Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00583/USCOURTS-almd-2_07-cv-00583-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 42:1395w21 Medicare Act

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On December 20, 2005, Pacificare merged with United Healthcare Services, Inc. 1

Plaintiffs have sued both Pacificare, as well as United Healthcare Services as a successor in interest.

For simplicity, this opinion will refer to both of these entities collectively as “Pacificare”.

IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

ROY LASSITER, et al., )

)

Plaintiffs, )

)

v. ) CASE NO. 2:07-cv-583-MEF

)

PACIFICARE LIFE & HEALTH ) (WO - Recommended for Publication)

INSURANCE COMPANY, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This cause is now before the Court on Plaintiffs’s Motion to Remand (Doc. # 9). 

Plaintiffs originally filed their complaint in the Circuit Court for Bullock County, Alabama,

alleging fraud and other state law claims against Pacificare Life and Health Insurance

Company (“Pacificare”) and Robert Bell (“Bell”), one of Pacificare’s sales agents, for 1

conduct arising out of the purchase of a Pacificare Medicare insurance policy. Defendants

argue that this Court has subject matter jurisdiction over the Plaintiffs’ claims under the

doctrine of complete preemption. The Court has thoroughly considered the submissions of

the parties in support of and in opposition to the motion. For the reasons set forth in this

Memorandum Opinion and Order, the Court finds that subject matter jurisdiction is lacking.

Therefore, the Motion to Remand is due to be GRANTED.

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I. FACTS AND PROCEDURAL HISTORY

Prior to May 23, 2005, Plaintiffs obtained health care services through Medicare parts

A and B. Through Medicare, Plaintiffs were able to obtain medical services from any

medical service provider anywhere in the country that accepted Medicare. In May 2005,

Plaintiffs were approached by Bell, a Pacificare sales agent, for the purpose of soliciting their

enrollment in Pacificare’s “Secure Horizons” plan, which is a “Medicare Advantage” plan,

a privately-run managed care service operating under Medicare parts C and D. Plaintiffs

elected to enroll in the Secure Horizons plan based on the representations of the sales agent.

However, by enrolling in Secure Horizons, Plaintiffs were only covered for medical services

provided by medical providers in the Pacificare network.

Plaintiffs claim that the true nature of the Secure Horizons plan was misrepresented

to them, and that they were misled to believe that they could continue to visit their regular

healthcare providers. Plaintiffs continued to visit their regular doctors and have incurred bills

as a result of these uncovered services. On May 23, 2007, Plaintiffs filed this claim in the

Circuit Court for Bullock County, Alabama, alleging various state law tort claims against

Pacificare and Bell. On June 25, 2007, Defendants removed the case to this court on the

grounds that Plaintiffs’ claims are completely preempted by federal law. On July 17, 2007,

Plaintiffs filed the instant Motion to Remand the case back to state court.

II. DISCUSSION

The Defendants argue that this Court has jurisdiction because the Plaintiffs’ state law

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claims are completely preempted by the Medicare Prescription Drug, Improvement, and

Modernization Act of 2003 (“MMA”). Federal courts are courts of limited jurisdiction. See,

e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Burns v. Windsor

Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). As such, they may only hear cases that they

have been authorized to hear by the Constitution or the Congress of the United States.

Kokkonen, 511 U.S. at 377. The burden of establishing that subject matter jurisdiction exists

rests upon the party asserting jurisdiction. Id. Pacificare, as the removing party, bears the

burden of proving federal jurisdiction in this case. See, e.g., Leonard v. Enterprise Rent a

Car, 279 F.3d 967, 972 (11th Cir. 2002). Pacificare’s sole argument for federal jurisdiction

is that the 2003 amendment to 28 U.S.C. § 1395w-26(b)(3) completely preempts Plaintiffs’

state law claims.

A civil action filed in a state court may be removed to federal court if the claim is one

“arising under” federal law. Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6 (2003). In

order to determine whether a complaint “arises under” federal law, a court must examine the

“well pleaded” allegations of the complaint and ignore potential defenses. Id. A suit arises

under the Constitution and laws of the United States only when the plaintiffs statement of his

own cause of action shows that it is based upon federal law or the Constitution. Id. As a

general rule, absent diversity jurisdiction, a case will not be removable if the complaint does

not affirmatively allege a federal claim. Id. However, a state claim may be removed to

federal court under two narrow exceptions to the well pleaded complaint rule: (1) when

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Congress expressly provides for removal, or (2) when a federal statute wholly displaces the

state-law cause of action through complete preemption. Id. at 8.

Consequently, federal jurisdiction exists only if the doctrine of complete preemption

applies. Complete preemption is to be distinguished from ordinary preemption. In their

brief, Pacificare confuses the two doctrines by citing cases applying ordinary preemption

rather than complete preemption. Ordinary preemption is an affirmative defense, which may

be raised in both state and federal court, when a plaintiff’s state law claims are substantively

displaced by federal law. Geddes v. American Airlines, Inc., 321 F.3d 1349, 1352 (11th Cir.

2003). In contrast, complete preemption is a jurisdictional rule for assessing federal

jurisdiction when a complaint purports to raise only state law claims. Id. at 1353. 

No circuit court of appeals has addressed the question before this Court of whether

the MMA completely preempts state law claims and thereby confers federal jurisdiction.

However, the issue has been addressed by other district courts. In Harris v. Pacificare Life

& Health Ins. Co., — F. Supp. 2d ----, 2007 WL 2846477 (M.D. Ala. Sept. 28, 2007)

(DeMent, J.), Pacificare attempted to remove state law claims arising out of the sale of a

Medicare insurance policy on the ground that § 1395w-26(b)(3) demonstrated Congress’s

intent for the MMA to completely preempt state law claims, which is the exact same

argument they are making to this Court. In Harris, Judge DeMent held that the MMA did

not completely preempt state law claims because it does not create an exclusive cause of

action. See Harris, 2007 WL 2846477, at *10-12. Furthermore, Judge Granade reached the

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same conclusion in Bolden v. Healthspring of Ala., Inc., No. CV07-413 (S.D. Ala. October

2, 2007). This Court is aware that one court has held that the MMA does completely

preempt state law claims. See Dial v. Healthspring of Ala., Inc., 501 F. Supp. 2d 1348 (S.D.

Ala. 2007).

This Court is persuaded by the reasoning in Harris and Bolden that the MMA does

not completely preempt state law claims. A federal statute does not completely preempt

state law claims unless Congress intended the federal statute to provide the “exclusive cause

of action.” See Beneficial Nat’l Bank, 539 U.S. at 8; Geddes, 321 F.3d at 1353 (“The

Supreme Court has cautioned that complete preemption can be found only in statutes with

‘extraordinary’ preemptive force. Moreover, that ‘extraordinary’ preemptive force must be

manifest in the clearly expressed intent of Congress.” (internal citations omitted)). The

MMA provides in § 1395w-26(b)(3) that “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.”

This language is not sufficient to demonstrate a clear intent by Congress to create an

exclusive private federal remedy. See Harris, 2007 WL 2846477, at *11-12. Indeed,

Pacificare compares this language to the preemption language in the Employee Retirement

Income Security Act of 1974 (“ERISA”) § 514(a), codified at 29 U.S.C. § 1144(a). While

ERISA is one of the few statutes where the Supreme Court has found complete preemption,

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it is well settled that complete preemption arises from ERISA’s civil enforcement scheme in

§ 502(a), codified at 29 U.S.C. § 1132(a), and that § 514(a) establishes only ordinary

preemption. See Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1211-12 (11th Cir.

1999). Accordingly, § 1395w-26(b)(3) is insufficient to establish a clear Congressional

intent that the MMA provides an exclusive private federal remedy. Therefore, this Court

lacks jurisdiction over the Plaintiffs’ claims and the case must be remanded back to the state

court.

III. CONCLUSION

For the reasons set forth above, it is hereby ORDERED that:

(1) Plaintiff’s Motion to Remand (Doc. # 9) is GRANTED;

(2) This case is REMANDED to the Circuit Court for Bullock County, Alabama;

(3) Any other pending motions are left for resolution by the Circuit Court for Bullock

County, Alabama; and

(4) The Clerk is DIRECTED to take appropriate steps to promptly effect the remand.

DONE this the 13 day of December, 2007. th

 /s/ Mark E. Fuller 

CHIEF UNITED STATES DISTRICT JUDGE

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