United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
C. Reeves United States District Judge.
2, 2017, the Court directed the defendants to show cause why
this matter should not be remanded to state court based on
lack of subject matter jurisdiction. [Record No. 6] Because
the defendants have sufficiently demonstrated that federal
subject matter jurisdiction exists [Record No. 9], the show
cause order will be set aside.
Mark Morcus filed this action in Fayette Circuit Court in
April 2017, alleging that Defendants Medi-Copy Services, Inc.
and Menika Bobo provided inaccurate information to Guardian
Life Insurance Company in connection to Morcus's claim
for long-term disability benefits. [Record No. 1-1] Morcus
contends that on August 31, 2016, Medi-Copy (through its
agent, Bobo) faxed records to Guardian which erroneously
indicated that Morcus was capable of working on a full-time
basis. Id. at p. 7. Specifically, Morcus alleges
that Bobo reported information to Guardian without consulting
his physician and that she signed the physician's name
without authorization. Guardian terminated Morcus's
long-term disability benefits after receiving the forms from
Medi-Copy. Morcus filed an administrative appeal and, in
March 2017, Guardian reversed the decision.
contends that the defendants' actions constitute various
violations of Kentucky law, including a breach of the
Consumer Protection Act, K.R.S. § 367.110, et
seq., fraudulent and negligent misrepresentation,
interference with contractual relations, negligence, K.R.S.
§ 516.040 (forgery in the third degree), and K.R.S.
§ 311.560 (prohibition against practice of medicine
without a license).[1" name="FN1" id=
"FN1">1] Morcus alleges that, because of the
defendants' actions, he incurred attorney's fees and
costs in pursuing the administrative appeal with Guardian.
Further, he was without long-term disability payments for
approximately seven months and alleges that he has suffered
emotional distress and inconvenience as a result. [Record No.
1-1, p. 14]
“arising under” federal law may be removed from
state court to federal court. See 28 U.S.C.
§§ 1441(a), 1331. In determining whether a case
arises under federal law, the Court ordinarily looks to face
of the plaintiff's complaint. See Franchise Tax Bd.
of Cal. v. Constr. Laborers Vacation Trust, 1');">463 U.S. 1,
9-10 (1983) (describing “well-pleaded complaint”
rule). An exception occurs, however, when a federal statute
wholly displaces the state-law cause of action and creates
federal removal jurisdiction. See Palkow v. CSX Transp.,
Inc., 1 F.3d 543');">431 F.3d 543, 553 (6th Cir. 2005).
enacted the Employee Retirement Income Security Act of 1974
(“ERISA”) to “protect . . . the interests
of participants in employee benefit plans and their
beneficiaries.” 29 U.S.C. § 1001(b). The Act
contains a civil enforcement mechanism whereby plan
participants or beneficiaries may sue to enforce rights under
an ERISA plan. 29 U.S.C. § 1132(a). Section 1332(a)
completely preempts “any state-law cause of action that
duplicates, supplements, or supplants the ERISA civil
enforcement remedy.” Hogan v. Jacobson, 823
F.3d 879, 880 (6th Cir. 2016) (quoting Aetna Health Inc.
v. Davila, 542 U.S. 200, 209 (2004)). However, claims
arising from a duty that “is not derived from, or
conditioned upon, the terms of an ERISA plan are not
completely preempted.” Milby v. MCMC LLC, 844
F.3d 605, 609 (6th Cir. 2016) (citing Gardner v.
Heartland Indus. Partners, LP, 15 F.3d 609');">715 F.3d 609, 614 (6th
Cir. 2013) (internal quotation marks omitted).
least one of the plaintiff's claims fall within the
category of state-law claims that are completely pre-empted
under ERISA. See, e.g., Milby, 844 F.3d at 612
(state-law claim based on unauthorized practice of medicine
was completely preempted). In Davila, 542 U.S. at
210, the Supreme Court provided that a claim is preempted
when the following factors are met:
(1) the plaintiff complains about the denial of benefits to
which he is entitled only because of the terms of an
ERISA-regulated employee benefit plan; and (2) the plaintiff
does not allege the violation of any legal duty (state or
federal) independent of ERISA or the plan terms.
look “beyond the label placed on a state law
claim” to determine whether the first prong is
satisfied, and ask whether the claim is in essence for the
recovery of an ERISA benefit plan. Milby v. MCMC
LLC, 844 F.3d 605, 610 (6th Cir. 2016) (quoting
Peters v. Lincoln Elec. Co., 285 F.3d 456, 469 (6th
Cir. 2002) (internal quotation marks omitted)). Although
Medi-Copy and Bobo are third-parties who generally fall
outside the ERISA enforcement regime, Morcus alleges that
their conduct was part of the process used to assess his
claim for benefit payment under the plan. See Milby,
844 F.3d at 610-11. Accordingly, the damages alleged
“arise from the ultimate denial of disability
benefits” and Morcus's state law claims are
essentially “an alternative enforcement mechanism to
ERISA's civil enforcement provisions.” Id.
at 611 (quoting Hogan v. Jacobson, 823 F.3d 872, 880
(6th Cir. 2016)).
second prong of the Davila test asks the Court to
determine whether the plaintiff alleges the violation of an
independent legal duty. 542 U.S. at 210. A tort is
independent of ERISA when the duty conferred was “not
derived from, or conditioned upon, the terms of the
plan” and “there is no need to interpret the plan
to determine whether that duty exists.” Milby,
844 F.3d at 611 (quoting Gardner, 715 F.3d at 614).
Any duty the defendants owed Morcus as a claims processor for
the plaintiff's health care provider arose because of and
within the context of the benefits review required under his
ERISA plan. See, e.g., Hogan, 823 F.3d at 882. As
the Sixth Circuit explained under similar circumstances in
Milby, third-party administrators do not have an
independent duty under the Kentucky medical licensing law.
Milby, 844 F.3d at 612. Accordingly, Morcus's
negligence per se claim implicitly relies on ERISA to
establish the requisite duty of care. Because both prongs of
the Davila test are satisfied, subject matter
jurisdiction exists under 28 U.S.C § 1331.
on the foregoing analysis, it is hereby
that the Show Cause Order entered on June 2, 2017, is SET