On May 3, 2016, the United States District Court for the Middle District of Pennsylvania published its opinion on Mikiewicz v. Hamorski and Erie Insurance Exchange, finding that simply because a state law claim involves a federal statute or would require a state court to make a determination as to the duties and obligations under the Medicare Secondary Payer Act, does not in and of itself provide a basis for removal from state court to federal court. Applying the well-pleaded complaint rule, the Court concludes that nothing on the face of Plaintiff’s motion to enforce the settlement agreement raises a question of federal law. The Court therefore removes the case from federal court and remands it back to state court.
On December 2013, Plaintiff Helen Mikiewicz had a motor vehicle accident with Defendant Stanley Hamorski, who was insured by Defendant Erie Insurance Exchange. The decision does not provide any details regarding the sequence of events leading up to the disagreement at hand, but it seems the parties reached an agreement to settle the matter, and sometime thereafter had some difficulty with seeing eye to eye on Medicare Secondary Payer (MSP) issues. As a result, on December 4, 2015, Plaintiff initiated this action in the Lackawanna County Court of Common Pleas alleging that Erie’s requirement to satisfy certain conditions in order to receive settlement funds violated Pennsylvania Rule of Civil Procedure 229.1, which requires settlement proceeds to be paid within twenty days of the execution of a Settlement Agreement and Release.
Approximately two weeks later, on December 17, 2015, Plaintiff filed a Motion to Enforce Settlement Release and Agreement against Erie. That same day, Erie filed its Answer and sought removal to federal court pursuant to 28 U.S.C. § 1441(a). According to Erie, removal to federal court was proper because Plaintiff’s claim involved federal law, the Medicare Secondary Payer Act (MSPA) and therefore federal question jurisdiction exists under 28 U.S.C. § 1331.1. Erie further maintains that removal is appropriate because the MSPA is an “extraordinary” statute that “completely preempts” state law. In response, on January 13, 2016, Plaintiff moved to remand the action back to the Lackawanna County Court of Common Pleas.
Plaintiff’s Claims Do Not Arise Under Federal Law
The Court reiterates that federal district courts have original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. However, whether an action “arises under” federal law is governed by the well-pleaded complaint rule. If a federal question is presented on the face of the plaintiff’s complaint, 28 U.S.C. § 1441(a) generally permits a defendant to remove the action to federal court. Therefore, It is Erie’s burden to show that removal was proper and that the “action is properly before the federal court.”
Erie contends that federal question jurisdiction exists under 28 U.S.C. § 1331 because “the Plaintiff’s Motion to Enforce Settlement Release and Agreement involves the MSP, a federal statute and its provisions including but not limited to 42 U.S.C. Section 1395y(b), and, in particular, Medicare’s entitlement to reimbursement from the primary payer.” However, the Court here indicates that simply because a state law claim “involves” a federal statute or would require a state court to “make a determination as to the duties and obligations in the MSP Act,” does not in and of itself provide a basis for removal. Applying the well-pleaded complaint rule, the Court concludes that “nothing on the face of Plaintiff’s motion to enforce the settlement agreement raises a question of federal law.”
Instead, Erie raises federal law as a defense to Plaintiff’s claim. As the Supreme Court has long recognized, a “case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff’s complaint, and even if both parties concede that the federal defense is the only question truly at issue.” Therefore, Erie cannot, “merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated.”
The MSP Act Does Not Completely Preempt State Law
Erie next asserts that removal is appropriate because the MSP “triggers the complete pre-emption doctrine because an interpretation of the MSP would set forth the obligation of all parties involved in civil litigation nationwide where there is an issue of whether Medicare is entitled to repayment of expenses incurred in civil litigation,” and the “issue is so extraordinary that a federal interpretation should completely preempt any state cause of action.” The “complete pre-emption doctrine,” a corollary to the well-pleaded complaint rule, provides that in certain limited circumstances “the pre-emptive force of a statute is so ‘extraordinary’ that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.”
“Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law.” Here, the Court points out that Erie pointed to no case supporting its assertion that the MSP is so “extraordinary” that it completely preempts state law and the Court is aware of none. In fact, courts in this Circuit have consistently held that a state law cause of action that “references or involves” the MSP or the Medicare statute is not removable to federal court because it does not raise a federal question. In addition, courts outside this Circuit consistently have held that “mere reference to the MSP and the Medicare statute is insufficient to confer federal question jurisdiction.”
Expenses, Costs, and Attorneys’ Fees
Plaintiff requests expenses, costs, and attorneys’ fees in connection with the Defendant’s improper removal to federal court. Pursuant to 28 U.S.C. § 1447(c) “an order remanding the case to state court may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal proceedings.” The Court here concludes that Erie lacked an objectively reasonable basis for removal. Plaintiff’s state law cause of action seeking to enforce a settlement agreement for allegedly violating state law–even if the claim hypothetically “involves” a federal statute such as the MSP–was plainly insufficient to permit removal. Because Erie’s arguments in support of removal wholly lack merit and have been consistently rejected by the federal courts, the Court concludes that Erie’s attempted removal of this action to federal court was objectively unreasonable. Accordingly, the Court grants Plaintiff’s motion for attorneys’ fees and costs under § 1447(c).
For the reasons set forth, the Court grants Plaintiff’s Motion to Remand to state court and for attorneys’ fees and costs. The case therefore is remanded to the Lackawanna County Court of Common Pleas, reminding us all that it is the claim before the court that will decide where the case belongs. Simply because an MSP issue may be a defense does not mean the case belongs in federal court. This case follows a long line of cases over the last several years in which state courts have applied and interpreted the MSP Act and resulting case law, applying it to the applicable state law. As always, Optum’s Settlement Solutions will continue to monitor and inform on the evolution of such federal and state case law.