Concert Health Plan Insurance v. Houston Northwest Partners, Ltd.

265 F.R.D. 319, 2010 U.S. Dist. LEXIS 18905, 2010 WL 742455
CourtDistrict Court, N.D. Illinois
DecidedMarch 3, 2010
DocketNo. 09 C 7550
StatusPublished

This text of 265 F.R.D. 319 (Concert Health Plan Insurance v. Houston Northwest Partners, Ltd.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Concert Health Plan Insurance v. Houston Northwest Partners, Ltd., 265 F.R.D. 319, 2010 U.S. Dist. LEXIS 18905, 2010 WL 742455 (N.D. Ill. 2010).

Opinion

MEMORANDUM OPINION AND ORDER

ELAINE E. BUCKLO, District Judge.

This action was brought by Concert Health Plan Insurance Company (“Concert”) against defendant Houston Northwest Partners, Ltd. d/b/a/ Houston Northwest Medical Center (“Houston”). Concert’s complaint seeks declaratory and injunctive relief from Houston. Houston has moved to dismiss this action for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and for a lack of subject matter jurisdiction under Rule 12(b)(1). In the alternative, Houston has moved to dismiss for improper venue under Rule 12(b)(3).

I. Background

Concert is an Illinois insurance company which provides medical benefits to its members pursuant to the PHCS Network PPO (“the Plan” or “the ERISA Plan”). Private Healthcare Systems, Inc. (“PHCS”) is an entity which contracts with insurance companies and health care providers to facilitate and provide provider networks and comprehensive medical management systems. Houston, a Texas hospital, entered into one such contract, the “PHCS Preferred Facility Agreement,” with PHCS (“the Houston contract”) to provide managed care. Concert entered into a “Subscriber Services Agreement” with PHCS (“the Concert contract”) to provide provider networks and a comprehensive medical management system to Concert. [321]*321Concert entered into the Concert contract in order to receive the benefits of a PPO network, including lower rates for services by participating providers.

On or about May 30, 2007, patient A. Zan-gri was admitted to Houston for necessary medical treatment. Concert provided health insurance to Zangri. On June 25, 2007, after it had discharged Zangri from the hospital, Houston submitted a claim to Concert for payment of Zangri’s medical bills. After Houston submitted its claim, Concert paid Houston $26,214.26, which was over $10,000 less than what was due under the Houston contract. On or about August 20, 2007, Houston appealed Concert’s underpayment and advised Concert and PHCS that the contractual allowance was $37,831.53. After taking into account Zangri’s responsibility of $753.24, Concert still owed Houston $10,864.03. Due to Concert’s refusal to make any additional payments and the length of time involved in the dispute, the contractual discount for this claim, provided for under the Houston contract, is no longer available and Houston asserts that Concert is now liable for the full amount of the charges (which total $69,960.91 plus interest, costs, and attorney’s fees). As a result of Concert’s failure to pay the amount due, Houston instituted arbitration proceedings against Concert in Texas. This lawsuit followed.

II. Analysis

A. Subject Matter Jurisdiction

1. Federal Question Jurisdiction

I first must determine whether I have subject matter jurisdiction over this action. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 587-88, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (where resolution of subject matter jurisdiction is not “arduous,” “both expedition and sensitivity to state courts’ coequal stature should impel the federal court to dispose of [subject matter jurisdiction] first”). Houston argues that neither federal question nor diversity jurisdiction is present here and thus subject matter jurisdiction is lacking.

For federal question jurisdiction to exist, a case must arise “under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. “Ordinarily a court determines whether there is federal question jurisdiction by examining the plaintiffs well-pleaded complaint, for it is long-settled law that a cause of action arises under federal law only when the plaintiffs well-pleaded complaint raises issues of federal law.” Rice v. Panchal, 65 F.3d 637, 639 (7th Cir.1995) (internal quotations omitted). In the context of a declaratory judgment, the well-pleaded complaint rule requires that jurisdiction be determined by whether the federal question would exist over the presumed suit by the declaratory judgment defendant. GNB Battery Technologies, Inc. v. Gould, Inc., 65 F.3d 615, 619 (7th Cir.1995). Houston argues that, despite Concert’s citation to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002, et seq. (“ERISA”), this dispute over payment is essentially a breach of contract case, governed by Texas law. In a one-sentence response, with no citation to case law, Concert cryptically states that, “While Houston is correct that this matter does not involve a claim for benefits under ERISA, the issue does involve a question arising under an Illinois health insurance plan governed by ERISA.” Resp. at 8.

In the end, I must determine whether a federal question would exist within the “presumed suit” by Houston against Concert. As this dispute involves a benefits plan, I am mindful of the broad reach of preemption under ERISA. ERISA is a comprehensive civil-enforcement scheme for employee welfare benefit plans that completely preempts any state-law cause of action that “duplicates, supplements, or supplants” an ERISA remedy. Aetna Health Inc. v. Davila, 542 U.S. 200, 209, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). Complete preemption converts a state law civil complaint alleging a cause of action that falls within ERISA’s enforcement provisions into “ ‘one stating a federal claim for purposes of the well-pleaded complaint rule.’ ” Id. (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65-66, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). “[T]he ERISA civil enforcement mechanism is one of those provisions with such ‘extraordinary [322]*322pre-emptive power’ that it ‘converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.’ ” Franciscan Skemp Healthcare, Inc. v. Centr. States Joint Bd. Health and Welfare Trust Fund, 538 F.3d 594, 596 (7th Cir.2008) (quoting Davila, 542 U.S. at 209, 124 S.Ct. 2488).

Section 502(a), ERISA’s civil enforcement mechanism, establishes that a civil action may be brought by a participant or beneficiary: “[T]o 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 plant.]” 29 U.S.C. § 1132(a)(1)(B). Therefore, if a party’s state law claims fall under this § 502(a)(1)(B) definition, they are preempted by ERISA.

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265 F.R.D. 319, 2010 U.S. Dist. LEXIS 18905, 2010 WL 742455, Counsel Stack Legal Research, https://law.counselstack.com/opinion/concert-health-plan-insurance-v-houston-northwest-partners-ltd-ilnd-2010.