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)
(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unpublished Eleventh Circuit decision that found the federal officer removal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
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
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).