United States District Court, E.D. Kentucky, Southern Division, Pikeville
PIKEVILLE JOSHUA L. HILL, Plaintiff,
PIKEVILLE MEDICAL CENTER, INC., Defendant.
MEMORANDUM OPINION AND ORDER
R. Thapar, United States District Judge
Hill is a podiatrist who used to work at Pikeville Medical
Center (“PMC”). He believes that PMC might have
miscalculated the payments he deserved for the services he
performed. R. 12 at 1-2. So he sued PMC, seeking “a
full and complete accounting of its calculations” of
his payments and a judgment against PMC for any leftover
payments that the accounting might reveal. R. 1-1 at 6. As
this would seem to be a run-of-the-mill contract dispute, and
as contract disputes are governed by state law, Hill brought
this case in state court. Id. PMC removed it here,
R. 1, and Hill moved to remand. R. 9. As the removing party,
PMC has the “burden” of convincing the Court that
it has jurisdiction. Alexander v. Elec. Data Sys.
Corp., 13 F.3d 940, 948 (6th Cir. 1994). If the Court
does not, the case must go back to where it came from.
federal court can assert jurisdiction based either on
diversity (when the plaintiff and defendant are citizens of
different states arguing over an amount greater than $75,
000, 28 U.S.C. § 1332) or a federal question (when the
dispute “aris[es] under the Constitution, laws, or
treaties of the United States” rather than of an
individual state, 28 U.S.C. § 1331). Hill and PMC are
both citizens of Kentucky, so diversity will not work. But
PMC contends that this case involves a federal question. R. 1
at 3-4; R. 10 at 3-5.
determine whether [Hill's] claims arise under federal
law, ” the Court must “examine the ‘well
pleaded' allegations of [his] complaint and ignore
[PMC's] potential defenses.” Beneficial
Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003). In
simpler terms, the Court must ask: Do Hill's claims
depend on federal law? If the answer is yes, then the Court
has jurisdiction. If the answer is no, then the Court does
not have jurisdiction- even if PMC might raise a federal-law
defense. This well-pleaded complaint rule makes the plaintiff
the “master” of his complaint. Caterpillar
Inc. v. Williams, 482 U.S. 386, 398 (1987). Thus,
although the removing defendant (PMC) must prove that
jurisdiction exists, the plaintiff (Hill) may choose
whether to establish that jurisdiction in the first
do so in two ways, which this Court mapped out in Dillon
v. Medtronic, Inc., 992 F.Supp.2d 751, 755-757 (2014).
There is the easy way: stating a federal cause of action.
See id. at 755-56 (“As Justice Holmes famously
quipped, ‘[a] suit arises under the law that creates
the cause of action.'” (quoting Am. Well Works
Co. v. Layne & Bowler Co., 241 U.S. 257, 260
(1916))). And then there is the hard way: bringing a
state-law cause of action that “contain[s]
‘significant federal issues.'” Id.
at 756 (quoting Grable & Sons Metal Prods., Inc. v.
Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005)).
The hard part lies in determining what exactly a
“significant federal issue” looks like. To help
out, the Supreme Court has provided a four-part test. A
state-law claim triggers federal-question jurisdiction if the
embedded federal issue is (1) necessarily raised, (2)
actually disputed, (3) substantial, and (4) if a federal
court can resolve it “without upsetting the traditional
balance of state and federal judicial power.”
Id.; see also Grable, 545 U.S. at 313-14.
argues that Hill wrote his complaint in a way that hides the
federal question at issue here. R. 10 at 2. So-called artful
pleading creates an exception to the general rule that the
federal question must be evident on the face of the
complaint. If a plaintiff has artificially pled his claims as
state claims when “in reality [they] depend on federal
law, ” then, artifice aside, those claims will still
give rise to federal-question jurisdiction. Dillon,
992 F.Supp.2d at 758; see Rivet v. Regions Bank of
Louisiana, 522 U.S. 470, 476 (1998). It is rather
unclear what work this “exception” actually does,
as “[t]here is no artifice in failing to plead a claim
that does not even exist”-and if a federal claim
does exist, a court can find it simply by applying
the four-part Grable test. Dillon, 992
F.Supp.2d at 758. So the question really is whether
there's any “there” there: Whether Hill meant
to or not, has he established federal jurisdiction by either
stating a federal cause of action or raising a significant
handed only Hill's complaint, a reader would not quickly
find a federal cause of action. See R. 1-1. Nor on
further investigation is there one hiding in the shadows.
Hill seeks an accounting and, if appropriate, judgement for
money owed under a contract. Both are contract-law claims,
and contract-law claims rise under state-not federal-law.
See R. 9-2 ¶ 8.8 (Podiatrist Employment
Agreement) (“This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of
Kentucky.”); see also Prince v. Appalachian
Reg'l Healthcare, Inc., 154 F.Supp.3d 516, 519 (E.D.
Ky. 2015) (noting that because the plaintiff pled only
state-law claims, including breach of contract,
“[t]here is no question that, under the well-pleaded
complaint rule, there would be no federal-question
jurisdiction here”); James T. Scatuorchio Racing
Stable, LLC v. Walmac Stud Mgmt., LLC, 941 F.Supp.2d
807, 824 (E.D. Ky. 2013) (“To maintain an accounting,
the claimant must have a contractual or fiduciary
relationship with the defendant[.]” (quoting Gentry
v. Cremeens, No. 2008-CA-830-MR, 2009 WL 1491358, at *2
(Ky. Ct. App. May 29, 2009)) (emphasis added)).
this case to Berea v. Mesa Medical Group, PLLC, 779
F.3d 352 (6th Cir. 2015), on which PMC relies. R. 10 at 2.
There, the plaintiff contended that her hospital employer had
wrongfully withheld certain FICA taxes from her paycheck.
Id. at 355-56. (The Federal Insurance Contribution
Act, or “FICA, ” imposes taxes to pay for
Medicare and Social Security. See 26 U.S.C.
§§ 3101-28.) She pled her case as a state-law claim
for unpaid wages, but the courts were not fooled: She was
seeking a federal-tax refund, and thus her cause of action
arose directly under the federal tax-refund law. Id.
at 357-58; see 26 U.S.C. § 7422(a). Here,
however, Hill's claim is no federal claim “in
disguise.” Id. at 357. Hill's contract
entitles him to payment according to a fee schedule that the
Centers for Medicare and Medicaid Services
(“CMS”) set via regulation. R. 9-2 ¶ 2.1.1.
But neither party has identified a federal statute
giving physicians a right to seek payment on those terms. Nor
do the fee-schedule regulations; indeed, a regulation
“may not create a right that Congress has not.”
Alexander v. Sandoval, 532 U.S. 275, 291 (2001). PMC
is obliged to pay Hill on these terms because that is what it
contracted to do. Because state law governs that contract,
Hill's cause of action to enforce its terms arises under
state- not federal-law. And because his cause of action does
not arise under any federal law, the easy way into federal
court is blocked.
hard way it is. PMC argues that Hill's complaint
“relies on federal law.” R. 10 at 3. Just from
that phrasing, it seems PMC will have a tough time proving
its case: It must show not merely that Hill's complaint
“relies on federal law, ” but that it raises a
“significant federal issue.” Grable,
545 U.S. at 312.
would presumably argue that it does. And that argument would
be based on the following facts, on which both parties agree.
R. 9; R. 10. PMC agreed to pay Hill in terms of “Work
Relative Value Units” (WRVUs). R. 9-2 ¶ 2.1.1. If
Hill hit his contractual “target”-1, 339.75 WRVUs
per quarter-PMC would pay him his full salary. Id.
¶ 2.1.5. If Hill came in a few WRVUs short of target any
given quarter, PMC would reduce his salary by that number
times $46.65. Id. ¶ 2.3. But if Hill had worked
more WRVUs than required, PMC would pay him a bonus of the
excess WRVUs times $46.65. Id. ¶ 2.2. Hill says
he “has reason to believe that [PMC] did not give him
proper credit for the” total number of WRVUs he worked
and did not pay him as much as it should have. R. 9 at 3.
Thus, Hill wants PMC to “provide him with the
underlying documentation [so] that he can verify [its]
calculations” and then to “adjust the
compensation he has been paid accordingly.” R. 12 at 2.
reason PMC believes this dispute raises a federal question is
that the value of a single WRVU is defined through Medicare,
a federal program. R. 10 at 3. Indeed, CMS-an arm of the
Department of Health and Human Services-publishes an updated
WRVU schedule every year. See Revisions to Payment
Policies Under the Physician Fee Schedule, 81 Fed. Reg. 80,
170 (Nov. 15, 2016). PMC argues that this case-a dispute over
the WRVUs for which it should have paid Hill-“brings
into conflict WRVU's themselves.” R. 10 at 3. This
case also, according to PMC, “involve[s] a dispute
o[ver]” the “uniform national definitions”
and “codes” that CMS promulgates to determine how
(and for what) doctors get paid. R. 10 at 3-4 (quoting 42
C.F.R. § 414.40(a)).
first question is whether these allegedly federal issues are
“necessarily raised” here. Dillon, 992
F.Supp.2d at 756. It is hard to answer “yes” to
that question when these issues might not even arise at all.
Before anything else, Hill seeks an accounting. His right to
an accounting has nothing to do with the value of WRVUs at
any given time; as discussed, this is merely a question of
state contract law. And without that accounting, it is not
clear whether PMC underpaid Hill. It might not have. If it
did not, then Hill has no contract-law claim against it for
failing to perform under the compensation agreement, as Hill
seems to recognize. R. 12 at 1 (“[Hill] claims that
[PMC] may have failed to give him proper
credit[.]”). So any such claim-let alone any federal
issues that might lurk underneath it-is not
the claim were “necessarily raised, ” it must
involve an “actually disputed” issue of federal
law. Dillon, 992 F.Supp.2d at 756. For an issue to
be actually disputed, of course, the parties must actually
disagree about it. Yet here, Hill is not arguing that PMC
misunderstood how WRVUs and the attendant coding
system work; he is merely arguing that PMC
misapplied those concepts in this case. And he means
that in the most clerical of ways: For example, he believes
someone at the payroll office miscoded his work, and caused
PMC to underpay him, by “hitting ‘2' instead
of ‘3'” on the keyboard. R. 12 at 2. This
case would perhaps be different if the parties had
“crossed swords” over the best way to read a
federal law. Mikulski v. Centerior Energy Corp., 501
F.3d 555, 570 (6th Cir. 2007) (quoting Arbaugh v. Y&H
Corp., 546 U.S. 500, 512 (2006)). But there is little
room for interpretation here. The WRVUs and their related
codes are what they are, a tautology that neither party
appears to dispute.
even if some federal issue were “necessarily
raised” and “actually disputed, ” that
issue must be “substantial.” Dillon, 992
F.Supp.2d at 756. This prong brings a degree of subjectivity
into the mix, requiring a court to “decide whether the
question to be resolved is important” enough to deserve
a portion of the court's limited store of federal
jurisdiction. Mikulski, 501 F.3d at 570; see
Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S.
677, 700 (2006)). Judicial voodoo is always difficult to
perform. But whatever “substantial” might mean,
it cannot mean the kinds of errors that Hill alleges-errors
that he is not sure even occurred. To address the questions
of fact and state law presented here, a court will possibly
need to refer to a federal regulation. But it will certainly
not need to resolve any substantial issue of federal law.
Assume for example that everything Hill says is true, that
PMC really did misapply the relevant WRVUs, and thus that PMC
really did miscalculate Hill's wages. If ...