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Because Matters Alleged in Plaintiff’s Complaint Related to ERISA, Removal from State to Federal Court Was Proper

Herman v. Lincoln Nat’l Life Ins. Co.,
No. 11-cv-03378-AW (U.S. District Court for the District of Maryland, Feb. 7, 2012)

by Colleen K. O’Brien, Law Clerk
Semmes, Bowen & Semmes (

In this case, the Court considered Plaintiff’s Motion to Remand. Plaintiff filed a case against Defendant Lincoln National Insurance Company (“Lincoln”) in the District Court of Maryland for Montgomery County on or about October 20, 2011, and on November 22, 2011, Defendant removed the action to the Maryland Federal District Court, contending that Plaintiff’s claims were preempted by ERISA, and thus, raised a federal question over which the Court had subject matter jurisdiction. Plaintiff filed a Motion for Remand, which the Court denied.

In the underlying action, Plaintiff sought to recover $22,424.73, which he claimed to be entitled to under “a valid contract.” Plaintiff’s Complaint did not discuss the nature of the contract. Defendant, however, alleged that the contract at issue was an Employee Welfare Benefit Plan (“Plan”) sponsored by Shopper’s Food Warehouse Corporation. Plaintiff’s Complaint asserted state law claims for recovery of health care benefits that were submitted around July 14, 1995, plus accrued interest and attorneys’ fees. Plaintiff claimed that he received a check for $22,424.73 owed under the policy, but that he never endorsed or deposited the check. He also alleged that Defendant subsequently failed to deliver the unclaimed funds to the Comptroller of Maryland, Compliance Division, Unclaimed Property, as required by Maryland state law. Plaintiff argued that his Complaint did not implicate ERISA and that it only implicated state law claims related to Defendant’s failure to reissue a payment check or escheat Plaintiff’s funds to the State of Maryland, as required by Maryland State law.

The Court noted that, generally, to establish federal question jurisdiction, the federal question must be presented by Plaintiff’s Complaint at the time the Petition for Removal is filed. There was an exception to this rule, however, allowing a state claim to be removed even when a federal question is not presented in Plaintiff’s Complaint when a federal statute wholly displaces the state law cause of action through complete preemption. ERISA was one such statute.

Defendant removed the action on the ground that Plaintiff’s state law claims fell within the scope of ERISA’s civil enforcement provision, § 502(a)(1)(B), and were thus completely preempted by ERISA. ERISA expressly preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA. 29 U.S.C.A. § 1144(a).

Plaintiff argued that his claim to Plan benefits was not one made “under the terms of the Plan” because his entitlement to the proceeds was not at issue. Moreover, the legal theories implicated by his Complaint related only to state law claims for failure to reissue a payment check, replace a payment check, or escheat Plaintiff’s unclaimed funds to the State of Maryland.

The Court disagreed. Plaintiff’s entitlement to the proceeds at this point were still at issue, and in determining Plaintiff’s right to recovery, the Court looked to the terms of the ERISA Plan and Group Policy upon which Plaintiff’s entitlement was based. The Group Policy, attached by Defendant to its Notice of Removal, provided the manner in which claims must be made and payments distributed, including coverage limitations. For example, the policy stated in Section 8, “CLAIM PROCEDURES” that “No legal action may [sic] brought more than three years after the date written proof of loss is required to be given.” The Policy’s language applied to Plaintiff’s claim and implicated his ability to recover the proceeds originally owed to him.

Therefore, the Court found that Plaintiff’s claims for the recovery of ERISA benefits fell within the scope of ERISA’s civil enforcement provision and were completely preempted. Plaintiff’s Complaint, thus, came within 28 U.S.C. § 1132(a)(1) and was removable to the Court pursuant to 28 U.S.C. § 1441, under the Court’s federal question jurisdiction. Plaintiff’s Motion for Remand was denied.