Potts v. Rawlings Co.
2012 U.S. Dist. LEXIS 137802
| S.D.N.Y. | 2012Background
- Medicare Secondary Payer framework makes Medicare a secondary payer where primary plans exist, requiring reimbursement when primary plans can pay.
- Medicare Advantage plans operate under Part C, with MA organizations able to bill primary payers and enrollees for reimbursement when appropriate.
- Plaintiffs allege MA liens/subrogation violate New York General Obligation Law § 5-335, and pursue a NYGBL § 349 deception claim.
- Plaintiffs seek declaratory relief and class-wide remedies; Defendants move to dismiss for lack of jurisdiction and failure to state a claim.
- The court granted the motion, holding GOL § 5-335 is preempted by the Medicare Act and that the claims arise under the Medicare Act, requiring exhaustion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exhaustion of administrative remedies under Medicare Act required? | Plaintiffs argue claims are state-law, not benefits claims, thus not requiring exhaustion. | Defendants contend claims arise under the Medicare Act and require exhaustion before review. | Exhaustion required; claims arise under the Medicare Act. |
| Preemption of GOL § 5-335 by Medicare Act as applied to MA organizations? | GOL § 5-335 does not apply to MA organizations and is not preempted. | Medicare Act preempts state laws that conflict with MSP/regulations; GOL § 5-335 is preempted. | GOL § 5-335 preempted as applied to MA organizations; state-law claims displaced. |
| Whether there is federal jurisdiction; complete preemption or ordinary preemption analysis? | State-law questions cannot be preempted to confer jurisdiction. | Medicare Act’s express preemption clause removes conflicting state-law claims. | Preemption controls jurisdiction; claims arise under the Act and are not viable. |
Key Cases Cited
- Heckler v. Ringer, 466 U.S. 601 (1984) (exhaustion as sole avenue for claims under Medicare Act)
- Bowen v. City of New York, 476 U.S. 467 (1986) (two-element final decision and presentment requirements; exhaustion nonwaivable element)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (final decision and exhaustion principles in Medicare context)
- Engstrom (Care Choices HMO v. Engstrom), 330 F.3d 786 (6th Cir. 2003) (MSP reimbursement rights and exhaustion concerns)
- Uhm v. Humana, 620 F.3d 1134 (9th Cir. 2010) (preemption and exhaustion in MA plan context; MSP regulations)
- Avandia Mktg., Sales Practices and Prods. Liab. Litig., 685 F.3d 353 (3d Cir. 2012) (private right of action not required to resolve preemption; remains may preempt state law)
- Parra v. PacifiCare of Arizona, Inc., 2011 WL 1119736 (D. Ariz. 2011) (discussion of private right of action and preemption; not controlling authority for preemption)
- Bodimetric Health Servs. v. Aetna Life & Cas., 903 F.2d 480 (7th Cir. 1990) (complete preemption implications; exhaustion context in private-subjects)