Dial v. Healthspring of Alabama, Inc.

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUG 26, 2008
No. 07-15529 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 07-00412-CV-2-KD-C
DELLA DIAL,
A. C. JOHNSON,
NANCY NORFLEET,
CONSTANCE TAYLOR,
ABRAHAM WASHINGTON,
GEORGIA M. WOODS,
LAURA B. WASHINGTON,
Plaintiffs-Appellants,
versus
HEALTHSPRING OF ALABAMA, INC.,
MARCUS TROTTER,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Alabama
_________________________
(August 26, 2008)
Before WILSON and PRYOR, Circuit Judges, and MIDDLEBROOKS,* District
Judge.
PRYOR, Circuit Judge:
This appeal presents the question whether a complaint about conduct
regulated by the Medicare Act filed in a state court may be removed to a federal
court. Seven individual beneficiaries of the federal Medicare program filed a
complaint against Healthspring of Alabama, Inc., the administrator of a Medicare
Advantage health-insurance plan. Healthspring removed the case to a federal court
and asserted that the complaint is “founded on a claim or right arising under the . .
. laws of the United States,” 28 U.S.C. § 1441, because it asserts claims that arise
under the Medicare Act. The district court concluded that at least one claim for
relief arises under federal law because the federal Medicare Act “wholly displaces
the state-law cause of action through complete preemption,” Beneficial Nat’l Bank
v. Anderson, 539 U.S. 1, 6, 124 S. Ct. 2058, 2062 (2003), and denied the
beneficiaries’ motion to remand. Because removal jurisdiction exists only where
“the district courts have original jurisdiction,” 28 U.S.C. § 1441, and the Medicare
statute “strips federal courts of primary federal-question subject matter
jurisdiction” over claims that arise under the Medicare Act, Cochran v. U.S. Health
*
Honorable Donald M. Middlebrooks, United States District Judge for the Southern
District of Florida, sitting by designation.
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Care Fin. Admin., 291 F.3d 775, 779 (11th Cir. 2002), we reverse with instructions
to the district court to remand the case to the state court.
I. BACKGROUND
Della Dial, A.C. Johnson, Nancy Porter Norfleet, Constance Taylor,
Abraham Washington, Laura B. Washington, and Georgia M. Woods are
beneficiaries of Medicare, a social-security program that provides
federally-subsidized health insurance and is administered by the Department of
Health and Human Services through the Centers for Medicare and Medicaid
Services. The benefits available under Medicare are prescribed by law and divided
into four “parts.” Part A provides hospital, skilled nursing, home health, and
hospice care benefits. Part B provides physician and other outpatient services.
Part D provides outpatient prescription drug benefits. The traditional Medicare
structure allows beneficiaries access to Parts A, B, and D as separate benefits. Part
C provides beneficiaries with an option to instead obtain the benefits available
under Parts A and B as well as some additional benefits through a health insurance
plan, known as a “Medicare Advantage Plan,” administered by a private company.
See generally Matthews v. Leavitt, 452 F.3d 145, 147 n.1 (2d Cir. 2006).
Dial and the other six persons had been beneficiaries under Parts A and B of
Medicare until 2005, when they enrolled in a Medicare Advantage Plan
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administered by Healthspring, known as the “Seniors First” plan. According to the
complaint, an agent of Healthspring met with each beneficiary. The beneficiaries
enrolled in the Seniors First plan based on representations made by the agent.
The beneficiaries filed a complaint against Healthspring in the Circuit Court
of Perry County, Alabama. The complaint asserts twelve counts, which are
phrased as claims under Alabama law. The complaint also states that “[t]he
Plaintiffs make no claims pursuant to any Federal Law, nor do the Plaintiffs make
any claims which would give rise to Federal jurisdiction. Plaintiffs’ claims arise
solely from state law.”
Healthspring removed the action to the federal district court under the
general federal-question removal statute, 28 U.S.C. § 1441(b), and asserted that the
beneficiaries’ claims are “completely preempted by federal law.” The district court
denied the beneficiaries’ motion to remand. The district court later granted the
plaintiffs’ application for an interlocutory appeal under 28 U.S.C. § 1292(b).
II. STANDARD OF REVIEW
We review de novo the denial of a motion to remand. Florence v. Crescent
Res., LLC., 484 F.3d 1293, 1297 (11th Cir. 2007).
III. DISCUSSION
Healthspring removed this action under the general federal-question removal
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statute, which provides, “Any civil action of which the district courts have original
jurisdiction founded on a claim or right arising under the Constitution, treaties or
laws of the United States shall be removable without regard to the citizenship or
residence of the parties.” 28 U.S.C. § 1441(b). To be removable under this statute,
the action must be founded on a claim or right arising under federal law, see Rivet
v. Regions Bank of La., 577 U.S. 470, 475, 118 S. Ct. 921, 925 (1998), and the
action must be one of which the district court has original jurisdiction, which
means that the action “originally could have been filed in federal court.”
Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429 (1987).
Ordinarily, “[t]o determine whether [a] claim arises under federal law, we
examine the ‘well pleaded’ allegations of the complaint and ignore potential
defenses.” Anderson, 539 U.S. at 6, 123 S. Ct. at 2062. The complaint expressly
alleges only state-law claims, but Healthspring argues that the complaint contains
claims that fall within an exception to the well-pleaded complaint rule that applies
“when a federal statute wholly displaces the state-law cause of action through
complete pre-emption.” Id. at 9, 123 S. Ct. at 2063. Complete preemption occurs
when a federal statute both preempts state substantive law and “provides the
exclusive cause of action for the claim asserted.” Id. at 8, 123 S. Ct. at 2063.
Healthspring argues that the Medicare Act expressly preempts state substantive
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law, see 42 U.S.C. § 1395w-26, and provides the exclusive remedy for at least
some of the allegations in the complaint, see 42 U.S.C. § 1395w-22(g)(5). Another
statute grants to district courts “original jurisdiction of all civil actions arising
under” federal law. 28 U.S.C. § 1331. If the complaint contains at least one claim
that arises under federal law within the meaning of section 1331, then the district
court has supplemental jurisdiction over related claims, even if those claims do not
arise under federal law. 28 U.S.C. § 1367(a).
The wrinkle in this appeal is that the only source of federal law that
Healthspring invokes in support of removal is the Medicare Act, which “strips
federal courts of primary federal-question subject matter jurisdiction” over claims
that arise under that Act. Cochran, 391 F.3d at 779 (citing 42 U.S.C. § 405(h )). In
place of that primary federal-question jurisdiction, the Act provides for an
administrative hearing before the Secretary of the Department of Health and
Human Services. 42 U.S.C. § 1395w-22(g)(5). If the amount in controversy is
sufficient, the Act provides for “judicial review of the Secretary’s final decision” in
the form of a civil action in federal district court against the Secretary. Id.; 42
U.S.C. § 405(g). This procedure for judicial review of the administrative decision
of the Secretary “to the exclusion of 28 U.S.C. § 1331, is the sole avenue for
judicial review for all ‘claim[s] arising under’ the Medicare Act.” Heckler v.
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Ringer, 466 U.S. 602, 614, 104 S. Ct. 2020 (1984).
Because the plaintiffs’ action is not a “civil action of which the district
courts have original jurisdiction,” the action is not removable. 28 U.S.C. §
1441(b); Williams, 482 U.S. at 392, 107 S. Ct. at 2429. We need not decide
whether the complaint against Healthspring arises under the Medicare Act because
the district court lacks removal jurisdiction in any event. Even if we assume that at
least one of the beneficiaries’ claims for relief arises under the Medicare Act, the
district court would lack subject-matter jurisdiction over their complaint because it
is not against the Secretary of the Department of Health and Human Services for
review of an administrative decision.
IV. CONCLUSION
The denial of the plaintiffs’ motion to remand is REVERSED. We
REMAND to the district court with instructions to remand the case to the state
court from which it was removed.
REVERSED and REMANDED.
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