Legal Case Summary

The hospital LLC versus Louisiana Health Service and Indiment to get the company. Okay, Mr. Feinberg. Did you get everything unloaded? I wanted to give you plenty of time to get settled. Good morning, Your Honors. My name is Adam Feinberg. On behalf of Blue Cross and Blue Shield of Louisiana, may please the Court. The only issue in this appeal is whether any of Blue Cross's grounds for removal were objectively reasonable at the time of the removal. And here we advance two separate grounds, complete preemption under both Arissa and the Federal Employees Health Benefits Act or FIBA on the one hand. And second, the Federal Officer Removal Statute, a 28 USC 1442A1. And I'm going to address both of those as we did in the briefs, starting with the complete preemption point. One thing you need to address as you go through your arguments is the fact that these same efforts had been rejected several times in the district court. To me, that raises a legal question one way or the other as to whether continued district court rejection should be enough to make it unreasonable or whether in fact there has to be some sort of a pellet, a decision on which companies could rely. Yes, and let me address that right off the bat. I think there are two separate responses to that

. The biggest of which, and the one I will spend a bit of time on today, is that that is not what has happened here. Claims of the sort at issue here have not been rejected. I'm not sure in any court, not let alone in a court of appeals. But you do raise a good point, Judge Smith, that there are certainly no court of appeals that we know of, and certainly not the fifth circuit that have rejected claims of the sort that are going on here. And there really isn't much of a dispute about the law in our view on the complete preemption point. We completely agree that claims that are in the nature of misrepresentation. In other words, the insurance company receiving a phone call or otherwise communicating with a provider and saying, yes, there is coverage, it's in this amount or anything along those lines. Claims that are based on those allegations, we do not contend, have never contended, are preempted. That's clear, I think, in the court's jurisprudence in Memorial Hospital and Transitional Hospital, and in Judge Reveley's decision in Access MediQuip most recently. Those claims aren't even ordinarily preempted, let alone completely preempted. However, that's not all we have going on here. There are claims for misrepresentation in the Omega's petition here. In causes of action 2, 3, and 4. But there are other claims as well that specifically seek remedies for health benefits

. Those are causes of action 1 and 5. And if you look at Judge Reveley's decision in Access MediQuip, he draws a very clear distinction between misrepresentation claims on the one hand, which do not depend on coverage at all. You don't even need to allege that there was underlying coverage. If the insurance company said there was and that you the provider would be paid, that's enough. That's all you need to show. On the other hand, claims like unjust enrichment are preempted and those do relate to benefits necessarily because the theory of an unjust enrichment claim is, I as the insurance company was unjustly enriched because I didn't have to pay some other provider for providing benefits under the insurance policy. And that is extremely clear from Judge Reveley's Access MediQuip decision. So the only question regarding the complete preemption issue has nothing to do with the law and has only to do with the construction of Omega's petition in the state court. And that's what I would like to go through a little bit because I think it makes clear that while there absolutely are claims from misrepresentation, there are other claims as well. And as this court noted in the Giles or Giles case, one claim that's completely preempted is enough to be able to remove the entire case. And so I urged the court to look carefully at Omega's petition in the state court because it covers a lot of ground. As I said, does make misrepresentation claims, but it also makes claims that sound like their antitrust claims that it colluded, it literally uses the word collusion with other Blue Cross entities, that it uses its market power unfairly again, sort of antitrust sounding claims. These are in paragraphs 29 and 30 of the petition, which starts at record page 125. There are also allegations that Blue Cross was purposely trying to drive providers out of business or threatening to retaliate against providers

. And importantly, there are allegations that Blue Cross refused to pre-authorize services. In other words, Omega called and said, will you tell me if this is, you're going to provide coverage? And Blue Cross said nothing. And that's an allegation. Well, of course, how can there be a recovery in a situation like that? It's certainly not based on misrepresentation because the whole allegation is that Blue Cross refused to make any representation. The only possible theories are that Omega is proceeding on acclaimed for benefits. And I think this becomes quite clear if you actually look at the causes of action in the petition. If you look at the three causes of action that we completely concede our based on misrepresentations, causes of action 2, 3, and 4, they are riddled with references to misrepresentation. Just for example, cause of action number 2, which is a cause of action for fraud, starts on record page 132. And in paragraph 48, defendants have made representations to Omega Hospital. Paragraph 50, defendants misrepresented such provisions to Omega Hospital. Paragraph 51, defendants misrepresentations were material. And Omega, reasonably, are relied to its detriment on such misrepresentations. That's in paragraph 51. Paragraph 52, these defendants intended to deceive Omega Hospital with their misrepresentations

. Paragraph 53, Omega was reasonably entitled to rely on defendants misrepresentations. Almost every paragraph in cause of action 2 talks about misrepresentation. The same thing is true of cause of action 3 and cause of action 4. We'll take a look at cause of action 1 and cause of action 5. The word misrepresentation does not appear at all. Nor does the concept of a misrepresentation. Instead, these causes of action allege that defendants have retained and continue to retain monies that rightfully belong to Omega Hospital for rendering covered medically necessary services to defendants insures. As Judge Reavly pointed out in Access Med Equip, it doesn't matter if there's coverage. If you're making a misrepresentation claim, these claims must be talking about something else. And Blue Cross reasonably interpreted that as meaning something other than a misrepresentation claim. Omega really has no response to this other than to say, well, we had some other general language in there that tied it back to the rest of the complaint. And they do, but it doesn't tie back to misrepresentation. It ties it back only to some generalized unfair or unlawful conduct. Well, as we just talked about, there are all kinds of unlawful conduct that it's alleged that don't have anything to do with misrepresentation

. So under that notion that what we really have is an unjust and unjust and unjust in Richmond claim, the second prong of Deville is satisfied. The only other thing we would need to show is that the first prong is satisfied. In other words, that Omega could have brought a claim at some point in time. And they certainly could have because they had assignments of benefits. That's not disputed. There's actually an actual assignment of benefits in the record of page 362. Their only argument is, well, we didn't allege that. Well, you don't have to allege that. Many cases make that clear. This court made it clear in Loanstar. We cited a case called Emmerus, where the from the District Court of Illinois earlier this year, where the plaintiff provider actually tried to literally throw away the assignments. They said they signed a writing saying, we forever wave our right to assignments before the lawsuit. And then they filed the lawsuit. And the court said, you can't do that

. Under the prong one of Deville, the question is, could you at any point in time have brought a case? And they certainly could have. And Omega's only response to that is, well, that was after the removal in this case. But come on, that is the state of the law. They weren't breaking new ground. And that Emmerus case relies on this court's decision in Loanstar, a case called Franciscans, scum from the seventh circuit, which Omega cites, and their brief as being consistent with fifth circuit law. And on a case from the Southern District of Texas in 2010 called Spring Versus Etna. And actually, the long quote in our brief is from that spring case. The Emmerus case is quoting Spring. And in Spring, there was an issue about, there was a heavy dispute about whether or not there were assignments. It just doesn't matter. The fact that assignments exist is enough. The plaintiff doesn't have to be proceeding under them. And unless the court has any questions about the complete preemption issue, I'll turn to the federal officer removal issue. This issue, unlike the issue of complete preemption, is almost exclusively an issue of law

. We have a disagreement about what the state of the law is. And in particular, on the second and main factor under the federal officer removal test. And that is whether or not Blue Cross was acting under the office of personnel management. And the dispute is that Omega says, well, you Blue Cross had to be under the direct and detailed control of the office of personnel management. And I will admit that there are a number of district court cases within the fifth circuit that say that. But that is not the law, and that has never been the law. Omega says that these courts sort of get this from this court's decision in Empire. I'm sorry, in Winters. But Winters simply doesn't say that. It happened to be in Winters that there was direct and detailed control by the federal agency there. But nothing in Winters suggests that that is an absolute requirement. The Supreme Court in Watson makes it very clear that that is not a requirement. As have every other circuit court of appeals to decide this issue after Watson. Including the Isaacson case from the second circuit that we cite, the Bennett case from the sixth circuit

. And perhaps most importantly for present purposes, the Jacks decision from the A-Surket, which involves another Blue Cross entity administering this very same program. And the court in Jacks goes through a lot of the detail of the program, including the supervision that OPM has, the fact that Blue Cross entities literally are administering a federal treasury account, a very rare circumstance, and found that the federal officer removal test was met. And there is other than a sprinkling or maybe perhaps more than a sprinkling of district court cases, there's nothing on the other side of that. There are no court of appeals decisions in any circuit that suggests that this detailed control test is applicable. And in fact, even within the fifth circuit, there are several district courts that reject the exact test that is being advanced by Omega here. Those are the Tacx versus American Eurocopter case that we cited and the Grand Acadian case that we cited just as examples. So at the very least, there was an objectively reasonable basis for Blue Cross to say that the federal officer removal statute applied and that it was acting under the Office of Personnel Management. Tell me what that requires to satisfy this statute. There are three basic elements. The first is that the removing party was a person and no offense to the council who argued before me, but every court, including this court, has said that a person can be a corporation, so that part of the test is clearly met. The second part of the test is the removing party has to have been acting under a federal officer and there has to be, as part of that, there has to be a causal nexus between actions acting under and the issues in the lawsuit. I'm sorry. And you're being more specific than that, what do you mean by acting under? Well, the Supreme Court in Watson analyzed this thoroughly and there are really two elements to that. Number one, it has to be a subservient relationship, so you can't be equal parties

. If it's a purely commercial transaction, for example, that doesn't count. The government has to have been a superior relationship over the removing party. And I think that is clearly met here. OPM is Blue Cross's boss, that's for sure in this relationship and anything that OPM would tell the carrier to do, they have to do for a whole host of reasons. And there are many regulations that describe OPM's powers over Blue Cross and the court and Jackson lays those out. And second of all, there has to be an assistance element of the relationship. The removing party has to be helping the government. And here, it's clearly helping the government. It's helping it provide insurance to federal employees. The Jackson case again, analyzes this and explains that that's all that's going on. The only reason Blue Cross is doing this is to help the federal government provide insurance to employees. And the third element of the federal officer removal statute is there has to be a colorable, not an established, but just a colorable federal defense. And here, we alleged that three defenses, sovereign immunity, is the first and preemption is the second, yes, judge really. And the third is displacement by federal common law under the Supreme Court's decision in boil

. In Jackson, the court found that all three of those were colorable for purposes of the federal officer removal statute. So in some sense, you need only look at Jackson and find that Blue Cross at the very least had an objectively reasonable basis for removing this case. One other thing I wanted to mention, we mentioned in a footnote in one of our briefs that the 2011 amendment to the removal statute. And it's a relatively minor point because I think the court in Watson made very clear that there's no direct and detailed control required as have the other circuit courts. But in 2011, Congress changed the statute to say to apply only for any act under color of such office to for or relating to any act under color of such office. And obviously that language broadens the type of acts that can be covered under the federal officer removal statute. All right, thank you, Mr. Fonberg. You've saved time for a little bit. Mr. Vettel. Yes, Mr. Flanagan. May I please the court, Thomas Flanagan, on behalf of Omega Hospital LLC, the district court did not abuse its considerable discretion in awarding fees and costs to Omega as a result of Blue Cross's improper removal of this state law dispute. This morning, I'd like to discuss three points. First, under the developed test and fifth circuit precedent, O'Rissa did not completely preempt health care providers state law claims against insurers for not paying them amounts as promised. Second, Blue Cross's reliance upon FIBA as a basis for complete preemption was equally unreasonable. The United States Supreme Court held in 2006 that the FIBA statute did not permit a complete preemption argument because FIBA did not contain a jurisdiction conferring provision as to insurance companies. And third, in the face of Winters versus Diamond Shamrock, Blue Cross could not reasonably invoke jurisdiction under the federal officer removal statute. Watson versus Philip Morris did not overrule Winters far from it. Let me begin with O'Rissa preemption. Again, the district court did not abuse its discretion in finding Blue Cross's arguments to be unreasonable. It's important to distinguish here, I think, between complete preemption and conflict preemption. The court's familiar with these. The difference between Section 502 and Section 514. The access med-equipped case, for example, is a conflict preemption case. There is a much weaker standard, developed for complete preemption, provides a tougher standard. And there's a two-part test

. This morning, I'd like to discuss three points. First, under the developed test and fifth circuit precedent, O'Rissa did not completely preempt health care providers state law claims against insurers for not paying them amounts as promised. Second, Blue Cross's reliance upon FIBA as a basis for complete preemption was equally unreasonable. The United States Supreme Court held in 2006 that the FIBA statute did not permit a complete preemption argument because FIBA did not contain a jurisdiction conferring provision as to insurance companies. And third, in the face of Winters versus Diamond Shamrock, Blue Cross could not reasonably invoke jurisdiction under the federal officer removal statute. Watson versus Philip Morris did not overrule Winters far from it. Let me begin with O'Rissa preemption. Again, the district court did not abuse its discretion in finding Blue Cross's arguments to be unreasonable. It's important to distinguish here, I think, between complete preemption and conflict preemption. The court's familiar with these. The difference between Section 502 and Section 514. The access med-equipped case, for example, is a conflict preemption case. There is a much weaker standard, developed for complete preemption, provides a tougher standard. And there's a two-part test. Could the plaintiff have brought its claims under Section 502? A right reserved to plan participants and beneficiaries, and if so, does the plaintiffs suit implicate any legal theories independent of O'Rissa? Will Blue Cross could not meet either part of a test as the district court reasonably found? First, Omega is neither a participant nor a beneficiary, and as this court said in Memorial Hospital, providers don't have standing under Section 502. Council says that there's an assignment, but there's a few problems with that argument. First, it is Blue Cross's burden of proof. In their notice of removal, they didn't mention any assignments. In their briefing to the district court, they did not mention any assignments. In their briefing to this court, they did not mention any assignments. But there's no question that no assignment was ever invoked by Omega in this case. And so that brings us back to Fifth Circuit Authority. In Memorial Hospital versus Northbrook Life, this court in a conflict preemption setting, again applying that weaker standard, said that an assignment would be quote irrelevant in the context of a state law claim by our provider who was not using that assignment. So since it's unquestionably the case that Omega has not invoked any assignment of benefits, any assignment in the record argued today for the first time would be irrelevant. And second, Omega's claims clearly implicate duties independent of Arissa as the district court reasonably found. And here again, we find guidance in Memorial Hospital, which talked about the commercial reality. What goes on between hospitals and insurance companies as they said each day in America? And that is it providers contact insurance companies. And they want to verify in advance coverage and payment before they take the risk of treating a person who needs care, otherwise they'll have to make other financial arrangements

. Could the plaintiff have brought its claims under Section 502? A right reserved to plan participants and beneficiaries, and if so, does the plaintiffs suit implicate any legal theories independent of O'Rissa? Will Blue Cross could not meet either part of a test as the district court reasonably found? First, Omega is neither a participant nor a beneficiary, and as this court said in Memorial Hospital, providers don't have standing under Section 502. Council says that there's an assignment, but there's a few problems with that argument. First, it is Blue Cross's burden of proof. In their notice of removal, they didn't mention any assignments. In their briefing to the district court, they did not mention any assignments. In their briefing to this court, they did not mention any assignments. But there's no question that no assignment was ever invoked by Omega in this case. And so that brings us back to Fifth Circuit Authority. In Memorial Hospital versus Northbrook Life, this court in a conflict preemption setting, again applying that weaker standard, said that an assignment would be quote irrelevant in the context of a state law claim by our provider who was not using that assignment. So since it's unquestionably the case that Omega has not invoked any assignment of benefits, any assignment in the record argued today for the first time would be irrelevant. And second, Omega's claims clearly implicate duties independent of Arissa as the district court reasonably found. And here again, we find guidance in Memorial Hospital, which talked about the commercial reality. What goes on between hospitals and insurance companies as they said each day in America? And that is it providers contact insurance companies. And they want to verify in advance coverage and payment before they take the risk of treating a person who needs care, otherwise they'll have to make other financial arrangements. Omega's petition is replete, almost annoyingly so with a repetition of this verification process. And I disagree with council on what the petition says because it's quite clear. Paragraphs 15, 16, 23, 24, I could go on. It alleges misrepresentation by telephone actually calling Blue Cross in 06 and 07. And then after 07 and there's a letter, it's an attachment exhibit A to the petition. Blue Cross said, Omega from now on, don't call us, use our iLink Blue system. And the petition alleges that thereafter that Omega did use the iLink Blue system and that it contained verifications and representations upon which Omega relied. Now there was a reference to the access medicoid case with which Judge Reavley is very familiar. It was two points about that first that was section 514 conflict preemption, not the de Villa test. But second that was a very unique unjust enrichment allegation in that case. With the plaintiff alleged is that they provided care wasn't compensated and that even had they not done it. If someone else had provided the same care under the terms of the plan, the insurance company would have been liable. And the court recognized that was a unique allegation that directly invoked the terms of the plan and for that purpose it was conflict preempted but not completely preempted. We'll note about our claims in 1 through 5 as is the style at least for the last 25 years in my experience, every claim incorporated by reference all preceding allegations of the petition

. Omega's petition is replete, almost annoyingly so with a repetition of this verification process. And I disagree with council on what the petition says because it's quite clear. Paragraphs 15, 16, 23, 24, I could go on. It alleges misrepresentation by telephone actually calling Blue Cross in 06 and 07. And then after 07 and there's a letter, it's an attachment exhibit A to the petition. Blue Cross said, Omega from now on, don't call us, use our iLink Blue system. And the petition alleges that thereafter that Omega did use the iLink Blue system and that it contained verifications and representations upon which Omega relied. Now there was a reference to the access medicoid case with which Judge Reavley is very familiar. It was two points about that first that was section 514 conflict preemption, not the de Villa test. But second that was a very unique unjust enrichment allegation in that case. With the plaintiff alleged is that they provided care wasn't compensated and that even had they not done it. If someone else had provided the same care under the terms of the plan, the insurance company would have been liable. And the court recognized that was a unique allegation that directly invoked the terms of the plan and for that purpose it was conflict preempted but not completely preempted. We'll note about our claims in 1 through 5 as is the style at least for the last 25 years in my experience, every claim incorporated by reference all preceding allegations of the petition. Let me move on now to the question of Fiba. The district court did not abuse its discretion here either. I think the starting point is Empire Health Choice DBA Blue Cross and Blue Shield versus McVeigh that's a 2006 United States Supreme Court case. There the Supreme Court it was Justice Ginsburg found that Fiba statute was unusual. It didn't provide that federal law preempted state law. It provided the terms of federal insurance contracts preempted any inconsistent state law. And she recognized for the majority that that unusual provision deserved a modest reading. And under that modest reading, complete preemption was not possible. And so the argument that there could be a reasonable belief in light of the McVeigh case I think is unsound and again the district court did not abuse its discretion and I keep coming back to that because that is the standard of review. Cases have recognized that the authority upon which Blue Cross relies a case called Botsford out of the Middle District of Alabama are no longer good law. They predate the McVeigh case. Regardless even under the old law, misrepresentations to providers about what they would get were never preempted by Arissa even before the McVeigh case. And then finally, Blue Cross had no reasonable basis to remove under the federal officer removal statute. Now this one is a little bit unique because in its original memorandum and opposition to the motion to remain, Blue Cross relegated this issue to a single footnote

. Let me move on now to the question of Fiba. The district court did not abuse its discretion here either. I think the starting point is Empire Health Choice DBA Blue Cross and Blue Shield versus McVeigh that's a 2006 United States Supreme Court case. There the Supreme Court it was Justice Ginsburg found that Fiba statute was unusual. It didn't provide that federal law preempted state law. It provided the terms of federal insurance contracts preempted any inconsistent state law. And she recognized for the majority that that unusual provision deserved a modest reading. And under that modest reading, complete preemption was not possible. And so the argument that there could be a reasonable belief in light of the McVeigh case I think is unsound and again the district court did not abuse its discretion and I keep coming back to that because that is the standard of review. Cases have recognized that the authority upon which Blue Cross relies a case called Botsford out of the Middle District of Alabama are no longer good law. They predate the McVeigh case. Regardless even under the old law, misrepresentations to providers about what they would get were never preempted by Arissa even before the McVeigh case. And then finally, Blue Cross had no reasonable basis to remove under the federal officer removal statute. Now this one is a little bit unique because in its original memorandum and opposition to the motion to remain, Blue Cross relegated this issue to a single footnote. There was then reply memorandum, Sir reply memorandum, none of which further mentioned federal officer removal. The district court did not even address it in its opinion because again it was simply relegated to a footnote. Ultimately there was a motion for reconsideration. The district court ruled that the issue was meritless but waived in any event. And the real question here is did the United States Supreme Court and the Watson case overall winters? And the answer is absolutely not. In fact, in Watson the Supreme Court held up winters as the example of how courts were applying federal officer removal for what the requirements were. It went on to say that it need not consider in that case a case that didn't deal with a private contractor at all, whether or when private contractors may invoke the federal officer removal statute. It put that issue to the side. Instead Watson made a gross distinction between those who are regulated by the government and those who provide goods and services to the government. And after making that distinction it dealt no further with private contractors except to say winters was the example and it need not consider whether and when private contractors can even use the statute. It then went on to the other half, the regulated side of the table. And it determined that being subject to regulations was not sufficient no matter how detailed, no matter how burdensome, a company like Philip Morris that has to comply with regulations cannot claim the mantle of being a federal officer. Now there are other cases out there going back to Willingham which are very distinguishable because there we have essentially full-time government workers whether their government employees or the standing trustee in Belvarsis Thornburg. We had in the Willingham case for example the Warden and Chief Medical Officer of Levinworth, the prison in Kansas

. There was then reply memorandum, Sir reply memorandum, none of which further mentioned federal officer removal. The district court did not even address it in its opinion because again it was simply relegated to a footnote. Ultimately there was a motion for reconsideration. The district court ruled that the issue was meritless but waived in any event. And the real question here is did the United States Supreme Court and the Watson case overall winters? And the answer is absolutely not. In fact, in Watson the Supreme Court held up winters as the example of how courts were applying federal officer removal for what the requirements were. It went on to say that it need not consider in that case a case that didn't deal with a private contractor at all, whether or when private contractors may invoke the federal officer removal statute. It put that issue to the side. Instead Watson made a gross distinction between those who are regulated by the government and those who provide goods and services to the government. And after making that distinction it dealt no further with private contractors except to say winters was the example and it need not consider whether and when private contractors can even use the statute. It then went on to the other half, the regulated side of the table. And it determined that being subject to regulations was not sufficient no matter how detailed, no matter how burdensome, a company like Philip Morris that has to comply with regulations cannot claim the mantle of being a federal officer. Now there are other cases out there going back to Willingham which are very distinguishable because there we have essentially full-time government workers whether their government employees or the standing trustee in Belvarsis Thornburg. We had in the Willingham case for example the Warden and Chief Medical Officer of Levinworth, the prison in Kansas. Willingham does announce a fairly broad standard that the removal statute is broad and the defense need only be colorable. I assume that test is one that we should apply. Well, Willingham as you recall was about 30 years before winters and winters articulated a different test for private contractors. Willingham of course was not a private contractor. We had employees of the federal government, the Warden and the Chief Medical Officer of Levinworth. And so winters had obviously had Willingham at its disposal in 1999 and recognized that for private contractors who do some work for the government, some work for private parties that an additional test was needed to determine are they in fact acting on behalf of the government when they're doing something or on their own behalf. Well, is that part of the Willingham test still a viable that says the federal defense need only be colorable? I agree that it is in terms of the colorable defenses. And frankly, I think that's Blue Cross's best argument but they need a lot more than that. Under the winters test they need first to show that they're acting under and that means this direct and detailed control and that was clearly met in winters. A question of the production of agent orange that the folian, that those of us of a certain age are familiar with, of course I'll use during the Vietnam War and the specifications were nothing if not precise. And in fact, there were warning claims in winters and yet the records show that the government restricted what could be on the packaging including warnings. So direct and detailed control. And so that was step one. The other step that they would have to show in addition to these colorable defenses is a causal nexus

. Willingham does announce a fairly broad standard that the removal statute is broad and the defense need only be colorable. I assume that test is one that we should apply. Well, Willingham as you recall was about 30 years before winters and winters articulated a different test for private contractors. Willingham of course was not a private contractor. We had employees of the federal government, the Warden and the Chief Medical Officer of Levinworth. And so winters had obviously had Willingham at its disposal in 1999 and recognized that for private contractors who do some work for the government, some work for private parties that an additional test was needed to determine are they in fact acting on behalf of the government when they're doing something or on their own behalf. Well, is that part of the Willingham test still a viable that says the federal defense need only be colorable? I agree that it is in terms of the colorable defenses. And frankly, I think that's Blue Cross's best argument but they need a lot more than that. Under the winters test they need first to show that they're acting under and that means this direct and detailed control and that was clearly met in winters. A question of the production of agent orange that the folian, that those of us of a certain age are familiar with, of course I'll use during the Vietnam War and the specifications were nothing if not precise. And in fact, there were warning claims in winters and yet the records show that the government restricted what could be on the packaging including warnings. So direct and detailed control. And so that was step one. The other step that they would have to show in addition to these colorable defenses is a causal nexus. So not only are they subject to this control but that the federal government's directions are connected to the plaintiff's claims and so the question arises in this case. How has Blue Cross shown that the United States told it how to interact with providers like omega hospital in terms of a pre-admission verification? There's no record evidence of that. And in fact it's inconsistent with the allegations of the petition which show that all of omega hospitals claims were treated the same way. There was no suggestion in this verification process that for federal government employees that they would get a different treatment from Blue Cross when they were at the hospital and needed verification. The representations, the treatment to omega hospital were across the board and so Blue Cross can't show any causal nexus between governmental instructions and directives on the one hand and what it actually did in interacting this commercial reality memorial talked about with omega hospital. So ultimately the question is was it reasonable for Blue Cross to rely upon out of circuit authority on the basis of Watson? When Watson specifically said we need not consider whether and when this statute may be used by private contractors. I would think that it's unreasonable in that instance because again Watson was so explicit that that was not the issue there. And in fact the courts of the Eastern District have been uniform judge Engelhart, judge Vance, judge Fallon and saying that Watson didn't change anything. Winters is still the law of the fifth circuit. Let me move on now. I want to hit this notion of discretion again. This court said in American Airlines versus Saber that the district court has discretion on this question. And Blue Cross in fact persists in removing providers claims and there was a denial of that and I can give you just a few names. Transitional hospitals omega hospital center for restorative breast surgery intra operative monitoring devices another transitional hospital river parishes and Lakeland anesthesia they keep doing it

. So not only are they subject to this control but that the federal government's directions are connected to the plaintiff's claims and so the question arises in this case. How has Blue Cross shown that the United States told it how to interact with providers like omega hospital in terms of a pre-admission verification? There's no record evidence of that. And in fact it's inconsistent with the allegations of the petition which show that all of omega hospitals claims were treated the same way. There was no suggestion in this verification process that for federal government employees that they would get a different treatment from Blue Cross when they were at the hospital and needed verification. The representations, the treatment to omega hospital were across the board and so Blue Cross can't show any causal nexus between governmental instructions and directives on the one hand and what it actually did in interacting this commercial reality memorial talked about with omega hospital. So ultimately the question is was it reasonable for Blue Cross to rely upon out of circuit authority on the basis of Watson? When Watson specifically said we need not consider whether and when this statute may be used by private contractors. I would think that it's unreasonable in that instance because again Watson was so explicit that that was not the issue there. And in fact the courts of the Eastern District have been uniform judge Engelhart, judge Vance, judge Fallon and saying that Watson didn't change anything. Winters is still the law of the fifth circuit. Let me move on now. I want to hit this notion of discretion again. This court said in American Airlines versus Saber that the district court has discretion on this question. And Blue Cross in fact persists in removing providers claims and there was a denial of that and I can give you just a few names. Transitional hospitals omega hospital center for restorative breast surgery intra operative monitoring devices another transitional hospital river parishes and Lakeland anesthesia they keep doing it. And the district court had discretion in this case and that's the only question before this court. The federal officer removal is not an issue. The case is back in state court as a late of May of 2015. On this record and based on this law the district court did not abuse its discretion in finding that omega was entitled to its modest expenses about $30,000 and this court should affirm there's also a motion pending for the additional costs incurred on appeal because if there is not any recovery on appeal then obviously it's a some of diminishing returns to have to defend the judgment in the appellate court starting from $30,000 would not make omega hospital whole. I recognize this court has discretion on that matter either to require the submission of fee applications here or demand the matter to the district court. And with that we would ask the court to affirm the district court's ruling. Before you sit down you reply brief. Your brief doesn't reply other than with one sentence I think to the discussion of jacks. What do you say about the jacks case here? What's a few things the first point is the jacks misinterpreted Watson and would broaden this test instead of a causal next. Well let me just ask is your position the jacks is wrong and it is not a reasonable interpretation on which we should rely in so far as what was colorable. I do believe that it's wrong again because of what we've got a case here out of the fifth circuit winters would specifically tell us part is what they need to do. Jacks is also distinguishable because there you have a subrigation action and subrigation is a component of that federal plan and so there's at least a colorable argument there when they're doing exactly what they were told to do in the plan that is seek subrigation when one of the particular insures has been hurt to go after the money if there has been a total recovery and recoup it and it goes to the United States Treasury this case is factually distinct. You're listed just a little while ago as some judges who are dealt with this issue already in the Eastern District. Have any of those cases involved assessing attorneys fees for the removal? Your Honor off hand I am not recalling one that does

. And the district court had discretion in this case and that's the only question before this court. The federal officer removal is not an issue. The case is back in state court as a late of May of 2015. On this record and based on this law the district court did not abuse its discretion in finding that omega was entitled to its modest expenses about $30,000 and this court should affirm there's also a motion pending for the additional costs incurred on appeal because if there is not any recovery on appeal then obviously it's a some of diminishing returns to have to defend the judgment in the appellate court starting from $30,000 would not make omega hospital whole. I recognize this court has discretion on that matter either to require the submission of fee applications here or demand the matter to the district court. And with that we would ask the court to affirm the district court's ruling. Before you sit down you reply brief. Your brief doesn't reply other than with one sentence I think to the discussion of jacks. What do you say about the jacks case here? What's a few things the first point is the jacks misinterpreted Watson and would broaden this test instead of a causal next. Well let me just ask is your position the jacks is wrong and it is not a reasonable interpretation on which we should rely in so far as what was colorable. I do believe that it's wrong again because of what we've got a case here out of the fifth circuit winters would specifically tell us part is what they need to do. Jacks is also distinguishable because there you have a subrigation action and subrigation is a component of that federal plan and so there's at least a colorable argument there when they're doing exactly what they were told to do in the plan that is seek subrigation when one of the particular insures has been hurt to go after the money if there has been a total recovery and recoup it and it goes to the United States Treasury this case is factually distinct. You're listed just a little while ago as some judges who are dealt with this issue already in the Eastern District. Have any of those cases involved assessing attorneys fees for the removal? Your Honor off hand I am not recalling one that does. Thank you, come. Thank you judges. All right thank you Mr. Flanagan Mr. Feinberg you've saved time for a bottle. Yes thank you Your Honours I just want to run through each of the three points that Omega just addressed. It is true the Deville test the two part Deville test applies as I mentioned before on Pran one the test isn't anything other than could they have brought it and here there are assignments but you don't even need to look at the assignment in the record. Their allegations say we want money for providing covered services well how are they possibly entitled to that unless they have an assignment and the answer is they're not in the emerus case that we cited makes exactly that point as does the spring case on which the emerus case relies. And again we fully agree that misrepresentation claims are not preempted and most of the cases if not all of them that Omega just cited were misrepresentation cases but that's not all we have here. As I mentioned before there are two other claims that have nothing to do with misrepresentation that you don't say anything about misrepresentation these are causes of action one and five. And this notion that there's a somehow unique element in judge release discussion of unjust enrichment in access metacquip. I don't know what that means unique an unjust enrichment claim is unique in that it's different from the misrepresentation claim I completely agree with that. That's exactly why it's it is preempted whereas the misrepresentation claims are not. I want to mention just a word or two about FIBA because I think the court probably doesn't need to deal with this issue and which is why I didn't address it

. If there's no if there's complete preemption under a RISSA then the case was properly removed you don't need to get to FIBA if there and that's the end of it if there's not then the FIBA argument is going to fail for the very same reason because it's essentially the same test. The other question whether or not there can ever be complete preemption under FIBA is a very complicated issue and we take we strongly disagree those two cases that Omega just mentioned AOT the anesthesiologist case and Alabama dentist both post date empire as do and other cases post date empire two that find complete preemption including a 2007 decision in one of the center for restorative breast cancer cases but that's a very complicated issue that I don't think this court needs to address because this case will rise or fall on on the other issues and on federal officer removal the key point is exactly what my opponent just said that Watson did not overturn winters but winters doesn't say there has to be complete or a direct and detailed control doesn't say that at all that happened to be the facts in that case and you look you need look no further than this court's decision in bell versus thornburg because it's abundantly clear that there was no complete control over the defendant in that case the defendant chose to fire the individual and that was enough for there to be federal officer removal and this isn't new with Watson this goes back to the 1800s one of the cases that Watson cites is a case called Davis versus South Carolina from the 1880s and and at the time federal officer removal only applied to revenue agents and there was a federal marshal who was acting as a revenue agent but there's also an uncommissioned army officer helping him and he accidentally shot the person who they were who trying to arrest and the court said that is acting under that sufficient acting under and clearly there was no direct control of the revenue agent telling the army officer to shoot the person accidentally or otherwise you just don't need direct and detailed control under any test thank you mr. Feinberg your case is under submission the court will take a brief reces