30 F.4th 905
9th Cir.2022Background
- Jet Rescue (Global Rescue Jets) air-ambulanced two Kaiser Medicare Advantage enrollees from Mexico to San Diego and billed Kaiser at its usual rates (~$283,500 and $232,700).
- Kaiser paid only Medicare-approved rates (~$23,096 and $17,365), asserting the transports would have been covered by original Medicare; Jet Rescue demanded full payment.
- Jet Rescue obtained one reconsideration denial, did not pursue further administrative appeals, assigned the enrollees’ claims to Jet Rescue, and sued Kaiser in state court; Kaiser removed to federal court.
- Kaiser moved to dismiss under Rule 12(b)(1) for lack of subject-matter jurisdiction because Jet Rescue failed to exhaust Medicare Advantage (Part C) administrative remedies; the district court dismissed; Jet Rescue appealed.
- The Ninth Circuit held Part C imports the same mandatory administrative-exhaustion regime as original Medicare, rejected Jet Rescue’s arguments that (a) exhaustion was unnecessary because MA organizations are not "officers or employees," (b) supplemental-benefit claims do not "arise under" the Medicare Act, and (c) exhaustion should be excused.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claimants/assignees must exhaust Part C administrative remedies before suing | No; MA claimants/assignees need not exhaust administrative remedies before filing suit | Yes; Part C incorporates the Medicare exhaustion regime and bars suit until final agency decision | Required: Part C imposes the same mandatory exhaustion (presentment + full review) as original Medicare; failure to exhaust deprives federal courts of jurisdiction |
| Whether a Medicare Advantage organization is an "officer or employee" under §405(h) | No; MA organizations are private, bear financial risk, and are not federal officers/employees | Yes; MA organizations function as the first-level decisionmaker in the Part C review scheme and are treated as officers/employees for §405(h) purposes | MA organizations qualify as "officers or employees" for §405(h) so the provision applies and makes exhaustion mandatory |
| Whether claims for supplemental benefits "arise under" the Medicare Act so §405(h) applies | No; supplemental benefits are outside original Medicare and thus not "arising under" the Medicare Act | Yes; supplemental benefits are provided under Part C and subject to Part C’s review scheme, so such claims arise under the Act | Held: Supplemental-benefit claims arise under Part C (are inextricably intertwined with benefit determinations) and are subject to §405(h) exhaustion requirements |
| Whether exhaustion should be excused (futility, irreparable harm, collateralness) | Excuse exhaustion due to futility/irreparable harm and that claims are collateral | Exhaustion should not be excused; agency expertise is required and review is not futile | Not excused: applying Johnson v. Shalala, Jet Rescue failed on the collateralness and futility prongs, so exhaustion stands |
Key Cases Cited
- Heckler v. Ringer, 466 U.S. 602 (1984) (Medicare beneficiaries must exhaust administrative remedies; §405(g)/(h) channel judicial review)
- Weinberger v. Salfi, 422 U.S. 749 (1975) (purposes of exhaustion: prevent premature judicial interference; allow agency to correct errors and compile record)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (presentment requirement principle cited in Ringer)
- Tenet Healthsystem GB, Inc. v. Care Improvement Plus South Central Ins. Co., 875 F.3d 584 (11th Cir. 2017) (Part C exhaustion required for non‑contract providers seeking payment from MA plans)
- Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010) (Part D/analogous regime: enrollees must exhaust administrative remedies; distinguishing collateral consumer claims)
- RenCare, Ltd. v. Humana Health Plan of Texas, Inc., 395 F.3d 555 (5th Cir. 2004) (contract-provider context addressing payment-rate rules under MA plans)
- Johnson v. Shalala, 2 F.3d 918 (9th Cir. 1993) (test for excusing administrative exhaustion: collateralness, irreparable harm, futility)
- Fitzgerald v. Barnstable School Committee, 555 U.S. 246 (2009) (statutory interpretation principle: similar language in related statutes suggests similar meaning)