Baker v. HM Health Insurance Company et al

Filing 27

MEMORANDUM OPINION AND ORDER DENYING IN PART AND GRANTING IN PART DEFENDANTS' 11 13 MOTIONS TO DISMISS, AND REMANDING THIS MATTER TO THE CIRCUIT COURT OF MARSHALL COUNTY. Signed by District Judge John Preston Bailey on 10/20/15. (copy to counsel via CM/ECF; Clerk of Marshall County Circuit Court)(lmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
WHEELING
VIVIAN LEE BAKER,
Plaintiff,
v.

Civil Action No. 5:15-CV-104
(BAILEY)

HM HEALTH INSURANCE COMPANY,
d/b/a HIGHMARK HEALTH INSURANCE
COMPANY and TROVER SOLUTIONS, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER DENYING IN PART AND
GRANTING IN PART DEFENDANTS’ MOTIONS TO DISMISS, AND
REMANDING THIS MATTER TO THE CIRCUIT COURT OF MARSHALL COUNTY
Currently pending before this Court are Defendant HM Health Insurance Company’s
(“Highmark”) Motion to Dismiss [Doc. 11], filed on August 31, 2015, and Defendant Trover
Solutions, Inc.’s (“Trover”) Motion to Dismiss [Doc. 13], filed on September 8, 2015.
Plaintiff filed a Response in Opposition to Highmark’s Motion to Dismiss [Doc. 17] on
September 15, 2015 and a Response in Opposition to Trover’s Motion to Dismiss [Doc.18]
on September 17, 2015. Defendant Highmark subsequently filed its reply brief [Doc. 20]
on September 21, 2015. Defendant Trover filed its reply brief [Doc. 21] on September 24,
2015. This matter is now ripe for decision. For the reasons set forth below, this Court
hereby DENIES IN PART and GRANTS IN PART the defendants’ Motions to Dismiss
[Docs. 11 and 13]. For the reasons set forth below, this matter is hereby remanded to the
Circuit Court of Marshall County.

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I. BACKGROUND
A.

Removal and Allegations in the Complaint:
Plaintiff filed the instant Complaint [Doc. 1] in the Circuit Court of Marshall County

on July 10, 2015. On December 8, 2012, plaintiff alleges that she was negligently struck
by a 2011 Ford Fusion SE while driving southbound on Jacob Street in Wheeling, West
Virginia [Doc. 1-1 at ¶ 7]. As a result of the accident, plaintiff claims that she received
medical treatment and incurred medical bills (Id. at ¶ 8).

During this time, plaintiff

maintained a “Freedom Blue PPO” insurance policy with Defendant Highmark (Id. at ¶ 9).
Plaintiff claims that while defendant Highmark initially paid most of her medical bills, the
company thereafter maintained a subrogation lien and demanded reimbursement for the
amount that they paid on her behalf (Id. at ¶¶ 10-11). Defendant Highmark hired defendant
Trover to collect reimbursement from plaintiff, who, in turn, provided plaintiff a
“Consolidated Statement of Benefits” outlining the medical providers, dates of service,
diagnosis codes, billed amounts, and actual bills for which the defendants were seeking
reimbursement (Id. at ¶¶ 12-13).
On or about April 23, 2014, defendant Trover agreed to accept $1,893.35 as what
was purported to be full and final settlement of defendant Highmark’s subrogation claim
against plaintiff (Id. at ¶ 14).

On or about September 25, 2014, defendant Highmark

contacted plaintiff’s counsel and allegedly confirmed that the agreed-upon $1,893.35 was
sufficient to satisfy any and all subrogation liens maintained by Defendant Highmark (Id.
at ¶ 15). On October 13, 2014, plaintiff authorized her counsel to issue a check to
defendant Trover to satisfy the subrogation liens in accordance with the parties’ agreement
(Id. at ¶ 16).
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In November 2014, plaintiff began receiving medical bills for the same medical bills
that had been initially paid by defendant Highmark, which plaintiff subsequently settled via
the subrogation payment (Id. at ¶ 17). Plaintiff alleges that she received those bills
because defendant Highmark withdrew payment for her medical bills, despite the fact that
they had already received and accepted reimbursement for the same (Id. at ¶ 18-19).
Plaintiff claims that because of the defendants’ collective actions, she was essentially
double-charged for the medical bills, as she paid both a subrogation lien and the bills
themselves (Id. at ¶ 20-21). As such, plaintiff filed suit and alleged actions sounding in
Fraud (Count I), Constructive Fraud (Count II), Unjust Enrichment (Count III), Bad Faith
(Count IV), the Tort of Outrage (Count V), and Negligence (Count VI) (Id. at ¶¶ 22-48).
Plaintiff seeks both Punitive and General damages as part of her action (Id. at ¶¶ 49-53).
On August 10, 2015, defendant Highmark filed a timely notice of removal pursuant
to 28 U.S.C. §§ 1331, 1441(a), and 1446(b) [Doc. 1 at ¶¶ 2-7]. In so doing, defendant
Highmark alleged that subject matter jurisdiction was proper before this Court, as the action
arises under the laws of the United States, see 28 U.S.C. § 1331, specifically portions of
the Medicare Act, Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395, et seq., and the
Federal Officer Removal Statute, 28 U.S.C. § 1442(a)(1) (Id. at ¶ 5-7). In so removing,
Defendant Highmark noted that the instant case met the four-prong test necessary for
removal under that statute, because it assists the Secretary of Centers for Medicare and
Medicaid Services in providing Medicare insurance (Id. at ¶ 18-24).
B.

Procedural History and Brief Summary of Defendants’ Motions to Dismiss, Plaintiff’s
Responses, and Defendants’ Replies in Opposition:
In the Motions to Dismiss pending before this Court, both defendant Highmark and
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Trover seek to dismiss plaintiff’s Complaint pursuant to F. R. Civ. P. 12(b)(1) and 12(b)(6).
This Court notes that defendants’ arguments are quite similar, both from a substantive and
stylistic standpoint. In short, both defendants contend that because plaintiff has not
exercised the full extent of administrative remedies available to her under the Medicare Act,
this Court purportedly lacks jurisdiction to hear her claim [Doc. 11-1 at 12-19; Doc. 13-1 at
8-13]. Defendants also both argue that plaintiff’s claims are expressly preempted by the
Medicare Act, pursuant to statutory language and case law which construes that language
as preventing prospective plaintiffs from bringing state law claims like those advanced by
plaintiff here [Doc. 11-1 at 7-12; Doc. 13-1 at 13-17]. Defendant Trover also argues in its
Motion to Dismiss that even if plaintiff’s claims are not dismissed via the preemption or
administrative remedy arguments, then plaintiff’s Outrage and Punitive Damages claims
must still be dismissed as she has pled “bare recitations” of the elements of those claims
[Doc. 13-1 at 17-20].
Plaintiff filed her Response in Opposition to Highmark’s Motion to Dismiss [Doc. 17]
on September 14, 2015 and her Response in Opposition to Trover’s Motion to Dismiss
[Doc.18] on September 17, 2015. In her response, plaintiff contends that her cause of
action does not challenge defendant Highmark’s “right to reimbursement under the
Medicare Act,” but seeks redress for defendants’ unlawful conduct in “making conditional
payments, seeking reimbursement, and accepting plaintiff’s reimbursement check” [Doc.
17 at 4-5; Doc. 18 at 5]. As such, plaintiff claims that this case does not arise under the
Medicare Act, nor is it inextricably intertwined with the same [Id.].
In their Replies in Support of Their Motions to Dismiss, Defendants counter by
quoting portions of the Complaint which purport to show that plaintiff’s claims are
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inextricably intertwined with the Medicare Act [Doc. 20 at 4-5; Doc. 21 at 2-3]. As such,
Defendants contend that plaintiff’s claims are completely preempted by the Medicare Act
and that plaintiff has failed to exhaust her administrative remedies under that act [Id. at 5-7;
Id. at 4-7]. This matter is now fully briefed, and is ripe for consideration by this Court.
II. LEGAL STANDARD
Fed. R. Civ. P. 12(b)(1):
Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, dismissal of a
claim is required if the Court lacks subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1).
Under Article III, § 2 of the Constitution, a federal court may exercise jurisdiction only over
a “case or controversy.” Where the question sought to be adjudicated has been mooted
by developments subsequent to the filing of the complaint, no justiciable controversy is
presented. Flast v. Cohen, 392 U.S. 83, 95 (1968); Marshall v. Meadows, 105 F.3d 904,
906 (4th Cir. 1997) (“One of the bulwark principles of constitutional law is the ‘cases’ or
‘controversies’ requirement for justiciability referred to in Article III.”). If events occur
subsequent to the filing of a lawsuit that divest the court of the ability to award meaningful
relief, the case must be dismissed as moot. Ross v. Reed, 719 F.2d 689, 693-94 (4th Cir.
1983).
III. DISCUSSION
A.

Plaintiff’s Claims Are Not Preempted by the Medicare Act, Nor Are They Subject to
Administrative Review:
As noted above, both defendants argue that plaintiff’s claims are expressly

preempted by the Medicare Act, pursuant to statutory language and case law which
construes that language as preventing prospective plaintiffs from bringing state law claims
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like those advanced by plaintiff here [Doc. 11-1 at 7-12; Doc. 13-1 at 13-17]. Defendant
Highmark, for example, contends that to allow plaintiff’s claims to proceed would, “render
the federal standards directly addressing these issues largely meaningless.” [Doc. 20 at 2].
Defendants also contend that because plaintiff has not exercised the full extent of
administrative remedies available to her under the Medicare Act, this Court purportedly
lacks jurisdiction to hear her claim [Doc. 11-1 at 12-19; Doc. 13-1 at 8-13]. However, while
Congress may have desired that the Medicare Act have broad preemptive force to better
facilitate that statute’s underlying policy goals, such preemptive force was not intended to
give Medicare Advantage providers, like defendant Highmark and its agent, Defendant
Trover, effective immunity from state law claims grounded in alleged independent
fraudulent and/or tortious activity.
It is first necessary to determine whether this case was properly removed at the
outset. Cases may be removed from state court to federal court pursuant to 28 U.S.C. §
1441(a), which authorizes removal of state court actions over “which the district courts of
the United States have original jurisdiction.” District courts have original jurisdiction over
claims “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §
1331. The well-pleaded complaint rule provides that a cause of action “arises under”
federal law only when federal law creates the cause of action and it is presented on the
face of the plaintiff's properly pleaded complaint. Gunn v. Minton, 133 S.Ct. 1059, 10641065 (2013) (citing Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463
U.S. 1, 10 (1983)).

While Federal preemption is often raised as a defense, the

well-pleaded complaint rule precludes a defendant from removing a case to federal court

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even if a federal defense is the only issue in a given case. Caterpillar Inc. v. Williams, 482
U.S. 386, 392–93 (1987) (citations omitted).
The courts recognize a narrow exception to the well-pleaded complaint rule, known
as the “complete preemption” doctrine. In the case of complete preemption, “Congress so
completely pre-empt[s] a particular area that any civil complaint raising this select group
of claims is necessarily federal in character.” Darcangelo v. Verizon Communications,
Inc., 292 F.3d 181, 187 (4th Cir. 2002). Under this doctrine, “if the subject matter of a
putative state law claim has been totally subsumed by federal law- such that state law
cannot even treat on the subject matter – then removal is appropriate.” Lontz v. Tharp,
413 F.3d 435 (4th Cir. 2005). Such claims are “rare.” Id. In the instant action, this Court
determines that the complete preemption doctrine does not apply. See Berman v.
Abington Radiology Associates, Inc., 1997 WL 534804 (E.D. Pa. 1997). That is to say,
the enforcement provision of the Medicare Act which would preempt Plaintiff’s claims, 42
U.S.C. §§ 405(h)-(g), does not “‘create a federal cause of action vindicating the same
interest that the plaintiff's cause of action seeks to vindicate.’” Id. (citations omitted).
Defendants correctly note that the “sole avenue for judicial review for all claims
arising under the Medicare Act,” is through the exhaustion of administrative remedies
available under 42 U.S.C. § 405(g). Heckler v. Ringer, 466 U.S. 602, 615 (1984); see also
Buckner v. Heckler, 804 F.2d 258, 259 (4th Cir. 1986). In so deciding whether § 405(g)
applies, it is necessary determine whether the claim “arises under” the Medicare Act; or is
otherwise so “‘inextricably intertwined’ with a claim for benefits that any judicial review is
barred.” See Starnes v. Schweiker, 748 F.2d. 217 (4th Cir. 1984); see also Heckler, 466

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U.S. at 614-615. Per the Supreme Court’s holding in Weinberger, claims “arising under”
the Medicare Act include those in which “both the standing and the substantive basis for
the presentation of the claims” is the Social Security Act. Weinberger v. Salfi, 422 U.S.
760, 761 (1975). If this Court determines that Plaintiff’s claims arise under the Medicare
Act, then it would not have jurisdiction to hear Plaintiff’s claim. See Potts v. Rawlings Co.,
LLC, 897 F.Supp.2d 185, 191-192 (S.D.N.Y. 2012).
Defendants cite a number of cases in support of their contentions that plaintiff’s
claims are preempted by the Medicare Act [Doc. 21 at 3], nearly all of which involve
instances where claims were inextricably intertwined with claims for benefits under the Act.
See, e.g., Id.; see also Einhorn v. CarePlus Health Plans, Inc., 43 F.Supp.3d 1329 (S.D.
Fla. 2014) (where a plaintiff sued a Medicare Advantage provider that sought to collect on
a Medicare lien, the Court held that such a claim was preempted by the Medicare Act);
Kaiser v. Blue Cross of Ca., 347 F.3d 1107, 1112 (9th Cir. 2003) (owners and operators
of a home health care agency sought relief after overpayment by Medicare Advantage
companies); Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653, 662 (E.D. La.
2014) (where an injured party sought a declaratory judgment stating that Defendant
Medicare Advantage provider was not entitled to reimbursement); Baughan v. Thompson,
2003 WL 22295354, at *2 (W.D. Va. Sept. 30, 2003). However, there is a key factual
difference between the cases cited by the defendants and the instant case: none of those
cases involve Medicare Advantage providers allegedly committing fraudulent or tortious
acts after receiving reimbursement.
In the instant case, plaintiff claims that defendants Highmark and Trover allegedly

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withdrew payments for treatment that she sought after she was injured in an automobile
accident, but, again, did so only after they accepted subrogation payments for those
payments [Doc. 1-1 at ¶ 14-21]. As plaintiff notes in her Responses, the defendants
fundamentally mis-categorize her claims [Doc. 17 at 5; Doc. 18 at 5]. Plaintiff has not
disputed her rights under the policy or whether the defendants are entitled to
reimbursement [Id.]. Instead, she complains that defendants allegedly, “fraudulently
deceived and lied to the plaintiff . . . so that (they) could receive (benefits) without having
to part with anything of value” [Id.]. As such, this Court finds that plaintiff’s claims do not
arise under the Medicare Act, and are not subject to preemption or administrative review
under that statute.
However, this Court concludes that it lacks subject matter jurisdiction to hear this
case, and must remand this action to the Circuit Court for Marshall County. As both
Defendants have raised that issue in their motions, this Court grants their motions in that
regard and pursuant to Fed. R. Civ. P. 12(b)(1).
IV. CONCLUSION
For the foregoing reasons, this Court finds that the Defendants’ Motions to Dismiss
[Docs. 11 and 13] should be, and hereby are DENIED IN PART and GRANTED IN PART
to the extent that this Court lacks subject matter jurisdiction pursuant to Fed. R. Civ. P.
12(b)(1). This matter is hereby remanded to the Circuit Court of Marshall County.
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to all counsel of record herein
and to transmit a copy to the Clerk of the Court of Marshall County.

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DATED: October 20, 2015

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