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Lopez-Munoz v. Triple-S Salud, Inc.

United States Court of Appeals, First Circuit

May 9, 2014

RAQUEL LÓPEZ-MUÑOZ AND ORLANDO RÍOS-WALKER, Plaintiffs, Appellants,
v.
TRIPLE-S SALUD, INC., Defendant, Appellee

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Carmen Consuelo Cerezo, U.S. District Judge.

José Vázquez García for appellants.

Cesar T. Alcover, with whom Casellas Alcover & Burgos, P.S.C. was on brief, for appellee.

Before Howard, Selya and Lipez, Circuit Judges.

OPINION

Page 2

SELYA, Circuit Judge.

In this matter of first impression within our circuit, we confront the question of whether the Federal Employees Health Benefits Act of 1959 (FEHBA), 5 U.S.C. § § 8901-8914, completely preempts local-law tort and contract claims arising out of a refusal by an FEHBA insurer to cover a medical procedure. Concluding that complete preemption does not exist, we reverse the orders appealed from and direct the district court to remand the action to the Puerto Rico Court of First Instance.

I. BACKGROUND

In 2009, physicians diagnosed plaintiff-appellant Raquel López-Muñoz with morbid obesity and recommended that she undergo gastric lap band surgery. Defendant-appellee Triple-S Salud, Inc., a health-care insurer that covered the plaintiff by virtue of her husband's employment with the federal government, initially denied authorization for the surgery. The plaintiff eventually persuaded the defendant

Page 3

to reconsider its refusal and scheduled the procedure for October 27, 2009.

Despite the plaintiff's confidence that her path had been cleared, obstacles loomed. The defendant voiced newfound objections to the cost of the lap band and the anesthesiologist's fees. During the next month, the plaintiff unsuccessfully attempted to quell these objections.

In due course, the plaintiff repaired to the Puerto Rico Court of First Instance and brought tort and breach of contract claims for damages against the defendant.[1] The defendant removed the action to the federal district court.

The notice of removal recited two grounds. First, it asserted that the FEHBA completely preempted the plaintiff's local-law claims, transmogrifying them into federal questions and conferring original jurisdiction upon the federal court. See 28 U.S.C. § § 1331, 1441(a). Second, it asserted that the defendant was acting under the direction of a federal officer, thus warranting removal. See id. § 1442(a)(1).

The plaintiff balked. She challenged the propriety of the removal and entreated the district court to remand the case to the Court of First Instance. The defendant meantime moved to dismiss the case, arguing that the FEHBA demanded (and the plaintiff had not pursued) exhaustion of administrative remedies.

The district court denied the plaintiff's motion to remand. It held that the FEHBA completely preempted the plaintiff's claims and, thus, federal jurisdiction attached. See id. § 1331. The court proceeded to dismiss the action without prejudice for failure of the plaintiff to exhaust administrative remedies. This timely appeal ensued.

II. ANALYSIS

We start with an overview of the pertinent provisions of the FEHBA and the implementing regulations. The FEHBA " establishes a comprehensive program of health insurance for federal employees" and family members covered under their plans. Empire HealthChoice Assur., Inc. v. McVeigh, 547 U.S. 677, 682, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006); see 5 U.S.C. § 8905(a)(3). Premiums shared by enrollees and the federal government fund the program. See 5 U.S.C. § § 8906(b)-(c), 8909(a). A panoply of health-care offerings is constructed through negotiation: the federal Office of Personnel Management (OPM) contracts with private insurers to provide and administer particular plans. See id. § 8902(a)-(d).

The FEHBA itself does not delineate specific procedures for resolving denial-of-benefits disputes. Instead, it grants OPM authority to prescribe ...


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