Opinion ID: 3052774
Heading Depth: 3
Heading Rank: 2

Heading: Preemption Provision

Text: [1] Humana contends, and the district court ruled, that each of the Uhms’ state law claims are preempted by the Act’s express preemption provision. We may find preemption only where it is the “clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). Because the Act contains an express preemption provision, the “task of statutory construction must in the first instance focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.” CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993). [2] Medicare Part D incorporates the express preemption provision contained in Part C, the Medicare Advantage (“MA”) program, which provides medical benefits to seniors through managed care.6 The Part D preemption provision states: The provisions of sections 1395w-24(g) [prohibition of premium taxes] and 1395w-26(b)(3) [preemption] of this title shall apply with respect to PDP sponsors and prescription drug plans under this part in the same manner as such sections apply to MA organiza- tions and MA plans under part C of this subchapter. 42 U.S.C. § 1395w-112(g). The Part C preemption provision in turn provides: The standards established under this part shall supercede any State law or regulation (other than State 6 Prior to the Act, Medicare Advantage was called “Medicare+Choice.” See 42 U.S.C. §1395w-21. 11558 UHM v. HUMANA INC licensing laws or State laws relating to plan sol- vency) with respect to MA plans which are offered by MA organizations under this part. 42 U.S.C. § 1395w-26(b)(3). See also 42 C.F.R. § 423.440(a) (adopting same language in Part D implementing regulations: “The standards established under this part supercede any State law or regulations (other than State licencing laws or State laws relating to plan solvency) for Part D plans offered by Part D plan sponsors.”). [3] The plain language of the statute provides therefore that CMS “standards” supercede State law or regulations insofar as the State law or regulation is “with respect to” a “prescription drug plan” offered by a “PDP sponsor.”7 [4] The inclusion of the phrase “law or regulation” demonstrates Congress’ intent to expressly supplant only positive state enactments. See Sprietsma v. Mercury Marine, 537 U.S. 51, 63 (2002) (interpreting the phrase “law or regulation” as indicating Congressional intent to expressly preempt only positive state enactments and not common law). As the Court in Sprietsma reasoned, if the term “law” was meant to encompass common law claims, “it might also be interpreted to include regulations, which would render the express reference to ‘regulation’ in the pre-emption clause superfluous.” Id. 7 CMS replaced the phrase “PDP sponsor” in its implementing regulations with “Part D sponsor,” because it “believe[s] that the preemption of State law . . . should operate uniformly for all Part D sponsors.” 70 Fed. Reg. 4319 (Jan. 28, 2005). A PDP provides “prescription drug coverage that is offered under a policy, contract or plan that has been approved . . . and that is offered by a PDP sponsor that has a contract with CMS . . .” 42 C.F.R. § 423.4. Part D plans include prescription drug plans, as well as MA-PD plans (which are offered through Medicare Advantage organizations), Programs of All Inclusive Care for the Elderly (PACE) plans offering qualified prescription drug coverage, and cost plans offering qualified prescription drug coverage. See id. UHM v. HUMANA INC 11559 [5] An express preemption provision, however, may “reach[ ] beyond positive enactments, such as statutes and regulations, to embrace common-law duties.” Bates v. Dow Agrosciences L.L.C., 544 U.S. 431, 443 (2005). Despite Congress’ inclusion of an express preemption clause, we are not “categorically preclude[d] . . . from applying principles of implied preemption” to determine what exactly Congress intended to preempt. Metrophones Telecomm., Inc. v. Global Crossing Telecomm., Inc., 423 F.3d 1056, 1072 (9th Cir. 2005). The Supreme Court has recognized implied preemption in two realms: field pre-emption, where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it, and conflict pre-emption where compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992) (citations and internal quotation marks omitted). There is no field preemption here. While it is true that the Act augmented the scope of the preemption provision,8 Congress did 8 The Medicare Part C preemption provision previously provided: (A) In general: The standards established under this subsection shall supersede any State law or regulation (including standards described in subparagraph (B)) with respect to Medicare+Choice plans which are offered by Medicare+Choice organizations under this part to the extent such law or regulation is inconsistent with such standards. (B) Standards specifically superceded: State standards relating to the following are superceded under this paragraph: (i) Benefit requirements (including cost-sharing requirements); (ii) Requirements relating to the inclusion or treatment of providers; (iii) Coverage determinations (including related appeals and griev11560 UHM v. HUMANA INC not signal its intent to occupy the entire field of Medicare regulation. First, Congress expressly left states the authority to regulate health plans in the areas of licensure and solvency, clearly demonstrating Congress’ recognition that the states maintain some role in the field. See § 1395w-26(b)(3). Second, the express provision provides that federal law preempts state law only to the extent that the federal government establishes standards. § 1395w-26(b)(3). This express language signals Congress’ intent to preempt state law only insofar as federal standards exist. Cf. Metrophones, 423 F.3d at 1072 (Congress did not occupy the entire field of payphone regulation by limiting federal preemption to state requirements that are inconsistent with federal regulations); Total TV v. Palmer Commc’ns, 69 F.3d 298, 303 (9th Cir. 1995) (recognizing that a provision superseding inconsistent state laws is “simply a recognition that Congress did not intend to fully occupy the field”). [6] Here, the implied conflict preemption analysis is substantially similar to the analysis of the Act’s express preemption provision: State common law is preempted to the extent that there are federal standards. Allowing a common law action in a realm where federal standards exist would “stand[ ] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Gade, 505 U.S. at 98 (internal quotation marks omitted). State common law actions, however, may stand in arenas where neither Conance processes); (iv) Requirements relating to marketing materials and summaries and schedules of benefits regarding a Medicare+Choice plan. 42 U.S.C. § 1395w-26(b)(3) (2002). In relevant part, the amended preemption provision omits the clause “to the extent such law or regulation is inconsistent with such standards,” thereby allowing the provision to cast a wider net. See also Medicare Prescription Drug Benefit, 70 Fed. Reg. 4319 (Jan. 28, 2005) (noting that the Act “reversed [the prior] presumption and provided that State laws are presumed to be preempted unless they relate to licensure or solvency”). UHM v. HUMANA INC 11561 gress nor CMS has established standards. Thus, our task is to determine whether the Uhms’ claims are subsumed by standards established pursuant to the Act. Humana contends that CMS has promulgated regulations—or standards—that govern each of the Uhms’ claims, and therefore all of their causes of action are preempted.9 Specifically, the Act and the implementing regulations contemplate disputes between PDP sponsors and beneficiaries, and CMS has created two mechanisms to deal with those disputes: “coverage determination” procedures and “grievance” procedures. Humana maintains that the Uhms’ complaints are actually grievances or requests for a coverage determination. CMS has also promulgated extensive regulations governing the marketing of PDPs, which Humana argues preempts the Uhms’ remaining claims. The Uhms’ argument, by contrast, is premised on the position that their claims exist outside of the Act and its implementing regulations. The Uhms maintain that the CMS standards are irrelevant because their claims are antecedent to their participation in the plan; that is, their claims all concern Humana’s pre-enrollment conduct, and furthermore, they assert that Humana failed to ever actually enroll them in the 9 Although the term “standard” is not defined in the Act, at the narrowest cut, a “standard” within the meaning of the preemption provision is a statutory provision or a regulation promulgated under the Act and published in the C.F.R. See 69 Fed. Reg. 46696 (Aug. 3, 2004) (describing proposed CMS rule on preemption of state laws and noting that not “every State requirement applying to PDP sponsors would now become null and void”); cf. Indep. Energy Producers Ass’n, Inc. v. Cal. Pub. Utils. Comm’n, 36 F.3d 848, 853 (9th Cir. 1994) (explaining that “a federal agency acting within the scope of its congressionally delegated authority may pre-empt state regulation”) (internal quotations omitted). Humana points to a broad definition of the term “standard” in Black’s Law Dictionary, which reads “criterion for measuring acceptability, quality, or accuracy.” Black’s Law Dictionary 1441 (8th ed. 2004). See also Webster’s New Universal Unabridged Dictionary 1857 (1996) (a standard is “something considered by an authority or by general consent as a basis of comparison; an approved model . . . ; a rule or principle that is used as a basis for judgment . . .”). 11562 UHM v. HUMANA INC PDP, making any remedies provided for under the Act inapplicable and unavailable to them.