Decatur Hospital Authority v. Aetna Health, Inc. , 854 F.3d 292 ( 2017 )

Case: 16-10313 Document: 00513956566 Page: 1 Date Filed: 04/18/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
April 18, 2017
No. 16-10313
Lyle W. Cayce
Clerk
DECATUR HOSPITAL AUTHORITY, doing business as Wise Regional
Health System,
Plaintiff - Appellee
v.
AETNA HEALTH, INCORPORATED,
Defendant - Appellant
Appeal from the United States District Court
for the Northern District of Texas
Before JOLLY, HIGGINBOTHAM, and GRAVES, Circuit Judges.
JAMES E. GRAVES, JR., Circuit Judge:
This appeal relates to ongoing litigation between Wise Regional Health
System, a Texas municipal hospital authority, and Aetna Health Inc., an
insurance plan administrator, regarding medical insurance claims Wise
Regional submitted on behalf of its patients. Wise Regional sued Aetna in
Texas state court, and, when Aetna removed, it relied in part upon the federal
officer removal statute, 28 U.S.C. § 1442. Finding Aetna’s removal untimely,
the district court remanded and awarded attorneys’ fees.
Case: 16-10313 Document: 00513956566 Page: 2 Date Filed: 04/18/2017
No. 16-10313
We have appellate jurisdiction over the remand order, and, upon de novo
review, we AFFIRM. We also perceive no abuse of discretion in the separate
attorneys’ fee award, and we AFFIRM.
BACKGROUND
On May 27, 2015, Wise Regional sent Aetna a demand letter “to address
claims Wise [Regional] has against Aetna for Aetna’s violations of the timely
claim processing requirements imposed by the Texas Prompt Pay Act.” Wise
Regional’s letter claimed state-law late-payment penalties in excess of $17.4
million had accrued.
Wise Regional’s demand letter made three specific requests. First, the
letter asked Aetna to contact Wise Regional’s counsel to coordinate a “secure,
HIPPA-compliant” transmission of “a detailed list of the claims at issue.”
Second, “[t]o make pre-suit negotiations more productive,” Wise Regional
asked Aetna to conduct a “line-of-business analysis” on the claims list to
identify “the payment arrangement (e.g., self-funded ERISA, fully insured,
Medicare Advantage, FEHBA)” implicated by each claim. 1 Third, Wise
Regional asked Aetna to provide information regarding any claim “Aetna
believes was timely paid.” Aetna’s counsel asked for the claims list on June 19,
2015, and Wise Regional provided it three days later.
On June 24, two days after sending the claims list, Wise Regional filed
in Texas state court a lawsuit predicated upon insurance claims it alleges
Aetna paid, but paid too slowly. On November 4, 2015, Wise Regional provided
objections and answers to Aetna’s first set of interrogatories. On December 4,
2015, Aetna removed the case to federal court pursuant to 28 U.S.C. § 1441(a)
and 28 U.S.C. § 1442.
1 Both Wise Regional’s state-court petition and briefing on appeal disclaim any pursuit
of claims implicating these federal insurance and health care programs. See Appellee’s Br. at
18, n.27.
2
Case: 16-10313 Document: 00513956566 Page: 3 Date Filed: 04/18/2017
No. 16-10313
Wise Regional filed a motion to remand, and the district court issued a
remand order on February 19, 2016. The district court’s memorandum opinion
stated that “the action should be remanded because [Aetna] did not timely
remove it.”
Wise Regional also filed a motion for attorneys’ fees. The district court
granted that motion on March 7, 2016, and awarded Wise Regional $14,500.
The district court ruled that Aetna “lacked an objectively reasonable basis for
seeking removal of this action almost five months after expiration of the thirty-
day deadline for removal,” and stated that “[Aetna’s] contention that it first
ascertained from the interrogatory answers that the case is one that was
removable borders on being absurd considering that the state court pleading
of [the] plaintiff provided exactly that same information.”
Aetna timely noticed its appeal of both the remand order and the
attorneys’ fees award.
JURISDICTION
The parties dispute whether this court has jurisdiction to review the
remand order. Aetna contends that we may review the remand order under 28
U.S.C. § 1447(d), which provides:
An order remanding a case to the State court
from which it was removed is not reviewable on
appeal or otherwise, except that an order
remanding a case to the State court from which
it was removed pursuant to section 1442 or 1443
of this title shall be reviewable by appeal or
otherwise.
28 U.S.C. § 1447(d). Wise Regional contends that because the district court
based its remand order on a defect in removal procedure (here, timeliness), we
must withhold appellate review. As discussed below, we conclude that this
court possesses appellate jurisdiction over the remand order.
3
Case: 16-10313 Document: 00513956566 Page: 4 Date Filed: 04/18/2017
No. 16-10313
As the parties correctly acknowledge, we also have jurisdiction to review
the award of attorneys’ fees. See Miranti v. Lee, 3 F.3d 925, 927–28 (5th Cir.
1993) (holding “that § 1447(d) does not prohibit review by this court of the order
of costs and fees”); see also Garcia v. Amfels, Inc., 254 F.3d 585, 587 (5th Cir.
2001).
STANDARD OF REVIEW
We review the district court’s remand order de novo, “without a thumb
on the remand side of the scale.” Savoie v. Huntington Ingalls, Inc., 817 F.3d
457, 462 (5th Cir. 2016), cert. denied, 137 S. Ct. 339 (2016). “The decision of the
district court to award attorneys’ fees is reviewed for an abuse of discretion.”
Garcia, 254 F.3d at 587.
DISCUSSION
As a threshold matter, this appeal requires us to analyze our appellate
jurisdiction over the district court’s remand order. We hold that appellate
jurisdiction exists. Applying de novo review, we hold that remand was proper.
Finally, we conclude the district court did not abuse its discretion by awarding
attorneys’ fees.
I. Appellate jurisdiction
“Orders remanding a case to state court are generally not reviewable.”
Savoie, 817 F.3d at 460. “The statute governing removal procedure [i.e., 28
U.S.C. § 1447(d)] provides for only two exceptions: remand orders involving
certain civil rights cases, 28 U.S.C. § 1443, and remand orders involving the
federal officer removal statute, 28 U.S.C. § 1442.” Id. “Our unusual ability to
review a remand order in [the Section 1442] context reflects the importance
Congress placed on providing federal jurisdiction for claims asserted against
federal officers and parties acting pursuant to the orders of a federal officer.”
Id.
4
Case: 16-10313 Document: 00513956566 Page: 5 Date Filed: 04/18/2017
No. 16-10313
Wise Regional notes that the district court expressly based its remand
order on the untimeliness of Aetna’s removal, and it contends this ground for
remand bars our review. “Untimely removal is a defect in removal procedure,”
Belser v. St. Paul Fire & Marine Ins. Co., 965 F.2d 5, 8 (5th Cir. 1992), and we
ordinarily lack jurisdiction to review a remand order based on such a defect,
see Price v. Johnson, 600 F.3d 460, 462 (5th Cir. 2010). Here, however, the fact
that Aetna relied upon the federal officer removal statute in its notice of
removal permits appellate review.
This conclusion flows from the text of Section 1447(d). As the Supreme
Court observed in Kircher, Section 1447(d) “specifically excepts certain
[statutory] actions from its bar.” Kircher v. Putnam Funds Trust, 547 U.S. 633,
640 n.7 (2006). 2 Put another way, “Congress has, when it wished, expressly
made 28 U.S.C. § 1447(d) inapplicable to particular remand orders.” Id. at 641
n.8 (emphasis added). In 2011, Congress expressly made Section 1447(d)’s bar
inapplicable to “an order remanding a case to the State court from which it was
removed pursuant to . . . section 1442. . . .” 28 U.S.C. § 1447(d). 3 Like the
Seventh Circuit, “[w]e take both Congress and Kircher at their word in saying
that, if appellate review of an ‘order’ has been authorized, that means review
of the ‘order.’ Not particular reasons for an order, but the order itself.” Lu
Junhong v. Boeing Co., 792 F.3d 805, 812 (7th Cir. 2015); see also 14C Charles
Alan Wright et al., Federal Practice & Procedure § 3740 n. 30.50 (4th ed., West)
(updated Jan. 2017) (“The Removal Clarification Act of 2011 amends Section
1447(d) to exempt remands to State court, of actions removed under Section
2 The Kircher opinion references a prior version of Section 1447(d) that provided a
specific exception for civil rights removals. The modern version of Section 1447(d) states an
exception for both the civil rights removal and federal officer removal statutes.
3This amendment accounts for the difference between the result we reach today and
the holding of Price, 600 F.3d at 460.
5
Case: 16-10313 Document: 00513956566 Page: 6 Date Filed: 04/18/2017
No. 16-10313
1442, from the prohibition on review that Section 1447(d) has heretofore
imposed on all removals except those of civil rights cases removed under
Section 1443.”); 15A Charles Alan Wright et al., Federal Practice & Procedure §
3914.11 (2d ed., West) (updated Jan. 2017) (“Although § 1447(d) allows review
of the ‘order remanding’ the case, it has been held that review is limited to
removability under § 1443. Review should instead be extended to all possible
grounds for removal underlying the order.) (emphasis in original).
In Robertson v. Ball, we declined to review “the part of [a] remand order”
expressing a Section 1447(c) ground (lack of subject matter jurisdiction) for
rejecting a party’s reliance upon a portion of the general removal statute,
Section 1441(b). See 534 F.2d 63, 65 (5th Cir. 1976). Robertson implies only
that we cannot review a remand order (or a portion thereof) expressly based on
a Section 1447(c) ground when the basis for removal is a statute that, like
Section 1441, Section 1447(d) does not specifically exempt from Section
1447(c)’s bar.
By recognizing “[t]he exception in [Section] 1447(d)’s prohibition of
appellate review for remands of removals effected under [Section] 1443,”
Robertson supports our elevation of Aetna’s purported Section 1442 basis for
removal (which supports appellate review) over the district court’s articulation
of a Section 1447(c) ground for remand (which would ordinarily foreclose
appellate review). See 534 F.2d at 66 n.5 (emphasis added); see also Charter
School of Pine Grove, Inc. v. St. Helena Parish School Bd., 417 F.3d 444, 446
(5th Cir. 2005) (per curiam) (stating that “we may review an order to remand
based on lack of subject matter jurisdiction [i.e., a Section 1447(c) ground for
remand] when the case remanded was removed pursuant to 28 U.S.C. § 1443
[i.e., a statute Section 1447(d) excepts from Section 1447(c)’s bar on
reviewability].”).
6
Case: 16-10313 Document: 00513956566 Page: 7 Date Filed: 04/18/2017
No. 16-10313
II. Merits of the remand order
Having established our jurisdiction to review the remand order, we
consider its merits de novo. We hold that the district court correctly remanded;
Aetna’s notice of removal was untimely.
“In essence, when read as a whole, § 1446(b) provides a two-step test for
determining whether a defendant timely removed a case.” Chapman v.
Powermatic, Inc., 969 F.2d 160, 161 (5th Cir. 1992). “[I]f the case stated by the
initial pleading is removable, then notice of removal must be filed within thirty
days from the receipt of the initial pleading by the defendant . . . .” Id. “[I]f the
case stated by the initial pleading is not removable, then notice of removal
must be filed within thirty days from the receipt of an amended pleading,
motion, order, or other paper from which the defendant can ascertain that the
case is removable.” Id.
Aetna urges us to conclude that this case only became removable when
Wise Regional provided its interrogatory responses. Aetna maintains that one
interrogatory response specified, for the first time, Wise Regional’s intention
to pursue removable claims.
We disagree with Aetna’s position essentially for the reasons cogently
articulated by the district court in its order awarding attorneys’ fees. See
Decatur Hospital Authority v. Aetna Health Inc., No. 4:15-cv-922-A, 2016 WL
950950 at *2–3 (N.D. Tex. March 7, 2016). There is no new information in the
interrogatory response at issue, which, in relevant part, referred Aetna “to the
spreadsheet served on its counsel on or about June 22, 2015.” Decatur Hosp.,
2016 WL 950950 at *2.
Aetna bases its theory of removability on the proposition that the
medical claims list includes entries that would support removal. Of course,
Aetna received the medical claims list two days before Wise Regional filed its
7
Case: 16-10313 Document: 00513956566 Page: 8 Date Filed: 04/18/2017
No. 16-10313
petition. Wise Regional’s petition referred to the medical claims list. Decatur
Hosp., 2016 WL 950950 at *2.
Given this factual context, even if we accepted Aetna’s theory of why this
case presents removable subject matter, 4 we would agree with the district
court’s conclusion that Aetna’s 30-day window for removal began to run under
Section 1446(b)(1) on June 30, 2015, the date it received service of the petition.
We perceive no aspect of Aetna’s theory of removability that would have only
become apparent when Wise Regional served its interrogatory response.
Because Aetna filed its notice of removal more than 30 days after June 30,
2015, we hold that remand was proper.
III. Award of attorneys’ fees
“The decision of the district court to award attorneys’ fees is reviewed for
an abuse of discretion.” Garcia, 254 F.3d at 587. “[A] court may award
attorney’s fees when the removing party lacks an objectively reasonable basis
for removal.” Am. Airlines, Inc. v. Sabre, Inc., 694 F.3d 539, 542 (5th Cir. 2012)
(internal quotations and citation omitted). “A defendant’s subjective good faith
belief that removal was proper is insufficient to establish that the district court
abused its discretion in awarding attorney’s fees under Section 1447(c).” Id. at
542, n.2.
The district court ruled that Aetna “lacked an objectively reasonable
basis for seeking removal of this action almost five months after expiration of
the thirty-day deadline for removal.” As stated in the previous section, we
agree with the district court’s conclusion that Aetna’s removal was untimely.
We perceive no abuse of discretion in the district court’s finding that Aetna had
no reasonable basis to think otherwise.
4 Wise Regional stridently disputes the notion that its suit pursues any removable
claims. See Appellee’s Br. at 18 n.27. Because we affirm the district court’s remand on
timeliness grounds, we express no view on this substantive issue.
8
Case: 16-10313 Document: 00513956566 Page: 9 Date Filed: 04/18/2017
No. 16-10313
CONCLUSION
Accordingly, we AFFIRM both the district court’s remand order and
award of attorneys’ fees.
9