W.D.Ala: Medicare state law claims preempted

The Southern District of Alabama denied the plaintiffs’ motion to remand back to state court their state law claims against a Medicare provider for breach of contract, fraud, and negligence when inducing plaintiffs to enroll in the provider’s Medicare managed health care plan. Even though plaintiffs raised no federal law claims, the court found that there was federal court jurisdiction, because federal Medicare law preempted “at least some” of plaintiffs’ claims. Dial v. Healthspring of Alabama, Inc., 2007 WL 2317783, No. CIV.A. 2:07-0412-KDC (S.D. Ala. Aug. 9, 2007).

The defendants argued that plaintiffs' state law claims relate to standards established under the Medicare Act, 42 U.S.C. §  1395w-21 through w-28, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Pub.L. No. 108-173, 117 Stat. 2066.  Defendants contended that plaintiffs’ claims are therefore superseded and preempted by 42 U.S.C. §  1395w-26(b)(3) (2006), which states: “The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under this part.”

 

The court noted that only one court of appeals had addressed the preemptive effect of 42 U.S.C. § 1395w-26(b)(3).  First Medical Health Plan, Inc. v. Vega-Ramos, 479 F.3d 46 (1st Cir. 2007).  (Click here for a complete discussion of that case.)  In Vega-Ramos, the First Circuit discussed § 1395w-26(b)(3) at length, but that case turned on whether the beneficiary obtained services under Medicare or Medicaid.  While the First Circuit concluded that the benefits were under Medicaid, not Medicare, the Alabama court found that the First Circuit “implie[d]” that, had the benefits been provided under Medicare, “preemption would have applied.”

 

The court also cited a district court case that held that state tort and contract claims were preempted by the MMA.  Uhm v. Humana, Inc., No. 06-0815, 2006 WL 1587443 (W.D.Wash., June 2, 2006). 

 

The court noted that it was persuaded by Uhm and First Medical.  The court found “that the legislative history and Congressional intent establish that the preemption provision of the MMA was intended to preempt state law applicable to areas for which the MMA has established regulations or standards.”  The court went on to hold that the Medicare law contains standards that address “at least some” of plaintiffs’ claims, and therefore those claims are preempted by federal law.  The court then concluded that there was federal question jurisdiction and indicated that the court would exercise supplemental and pendant jurisdiction pursuant to 28 U.S.C. § 1367(a) over any remaining state law claims to the extent they are not preempted.