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Progressive Insurance Co. v. Blue Cross Blue Shield of Michigan

United States District Court, E.D. Michigan, Southern Division

July 25, 2019

Progressive Insurance Company, Plaintiff,
Blue Cross Blue Shield of Michigan et al., Defendants.



         I. Introduction

         Before the Court is Plaintiff Progressive Insurance Company's (“Progressive”) Motion to Remand. Dkt. No. 8. Also before this Court is Defendants' Motion to Dismiss. Dkt. No. 5. Plaintiffs filed this action in Oakland County Circuit Court and Defendants removed the action to this Court, asserting that this Court has jurisdiction over the matter pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiff asserts that this Court does not have federal question jurisdiction over this matter because this is not a case arising under ERISA. Defendants move this Court to dismiss this action alleging that Plaintiff does not have standing to pursue their claims and that Plaintiff failed to exhaust administrative remedies. For the reasons discussed below, this Court will deny Plaintiff's Motion to Remand and grant Defendants' Motion to Dismiss.

         II. Factual Background

         On or about July 22, 2016, Diane Mills-Gutierrez sustained bodily injuries in a motor vehicle accident. Dkt. No. 1, pg. 12 (Pg. ID 12). At the time of the accident, Mills-Gutierrez had a health insurance policy through Defendants, the Blue Care Network (“BCN”) and Blue Cross Blue Shield of Michigan (“Blue Cross”). Id. at pg. 13 (Pg. ID 13). It is not disputed that Mills-Gutierrez's employee benefits plan is an ERISA plan. See Dkt. No. 12, pg. 2 (Pg. ID 167) (Plaintiff stating that “Defendant is an ERISA plan.”). Mills-Gutierrez received medically necessary treatment for injuries arising out of the automobile crash at the Mary Free Bed Rehabilitation Hospital (“Mary Free Bed”) from August 1, 2016 through October 26, 2016. Id. Her medical expenses amounted to $250, 215.75. Id. BCN paid for most of Mills-Gutierrez's treatment, but left a balance of $49, 781.50 outstanding because it determined that some of her claims were not medically necessary. Id.; Dkt. No. 9, pg. 15 (Pg. ID 142).

         Mills-Gutierrez assigned Mary Free Bed the right to pursue payment of the outstanding medical bill. Id. Mary Free Bed filed a lawsuit against Progressive for payment of the outstanding medical bill. Id. Progressive settled the claim in the amount of $45, 301.17. Id. However, Progressive asserts that Defendant Blue Cross is the primary insurer in this matter and therefore Progressive is entitled to a full reimbursement of the payments it made to Mary Free Bed. Id. Defendants do not dispute that they are the primary insurer. Dkt. No. 9, pg. 15 (Pg. ID 142).

         Plaintiff filed the present action against Defendants on December 13, 2018 in Oakland County Circuit Court. Dkt. No. 1, pg. 11 (Pg. ID 11). Defendants removed the action to this Court on January 17, 2019. Dkt. No. 1. Defendants' Notice of Removal asserts that removal to this Court is proper because this is a suit seeking payment of medical benefits filed by a participant in an employee welfare benefit plan (the Blue Care Network Plan) as defined by ERISA. Id. at pg. 5 (Pg. ID 5). Therefore, Defendants assert that ERISA preempts this suit and is removable to this Court. Id. Plaintiff filed the present Motion to Remand on February 6, 2019. Defendants opposed the Motion on February 20, 2019. Dkt. No. 9. Plaintiff replied on February 27, 2019. Dkt. No. 12.

         III. Legal Standard

         The removal statute states that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant” to federal court. 28 U.S.C. § 1441(a). Determination of whether a particular case arises under federal law turns on the well-pleaded complaint rule. The well-pleaded complaint rule holds that a cause of action arises under federal law when the plaintiff's well-pleaded complaint raises issue of federal law. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). A defense of federal preemption is not grounds for federal question jurisdiction because the defense does not appear on the face of a well-pleaded complaint. Id. An exception to the well-pleaded complaint rule exists where a federal statute has completely preempted a particular area of a complaint, making the claims “necessarily federal in character.” See Id. at 63-64. In other words, “[o]nce 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.” Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987).

         IV. Discussion

         1. Motion to Remand

         Plaintiff's Motion to Remand argues that it seeks relief pursuant to M.C.L. 500.3109a and not ERISA. Dkt. No. 8, pg. 3 (Pg. ID 98). Plaintiff contends that it never mentioned ERISA in its complaint. Id. at pg. 4 (Pg. ID 99). Plaintiff also states that Defendants failed to state how the employee benefit plan is funded in their Notice of Removal, which is critical information to have in order for this Court to exercise subject matter jurisdiction over this case. Id. Plaintiff asserts that if a plan is not self-funded, then ERISA is not applicable and state law governs. Id. at pg. 10 (Pg. ID 100).

         Defendant asserts that ERISA completely preempts the claims asserted in Plaintiff's complaint pursuant to the two-prong test asserted in Aetna Health Inc. v. Davila. 542 U.S. 200 (2004). Dkt. No. 9, pg. 16 (Pg. ID 143).

         ERISA § 502(a)(1)(B) states that: “A civil action may be brought-(1) by a participant or beneficiary- . . . (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). ERISA completely preempts a claim brought under state law “if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant's ...

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