Case Information
*1 Before: CHAGARES, SHWARTZ, and RENDELL, Circuit Judges. (Filed: November 17, 2015)
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OPINION [*]
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SHWARTZ, Circuit Judge.
MHA, the owner of Meadowlands Hospital Medical Center, appeals the dismissal with prejudice of its suit against HealthFirst, Inc. and other related companies for reimbursement for medical services provided to HealthFirst’s Medicare and Medicaid enrollees. Because the federal courts lack subject matter jurisdiction, we will vacate the District Court’s dismissal order and remand with instructions to remand the case to state court.
I
HealthFirst is the parent company of HealthFirst Health Plan of New Jersey, Inc., a privately owned insurance company that offers health insurance plans under Medicare Part C. It is also a licensed Medicaid health management organization and managed care organization. Between 2010 and 2013, Meadowlands Hospital billed HealthFirst for medical care provided to HealthFirst’s Medicare and Medicaid enrollees. Because MHA did not have a contract with HealthFirst specifying agreed-upon rates, Medicare and Medicaid law governed both whether reimbursement was available for the care provided and the reimbursement rate. MHA asserts that because it was an out-of-network provider, HealthFirst delayed and/or denied reimbursements to pressure MHA into *3 signing a contract with HealthFirst to become an in-network provider. To this end, MHA claims that HealthFirst improperly asserted that certain services were not authorized or did not qualify as emergency care, wrongly denied claims as untimely, and/or ignored or refused to process them. In total, MHA was reimbursed for only $2.5 million out of the $28.9 million it claims that it was owed.
MHA filed a complaint in state court alleging that HealthFirst violated New Jersey regulations governing reimbursements to out-of-network providers under Medicaid. MHA also brought claims for unjust enrichment and “quantum meruit—implied contract.” App. 51-53. HealthFirst removed the suit to federal court and MHA moved for remand, but withdrew that motion before it was decided.
HealthFirst moved to dismiss the complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6) and MHA cross-moved for leave to file an amended complaint. The District Court dismissed MHA’s Medicaid-based claims because it failed to exhaust administrative remedies before bringing suit and MHA’s Medicare-based claims because they were preempted by federal Medicare law. The District Court denied MHA’s motion to amend the complaint as futile. MHA appeals.
II [2]
Federal courts are courts of limited jurisdiction, and a case can only be removed to a federal district court if the case could have originally been filed there. [3] 28 U.S.C. § 1441(a). This requires a showing that the federal court has subject matter jurisdiction.
Where, as here, no diversity jurisdiction is alleged, jurisdiction ordinarily rests on
the presence of a federal cause of action on the face of the complaint. See Merrell Dow
Pharm. Inc. v. Thompson,
We will not entertain HealthFirst’s assertion of federal officer removal, as this was
not a basis for removal claimed in the notice of removal. While it may be permissible to
add further detail to jurisdictional allegations, a defendant may not rely on an entirely
new basis for jurisdiction not set forth in the removal petition. See USX Corp. v.
Adriatic Ins. Co.,
Jurisdiction also cannot be asserted here on the basis of 42 U.S.C. § 1983. While the complaint cites § 1983, this language appears in a background section, and none of *6 the six counts assert a claim based on it. Moreover, the fact that HealthFirst did not move to dismiss a claim under § 1983, and MHA did not seek to avoid dismissal based upon the existence of a § 1983 claim, further reveals that no party viewed the complaint as seeking relief under § 1983. Thus, § 1983 does not provide a basis for subject matter jurisdiction.
HealthFirst’s final proposed source of jurisdiction, so called “arising under” or
“embedded” jurisdiction, also does not provide a basis for subject matter jurisdiction in
this case. This is a “special and small” category of cases requiring three elements.
Empire Healthchoice Assur., Inc. v. McVeigh,
. . .
71. Accordingly, HFNJ is liable to Plaintiff as a Medicaid MCO for payment for emergency services under the Act, pursuant to SSA § 1923(b)(2); and enrollees must be protected against liability, even if the MCO is not paid by the State, and for any services furnished by “a provider with a contractual, referral or other arrangement with the organization.” § 1932(b)(6); 42 C.F.R. § 438.106(c), pursuant to 42 U.S.C. § 1983.
App. 36, 38-39.
Supreme Court has distinguished cases such as Grable that present a “nearly pure issue of
law” that would govern numerous other cases, from those that are “fact-bound and
situation-specific.” Empire,
As to the first factor, HealthFirst has failed to establish that it is necessary to
construe federal law to determine whether MHA can establish the elements of its claims
for unjust enrichment and quantum meruit. These claims essentially require MHA to
show that it provided a service to HealthFirst for which it was not fairly compensated.
See, e.g., Montich v. Miele USA, Inc.,
That HealthFirst may point to the Medicare law as part of its defense also does not make federal law a “necessary” part of MHA’s claim. HealthFirst’s arguments that Medicare regulations will demonstrate that the services rendered were not covered or the reimbursement claims exceed Medicare’s cap are more “properly characterized as a defense to the Plaintiffs’ state-law reimbursement claim” rather than a required element of MHA’s claims. PremierTox, Inc. v. Kentucky Spirit Health Plan, Inc., No. 1:12CV-
00010,
Even if we assume that construction of the Medicare Act will be required to
determine MHA’s prima facie entitlement to relief, the federal issues raised by this case
are not “actually disputed and substantial” as required under the second factor. Grable,
Second, this case does not present the unusually strong federal interest required to
qualify for the federal forum. This suit does not call into question the validity of a federal
statute or the conduct of a federal actor. See, e.g., Main & Assocs., Inc. v. Blue Cross
and Blue Shield of Ala.,
While HealthFirst argues that there is a substantial federal interest in ensuring the
uniform development of Medicare law, state courts are plainly competent to apply the
Medicare Act to state law claims. If they were not, “the extremely rare exception
discussed in [Grable and its progeny] would swallow up the general rule.” Pritika v.
Moore,
Because this case does not “necessarily raise” a federal issue that is “actually
disputed and substantial,” the federal court may not exercise subject matter jurisdiction
based on “embedded jurisdiction.” Grable,
III
For the foregoing reasons, HealthFirst has not carried its burden as the removing party to show that the federal courts have subject matter jurisdiction over this case, and *12 we will therefore vacate the dismissal of MHA’s claims and remand to the District Court with instructions to remand this case to state court.
Notes
[*] This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent.
[1] MHA voluntarily dismissed its claims for fraudulent and negligent misrepresentation, equitable and promissory estoppel, and breach of fair dealing through unfair claims settlement practices.
[2] The District Court asserted jurisdiction pursuant to 28 U.S.C. § 1331, but the
propriety of this is disputed. We have appellate jurisdiction under 28 U.S.C. § 1291. We
conduct plenary review of subject matter jurisdiction. Nat’l Union Fire Ins. Co. v. City
Sav., F.S.B.,
[3] “The removing party . . . carries a heavy burden of showing that at all stages of
the litigation the case is properly before the federal court. Removal statutes are to be
strictly construed, with all doubts to be resolved in favor of remand.” Brown v. Jevic,
[4] Neither party asserts that complete preemption creates jurisdiction here.
[5] The complaint’s sole references to § 1983 read as follows: 60. Medicaid MCOs must pay non-plan providers promptly for “emergency services” furnished to their enrollees without regard to a prior authorization from the MCO. See 42 U.S.C. §§ 1396b(2)(1)(vii), 1396b(m), 1396u-2(b), 1395mm(g)(6)(A); 42 C.F.R. § 438.114. HFNJ is liable to plaintiff as a Medicaid MCO for payment for emergency services under the Act, pursuant to SSA § 1923(b)(2) and 42 U.S.C. § 1983.
[6] The prototypical case of Grable jurisdiction is one in which the federal
government itself seeks access to a federal forum, an action of the federal government
must be adjudicated, or where the validity of a federal statute is in question. Gunn, 133
S.Ct. at 1066; see also Grable,
[7] Grable jurisdiction was found to be appropriate in a similar suit against a health
insurance company offering Medicare benefits. See New York City Health and Hosps.
Corp. v. WellCare of New York, Inc.,
[8] As the first two elements of Grable’s conjunctive test were not satisfied, we need
not reach the third factor, which considers whether taking jurisdiction over cases such as
this one would disturb the “congressionally approved balance of federal and state judicial
responsibilities” described in Grable,