Davita Inc. v. Amy's Kitchen, Inc. ( 2020 )

FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 24 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVITA INC.; STAR DIALYSIS, LLC, No. 19-15963
Plaintiffs-Appellants, D.C. No. 4:18-cv-06975-JST
v.
OPINION
AMY'S KITCHEN, INC.; AMY'S
KITCHEN, INC. EMPLOYEE BENEFIT
HEALTH PLAN,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Jon S. Tigar, District Judge, Presiding
Argued and Submitted October 8, 2020
Seattle, Washington
Before: Susan P. Graber and William A. Fletcher, Circuit Judges, and Leslie E.
Kobayashi,* District Judge.
Opinion by Judge Graber
GRABER, Circuit Judge:
Renal dialysis is a life-saving treatment for those with serious kidney
afflictions, including acute kidney injury and end-stage renal disease ("ESRD").
*
The Honorable Leslie E. Kobayashi, United States District Judge for
the District of Hawaii, sitting by designation.
Plaintiffs DaVita, Inc., and Star Dialysis (collectively, "DaVita") provide dialysis
treatment to many patients and seek payment from any applicable group health
plan. One of DaVita’s patients is a beneficiary of Defendant Amy’s Kitchen’s
Employee Benefit Health Plan ("Amy’s Plan" or "the Plan"), a health plan offered
and administered by Defendant Amy’s Kitchen, Inc. ("Amy’s Kitchen"). The
patient has ESRD and has received routine maintenance dialysis from DaVita.
Amy’s Plan covers all types of dialysis, regardless of the underlying diagnosis, but
the Plan’s reimbursement rate for dialysis differs from the rate it pays for many
other services. The Plan paid DaVita according to the Plan’s terms.
Dissatisfied with the payment amounts that it received from Amy’s Plan,
DaVita brought this action, arguing that the Plan’s dialysis provisions violate (1)
the Medicare as Secondary Payer provisions ("MSP") of the Social Security Act,
(2) the Employee Retirement Income Security Act of 1974 ("ERISA"), and (3)
state law. The district court dismissed the federal claims and declined to exercise
supplemental jurisdiction over the state-law claims. With respect to the MSP
claim, the court held that, because the Plan reimburses at the same rate for all
dialysis services, regardless of underlying diagnosis and regardless of Medicare
eligibility, the Plan does not violate the MSP. Reviewing de novo and taking the
allegations in the complaint as true, Daewoo Elecs. Am., Inc. v. Opta Corp., 875
2
F.3d 1241, 1246 (9th Cir. 2017), we agree with the district court’s conclusions and
therefore affirm.
FACTUAL AND PROCEDURAL HISTORY
Doctors classify chronic kidney disease into five stages. The last stage,
Stage 5, is known as kidney failure or ESRD. More than 700,000 people in the
United States have ESRD. To survive, a person with ESRD requires either a
kidney transplant or routine maintenance dialysis, a treatment that performs the
functions of a kidney. 42 C.F.R. § 406.13(b); see also Kidney Disease Statistics
for the United States, Nat’l Insts. of Health (December 2016),
https://www.niddk.nih.gov/health-information/health-statistics/kidney-disease.
Most persons with ESRD never receive a kidney transplant, so they receive regular
maintenance dialysis for the remainder of their lives. According to DaVita, a
person with ESRD typically receives dialysis three times a week. Persons with
ESRD are eligible for Medicare pursuant to 42 U.S.C. § 426-1 after the first three
months of regular dialysis treatment.
People with ESRD are not the only recipients of dialysis. The other
common recipients of dialysis are those with "acute kidney injury," described by
the National Kidney Foundation as "a sudden episode of kidney failure or kidney
damage that happens within a few hours or a few days." Acute Kidney Injury,
Nat’l Kidney Found. (Oct. 30, 2020), https://www.kidney.org/atoz/content/
3
AcuteKidneyInjury. Acute kidney injury has many different causes and correlated
diseases. Id. Recently, for example, a study cited by the National Kidney
Foundation concluded that "people hospitalized with COVID-19 are at significant
risk of [acute kidney injury]." Kidney Disease and COVID-19, Nat’l Kidney
Found., https://www.kidney.org/coronavirus/kidney-disease-covid-19 (last visited
Nov. 16, 2020). Treatment of acute kidney injury restores long-term kidney
function. Accordingly, unlike persons with ESRD, persons with acute kidney
injury generally recover enough kidney function so that they no longer need
dialysis. Similarly, unlike persons with ESRD, persons with acute kidney injury
are not eligible for Medicare pursuant to 42 U.S.C. § 426-1.
When a patient with ESRD is enrolled in both Medicare and a group health
plan, the MSP allocates primary-payer responsibility between Medicare and the
plan. Once the individual becomes eligible for Medicare, which occurs after three
months of dialysis treatment, the plan remains the primary payer and Medicare
becomes the secondary payer during a 30-month coordination period. 42 U.S.C.
§ 1395y(b)(1)(C)(i). When the coordination period ends, the plan may be the
secondary payer thereafter. Id. § 1395y(b)(1)(C).
The MSP also imposes two substantive requirements on group health plans
with respect to persons with ESRD. First, during the coordination period, a plan
may not "take into account" a person’s eligibility for Medicare due to ESRD. Id.
4
§ 1395y(b)(1)(C)(i). Second, a plan may not "differentiate in the benefits it
provides between individuals having [ESRD] and other individuals covered by
[the] plan on the basis of the existence of [ESRD], the need for renal dialysis, or in
any other manner." Id. § 1395y(b)(1)(C)(ii).
Amy’s Kitchen sells organic foods throughout the United States and
employs more than 2,400 people. Many employees are eligible to enroll in Amy’s
Plan, which is an "employee benefit plan" pursuant to ERISA. Amy’s Plan is a
preferred provider organization health plan. A beneficiary may visit any medical
provider, some of which are "in-network" and some of which are "out-of-network."
For many medical services, the Plan provides no coverage at all, whether that
service is given by an in-network or an out-of-network provider. But for most
services covered by the Plan, the processing of claims depends on whether the
beneficiary visits an in-network provider or an out-of-network provider. Visiting
an in-network provider generally results in lower copayments and other advantages
for beneficiaries. The Plan typically pays in-network providers according to a rate
determined by contract and pays out-of-network providers, in the words of the
Plan, the "Customary, Usual, and Reasonable Charge" for the service.
"Patient 1" is a beneficiary of Amy’s Plan who has ESRD. Patient 1 began
receiving regular dialysis treatment in 2016 from DaVita. At the time, DaVita was
5
an in-network provider, and the Plan reimbursed DaVita at the appropriate
contractual rate.
In 2017, Amy’s Plan modified its terms of coverage by implementing a
"Dialysis Benefit Preservation Program." The Plan explained that it had found
evidence of "significant inflation" of prices charged by dialysis providers; the use
of inflated revenues "to subsidize reduced prices to other types of payers as
incentives"; and "the specific targeting of the Plan and other non-governmental and
non-commercial plans by the dialysis providers as profit centers." The Plan
implemented the program because of its
fiduciary obligation to preserve Plan assets against charges which (i)
exceed reasonable value due to factors not beneficial to covered persons
. . . and (ii) are used by the dialysis providers for purposes contrary to
the covered persons’ interests, such as subsidies for other plans and
discriminatory profit-taking.
The Program applies to all claims for "reimbursement of products and
services provided for purposes of outpatient dialysis, regardless of the condition
causing the need for dialysis." The Plan no longer uses the in-network/out-of-
network distinction for dialysis-related reimbursements. Instead, "[a]ll dialysis-
related claims will be subject to cost review by the plan administrator to determine
whether the charges indicate the effects of market concentration or discrimination
in charges."
With respect to dialysis-related claims, the plan administrator shall
determine the Usual and Reasonable Charge based upon the average
6
payment actually made for reasonably comparable services and/or
supplies to all providers of the same services and/or supplies by all
types of plans in the applicable market during the preceding calendar
year, based upon reasonably available data, adjusted for the national
Consumer Price Index medical care rate of inflation.
The "Usual and Reasonable Charge" differs from the "Customary, Usual, and
Reasonable Charge" that applies to reimbursements for some other types of
medical treatment.
DaVita alleges that the reimbursements that it received beginning in 2017
were far less than the reimbursements that it received in 2016. DaVita brought this
action, alleging claims on its own behalf and as an assignee of Patient 1’s claims.
DaVita alleges that the Plan’s 2017 implementation of the dialysis-specific
program violated the MSP, ERISA, and state law. The district court dismissed
with prejudice all federal claims and declined to exercise supplemental jurisdiction
over the state-law claims. DaVita timely appeals.
DISCUSSION
A. MSP Claim
The MSP imposes two substantive requirements on group health plans with
respect to persons with ESRD. A group health plan:
(i) may not take into account that an individual is entitled to or eligible
for benefits under this subchapter under section 426-1 of this title
[during the 30-month coordination period]; and
(ii) may not differentiate in the benefits it provides between individuals
having end stage renal disease and other individuals covered by such
7
plan on the basis of the existence of end stage renal disease, the need
for renal dialysis, or in any other manner[.]
42 U.S.C. § 1395y(b)(1)(C). Amy’s Plan uniformly reimburses all dialysis
treatments whether or not the beneficiary is eligible for Medicare and whether or
not the beneficiary has ESRD. And dialysis is a treatment received by many
people: some are eligible for Medicare and some are ineligible; some have ESRD
and some do not have ESRD. DaVita nevertheless argues that, because the Plan
allegedly pays less for dialysis treatments than for other treatments, the Plan
violates both of the MSP’s requirements. For the reasons that follow, we disagree.
1. "Take Into Account"
The MSP prohibits a plan from taking into account whether the covered
individual is eligible for or enrolled in Medicare during the coordination period,
after which time the plan may be the secondary payer. See id. § 1395y(b)(1)(C)(i)
(providing that a plan "may not take into account that an individual is entitled to or
eligible for [Medicare] benefits" (emphasis added)). The Plan plainly did not take
into account Patient 1’s eligibility for, or enrollment in, Medicare. The Plan
uniformly reimburses all dialysis treatment, whether or not the beneficiary is
eligible for Medicare or enrolled in Medicare.
Notably, many persons who receive dialysis are ineligible for Medicare:
those with acute kidney injury are not, by virtue of that injury, eligible for
Medicare, and even those who have ESRD are eligible for Medicare only after the
8
first three months of dialysis treatment. Yet the Plan takes no notice whatsoever of
whether the claimant is eligible for Medicare. Claims are paid at the same rate
whether the claimant has acute kidney injury, is in the first months of ESRD
treatment, or is eligible for Medicare.
Nor does it matter, for purposes of the MSP, that the Plan calculates its
reimbursement rate by taking into account, along with other factors, the amount
that Medicare pays for dialysis treatment of other individuals. The MSP bars
consideration of the individual claimant’s eligibility for Medicare, a factor that the
Plan ignores.
Finally, our reading of the "take into account" provision renders neither that
provision nor the differentiation provision superfluous. Both provisions serve
functions that the other does not. The "take into account" provision prohibits a
plan from taking Medicare eligibility into account during the 30-month
coordination period and permits a plan to become the secondary payer after the
coordination period. Nothing in the differentiation provision concerns who pays
first. Similarly, the differentiation provision prohibits a plan from differentiating
against any person who has ESRD, including a person who is ineligible for
Medicare.
In sum, Amy’s Plan did not "take into account" Patient 1’s eligibility for
Medicare and thus comported with the MSP’s first requirement.
9
2. Differentiation
The MSP provides that a plan "may not differentiate in the benefits it
provides between individuals having end stage renal disease and other individuals
covered by such plan on the basis of the existence of end stage renal disease, the
need for renal dialysis, or in any other manner." 42 U.S.C. § 1395y(b)(1)(C)(ii).
Under the Plan, individuals with ESRD receive identical benefits, including
dialysis benefits, as those who do not have ESRD. Renal dialysis is a potential
treatment for all persons, not just for those with ESRD, and the Plan uniformly
reimburses a provider for renal dialysis whether or not the patient has ESRD.
Accordingly, the Plan does not—in any way or for any reason—"differentiate in
the benefits it provides between individuals having end stage renal disease and
other individuals covered by such plan." Id.
The second half of the statutory text does not change that conclusion. Plans
may not provide differing benefits to persons with ESRD "on the basis of the
existence of end stage renal disease, the need for renal dialysis, or in any other
manner." Id. The clause is grammatically challenging to interpret, because "on the
basis of" appears to apply to "the need for renal dialysis" but cannot meaningfully
apply to "in any other manner." See DaVita, Inc. v. Marietta Mem’l Hosp. Empl.
Health Benefit Plan, 978 F.3d 326, 361 (6th Cir. 2020) (Murphy, J., concurring in
part and dissenting in part) ("This list likely contains a typo because it makes no
10
sense to say ‘on the basis of . . . in any other manner.’" (ellipsis in original)). The
corresponding regulation slips in an "or" to address the grammatical issue,
prohibiting differentiation "on the basis of the existence of ESRD, or the need for
renal dialysis, or in any other manner." 42 C.F.R. § 411.161(b)(1) (emphasis
added). But we need not dwell on the nuances. Even the broadest possible reading
of the second half of the statutory text—prohibiting differentiation in the provision
of benefits for any reason and in any manner—does not change our interpretation
of the requirement as a whole.
A plan may not provide differing benefits to persons with ESRD than to
other insureds, no matter the reason and no matter the manner. For example, a
plan may not provide differing benefits to persons with ESRD simply because an
individual has ESRD, or because an individual with ESRD needs renal dialysis, or
because an individual with ESRD has a greater statistical chance of needing other
services. See 42 U.S.C. § 1395y(b)(1)(C)(ii) (prohibiting differentiation "on the
basis of the existence of end stage renal disease, the need for renal dialysis, or in
any other manner"). And a plan may not provide differing benefits to persons with
ESRD by, for example, terminating their coverage, charging higher premiums,
exacting higher co-payments, or requiring longer waiting times. 42 C.F.R.
§ 411.611(b)(2)(i)-(iii). But the pertinent question remains whether the plan
provides differing benefits to persons with ESRD than to all other insureds.
11
Because Amy’s Plan provides identical benefits, including dialysis benefits, to all
insured persons, the Plan does not run afoul of the MSP.
We do not hold that all facially neutral plans comply with the MSP. A
facially neutral provision that, in effect, operated to differentiate "between
individuals having end stage renal disease and other individuals covered by such
plan" would not comport with the MSP. 42 U.S.C. § 1395y(b)(1)(C)(ii). For
example, a plan would violate the MSP if it provided different coverage for routine
maintenance dialysis—that is, dialysis received only by persons with ESRD—than
for all other dialysis. See 42 C.F.R. § 411.161(b)(2)(v) (listing, as an example of a
prohibited differentiation, a plan’s "[f]ailure to cover routine maintenance dialysis
. . . when a plan covers other dialysis services"). So, too, would a plan violate the
MSP if it declined to cover an ESRD-specific medication even though it covered
comparable non-ESRD-specific medications. That is, provisions that affect only
those with ESRD necessarily provide differing benefits to those with ESRD as
compared to other insureds.
But Amy’s Plan has no such differentiating effect. The Plan treats all
dialysis the same, and persons with ESRD are not the exclusive recipients of
dialysis. Many persons who do not have ESRD receive dialysis as treatment for
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acute kidney injury.1
DaVita concedes that dialysis is not exclusively a treatment for ESRD. But
DaVita emphasizes that most people who receive dialysis have ESRD, so that
Amy’s Plan has a remarkably disproportionate effect on persons with ESRD.
DaVita encourages us to hold that the MSP’s prohibition on differing treatment
bars not only actual differentiation (whether by name or by exclusive effect) but
also all provisions that have a disproportionate effect, or disparate impact, on
persons with ESRD.
In assessing whether the MSP encompasses a disparate-impact theory, we
find helpful the Sixth Circuit’s recent decision in Marietta, 978 F.3d at 347–52.
Applying the Supreme Court’s guidance in Texas Department of Housing &
Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015),
the Sixth Circuit held that the MSP encompasses a disparate-impact theory.
Marietta, 978 F.3d at 350–51. Judge Murphy disagreed with the majority’s
conclusion, writing separately to state his view that "a plan that uniformly offers
the same benefits to all groups does not violate [the MSP’s differentiation] clause."
1
In 2000, about 12,000 persons in the United States with acute kidney injury
received dialysis. Pavkov ME, Harding JL, Burrows NR., Trends in
Hospitalizations for Acute Kidney Injury — United States, 2000–2014, Morbidity
& Mortality Wkly. Rep., March 16, 2018, 67:289–293, Table,
https://www.cdc.gov/mmwr/volumes/67/wr/mm6710a2.htm. That number rose to
18,000 by 2006. Id. And in 2014, the number climbed to more than 28,000. Id.
13
Id. at 360 (Murphy, J., dissenting in part). We agree with the Sixth Circuit that the
Supreme Court’s decision in Inclusive Communities provides the appropriate
framework for considering whether a statute encompasses a disparate-impact
theory, but we disagree with the Marietta majority’s conclusion.
Inclusive Communities considered whether the Fair Housing Act ("FHA")
encompassed a disparate-impact theory of liability. 576 U.S. at 533–34. The
Court began its analysis by discussing "two other antidiscrimination statutes that
preceded it"—Title VII of the Civil Rights Act of 1964, and the Age
Discrimination in Employment Act of 1967 ("ADEA")—that the Court previously
had held encompassed disparate-impact liability. Id. at 530–33; see Griggs v.
Duke Power Co., 401 U.S. 424 (1971) (Title VII); Smith v. City of Jackson, 544
U.S. 228 (2005) (ADEA). The Court discussed the obvious similarities in text and
structure between the relevant provisions of Title VII and the ADEA, on the one
hand, and the relevant provisions of the FHA, on the other. Inclusive
Communities, 576 U.S. at 534–35. Title VII provides:
It shall be an unlawful employment practice for an employer—
(1) to fail or refuse to hire or to discharge any individual, or otherwise
to discriminate against any individual with respect to his compensation,
terms, conditions, or privileges of employment, because of such
individual’s race, color, religion, sex, or national origin; or
(2) to limit, segregate, or classify his employees or applicants for
employment in any way which would deprive or tend to deprive any
individual of employment opportunities or otherwise adversely affect
14
his status as an employee, because of such individual’s race, color,
religion, sex, or national origin.
42 U.S.C. § 2000e-2(a) (emphases added); see Inclusive Communities, 576 U.S. at
530–31 (quoting this text). The ADEA provides:
It shall be unlawful for an employer—
(1) to fail or refuse to hire or to discharge any individual or otherwise
discriminate against any individual with respect to his compensation,
terms, conditions, or privileges of employment, because of such
individual’s age;
(2) to limit, segregate, or classify his employees in any way which
would deprive or tend to deprive any individual of employment
opportunities or otherwise adversely affect his status as an employee,
because of such individual’s age; or
(3) to reduce the wage rate of any employee in order to comply with
this chapter.
29 U.S.C. § 623(a) (emphases added); see Inclusive Communities, 576 U.S. at 532
(quoting this text). The first relevant FHA provision states:
It shall be unlawful for any person or other entity whose business
includes engaging in residential real estate-related transactions to
discriminate against any person in making available such a transaction,
or in the terms or conditions of such a transaction, because of race,
color, religion, sex, handicap, familial status, or national origin.
42 U.S.C. § 3605(a) (emphasis added); see Inclusive Communities, 576 U.S. at
534 (quoting this text). The second relevant FHA provision states that it is
unlawful:
To refuse to sell or rent after the making of a bona fide offer, or to refuse
to negotiate for the sale or rental of, or otherwise make unavailable or
15
deny, a dwelling to any person because of race, color, religion, sex,
familial status, or national origin.
42 U.S.C. § 3604(a) (emphasis added); see Inclusive Communities, 576 U.S. at
533 (quoting this text).
The Court noted that the only textual difference is that Title VII and the
ADEA use the phrase "or otherwise adversely affect" while the FHA uses the
phrase "or otherwise make unavailable or deny."2 Inclusive Communities, 576
U.S. at 532–33. But the Court held that the different wording was irrelevant
because both formulations, and the word "discriminate," are "results-oriented
language," which "counsels in favor of recognizing disparate-impact liability." Id.
at 534. The Court explained further:
It is true that Congress did not reiterate Title VII’s exact language in
the FHA, but that is because to do so would have made the relevant
sentence awkward and unclear. A provision making it unlawful to
"refuse to sell[,] ... or otherwise [adversely affect], a dwelling to any
person" because of a protected trait would be grammatically obtuse,
difficult to interpret, and far more expansive in scope than Congress
likely intended.
Id. at 535 (alterations and ellipsis in original).
2
In its briefing to us, DaVita also cites the disparate-impact provision in the
Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12112. But that
statute’s text, which prohibits many forms of "discriminat[ion]," does not differ
meaningfully from the relevant text of Title VII or the ADEA. Id. § 12112(a); see
also id. § 12112(b)(3) (defining ways that an entity may impermissibly
discriminate to include "utilizing standards, criteria, or methods of administration
. . . that have the effect of discrimination on the basis of disability" (emphasis
added)).
16
The Supreme Court next found later amendments to the FHA, enacted in
light of intervening court decisions, to be of "crucial importance." Id. In
particular, "all nine Courts of Appeals to have addressed the question had
concluded that the Fair Housing Act encompassed disparate-impact claims." Id.
When Congress amended the FHA, it chose to retain the relevant statutory text
and, moreover, added three new clauses that made sense only if the FHA
encompassed a disparate-impact theory of liability. Id. at 536–39.
Finally, the Court held that "[r]ecognition of disparate-impact claims is
consistent with the FHA’s central purpose." Id. at 539. "The FHA, like Title VII
and the ADEA, was enacted to eradicate discriminatory practices within a sector of
our Nation’s economy." Id.; see also id. at 528–30 (recounting the long history of
discriminatory housing).
The Court made clear that its conclusion that the FHA encompassed a
disparate-impact theory resulted from considering all of the factors just discussed:
"The Court holds that disparate-impact claims are cognizable under the Fair
Housing Act upon considering its results-oriented language, the Court’s
interpretation of similar language in Title VII and the ADEA, Congress’
ratification of disparate-impact claims in 1988 against the backdrop of the
unanimous view of nine Courts of Appeals, and the statutory purpose." Id. at 545–
17
46; see also Smith, 544 U.S. at 237 (noting the unanimous holdings of the courts of
appeal that the ADEA's prohibition encompasses disparate impacts).
Applying the teaching of Inclusive Communities, we begin, as did the Sixth
Circuit, with the statutory text:
[A group health plan] may not differentiate in the benefits it provides
between individuals having end stage renal disease and other
individuals covered by such plan on the basis of the existence of end
stage renal disease, the need for renal dialysis, or in any other manner.
42 U.S.C. § 1395y(b)(1)(C)(ii) (emphases added). The Sixth Circuit’s majority
focused exclusively on the final five words of the provision: "or in any other
manner." Marietta, 978 F.3d at 348–51. The court noted that, like the important
statutory passage in the FHA, that passage is "at the end of a series of prohibitions
that deal with disparate treatment" and "is exceedingly broad." Id. at 350
(emphasis omitted). From those observations, the Sixth Circuit concluded that the
MSP’s "non-differentiation provision permits a disparate impact claim." Id. at 351.
We respectfully suggest that the Marietta majority’s analysis of whether the
statute gives rise to a disparate-impact claim was incomplete. Not every list of
actions followed by a broad catch-all clause means that Congress intended to
encompass a disparate-impact theory. Inclusive Communities requires both a more
detailed study of the statutory text and a consideration of other relevant factors.
First, continuing with the textual analysis, a different aspect of the provision
strongly suggests that Congress did not intend to create a disparate-impact theory
18
of liability. In particular, Congress chose to prohibit actions that "differentiate"
rather than "discriminate." Just as the FHA’s use of the word "discriminate"
suggested disparate-impact liability to the Supreme Court in light of the identical
wording of Title VII and the ADEA, Inclusive Communities, 576 U.S. at 534,
Congress’ decision not to use the word "discriminate" in the MSP strongly
suggests that it did not intend to encompass disparate-impact liability. The
presumption that different words carry different meanings is ordinarily weak when
applied, as here, to different Acts, because "[w]e do not presume that when
Congress legislates it has firmly in mind every term of every pre-existing statute."
Agredano v. Mutual of Omaha Cos., 75 F.3d 541, 544 (9th Cir. 1996). But
Congress certainly was aware of the important term "discriminate," which long has
carried a particular meaning. We find it significant that Congress chose to avoid
that common term in favor of a different verb, "differentiate." See Hall v. United
States, 566 U.S. 506, 516 (2012) ("We assume that Congress is aware of existing
law when it passes legislation." (internal quotation marks omitted)); see also Bare
v. Barr, 975 F.3d 952, 968 (9th Cir. 2020) ("We must presume that Congress
intended a different meaning when it uses different words in connection with the
same subject." (internal quotation marks omitted)).
Read as a whole, then, the statutory text does not suggest that Congress
intended to sweep in actions that disproportionately affect persons with ESRD
19
under a disparate-impact theory. We may agree with the Sixth Circuit that the
phrase "or in any other manner" is "results-oriented" in a sense. Marietta, 978 F.3d
at 350 & n.15. But the statutory text makes clear that the pertinent inquiry remains
whether the plan's provisions "result" in different benefits for persons with ESRD,
not whether the plan's provisions disproportionately affect persons with ESRD or
otherwise "discriminate" against persons with ESRD.
Nor is there any indication that Congress acquiesced in a disparate-impact
theory that has been widely adopted by the federal courts. If anything, the MSP’s
statutory history and additional provisions suggest the opposite conclusion. For
example, until just a couple of months ago, no court had held that the MSP
encompasses a disparate-impact theory of liability. See, e.g., Nat'l Renal All., LLC
v. Blue Cross & Blue Shield of Ga., Inc., 598 F. Supp. 2d 1344, 1354–55 (N.D.
Ga. 2009) (rejecting, as failing to state a claim, an assertion that a plan’s uniform
reimbursement for all dialysis constituted differentiation under the MSP).
Additionally, and unlike the FHA, no other provision in the MSP assumes that the
differentiation provision encompasses disparate-impact liability. Indeed, nearly
every provision in the MSP concerns topics other than ESRD. In sum, one factor
that was "of crucial importance," Inclusive Communities, 576 U.S. at 535, in
concluding that the FHA encompasses disparate impacts is, at best, completely
absent with respect to the MSP.
20
Finally, we consider the statute’s "central purpose." Id. at 539. This factor,
too, strongly suggests that Congress did not intend a disparate-impact theory of
liability in the MSP. All of the anti-discrimination statutes cited by DaVita and the
Sixth Circuit sought to address, as their sole or central purpose, a history of
discrimination against a minority class of persons. As their titles suggest, the Fair
Housing Act, Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act, and the Americans with Disabilities Act all aimed, as their
central purpose, to address longstanding and entrenched discriminatory practices.
By sharp contrast, there is little evidence, either in the legislative history of
the MSP or in other sources, that persons with ESRD have been subjected to
historical or entrenched societal discrimination akin to the discrimination faced by
the classes of persons protected by the FHA, Title VII, the ADEA, and the
ADA.3 As we hold in DaVita v. Virginia Mason Memorial Hospital, No. 19-
35692, - F.3d – (9th Cir. 2020), ensuring equal health-care benefits for insureds
who have ESRD, in limited circumstances, is one of the purposes of the Medicare
3
DaVita directs us primarily to a Senate Report in 1981—eight years before
Congress added the differentiation provision—that expressed "concern[]" that
employers might engage in "job discrimination" against persons entitled to
Medicare. S. Rep. No. 97-139, at 736 (1981). Congress directed the relevant
Secretary to "investigate promptly complaints of this nature[] and report his
findings to the Congress." Id. That level of concern pales in comparison to, for
example, Congress’ deep concern with the entrenched historical discrimination in
housing on the basis of race. Inclusive Communities, 576 U.S. at 528–30.
21
as Secondary Payer provisions. But the tightly cabined nature of the anti-
differentiation provision of the MSP suggests a carefully circumscribed concern,
not a remedy for widespread injustice. Moreover, the "central purpose," Inclusive
Communities, 576 U.S. at 539, of the MSP provisions remains a congressional aim
to save Medicare money. See Zinman v. Shalala, 67 F.3d 841, 845 (9th Cir. 1995)
(noting that "the overarching statutory purpose" of the Medicare as Secondary
Payer provisions is to "reduc[e] Medicare costs").
Although this case concerns a plan’s reimbursement rates for dialysis, a
disparate-impact theory presumably could give rise to a broad array of challenges.
Notably, approximately half of persons with ESRD have diabetes or cardiovascular
disease, and cardiovascular disease "contributes to more than half of all deaths
among patients with ESRD." Kidney Disease Statistics for the United States, Nat’l
Insts. of Health (December 2016), https://www.niddk.nih.gov/health-
information/health-statistics/kidney-disease. Accordingly, a plan that provided less
preferential coverage for those ailments might disproportionately affect persons
with ESRD. Embracing a disparate-impact theory of liability would create
uncertainty for insurers as to permissible provisions related to those illnesses. We
doubt that Congress intended, in a statute aimed almost entirely at saving Medicare
money, to require group health plans to ensure that its plans have no
disproportionate effects on persons with ESRD. Rather, we conclude that
22
Congress meant what it said: a plan may not "differentiate in the benefits it
provides between individuals having [ESRD] and other individuals covered by
such plan." 42 U.S.C. § 1395y(b)(1)(C)(ii).
In sum, consideration of the relevant factors described in Inclusive
Communities confirms our reading of the statutory text. Congress prohibited
group health plans from offering different benefits to persons with ESRD than to
others, but it did not bar other differences that merely have a disproportionate
effect on persons with ESRD.
Although congressional intent is clear, we also note that the MSP’s
implementing regulations provide no support for a disparate-impact claim. In both
Smith, 544 U.S. at 239, and Griggs, 401 U.S. at 433–34, the Supreme Court
interpreted the pertinent statutory provision as encompassing a disparate-impact
theory partly because the relevant agency had interpreted the statute in that
manner. Similarly, although the Court in Inclusive Communities did not discuss
the agency’s interpretation in its analysis, the Court noted at the outset that "the
Secretary of Housing and Urban Development issued a regulation interpreting the
FHA to encompass disparate-impact liability," including by establishing a multi-
step "burden-shifting framework." 576 U.S. at 527 (abbreviation omitted).
23
The relevant regulations here tell a different story. Perhaps most
convincingly, the agency expressly approved a plan provision that would have a
clearly disproportionate effect on those with ESRD:
(c) Uniform Limitations on particular services permissible. A plan is
not prohibited from limiting covered utilization of a particular service
as long as the limitation applies uniformly to all plan enrollees. For
instance, if a plan limits its coverage of renal dialysis sessions to 30 per
year for all plan enrollees, the plan would not be differentiating in the
benefits it provides between plan enrollees who have ESRD and those
who do not.
42 C.F.R. § 411.161(c). Persons with ESRD typically require three dialysis
sessions a week, so the hypothetical limitation would apply to all persons with
ESRD. Persons with acute kidney injury, by contrast, rarely require 30 sessions of
dialysis. In other words, even though the regulation’s hypothetical limitation
would have an overwhelmingly disparate effect on persons with ESRD, the agency
expressly approved the limitation as consistent with the MSP’s differentiation
provision.
Similarly, the agency’s illustrative examples in § 411.161(b)(2)4 all comport
with our understanding of the statutory text. For example, a group health plan may
4
The regulation provides:
(2) [Group health plan] actions that constitute differentiation in
plan benefits (and that may also constitute "taking into account"
Medicare eligibility or entitlement) include, but are not limited
to the following:
(continued)
24
not provide "less comprehensive health plan coverage" to "persons who have
ESRD" and may not charge "individuals with ESRD higher premiums." 42 C.F.R.
§ 411.161(b)(2)(ii)-(iii). As is most relevant here, a plan may not decline to cover
"routine maintenance dialysis" if it covers "other dialysis services," and a plan
must pay identically for dialysis for persons with ESRD as for dialysis for persons
who do not have ESRD. Id. § 411.161(b)(2)(iv)-(v). That is, a plan may not cover
(i) Terminating coverage of individuals with ESRD, when there
is no basis for such termination unrelated to ESRD (such as
failure to pay plan premiums) that would result in termination for
individuals who do not have ESRD.
(ii) Imposing on persons who have ESRD, but not on others
enrolled in the plan, benefit limitations such as less
comprehensive health plan coverage, reductions in benefits,
exclusions of benefits, a higher deductible or coinsurance, a
longer waiting period, a lower annual or lifetime benefit limit, or
more restrictive preexisting illness limitations.
(iii) Charging individuals with ESRD higher premiums.
(iv) Paying providers and suppliers less for services furnished to
individuals who have ESRD than for the same services furnished
to those who do not have ESRD, such as paying 80 percent of the
Medicare rate for renal dialysis on behalf of a plan enrollee who
has ESRD and the usual, reasonable and customary charge for
renal dialysis on behalf of an enrollee who does not have ESRD.
(v) Failure to cover routine maintenance dialysis or kidney
transplants, when a plan covers other dialysis services or other
organ transplants.
42 C.F.R. § 411.161(b).
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an exclusively-ESRD treatment differently than a comparable non-ESRD
treatment; but nothing suggests that a plan must cover all dialysis treatments to the
same extent as, say, chemotherapy or insulin treatments.
We acknowledge one potential exception to the foregoing analysis. One of
the regulation’s examples of impermissible differentiation is a plan’s failure to
cover kidney transplants when the plan covers other organ transplants. Id.
§ 411.161(b)(2)(v). DaVita cites an article published in 2015 on the topic of
kidney transplants, Educational Guidance on Patient Referral to Kidney
Transplantation, U.S. Dept. of Health & Hum. Servs., (Sept. 2015),
https://optn.transplant.hrsa.gov/resources/guidance/educational-guidance-on-
patient-referral-to-kidney-transplantation. "With advances in surgical technique,
immunosuppression, and post-transplant care, criteria for kidney transplantation
have evolved dramatically." Id. Given the long waiting times for finding a
suitable kidney donor, the article recommends that doctors consider referring some
patients, especially those with rapidly progressive kidney disease, for evaluation
for a kidney transplant even if the patient is in stage 4 of chronic kidney disease,
one stage shy of ESRD (stage 5). Id. DaVita asserts that some patients receive a
kidney transplant before their disease progresses to ESRD. The regulation
therefore suggests, in DaVita’s view, that a disparate-impact theory is available.
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The regulatory history does not reveal, when the agency promulgated the
regulation in 1995, whether persons with stage 4 kidney disease received
transplants; if so, whether the agency was aware of that fact; and if so, what the
agency’s reason for including the example was. We need not investigate those
questions, though, because even if we assume that the agency included one
example that would support a disparate-impact claim, it suggests, at most, that the
regulation is inconsistent with respect to the availability of a disparate-impact
claim. See Marietta, 978 F.3d at 351 ("Put simply, the non-differentiation
regulations do more to confuse than to clarify."). Whether we view the
implementing regulations for the MSP as foreclosing entirely a disparate-impact
theory or as inconsistent on the question, those regulations are wholly unlike the
implementing regulations for Title VII, the ADEA, and the FHA, which clearly
allowed disparate-impact claims. The regulations therefore provide no support for
a disparate-impact claim.
In conclusion, a plan that provides identical benefits to someone with ESRD
as to someone without ESRD does not "differentiate" between those two classes.
That simplistic approach must yield for treatments that apply exclusively to ESRD
patients, because differential coverage of ESRD-specific treatments is no different
than differential treatment of persons with ESRD. But for treatments that apply
27
both to those with ESRD and those without ESRD, a plan’s provision of identical
benefits does not "differentiate" on any basis at all.
Because Amy’s Plan provides identical benefits, including dialysis benefits,
to persons with ESRD as to all other insureds and does not consider an individual’s
eligibility for Medicare, Amy’s Plan comports with the MSP.5
B. ERISA Claims
ERISA authorizes a beneficiary to bring claims seeking "to recover benefits
due to him under the terms of his plan." 29 U.S.C. § 1132(a)(1)(B). Separate
ERISA provisions authorize a beneficiary to bring equitable claims, seeking either
injunctive or equitable relief. Id. § 1132(a)(1)(A) & (a)(3). DaVita asserts both
types of claims.
As DaVita acknowledges, it cannot bring ERISA claims on its own behalf.
See id. § 1132(a)(1)(B) (allowing a claim for benefits "by a participant or
beneficiary"); id. § 1132(a)(3) (allowing equitable claims "by a participant,
beneficiary, or fiduciary"); Spinedex Physical Therapy USA Inc. v. United
Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014) ("As a non-
participant health care provider, Spinedex cannot bring claims for benefits on its
5
Because both the 2016 version and the 2017 version of Amy’s Plan
comported with the MSP, it is irrelevant that the 2017 amendment modified only
the dialysis provisions of Amy’s Plan. See Curtiss-Wright Corp. v.
Schoonejongen, 514 U.S. 73, 78 (1995) ("[P]lan sponsors are generally free under
ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans.").
28
own behalf."). DaVita seeks, instead, to bring claims on behalf of Patient 1, who
signed a form assigning some causes of action to DaVita.
The assignment form plainly encompasses a claim seeking to recover
benefits, so DaVita may bring that claim. See Spinedex, 770 F.3d at 1288–91
(holding that a valid assignment of rights allows a third party to bring the
beneficiary’s claim). But the complaint fails to state a claim. All of DaVita’s
arguments stem from its argument, which we reject, that the Plan violates the MSP.
Under the clear terms of the Plan, Patient 1 received all the "benefits due to him [or
her] under the terms of [the] plan." 29 U.S.C. § 1132(a)(1)(B).
We conclude that DaVita may not bring the equitable claims, however,
because the assignment form did not encompass an assignment of equitable claims.
"The question of what rights and remedies pass with a given assignment depends
upon the intent of the parties." DB Healthcare, LLC v. Blue Cross Blue Shield of
Ariz., Inc., 852 F.3d 868, 876 (9th Cir. 2017) (internal quotation marks omitted).
To make that determination, "we look at the language and context of the
authorization[]." Id. at 877.
By signing the assignment form, Patient 1 agreed to thirteen numbered
items. The fifth item included this sentence:
I hereby assign to DaVita all of my right, title and interest in any cause
of action and/or any payment due to me (or my estate) under any
employee benefit plan, insurance plan, union trust fund, or similar plan
("Plan"), under which I am a participant or beneficiary, for services,
29
drugs or supplies provided by DaVita to me for purposes of creating an
assignment of benefits under ERISA or any other applicable law.
The Sixth Circuit recently held that a nearly identical assignment did not
assign equitable claims, and we agree with its analysis on this point. Marietta, 978
F.3d at 344–45. The wording of the assignment itself suggests only an assignment
of a claim for benefits: Patient 1 assigned "all of [Patient 1’s] right, title and
interest in any cause of action . . . under any employee benefit plan . . . for
purposes of creating an assignment of benefits under ERISA or any other
applicable law." (Emphasis added). The most natural reading of that sentence is
that Patient 1 assigned all possible causes of action for the payment of benefits.
The assignment of "any cause of action" is not superfluous because it refers to the
causes of action available "under ERISA or any other applicable law," such as state
contract law.
The broader context of the sentence confirms that interpretation. The title of
numbered item five is "Assignment of Benefits; Lien." And all of the remaining
sentences of the same paragraph—such as how the patient should handle
payments, the "automatic lien," and the pursuit of "collections"—pertain strictly to
payments. Zooming out further still, the overall purpose of the document similarly
focuses exclusively on responsibility for payments, affirming that the patient "is
personally responsible for payments"; noting that the patient is "assigning rights to
payments from my insurer"; and "authorizing DaVita to obtain the necessary
30
information to obtain such payments." (Emphases added.) As in Spinedex, 770
F.3d at 1292, "the entirety of the Assignment indicates that [Patient 1] intended to
assign to [DaVita] only [his or her] rights to bring suit for payment of benefits."
See also DB Healthcare, 852 F.3d at 876–77 (holding that an assignment implicit
in "I Hereby Authorize My Insurance Benefits to Be Paid Directly to the
Physician" encompassed only a claim for benefits and not equitable claims).
AFFIRMED.
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