Quishenberry v. UnitedHealthcare CA2/7 ( 2021 )

Filed 9/21/21 Quishenberry v. UnitedHealthcare CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
LARRY QUISHENBERRY, B303451
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC631077)
v.
UNITEDHEALTHCARE, INC.
et al.,
Defendants and
Respondents.
APPEAL from judgments of the Superior Court of Los
Angeles County, Ralph Hofer, Judge. Affirmed.
Balisok & Associates and Russell S. Balisok for Plaintiff
and Appellant.
Walraven & Westerfeld, Bryan S. Westerfeld and Jessica B.
Hardy for Defendants and Respondents UnitedHealthcare, Inc.,
UnitedHealth Group Incorporated, UnitedHealthcare Services,
Inc., and UHC of California.
Carroll, Kelly, Trotter & Franzen, Michael J. Trotter,
Brenda M. Ligorsky, and David P. Pruett for Defendants and
Respondents Health Care Partners Medical Group and
Healthcare Partners LLC.
_____________
Larry Quishenberry appeals from judgments of dismissal
entered after the trial court sustained the demurrers of
defendants UnitedHealthcare, Inc., UnitedHealth Group
Incorporated, UnitedHealthcare Services, Inc., and UHC of
California (collectively, the UnitedHealthcare entities) and
Health Care Partners Medical Group and Healthcare Partners
LLC (collectively, Healthcare Partners) without leave to amend.
Quishenberry alleged his father, Eugene Quishenberry,1 was
prematurely discharged from a skilled nursing facility operated
by GEM HealthCare, LLC (GEM), and Eugene died after his
health deteriorated. Quishenberry sued GEM; Dr. Jae H. Lee,
the doctor who provided Eugene’s care at the GEM facility; the
UnitedHealthcare entities, which provided a Medicare Advantage
(MA) Health Maintenance Organization plan to Eugene; and
Healthcare Partners, which provided physician services to
Eugene, including the services of Dr. Lee. Quishenberry asserted
causes of action for negligence, elder abuse, bad faith, and
wrongful death.2
1 To avoid confusion, we refer to Eugene Quishenberry by his
first name.
2 Quishenberry describes his first and second causes of
action as claims for “[n]egligence and [r]ecklessness—elder
abuse.” We refer to these claims as negligence claims for
simplicity.
2
On appeal, Quishenberry contends the trial court erred in
ruling the Medicare Part C preemption clause (42 U.S.C. §1395w-
26(b)(3)) barred his causes of action. Quishenberry also
challenges the trial court’s determination Health & Safety Code
section 1371.25 barred his claims against the UnitedHealthcare
entities because the claims were based on the UnitedHealthcare
entities’ vicarious liability for the acts of GEM and Dr. Lee.
Because Quishenberry’s claims are preempted, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Lawsuit
Quishenberry filed this action on August 19, 2016
individually and as a successor in interest to Eugene.
After the trial court sustained demurrers to the first amended
complaint, Quishenberry filed a second amended complaint
(complaint) alleging claims for negligence, elder abuse, bad faith,3
and wrongful death. The complaint alleged Eugene, who was
born on October 12, 1929, was enrolled in an MA plan offered by
one or more of the UnitedHealthcare entities.4 The relationships
among the UnitedHealthcare entities were “complex and not fully
known or understood by” Quishenberry. The complaint alleged
the UnitedHealthcare entities delegated to HealthCare Partners
their responsibility to provide certain health care benefits
3 Quishenberry does not on appeal challenge dismissal of this
claim.
4 The second amended complaint incorrectly identified
UnitedHealthcare, Inc. as United Health Care, Inc. and United
Healthcare Insurance, Inc., and UHC of California as United
Healthcare-California, Inc. and UHC-California, Inc.
3
(physician services) and administrative protections owed to MA
plan enrollees by contracting with Healthcare Partners to provide
physician services for the plan’s enrollees. The UnitedHealthcare
entities delegated to GEM,5 which operated a skilled nursing
facility in Pasadena, their responsibility to provide custodial care
and administrative protections to plan enrollees.
In approximately November 2014, then-85-year-old Eugene
broke his hip and was hospitalized at Huntington Hospital, which
had a contract with the UnitedHealthcare entities to provide
hospital services for enrollees. Eugene was later transferred to
GEM’s skilled nursing facility under the care of Dr. Lee, a
medical doctor allegedly employed by Healthcare Partners. The
complaint alleged that during Eugene’s stay at GEM’s skilled
nursing facility, he developed severe pressure sores on his feet
because of GEM’s neglect. Neither Dr. Lee or GEM’s nursing
staff properly treated the sores, which made it difficult and
painful for Eugene to walk without assistance.
Eugene was at GEM’s skilled nursing facility for 24 days,
from November 4 through 28, 2014. According to the complaint,
Eugene was entitled under Medicare to an additional 76 days of
care at GEM’s skilled nursing facility with daily physical therapy
and care for his pressure sores. “Nevertheless, following
[Dr.] Lee’s direction, and pursuant to the business practice of
[Healthcare Partners] and the UnitedHealthcare entities, GEM
furnished Eugene with a false statement that he was no longer
qualified under Medicare for further inpatient care at GEM. [¶]
Eugene was transferred to his home, where, without adequate
nursing care and physical therapy and as a proximate cause of
5 In 2016 Quishenberry settled with GEM.
4
Dr. Lee’s treatment decisions, Eugene’s health declined, he
experienced pain and suffering, and died.”6
The complaint alleged as to the negligence cause of action,
“Despite the said knowledge that GEM was not providing
necessary skilled nursing care to its resident-patients . . . , the
[UnitedHealthcare] entities, GEM and [Healthcare Partners]
acquiesced to, encouraged, directed, aided and abetted [Dr.] Lee’s
action to discharge Eugene under circumstances where
acceptable medical practice and Medicare rules required that
Eugene remain at GEM for more intense attention to his health
care needs.” Further, the UnitedHealthcare entities, Healthcare
Partners, and Dr. Lee acted recklessly and willfully because they
“knew or should have known that they created the peril that
enrollee patients including Eugene would be at risk of injury” and
“consciously disregarded the peril and the probability of injury to
resident-patients, including Eugene.”
The complaint alleged a separate negligence cause of action
against the UnitedHealthcare entities and Healthcare Partners
based on the special relationship doctrine. The complaint
asserted Dr. Lee was an agent of Healthcare Partners, and both
Healthcare Partners and GEM were agents of the
6 Although the complaint alleged Eugene died on August 24,
2014, Eugene’s death certificate, which was attached to
Quishenberry’s successor-in-interest affidavit, shows Eugene died
on August 24, 2015. Healthcare Partners argues that Eugene
therefore lived for 269 days after his discharge from GEM’s
nursing facility, questioning whether Eugene’s death could have
been caused by his premature discharge. But whether
Quishenberry would be able to prove at trial that Eugene’s death
was caused by his allegedly premature discharge from GEM is
not before us in this appeal.
5
UnitedHealthcare entities. The complaint alleged, “Both
[Healthcare Partners] and the United Healthcare entities were
by contract and by federal law in a position to control the conduct
of [Dr.] Lee and GEM in their provision of care to Eugene . . . .
[¶] Both [Healthcare Partners] and the United Healthcare
entities actually knew that GEM and Lee would formulate their
treatment plan for Eugene so as to arrange for his early
discharge from GEM to home, and actually knew that this
treatment plan would be harmful to Eugene. Instead of
intervening to control GEM and Lee’s treatment decision making,
as by ensuring that GEM and Lee knew that further care and
treatment at GEM was a covered benefit under Eugene’s
Medicare plan, each said defendant failed to take any action, and
allowed Dr. Lee and GEM’s discharge of Eugene to home.” The
complaint added, “[Healthcare Partners] and the United
Healthcare entities were motivated by their need to increase
profit by reducing the cost of providing care to enrollees including
Eugene in a skilled nursing facility setting.”
For the elder abuse cause of action, the complaint alleged
all defendants “had responsibility for the custodial care and
custodial treatment of Eugene” because of their agreement with
the Center for Medicare and Medicaid Services (CMS).7 The
complaint alleged Healthcare Partners and the UnitedHealthcare
entities “were and are legally responsible for the physical care
7 The Centers for Medicare & Medicaid Services is part of the
United States Department of Health and Human Services and
contracts with MA plan providers. ( [as of Sept. 21, 2021], archived at
; Uhm v. Humana, Inc. (9th Cir.
2010) 620 F.3d 1134, 1138.)
6
and custody of enrollees including Eugene under Welfare &
Institutions Code section 15610.57.”
Finally, the complaint asserted a wrongful death cause of
action against all defendants for Quishenberry’s loss of
consortium.
B. Defendants’ Demurrers
On April 19, 2019 the UnitedHealthcare entities demurred
to the second amended complaint. They argued Quishenberry’s
state law claims were preempted by the Medicare Act’s
preemption clause (42 U.S.C. § 1395w-26(b)(3); Medicare Part C
preemption clause). Further, Quishenberry’s claims were based
on vicarious liability for the acts of GEM and Dr. Lee, and thus
the claims were barred under section 1371.25 of the Knox-Keene
Health Care Service Plan Act of 1975 (Health & Saf. Code, § 1340
et seq.; Knox-Keene Act). The UnitedHealthcare entities
asserted Health & Safety Code section 1371.25 was not
preempted by the Medicare Act, and if it was, Quishenberry’s
claims would also be preempted. In addition, Quishenberry
failed to state viable claims for elder abuse and wrongful death.
Healthcare Partners and Dr. Lee also demurred, likewise
asserting the Medicare Act preempted Quishenberry’s claims. In
addition, they asserted Quishenberry failed to exhaust his
administrative remedies available under the Medicare Act before
seeking judicial review. They also contended Quishenberry’s
claims for negligence and elder abuse were disguised challenges
to the financial arrangements among the defendants, which were
authorized under the Knox-Keene Act. Moreover, Dr. Lee could
not be held liable for elder abuse because he was not in a
custodial or caretaking relationship with Eugene.
7
C. The Trial Court’s Ruling and Judgment
After a hearing, on October 25, 2019 the trial court
sustained the demurrers filed by the UnitedHealthcare entities
and Healthcare Partners without leave to amend, but overruled
Dr. Lee’s demurrer. Relying on Roberts v. United Healthcare
Services, Inc. (2016) 2 Cal.App.5th 132 (Roberts), the court found
Quishenberry’s causes of action against the UnitedHealthcare
entities and Healthcare Partners were preempted by the
Medicare Act because the allegations involved defendants’
“failure to administer properly the health care plan.” In addition,
the claims against the UnitedHealthcare entities were “barred by
Health & Safety Code section 1371.25 which provides that a
healthcare service plan is not vicariously liable for acts or
omissions of the actual health care services providers.”
The trial court entered a judgment in favor of Healthcare
Partners on December 3, 2019, and a judgment in favor of the
UnitedHealthcare entities on December 6, 2019. Quishenberry
timely appealed both judgments.
DISCUSSION
A. Standard of Review
“‘In reviewing an order sustaining a demurrer, we examine
the operative complaint de novo to determine whether it alleges
facts sufficient to state a cause of action under any legal theory.’
[Citation.] ‘“‘“We treat the demurrer as admitting all material
facts properly pleaded, but not contentions, deductions or
conclusions of fact or law. . . . We also consider matters which
may be judicially noticed.” . . . Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in
their context.’”’” (Mathews v. Becerra (2019) 8 Cal.5th 756, 768;
8
accord, Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc. (2016) 1 Cal.5th 994, 1010.) “A
judgment of dismissal after a demurrer has been sustained
without leave to amend will be affirmed if proper on any grounds
stated in the demurrer, whether or not the court acted on that
ground.” (Carman v. Alvord (1982) 31 Cal.3d 318, 324; accord, Ko
v. Maxim Healthcare Services, Inc. (2020) 58 Cal.App.5th 1144,
1150.)
B. Preemption Principles
“‘“The supremacy clause of the United States Constitution
establishes a constitutional choice-of-law rule, makes federal law
paramount, and vests Congress with the power to preempt state
law.” [Citations.] Similarly, federal agencies, acting pursuant to
authorization from Congress, can issue regulations that override
state requirements. [Citations.] Preemption is foremost a
question of congressional intent: did Congress, expressly or
implicitly, seek to displace state law?’” (Solus Industrial
Innovations, LLC v. Superior Court (2018) 4 Cal.5th 316, 331
(Solus); accord, Quesada v. Herb Thyme Farms, Inc. (2015) 62
Cal.4th 298, 307-308 (Quesada).)
“‘Congress may expressly preempt state law through an
explicit preemption clause, or courts may imply preemption
under the field, conflict, or obstacle preemption doctrines.’”
(Solus, supra, 4 Cal.5th at p. 332; accord, Quesada, supra,
62 Cal.4th at p. 308.) “‘[E]xpress preemption arises when
Congress “define[s] explicitly the extent to which its enactments
pre-empt state law.’” (Parks v. MBNA America Bank, N.A. (2012)
54 Cal.4th 376, 383; accord, Viva! Internat. Voice for Animals v.
Adidas Promotional Retail Operations, Inc. (2007) 41 Cal.4th 929,
936.) “Implied preemption, for its part, may be found ‘(i) when it
9
is clear that Congress intended, by comprehensive legislation, to
occupy the entire field of regulation, leaving no room for the states
to supplement federal law [citation]; (ii) when compliance with
both federal and state regulations is an impossibility [citation]; or
(iii) when state law “stands as an obstacle to the accomplishment
and execution of the full purposes and objectives of Congress.”’”
(Solus, at p. 332; accord, Parks, at p. 383.)
“We ‘conduct[] the search for congressional intent through
the lens of a presumption against preemption. [Citations.] The
presumption is founded on “respect for the States as ‘independent
sovereigns in our federal system’”; that respect requires courts “to
assume that ‘Congress does not cavalierly pre-empt state-law
causes of action.’”’” (Solus, supra, 4 Cal.5th at p. 332; accord,
Quesada, supra, 62 Cal.4th at pp. 312-313.) “A rebuttal of the
presumption requires a demonstration that preemption was the
‘“‘clear and manifest purpose of Congress.’”’” (Quesada, at p. 313;
accord, Roberts, supra, 2 Cal.App.5th at p. 142.) The party
asserting preemption has the burden of overcoming the
presumption against preemption and demonstrating preemption
applies. (Quesada, at p. 308; Jankey v. Lee (2012) 55 Cal.4th
1038, 1048.) “Where, as here, preemption turns on questions of
law such as the meaning of a preemption clause or the
ascertainment of congressional intent, our review is de novo.”
(Roberts, at p. 142; accord, People v. Superior Court (Cal Cartage
Transportation Express, LLC) (2020) 57 Cal.App.5th 619, 627; see
Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1089, fn. 10
[“federal preemption presents a pure question of law”].)
C. The Medicare Act and Part C Preemption
The Medicare Act (42 U.S.C. § 1395 et seq.; Medicare Act)
“established a federally subsidized health insurance program
10
that is administered by the Secretary of Health and Human
Services (the Secretary) . . . . Part A of Medicare, 42 United
States Code section 1395c et seq., covers the cost of
hospitalization and related expenses that are ‘reasonable and
necessary’ for the diagnosis or treatment of illness or
injury . . . . Part B of Medicare (42 U.S.C. § 1395j et seq.)
establishes a voluntary supplementary medical insurance
program for Medicare-eligible individuals and certain other
persons over age 65, covering specified medical services, devices,
and equipment.” (McCall v. PaciCare of Cal., Inc. (2001) 25
Cal.4th 412, 416; accord, Roberts, supra, 2 Cal.App.5th pp. 139-
140.)
Under Part C of the Act, added in 1997 (42 U.S.C.
§§ 1395w-21 to 1395w-28), “Medicare beneficiaries can sign up for
a privately administered health care plan—originally called a
“Medicare+Choice” plan, but later renamed a “Medicare
Advantage” plan—that provides all of the Part A and B benefits
as well as additional benefits. [Citations.] If a beneficiary elects
to participate in such a plan, the government pays the plan’s
administrator a flat, monthly fee to provide all Medicare benefits
for that beneficiary. Because Part C limits the government’s
responsibility to adjust the monthly fee, the private health plan—
rather than the government—ends up ‘assum[ing] the risk
associated with insuring’ the beneficiary.” (Roberts, supra,
2 Cal.App.5th p. 140; accord, Martin v. PacifiCare of California,
supra, 198 Cal.App.4th at p. 1394; Yarick v. PacifiCare of
California (2009) 179 Cal.App.4th 1158, 1163 (Yarick).)
When it was first enacted in 1997, Part C contained a
preemption clause that provided, “(A) In general.—The standards
established under this subsection shall supersede any State law
or regulation (including standards described in subparagraph
11
(B)) with respect to Medicare+Choice plans which are offered by
Medicare+Choice organizations under this part to the extent such
law or regulation is inconsistent with such standards. [¶] (B)
Standards specifically superseded.—State standards relating to
the following are superseded under this paragraph: [¶] (i) Benefit
requirements. [¶] (ii) Requirements relating to inclusion or
treatment of providers. [¶] Coverage determinations (including
related appeals and grievance processes).” (Pub.L. No. 105-33,
§ 1856(b)(3) (Aug. 5, 1997) 111 Stat. 251.)
The Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (2003 Medicare Modernization Act)
amended the Medicare Part C preemption clause to contain the
current language: “Relation to state laws.—The standards
established under this part 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 this part.” (Pub.L. No. 108-173, § 232
(Dec. 8, 2003) 117 Stat. 2066; 42 U.S.C. § 1395w-26(b)(3).)
D. Quishenberry’s Claims Are Expressly Preempted by the
Medicare Part C Preemption Clause
Quishenberry’s negligence, elder abuse, and wrongful death
causes of action are based on California law in an area in which
Medicare Part C regulations have established standards for MA
plans. Under part 422 of title 42 of the Code of Federal
Regulations, the Secretary through CMS has “establishe[d]
standards and set[] forth the requirements, limitations, and
procedures for Medicare services furnished, or paid for, by
Medicare Advantage organizations through Medicare Advantage
plans.” (42 C.F.R. § 422.1(b).) The regulations include CMS’s
approval of the network of MA providers “to ensure that all
12
applicable requirements are met, including access and
availability, service area, and quality.” (42 C.F.R.
§ 422.4(a)(1)(i)).) CMS also sets standards governing provider
“selection and credentialing” for MA plans (42 C.F.R. § 422.204);
requirements relating to “an ongoing quality improvement
program” for each MA plan (42 C.F.R. § 422.152(a)); and the
requirement that “[f]or each plan, the organization must correct
all problems that come to its attention through internal
surveillance, complaints, or other mechanisms” (42 C.F.R.
§ 422.152(f)(3)). In addition, the MA organization must consult
with physicians who provide services under the MA plan
regarding the MA organization’s “medical policy, quality
improvement programs and medical management procedures”
and ensure the physicians’ “[d]ecisions with respect to utilization
management, enrollee education, coverage of services, and other
areas in which the guidelines apply are consistent with the
guidelines.” (42 C.F.R. § 422.202(b)(3)).
CMS has also promulgated regulations requiring MA
organizations to provide services “covered by Part A and Part B
(if the enrollee is entitled to benefits under both parts)” and to
comply with “CMS’s national coverage determinations,”
“[g]eneral coverage guidelines,” and “[w]ritten coverage decisions
of local Medicare contractors with jurisdiction for claims in the
area in which services are covered under the MA plan.”
(42 C.F.R. § 422.101 (b)(1-3).) Under Part A, Medicare benefits
include coverage of “post-hospital extended care services for up to
100 days during any spell of illness.” (42 U.S.C.
§ 1395d(a)(2)(A).) The regulations require an MA organization to
provide coverage of posthospital extended care services at a
skilled nursing facility if an enrollee “[has] been an inpatient in a
qualifying hospital for at least three (3) consecutive calendar
13
days, not including the day of the discharge, and must have been
discharged in or after the month he or she became eligible for
Medicare.” (Rapport v. Leavitt (W.D.N.Y. 2008) 564 F.Supp.2d
186, 188-189, citing 42 C.F.R. § 409.30(a).)
To receive coverage, “the beneficiary must (1) require
skilled nursing or rehabilitative services, (2) on a daily basis,
(3) the services must be furnished for a condition for which the
beneficiary received inpatient services, for a condition which
arose while the beneficiary was receiving care in an SNF [skilled
nursing facility] for a condition for which the beneficiary was
hospitalized, or, for MA beneficiaries whose plans waive the 3 day
hospital stay requirement, for a condition for which a physician
has determined that direct admission to an SNF was medically
appropriate without a prior hospital stay, and (4) the services
must be such that as a practical matter they can only be provided
at an SNF on an inpatient basis.” (United HealthCare Ins. Co. v.
Sebelius (D. Minn. 2011) 774 F.Supp.2d 1014, 1019, citing
42 C.F.R. § 409.31.)
Quishenberry’s common law negligence and statutory elder
abuse and wrongful death claims against the UnitedHealthcare
entities8 and Healthcare Partners are based on the premature
8 Quishenberry argues that because the complaint alleged it
is “uncertain[]” which of the UnitedHealthcare entities contracted
with CMS to provide an MA plan to Eugene, none of the entities
qualifies as an MA organization. But Quishenberry’s claims are
premised on the provision of an MA plan to Eugene, and
therefore, only the UnitedHealthcare entity that provided the MA
plan would be directly liable. Any liability of the related
UnitedHealthcare entities would be derivative of the liability of
the MA plan provider, and thus preempted to the same extent the
claims against the MA organization are preempted. (See Uhm v.
14
discharge of Eugene from GEM without adequately treating his
pressure sores or providing sufficient physical therapy. The
complaint alleged Eugene stayed for 24 days at GEM’s skilled
nursing facility, but under Medicare Eugene was entitled to an
additional 76 days of stay to receive daily physical therapy and
care for his pressure sores. Further, “[d]espite the said
knowledge that GEM was not providing necessary skilled nursing
care to its resident-patients,” Healthcare Partners and the
UnitedHealthcare entities “acquiesced to, encouraged, directed,
aided and abetted [Dr.] Lee’s action to discharge Eugene under
circumstances where acceptable medical practice and Medicare
rules required that Eugene remain at GEM for more intense
attention to his health care needs.” These allegations require a
determination of the amount of allowable Medicare benefits for
skilled nursing care, an area regulated by standards established
by CMS; thus, Quishenberry’s claims are preempted. (See 42
C.F.R. § 422.101 [MA plan must provide services covered by
Parts A and B]; 42 C.F.R. §§ 409.30 & 409.31 [setting eligibility
requirements for skilled nursing facility benefits].)9
Humana, Inc., supra, 620 F.3d at pp. 1157-1158 [claims against
parent company of MA plan provider were preempted because the
liability of the parent was “entirely derivative of its relationship
with the [MA plan provider]”].)
9 The complaint also alleged GEM nursing staff and Dr. Lee
did not properly treat Eugene’s pressure sores. The
UnitedHealthcare entities argue these allegations concern the
UnitedHealthcare entities’ oversight of GEM and Dr. Lee, which
is subject to CMS’s requirement that MA organizations “operate a
quality assurance and performance improvement program”
(42 C.F.R. § 422.504(a)(5)), maintain an “ongoing quality
improvement program,” and “correct all problems that come to its
15
Quishenberry contends his claims against Healthcare
Partners are not preempted because only an MA organization is
entitled to the benefit of the Medicare Part C preemption clause,
and it is undisputed Healthcare Partners is not an MA
organization. But the allegations concerning Eugene’s eligibility
for posthospital extended care services at a skilled nursing
facility are governed by the CMS standards regardless of whether
the claims are asserted against an MA organization. For
example, 42 Code of Federal Regulations 409.30 sets standards
for the provision of posthospital skilled nursing facility care,
without any reference to MA organizations.10 Although the
Medicare Part C preemption provision applies to preempt state
laws “with respect to MA plans which are offered by MA
organizations under this part” (42 U.S.C. § 1395w-26(b)(3)),
Healthcare Partners’s liability arises from the decision to
attention through internal surveillance, complaints, or other
mechanisms” (42 C.F.R. § 422.152(f)(3)). The UnitedHealthcare
entities are correct that to the extent the complaint alleged they
failed to provide sufficient oversight of the care provided by GEM
and Dr. Lee, Quishenberry’s claims would be preempted. As to
Healthcare Partners, the complaint alleged Dr. “Lee was
employed by [Healthcare Partners] . . . to provide physician
services to enrollees including Eugene,” but Quishenberry did not
argue in the trial court in opposition to Healthcare Partners’
demurrer, nor does he argue on appeal, that his claims against
Healthcare Partners are based on its vicarious liability as Dr.
Lee’s employer.
10 Under 42 Code of Federal Regulations section 409.30,
posthospital skilled nursing facility care “is covered only if the
beneficiary meets the requirements of this section and only for
days when he or she needs and receives care of the level
described in § 409.31.”
16
discharge Eugene based on a determination Eugene was not
eligible for additional Medicare benefits under the MA plan
offered by UnitedHealthcare entities (an MA organization).11
Our conclusion that preemption applies to Quishenberry’s
causes of action against the UnitedHealthcare entities and
against Healthcare Partners is consistent with the holdings by
the courts that have broadly construed the Medicare Part C
preemption clause. (See Roberts, supra, 2 Cal.App.5th at pp. 138,
143 [MA standards governing the content of an MA plan’s
marketing materials and adequacy of its network expressly
11 Even if express preemption did not apply, Quishenberry’s
claims would be barred by implied preemption based on the
doctrine of “obstacle preemption” because his state law claims
would “stand[] as an obstacle to the full accomplishment and
execution of congressional objectives.” (People ex rel. Harris v.
Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 778;
accord, Solus, supra, 4 Cal.5th at p. 332.) Allowing Quishenberry
to bring state law claims against Healthcare Partners based on
the premature discharge of Eugene from GEM’s skilled nursing
facility would undermine CMS’s ability to regulate Medicare
benefits coverage, including eligibility requirements for skilled
nursing facility care. (See Roberts, supra, 2 Cal.5th at p. 149
[“[C]laims based on misrepresentations in United Healthcare's
marketing materials and based on the adequacy of its plan are
impliedly preempted by the Act.”]; Yarick, supra, 179 Cal.App.4th
at pp. 1167-1168 [“If state common law judgments were
permitted to impose damages on the basis of these federally
approved contracts and quality assurance programs, the federal
authorities would lose control of the regulatory authority that is
at the very core of Medicare generally and the MA program
specifically.”].)
17
preempted state law claims for unfair competition, misleading
advertising, constructive fraud, and financial elder abuse under
Medicare Part C preemption clause]; Uhm v. Humana, Inc.,
supra, 620 F.3d 1134, 1148-1153 (Uhm) [under Medicare Part C
preemption clause, expressly incorporated into Medicare Part D,
CMS regulations governing Part D prescription drug plan’s
marketing materials preempted state law fraud and consumer
protection act claims]; Morrison v. Health Plan of Nev., Inc. (Nev.
2014) 130 Nev. 517, 523 [328 P.3d 1165, 1169] [CMS regulations
governing provider selection and quality improvement program
preempted state common law negligence claim alleging MA
organization negligently directed plaintiff to clinic and failed to
investigate clinic’s unsafe medical practices].)
As our colleagues in Division Two of this district explained
in Roberts, supra, 2 Cal.App.5th at page 143, “[T]he plain
language of section 1395w-26(b)(3) plainly spells out Congress’s
intent that the standards governing Medicare Advantage plans
will displace ‘any State law or regulation’ except for State laws
regarding licensing or plan solvency.” Further, the legislative
history of the 2003 Medicare Modernization Act—in replacing the
prior preemption clause that only superseded “state standards” in
four discrete areas and other “[s]tate laws or regulations”
inconsistent with the Part C standards with the current language
preempting “any [s]tate law or regulation”—shows Congress’s
clear intent to broaden the scope of the preemption clause.
(Roberts, at p. 143.)
As the Conference Report accompanying the 2003 House
bill explained, “Medicare law currently preempts state law or
regulation from applying to M+C plans to the extent they are
inconsistent with federal requirements imposed on M+C plans,
and specifically, relating to benefit requirements, the inclusion or
18
treatment of providers, and coverage determinations (including
related appeals and grievance processes). . . . [¶] . . . Federal
standards established by this legislation would supersede any
state law or regulation (other than state licensure laws and state
laws relating to plan solvency) with respect to MA plans offered
by MA organizations.” (H.R. Rep. No. 108-391, 1st Sess., pp. 1,
556 (2003).) The report added, “The conference agreement
clarifies that the MA program is a federal program operated
under Federal rules. State laws do not, and should not apply,
with the exception of state licensing laws or state laws related to
plan solvency. There has been some confusion in recent court
cases.” (Id. at p. 557; see Roberts, supra, 2 Cal.App.5th at p. 143.)
Moreover, in its proposed rule for the MA program, CMS
stated, “Congressional intent is now unambiguous in prohibiting
States from exercising authority over MA plans in any area other
than State licensing laws and State laws relating to plan
solvency.” (69 Fed.Reg. 46866, 46880 (Aug. 3, 2004).) CMS
added, “In 2003, section 232(a) of the [2003 Medicare
Modernization Act] . . . broadened Federal preemption of State
standards to broadly apply preemption to all State law or
regulation (other than State licensing laws or State laws relating
to plan solvency).” (69 Fed.Reg. at p. 46926.) The 2003 Medicare
Modernization Act “revision relieves uncertainty of which State
laws are preempted by ‘preempting the field’ of State laws other
than State laws on licensing and solvency.” (Id. at p. 46927.)
In its final rule, CMS noted that prior to enactment of the
2003 Medicare Modernization Act, “[t]he presumption was that a
State law was not preempted if it did not conflict with an M+C
requirement, and did not fall into one of the four specified
categories where preemption was presumed . . . . [¶] We
concluded that the [2003 Medicare Modernization Act] reversed
19
this presumption and provided that State laws are presumed to
be preempted unless they relate to licensure or solvency. We also
referenced the Congress’ intent that the MA program, as a
Federal program, operate under Federal rules, and referred to
the Conference Report as making clear the Congress’ intent to
broaden the scope of preemption.” (70 Fed.Reg. 4194, 4319
(Jan. 28, 2005).)
Quishenberry also contends the Medicare Part C
preemption clause does not preempt his state common law claims
because the clause’s “language usually is interpreted to preempt
only ‘positive state enactments,’ that is, laws and administrative
regulations, but not the common law.” (Yarick, supra, 179
Cal.App.4th 1158, 1165-1166, citing Sprietsma v. Mercury
Marine (2002) 537 U.S. 51, 63 (Sprietsma); accord, Cotton v.
StarCare Medical Group (2010) 183 Cal.App.4th 437, 450-451
(Cotton) [“The statute’s use of the term ‘standards’ and the
phrases ‘law or regulation’ and ‘with respect to MA plans’ reflects
Congress intended ‘to preempt only “positive state enactments,”
that is, laws and administrative regulations, but not the common
law.’”].) Quishenberry’s contention is not persuasive.
In Yarick, the Fifth Appellate District rejected the
defendant MA organization’s argument the Medicare Part C
preemption clause expressly preempted the plaintiff’s claims for
negligence, elder abuse, and wrongful death arising from the
allegedly premature discharge of decedent from a health care
facility to the extent the claims were based on common law duties
independent of standards under the Knox-Keene Act, but the
court found the common law claims were impliedly preempted
under the Medicare Act. (Yarick, supra, 179 Cal.App.4th at
p. 1161, 1166-1168.) In Cotton, 183 Cal.App.4th at pages 450 to
451, the Fourth Appellate District read the Medicare Part C
20
preemption provision even more narrowly than Yarick,
concluding the plaintiff’s claims for negligence, elder abuse, and
wrongful death were not preempted because the Medicare Part C
preemption clause only superseded state laws or regulation “with
respect to” MA plans, that is, state laws or regulations that
targeted MA plans. (Id. at pp. 452-453.)
We agree with our colleagues in Roberts, supra,
2 Cal.App.5th at pages 145 to 147 and decline to follow Cotton
and Yarick. As the court in Roberts explained, Cotton and Yarick
are inconsistent with Riegel v. Medtronic, Inc. (2008) 552 U.S.
312, 315, 324, in which the Supreme Court held the preemption
clause in the Medical Device Amendments of 1976 (21 U.S.C.
§ 360k), which preempted “state ‘requirements,’ reached
‘common-law duties’ as well as duties created by positive law.”
(Roberts, supra, at 2 Cal.App.5th at p. 145, quoting Riegel, at
p. 324.) The court in Roberts explained Riegel rejected “Cotton’s
holding that Part C’s preemption clause only reaches laws
specifically targeting Medicare Advantage plans” by concluding
the Medical Device Amendments of 1976’s preemption clause that
reached “‘requirements . . . with respect to’” medical devices did
not mean “that the state laws preempted by that clause ‘must
apply only to the relevant device, or only to medical devices and
not to all products and all actions in general.’” (Roberts, at pp.
146-147, quoting Riegel, supra, 552 U.S. at pp. 327-328.)
We also agree with Roberts that Sprietsma, supra, 537 U.S.
at page 51, relied on by Cotton and Yarick, is not controlling as to
the determination of the scope of Medicare Part C preemption.
(Roberts, supra, 2 Cal.App.5th at pp. 145-146.) In Sprietsma, the
Supreme Court held the language of the express preemption
clause in the Federal Boat Safety Act of 1971, which provided
that “a State . . . may not establish, continue in effect, or enforce
21
a law or regulation establishing a recreational vehicle or
associated equipment performance or other safety standard,” did
not preempt common law claims. (Sprietsma, at pp. 58, 63-64.)
The court in Roberts explained, “Sprietsma held that the clause
reached only positive state enactments and grounded its holding
on three points: (1) ‘[T]he article “a” before “law or regulation”
implies a discreteness—which is embodied in statutes and
regulations—that is not present in the common law’ (Sprietsma,
at p. 63); (2) the word ‘law’ in ‘law or regulation’ ‘might . . . be
interpreted to include regulations, which would render the
express reference to “regulation” . . . superfluous’ (ibid.); and
(3) the existence of the savings clause, which exists to ‘“save”’
‘“some significant number of common-law liability cases”’ (ibid.,
quoting Geier v. American Honda Motor Co. (2000) 529 U.S. 861,
868).” (Roberts, at pp. 145-146.)
Roberts distinguished Sprietsma as to all three bases for its
holding: “[Sprietsma’s] first and third rationales are wholly
inapplicable to Part C. Part C’s preemption clause refers to ‘any
State law or regulation’—not ‘a State law or regulation’; because
‘“the word ‘any’ has an expansive meaning, that is, ‘one or some
indiscriminately of whatever kind’”’ [citations], ‘[t]he use of “any”
negates the “discreteness” that the Court identified in Sprietsma’
. . . . Part C also has no clause saving common law actions. The
closest the Act comes is section 1395, which reserves to state law
only the ‘supervision or control’ (1) ‘over the practice of medicine
or the manner in which medical services are provided,’ (2) ‘over
the selection, tenure, or compensation of any officer or employee
of any institution, agency, or person providing health services,’ or
(3) ‘over the administration or operation of any such institution.’
(42 U.S.C. § 1395.) Even if we assume that Part C’s later-enacted
express preemption clause did not supersede this reservation
22
clause . . . , the reservation clause does not purport to preserve
common law actions dealing with the same subjects otherwise
covered by Part C’s standards—and hence does not override Part
C’s preemption clause.” (Roberts, supra, 2 Cal.App.5th at p. 146.)
As to the second concern—“that the word ‘regulation’
‘might’ be superfluous if the word ‘law’ were read broadly to reach
all positive and common law enactments”—the court in Roberts
concluded this was “too thin a reed upon which to leave all
common law actions intact when doing so, as noted above, would
disrupt the efficacy of the Center’s preapproval of marketing
materials and plan coverage.” (Roberts, supra, 2 Cal.App.5th at
p. 146.) We agree with Roberts’s reasoning that the “canon of
statutory construction that counsels against construing words as
surplusage,” albeit “a guide for ascertaining legislative intent,”
“is not a command,” and “[w]here . . . that canon leads to a result
at odds with the otherwise clearly expressed legislative intent,
the canon necessarily yields to that intent.” (Roberts, at p. 146;
accord, Uhm, supra, 620 F.3d at p. 1154 [“[G]iven the tentative
nature of Sprietsma’s superfluity point—using the word ‘might’—
as well as the key differences we have identified between the
[Federal Boat Safety Act] and the [2003 Medicare Modernization]
Act, we hold that Sprietsma does not control here.”].) Although
we generally construe words in a statue to avoid surplusage, this
canon of construction must yield to the plain language of the
Medicare Part C preemption clause and its legislative history
that clearly state Congress’s intent that Medicare Part C’s
23
standards preempt “any” state law or regulation (except for state
licensing or plan-solvency laws) with respect to MA plans.12
DISPOSITION
The judgments are affirmed.
FEUER, J.
We concur:
PERLUSS, P. J.
SEGAL, J.
12 Because the Medicare Part C preemption clause preempts
Quishenberry’s state common law and statutory claims, the trial
court did not err in sustaining the demurrers filed by the United
HealthCare entities and Healthcare Partners without leave to
amend. Further, we do no reach whether Quishenberry failed to
exhaust his administrative remedies under the Medicare Act;
whether Quishenberry’s claims were barred under Health &
Safety Code section 1371.25 of the Knox-Keene Act; and whether
Quishenberry stated viable claims for elder abuse and wrongful
death.
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