PEARL RAY and ANDREW RAY, SR . v. Muhammad Tabriz

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 23-3285
P EARL R AY and A NDREW R AY, SR .,
Plaintiffs-Appellees,
v.
MUHAMMAD T ABRIZ,
Defendant.
A PPEAL OF : BLUE C ROSS AND BLUE SHIELD A SSOCIATION
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:23-cv-01467 — Virginia M. Kendall, Chief Judge.
____________________
A RGUED MAY 30, 2024 — D ECIDED A UGUST 2, 2024
____________________
Before ST . EVE , KIRSCH , and KOLAR , Circuit Judges.
KIRSCH , Circuit Judge. Pearl Ray and her husband, Andrew
Ray, Sr., sued medical providers in Illinois state court, alleg-
ing that the providers’ medical malpractice injured her and
that Andrew consequently suffered a loss of consortium. The
plaintiffs settled with all but one of the defendants.

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2 No. 23-3285
Under the Federal Employees Health Benefits Act
(FEHBA), 5 U.S.C. §§ 8901 et seq., the Office of Personnel
Management (OPM) may contract with private carriers for
federal employees’ health insurance. 5 U.S.C. § 8902(a). Since
before the alleged malpractice, Pearl has been enrolled in the
Service Benefit Plan (the “Plan”), a federal health benefits
plan. FEHBA governs the Plan, and Blue Cross and Blue
Shield Association (BCBSA) is the Plan’s carrier. The Plan’s
terms, as well as OPM regulations, provide that a Federal Em-
ployees Health Benefits (FEHB) carrier is entitled to full reim-
bursement for benefits paid to an enrollee to treat an injury or
illness if the enrollee makes a monetary recovery from a third
party in connection with the same injury or illness. For in-
stance, in 2015, OPM promulgated a regulation providing that
a FEHB carrier is entitled to pursue reimbursement recover-
ies, 5 C.F.R. § 890.106(a), and that a carrier’s reimbursement
right supersedes other parties’ rights, id. § 890.106(e).
After the plaintiffs reached the settlement (making a re-
covery from third parties), and under these reimbursement
provisions, BCBSA asserted a reimbursement lien on the set-
tlement for the benefits it paid in connection with Pearl’s med-
ical malpractice injuries. The plaintiffs subsequently filed a
motion for lien adjudication, arguing that Illinois’s common
fund doctrine reduces the reimbursement amount BCBSA re-
ceives by a proportionate amount of the plaintiffs’ attorney’s
fees and costs. BCBSA removed the case to federal court un-
der 28 U.S.C. §§ 1441 and 1442, arguing that the court had fed-
eral question jurisdiction over the entire action and that the
motion for adjudication was removable on federal officer
grounds. The plaintiffs moved to remand. In response,
BCBSA did not argue that the court could exercise jurisdiction
over just the motion on federal officer grounds if it lacked

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No. 23-3285 3
federal question jurisdiction over the entire case. Instead,
BCBSA asserted that it could remove only the motion for ad-
judication if § 1442 were the only basis for removal but that
there was an alternate removal basis: federal question juris-
diction.
The court denied the remand motion but later granted the
plaintiffs’ motion to reconsider, remanding the entire case be-
cause the court concluded that it lacked federal question ju-
risdiction. It stated it remanded the entire case because in
“agree[ing] with the Rays that under 28 U.S.C. § 1442(d)(1),
only the Motion for Adjudication, and not the entire case,
could be removed to federal court unless there was a separate
basis for removal[,] … BCBSA hung its hat on federal question
jurisdiction.” BCBSA appealed. On appeal, it argues that the
court has federal question jurisdiction over the case, 28 U.S.C.
§§ 1331 and 1441, and that the motion for adjudication was
removable under the federal officer removal statute, id.
§ 1442(a)(1). We address these arguments in turn, reviewing
the district court’s order de novo. Ruppel v. CBS Corp., 701 F.3d
1176, 1180 (7th Cir. 2012).
I
The party seeking removal to federal court must establish
that removal is proper. Id. BCBSA first contends that removal
was proper under § 1441, which allows for the removal of
suits over which federal courts have original jurisdiction. It
argues that federal common law governs the action and thus
that the district court has federal question jurisdiction under
§ 1331. Downey v. State Farm Fire & Cas. Co., 266 F.3d 675, 680
(7th Cir. 2001) (“Sometimes the federal interest in a contro-
versy is so dominant that federal law applies—activating fed-
eral-question jurisdiction under § 1331—even if the national

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4 No. 23-3285
government is not a party.”); see also Nat’l Farmers Union Ins.
Cos. v. Crow Tribe of Indians, 471 U.S. 845, 850 (1985) (“It is well
settled that [§ 1331’s] statutory grant of ‘jurisdiction will sup-
port claims founded upon federal common law as well as
those of a statutory origin.’”) (quotation omitted). But a court
may create federal common law only when state law would
sit in “significant conflict” with “uniquely federal interests.”
Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677,
688 (2006) (cleaned up).
BCBSA asserts that federal common law displaces the Illi-
nois common fund doctrine and governs the action because
the common fund doctrine significantly conflicts with
uniquely federal interests in FEHBA reimbursement disputes.
In BCBSA’s view, the common fund doctrine, which “allows
a person who incurs attorney’s fees in obtaining a judgment
or settlement that confers a benefit on another to deduct a por-
tion of the fee,” conflicts with both the Plan’s reimbursement
provision and OPM’s regulation. Blue Cross Blue Shield of Ill. v.
Cruz (Cruz II), 495 F.3d 510, 511 (7th Cir. 2007). But the Su-
preme Court stated in Empire Healthchoice Assurance, Inc. v.
McVeigh, 547 U.S. 677 (2006), that though FEHBA reimburse-
ment disputes implicate “distinctly federal interests” (like the
OPM-BCBSA contract’s negotiation by a federal agency), fed-
eral common law does not govern them because “countervail-
ing considerations control”—namely that a reimbursement
right predicated on a FEHBA authorized contract “is not a
prescription of federal law.” Id. at 696. Instead, such claims,
which “seek[] recovery from the proceeds of state-court liti-
gation, are the sort ordinarily resolved in state courts.” Id. at
683; see also id. at 692 (noting the Plan’s provisions on reim-
bursement and subrogation “depend upon a recovery from a
third party under terms and conditions ordinarily governed

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No. 23-3285 5
by state law”). The Court concluded, “Had Congress found it
necessary or proper to extend federal jurisdiction further, in
particular, to encompass contract-derived reimbursement
claims between carriers and insured workers, it would have
been easy enough for Congress to say so. We have no warrant
to expand Congress’ jurisdictional grant ‘by judicial decree.’”
Id. at 696 (citations omitted).
We then squarely addressed the issue in Blue Cross Blue
Shield of Illinois v. Cruz (Cruz II), 495 F.3d 510 (7th Cir. 2007).
In Cruz II, Blue Cross and Blue Shield of Illinois argued that
its contract with OPM “involves a unique federal interest that
has to be protected against conflicting state laws, such as Illi-
nois’s common fund doctrine, and that achieving this purpose
requires that all disputes arising from the contract be resolved
under federal common law.” Id. at 512 (citation omitted). But
we rejected this argument, holding that there was no unique
federal interest in “whether a state’s common fund doctrine
should be allowed to override a term in the insurance con-
tract” and thus that there was no federal question jurisdiction
over Blue Cross’s reimbursement suit. Id. at 512–14. We rea-
soned that Blue Cross’s argument “ignores the principle that
jurisdictional provisions should be simple and clear so that a
party is not placed in the position of filing a suit in one court
only to discover after years of litigating there that it has to
start over in another court because the first court lacked juris-
diction.” Id. at 513.
We also explained that our decision in Blue Cross & Blue
Shield of Illinois v. Cruz (Cruz I), 396 F.3d 793 (7th Cir. 2005),
erroneously applied federal common law to a FEHBA reim-
bursement dispute against Blue Cross in which the defendant
sought application of Illinois’s common fund doctrine, id. at

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6 No. 23-3285
796. Cruz II, 495 F.3d at 513. In Cruz I, we found a conflict be-
tween state law and the federal policy of uniform healthcare
benefits and thus applied federal common law. 396 F.3d at 799
(vacated, Cruz v. Blue Cross & Blue Shield of Ill., 548 U.S. 901
(2006), and abrogated by McVeigh, 547 U.S. 677). But that use
of federal common law was misplaced: McVeigh, which suc-
ceeded Cruz I, distinguished between benefits and reimburse-
ment. Cruz II, 495 F.3d at 513. As we noted, the Plan deter-
mines the benefits amount, which is uniform across states and
unaffected by the common fund doctrine. Id. The common
fund doctrine only “affects how much of a tort judgment or
other judgment against (or settlement with) a third party the
plaintiff gets to keep and how much he must give the insurer.
The disuniformity that results is not a disuniformity in bene-
fits.” Id.
In response, BCBSA argues that Cruz II does not survive
the Supreme Court’s decision in Coventry Health Care of Mis-
souri, Inc. v. Nevils, 581 U.S. 87 (2017), and that the common
fund doctrine significantly conflicts with an OPM regulation
promulgated in 2015. Both arguments fail. First, Cruz II sur-
vives Nevils, as does McVeigh. In Nevils, the Court held that
under FEHBA’s express preemption provision, 5 U.S.C.
§ 8902(m), contractual subrogation and reimbursement provi-
sions override state laws barring subrogation and reimburse-
ment. 581 U.S. at 95–96. The Court cast no doubt on McVeigh’s
“principal holding” that § 1331 does not confer jurisdiction
over FEHBA reimbursement actions. Id. at 97. It explained
that McVeigh did not reach the choice of law question pre-
sented in Nevils because “[e]ven if FEHBA’s preemption pro-
vision reaches contract-based reimbursement claims,” “that
provision is not sufficiently broad to confer federal jurisdic-
tion.” Id. (quotations omitted). True, the Court discussed the

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No. 23-3285 7
“distinctly federal interests” involved in Nevils, citing to
McVeigh, but it emphasized that the provision at issue was
simply “not a jurisdiction-conferring provision.” Id. at 96–97
(quotation omitted). Cruz II’s jurisdictional holding therefore
survives Nevils and precludes federal question jurisdiction
over BCBSA’s suit.
Further, BCBSA argues that OPM’s 2015 promulgation of
a FEHBA reimbursement regulation creates a significant con-
flict between state law and federal interests, but the counter-
vailing considerations outlined in McVeigh still control: the re-
imbursement right is not a creature of federal law. Though the
2015 regulation provides that a FEHB carrier is entitled to
pursue reimbursement recoveries, 5 C.F.R. § 890.106(a), and
that a carrier’s reimbursement right supersedes other parties’
rights, id. § 890.106(e), a carrier’s reimbursement right is still
not a prescription of federal law, and BCBSA does not argue
otherwise. The right instead stems from a personal injury re-
covery, and state law governs the claim underlying that re-
covery. McVeigh, 547 U.S. at 698. Thus, under McVeigh and
Cruz II, there is still no uniquely federal interest that supports
federal question jurisdiction, and the district court properly
held that it did not have such jurisdiction.
II
A
We now turn to BCBSA’s federal officer removal argu-
ment. Under § 1442, a defendant may remove a motion “sep-
arately from an underlying case not otherwise removable.”
Hammer v. U.S. Dep’t of Health & Hum. Servs., 905 F.3d 517, 526
(7th Cir. 2018); 28 U.S.C. § 1442(d)(1) (“If removal is sought
for a proceeding …, and there is no other basis for removal,

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8 No. 23-3285
only that proceeding may be removed to the district court.”).
The defendant “must show it was a (1) ‘person’ (2) ‘acting un-
der’ the United States, its agencies, or its officers (3) that has
been sued ‘for or relating to any act under color of such office,’
and (4) has a colorable federal defense to the plaintiff's claim.”
Ruppel, 701 F.3d at 1180–81 (quoting 28 U.S.C. § 1442(a)). The
statute thus operates as an exception to the well-pleaded com-
plaint rule: whereas an action may generally be removed to
federal court under federal question jurisdiction only if “the
federal question ... appear[s] on the face of [the] properly
pleaded complaint,” under the federal officer removal statute,
“the federal-question element is met if the defense depends
on federal law,” and removal is proper if all elements for fed-
eral officer removal are established. Jefferson County v. Acker,
527 U.S. 423, 430–31 (1999).
On appeal, the plaintiffs make no argument as to whether
BCBSA satisfies the four requirements for federal officer re-
moval. Instead, they argue that federal officer removal should
be limited to where the federal defense involves “participa-
tion in federal law enforcement” and that the common fund
doctrine does not conflict with FEHBA policies. We address
these arguments, which fail, before analyzing the four prongs
for removal.
The federal officer removal statute is not limited to when
the federal defense involves federal law enforcement’s partic-
ipation. The plaintiffs cite Watson v. Philip Morris Cos., Inc., 551
U.S. 142 (2007), and Martin v. Petersen Health Operations, LLC,
37 F.4th 1210 (7th Cir. 2022), to say otherwise. They argue that
the Supreme Court stated in Watson that the statute’s main
purpose is to prevent states from using their courts to inter-
fere with the federal government’s enforcement of federal

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No. 23-3285 9
laws. But the passage from Watson the plaintiffs cite instead
discusses that federal regulation of a party, standing alone,
does not make federal officer removal proper. Similarly, we
concluded in Martin that federal officer removal was im-
proper because the defendant claimed it was “acting under”
a federal officer when it was merely subject to extensive reg-
ulation. 37 F.4th at 1212–13. As we will discuss below, BCBSA
was not just complying with federal law but was also acting
on OPM’s behalf, and thus Watson and Martin are inapposite.
The plaintiffs insist that finding BCBSA’s removal proper
in this case would cause removal to “become the norm in vir-
tually all cases involving state-law claims against companies
in regulated industries or involving federal employees cov-
ered by BCBSA.” But again, mere regulation is not enough for
federal officer removal, and so this argument fails, too. We are
similarly unpersuaded by the plaintiffs’ assertion that re-
moval was improper because the common fund doctrine is
compatible with FEHBA subrogation interests. They do not
explain how this compatibility affects BCBSA’s fulfillment of
the requirements for federal officer removal. To the extent
they assert that BCBSA does not have a colorable defense, this
argument fails, as we will explain below. All of the plaintiffs’
arguments against removal are thus unavailing.
Turning to the requirements for federal officer removal,
the first prong is met: BCBSA is a “person” under the statute.
“[U]nless the context indicates otherwise,” we construe the
term “person” in a statute to include corporations and com-
panies. Ruppel, 701 F.3d at 1181. There is no indication that the
definition of person in § 1442 excludes corporations, id., and
the plaintiffs do not suggest otherwise.

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10 No. 23-3285
Second, BCBSA was “acting under” a federal agency—
OPM. BCBSA’s “‘acting under’ must involve an effort to as-
sist, or to help carry out, the federal superior’s duties or tasks.”
Id. (emphasis in original) (quotation omitted). “‘Acting under’
covers situations … where the federal government uses a pri-
vate corporation to achieve an end it would have otherwise
used its own agents to complete.” Id. BCBSA helps OPM, the
federal superior, establish a health benefits program for fed-
eral employees; OPM retains “direct and extensive control
over these benefit contracts under the FEHBA.” Jacks v. Merid-
ian Res. Co., LLC, 701 F.3d 1224, 1233 (8th Cir. 2012), abrogated
on other grounds by BP P.L.C. v. Mayor & City Council of Balt.,
593 U.S. 230 (2021). As Justice Breyer noted in McVeigh,
BCBSA’s “only role in this scheme is to administer the health
benefits plan for the federal agency in exchange for a fixed
service charge.” 547 U.S. at 704 (Breyer, J., dissenting). Simi-
larly, the Ninth Circuit explained in Goncalves v. Rady Chil-
dren’s Hospital San Diego, 865 F.3d 1237 (9th Cir. 2017), in find-
ing a motion to expunge a subrogation lien removable under
§ 1442, that the government delegated OPM’s responsibility
“to make reasonable efforts to pursue [reimbursement and]
subrogation claims and decide when filing suit in federal
court is a wise decision” to the carriers. Id. at 1247; see also
Jacks, 701 F.3d at 1234 (noting that Blue Cross and Blue Shield
of Kansas City was not merely complying with federal law
but rather “ha[d] been delegated particular authority by
OPM”). BCBSA is acting under OPM, pursuing a reimburse-
ment claim on OPM’s behalf.
Third, this action is for or relating to BCBSA’s acts under
OPM’s authority. In other words, there was a “causal connec-
tion between the charged conduct and asserted official au-
thority.” Ruppel, 701 F.3d at 1181 (quotation omitted). BCBSA

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No. 23-3285 11
can establish this causal connection if its relationship with the
plaintiffs is “derived solely from its official duties” for OPM.
Id. (cleaned up). As discussed above, OPM has delegated the
responsibility to pursue reimbursement claims to private car-
riers, including BCBSA. BCBSA’s relationship with the plain-
tiffs is derived solely from its official duty to pursue reim-
bursement claims for OPM; the plaintiffs filed the motion for
adjudication because of BCBSA’s assertion of the reimburse-
ment right on OPM’s behalf. BCBSA has thus shown that the
plaintiffs have sued it for an act under federal authority.
Fourth, BCBSA has a colorable federal defense. “[T]he
claimed defense need only be ‘plausible.’” Id. at 1182 (quota-
tion omitted). BCBSA’s express preemption defense is plausi-
ble, so we need not address its other proffered defenses. For
its express preemption defense, BCBSA argues that under
Nevils, the Plan’s reimbursement provisions preempt the
common fund doctrine. This defense is colorable because, as
previously discussed, the Supreme Court held in Nevils that
under FEHBA’s express preemption provision, § 8902(m)(1),
contractual reimbursement provisions override state laws
barring reimbursement. 581 U.S. at 94–97; see also Goncalves,
865 F.3d at 1249 (“In light of Nevils, we have little trouble con-
cluding that the Blues’ assertion that § 8902(m)(1) preempts
any state law supporting Goncalves’s motion to expunge the
lien is a colorable federal defense.”). BCBSA has therefore sat-
isfied all four elements for federal officer removal.
Because removal of the motion was proper, the district
court erred in remanding the entire case, including the motion
for adjudication. “Federal law does not permit a district judge
to remand the complete litigation just because portions be-
long in state court. Judges must exercise the jurisdiction they

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12 No. 23-3285
have been given.” Bergquist v. Mann Bracken, LLP, 592 F.3d
816, 819 (7th Cir. 2010). Thus, “[i]f some parts of a single suit
are within federal jurisdiction, while others are not, then the
federal court must resolve the elements within federal juris-
diction and remand the rest.” Id. We recognize that BCBSA
did not argue below that the court should exercise jurisdiction
over the motion for adjudication even if it remanded the rest
of the case back to state court. We do not doubt that the dis-
trict court would have kept the motion if the parties had fully
presented this issue.
B
Finally, the prior exclusive jurisdiction doctrine is not a
barrier to the court’s exercise of jurisdiction over the motion.
The plaintiffs abandoned their prior exclusive jurisdiction ar-
gument on appeal, but we address it to ensure the district
court’s exercise of jurisdiction would be proper. Under the
doctrine, “two suits, both of which are in rem or quasi in rem
and require the courts to have possession or control of the
same property, cannot proceed at the same time, and the sec-
ond court must yield to the first.” Hammer, 905 F.3d at 536. A
proceeding in rem “is one which is taken directly against
property or one which is brought to enforce a right in the
thing itself.” Austin v. Royal League, 147 N.E. 106, 109 (Ill.
1925). An action is not in rem or quasi in rem when it “seek[s]
only to establish rights,” thereby “adjudicat[ing] questions
which precede distribution” rather than “deal[ing] with the
property and other distribution.” Commonwealth Tr. Co. of
Pittsburgh v. Bradford, 297 U.S. 613, 619 (1936). Such an action
is instead in personam.
The prior exclusive jurisdiction doctrine is inapplicable
here because the motion for adjudication is in personam. “An

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No. 23-3285 13
action to recover fees under the common fund doctrine is an
independent action invoking the attorney’s right to the pay-
ment of fees for services rendered.” Bishop v. Burgard, 764
N.E.2d 24, 31 (Ill. 2002). The plaintiffs seek an order finding
that the common fund doctrine applies (and thus reduces the
reimbursement amount BCBSA receives). In other words,
they seek “merely to establish … [their attorney’s] right to
share in [the settlement funds], and thus to obtain an adjudi-
cation which might be had without disturbing the control of
the state court.” United States v. Bank of N.Y. & Tr. Co., 296 U.S.
463, 478 (1936). Such a motion is in personam, and the prior
exclusive jurisdiction doctrine is inapplicable to it. See Prin-
cess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 466
(1939) (noting the doctrine “has no application to a case in a
federal court … wherein the plaintiff seeks merely an adjudi-
cation of his right of his interest as a basis of a claim against a
fund in the possession of a state court”).
Unlike a motion for enforcement, the plaintiffs’ motion for
adjudication “does not by itself get [them] any money.” Silk v.
Bond, 65 F.4th 445, 453 (9th Cir. 2023). For this reason, we are
unpersuaded by case law concluding that a motion for lien
adjudication is in rem. These cases are premised on the Illinois
Supreme Court’s discussion of an in rem action as one
“brought to enforce a right in the thing itself.” Zilinger v. Allied
Amer. Ins. Co., 957 F. Supp. 148, 149 (N.D. Ill. 1997) (quoting
Austin, 147 N.E. at 109); see also Jayko v. Fraczek, 966 N.E.2d
1121, 1132–33 (Ill. App. Ct. 2012); Smith v. Hammel, 14 N.E.3d
742, 745 (Ill. App. Ct. 2014). But again, the plaintiffs’ motion
for adjudication merely seeks to establish a right—that the
common fund doctrine applies, entitling the plaintiffs’ attor-
ney to settlement funds—not to enforce the lien or settlement
agreement or to expunge the lien. Cf. Goncalves, 865 F.3d at

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14 No. 23-3285
1260 (Wardlaw, J., dissenting) (finding a motion for lien ex-
pungement is quasi in rem). The district court should thus ex-
ercise its jurisdiction over the motion.
A FFIRMED IN PART , R EVERSED IN PART , AND R EMANDED

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