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10-cv-4098

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Case Summary: Jahnke and Sons, et al. v. Blue Cross and Blue Shield of Kansas, Inc., 10-cv-4098 (D. Kans.)

This is an insurance benefit denial case which the defendant, Blue Cross and Blue Shield (BCBS), attempted to remove to federal court based on an argument that the claim was covered by ERISA, a federal statute, which created a federal question. Defendant’s argument was rejected and the case was remanded back to Kansas state court.

Plaintiffs, Samuel R. Jahnke and his sons, operated a family farming business. They had a group health insurance policy with BCBS from 2005-2008. In 2008, they decided they no longer needed maternity benefits and contacted BCBS to drop that coverage from their policy. BCBS allegedly issued new individual policies to each of them on September 5, 2008. In April 2009, Mr. Jahnke, Sr. was diagnosed with a brain tumor and underwent surgery for same. The Jahnke’s filed a claim with BCBS which denied the claim arguing that the “new” policy had a 240 day waiting period for tumors. The Jahnke’s appealed the ruling twice and then filed suit. BCBS’s position was that, despite the fact that the Jahnke’s had had coverage with BCBS for nearly 4 years, the first three years were under a group policy and the last few months were under an individual policy – which were “different” policies – and, therefore, the waiting period began anew with the “new” policy.

BCBS attempted to remove the case to federal court based on the ERISA statutory scheme applying. Its argument was that the policy premiums were paid by Jahnke & Sons, the employer, as a “benefit” which made ERISA applicable. On June 21. 2012, the evidentiary hearing on removal was held. Arguments made at this hearing are covered in the video. On August 7, 2012, the Court issued an order ruling that, based on the “very credible” testimony of Ms. Jahnke (secretary for the company) and the company’s accountant, the payments made from a Jahnke & Sons checking account to BCBS were “distributions” to the employees, rather than direct payment of benefits, so that, technically, the employees paid the premiums, not the employer; therefore, ERISA – which requires a payment by an employer – did not apply and there was no basis for federal jurisdiction. The case has now been remanded to Kansas district court.

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Case Highlights

  • Notice of Removal filed 8/23/2010 [Doc #1]
  • Defendant’s Trial Brief filed 1/30/2012 [Doc #56]
  • Plaintiffs’ Trial Brief filed 1/30/2012 [Doc #58]
  • Evidentiary Hearing on 6/21/2012

 

Case-related documents, including those referenced above, are available via the Public Access to Court Electronic Records (PACER) service. For more information, visit Pacer.gov.