Zhang v. United Healthcare Ins. Co., No. 11-CV-72, 2011 WL 1533008 (E.D. Wis. April 22, 2011).

A District Court in Wisconsin remanded this case to state court after finding that the defendant, United Healthcare, had failed to meet the “rather minimal burden” of proving the requisite amount in controversy under CAFA.

The plaintiff, Jia Le Zhang, brought suit in Wisconsin state court against United, alleging that it had refused to process and pay his health insurance claims unless he first signed a subrogation agreement that he alleged violated Wisconsin state law. Zhang further alleged that his claim for medical benefits was wrongfully denied by United because he refused to sign the subrogation agreement. Zhang sued United individually, and on behalf of “all others similarly situated” – which was “a class of ‘all students who purchased’ a certain health insurance policy from [United] while they were attending colleges or universities in Wisconsin and who were asked to sign a subrogation agreement ‘purporting to give [United] a right to first-dollar recovery on subrogation claims.’” Zhang asked for general damages, punitive damages, costs and expenses, reasonable attorneys’ fees and pre and post judgment interest.

United removed the case to federal court, and Zhang moved to remand. Zhang did not take issue with whether CAFA’s minimal diversity and class size requirements were met. Rather, he argued that United had failed to prove that the amount in controversy exceeded $5 million, and the district court agreed.

The district court began its analysis by disagreeing with Zhang’s argument that United had to provide proof of the amount in controversy at the time of removal. The court noted that there was “no legal basis” for the argument that the notice of removal itself must contain evidence of the jurisdictional amount in controversy. As long as a party seeking removal provides “factual allegations from which removal jurisdiction is plausible, the notice [of removal] is sufficient.” Here, the court found that United had alleged in its notice facts from which it was plausible to find that more than $5 million was in controversy.

But, when the party seeking remand challenges the allegation of the amount in controversy, the party seeking removal must “support its assertion with competent proof,” by a preponderance of the evidence. The court found that United had failed to meet this “rather minimal burden.” 

The court noted that the only evidence provided by United of the amount in controversy was an affidavit indicating that Zhang’s benefits claim amounted to approximately $6,950. The court noted that it could not “simply multiply what the plaintiff’s denied claims are” by the number of potential class members, as that sum would not be “reliable.” 

The court disagreed with United’s argument that it could rely on allegations from Zhang’s complaint to prove that CAFA jurisdiction existed, noting that Zhang’s estimate of the class size being in the “thousands” was not an allegation that “the class of thousands [would] have damages identical to that of Mr. Zhang.”

So, because United failed to offer evidence that the amount in controversy exceeded $5 million, the court remanded the case back to Wisconsin state court. For now at least, United will be “looking out for” the citizens of Wisconsin from a state courtroom.