629 F. App'x 409
3rd Cir.2015Background
- MHA (owner of Meadowlands Hospital) sued HealthFirst (Medicare Part C and Medicaid MCO) in New Jersey state court seeking reimbursement for services to HealthFirst enrollees; MHA alleges HealthFirst underpaid or denied claims to force an in-network contract.
- MHA sought recovery under New Jersey regulations and common-law unjust enrichment/quantum meruit; it was paid $2.5M but claims ~$28.9M owed.
- HealthFirst removed the suit to federal court; MHA initially moved to remand but withdrew that motion.
- The District Court dismissed MHA’s Medicaid claims for failure to exhaust administrative remedies and dismissed Medicare-based claims as preempted by federal law; it denied leave to amend as futile.
- On appeal, the Third Circuit addressed whether federal subject-matter jurisdiction existed for the removed case and evaluated three asserted bases: federal officer removal, 42 U.S.C. § 1983, and Grable-style "embedded" federal-question jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal officer removal under 28 U.S.C. § 1442(a)(1) supports removal | MHA did not assert this; no argument | HealthFirst attempted to invoke federal officer removal on appeal | Not entertained — removal basis not pleaded in notice of removal |
| Whether 42 U.S.C. § 1983 creates federal-question jurisdiction | MHA cited § 1983 in background but did not plead a § 1983 claim | HealthFirst relied on the complaint language to assert federal jurisdiction | § 1983 not a basis: complaint did not assert a § 1983 cause of action |
| Whether state-law unjust enrichment/quantum meruit claims "arise under" federal law (Grable) because federal Medicare/Medicaid law governs reimbursement | MHA: claims are state-law remedies for reasonable value; federal law may inform damages but is not an element | HealthFirst: federal Medicare/Medicaid rules are necessary to resolve entitlement and reimbursement amount, so federal-question jurisdiction exists | Denied: federal law is not a "necessarily raised" element; any federal issue is incidental or defensive and not "actually disputed and substantial" |
| Whether the case belongs in federal court given federal interest in uniform Medicare law | MHA: state courts competent to apply federal statutes; no substantial federal interest requiring federal forum | HealthFirst: uniform interpretation of Medicare/Medicaid warrants federal adjudication | Denied: the case is fact-bound, lacking the strong federal interest that would overcome the balance of federal/state responsibilities |
Key Cases Cited
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (federal jurisdiction ordinarily requires a federal cause of action on the face of the complaint)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (narrow "embedded" federal-question jurisdiction where a state claim necessarily raises a substantial federal issue)
- Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677 (limits on Grable where federal issue is fact-bound or situation-specific)
- Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (complete preemption doctrine can create federal jurisdiction in limited contexts)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (a federal defense does not convert a state-law claim into a federal one)
- Gunn v. Minton, 568 U.S. 251 (federal question jurisdiction requires the federal issue to be significant to the federal system, not merely to the parties)