Kennedy III v. UnitedHealth Group Incorporated

Background

William A. Kennedy III, M.D., and William A. Kennedy III MD PLLC sued UnitedHealth Group Incorporated, UnitedHealthcare Insurance Company of New York, UnitedHealthcare of New York, Inc., Oxford Health Plans (NY), Inc., and Oxford Health Insurance, Inc. The case began in New York State Supreme Court. United removed it to the U.S. District Court for the Southern District of New York, relying on federal-question jurisdiction under 28 U.S.C. § 1331.

The amended complaint asserted two New York-law claims: breach of implied-in-fact contracts and unjust enrichment. It alleged that Kennedy provided emergency ear, nose, and throat care to members of United’s health plans but was not paid for approximately 182 claims totaling more than $15 million. The complaint referred to the federal Emergency Medical Treatment and Labor Act (EMTALA), as well as New York law, in alleging that Kennedy was required to provide emergency treatment. The amended complaint removed references to the Affordable Care Act but continued to refer to EMTALA.

Kennedy moved to remand, arguing that the federal court lacked jurisdiction. United opposed the motion and had also moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). The court had stayed consideration of the dismissal motion until it resolved the jurisdiction issue.

Federal-question jurisdiction

The court explained that federal-question jurisdiction usually exists when federal law creates the claim. In the limited situation where a state-law claim contains an important federal issue, jurisdiction may exist only if the federal issue is necessarily raised, actually disputed, substantial to the federal system as a whole, and capable of resolution in federal court without upsetting the balance between federal and state courts. This is commonly called the Grable-Gunn test.

The court held that Kennedy’s claims did not satisfy that test. First, EMTALA was not necessarily raised because the amended complaint identified both EMTALA and New York Public Health Law § 2805-b(2)(B) as sources of Kennedy’s alleged duty to provide emergency care. The New York statute supplied an independent state-law basis for that allegation, so the court could resolve the unjust-enrichment claim without deciding EMTALA’s application.

Second, the court held that any EMTALA issue would not be substantial in the jurisdictional sense. At most, the issue would involve a fact-specific determination about whether the hospitals where Kennedy was on call qualified as participating hospitals under EMTALA. The court found that this would not establish a legal rule of broad importance to the federal system.

Third, the court held that exercising federal jurisdiction would disrupt the appropriate division of responsibilities between federal and state courts. EMTALA provides a cause of action for patients injured by a hospital’s refusal to provide emergency services, but the court found that it does not create a private claim for emergency-care physicians seeking payment from health insurers for contract breach or unjust enrichment. The court also rejected United’s argument that the federal No Surprises Act supplied an exclusive federal remedy for providers seeking payment from insurers.

The court noted that diversity jurisdiction was undisputedly unavailable. Because the amended complaint did not establish federal-question jurisdiction and no other jurisdictional basis applied, the federal court could not retain the case.

Disposition

The court granted Kennedy’s motion to remand for lack of subject-matter jurisdiction. It denied United’s motion to dismiss as moot, with that dismissal without prejudice to renewal upon remand to state court. The court directed the Clerk to transfer the case to New York State Supreme Court, terminate the pending motions, and close the case as a federal-court action.