OPINION AND ORDER
On August 1, 2011, Plaintiff Rebecca Meek-Horton commenced this action on behalf of herself and others similarly situated (“Plaintiffs”) against forty health care insurers that offer Medicare Advantage Plans (“MA Plans”) (“Defendants”) by filing a putative class action complaint in the Supreme Court of the State of New York, New York County. On August 29, 2011, Defendants filed a notice to remove the aсtion from state court pursuant to the Class Action Fairness Act. See 28 U.S.C. § 1332(d).
On October 7, 2011, an Amended Complaint was filed' on behalf of Plaintiffs. Subsequently, Plaintiffs agreed to dismiss a number of Defendants from the action. The fifteen remaining Defendants move to dismiss the Amended Complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction or, alternativеly, pursuant to Rule 12(b)(6) for failure to state a claim upon which relief may be granted. For the following reasons, Defendants’ motion to dismiss is granted.
I. Background
Plaintiffs allege that they are a class of Medicare-eligible individuals who enrolled in MA Plans and received medical benefits pursuant to Part C of the Medicare Program. (Am. Compl. ¶ 1; Pis.’ Mem. of Law in Opp’n to Defs.’ Mot. to Dismiss (“Pis.’ Mem.”) at 1, ECF Nо. 95.) Plaintiffs also allege that they are a class of individuals who, as a result of bringing personal injury and wrongful death lawsuits in New York State courts, have received monetary settlements from third party tortfeasors. (Am. Compl. ¶ 1.)
Defendants are private health care insurers
A. The Medicare Advantage Program
Medicare is a federally funded program established in 1965 as part of the Social Security Act that aims to provide medical care for individuals who (1) are more than 65 years of age, (2) have received Social Security disability benefits for at least 24
Under the MSPA, Medicare is prohibited from making a payment for an enrollee’s medical benefits if “payment has been made or can reasonably be expected to be made under a workmen’s compensation law or plan of the United States or a State or under an automobile or liability insurance policy or plan (including a self-insured plan) or under no fault insurance.” 42 U.S.C. § 1395y(b)(2)(A); accord 42 C.F.R. § 411.32(a)(1). Should there be remaining expenses after the primary plan has provided payment. Medicare becomes the “secondary payer” and will cover the remaining balance. See N.Y. Life Ins. Co. v. United States,
A primary plan, and an entity that receives рayment from a primary plan, shall reimburse the appropriate [Medicare] Trust Fund for any payment made by the Secretary [of the Department of Health and Human Services (“HHS”) ] under this subchapter with respect to an item or service if it is established that such primary plan has or had a responsibility to make payment with respect to such item or service.
42 U.S.C. § 1395y(b)(2)(B)(ii).
The MSPA provides that the United States “may bring an action against any or all entities that are or were required or responsible ... to make payment with respect to the same item or service (or any portion thereof) under a primary plan.” Id. § 1395y(b)(2)(B)(iii). Furthermore, the MSPA also provides the United States with a right of subrogation. Id. § 1395y(b)(2)(B)(iv) (“The United States shall be subrogated (to thе extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan”).
This case involves benefits paid under the Medicare Advantage Program (“MA Program”), which is set forth in Part C of the Medicare Act (“Part C” or the “Medicare Advаntage statute”), and more commonly known as “Medicare + Choice” or “Medicare Part C.” 42 U.S.C. §§ 1395w-21-1395w-29; see also Potts,
Whereas traditional Medicare operates as a fee-for-service plan in which providers directly bill the fеderal government for reimbursement for specific services performed, MAOs are paid a set monthly reimbursement rate based on a formula established by the Center for Medicare and Medicaid Services (“CMS”), pursuant
B. New York General Obligations Law § 5-335(a)
Plaintiffs argue that the MSPA does not govern this action because their claims do not concern a specific benefit determination arising under the Medicare Act. (See Pis.’ Mem. at 8-9.) Instead, Plaintiffs assert that their claims are “rooted in traditional state law theories of relief, common law fraud, contract law, and violations of New York’s statutory law, GOL § 5-335.” (Id.) GOL § 5-335(a) states in relevant part that:
When a plaintiff settles with one or more defendants in аn action for personal injuries, medical, dental, or podiatric malpractice, or wrongful death, it shall be conclusively presumed that the settlement does not include any compensation for the cost of health care services, loss of earnings or other economic loss to the extent those losses or expenses have been or are obligated to be paid or reimbursed by a benefit provider, except for those payments as to which there is a statutory right of reimbursement. By entering into any such settlement, a plaintiff shall not be deemed to have taken an action in derogation of any nonstatutory right of any benefit provider that paid or is obligated to pay those lоsses or expenses; nor shall a plaintiffs entry into such settlement constitute a violation of any contract between the plaintiff and such benefit provider. Except where there is a statutory right of reimbursement, no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said benefit provider.
Id. (emphasis added). By its express terms, GOL § 5-335 does not apply to those benefit providers who have a statutory right under federal or state law to be reimbursed for benefits provided to settling рlaintiffs in personal injury or wrongful death actions. Id.
II. Legal Standards
Defendants contend that the Court has three grounds to dismiss Plaintiffs’ Complaint under Rule 12(b)(1) for lack of subject matter jurisdiction, or alternatively under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. The “standards for dismissal under [Rule] 12(b)(6) and 12(b)(1) are substantively identical.” Lerner v. Fleet Bank, N.A.,
In order to survive a Rule 12(b)(6) motion to dismiss, Plaintiffs must have alleged “enough facts to state a claim to relief that is plausible on its face.” Ruoto
“Under the Supremacy Clause of the United States Constitution, U.S. Const. Art. VI, cl. 2, ‘[w]here a state statute conflicts with, or frustrates, federal law, the former must give way.’ ” Potts,
III. Discussion
Defendants seek to dismiss the Amended Complaint on three grounds. Defendants argue that (1) Plaintiffs have not exhausted their administrative remedies under the Medicare Act, 42 U.S.C. §§ 1395-1395ggg and therefore the claims must be dismissed for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(6); (2) the Medicare Act preempts Plaintiffs’ state law claims; and (3) Plaintiffs fail to state a claim upon which relief may be granted. (Defs.’ Mem. of Law in Supp. of Mot. to Dismiss (“Defs.’ Mem.”) at 1, ECF No. 87.)
The dispositive issue in this case is whether Congress, in enacting the Medicare Advantage Program, intended to provide MAOs with a statutory right of reimbursement for medical benefits paid to an enrollee who subsequently recovers a settlement from a third party tortfeasor. Specifically, this case turns on the Court’s interpretation of the secondary payer provision of Medicare Part C, 42 U.S.C. § 1395w-22(a)(4), and whether it provides a statutory right оf reimbursement for MAOs that preempts the provisions of GOL § 5-335.
Plaintiffs argue that MAOs are a creation of Medicare Part C and that the statute does not grant MAOs a statutory right “to recover accident-related payments made on behalf of Medicare Advantage beneficiaries.” (Pis.’ Mem. at 2.) Rather, Plaintiffs contend that the statute “merely authorizes the privatе insurer to include in its insurance contract a right of subrogation against an insured’s recovery from a third party for money previously paid for the insured’s medical care.” (Id.) Therefore, Plaintiffs argue that MAOs have no statutory right of reimbursement under either federal or state law, and accordingly, MA Plans are subject to the provisions of GOL § 5-335. (Id.)
In support of this argument, Plaintiffs pоint to the difference in language employed by Congress in the MSPA concern
A primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary- plan has or had a responsibility to make payment with respect to such item or service.
42 U.S.C. § 1395y(b)(2)(B)(ii) (emphasis added). In contrast, the secondary payer provision of Medicare Part C, which applies to MAOs administering MA Plans, states:
Notwithstanding any other provision of law, a [MA] organization may (in the case of the provision of items and services to an individual under a [MA] plan under circumstances in which payment under this subchapter is made secondary pursuant to section 1395y(b)(2)) of this title charge or authorize the provider of such services to charge, in accordance with the chargеs allowed under a law, plan, or policy described in such section—
(A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or
(B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services.
§ 1395w-22(a)(4) (emphasis added). Plaintiffs contrast the “shall” language that appears in traditional Medicare, § 1395y(b)(2)(B)(ii), with the “may” language that appears in Medicare Part C, § 1395w-22(a)(4), to assert that “if [Congress] wanted to have these Medicare Advantage plans to be at the same equal footing as the Traditional Medicare plans and have a mandatory reimbursement, they would have said so ... they didn’t.” (Tr. at 34-35.)
Plaintiffs’ аrgument is defeated by the plain language of the governing statute. In Part C of the Medicare Act, Congress expressly preempted all but a limited number of State laws, and GOL § 5-335 does not fall within the limited category of State laws exempted from preemption. See § 1395w-26(b)(3). Indeed, the Medicare Act states in relevant part that “the standards established under [Part C] 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 [Part C].” Id. The regulations promulgated by the Secretary of HHS contain similarly explicit language, stating that “the rules established under this section supersede any State laws, regulations, contract requirements, or other standards that would otherwise apply to MA plans.” 42 C.F.R. § 422.108(f).
Other courts have interpreted the preemption provision of Medicare Part C broadly, see Uhm v. Humana, Inc.,
Similarly, in Uhm, the Ninth Circuit analyzed both the language and legislative history of the Medicare Part C preemption provision and found that Congress provided no indication that it “intended to save any common law claims” through a savings clause in the Medicare Act.
In sum, Plaintiffs have exclusively plead their claims under a state law, GOL § 5-335, and argued that their claims do not “arise under” the Medicare Act because they “do not seek benefits or reimbursement for benefits,” (Pis.’ Mem. at 5; see also id. at 6-13). Given that the sole alleged basis for Plaintiffs’ claims, GOL § 5-335, is expressly preempted by the “plain wording” of federal law, 42 U.S.C. § 1395w-26(b)(3), and agency regulation, 42 C.F.R. § 422.108(f), this action contains no claims upon which relief may be granted by this Court. See CSX Transp.,
For the foregoing reasons, Defendants’ motion tо dismiss Plaintiffs’ Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) is granted without prejudice. IT IS SO ORDERED.
Notes
. Defendants also include agents of Medicare Advantage Organizations, such as reimbursement claims recovery contractors. (Oral Arg. Hr’g Tr. at 5-6, April 17, 2012 at 5-6.)
. As quoted supra at 693, GOL § 5-335(a) states in relevant part that:
Except where there is a statutory right of reimbursement, no party entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall have no lien or right of subrogation or reimbursement against any such settling party
Id. (emphasis added).
. While Uhm deals with Medicare Part D, the preemption provision of Part D directly incorporates the express preemption provision contained in Part C. Sea 42 U.S.C. § 1395w-112(g).
. In Potts, Judge Oetken went a step further and considered the nature of the Potts plaintiffs' claims. He held thаt "claims concerning reimbursement of secondary benefits are 'inextricably intertwined’ with claims for benefits,"