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Dominion Pathology Laboratories, P.C. v. Anthem Health Plans of Virginia, Inc.

United States District Court, E.D. Virginia, Norfolk Division

June 19, 2015



REBECCA BEACH SMITH, Chief District Judge.

This matter comes before the court on the Motion to Remand and the Memorandum in Support, filed by the Plaintiff, Dominion Pathology Laboratories, P.C. ECF Nos. 8, 9. For the reasons set forth below, the Motion to Remand is GRANTED.


The Plaintiff is a three-physician practice that provides biopsy diagnostic services, and has been a participating provider in the preferred provider network of Anthem Health Plans of Virginia, Inc. (the "Defendant"), for approximately twelve years. Compl. ¶¶ 5, 12, 17, ECF No. 1-1. Pursuant to various provider agreements between the parties, the Defendant would reimburse the Plaintiff for the particular services provided based on a "Current Procedural Terminology" ("CPT") code. See id. ¶¶ 14-16. On January 1, 2014, the Defendant reduced reimbursement rates for the Plaintiff's services by approximately eighteen percent. See id. ¶ 18. Thereafter, on October 15, 2014, the Defendant notified the Plaintiff "of its unilateral intent to amend the parties' agreement" by decreasing reimbursement rates "by nearly sixty percent, " which changes became effective on February 2, 2015. Id . ¶¶ 21, 23, 29.

On March 10, 2015, the Plaintiff filed this action in the Circuit Court for the City of Norfolk, Virginia, seeking declarations that the Defendant violated federal law under § 2706 of the Patient Protection and Affordable Care Act (the "ACA"), [1] and state law under § 38.2-3407 of the Virginia Code, [2] and alleging breach of contract by the Defendant. See Compl. The Defendant was served with the state Complaint on March 16, 2015. Notice Removal at 2, ECF No. 1. Subsequently, on April 10, 2015, the Defendant filed its timely Notice of Removal ("Notice") in this court, asserting federal question jurisdiction pursuant to 28 U.S.C. §§ 1331, 1441, and 1446. Notice at 1.

On May 1, 2015, the Plaintiff filed the Motion to Remand currently before the court. The Defendant filed its Memorandum in Opposition on May 18, 2015. ECF No. 13.[3] Thereafter, the Plaintiff filed its Rebuttal. ECF No. 15. The Motion to Remand is now ripe for review.[4]

II. Analysis

"The district courts of the United States are courts of limited subject matter jurisdiction." United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009) (citing Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005)). Federal courts may exercise "only the jurisdiction authorized them by the United States Constitution and by federal statute." Id . (citing Bowles v. Russell, 551 U.S. 205 (2007); Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)).

The applicable statute permits the removal of "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) ("Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant."). However, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). "Because removal jurisdiction raises significant federalism concerns, [the court] must strictly construe removal jurisdiction." Mulcahey v. Columbia Organic Chems. Co., Inc., 29 F.3d 148, 151 (4th Cir. 1994). Moreover, any doubts about the propriety of removal should be resolved in favor of remand to state court. See Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir. 2004) (en banc).

On a motion to remand, the burden of establishing federal subject matter jurisdiction remains with the party seeking removal to the federal forum, which, in this case, is the Defendant. Mulcahey, 29 F.3d at 151. In its Notice of Removal, the Defendant argues that the court has federal question jurisdiction under 28 U.S.C. § 1331 because the Plaintiff seeks relief under the ACA. Notice at 1, 3. The Defendant further asserts that the Plaintiff's "state claims contain precisely the type of federal issue that warrants adjudication in federal court." Def.'s Mem. Opp'n at 8.

A district court has federal question jurisdiction over all civil actions "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. It is well-settled that "a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). "For statutory purposes, a case can aris[e] under' federal law in two ways. Most directly, a case arises under federal law when federal law creates the cause of action asserted." Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013) (citing Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916)). Such claims "account [] for the vast bulk of suits that arise under federal law." Id . (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9 (1983)).

Alternatively, state-law claims may "arise under" federal law if they "implicate significant federal issues." Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005). These claims constitute a "special and small category" of federal "arising under" jurisdiction. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). More specifically, "federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn, 133 S.Ct. at 1065. Moreover, "the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986). Similarly, "the presence of a disputed federal issue and the ostensible importance of a federal forum are never necessarily dispositive; there must always be an assessment of any disruptive portent in exercising federal jurisdiction." Grable, 545 U.S. at 314.

In the instant case, federal law does not create the cause of action asserted. In essence, the Complaint states a breach of contract claim and seeks a declaration that the Defendant has not complied with the terms of the parties' contract, which incorporated compliance with both federal and state laws as a condition of the contract. See Compl. ¶¶ 64-68. Generally, the rights and obligations under the parties' contract are governed by state law. See Volt Info. Scis., Inc. v. Bd. of Trs., 489 U.S. 468, 474 (1989). The parties, and the court, agree that § 2706 of the ACA does not create a private right of action. See Def.'s Mem. Opp'n at 15; Pl.'s Mem. Supp. Mot. Remand at 6. However, although a private right of action is a sufficient condition for federal question jurisdiction, it is not a necessary one. See Grable, 545 U.S. at 317. Accordingly, federal question jurisdiction will exist in this case only if the Plaintiff's state law claims necessarily depend on resolution of a substantial question of federal law.

The removal of this litigation fails to satisfy parts (1), (3), and (4) of Gunn.[5] The Plaintiff's suit does not "necessarily raise" an issue of federal law. As the Court of Appeals for the Fourth Circuit has recognized, "a plaintiff's right to relief for a given claim necessarily depends on a question of federal law only when every legal theory supporting the claim requires the resolution of a federal issue.'" Flying Pigs, LLC v. RRAJ Franchising, LLC, 757 F.3d 177, 182 (4th Cir. 2014) (quoting Dixon, 369 F.3d at 816). Therefore, "if the plaintiff can support his claim with even one ...

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