Contract Dispute

Ortiz-Enriquez v. Nat'l Healthcare Affiliates, No. Civ. 05-1461(PG) (D.P.R. Oct. 18, 2005)

A sales agreement for a home care services company provided that the seller could retain funds in an account established pursuant to a deed of trust, less any amount owed to Medicare as a result of termination of, or a withdrawal from, the trust. The buyer was paid these funds by the Medicare Program. The seller claimed that the buyer failed to pay him these amounts. The buyer disagreed. When the seller sued in state court, the buyer petitioned that the state court remove the action to federal court because the complaint implicated federal Medicare law. The Puerto Rican state court complied with the buyer's request. The seller then filed a motion with the federal district court to remand the lawsuit back to state court. The United States District Court for Puerto Rico agreed with the seller and remanded the case back to state court, holding that although an interpretation of Medicare law may be necessary to defend the buyer's actions, removal to a federal court may not be based exclusively on a federal defense. The federal court noted that all claims were founded in state law, and therefore the federal court did not have original jurisdiction over the case.