A recent Legal Intelligencer story, “Insurer Hit With Attorney Fees for ‘Unreasonable’ Removal,” reports that a federal judge has ordered an insurance company to pay attorney fees and costs for an "objectively unreasonable" attempt to remove to federal court a lawsuit over a motor vehicle insurance settlement.

In a memorandum opinion in Mikiewicz v. Hamorski, U.S. District Judge Robert D. Mariani of the Middle District of Pennsylvania found that a claim seeking to enforce a settlement agreement for allegedly violating state law was insufficient to allow removal, despite the suit's involvement of a federal statute.

Helen Mikiewicz was in a December 2013 accident with Stanley Hamorski, who was insured by Erie Insurance Exchange, Mariani said.  She initiated an action in the Lackawanna County Court of Common Pleas last December alleging that Erie violated Pennsylvania Rule of Civil Procedure 229.1, which requires settlement proceeds to be paid within 20 days of a settlement agreement being executed.  She alleged that Erie required her to satisfy certain conditions in order to receive the funds from her settlement.

After Mikiewicz filed a motion to enforce the agreement and argued it before a Lackawanna County judge, Erie filed an answer and sought removal to the Middle District, Mariani said.  Erie argued that Mikiewicz's claim involved the federal statute known as the Medicare Secondary Payer Act, and therefore federal question jurisdiction existed.  The company also argued that the MSPA is an "'extraordinary'" statute that entirely pre-empts state law.  Mariani, though, found no basis for Erie's removal.

"As plaintiff notes, Erie 'has repeatedly been sanctioned' for making similar unsuccessful arguments in the past concerning the MSPA," Mariani said.  "Because Erie's arguments in support of removal wholly lack merit and have been consistently rejected by the federal courts ... the court concludes that Erie's removal of this action was objectively unreasonable."

A matter is not ripe for removal simply because a state law claim "'involves'" a federal statute or would require a state court to make a determination about duties tied to the MSPA, Mariani said.  Nothing in Mikiewicz's motion to enforce the settlement agreement raised a question of federal law, he said, and nothing indicated "artful pleading" in an attempt to avoid federal jurisdiction.

"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,'" Mariani said, quoting the U.S. Supreme Court's 1987 ruling in Caterpillar v. Williams.

Turning to Erie's claim that the MSPA completely pre-empts state law, Mariani said the company pointed to no case law in supporting its assertion of the statute's "'extraordinary'" nature.  The court, he said, was aware of no such case law.  In fact, courts in the Third Circuit have consistently held that a state law cause of action that references or involves the MSPA or the Medicare statute cannot be removed to federal court because it does not raise a federal question, Mariani said.  Taken in full, Erie lacked a basis for removal of the action, Mariani said.

"Plaintiff's state law cause of action seeking to enforce a settlement agreement for allegedly violating state law—even if the claim hypothetically 'involves' a federal statute such as the MSPA—was plainly insufficient to permit removal," he said.

Mariani granted Mikiewicz's motion for attorney fees and costs, and ordered her to file a memorandum of costs and expenses incurred as a result of Erie's removal.

Paul T. Oven of Dougherty Leventhal & Price, representing Mikiewicz, said the ruling "hopefully will serve as a deterrent against carriers seeking to assert the government's rights, seemingly as their own, but also now looking to drag this impermissibly into federal court based solely on a defense they want to have, as opposed to the simple state law claim it is."