Ohio State Chiropractic Association et al v. Humana Health Plan, Inc. et al

Filing 13

Order and Decision granting Defendants' motion to dismiss (Doc. # 5 ). The complaint is dismissed without prejudice for failure to exhaust administrative remedies. Judge John R. Adams on 1/23/15. (K,C)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

Ohio State Chiropractic Association, et al., )
)
)
)
Plaintiffs,
)
)
v.
)
)
Humana Health Plan, Inc., et al.,
)
)
)
Defendants.
)
)

CASE NO: 5:14CV2313

JUDGE JOHN ADAMS
ORDER AND DECISION
(Resolving Doc. 5)

Pending before the Court is Defendants’ motion to dismiss the complaint (Doc.
5). Plaintiffs Ohio State Chiropractic Association (“OSCA”) and Dr. Thaddeus Bosman
have opposed the motion and Defendants have replied.

The motion to dismiss is

GRANTED.
I. Legal Standard
The Sixth Circuit stated the standard for reviewing a motion to dismiss in Assn. of
Cleveland Fire Fighters v. Cleveland, 502 F.3d 545 (6th Cir. 2007) as follows:
The Supreme Court has recently clarified the law with respect to what a
plaintiff must plead in order to survive a Rule 12(b)(6) motion. Bell Atl.
Corp. v. Twombly, 550 U.S. 544 (2007). The Court stated that “a
plaintiff’s obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Id. at 1964-65 (citations and
quotation marks omitted). Additionally, the Court emphasized that even
though a complaint need not contain “detailed” factual allegations, its
“[f]actual allegations must be enough to raise a right to relief above the
speculative level on the assumption that all the allegations in the
complaint are true.” Id. (internal citation and quotation marks omitted). In
so holding, the Court disavowed the oft-quoted Rule 12(b)(6) standard of
Conley v. Gibson, 355 U.S. 41, 45-46 (1957) (recognizing “the accepted

rule that a complaint should not be dismissed for failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no set of facts
in support of his claim which would entitle him to relief”), characterizing
that rule as one “best forgotten as an incomplete, negative gloss on an
accepted pleading standard.” Twombly, 550 U.S. at 563.
Id. at 548. Instead, “a complaint must contain sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 129
S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotations omitted).
If an allegation is capable of more than one inference, this Court must construe it
in the plaintiff’s favor. Columbia Natural Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th
Cir. 1995) (citing Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir. 1993)). This Court
may not grant a Rule 12(b)(6) motion merely because it may not believe the plaintiff’s
factual allegations. Id. Although this is a liberal standard of review, the plaintiff still
must do more than merely assert bare legal conclusions. Id. Specifically, the complaint
must contain “either direct or inferential allegations respecting all the material elements
to sustain a recovery under some viable legal theory.” Scheid v. Fanny Farmer Candy
Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988) (quotations and emphasis omitted).
II. Analysis
In their motion, Defendants contend that this court lacks subject matter
jurisdiction over the complaint because Plaintiffs have failed to exhaust their
administrative remedies. Plaintiffs respond that no exhaustion is required under the facts
they have pled in their complaint.
Section 405(h), made applicable to the Medicare Act by 43 U.S.C. § 1395ii,
provides that any claim “arising under” the Medicare Act must be brought exclusively
under 42 U.S.C. § 405(g). See 42 U.S .C. § 405(h); Heckler v. Ringer, 466 U.S. 602,

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614–15 (1984) (stating that section 405(h) provides that section 405(g) is the sole avenue
for judicial review for all “claim[s] arising under” the Medicare Act); Applying the
foregoing rule to the instant case, this Court concludes that, if plaintiffs’ claims against
Humana. “arise under” the Medicare Act, dismissal is proper, but, if plaintiffs’ claims
against Humana do not “arise under” the Medicare Act, then exhaustion is not required.
The United States Supreme Court seems to have adopted two alternative tests for
determining whether a claim “arises under” the Medicare Act. First, a claim “arises
under” the Medicare Act if “both the standing and the substantive basis for the
presentation” of the claim is the Act. Ringer, 466 U.S. at 615 (quoting Weinberger v.
Salfi, 422 U.S. 749, 760–61(1975)). Second, a claim “arises under” the Medicare Act if
it is “inextricably intertwined” with a claim for Medicare benefits. Ringer, 422 U.S. at
614.
Herein, Plaintiffs’ complaint alleges as follows.

Humana is a Medicare

Advantage Organization (“MAO”), or in other words, a managed health care organization
that provides Part C Medicare benefits to enrollees through privately-run Medicare
Advantage programs. Plaintiff Bosman is a non-contracted provider that serviced Human
Medicare Advantage enrollees. Bosman, along with members of the proposed class,
submitted bills to Humana for services provided. The complaint claims that Humana has
for several years paid Bosman and the class members at a rate higher than that
established by the Medicare Fee Schedule.

Subsequently, Humana began mailing

Bosman and class members overpayment recovery notifications. Bosman in particular
received notices on at least four occasions, indicating that he had received overpayments
in the amount of $1,287.48.

Humana has attempted to recoup these alleged

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overpayments by deducting amounts from bills later submitted by Bosman and the
proposed class members.

As a result of this conduct, Bosman seeks a declaratory

judgment, injunctive relief, and raises claims on behalf of himself and the proposed class
for conversion, unjust enrichment, and breach of implied contract.
Based upon the above allegations, Humana contends that the claims are
inextricably intertwined with a claim for benefits under Medicare and therefore
exhaustion is required. In response, Plaintiffs rely heavily on RenCare Ltd. V. Humana
Health Plan of Texas, Inc., 395 F.3d 555 (5th Cir. 2004) for the proposition that payment
disputes between MAOs and providers are not properly construed as claims for Medicare
benefits. In that regard, the Court finds itself in agreement with a colleague in the
Southern District of Florida that recently opined:
Additionally, RenCare is distinguishable from the facts here in several
ways. First, the Fifth Circuit rationale in RenCare relied on the regulatory
system in effect at that time, which was subsequently replaced with a new
framework which changed the way that MA organizations are paid. 42
U.S.C. § 1395w–24(a)(1)(A) (2014). Under the new framework, MA
organizations must now submit a bid estimating its costs for the following
year. Decisions on whether payments should or should not be made affect
the estimated medical expenses for the following year, which in turn affect
the government’s savings and the enrollee's premiums and benefits
received. Therefore, the way in which claims for benefits are resolved will
have a financial impact on the government and enrollees. Second, the fact
that Plaintiff and Defendant had a separate contract does not preclude
Plaintiff from its requirement to exhaust administrative remedies. The
Provider Agreement did not contain any provisions excusing Plaintiff
from exhausting the Medicare appeals process. In fact, the Provider
Agreement states that the provider agreed “to accept the terms and
conditions set forth in [the Provider] Agreement as they apply to ...
Medicare HMO plans, Medicare POS Plans, Medicare Supplement/Select
Plans [and] Other Medicare Plans.” Aff. of Joyce King, at 32.”
Associates Rehabilitation Recovery, Inc. v. Humana Medical Plan, Inc., 2014 WL
7404547, at *3 (S.D.Fla. Dec. 10, 2014).

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This Court similarly concludes that any

resolution of whether Humana has a right to recover these alleged repayments will have a
direct financial impact on the federal government. A ruling in Plaintiffs’ favor will alter
the estimated medical expenses for Humana moving forward, in turn affecting the
government’s savings and enrollees’ premiums.

Accordingly, despite their labels as

declaratory judgment and state law claims, the claims are inextricably intertwined with a
claim for Medicare benefits. As such, the claims must be administratively exhausted
before they are presented to a District Court for review.
III.

Conclusion

Defendants’ motion to dismiss is GRANTED. The complaint is hereby dismissed
without prejudice for failure to exhaust administrative remedies.
IT IS SO ORDERED.

January 23, 2015
Date

____/s/ Judge John R. Adams_______
JUDGE JOHN R. ADAMS
UNITED STATES DISTRICT COURT

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