NAOMI AYLWARD V. SELECTHEALTH, INC., No. 20-55653 (9th Cir. 2022)
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Plaintiff filed a lawsuit alleging state law claims arising from SelectHealth’s administration of her deceased husband’s MA plan and his death. Under Part C of the Medicare Act, beneficiaries can enroll in an MA plan and receive Medicare benefits through private MA organizations instead of the government. SelectHealth removed the action to federal court on the basis of diversity jurisdiction.
The Ninth Circuit affirmed the district court’s summary judgment in favor of SelectHealth, Inc. because the Medicare Act’s express preemption provision, 42 U.S.C. Section 1395w-26(b)(3), barred Plaintiff’s state law claims.
The court held that Section 1872 of Title XVIII of the SSA provides that Section 205(h) is applicable to cases under the Medicare Act to the same extent as in cases under Title II. The court concluded that enrollees in an MA plan must likewise first exhaust their administrative remedies before seeking judicial review of a claim for benefits.
Next, the court concluded that Plaintiff’s claims were not subject to the SSA’s exhaustion requirement because the dispute was not whether Plaintiff’s husband received a favorable outcome from the internal benefits determination process but rather whether he should have received the services earlier.
Further, the court held that Plaintiff’s claim that SelectHealth breached a duty to process timely her husband’s October 7, 2016, appeal was expressly preempted. Because the standards established under Part C supersede any state law duty that would impose obligations of MA plans on the same subject.
Court Description: Medicare. The panel affirmed the district court’s summary judgment in favor of SelectHealth, Inc., a health insurance benefits company, in a case involving disputed benefits under a Medicare Advantage (“MA”) plan governed by Part C of Title XVIII of the Social Security Act (“SSA”), popularly known as the Medicare Act. Naomi Aylward filed a lawsuit in state court, alleging state law claims arising from SelectHealth’s administration of her deceased husband’s MA plan and his death. Under Part C of the Medicare Act, beneficiaries can enroll in an MA plan and receive Medicare benefits through private MA organizations instead of the government. SelectHealth removed the action to federal court on the basis of diversity jurisdiction. * The Honorable Jed S. Rakoff, United States District Judge for the Southern District of New York, sitting by designation. AYLWARD V. SELECTHEALTH 3 The panel first considered whether plaintiff’s claims must be exhausted through the Medicare Act’s administrative review scheme. Section 205(h) of Title II of the SSA makes the judicial review provided in § 205(g) the exclusive means for reviewing administrative determinations under Title II. The panel held that Section 1872 of Title XVIII of the SSA provides that § 205(h) is applicable to cases under the Medicare Act to the same extent as in cases under Title II. The panel concluded that enrollees in an MA plan must likewise first exhaust their administrative remedies before seeking judicial review of a claim for benefits. The panel next considered whether plaintiff exhausted her administrative remedies. The panel concluded that plaintiff’s claims were not subject to the SSA’s exhaustion requirement because the dispute was not whether plaintiff’s husband received a favorable outcome from the internal benefits determination process but rather whether he should have received the services earlier. This is not an issue that has an administrative remedy under § 1852(g)(5). Claims outside the administrative process are not ones that can give rise to the sort of administrative decision that triggers applicability of § 205(h) and, in turn, § 205(g). The panel next considered whether the Medicare Act preempted plaintiff’s state law claims. First, the panel held that plaintiff’s claim that SelectHealth breached a duty to process timely her husband’s October 7, 2016, appeal was expressly preempted. Because the standards established under Part C expressly prescribe the relevant duties of MA plans with respect to when expedited treatment is required and what timeframes apply, those standards supersede any state law duty that would impose obligations of MA plans on the same subject. Accordingly, to the extent plaintiff’s state 4 AYLWARD V. SELECTHEALTH law claims depend on the timeliness of SelectHealth’s processing of Mr. Aylward’s appeal, the panel held that the Medicare Act preempted those claims, whether or not they would be inconsistent with federal regulations. Second, the panel held that the Medicare Act also preempted plaintiff’s claims based on SelectHealth’s alleged breach of duty to investigate properly Mr. Aylward’s August 23, 2016, preauthorization request for consultation and testing at St. Joseph’s Hospital and Medical Center in Phoenix, Arizona. The panel held this second asserted duty was essentially identical to the first alleged duty: a duty to process the claim for benefits, and receive a favorable decision, more quickly. For the same reasons discussed for the October 7, 2016, appeal, the panel concluded that a state law claim based on a duty to process claims for benefits in a timely manner was preempted by the Part C regulations that set forth the timeframes for initial determinations and reconsideration decisions. Because the Medicare Act’s express preemption provision, 42 U.S.C. §1395w-26(b)(3), barred plaintiff’s state law claims, the panel affirmed the district court’s summary judgment in favor of SelectHealth.
This opinion or order relates to an opinion or order originally issued on April 13, 2022.
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