4844-5738-4647.10 

UNITED STATES DISTRICT COURT FOR THE 

SOUTHERN DISTRICT OF FLORIDA 

Ft. Lauderdale Division 

Case No. 

SOUTH BROWARD HOSPITAL 

DISTRICT d/b/a MEMORIAL 

HEALTHCARE SYSTEM, 

Plaintiff, 

vs. 

BLUE CROSS AND BLUE 

SHIELD OF FLORIDA, INC. 

and HEALTH OPTIONS, INC. 

Defendants. 

/ 

DEFENDANTS’ NOTICE OF REMOVAL 

Defendants Blue Cross and Blue Shield of Florida, Inc. (“BCBSF”) and Health Options, 

Inc. (“HOI”) (BCBSF and HOI collectively, “Florida Blue”), pursuant to 28 U.S.C. §§ 1441, 1442, 

and 1446, remove this action from the Circuit Court of the Seventeenth Judicial Circuit in and for 

Broward County, Florida, to the Ft. Lauderdale Division of the United States District Court for the 

Southern District of Florida, and in support thereof, state: 

BASIS FOR REMOVAL

1. Florida Blue removes this action under the federal officer removal statute, 28 

U.S.C. § 1442(a)(1), because Plaintiff sues Florida Blue in its capacity as a person acting under a 

federal officer or agency for or relating to acts taken under color of such office.1 Any remaining 

state law claims are within this Court’s supplemental jurisdiction. 

1

 In an effort to limit the removal of its claims, Memorial improperly split its claims into three separate 

actions: (1) Case No. 20-10731, the instant action, which alleges claims for services rendered to patients 

covered under Medicare Advantage plans governed by the Medicare Act; (2) Case No. 20-10727, which 

alleges claims for services rendered to patients covered under group health benefits plans governed by 

ERISA; and (3) Case No. 20-10729, which alleges claims for services rendered to patients covered under 

individual health insurance policies. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 1 of 20
2 

4844-5738-4647.10 

PROCEDURAL REQUIREMENTS

2. On June 30, 2020, Plaintiff South Broward Hospital District d/b/a Memorial 

Healthcare System (“Memorial”) filed a complaint in the Circuit Court of the Seventeenth Judicial 

Circuit in and for Broward County, Florida, styled as South Broward Hospital District d/b/a 

Memorial Healthcare System v. Blue Cross and Blue Shield of Florida, Inc. and Health Options, 

Inc., Case No. 20-10731 (the “State Court Action”). 

3. HOI was served with a summons and the complaint on July 16, 2020. BCBSF was 

served with a summons and the complaint on July 31, 2020.2 Pursuant to 28 U.S.C. § 1446(b), 

Florida Blue timely files this notice of removal within 30 days after service of the summonses and 

complaints. See Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347-48 (1999) 

(holding the 30-day removal period is triggered by formal service); Harrell v. Bank of Am., N.A., 

813 Fed. Appx. 397, 399 (11th Cir. 2020) (same); see also Bailey v. Janssen Pharmaceutica, Inc., 

536 F.3d 1202, 1203 (11th Cir. 2008) (holding the removal period expires 30 days after service on 

the last-served defendant). 

4. Pursuant to 28 U.S.C. § 1446(a), attached as Composite Exhibit A (1-12) are 

copies of all process, pleadings, and orders served on Florida Blue or filed in the State Court Action 

as of the date of removal, except (i) Exhibit A to the complaint, the Hospital Services Agreement 

between HOI and Memorial (the “HOI Hospital Services Agreement”), (ii) Exhibit B to the 

complaint, the Medicare Advantage Amendment to the HOI Hospital Services Agreement (the 

“HOI Medicare Advantage Amendment”), (iii) Exhibit C to the complaint, the NetworkBlue 

2

 Under Florida law, the sole method of service of a civil action on a health insurance company, such as 

BCBSF, is by serving Florida’s Chief Financial Officer. See Fla. Stat. § 624.422; see also id. § 624.307(9). 

Service is effective upon the date the Chief Financial Officer makes the summons and complaint available 

to the health insurance company, “and the time for pleading prescribed by the rules of procedure [runs] 

from this date.” Fla. Stat. § 48.151(1). 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 2 of 20
3 

4844-5738-4647.10 

Hospital Services Agreement between BCBSF and Memorial (the “BCBSF Hospital Services 

Agreement”), and (iv) Exhibit D to the complaint, the Medicare Advantage Amendment to the 

BCBSF Hospital Services Agreement (the “BCBSF Medicare Advantage Amendment”), each of 

which Memorial served but did not file in the State Court Action because they are governed by 

confidentiality provisions.3

5. The United States District Court for the Southern District of Florida embraces the 

county in which the State Court Action is now pending and, thus, this Court is the proper forum 

for removal pursuant to 28 U.S.C. § 89(c) and 1441(a). 

6. Defendants BCBSF and HOI are the only defendants named in the State Court 

Action. Thus, all defendants join in the removal of the State Court Action. 

7. In accordance with 28 U.S.C. § 1446(d), a copy of this notice of removal is being 

served on Memorial and a copy also is being filed with the Clerk of the Circuit Court of the 

Seventeenth Judicial Circuit in and for Broward County, Florida. 

8. A filing fee of $400.00 is being tendered to the Clerk of the United States District 

Court for the Southern District of Florida. 

STATE COURT ACTION 

9. In the State Court Action, Memorial alleges Florida Blue improperly denied and 

underpaid claims for covered medical services rendered by Memorial to Medicare beneficiaries 

covered under Florida Blue’s Medicare Advantage plans. See Compl. ¶ 1. 

10. Memorial is a special tax district healthcare system. See id. ¶ 2. 

11. BCBSF is a health insurance company. See id. ¶ 3. 

3

 Pursuant to Local Rule 5.4, Florida Blue will promptly move the Court to authorize the parties to file 

under seal the HOI Hospital Services Agreement, the HOI Medicare Advantage Amendment, the BCBSF 

Hospital Services Agreement, and BCBSF Medicare Advantage Amendment. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 3 of 20
4 

4844-5738-4647.10 

12. HOI is a health maintenance organization (“HMO”). See id. ¶ 4. 

13. Florida Blue is a Medicare Advantage Organization (“MAO”) that has entered into 

contracts with the Centers for Medicare and Medicaid Services (“CMS”) to administer Medicare 

benefits under Title XVIII, Part C, of the Social Security Act. See id. ¶¶ 5, 11. 

14. Memorial and Florida Blue have entered into the HOI Hospital Services Agreement 

and the BCBSF Hospital Services Agreement (collectively, the “Hospital Services Agreements”) 

and the HOI Medicare Advantage Amendment and the BCBSF Medicare Advantage Amendment 

(collectively, the “Medicare Advantage Amendments”) (the Hospital Services Agreements and the 

Medicare Advantage Amendments are collectively the “Provider Agreements”) governing 

Memorial’s provision of covered services to Medicare beneficiaries covered under Florida Blue’s 

Medicare Advantage plans. See id. ¶¶ 16-18, 26-28, 36, 44, 52, 62, Exs. A-D. In the healthcare 

industry, Memorial is referred to as a “participating provider.” 

15. Memorial asserts claims for services Memorial rendered as a participating provider 

“pursuant to [Florida Blue’s] Medicare Advantage plans” to patients covered under Florida Blue’s 

Medicare Advantage plans. See id. ¶¶ 1, 31-34. 

16. Memorial alleges there are “thousands” of claims in dispute. See id. ¶ 31. 

17. Count 1 purports to allege a cause of action against HOI for breach of the HOI 

Hospital Services Agreement and the HOI Medicare Advantage Amendment. See id. ¶¶ 35-42. 

Count 2 purports to allege a cause of action against BCBSF for breach of the BCBSF Hospital 

Services Agreement and the BCBSF Medicare Advantage Amendment. See id. ¶¶ 43-50. Counts 

3 and 4 purport to allege causes of action against HOI and BCBSF for breach of the implied 

covenant of good faith and fair dealing under the Provider Agreements. See id. ¶¶ 51-70. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 4 of 20
5 

4844-5738-4647.10 

18. In Counts 1 and 2, Memorial alleges: (i) Florida Blue is obligated to pay Memorial 

for “covered services” rendered to Medicare beneficiaries covered under Florida Blue’s Medicare 

Advantage plans in the amounts agreed to in the Medicare Advantage Amendments; (ii) Memorial 

rendered services to Medicare beneficiaries “covered” under Florida Blue’s Medicare Advantage 

plans; and (iii) Florida Blue breached the Medicare Advantage Amendments by “engag[ing] in a 

pattern and practice of improper claims processing practices.” See id. ¶¶ 37-40, 45-48. 

19. According to Memorial, the “improper claims processing practices” include: 

(a) “denying payment and underpaying Memorial for covered services”; (b) “recovering contested 

overpayments”; (c) “failing to respond to Memorial’s requests for authorization to perform 

medically necessary covered services”; (d) “failing to pay for medically necessary covered 

services that were appealed”; (e) “pending the processing and payment of claims and appeals”; 

and (f) “engaging in otherwise [unidentified] abusive and unduly burdensome claims processing 

practices.” See id. ¶¶ 40, 48. 

20. In Counts 3 and 4, Memorial alleges: (i) the Provider Agreements incorporate 

Florida Blue’s “claim processing policies and procedures” and “provider manual”; (ii) Florida 

Blue “has discretion to change or modify” the policies, procedures, and manual “subject to certain 

limitations” in the Provider Agreements; (iii) Memorial “reasonably relied” that Florida Blue 

would “pay and process claims” in accordance with Section 3 of the Medicare Advantage 

Amendments; and (iv) Florida Blue “unfairly frustrated the agreed-upon purpose” of the Medicare 

Advantage Agreements. See id. ¶¶ 53, 55, 58, 63, 65, 68. 

21. Memorial alleges Florida Blue “violat[ed] Memorial’s reasonable commercial 

expectation” by: (a) failing to pay claims in accordance with the Provider Agreements; (b) using 

“unreasonable and/or illegal claims processing practices”; (c) unilaterally modifying “claims 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 5 of 20
6 

4844-5738-4647.10 

processing policies and practices in an arbitrary or unreasonably [sic] manner”; and (d) “imposing 

unreasonable utilization review and medical necessity criteria.” See id. ¶¶ 56-57, 66-67. 

MEDICARE ADVANTAGE PROGRAM 

22. The Medicare Act, 42 U.S.C. § 1395 et seq., enacted in 1965, established a federally 

subsidized health insurance program primarily benefiting the elderly and disabled persons. See 

Heckler v. Ringer, 466 U.S. 602, 605 (1984). When it was enacted, Medicare consisted of two 

parts, Part A covering inpatient services, and Part B covering outpatient services. Under Parts A 

and B, the federal government pays health care providers directly for covered services rendered to 

Medicare beneficiaries. See 42 U.S.C. §§ 1395c-1395i-5, 1395j-1395w-6. 

23. The Medicare Act is administered by the Secretary of the Department of Health and 

Human Services (“HHS”), which has delegated this responsibility to CMS. 

24. In 1997, Congress enacted Part C, now known as “Medicare Advantage,” to provide 

an alternative program for Medicare beneficiaries to receive Medicare benefits through private 

Medicare Advantage plans. See 42 U.S.C. § 1395w-21-22. 

25. Congress enacted Part C to expand the number and type of plans available to 

Medicare beneficiaries, improve access to quality healthcare services, and reduce costs by 

introducing competition and taking advantage of cost-reduction and risk-shifting measures used 

by private insurance companies. See In re Avandia Mktg. Sales Practices & Prods. Liab. Litig., 

685 F.3d 353, 363 (3d Cir. 2012). 

26. To administer Part C, CMS enters into contracts with private insurance companies, 

such as Florida Blue, referred to as “Medicare Advantage Organizations” or “MAOs.” See 42 

U.S.C. § 1395w-27; 42 C.F.R. §§ 422.503, 422.504. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 6 of 20
7 

4844-5738-4647.10 

27. The contracts between CMS and MAOs “shall provide that the [MAO] agrees to 

comply with the applicable requirements and standards of [Part C] and the terms and conditions 

of payment as provided for in [Part C].” 42 U.S.C. § 1395w-27(a). 

28. CMS makes monthly per-beneficiary payments to MAOs, which then take on the 

financial risk of serving Medicare beneficiaries. See 42 U.S.C. §§ 1395w-23, 1395w-25(b). 

29. MAOs are subject to extensive federal regulation. See 42 C.F.R. §§ 422.1-

422.2615; see also CMS Medicare Managed Care Manual, Pub. No. 100-16, 

https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-ManualsIOMs-Items/CMS019326 (last visited August 17, 2020). 

30. MAOs must offer the same basic Medicare benefits available under Parts A and B. 

See 42 U.S.C. § 1395w-22(a)(1)(A); 42 C.F.R. § 422.100(a). MAOs also may offer certain 

supplemental benefits approved by CMS. See 42 C.F.R. § 422.100(c), (f). 

31. The Medicare Act generally precludes coverage for medical services that “are not 

reasonable and necessary for the diagnosis or treatment of illness or injury.” See 42 U.S.C. 

§ 1395y(a)(1)(A). 

32. MAOs determine whether services are covered under Parts A and B of the Medicare 

Act. See 42 U.S.C. § 1395w-22(g)(1)(A). 

33. In making coverage decisions, MAOs must comply with CMS’s national coverage 

determinations, general coverage guidelines in Medicare manuals and instructions, and written 

coverage determinations of local Medicare contractors. See 42 C.F.R. § 422.101. 

34. The Medicare Act includes a mandatory administrative appeal process for coverage 

determinations. See 42 U.S.C. §§ 405, 1395w-22(g), 1395ff, 1395ii. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 7 of 20
8 

4844-5738-4647.10 

35. MAO coverage determinations are subject to multiple levels of administrative 

review, including reconsideration by the MAO, reconsideration by an independent entity, hearing 

before an administrative law judge, and review by the Medicare Appeals Council. See 42 C.F.R. 

§§ 422.562, 422.578, 422.592, 422.600, 422.608. 

36. CMS also prescribes requirements for relationships with participating providers, 

see 42 U.S.C. § 422.200-.224, and the provision of emergency services, see 42 U.S.C. § 422.113. 

FLORIDA BLUE’S CONTRACTS WITH CMS

37. Florida Blue has contracts with CMS to administer Medicare benefits to Medicare 

beneficiaries pursuant to Medicare Advantage plans under Part C of the Medicare Act. See 

Declaration of Amanda Iacovella (“Iacovella Declaration”) ¶ 3 (attached as Exhibit B). 

38. Attached as Composite Exhibits 1 and 2 to the Iacovella Declaration are Florida 

Blue’s contracts with CMS (the “CMS Contracts”). See id. ¶¶ 4-6. 

39. Under the CMS Contracts, Florida Blue “agrees to operate one or more [Medicare 

Advantage plans] . . . in compliance with the requirements of [the CMS Contracts] and applicable 

Federal statutes, regulations, and policies.” See CMS Contracts, Art. II, § A. 

40. Florida Blue “agrees to provide enrollees in each of its [Medicare Advantage] plans 

the basic benefits as required under 42 C.F.R. § 422.101 and, to the extent applicable, supplemental 

benefits under 42 C.F.R. § 422.102.” See id., Art. III, § A(1). 

41. Florida Blue “agrees to comply with all requirements in 42 C.F.R. Part 422, Subpart 

M governing coverage determinations, grievances, and appeals.” See id., Art. III, § C(1). 

42. Florida Blue’s utilization policies and procedures “must reflect current standards of 

medical practice in processing requests for initial or continued authorization of services” including 

mechanisms to evaluate underutilization and overutilization. See id., Art. III, § E(4). 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 8 of 20
9 

4844-5738-4647.10 

43. The CMS Contracts also subject Florida Blue to comprehensive recordkeeping and 

reporting requirements. See id., Art. VI. 

THE MEDICARE ADVANTAGE AMENDMENTS 

44. In the Medicare Advantage Amendments, the parties “agree to comply with the 

Medicare Advantage contracting requirements established pursuant to federal regulation and/or 

CMS” and “acknowledge that CMS requires that [MAOs], and the persons and entities with which 

they contract, comply with certain requirements and include certain contractual provisions in 

contracts relating to the provision of items and services under the Medicare Advantage Program.” 

See Medicare Advantage Amendments, § 2, Ex. 1. 

45. “The Parties acknowledge and agree that [Florida Blue] shall oversee, and 

ultimately remain responsible and accountable to CMS for, those functions and responsibilities 

required of [Florida Blue] pursuant to all Laws [including] federal statutes, rules and regulations[,] 

. . . legally binding CMS orders, decrees, and instructions[,] . . . or requirements of governmental 

entities having jurisdiction over the execution, delivery, or performance of this Medicare 

Advantage Amendment.” See id. at Ex. 1, §§ 2, 1(d). 

46. Memorial “agrees to comply with and be subject to all applicable Medicare 

program laws, rules and regulations, reporting requirements, and CMS instructions as 

implemented and amended by CMS.” See id. at Ex. 1, § 4(b). 

47. Memorial also agrees to “perform all Covered Services in a manner consistent with 

and in compliance with . . . all applicable Laws, including . . . laws, regulations and CMS 

instructions relating to the Program; [Florida Blue’s] contract(s) with CMS; and conditions of 

federal program participation.” See id. at Ex. 1, § 12. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 9 of 20
10 

4844-5738-4647.10 

48. The Medicare Advantage Amendments prescribe compensation only for services 

that are “covered under the applicable [Medicare Advantage plan].” See id. § 3; see also id. at Ex. 

1, § 8; Ex. 2, Appx. 1 and 2. 

49. Memorial “agrees to hold all Medicare Advantage Members harmless and prevent 

such Medicare Advantage Members from incurring financial liabilities for payment of fees that 

are the legal obligation of [Florida Blue] and shall accept [Florida Blue’s] payment as payment in 

full, less any co-insurance, co-payments or deductibles” and “agrees not to bill, charge, collect a 

deposit from, or receive or demand other compensation or remuneration from a Medicare 

Advantage Member” including in the event of “nonpayment by [Florida Blue]” and “breach of 

agreement by [Florida Blue].” See id. at Ex. 1, § 5(a). 

50. Memorial also “agrees to participate in and cooperate fully with [Florida Blue’s] 

policies and procedures established pursuant to federal requirements and as required by CMS for 

grievances and appeals for Medicare Members.” See id. at Ex. 1, § 10. 

51. “To the extent that any provision of [the Medicare Advantage Amendments] 

conflicts with the provisions of applicable Law, regulations, CMS instructions, or conditions of 

federal program participation, the provisions of such applicable Laws, regulations, CMS 

instructions or conditions of federal program participation shall govern.” See id. at Ex. 1, § 12. 

FLORIDA BLUE’S MEDICARE ADVANTAGE PLANS 

52. Attached as Exhibit 3 to the Iacovella Declaration is a Medicare Advantage plan 

offered by HOI in 2016 (the “2016 HOI Medicare Advantage Plan”). See Iacovella Declaration

¶¶ 7-8. Attached as Exhibit 4 to the Iacovella Declaration is a Medicare Advantage plan offered 

by BCBSF in 2018 (the “2018 BCBSF Medicare Advantage Plan”). See id. ¶¶ 7, 9.

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 10 of 20
11 

4844-5738-4647.10 

53. The 2016 HOI Medicare Advantage Plan and the 2018 BCBSF Medicare 

Advantage Plan are representative of Florida Blue’s Medicare Advantage plans offered to 

Medicare beneficiaries since 2015. See id. ¶ 10.

54. The 2016 HOI Medicare Advantage Plan and the 2018 BCBSF Medicare 

Advantage Plan define “covered services” as “the medical care, health care services, supplies, and 

equipment that are covered by our plan.” See 2016 HOI Medicare Advantage Plan at 39; 2018 

BCBSF Medicare Advantage Plan at 46. The plans “must cover all services covered by Original 

Medicare and must follow Original Medicare’s coverage rules.” See 2016 HOI Medicare 

Advantage Plan at 39; 2018 BCBSF Medicare Advantage Plan at 46. To be covered, services 

must be: (i) “medically necessary,” defined as services that are “needed for the prevention, 

diagnosis, or treatment of your medical condition” and “meet accepted standards of medical 

practice”; (ii) “provided according to the coverage guidelines established by Medicare”; and 

(iii) for certain hospital services, “only if . . . approv[ed] in advance.” See 2016 HOI Medicare 

Advantage Plan at 57, 70, 78; 2018 BCBSF Medicare Advantage Plan at 61, 78, 86. Excluded 

services include: (i) services “considered not reasonable and necessary, according to the standards 

of Original Medicare”; (ii) “experimental” services “determined by our plan and Original 

Medicare to not be generally accepted by the medical community”; and (iii) certain cosmetic 

surgeries and procedures. See 2016 HOI Medicare Advantage Plan at 94-95; 2018 BCBSF 

Medicare Advantage Plan at 105-06.

MEDICARE ADVANTAGE CLAIMS 

55. Since June 30, 2015, Florida Blue has denied claims submitted by Memorial for 

lack of coverage under Florida Blue’s Medicare Advantage plans. See Iacovella Declaration 

¶¶ 11-12. Because Memorial’s complaint does not limit the denials it challenges, Memorial 

necessarily alleges Florida Blue denied these and the exemplar claims identified below. See 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 11 of 20
12 

4844-5738-4647.10 

Borrero v. United Healthcare of N.Y., Inc., 610 F.3d 1296, 1304 (11th Cir. 2010) (“Because their 

complaints contest the global practices of United and do not identify any specific patient, we must 

assume that the providers are asserting at least some derivative claims.”). 

56. Attached as Composite Exhibit 5 to the Iacovella Declaration is an exemplar claim 

submitted by Memorial and corresponding remittance advice4 denying the claim for lack of 

coverage under the 2016 HOI Medicare Advantage Plan. See Iacovella Declaration ¶ 13. As 

reflected in the remittance advice, HOI denied one claim line for lack of authorization and two 

claim lines because those services are inclusive of the services for which there was no 

authorization. See id.

57. Attached as Composite Exhibit 6 to the Iacovella Declaration is an exemplar claim 

submitted by Memorial and corresponding remittance advice denying the claim for lack of 

coverage under the 2018 BCSBF Medicare Advantage Plan. See id. ¶ 14. As reflected in the 

remittance advice, BCBSF denied this claim due to coverage restrictions in the 2018 BCBSF 

Medicare Advantage Plan. See id. 

FEDERAL OFFICER REMOVAL 

58. The federal officer removal statute, 28 U.S.C. § 1442(a)(1), authorizes the removal 

of any action against the “United States or any agency thereof or any officer (or person acting 

under that officer) of the United States or of any agency thereof, in an official or individual 

capacity, for or relating to any act under color of such office.” (Emphasis added.) 

59. The Supreme Court instructs that the words “acting under” are “broad” and must 

be “liberally construed.” Watson v. Philip Morris Companies, Inc., 551 U.S. 142, 147 (2007) 

4

 All patient-identifying information in exemplar documents has been redacted in compliance with the 

Health Insurance Portability and Accountability Act. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 12 of 20
13 

4844-5738-4647.10 

(citation omitted); see also McMahon v. Presidential Airways, Inc., 410 F. Supp. 2d 1189, 1196 

(M.D. Fla. 2006) (federal officer removal statute is “not narrow” or “limited”). 

60. Unlike the usual presumption against removal, the right of removal under the 

federal office removal statute “is made absolute whenever a suit in state court is for any act ‘under 

color’ of federal office.” Magnin v. Teledyne Cont’l Motors, 91 F.3d 1424, 1427 (11th Cir. 1996) 

(citations omitted). 

61. For a private party to invoke the federal officer removal statute, the party must 

plead: (a) the party is a person; (b) the party acted under the direction of a federal officer or agency; 

(c) there is a causal connection between the federal direction and the conduct in question; and 

(d) the party has a colorable federal defense. See, e.g., Baptist Hosp. of Miami, Inc. v. Medica 

Healthcare Plans, Inc., No. 18-cv-25460, 2019 WL 1915386, at *1 (S.D. Fla. Mar. 21, 2019); 

Assocs. Rehab. Recovery, Inc. v. Humana Med. Plan, Inc., 76 F. Supp. 3d 1388, 1391 (S.D. Fla. 

2014); Einhorn v. Careplus Health Plans, Inc., 43 F. Supp. 3d 1268, 1269-70 (S.D. Fla. 2014). 

a. Florida Blue is a “Person”

62. A corporation is a “person” for purposes of the federal officer removal statute. See 

Assocs. Rehab. Recovery, Inc., 76 F. Supp. 3d at 1391 (citing 1 U.S.C. § 1); see also Hepstall v. 

Humana Health Plan, Inc., No. 18-0163, 2018 WL 4677871, at *2 (S.D. Ala. July 3, 2018). 

b. Florida Blue “Acts Under” CMS 

63. MAOs act under the direction of CMS when denying claims of participating 

providers for lack of coverage under the Medicare Act or a Medicare Advantage plan. See Baptist 

Hosp. of Miami, Inc., 2019 WL 1915386, at *25 (“[C]overage disputes invoke the Federal Officer 

5

 In Baptist Hospital of Miami, the participating provider alleged the MAO determined services were “not 

medically necessary or covered under the Medicare Act or the patient’s [Medicare Advantage] plan.” 

Baptist Hosp. of Miami, Inc., 2019 WL 1915386, at *1. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 13 of 20
14 

4844-5738-4647.10 

Removal Statute because in determining whether Medicare provides coverage, the MAO is 

interpreting and applying the Medicare rules and regulations pursuant to authority delegated to it 

by CMS. . . . Accordingly, at issue are Defendant’s interpretations and applications of Medicare 

guidelines and manuals. In issuing denials based on those guidelines, Defendant was ‘acting 

under’ the authority of CMS, which delegated to Defendant the authority to make those denials 

pursuant to certain criteria.”); Assocs. Rehab. Recovery, Inc., 76 F. Supp. 3d at 13916 (“Defendant 

contracted with CMS to administer Medicare benefits on behalf of the federal government for 

Medicare enrollees in the Medicare Advantage plans offered by Defendant. . . . Defendant operates 

pursuant to this contract and pursuant to comprehensive regulations promulgated by CMS.”); see 

also Body & Mind Acupuncture v. Humana Health Plan, Inc., No. 1:16CV211, 2017 WL 653270, 

at *5 (N.D. W. Va. Feb. 16, 2017) (collecting cases); Beaumont Foot Specialists, Inc. v. United 

Healthcare of Tex., Inc., No. 1:15-cv-216, 2015 WL 9257026, at *4 (E.D. Tex. Dec. 14, 2015). 

64. Similarly, MAOs act under the direction of CMS when denying claims of Medicare 

beneficiaries for lack of coverage under the Medicare Act or a Medicare Advantage plan. See 

Hepstall, 2018 WL 4677871, at*5 (“Having closely examined the cases which have determined 

the issue, this Court agrees . . . that MAOs . . . are acting under the CMS when providing Medicare 

benefits to beneficiaries of the Act.”); see also Inchauspe v. Scan Health Plan, No. 2:17-cv-06011, 

2018 WL 566790, at *5 (C.D. Cal. Jan. 23, 2018) (“The Court agrees with the majority of district 

courts which have held that MAOs administering Part C benefits fall within the category of highly 

regulated private contractors described in Watson.”). 

6

 In Associates Rehabilitation Recovery, the participating provider alleged the MAO determined services 

were “not covered under the Medicare Act or the enrollee’s Medicare Advantage plan.” Assocs. Rehab. 

Recovery, Inc., 76 F. Supp. 3d at 1390. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 14 of 20
15 

4844-5738-4647.10 

65. In the complaint, Memorial alleges, among other things, that: (1) Florida Blue 

improperly denied claims, “den[ied] payment . . . for covered services,” and “fail[ed] to pay for 

medically necessary covered services” rendered to Medicare beneficiaries covered under Medicare 

Advantage plans, including by employing “unreasonable utilization review and medical necessity 

criteria,” see Compl. ¶¶ 1, 40(a), 40(d), 48(a), 48(d), 56(b)-(c), 57, 66(b)-(c), 67; (2) Florida Blue 

recouped overpayments due to lack of coverage under Medicare Advantage plans, see id. ¶¶ 1, 

40(b), 48(b); and (3) Florida Blue denied coverage under Medicare Advantage plans by failing to 

authorize “medically necessary covered services,” see id. ¶¶ 1, 40(c), 48(c). 

66. Memorial expressly challenges denial of coverage, recoupments based upon lack 

of coverage, and denial of authorization under the Medicare Act and Medicare Advantage plans. 

67. The Medicare Act requires Florida Blue to cover all services under Parts A and B, 

generally limits coverage to “reasonable and necessary” services, establishes criteria for Medicare 

coverage determinations, and provides for mandatory administrative review of MAO decisions 

denying coverage under Medicare Advantage plans. 

68. In performing the acts challenged by Memorial, CMS exercises unusually close, 

direct, and detailed control over Florida Blue through the CMS Contracts, regulations, manuals, 

the annual bid process, the Medicare appeals process, audits, and other program directives. 

69. In sum, CMS has delegated to Florida Blue legal authority to administer Medicare 

benefits for Medicare beneficiaries covered under Medicare Advantage plans. Florida Blue assists 

the federal government to carry-out and fulfill a basic and necessary governmental function—

providing Medicare benefits to Medicare beneficiaries. In the absence of Medicare Advantage 

plans, the federal government would have to perform this function itself by administering 

Medicare benefits to these Medicare beneficiaries under Parts A and B of the Medicare Act. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 15 of 20
16 

4844-5738-4647.10 

70. Thus, for purposes of the federal officer removal statute, Florida Blue “acts under” 

the direction, guidance, and control of CMS. 

c. There is a Causal Connection to CMS’ Direction

71. The Removal Clarification Act of 2011 added “or relating to” in the requirement 

that the act complained of be “for or relating to any act under color of office.” 

72. This is a “low standard;” indeed, the acts challenged need not even be the action 

under federal direction or control. See Body & Mind Acupuncture, 2017 WL 653270, at *6. 

73. A causal nexus exists here because, but for Florida Blue’s contract with CMS to 

administer Medicare benefits, Florida Blue would not have administered Memorial’s claims, and 

Memorial would have no grounds to assert a cause of action against Florida Blue. 

74. A causal nexus also exists here because Memorial challenges denial of coverage 

for services rendered to Medicare beneficiaries under Medicare Advantage plans. See Assocs. 

Rehab. Recovery, Inc., 76 F. Supp. 3d at 1391 (“Plaintiff’s claims concern Defendant’s denial of 

payments, payments which it denied pursuant to its authority and obligations under federal law.”); 

see also Body & Mind Acupuncture, 2017 WL 653270, at *6 (“Whether Humana properly paid 

Body & Mind or used CMS mandated procedure codes, those acts took place because of or in the 

course of performing what it was asked to do by the government—pay healthcare providers for 

services rendered to beneficiaries of its MA plans.”) (internal quotation marks omitted); Hepstall, 

2018 WL 4677871, at *5 (“Plaintiff’s claims are, in part, based upon Humana’s alleged refusal to 

pay for benefits that it was contractually obligated to provide. Because his claims are intertwined 

with Humana’s obligations pursuant to regulations that govern its role in administering Part C 

Medicare claims, the Court finds that the causal nexus requirement has been met.”). 

d. Florida Blue has Colorable Federal Defenses 

75. Florida Blue has the colorable defense of federal preemption. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 16 of 20
17 

4844-5738-4647.10 

76. Part C of the Medicare Act contains an express preemption provision: “The 

standards established under [Part C] shall supersede any State law or regulation (other than State 

licensing laws or State laws relating to plan solvency) with respect to [Medicare Advantage] plans 

which are offered by [MAOs] under this part.” 42 U.S.C. § 1395w-26(b)(3). 

77. To the extent Memorial challenges coverage decisions governed by the Medicare 

Act, Florida Blue has the colorable federal defense of express or conflict preemption. See Einhorn, 

43 F. Supp. 3d at 1270 (removing party had the colorable federal defense of preemption because 

“[t]he extent to which federal law imposes certain requirements upon [defendant] as a Medicare 

Advantage plan and whether it may afford it any corresponding protection from liability, are issues 

of federal law”) (internal quotations and citations omitted); see also Hepstall, 2018 WL 4677871, 

at *6 (removing party had the colorable federal defense of preemption); Assocs. Rehab. Recovery, 

Inc., 76 F. Supp. 3d at 1391-93 (same). 

78. Florida Blue also has the colorable federal defense of failure to exhaust 

administrative remedies. 

79. Like a Medicare beneficiary, a participating provider challenging a coverage 

decision must exhaust administrative remedies before challenging coverage decisions in federal 

court. See Assocs. Rehab. Recovery, Inc., 76 F. Supp. 3d at 1393 (MAO had a colorable federal 

defense of failure to exhaust administrative remedies as the participating provider’s claims were 

inextricably intertwined with a claim for reimbursement under the Medicare Act because, “under 

its contract with CMS, Humana may pay Medicare benefits only for medically necessary services,” 

and under the provider agreement, Humana agreed to pay only for “covered services,” which were 

dependent upon the Medicare Advantage plans); see also Body & Mind Acupuncture, 2017 WL 

653270, at *4 (holding participating provider raised colorable federal defense of failure to exhaust 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 17 of 20
18 

4844-5738-4647.10 

administrative remedies in dispute over recoupment due to improper billing); United Behavioral 

Health v. Maricopa Integrated Health Sys., 240 Ariz. 118, 123 (Ariz. 2016) (“Resolution turns on 

whether UBH correctly applied Medicare standards to determine that continued in-patient care for 

the [Medicare Advantage] Plan Members was not covered—a matter inextricably intertwined with 

a claim for benefits and falling within HHS’s expertise.”); Ex parte Blue Cross & Blue Shield of 

Ala., 90 So. 3d 158, 164 (Ala. 2012) (“Although framed in terms of a contractual dispute between 

BCBS and Southern Springs, Southern Springs’ claim is, at bottom, a claim that the [Medicare 

Advantage plan] enrollees are being denied coverage and/or benefits to which they are entitled 

under the Medicare Act.”). 

80. Memorial’s allegation that, under CMS Pub. 100-16, Medicare Managed Care 

Manual, Chapter 12 § 70.1, “contract providers have no remedy other than a common law claim 

for breach of contract to receive payment due to them under their contract with the MAOs,” see 

Compl. ¶ 14, is an erroneous conclusion of law. See United Behavioral Health, 240 Ariz. At 125 

(holding the manual “conflict[s] with the regulations if the payment dispute concerns an 

organization determination regarding coverage”). 

81. Indeed, in the Medicare Advantage Amendments, Memorial “agrees to participate 

in . . . [Florida Blue’s] policies and procedures . . . required by CMS for grievances and appeals 

for Medicare Members.” See Medicare Advantage Amendments, Ex. 1, § 10. 

82. Here, Memorial’s claims challenging denials of coverage are inextricably 

intertwined with claims for reimbursement of Medicare benefits. 

83. Indeed, Memorial’s alleged harm could be completely remedied by retroactive 

payment of Medicare benefits. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 18 of 20
19 

4844-5738-4647.10 

84. In the complaint, Memorial does not specifically allege it exhausted all available 

administrative remedies with respect to each claim it asserts. 

SUPPLEMENTAL JURISDICTION 

85. Pursuant to 28 U.S.C. §§ 1367(a) and 1441(c), this Court has supplemental 

jurisdiction over any remaining state law claims, because those claims are so related to the claims 

within the original jurisdiction of the Court that they form part of the same case or controversy 

under Article III of the United States Constitution. 

86. Memorial alleges the same theories of liability with respect to all of its claims. 

87. The Court has supplemental jurisdiction over any underpayment claims. See 

Baptist Hosp. of Miami, Inc., 2019 WL 1915386 at *2 n.2. 

88. None of the potential state law claims—common law claims for breach of contract 

and breach of the implied covenant of good faith and fair dealing—raise novel or complex issues 

of state law. See 28 U.S.C. § 1367(c)(1). 

89. Because Memorial appears to assert more Medicare coverage claims than 

underpayment claims, state law claims do not predominate. See 28 U.S.C. § 1367(c)(2). 

90. As of the filing of this notice of removal, the Court has not dismissed all federal 

claims. See 28 U.S.C. § 1367(c)(3). 

91. There are no “exceptional circumstances” or “compelling reasons” to decline 

supplemental jurisdiction. See 28 U.S.C. § 1367(c)(4). 

CONCLUSION 

WHEREFORE, Defendants Blue Cross and Blue Shield of Florida, Inc. and Health 

Options, Inc. respectfully submit this notice of removal and request that the Court grant them such 

other and further relief as the Court deems just and proper. 

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 19 of 20
20 

4844-5738-4647.10 

FOLEY & LARDNER LLP

By: /s/ Justin B. Uhlemann 

Justin B. Uhlemann (FNB 568872)

juhlemann@foley.com 

marmada-milian@foley.com 

2 South Biscayne Boulevard 

One Biscayne Tower, Suite 1900 

Miami, Florida 33131 

Telephone: 305.482.8400 

Facsimile: 305.482.8600 

Katlin C. Cravatta (FBN 113258) 

kcravatta@foley.com 

bshelley@foley.com 

111 North Orange Avenue 

Suite 1800 

Orlando, Florida 32801 

Telephone: 407.423.7656 

Facsimile: 407.648.1743 

Of counsel 

Christopher M. Murphy 

cmurphy@mwe.com 

MCDERMOTT WILL & EMERY LLP 

444 West Lake Street 

Suite 4000 

Chicago, Illinois 60606 

Telephone: 312.372.2000 

Facsimile: 312.984.7700 

Counsel for Defendants Blue Cross and Blue Shield 

of Florida, Inc. and Health Options, Inc.

Case 0:20-cv-61655-AHS Document 1 Entered on FLSD Docket 08/17/2020 Page 20 of 20