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US District Court: Involvement of MSPA Does Not Create a Federal Question

In Mikiewicz v. Hamorski and Erie Insurance Exchange, 2016 U.S. Dist. LEXIS 58859 (May 3, 2016), the United States District Court for the Middle District of Pennsylvania removed the case before them from federal court and remanded it back to state court, finding that the mere involvement of a federal statute is not enough to provide a proper basis for removal from state court to federal court. In remanding the case to state court, the Court applied the well-pleaded complaint rule and concluded that nothing on the face of Plaintiff’s motion to enforce the settlement agreement raised a question of federal law.

In December 2013, Ms. Helen Mikiewicz (Plaintiff) was involved in an automobile accident with Defendant Stanley Hamorski, who was insured by Defendant Erie Insurance Exchange (Erie). Sometime after, it appears that the parties reached a settlement agreement and a settlement release was executed. In the case at hand, Erie initiated removal to federal court following Plaintiff’s filing, which alleged that Erie withholding settlement funds violated Pennsylvania Rule of Civil Procedure 229.1, a rule requiring settlement proceeds to be paid within twenty days of the execution of a Settlement Agreement and Release. Although the published opinion is not clear regarding the exact nature of the parties’ dispute, it appears, given Erie’s basis for removal, that after the execution of the settlement release, the parties had a dispute involving Medicare Secondary Payer issues. Shortly after Plaintiff filed her action to enforce the settlement agreement, Erie sought removal to federal court arguing that, because Plaintiff’s claim involves federal law, more specifically the Medicare Secondary Payer Act (MSPA), federal question jurisdiction exists under 28 U.S.C. § 1331.1. Erie further argued that removal was appropriate in this case because the MSPA is an “extraordinary” statute that “completely preempts” state law. Plaintiff disagreed and filed a Motion to Remand to state court, pursuant to 28 U.S.C. § 1446 and 1447.

The Court disposed of Erie’s argument that federal question jurisdiction exists under 28 U.S.C. § 1331, noting that “simply because a state law claim ‘involves’ a federal statute or would require a state court to ‘make a determination as to the duties and obligations in the MSP Act,’ does not in and of itself provide a basis for removal.” The Court further noted that Erie cannot, “merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated.” With regard to Erie’s assertion that removal is appropriate because the MSPA is an extraordinary statute that completely preempts state law, the Court pointed to the fact that Erie had provided no case supporting their position that the MSPA is so extraordinary that it completely preempts state law and indicated that they, the Court, are aware of none. The Court actually noted the opposite to be true and indicated that, “Courts in this Circuit have consistently held that a state law cause of action that references or ‘involves’ the MSPA or the Medicare statute is not removable to federal court because it does not raise a federal question”. The Court dismissed Erie’s argument, finding that removal was improper, as “nothing in the MSPA or the Medicare statue demonstrates that the MSPA completely pre-empts state law.”

In addition to finding removal improper, the Court granted Plaintiff’s motion for attorney’s fees and costs, concluding that Erie’s attempted removal of this action to federal court lacked an “objectively reasonable” basis for removal.

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