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Hawaii Medical Services Association v. Nitta

United States District Court, D. Hawaii

June 7, 2019

HAWAII MEDICAL SERVICES ASSOCIATION, Plaintiff,
v.
FREDERICK NITTA, M.D., Defendant.

          ORDER ADOPTING IN PART AND REJECTING IN PART FINDINGS AND RECOMMENDATION, ECF NO. 16, AND REMANDING ACTION TO STATE COURT

          J. Michael Seabright Chief United States District Judge.

         I. INTRODUCTION

         Defendant Frederick Nitta, M.D. (“Defendant” or “Dr. Nitta”) objects, under 28 U.S.C. § 636(b)(1) and Local Rule 72.4, to Magistrate Judge Kenneth J. Mansfield's March 27, 2019 Findings and Recommendation to Grant Plaintiff Hawaii Medical Service Association's (“Plaintiff” or “HMSA”) Motion for Remand (the “F&R”). ECF No. 17. The F&R recommended that the court remand this action to the State of Hawaii Circuit Court for the Third Circuit (“state court”) based on its findings that (1) there is no basis for federal question jurisdiction, and (2) the state court proceeding was not a “civil action” and therefore, there was no valid procedural basis to remove the case. ECF No.16 at PageID #186, 191. The F&R further found that without a valid procedural basis for removal, Defendant's removal “teeters on the edge of violating Federal Rule of Civil Procedure 11(b), ” and recommended awarding Plaintiff, pursuant to 28 U.S.C. § 1447(c), its “just costs and actual expenses” of $19, 083.76 in attorneys' fees and costs incurred in connection with the removal. Id. at PageID # 186, 195.

         Defendant objects to a portion of the F&R-its findings that (1) there is no federal question jurisdiction, and (2) an award of attorneys' fees in excess of $19, 000 is “just.” ECF No. 17 at PageID #198-201.

         Upon de novo review, the court agrees that there is no basis for federal question jurisdiction, but disagrees that an award of attorneys' fees is warranted. Further, absent objection, the court declines to decide whether a valid procedural basis exists to remove this action, but even if no valid procedure exists, the court disagrees that Defendant's removal “teeters on the edge of” violating Rule 11(b).

         Thus, the F&R is ADOPTED in part and REJECTED in part, and this action is REMANDED to state court.

         II. BACKGROUND

         A. State Court Proceedings

         On January 7, 2019, Plaintiff filed a Motion for Order Confirming Final Award of Arbitrator (“Final Award”) in state court (“Motion for Confirmation”). ECF No. 1-1. As alleged in the Motion for Confirmation, HMSA and Dr. Nitta are parties to a QUEST Participating Provider Agreement (“QUEST PPA”), which “governs the services provided by Dr. Nitta to HMSA's members enrolled in the Medicaid managed care program implemented by the Med-QUEST division with the Department of Human Services for the State of Hawai'i, referred to as “QUEST.”[1] ECF No. 1-1 at PageID #6 n.2; see Id. at PageID #28. Pursuant to the QUEST PPA and a separate Agreement to Participate in Binding Arbitration (“APBA”), the parties agreed that disputes between them would be submitted to arbitration under the FAA. See ECF No. 1-1 at PageID #7, 30, 38-39. As provided in section 8.3(a) of the QUEST PPA, the parties also agreed that “[t]he decision of the arbitrator shall be final and binding on the parties and judgment shall be entered thereon upon timely motion by either party in a court of competent jurisdiction.” Id. at PageID #7, 30.

         In June 2018, HMSA and Dr. Nitta participated in an arbitration to resolve a dispute over Dr. Nitta's billing and HMSA's payment for medical tests administered by Dr. Nitta to HMSA members between 2012 and 2014. See id. at PageID #7. On December 12, 2018, the arbitrator issued his Final Award in favor of HMSA and against Dr. Nitta, requiring Dr. Nitta to reimburse HMSA $1, 765, 822.33 that he received as a result of improper billing. Id. at PageID #13-25. The Motion for Confirmation asserts that the Final Award “arises out of Dr. Nitta's billings submitted to HMSA under [the QUEST PPA].” Id. at PageID #6. Plaintiff moved for confirmation of the Final Award pursuant to both the Federal Arbitration Act (“FAA”) and Hawaii's Uniform Arbitration Act (“HUAA”), specifically, “9 U.S.C. § 9 and [Hawaii Revised Statutes (“HRS”)] chapter 658A.”[2] Id. at PageID #5-7.

         B. Federal Court Proceedings

         On January 11, 2019, Defendant removed this action pursuant to 28 U.S.C. § 1441, asserting federal question jurisdiction.[3] ECF No. 1. More specifically, the Notice of Removal asserts that “the action seeks to confirm the award of an arbitration proceeding arising from the interpretation of federal laws and regulations and conducted in accordance with the rules of the [FAA].” Id. at PageID #2. On February 4, 2019, Plaintiff filed a Motion for Remand. ECF No. 4. On February 18, 2019, Defendant filed an Opposition, ECF No. 9, asserting an additional basis for federal question jurisdiction-that “the arbitrator's award in the underlying case was rendered in manifest disregard of federal law.” ECF No. 9-1 at PageID #71. On February 25, 2019, Plaintiff filed a Reply ECF No. 10.

         On February 27, 2019, Magistrate Judge Mansfield issued an Entering Order recommending that Plaintiff's Motion for Remand be granted, finding that Plaintiff is entitled to an award of its just costs and actual expenses, including attorney fees, incurred as a result of Defendant's removal, and directing Plaintiff's counsel to submit a declaration detailing those fees. ECF No. 12. On March 6, 2019, Plaintiff's counsel submitted her declaration, and on March 15, 2019, Defendant's counsel filed a declaration in response. ECF Nos. 13, 15. ECF No. 15 ¶ 17.

         On March 27, 2019, Magistrate Judge Mansfield issued the F&R to Grant Plaintiff's Motion for Remand and, pursuant to 28 U.S.C. § 1447(c), award Plaintiff $19, 083.76 in attorneys' fees and costs incurred in connection with the removal. ECF No. 16. On March 29, 2019, Defendant filed Objections to the F&R and on April 12, 2019, HMSA filed a Response, which includes a request for additional fees and costs expended in preparing the Response. ECF Nos. 17-18. Pursuant to Local Rule 7.2(d), the court finds this matter suitable for disposition without a hearing.

         III. STANDARD OF REVIEW

         When a party objects to a magistrate judge's findings or recommendations, the district court must review de novo those portions to which the objections are made and “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise.”). That is, “[t]he district judge may accept the portions of the findings and recommendation to which the parties have not objected as long as it is satisfied that there is no clear error on the face of the record.” Naehu v. Read, 2017 WL 1162180, at *3 (D. Haw. Mar. 28, 2017) (citations omitted).

         Under a de novo standard, this court reviews “the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not hold a de novo hearing; however, it is the court's obligation to arrive at its own independent conclusion about those portions of the magistrate judge's findings or recommendation to which a party objects. United States v. Remsing, 874 F.2d 614, 618 (9th Cir. 1989).

         IV. DISCUSSION

         Defendant contends that Magistrate Judge Mansfield erred in determining that (1) there is no federal question jurisdiction, and (2) an award of Plaintiff's attorneys' fees and costs in excess of $19, 000 is “just.” ECF No. 17 at PageID #199-201. The court first sets forth the legal standard for removal pursuant to § 1441, and then addresses Defendant's Objections.

         A. Removal Legal Standard

         Under 28 U.S.C. § 1441, a defendant may remove to federal district court “any civil action brought in a State court, ” provided the district court to which the action is removed would have “original jurisdiction” over that action. See City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997). Thus, removal jurisdiction generally exists where a case filed in state court presents claims “arising under the Constitution, laws, or treaties of the United States, ” 28 U.S.C. § 1331, ...


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