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U.S. Court In Louisiana Remands Hospital�s Negligent Misrepresentation Claim Against Insurer To State Court


HLD, v. 33, n. 10 (October 2005)

U.S. Court In Louisiana Remands Hospital's Negligent Misrepresentation Claim Against Insurer To State Court

            The U.S. District Court for the Eastern District of Louisiana remanded a hospital's action against an insurer asserting the insurer negligently misrepresented that it would cover treatment provided to an enrollee of a Federal Employees Health Benefits Act (FEHBA) plan.

            Kindred Hospital New Orleans (Kindred), a long term acute care hospital, sued Blue Cross Blue Shield of Louisiana (Blue Cross) after the insurer refused to pay for services provided to one of its enrollees. According to Kindred, before admitting the patient at issue, Blue Cross represented that it would reimburse the facility for treatment provided to its enrollee pursuant to its health plan. Kindred contended that Blue Cross' assurance of coverage induced it to administer treatment to the patient. Kindred brought its action in state court, alleging breach of contract and detrimental reliance.

Blue Cross removed the action to federal court on the grounds that the claims arose under federal law because they challenged the administration of FEHBA benefits and that the FEHBA completely pre-empted the claims. Blue Cross also asserted that removal was proper under the federal officer removal statute, 28 U.S.C. � 1442(a)(1). The district court rejected these bases and remanded the action to state court. Subsequently, Blue Cross again sought removal to federal court, contending that Kindred had asserted new statutory violations that triggered removal under � 1442(a)(1) and had made references to Medicare that created a federal question. Kindred moved for remand.

The U.S. District Court for the Eastern District of Louisiana granted the motion to remand. First, the court rejected Blue Cross' argument that the case was removable under the federal officer removal statute, which is intended to protect officers of the federal government who run afoul of state law when acting pursuant to authority granted to them under federal law. Blue Cross asserted that the case was now removable because Kindred alleged for the first time in a summary judgment motion that the insurer had violated La. Rev. Stat. � 40:2010 when it paid part of the benefits owed to the patient's estate instead of to Kindred. In making this argument, Blue Cross relied on an unpublished Eleventh Circuit decision that found the federal officer removal statute permits a health plan insurer providing benefits under a federal program to remove a case where a provider is suing the insurer to compel an action that would be contrary to the terms of the federal plan. Even ignoring the fact that the case cited by Blue Cross is not binding authority, the court said Kindred was not seeking to hold the insurer directly liable under this statute, but rather referenced � 40:2010 only in support of its summary judgment motion on its negligent misrepresentation claim.

The court also rejected Blue Cross' contention that federal question jurisdiction now existed because Kindred asserted in its summary judgment motion that the insurer represented it would pay 70% of "Medicare allowable charges," which is governed by federal law. "To the extent that any interpretation of federal law is necessary to resolving this matter it would be minor compared to the other issues in the case," said the court.

Finally, the court declined to award Kindred attorney's fees and costs based on its contention that that Blue Cross systematically removes cases to federal court on frivolous grounds. While the court agreed that the second removal was based on tenuous grounds, it refused to find that Blue Cross lacked objectively reasonable grounds for removal.

Transitional Hosp. Corp. of La., Inc. v. Louisiana Health Serv. & Indemnity Co., No. Civ.A.05-2221, 2005 WL 2037553 (E.D. La. Aug. 16, 2005).


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