St. Charles Surgical Hospital, LLC v. Louisiana Health Service & Indemnity Co., No. 20-30093 (5th Cir. 2021)
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After St. Charles filed suit against BCBS in Louisiana state court for state law fraud and abuse-of-right claims, BCBS removed the action to federal court. St. Charles had filed its third-amended petition and produced documents listing claims that involved patients insured under the Federal Employees Health Benefits Act (FEHBA).
The Fifth Circuit concluded that the appropriate course is for the district court to determine on remand whether St. Charles's waivers defeat federal officer jurisdiction, because the issue was neither a basis for the district court's decision nor extensively briefed by either party, and because the record was not fully developed in the district court. If St. Charles's waiver of FEHBA-governed claims does not settle the matter, the district court's jurisdiction hinges on a proper analysis of federal officer removal. Weighing the district court's remand order against the clarified test for federal officer removal in Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286, 290 (5th Cir. 2020) (en banc), the court concluded that the district court erred in its analysis. First, the district court applied St. Charles I too narrowly in determining that BCBS was not "acting under" OPM merely because St. Charles's claims "do not arise out of procedures dictated by OPM." Furthermore, even though the district court stated that the "causal nexus" element "ha[d] no bearing on the [c]ourt's decision in this case," the court concluded that this issue should be revisited on remand. Accordingly, the court vacated the district court's remand order and remanded for further proceedings.
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