Central Valley Medical Group Inc. v. CareMore Health Plan ( 2023 )

1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 EASTERN DISTRICT OF CALIFORNIA 11 12 CENTRAL VALLEY MEDICAL GROUP No. 1:23-cv-00240-JLT-SKO INC., a California 13 corporation, 14 Plaintiff, ORDER GRANTING PLAINTIFF’S MOTION TO REMAND 15 v. 16 CAREMORE HEALTH PLAN, a California general stock 17 corporation, 18 Defendant. 19 20 Before the Court is Central Valley Medical Group Inc.’s 21 (“Plaintiff”) motion to remand the present case to state court. 22 Mot. to Remand (“Mot.”), ECF No. 10. For the reasons set forth 23 below, the Court GRANTS Plaintiff’s motion. 24 I. FACTUAL AND PROCEDURAL BACKGROUND 25 On January 27, 2023, Plaintiff filed a complaint in 26 Stanislaus County Superior Court against Caremore Health Plan 27 (“Defendant”). Complaint (“Compl.”), Exh. 1 to Notice of 28 Removal, ECF No. 1. Plaintiff is an “Independent Physician 1 Association” that provides primary care and specialty care for 2 various health plans and its member patients. Compl. ¶ 7. 3 Defendant is a “Health Care Service Plan” that provides members 4 with Medicare Advantage Plan benefits and is contracted with 5 Plaintiff to provide medical services to Defendant’s members. 6 Id. ¶ 8. 7 In 2019, Plaintiff and Defendant entered into an agreement 8 (“2019 Agreement”) that the parties would negotiate more 9 favorable compensation terms for Plaintiff to begin during the 10 2022 calendar year. Id. The 2019 Agreement did not explicitly 11 state what those new terms would be, but that the parties would 12 negotiate the terms prior to the 2022 calendar year. Id. ¶ 10. 13 Since executing the agreement, Plaintiff has contacted Defendant 14 several times to negotiate the compensation terms, however, 15 Defendant has indicated it is no longer interested in 16 renegotiating. Id. ¶¶ 14, 15. Plaintiff filed a complaint in 17 state court alleging ten (10) state law causes of actions. See 18 generally Compl. 19 Defendant filed a Notice of Removal on February 16, 2023. 20 Notice of Removal (“Notice”), ECF No. 1. Defendant alleges 21 removal is proper under 28 U.S.C. § 1442(a)(1), the “Federal 22 Officer Removal Statute” or “Statute”. Id. at 3-8. Plaintiff 23 filed the present motion to remand on March 1, 2023, arguing 24 Defendant was not acting under a federal agency during its 25 wrongful conduct. Mot. at 4. Defendant filed an opposition. 26 Opp’n, ECF No. 14. Plaintiff filed a reply. Reply, ECF No. 15. 27 /// 28 /// 1 II. OPINION 2 A. Legal Standard 3 An entity seeking removal under the Federal Officer Removal 4 Statute must show that: 5 (a) it is a person within the meaning of the statute; 6 (b) it was acting pursuant to a federal officer’s 7 directions; 8 (c) there is a causal nexus between plaintiff’s claims 9 and the acts performed pursuant to the federal 10 officer's directions; and 11 (d) it can assert a colorable federal defense. 12 Goncalves v. Rady Children's Hosp. San Diego, 865 F.3d 1237, 13 1244 (9th Cir. 2017). Removal under the Statute is broader than 14 general removal statutes because (1) federal officers can remove 15 both civil and criminal cases and (2) a federal officer can 16 remove a case even if the face of plaintiff’s complaint does not 17 have original federal jurisdiction, as required by the well- 18 pleaded complaint rule. Jefferson Cty. v. Acker, 527 U.S. 423, 19 431 (1999); Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1253 20 (9th Cir. 2006). The federal question element is satisfied if 21 the defendant’s defense depends on federal law. Id. 22 Although the Federal Officer Removal Statute is broader 23 than general removal statutes, the notice of removal is still 24 required to contain more than “mere legal conclusions.” Leite 25 v. Crane Co., 749 F.3d 1117, 1122 (9th Cir. 2014). The notice 26 must “allege the underlying facts supporting each of the 27 requirements for removal jurisdiction.” Id. In ruling on a 28 motion to remand where a defendant invokes the Federal Officer 1 Removal Statute, courts apply the same standard as a Rule 2 12(b)(1) motion to dismiss for lack of subject-matter 3 jurisdiction. Id. Doing so “will not unduly burden the unique 4 rights § 1442 affords removing defendants.” Id. 5 Under the standard set forth in Rule 12(b)(1), a 6 plaintiff’s motion to remand may raise either a facial attack or 7 a factual attack of the defendant’s jurisdictional allegations. 8 Id. (citing Safe Air For Everyone v. Meyer, 373 F.3d 1035, 1039 9 (9th Cir. 2004)). Under a facial attack, the court applies the 10 same standard as a Rule 12(b)(6) motion to dismiss and accepts a 11 defendant’s facts in their notice as true and determines whether 12 the facts are sufficient on their face to invoke federal 13 jurisdiction. Id. (citing Pride v. Correa, 719 F.3d 1130, 1133 14 (9th Cir. 2013)). Here, Plaintiff raises a facial attack to 15 Defendant’s claims, alleging Defendant has failed to demonstrate 16 three (3) of the four (4) elements required under the Federal 17 Officer Removal Statute. Mot. at 6:4-5; See generally Reply. 18 B. Discussion 19 Defendant claims it has satisfied each of the four (4) 20 elements required under the Federal Officer Removal Statute. 21 Notice at 3:24-25; Opp’n at 2:1. Plaintiff, however, asserts 22 (1) Defendant was not acting under a federal agent during the 23 alleged wrongful conduct; (2) there is no causal nexus between 24 Defendant’s actions acting under a federal agency and the 25 alleged harms; and (3) Defendant cannot assert a colorable 26 federal defense. Mot. at 6:4-5; See generally Reply. Plaintiff 27 does not dispute that Defendant is a “person” for purposes of 28 the Statute. The Court addresses the remaining three disputed 1 elements below. 2 1. Acting Under Federal Direction 3 Defendant states it is paid by Medicare Advantage to 4 provide services for Medicare beneficiaries. Notice ¶ 10. 5 Defendant claims it was acting under the Centers for Medicare & 6 Medicaid Services (“CMS”), which is an agency within the U.S. 7 Department of Health and Human Services, because it was 8 performing the function of administering Medicare benefits by 9 contracting with Plaintiff. Id. ¶ 12. 10 The Court notes, the basic purpose of the Federal Officer 11 Removal Statute is to protect the Federal Government from 12 interference of its operations resulting from state court 13 proceedings. Watson v. Philip Morris Cos., 551 U.S. 142, 150 14 (2007). A private person may be “acting under” a federal 15 officer or agency as a contractor if the assistance they provide 16 goes “beyond simple compliance with the law and helps officers 17 fulfill other basic governmental tasks.” Id. at 153. By 18 example, if a contractor performs a job that, in the absence of 19 the contract with a private firm, the Government itself would 20 have to perform, that may be considered “acting under” a federal 21 officer or agency. Id. at 154. Similarly, if a federal officer 22 or agency delegates legal authority to the contractor, and the 23 contractor is subject to extensive supervision and is closely 24 monitored, that may be considered “acting under” a federal 25 officer or agency. Id.; Goncalves v. Rady Children’s Hosp. San 26 Diego, 865 F.3d 1237, 1247 (9th Cir. 2017). 27 Here, Defendant has not provided adequate facts to show how 28 providing Medicare services goes “beyond simple compliance with 1 the law.” Watson, 551 U.S at 153. Defendant has not referenced 2 any contract with CMS that shows a delegation of any legal 3 authority to Defendant. Nor has Defendant detailed whether CMS 4 has control over Defendant’s alleged actions towards Plaintiff, 5 such as CMS requiring prior approval of payment decisions to 6 providers, CMS limiting Defendant’s ability to pay or negotiate 7 pay to providers, or CMS’s special interest in such decisions. 8 See Gonclaves, 865 F.3d at 1247. Defendant has failed to show 9 it was acting under a federal agent or officer when it failed to 10 renegotiate with Plaintiff. 11 2. Causal Connection Between Plaintiff’s Claims and 12 Defendant’s Actions Under Federal Direction 13 Defendant admits it only needs to show that the challenged 14 acts occurred because of what it was asked to do by the 15 Government. Id. ¶ 13 (citing Goncalves, 865 F.3d at 1245). To 16 meet this burden, Defendant vaguely states it entered into the 17 2019 Agreement with Plaintiff to assist and help carry out the 18 coverage of Medicare Advantage Plans, which is causally 19 connected to Plaintiff’s claims. Id. ¶ 13. 20 As discussed above, Defendant has failed to demonstrate 21 that the wrongful conduct of failing to renegotiate with 22 Plaintiff was taken at the direction of CMS. Although the 23 “hurdle erected by the causal connection element ‘is quite 24 low,’” (Notice ¶ 13) Defendant has failed to provide any facts 25 that support its alleged wrongful conduct occurred because of 26 what it was asked to do by CMS. Having failed to allege any 27 facts that Defendant was acting under CMS’s direction, Defendant 28 has failed to plead a causal connection between Plaintiff’s 1 claims and Defendant’s actions under federal direction. 2 3. Colorable Federal Defense 3 Defendant argues that because Plaintiff asserts allegations 4 that Defendant promised to pay Plaintiff, and because federal 5 law and federal funds apply, at least some of Plaintiff’s claims 6 are preempted by the Medicare Act. Id. ¶ 18. Defendant argues 7 because Plaintiff is disputing rates paid in relation to 8 Medicare benefits, there is a legitimate question as to the 9 applicability of federal preemption under the Medicare Act. 10 Id. In its opposition, Defendant states the new compensation 11 terms “may or may not violate the Medicare Act’s standards and 12 regulations.” Opp’n at 16:1. To support its argument, 13 Defendant cites Prime Healthcare Servs. v. Humana Ins. Co., No. 14 CV 16-01097-BRO (JEMx), 2016 U.S. Dist. LEXIS 191634 (C.D. Cal. 15 Nov. 4, 2016). In Prime, the court found a plaintiff’s state 16 law claims were nothing more than an attempt to be reimbursed 17 for underpayments of Medicare benefits. Id. at 22. The court 18 found federal preemption applied because the plaintiff’s claims 19 were “inextricably intertwined with a claim for Medicare 20 benefits, and as such, arise under Medicare.” Id. at 26. 21 Here, in contrast, Plaintiff’s state law claims are based 22 on “(1) the breach of a specific contractual provision in an 23 agreement; (2) the intentional inference of existing contractual 24 relations; and (3) [Defendant’s] false and intentional 25 misrepresentations (among other wrongs).” Reply at 3. 26 Defendant has not argued, nor does the Court find, any of these 27 obligations are “inextricably intertwined” with claims for 28 Medicare benefits, like reimbursement rates. eee ene eee nnn nn nen on rE EI OS ED 1 Although Defendant states there is a legitimate question as 2 to federal preemption under the Medicare Act, absent a specific 3 statute or regulation that implicates this legitimate question, 4 the Court does not find a colorable federal defense exists. 5 Rather, Plaintiff “may be able to prove the elements of [its] 6 causes of action without regard to any provisions of the Act 7 relating to provision of benefits.” Do Sung Uhm v. Humana, 8 Inc., 620 F.3d 1134, 1145 (Sth Cir. 2010). 9 The Court agrees with Plaintiff and finds that Defendant 10 has not alleged sufficient facts to demonstrate (1) Defendant 11 was acting under a federal agent during the alleged wrongful 12 conduct; (2) there is a causal nexus between Defendant’s actions 13 acting under a federal agency and the alleged harms; and 14 (3) Defendant has a colorable federal defense. The Plaintiff's 15 request to remand is GRANTED. 16 TILT. ORDER 17 For the reasons set forth above, the Court GRANTS 18 Plaintiff’s Motion to Remand. 19 IT IS SO ORDERED. 20 Dated: December 12, 2023 21 cp, JOHN A. MENDEZ 23 SENIOR UNITED*STATES DISTRICT JUDGE 24 25 26 27 28