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Mayer v. Mercy Health Services, LLC

United States District Court, E.D. Missouri, Eastern Division

February 11, 2019

URSULA MAYER Plaintiff,
v.
MERCY HEALTH SERVICES, LLC d/b/a/ MERCY HEALTH and LIFE INSURANCE COMPANY OF NORTH AMERICA d/b/a/ CIGNA GROUP INSURANCE, Defendants.

          MEMORANDUM AND ORDER

          JEAN C. HAMILTON UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff's Motion to Remand, filed April 8, 2018, (ECF No. 14) and Defendant Life Insurance Company of North America's Motion to Dismiss, filed April 30, 2018. (ECF No. 27). The matter is fully briefed and ready for disposition.

         BACKGROUND [1]

         On December 13, 2017, Plaintiff filed a State Court Complaint in the Circuit Court of St. Louis County, Missouri. In her State Court Complaint, Plaintiff alleges that she is an employee of Mercy and was insured under a group long term disability (“LTD”) insurance policy (“The Policy” issued by Cigna; that Plaintiff became totally disabled as defined in the Police; that she applied for LTD benefits under the Policy; and that her application for LTD benefits was denied (ECF No. 6, ¶¶ 23-41). Count I of the Complaint alleges Breach of Contract against Cigna. Count II alleges Vexatious Refusal to Pau against Cigna. Count III alleges tortious interference with Contract against Mercy. Count IV alleges Civil Conspiracy against Mercy and Cigna (jointly, “Defendants”). (ECF No. 6 at 7-12).

         Plaintiff alleges that: “Mercy is organized exclusively for religious, charitable, scientific, and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code” (“IRC”); the “Mercy Articles of Incorporation require that Mercy operate to serve the mission of the Roman Catholic Church” and that it operate “to evidence the policies of the Sisters of Mercy and Mercy Health Ministry”; “Mercy adheres to and is guided by the Ethical and Religious Directives for Catholic Health Services of the National Conference of Catholic Bishiops”; in promotional material Mercy describes its values to include “wisely us[ing] our talents and resources to strengthen Mercy as a ministry of the Church”; Mercy is associated with the Roman Catholic Church as well as the Sisters of Mercy, as defined by [The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. (“ERISA”)], as it shares common religious bonds and convictions of the Church”; “Mercy is ‘associated with a church or a convention or association of churches'”; and Mercy's articles of incorporation and values “affirm its obligation to act in conformity with the teachings of the Catholic church and the Sisters of Mercy.” (ECF No. 6, ¶¶ 4-13, 17-19). The Complaint further alleges that, based on the foregoing, the LTD Plan at issue is a “church plan” as defined by ERISA; that, therefore, the LTD Plan is exempt from ERISA pursuant to 29 U.S.C. § 1003(b) and the “contract is subject to the law of the State of Missouri.” On March 9, 2018, Cigna timely removed Plaintiff's cause of action to the United States Court for the Eastern District of Missouri based on federal question jurisdiction, 28 U.S.C. § 1331 On March 12, 2018, Defendant Mercy Health Services, LLC consented to Removal. (ECF No. 11). In its Notice of Removal, Defendant Cigna asserted that the Policy was issued in connection with an “employee welfare benefit plan” as that term is defined in ERISA 29 U.S.C. § 1002(1), and that the Policy is therefore subject to ERISA and the Plaintiff's state law claims are preempted by ERISA. (ECF No. 1, ¶¶ 10, 15). In support of the assertion that the policy is subject to ERISA the Notice of Removal states that the policy application states that ‘Mercy reported that it filed ERISA reports” and “provided an ERISA plan name and ERISA plan numbers in conjunction with its short term and long term disability policies”; that an ERISA coverage worksheet which Mercy provided to Cigna reflects that “the policyholder” is not a religious organization or hospital; and that Mercy “has been filing ERISA Form 5500s” for the LTD Plan since “at least 2009.” (ECF No. 1, ¶¶ 11-14).

         On April 8, 2018, Plaintiff filed her Motion to Remand (ECF No. 14) reasserting her claim that her cause of action is not preempted by ERISA and that Removal was not proper because the LTD Plan is a church plan, and therefore the Court does not have federal question jurisdiction; that Mercy has argued in prior cases that its pension plan is exempt from ERISA because Mercy is controlled by and associated with the Catholic Church; that the doctrine of judicial estoppel prevents Mercy from asserting a claim in the instant matter that is inconsistent with its claim in prior proceedings that ERISA did not apply. (ECF No. 15, at 5).In opposition to the Motion to Remand, Defendants contend that ERISA preempts the allegations of Plaintiff's Complaint, and therefore, the Court has jurisdiction (ECF No. 26). Specifically, Defendants argue that Mercy Health made clear elections to make its LTD Plan an ERISA plan pursuant to 26 U.S.C § 410(d). (ECF No. 26, 9-10). On April 30, 2018, Defendant Cigna filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (ECF No. 27) and Defendant Mercy Health Services, LLC joined. (ECF No. 30). The Motion to Dismiss also argues that Plaintiff's claims are preempted by the provisions of ERISA. (ECF No. 28).

         On June 25, 2018, the Court issued a Memorandum and Order holding Plaintiff's Motion to Remand and Defendants' Motion to Dismiss in abeyance. (ECF No. 43). The Court determined with regard to judicial estoppel, that the status of Mercy's pension plan as a Church Plan is not determinate of whether the LTD Plan at issue is also a Church Plan, and the Defendants are not estopped from arguing that the LTD Plan is not a Church Plan. (ECF No. 43 at 17). The Court further determined that the Defendants have not effectively opted the LTD Plan into ERISA pursuant to § 410(d). The Court also determined that “Defendants have the burden to establish that the…LTD Plan is not a church plan and thus subject to ERISA” and found that it did not have sufficient verified facts before it to determine whether or not the LTD plan is a church plan, and therefore, whether or not it is exempt from ERISA. (ECF No. 43, at 25). The Court granted the parties thirty (30) days to conduct discovery for the limited purpose of developing a record relevant to whether the LTD Plan is a church plan. (ECF No. 43 at 26).

         On July 25, 2018, and on October 22, 2018, the Parties were granted extensions of time to conduct their limited discovery. (ECF Nos. 45, 47). On November 28, 2018, the Plaintiff filed her supplemental memorandum with the court. (ECF No. 50). On November 30, 2018, Defendants asked for additional time to file their supplemental memorandum. (ECF Nos. 51, 53). On December 28, 2018, Defendant Mercy filed its supplemental memorandum. (ECF No. 55). On January 2, 2019, the Court granted Defendant Cigna leave to join Defendant Mercy's memorandum. (ECF No. 57).

         LEGAL STANDARD

         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. “The presence or absence of federal-question jurisdiction is governed by the ‘well pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc. v. Williams, 482, U.S. 386, 392 (1987)(citation omitted). See also, Gaming Corp. of America v. Dorsey & Whitney, 88 F.3d 536, 542 (8th Cir. 1996) (“The ‘well-pleaded complaint rule' requires that a federal cause of action must be stated on the face of the complaint before the defendant may remove the action based on federal question jurisdiction.”) (quoting Caterpillar, 482 U.S. at 392). Because federal law provides that Plaintiffs are the “masters of the complaint, ” plaintiffs “may avoid federal jurisdiction by exclusive reliance on state law.” Caterpillar, 482 U.S. at 392.

         There is however an exception to the well pleaded complaint rule in cases where “‘a federal statute wholly displaces the state-law cause of action through complete preemption.'” Hall v. USAble Life, 774 F.Supp.2d 953, 955 (E.D. Ark. 2011)(quoting, Aetna Health, Inc. v. Davila, 542 U.S. 200, 207-8 (2004)). “ERISA's civil enforcement provision, 29 U.S.C. § 1132(a), has such preemptive force that it converts an ordinary state common law complaint into one stating a federal claim.” Hall, 774 F.Supp.2d at 955.

         Except as otherwise expressly provided by Congress, civil actions for which the district courts of the United States have original jurisdiction may be removed from State court to federal district court. 28 U.S.C. §§ 1441(a), 1446. A party opposing removal may file a motion to remand to State Court. 28 U.S.C. § 1447(c). The party removing and opposing remand has the burden of establishing federal jurisdiction. See In re Business Men's Assur. Co. of America, 992 F.2d 181, 183 (8th Cir. 1983)(per curiam). Upon considering a motion to remand, a district court is “required to resolve all doubts about federal jurisdiction in favor of remand.” Id.(citing Steel Valley Auth. V. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3rd Cir. 1987)). See also, Transit Cas. Co. v. Certain Unterwriters at Lloyds of London, 119 F.3d 619, 625 (8th Cir. 1997). “[C]auses of action within the scope of the civil enforcement provisions of [ERISA] § 502(a) [may be] removable to federal court.” Aetna Health, 542 U.S. at 209 (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987)).

         The Eighth Circuit in Chronister v. Baptist Health, 443 F.3d 648 (8th Cir. 2006)[2] held that, in a case removed from state court based on federal question jurisdiction pursuant to ERISA, if the employee benefit plan at issue is a “church plan” within the meaning of ERISA, a federal question does not exist, and the court “‘must remand the matter to state court.'” Chronister, 443 F.3d at 651(quoting, Lown v. Cont'l Cas. Co., 238 F.3d 543, 547 (4th Cir. 2001)). If the employee benefit plan at issue is not exempt, ...


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