319 F. Supp. 3d 587
D.P.R.2018Background
- Mennonite General Hospital sued Molina, MMM, and MSO in Puerto Rico court under Puerto Rico Law 5-2014 alleging wrongful denial of payment for hospital services based on insurers' clinical guidelines.
- MMM (a Puerto Rico MCO) and MSO removed the case to federal court invoking federal-question jurisdiction and, alternatively, the federal-officer removal statute; Molina consented to removal.
- Plaintiff moved to remand, asserting the complaint raises only state-law claims concerning Medicaid enrollees; the court treated the complaint as limited to Medicaid patients.
- Law 5 (amending Puerto Rico Medicaid administrative law) forbids insurers from denying hospitalization authorization when there is a medical recommendation based on medical need and states clinical guidelines are only support tools.
- Defendants argued resolution necessarily presents a substantial federal question about whether MCOs administering Medicaid may use utilization review based on clinical guidelines, and alternatively argued they were "acting under" federal officers for § 1442 removal.
- The district court granted the motion to remand, finding no substantial federal-question jurisdiction and that § 1442 did not apply because defendants did not show they were acting under a federal superior.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question removal ("arising under") exists | Law 5 claim is a state-law question about Medicaid enrollees; states may define "medical necessity" so federal jurisdiction absent | Plaintiff's claim necessarily raises a disputed federal issue about whether Medicaid MCOs can be prohibited from using clinical guidelines; the issue is substantial and impacts federal interests | No federal-question jurisdiction: state-law claim predominates; issue not sufficiently substantial to warrant federal jurisdiction |
| Whether removal under federal-officer statute (§ 1442) is proper | § 1442 inapplicable; defendants did not show they acted under a federal officer for the challenged conduct | Defendants administer federally funded Medicaid programs and are highly regulated, so § 1442 permits removal | § 1442 inapplicable: defendants failed to show they assisted or helped carry out federal duties beyond mere compliance with federal regulation |
Key Cases Cited
- Danca v. Private Health Care Sys., Inc., 185 F.3d 1 (1st Cir. 1999) (plaintiff is master of complaint; removal construed narrowly)
- Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005) (test for state claim that "arises under" federal law)
- Gunn v. Minton, 568 U.S. 251 (2013) (four-part contextual inquiry for Grable substantiality)
- Watson v. Philip Morris Cos., Inc., 551 U.S. 142 (2007) (limits of "acting under" for § 1442; private compliance with regulation insufficient)
- Mesa v. California, 489 U.S. 121 (1989) (requirements for § 1442 removal)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (1986) (defensive federal issues generally do not confer federal jurisdiction)
- Beal v. Doe, 432 U.S. 438 (1977) (states have broad discretion to set Medicaid standards)
- Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498 (1990) (state Medicaid plan must be approved by Secretary; federal oversight of state plans)
- Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) (fact-bound state claims are unlikely to affect federal law development)