 2009 WL 2982632 (D.N.J. Sept. 10, 2009) ............................................................... 14 Pub. Warehousing Co. K.S.C. v. Def. Supply Ctr. Philadelphia, 489 F. Supp. 2d 30 (D.D.C. 2007) ............................................................................. 10 Rodriguez v. F.B.I., 876 F. Supp. 706 (E.D. Pa. 1995) ............................................................................. 16 Scoratow v. Smith, 2009 WL 890575 (W.D. Pa. Mar. 27, 2009) ............................................................. 14 Sellers v. Brown, 633 F.2d 106 (8th Cir. 1980) ............................................................................ 2, 9, 11 Spirakis v. Foreclosure of Deeds of Trust of Bank of N. Carolina to BNC Credit Corp., No. 14-19, 2014 WL 2854877 (E.D.N.C. June 23, 2014) ........................ 13, 15 Stephenson v. United States, 58 Fed. Cl. 186 (2003) ............................................................................................... 13 Trico Development Assocs. v. O.C.E.A.N., Inc., 2011 WL 4550203 (D.N.J. Sept. 29, 2011) ............................................................... 14 Turturro v. Agusta Aerospace Corp., 2010 WL 3239199 (E.D. Pa. Aug. 13, 2010) ............................................................ 14 Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 5 of 23 PageID: 274 iv Twp. of Saddle Brook v. United States, No. 09-2373, 2010 WL 323348 (D.N.J. Jan. 19, 2010) ............................................ 16 United States ex rel. Spay v. CVS Caremark Corp., 913 F. Supp. 2d 125 (E.D. Pa. 2012) .......................................................................... 6 United States v. Dalm, 494 U.S. 596 (1990) .................................................................................................... 8 United States v. Testan, 424 U.S. 392 (1976) .................................................................................................... 8 United States v. White Mountain Apache Tribe, 537 U.S. 465 (2003) .................................................................................................. 12 Villegas v. United States, 926 F. Supp. 2d 1185 (E.D. Wash. 2013) ................................................................. 11 Washington Hosp. Ctr. Corp. v. Waters, No. 91-1638 (GHR), 1992 WL 23746 (D.D.C. Jan. 21, 1992) .............................. 2, 10 Wright v. Tricare Mgmt., No. 06- 1051, 2007 WL 725797 (W.D. Ark. Mar. 7, 2007) ..................................... 1, 7 Statutes 10 U.S.C. § 1071 (2012) ................................................................................................. 4 10 U.S.C. § 1086(c) (2012) ............................................................................................. 4 10 U.S.C. 1073(a)(2) (2012) ....................................................................................... 4, 7 28 U.S.C. § 1346(a)(2) ................................................................................................ 8, 9 28 U.S.C. § 1441(f) ....................................................................................................... 15 28 U.S.C. § 1442 ........................................................................................................... 15 Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 6 of 23 PageID: 275 v 28 U.S.C. § 1491 ....................................................................................................... 8, 12 28 U.S.C. § 1491(a)(1) .................................................................................................... 8 28 U.S.C. §§ 1441 & 1446 ........................................................................................ 5, 15 29 U.S.C. § 1003(b)(1) .................................................................................................. 12 Rules Fed. R. Civ. P. 12(b)(1) ............................................................................................... 1, 6 Regulations 32 C.F.R. § 199 (2015) .................................................................................................... 4 32 C.F.R. § 199.1(e) .................................................................................................... 4, 6 Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 7 of 23 PageID: 276 I. Preliminary Statement This case arises from an insurance coverage dispute between plaintiff Lourdes Specialty Hospital of Southern New Jersey and defendants Aetna, Inc., and the United States (incorrectly named as “Tricare for Life”). Tricare is a health care program for uniformed service members and their families that is administered by the Defense Health Agency, a component of the Department of Defense. “Tricare for Life” is one Tricare plan, which offers coverage for Tricare-eligible beneficiaries who have Medicare Part A and Part B. See https://tricare.mil/tfl. Lourdes alleges that Aetna and Tricare for Life owe Lourdes $310,549.61 for care that Lourdes provided to a patient who had primary coverage through Aetna and secondary coverage through Tricare for Life. The complaint should be dismissed as against “Tricare for Life” for lack of subject-matter jurisdiction. First, because Tricare for Life is a federal program administered by a federal agency, and because any recovery from Tricare would come from the United States Treasury, the United States is the real party in interest and should be substituted for Tricare for Life. See, e.g., Wright v. Tricare Mgmt., No. 06- 1051, 2007 WL 725797, at *2 (W.D. Ark. Mar. 7, 2007) (“In the context of paying TRICARE and Medicare claims, courts have held that causing the expenditures of TRICARE or Medicare funds makes the United States the real party in interest.”) (collecting cases). Second, once the United States has been substituted for Tricare for Life, the Court lacks subject-matter jurisdiction because the U.S. Court of Federal Claims has Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 8 of 23 PageID: 277 2 exclusive jurisdiction over non-tort claims against the federal government when the amount in controversy exceeds $10,000. Many courts have held that the Court of Federal Claims is the only court with jurisdiction to consider breach-of-contract lawsuits that arise from Tricare coverage disputes. See, e.g., Sellers v. Brown, 633 F.2d 106, 107-08 (8th Cir. 1980) (claim against CHAMPUS1 for healthcare costs “is essentially one against the United States for the payment of damages” and therefore “is within the exclusive jurisdiction of the Court of Claims”); Green Hosp. v. United States, 23 Cl. Ct. 393, 399 (1991) (finding that Court of Claims had jurisdiction over claim arising from CHAMPUS coverage dispute because it was “a claim for payment of benefits created by statute and payable from the national treasury”); Washington Hosp. Ctr. Corp. v. Waters, No. 91-1638 (GHR), 1992 WL 23746, at *3 (D.D.C. Jan. 21, 1992) (finding that it was “abundantly clear that this Court lacks subject matter jurisdiction” where plaintiffs alleged that United States “breached its contract as an insurer”). Because this case arises from a Tricare coverage dispute, the U.S. Court of Federal Claims has exclusive jurisdiction. Finally, the Court also lacks subject-matter jurisdiction for an additional, independent reason: this case originated in state court and was removed to this 1 CHAMPUS – the Civilian Health and Medical Program of the Uniformed Services – was the precursor to Tricare. See, e.g., N. Michigan Hosps., Inc. v. Health Net Fed. Servs., LLC, No. 07-039, 2008 WL 2233964, at *1 (D. Del. May 30, 2008) (discussing history of CHAMPUS and Tricare). Many of the cases cited in this memorandum pertain to CHAMPUS but apply here with equal force. See Greene v. Life Care Centers of Am., Inc., No. 07-1648, 2008 WL 5378259, at *4 (D.S.C. Dec. 23, 2008) (“TRICARE is a successor program of CHAMPUS, and laws and regulations that previously applied to CHAMPUS now apply to TRICARE”); see also Ingham Reg’l Med. Ctr. v. United States, 126 Fed. Cl. 1, 9 n.3 (2016). Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 9 of 23 PageID: 278 3 Court, and because the state court lacked jurisdiction over the United States, this Court did not acquire jurisdiction over the United States by virtue of the removal. “It is well established that the jurisdiction of the federal courts upon removal is derivative in nature, so that if a state court lacks jurisdiction over a case, the federal court acquires none upon removal.” Leddy v. U.S. Postal Serv., 525 F. Supp. 1053, 1055 (E.D. Pa. 1981). In sum, this Court lacks subject-matter jurisdiction because (a) the U.S. Court of Federal Claims has exclusive jurisdiction over non-tort claims against the United States in excess of $10,000, and (b) the state court in which this case originated lacked jurisdiction over the United States, and this Court did not acquire jurisdiction by virtue of the removal. The claims against the United States/Tricare for Life should be dismissed or, in the alternative, transferred to the U.S. Court of Federal Claims. Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 10 of 23 PageID: 279 4 II. Statement of Facts A. Background on Tricare A recent opinion from the Court of Federal Claims, Ingham Reg’l Med. Ctr. v. United States, 126 Fed. Cl. 1 (2016), provides background on the Tricare program: In 1956, Congress established a military health care system, now known as TRICARE, to “create and maintain high morale in the uniformed services by providing an improved and uniform program of medical and dental care for members and certain former members of those services, and for their dependents.” See 10 U.S.C. § 1071 (2012). Although the program initially covered only active duty members and their dependents, coverage was later expanded to include retirees, eligible dependents of retirees, and survivors, i.e., certain surviving dependents of deceased service members killed on active duty. See Military Medical Benefits Amendments of 1966, Pub.L. No. 89–614, 80 Stat. at 865; see also 10 U.S.C. § 1086(c) (2012). The law empowers the Secretary of Defense to administer TRICARE and the Secretary has used that power to promulgate regulations and manuals that, together with the underlying statutes, govern the TRICARE program. See 10 U.S.C. 1073(a)(2) (2012); see generally 32 C.F.R. § 199 (2015). Ingham Reg’l Med. Ctr, 126 Fed. Cl. at 9-10. “Tricare for Life” is one Tricare plan, which offers coverage for Tricare-eligible beneficiaries who have Medicare Part A and Part B. See https://tricare.mil/tfl. Tricare is funded by the federal treasury. See 32 C.F.R. § 199.1(e) (“The funds used by CHAMPUS are appropriated funds furnished by the Congress through the annual appropriation acts for the Department of Defense and the DHHS.”); see also Mays v. United States, 806 F.2d 976, 977 (10th Cir. 1986) (“All of the money for the CHAMPUS program comes from the general treasury of the United States”). Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 11 of 23 PageID: 280 5 B. Allegations in the complaint In its complaint (which was filed in state court), Lourdes alleges that it provided medical services to its patient, “Beatrice F.,” who had primary coverage through Aetna and secondary coverage through Tricare for Life. See Complaint (Docket No. 1-1) ¶¶ 4-8. Lourdes alleges that Beatrice F. assigned her benefits to Lourdes, and that Lourdes was owed a total of $311,765.61 for services rendered to Beatrice F. Id. ¶ 10-11. The complaint alleges that Lourdes received no payment from Aetna and $1,216 from Tricare (see ¶ 6), and accordingly seeks “an order directing Defendants to pay to plaintiff $310,549.61.” Id. ¶ 43(f); see also id. ¶ 52(a) (seeking “an order directing Defendant Tricare to pay to Plaintiff $310,549.61”). The complaint contains claims for breach of contract and similar claims that arise out of the breach- of-contract claim. See Complaint Count 1 (breach of contract against Aetna), Court Two (breach of contract against Tricare), Count 3 (“failure to make all payments pursuant to member’s plan” against Tricare), Count 4 (breach of fiduciary duty against all defendants), Count 5 (failure to establish/maintain reasonable claims procedures against all defendants). C. Procedural history Lourdes initiated this lawsuit on or about November 16, 2016, by filing a complaint against Aetna and Tricare for Life in New Jersey Superior Court, docket no. BUR-L-2390-16, in Burlington County. See Docket No. 1 (notice of removal); Docket No. 1-1 (copy of state-court complaint). On or about December 28, 2016, Aetna removed the case to this Court under 28 U.S.C. §§ 1441 & 1446. See Docket No. 1. Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 12 of 23 PageID: 281 6 III. Argument A. Standard of review “A defendant may move to dismiss a claim for lack of subject matter jurisdiction under Federal Rule of Civil Procedure Rule 12(b)(1).” Dempsey v. United States, No. 15-2847, 2015 WL 6561217, at *1 (D.N.J. Oct. 29, 2015). Once a 12(b)(1) challenge is raised, “the plaintiff bears the burden of demonstrating the existence of subject matter jurisdiction.” Id. When, as here, the motion is filed before answering, the challenge is treated as a “facial” challenge to the Court’s jurisdiction. See, e.g., Kalick v. United States, 35 F. Supp. 3d 639, 644 (D.N.J. 2014). When considering a facial challenge, the Court should determine whether the allegations in the complaint, taken as true, contain facts sufficient to establish subject-matter jurisdiction. Id. In addition to the facts alleged in the complaint, the Court may also consider “documents referenced therein and attached thereto,” Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000), and may also take judicial notice of public records and other sources whose accuracy cannot reasonably be questioned. See, e.g., United States ex rel. Spay v. CVS Caremark Corp., 913 F. Supp. 2d 125, 139 (E.D. Pa. 2012). B. The United States is the real party in interest and should be substituted for Tricare for Life. As explained above, Tricare was established by Congress, is administered by the Department of Defense, and is funded by the federal treasury. See 32 C.F.R. § 199.1(e) (“The funds used by CHAMPUS are appropriated funds furnished by the Congress through the annual appropriation acts for the Department of Defense and Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 13 of 23 PageID: 282 7 the DHHS.”); 10 U.S.C. § 1073(a)(2) (“Except as otherwise provided in this chapter, the Secretary of Defense shall have responsibility for administering the TRICARE program and making any decision affecting such program”); see also Mays, 806 F.2d at 977 (“All of the money for the CHAMPUS program comes from the general treasury of the United States”). The complaint seeks $310,549.61 from Tricare, and, because Tricare is funded by the federal treasury, any judgment against Tricare would require the expenditure of federal funds. “The general rule is that a suit is against the sovereign if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration.” Dugan v. Rank, 372 U.S. 609, 620 (1963). Due to this principle, in similar circumstances – i.e., when a plaintiff seeks to recover money from the federal treasury based on the allegation that Tricare wrongly denied a claim – courts have consistently held that the real party in interest is the United States. See, e.g., Wright, 2007 WL 725797, at *2 (“In the context of paying TRICARE and Medicare claims, courts have held that causing the expenditures of TRICARE or Medicare funds makes the United States the real party in interest.”); Hofmann v. Hammack, 82 F. Supp. 2d 898, 899 (N.D. Ill. 2000) (holding that “the United States is the real party in interest here, although Ms. Hofmann names a private person and an insurance carrier as defendants” because “her claim is for monies she alleges are owed her under CHAMPUS, and she does not dispute that CHAMPUS claims are paid by direct appropriations from the United States Treasury”); Holton v. Blue Cross & Blue Shield of S.C., 56 F. Supp. 2d 1347, 1353 (M.D. Ala. 1999) (“the United States is the real Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 14 of 23 PageID: 283 8 party in interest for any purported breach of contract resulting from Blue Cross and Blue Shield’s administration of CHAMPUS”); Christman v. Grays, No. 05-192, 2005 WL 3088529, at *2 (S.D. Ohio Nov. 17, 2005) (substituting United States as defendant because “the United States is the real party in interest in actions where the federal treasury might ultimately be liable”). As in the cases cited above, the Court should find that a suit against “Tricare for Life” is a suit against the sovereign and substitute the United States as the real party in interest in lieu of “Tricare for Life.” C. The Court lacks subject-matter jurisdiction because the Court of Federal Claims has exclusive jurisdiction over breach-of-contract claims against the United States that exceed $10,000. As sovereign, the federal government “is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court’s jurisdiction to entertain the suit.” United States v. Testan, 424 U.S. 392, 399 (1976) (quotation omitted). Absent a specific waiver of sovereign immunity, the courts lack subject matter jurisdiction over claims against the federal government. See, e.g., United States v. Dalm, 494 U.S. 596, 608 (1990). Two such waivers of sovereign immunity are the Tucker Act, 28 U.S.C. § 1491, and the Little Tucker Act, 28 U.S.C. § 1346(a)(2). The Tucker Act provides that “the United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded . . . upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1). The Little Tucker Act provides, in turn, Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 15 of 23 PageID: 284 9 that the “district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims,” of a “civil action or claim against the United States, not exceeding $10,000 in amount, founded . . . upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1346(a)(2). Taken together, these statutes establish that the district courts and the Court of Federal Claims have concurrent jurisdiction over non-tort claims against the United States that do not exceed $10,000, and the Court of Federal Claims has exclusive jurisdiction over non-tort claims that exceed $10,000. See Clinton v. Goldsmith, 526 U.S. 529, 540 n.13 (1999) (“Under the Tucker Act, the Court of Federal Claims has exclusive jurisdiction over nontort claims against the Government for greater than $10,000.”); Hahn v. United States, 757 F.2d 581, 586 (3d Cir. 1985) (collecting cases) (“It is uniformly held that, for claims exceeding $10,000, the Tucker Act vests exclusive jurisdiction in the Claims Court.”); Baig v. Nuclear Regulator Commission, No. 10-0842, 2011 WL 2214660, at *6 (D.N.J. 2011) (“the Court of Federal Claims has exclusive jurisdiction of all contractual claims against the federal government over $10,000”). Further, many courts have recognized that claims arising from Tricare or CHAMPUS coverage disputes are the types of non-tort claims against the United States that must be brought in the Court of Federal Claims. See, e.g., Sellers, 633 F.2d at 107-08 (claim against CHAMPUS “is essentially one against the United States for the payment of damages” and therefore “is within the exclusive jurisdiction Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 16 of 23 PageID: 285 10 of the Court of Claims”); Green Hosp., 23 Cl. Ct. at 399 (finding that Court of Claims had jurisdiction over claim arising from CHAMPUS coverage dispute because it was “a claim for payment of benefits created by statute and payable from the national treasury”); Washington Hosp. Ctr. Corp., 1992 WL 23746, at *3 (finding that it was “abundantly clear that this Court lacks subject matter jurisdiction” over claim arising from denial of CHAMPUS benefits where plaintiffs alleged that United States “breached its contract as an insurer”). These authorities establish that Lourdes’s complaint can only be brought in the Court of Federal Claims. First, it exceeds $10,000. See Complaint ¶ 43(f) (seeking $310,549.61 from Tricare). Second, it arises from a non-tort – an alleged breach of contract. See id. ¶¶ 38-43 (under heading “Count Two Breach of Contract Against Defendant Tricare”). It therefore lies within the exclusive jurisdiction of the Court of Federal Claims. Finally, Lourdes cannot invoke this Court’s jurisdiction by couching its claims in terms of “failure to make all payments” (Count Three), breach of fiduciary duty (Count Four), or “failure to establish/maintain reasonable claims procedures” (Count Five). “The determination of whether a claim belongs in the district court or in the Court of Federal Claims depends upon whether the claim is ‘at its essence’ one covered by the relevant Court of Federal Claims statute . . . or is instead a constitutional or other statutory claim.” Pub. Warehousing Co. K.S.C. v. Def. Supply Ctr. Philadelphia, 489 F. Supp. 2d 30, 43 (D.D.C. 2007). Put another way, “a plaintiff whose claims against the United States are essentially contractual should not be Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 17 of 23 PageID: 286 11 allowed to avoid the jurisdictional (and hence remedial) restrictions of the Tucker Act by casting its pleadings in terms that would enable a district court to exercise jurisdiction under a separate statute and enlarged waivers of sovereign immunity.” Megapulse, Inc. v. Lewis, 672 F.2d 959, 967 (D.C. Cir. 1982). Thus, courts should “look beyond the pleadings of a case” to determine whether it is “at its essence a contract claim within the Tucker Act.” Id. If so, the district court lacks jurisdiction. Numerous courts have held that claims that are derivative of contract claims (such as breach of fiduciary duty and the like) must, as with the contract claims themselves, be brought in the Court of Federal Claims. See, e.g., Albrecht v. Comm. on Employee Benefits of Fed. Reserve Employee Benefits Sys., 357 F.3d 62, 68 (D.C. Cir. 2004) (district court lacked jurisdiction over breach-of-fiduciary-duty claim because claim depended “on the terms of a contract”); Villegas v. United States, 926 F. Supp. 2d 1185, 1202 (E.D. Wash. 2013) (claim of breach of fiduciary in excess of $500,000 could only be brought in Court of Federal Claims); Sellers, 633 F.2d at 108 (claims for declaratory judgment had to be brought in Court of Federal Claims because “we must look beyond the facial allegations of the complaint to determine the true nature of this suit” and suit sought “in substance” a “money judgment against the United States”). Lourdes’s claims for breach of fiduciary duty and the like are indistinguishable from these cases; the claims are based on an alleged insurance agreement between Lourdes’s patient and the United States, and Lourdes seeks a money judgment in Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 18 of 23 PageID: 287 12 excess of $10,000 from the United States Treasury. Accordingly, its claims must be brought in the Court of Federal Claims.2 D. The Superior Court had no jurisdiction to proceed on Lourdes’s tort claim against the United States and this Court has acquired none on removal. Under the doctrine of derivative jurisdiction, the case must be dismissed. 1. The United States cannot be sued for breach of contract in state court As discussed above, it is long and well established that the United States, its agencies, and instrumentalities are immune from suit except as Congress has expressly consented and that upon such consent, suit may be brought only in accordance with the strictest adherence to its statutory terms. Moreover, the precise terms of that consent define any court’s jurisdiction to entertain an action brought pursuant to it. See, e.g., Orff v. United States, 545 U.S. 596, 601-02 (2005); United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003). Also as discussed above, actions like this one, seeking to recover more than $10,000 from the United States and/or its agencies or employees for alleged breach of contract, are governed by the Tucker Act, 28 U.S.C. § 1491. Several provisions of the Tucker Act are significant here. First, the United States itself is the only proper defendant. See, e.g., Hairston v. United States, 99 Fed. Cl. 695, 697 (2011) (under the Tucker Act, “the only proper defendant for any matter before this court is the United 2 Lourdes also appears to invoke the Court’s jurisdiction under ERISA. See, e.g., Complaint ¶ 63 (“Plaintiff avers this Count to the extent ERISA governs this dispute.”). But “CHAMPUS, as a governmental program, is excluded from ERISA.” McGee v. Funderburg, 17 F.3d 1122, 1125 (8th Cir. 1994); see also 29 U.S.C. § 1003(b)(1) (providing that “the provisions of this subchapter shall not apply to any employee benefit plan if . . . such plan is a governmental plan”). Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 19 of 23 PageID: 288 13 States, not its officers, nor any other individual”); Stephenson v. United States, 58 Fed. Cl. 186, 190 (2003) (same). Second, the Court of Federal Claims has exclusive jurisdiction. Clinton, 526 U.S. 529, 540 n.13 (1999) (“Under the Tucker Act, the Court of Federal Claims has exclusive jurisdiction over nontort claims against the Government for greater than $10,000.”) (emphasis added). The import and effect of the exclusivity provision is clear and inarguable. Because the Court of Federal Claims has “exclusive” jurisdiction over non-tort claims against the United States in excess of $10,000, the Superior Court of New Jersey lacked subject matter jurisdiction over this case as it pertains to Tricare for Life. See, e.g., Areskog v. United States, 396 F. Supp. 834, 838 (D. Conn. 1975) (explaining that “the State Court lacked jurisdiction over the defendant United States” because Federal Tort Claims Act “confers exclusive jurisdiction on the district courts”); Jacobson v. United States, 422 N.J. Super. 561, 568 (App. Div. 2011) (“the federal government, as sovereign, is immune from suit in state courts absent the consent of Congress”); Spirakis v. Foreclosure of Deeds of Trust of Bank of N. Carolina to BNC Credit Corp., No. 14-19, 2014 WL 2854877, at *2 (E.D.N.C. June 23, 2014) (“the United States, and in turn its agencies the Department of the Treasury and the Board of Governors of the Federal Reserve System, enjoy sovereign immunity from suit in state court unless otherwise waived”). 2. This Court did not acquire jurisdiction upon removal. When a case is removed from state court, this Court’s jurisdiction is derivative of the state court’s jurisdiction. Consequently, if the state court lacked subject-matter Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 20 of 23 PageID: 289 14 jurisdiction, the federal court acquires none upon removal even if the federal court would have had jurisdiction over the case had it originated there. See, e.g., Arizona v. Manypenny, 451 U.S. 232, 243 n.17 (1981) (“it is well settled that if the state court lacks jurisdiction over the subject matter or the parties, the federal court acquires none upon removal, even though the federal court would have had jurisdiction if the suit had originated there”). This longstanding rule has been applied in a variety of contexts. See, e.g., Copley v. U.S. Department of Energy, 2012 WL 1111568, **6, 9 (S.D.W.Va. Mar. 30, 2012) (claim of employment discrimination under Title VII of the Civil Rights Act and the Age Discrimination in Employment Act could not be brought in state court, and district court therefore had no jurisdiction over the action on removal); Trico Development Assocs. v. O.C.E.A.N., Inc., 2011 WL 4550203, *3-4 (D.N.J. Sept. 29, 2011) (state court had no jurisdiction over third-party tort action filed against the United States; the District Court acquired no jurisdiction over the claim upon removal).3 As this case was commenced in a state court that lacked subject-matter jurisdiction over Lourdes’s claims against Tricare, this Court did not acquire subject- matter jurisdiction over those claims on removal and must dismiss the action for that 3 See also Turturro v. Agusta Aerospace Corp., 2010 WL 3239199, **2, 3 (E.D. Pa. Aug. 13, 2010) (same); Pleasant Gardens Realty Corp. v. H. Kohnstamm & Company, Inc., 2009 WL 2982632, *6 (D.N.J. Sept. 10, 2009) (federal court had no derivative jurisdiction to enforce subpoenas for EPA non-party witnesses in action initiated in state court and removed to federal court); Scoratow v. Smith, 2009 WL 890575 (W.D. Pa. Mar. 27, 2009) (dismissing tort action against the USPS removed from state court). Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 21 of 23 PageID: 290 15 reason. See generally Palmer v. City National Bank of W. Va., 498 F.3d 236, 244-46 (4th Cir. 2007); In re Elko County Grand Jury, 109 F.3d 554, 555 (9th Cir. 1997); Bradshaw v. General Motors Corp., 805 F.2d 110, 112-13 (3d Cir. 1986).4 4 28 U.S.C. § 1441, the general removal statute which governs removal based on diversity of citizenship, has been amended to preclude application of the derivative jurisdiction doctrine in cases removed pursuant to that statute. See 28 U.S.C. § 1441(f). However, the doctrine still applies to cases removed under 28 U.S.C. § 1442, which governs removal of lawsuits commenced in state court against “the United States or any agency thereof.” 28 U.S.C. § 1442; see generally Spirakis v. Foreclosure of Deeds of Trust of Bank of N. Carolina to BNC Credit Corp., No. 14-19, 2014 WL 2854877, at *2 (E.D.N.C. June 23, 2014). Here, Aetna removed the case pursuant to 28 U.S.C. § 1441, but the United States could have (and would have) removed the case pursuant to 28 U.S.C. § 1442 had Aetna not acted first. Although we have not found a case directly on point, we are not aware of any authority establishing that the Court would acquire jurisdiction over the United States by virtue of the fact that a non-federal co-defendant removed the case first, particularly in light of unambiguous authority holding that only the Court of Federal Claims has jurisdiction in cases such as this one. Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 22 of 23 PageID: 291 16 IV. Conclusion For the foregoing reasons, the Court should substitute the United States in place of Tricare for Life and dismiss the complaint as against the United States for lack of subject-matter jurisdiction. In the alternative, the Court is permitted to transfer the claims against the United States to the U.S. Court of Federal Claims. See, e.g., Twp. of Saddle Brook v. United States, No. 09-2373, 2010 WL 323348, at *3 (D.N.J. Jan. 19, 2010) (transferring breach-of-contract claims against United States to Court of Federal Claims); Rodriguez v. F.B.I., 876 F. Supp. 706, 709 (E.D. Pa. 1995) (same). Respectfully submitted, Dated: May 8, 2017 WILLIAM E. FITZPATRICK Acting United States Attorney By: /s/ David Bober DAVID BOBER Assistant U.S. Attorney Case 1:16-cv-09538-NLH-KMW Document 27-1 Filed 05/12/17 Page 23 of 23 PageID: 292 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY Lourdes Specialty Hospital of Southern New Jersey, Plaintiff, v. Aetna, Inc.; Tricare for Life, Defendants. Hon. Noel L. Hillman Civil No. 16-9538 (NLH)(KMW) Proposed Order This matter having been brought before the Court on a motion by William E. Fitzpatrick, Acting United States Attorney for the District of New Jersey (David Bober, Assistant United States Attorney, appearing), attorney for defendant the United States of America (incorrectly named herein as “Tricare for Life”), for an order dismissing the claims against the United States/Tricare for Life pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject-matter jurisdiction, and the Court having considered the matter, It is on this __________ day of ___________, 2017, ORDERED that the motion to dismiss filed on behalf of the United States/Tricare for Life is granted and the complaint is dismissed as against the United States/Tricare for Life for lack of subject-matter jurisdiction. _____________________________ Hon. Noel L. Hillman United States District Judge Case 1:16-cv-09538-NLH-KMW Document 27-2 Filed 05/12/17 Page 1 of 1 PageID: 293