U.S. District Court for the Western District of Michigan; Docket No. 1:99-CV-413;
Honorable Robert Holmes Bell; Unpublished
Official Federal Reporter Citation: Not Applicable; Link to Opinion
Coordination with ERISA Plans [§3109a]
This case involved a procedural issue concerning whether or not Farm Bureau had properly sought removal to federal district court of a state court declaratory judgment action seeking to determine responsibility for payment of PIP benefits as between the no-fault insurance company and an ERISA health insurance plan.
In holding that Farm Bureau's removal of the action was improper, Judge Bell held that under the federal removal statute, 28 USC §1446, all of the defendants in the state court action must consent to the removal and the notice of removal must be signed by all of the defendants. The only exception to the rule of unanimity required with respect to the notice of removal is contained in 28 USC §1441(c) which provides that when a "separate and independent claim that is removable under section 1441(c) is joined with nonremovable claims, only the defendant to the separate and independent claim need seek removal."
Here, Farm Bureau argued that the claim filed by plaintiffs against Farm Bureau for PIP benefits was separate and independent from plaintiffs' claims against the ERISA health insurance plan for the same benefits under that plan.
The dispute concerned interpretation of competing coordination of benefit clauses under the no-fault policy and the ERISA health insurance plan. In rejecting Farm Bureau's argument, Judge Bell pointed out that separable and independent claims must arise from "different sets of acts or transactions and different wrongs."
Here, the plaintiffs' rights must be resolved in the context of both defendants' policies. These are interlocked obligations. The plaintiffs' claim against the ERISA claim was, therefore, not separate and independent from the claim against Farm Bureau. Farm Bureau's removal under the federal removal statute was therefore not proper, because both defendants are subject to the underlying federal claim and thus need to assent to the removal.
Judge Bell also rejected Farm Bureau's claim that because the ERISA health insurer had filed a cross-claim against Farm Bureau, and because such cross-claim would have been removable if sued upon alone, this would permit the entire action to be removed. Again, Judge Bell held that Farm Bureau's characterization of the cross-claim as a separate and independent claim was not correct, because the cross-claim arises out of the insurance coverage dispute and seeks to coordinate benefits between the two policies.