11th Cir.: No removal in Medicare Advantage suit

The Eleventh Circuit held that removal of state law claims against a Medicare Advantage plan was improper, because even the claims fell within the scope of Medicare preemption, the district court would have lacked jurisdiction in the first instance.

 The Medicare Modernization Act provides that claims “arising under” the Act must first be brought to the Department for Health and Human Services. The court did not decide whether the plaintiffs’ claims were preempted, leaving that question for the state court. Dial v. Healthspring of Alabama Inc., --- F.3d ---, 2008 WL 3896741 (11th Cir. Aug. 26, 2008) (No. 07-15529).

          The scope of preemption under the Medicare Modernization Act (MMA) has been the subject of much recent litigation. See generally Rochelle Bobroff & Jane Perkins, “Recent Developments in Court Access for Medicaid and Medicare Cases,” Clearinghouse Review Sept./Oct. 2008. The MMA expressly preempts “any state law or regulation (other than State licensing law or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under” the Act. 42 U.S.C. § 1395w-26(b)(3).

 

          Dial and other Medicare recipients brought state law claims against Healthspring including fraudulent misrepresentation. The district court held that “at least some” of the claims were preempted because they related to marketing and coverage – both matters regulated by the MMA – and that therefore removal was proper. 501 F.Supp.2d 1348 (S.D. Ala. 2007) (summary here). A sister district criticized the lower court for failing to distinguish between ordinary preemption principles and the narrow rule of complete preemption that is a basis for removal. Harris v. Pacificare Life & Health Ins., 514 F.Supp.2d 1280 (M.D. Ala. 2007) (summary here).

 

          The Eleventh Circuit avoided both these questions, because the Medicare Act strips district courts of original jurisdiction and requires claims be decided by Secretary of HHS in the first instance. 42 U.S.C. § 405(g)-(h); Heckler v. Ringer, 466 U.S. 602 (1984). Because the district court lacked original jurisdiction over the suit, it was not removable and must be remanded to the state court. The panel expressed no view as to whether the claims would ultimately be preempted.

 

Barring disagreement by other circuits, this decision would appear to settle the question of removal under the MMA, and leave preemption as a defense to be established by Medicare Advantage plans in state courts.