Opinion
Case No. C-3-98-323
March 3, 1999.
Richard S. Wayne, Ronald P. Keller, Steven F. Stuhlbarg, Charles M. Rowland, II, Attorney for Plaintiff.
Earle J. Maiman, Attorney for Defendant.
DECISION AND ENTRY OVERRULING PLAINTIFFS' MOTION FOR REMAND TO THE COURT OF COMMON PLEAS FOR GREENE COUNTY, OHIO (DOC. #8); CONFERENCE CALL SET.
This matter comes before the Court upon a Motion for Remand to the Court of Common Pleas for Greene County, Ohio (Doc. #8), filed by Plaintiffs Richard D. Thompson and Mildred F. Bodkin. The Plaintiffs contend that the Defendant improperly removed this action, because the Court lacks subject matter jurisdiction over the claims raised in their Complaint (Doc. #1 at Exh. A). Pursuant to 28 U.S.C. § 1447(c), they also seek an award of costs and actual expenses incurred as a result of the Defendant's removal.
I. Factual and Procedural Background
Plaintiff Richard Thompson is a resident of Greene County, Ohio. In 1997, he enrolled in a health maintenance organization ("HMO") Medicare "risk" program offered by Defendant Community Insurance Company, d.b.a. Anthem Blue Cross and Blue Shield. (Complaint, at ¶ 1-2; Gross affidavit, at ¶ 2). The program is known as "Anthem Senior Advantage," and it provides an alternative to traditional Medicare for Medicare-eligible individuals residing within the plan's service area. (Complaint, at ¶ 3; Gross affidavit, at ¶ 2). Plaintiff Mildred Bodkin is a resident of Miami County, Ohio. She also enrolled in the Anthem Senior Advantage plan in 1997. (Complaint, at ¶ 2). Bodkin contends that the Defendant solicited her enrollment, while simultaneously advising existing enrollees that it planned to terminate coverage in twenty-two Ohio counties. (Complaint, at ¶ 2).
As a Medicare "risk" product, the Defendant's Anthem Senior Advantage plan differs from traditional Medicare coverage. Under traditional Medicare, the federal government sets a payment schedule for covered services and provides reimbursement to doctors and hospitals. (Gross affidavit, at ¶ 3). Under a "risk" program, such as Anthem Senior Advantage, the federal government's Health Care Financing Administration (HCFA) makes a set, per-capita monthly payment to the Defendant for each beneficiary enrolled in the "risk" plan. The Defendant then reimburses doctors and hospitals pursuant to its own contract with the providers. (Gross affidavit, at ¶ 3).
Prior to offering its Anthem Senior Advantage plan, the Defendant completed a lengthy application process with the HCFA, a division of the Department of Health and Human Services. (Gross affidavit, at ¶ 4). The HCFA reviewed and approved the Defendant's qualifications, as well as all of the materials and forms it proposed to use when offering its Medicare "risk" HMO plan. (Id. at ¶ 4). The HCFA subsequently contracted with the Defendant for the provision of Medicare "risk" services in a specified geographical region of Ohio. (Id. at ¶ 5). After undergoing an additional review and application process in 1996, the HCFA approved the Defendant's expansion of its Anthem Senior Advantage service area into additional Ohio counties. (Id. at ¶ 6).
The Defendant's Anthem Senior Advantage contracts with the Plaintiffs state that the Defendant's contractual relationship with the HCFA is renewed annually. (Complaint, at ¶ 18). The Plaintiffs' contracts with the Defendant also include a section entitled, "Termination of Coverage." The section lists a variety of reasons for which Anthem Senior Advantage members may be "involuntarily disenrolled" from the plan. (Id. at ¶ 22). These reasons include: (1) relocation outside plan's service area; (2) remaining outside the service area for more than ninety consecutive days; (3) loss of entitlement to Medicare "part B" benefits; (4) fraud or forgery; (5) failure to pay any charges; (6) any material misrepresentations; (7) unauthorized use of membership cards or similar documents to receive services; (8) disenrollment "for cause"; (9) termination of the Defendant's contract with the HCFA; and (10) death of the enrollee. (Id.).
In May, 1998, the Defendant distributed correspondence to approximately 20,000 plan enrollees in twenty-two Ohio counties, stating that Anthem Senior Advantage would discontinue its coverage as of December 31, 1998. (Id. at 24). As a result, the Plaintiffs contend that the affected enrollees in six counties have no alternative Medicare HMO option, and that they face the prospect of returning to traditional Medicare coverage, locating a supplemental policy, and possibly paying higher premiums. (Id. at ¶ 25).
After receiving the Defendant's correspondence, the Plaintiffs filed a nine-count Complaint in the Court of Common Pleas for Greene County, Ohio. (Notice of Removal, Doc. #1, at Exh. A). The Complaint alleges contractual and tort law claims stemming from the Defendant's unilateral termination of its Anthem Senior Advantage plan in the Plaintiffs' counties. (Id.). As a result, the Plaintiffs seek compensatory and punitive damages, specific performance, and declaratory and injunctive relief. (Id.).
The Defendant subsequently removed the Plaintiffs' lawsuit to federal court on July 30, 1998. (Notice of Removal, Doc. #1). In response, the Plaintiffs have filed a Motion for Remand to the Court of Common Pleas for Greene County, Ohio. (Doc. #8). That Motion has been fully briefed, and it is now before the Court for resolution.
II. Analysis
Pursuant to 28 U.S.C. § 1441, a party may remove an action to federal court if the action is one over which the District Courts have original jurisdiction. The Defendant's Notice of Removal (Doc. #1) alleges that the present lawsuit is one over which the Court possesses original jurisdiction under 28 U.S.C. § 1331 and § 1346. The Notice also states that removal is proper under 28 U.S.C. § 1442(a) and 28 U.S.C. § 1441(a) and (b). The Court will address these potential grounds for removal in the order that best facilitates its analysis.
As the Plaintiffs properly note, 28 U.S.C. § 1441(a) and (b) are the statutory provisions governing the general conditions under which actions may be removed from state court. They do not provide an independent basis for the Court's exercise of "original jurisdiction" over their Complaint. Rather, they merely authorize the removal of any action over which the Court does possess such original jurisdiction.
1. Removal under 28 U.S.C. § 1442(a)
In support of its decision to remove the Plaintiffs' Complaint, the Defendant relies upon 28 U.S.C. § 1442(a)(1), the federal officer removal statute, which provides:
"(a) A civil action or criminal prosecution commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending:
"(1) The United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office or on account of any right, title or authority claimed under any Act of Congress for the apprehension or punishment of criminals or the collection of the revenue."
This statute is intended to prevent federal officers or persons acting under their direction from being tried in state courts for acts committed within the scope of their federal employment. Peterson v. Blue Cross/Blue Shield of Texas, 508 F.2d 55, 58 (5th Cir. 1975). In Willingham v. Morgan, 395 U.S. 402, 405 (1969), the Court recognized that 28 U.S.C. § 1442(a)(1) is "an incident of federal supremacy," and that one of its purposes is to provide a federal forum when federal officers, or those acting at their direction, must assert defenses arising from their official duties. The test for removal is broader than the test for official immunity, and the statute's scope is not "narrow" or "limited."Peterson, 508 F.2d at 58, citing Colorado v. Symes, 286 U.S. 510, 517 (1932). Consequently, the judiciary should not frustrate the statute's broad application by engaging in a "grudging interpretation" of its provisions. Willingham, 395 U.S. at 405-507.
A non-officer defendant may remove an action from state court under 28 U.S.C. § 1442(a)(1) by establishing: (1) that it is a "person" within the meaning of the statue; (2) that it acted pursuant to a federal officer's directions, and that a causal nexus exists between the defendant's actions under color of federal office and the plaintiffs' claims; and (3) that it has a colorable defense to the plaintiffs' claims. Mesa v. California, 489 U.S. 121 (1989); Willingham v. Morgan, 395 U.S. 402 (1969);Winters v. Diamond Shamrock Chemical Co., 149 F.3d 387, 398, 400 (5th Cir. 1998). A defendant satisfying these requirements possesses an absolute right to remove an action to federal court, regardless of whether the lawsuit originally could have been brought in federal court. Magnin v. Teledyne Continental Motors, 91 F.3d 1424, 1427 (11th Cir. 1996), citing Willingham, 395 U.S. at 406. "If the statutory prerequisites are satisfied, section 1442(a)(1) provides an independent federal jurisdictional basis."Id. In the present case, the Defendant has met its burden of establishing each of the foregoing elements.
First, the Court agrees that the Defendant qualifies as a "person" under the federal officer removal statute. As noted above, the statute authorizes any "person" acting under a federal officer to remove an action to federal court. In support of their argument that the Defendant does not qualify as a "person," the Plaintiffs rely upon the District Court's analysis in Arnold v. Blue Cross and Blue Shield of Texas, Inc., 973 F. Supp. 726, 739 (S.D.Tex. 1997). In Arnold, the court expressed serious doubt about whether a corporation qualified as a "person" under the federal officer statute. In so doing, the court looked toInternational Primate Protection League v. Administrators of Tulane Educational Fund, 500 U.S. 72 (1991), in which the Supreme Court construed 28 U.S.C. § 1442(a)(1) as allowing removal byindividual officers of the government, but not agencies of the government. The Arnold court reasoned by analogy that the statute permitted removal by individuals but not corporations.
The Plaintiffs fail to acknowledge, however, that in the wake of International Primate, Congress amended the federal officer statute to its present form and plainly authorized removal by agencies and individual officers. See State of Nebraska, ex rel., Department of Social Services v. Bentson, 146 F.3d 676, 678 (9th Cir. 1998) (noting that Congress has enacted the Federal Courts Improvement Act of 1996, Pub.L. 104-317, 110 Stat. 3847, 3850, "which amended the removal statute to expressly allow removal by federal agencies"); Dalrymple v. Grand River Dam Authority, 145 F.3d 1180, 1184 (10th Cir. 1998) (recognizing that the amendment to the federal officer statute "legislatively reversed the Supreme Court's decision in International Primate . . .").
Given Congress' recent amendment to 28 U.S.C. § 1442(a)(1), the Court finds no merit to the Plaintiffs' argument that the statute protects only individuals and not agencies or corporations. Furthermore, the overwhelming weight of recent judicial authority supports the view that corporations qualify as "persons" under the federal officer statute. See Winters, 149 F.3d at 398; Arness v. Boeing North American, Inc., 997 F. Supp. 1268, 1271-1272 (C.D.Cal. 1998); Ruffin v. Armco Steel Corp., 959 F. Supp. 770, 773 (S.D.Tex. 1997); Good v. Armstrong World Indus., 914 F. Supp. 1125, 1127-1128 (E.D.Pa. 1996); Fung v. Abex Corp., 816 F. Supp. 569, 572 (N.D.Cal. 1992); Aikin v. Big Three Industries, Inc., 851 F. Supp. 819, 822-23 (E.D.Tex. 1994); Ryan v. Dow Chemical Co., 781 F. Supp. 934, 939 (E.D.N.Y. 1992). Based upon the foregoing authority, and the Court's reading of the statute, the Defendant qualifies as a "person" under 28 U.S.C. § 1442(a)(1).
Second, the Court concludes that the Defendant acted under the direction of a federal officer, as that phrase is used in the statute, and that a causal nexus exists between the Defendant's actions, under the color of federal office, and the Plaintiffs' claims. In reaching this conclusion, the Court first notes that the Medicare "risk" program offered by the Defendant is a creature of federal statute. Federal law provides that the program shall be administered by the Secretary of Health and Human Services either directly or by contract. Title 42 of the United States Code, which governs Medicare "risk" programs, such as the one provided by the Defendant, states:
"Except as otherwise provided in this subchapter and in the Railroad Retirement Act of 1974 [ 45 U.S.C.A. § 231 et seq.], the insurance programs established by this subchapter shall be administered by the Secretary [of Health and Human Services]. The Secretary may perform any of his functions under this subchapter directly, or by contract providing for payment in advance or by way of reimbursement, and in such installments as the Secretary may deem necessary."42 U.S.C. § 1395kk (Emphasis added).
This paragraph indicates that the Defendant's Anthem Senior Advantage contracts with the individual Plaintiffs are a product of the federal government delegating its administrative obligations to the Defendant. Accordingly, the Court agrees that the Defendant, in its role as a provider of Medicare "risk" coverage, was acting under a federal officer, the Secretary of the Department of Health and Human Services. Cf. Ryan, 781 F. Supp. at 949 (noting that "Defendants in suits against private companies acting as fiscal intermediaries for the federal Medicare program have been found entitled to removal under section 1442(a)(1)");Group Health, Inc. v. Blue Cross Ass'n, 587 F. Supp. 887, 891 (S.D.N.Y. 1984); (finding that Medicare "fiscal intermediaries" act as agents of the federal government); Neurological Associates v. Blue Cross/Blue Shield of Florida, Inc., 632 F. Supp. 1078 (S.D.Fla. 1986). In further support of this conclusion, the Court notes that the Defendant's relationship with the Plaintiffs was governed, from its inception through its ultimate termination, by a multitude of contractual, administrative, and statutory regulations, all imposed by the federal government via the authority of the Secretary of the Department of Health and Human Services.
In Grijalva v. Shalala, 152 F.3d 1115 (9th Cir. 1998), the Ninth Circuit recently examined the effect of this extensive control over entities, like the Defendant, which provide the public with Medicare "risk" plans under a contract with the federal government. When individuals enroll in such plans, "HMOs provide to enrolled Medicare beneficiaries all of the Medicare services provided in the [Medicare] statute . . . in exchange for a monthly flat payment from the Secretary [of Health and Human Services]." Id. at 1117. The Medicate statute provides numerous procedural protections for individuals who enroll in the HMOs. Id. The federal government also regulates the conduct of the HMOs and imposes various sanctions, including contract termination, if the HMOs violate their contractual, regulatory, or statutory obligations. Id. at 118. As a result of this pervasive control, the Ninth Circuit reasoned:
In their Reply memorandum (Doc. #14), the Plaintiffs argue that Grijalva is not pertinent, because it addressed whether an HMO's denial of Medicare benefits constitutes state action. Although the Court agrees that Grijalva does not address the issue of removal, the Court finds it instructive, because it examines the manner in which the federal government regulates and controls the activities of Medicare HMO programs, such as the one offered by the Defendant. Additionally, the Court notes that the "state action" test articulated in Grijalva closely resembles the standard for finding a nexus between the Plaintiffs' claims and the Defendant's actions under the color of official authority for purposes of 28 U.S.C. § 1442(a)(1). In Grijalva, the court explained that "state action" exists "when there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself." Grijalva, 152 F.3d at 1119. Similarly, in Arness v. Boeing North American, Inc., 997 F. Supp. 1268, 1273 (C.D.Cal. 1998), the District Court noted that a defendant acts "under the direction" of a federal officer, for purposes of 28 U.S.C. § 1442(a)(1), if the federal government had direct and detailed control over the defendant's actions, i.e., "if a causal nexus exists between the conduct charged in [p]laintiff's claims and the acts performed by [the defendant] at the direction of official federal authority."
"We find that HMOs and the federal government are essentially engaged as joint participants to provide Medicare services such that actions of HMOs in denying medical services to Medicare beneficiaries and in failing to provide adequate notice may fairly be attributed to the federal government. The Secretary extensively regulates the provision of Medicare services by HMOs. HMOs are required, by the Medicare statute and their contracts with the Secretary, to comply with all federal laws and regulations. The Secretary is required to ensure, inter alia, that HMOs provide adequate notice and meaningful appeal procedures to beneficiaries. The Secretary pays HMOs for each enrolled Medicare beneficiary (regardless of the services provided). The federal government has created the legal framework — the standards and enforcement mechanisms — within which HMOs make adverse determinations, issue notices, and guarantee appeal rights. Medicare beneficiaries enrolled in HMOs may appeal an HMO's adverse determination to the Secretary, who has the power to overturn the HMO's decision. Each of these factors alone might not be sufficient to establish federal action. Together they show federal action."
Although Grijalva involved an HMO's denial of specific Medicare benefits to plan participants, the Court finds the Ninth Circuit's decision significant for its recognition of the extensive governmental control exerted over entities that offer Medicare "risk" contracts to the public. Notably, the federal government exercised extensive control over all aspects of the Defendant's relationship with the Plaintiffs, not just its benefits determinations. In fact, the Court notes that the HCFA supplied the Defendant with the precise language it used in its contracts with the Plaintiffs — the very terminology upon which the Plaintiffs now rest their breach of contract allegations.
The crux of the Plaintiffs' contract claims is that the Defendant breached its Anthem Senior Advantage contract with them when it "selectively terminated" medical coverage in their counties. (Complaint, Doc. #1, at Exh. A, ¶ 8). The Court notes, however, that the HCFA expressly authorized the Defendant to undertake such "service area reductions." In particular, the HCFA and federal regulations permitted the Defendant to "nonrenew" or "terminate" its contract with the federal government, provided that it followed certain procedures, which include providing advance notice to the government and affected plan enrollees. See Medicare Risk HMO Manual, HCFA Pub. 75 at § 3004.1, Gross affidavit, at Exh. 5; 42 C.F.R. § 417.488, § 417.492, and § 417.494. Significantly, the government's Medicare Risk HMO Manual, which was provided to the Defendant, states that "HCFA views service area reductions as partial contract terminations or nonrenewals. All requirements for nonrenewals and terminations also apply to service area reductions." HCFA Pub. 75 at 3004.1. As a result, the federal government authorized and regulated the conduct underlying the Plaintiffs' breach of contract claims.
Equally significantly, the federal government also recommended the precise contract language upon which the Plaintiffs' breach of contract claims rest. Among the publications that the HCFA provided to the Defendant was a Medicare Managed Care Marketing Guide. (Gross affidavit, at ¶ 7). That guide included a model member contract/subscriber agreement. Although the Defendant's use of the model contract was not mandatory, the HCFA informed the Defendant that "approval will be expedited for those plans choosing to use the model language." (Id., at Exh. 6, p. 59). The model contract included a section addressing "involuntary disenrollment." (Id. at 88). In relevant part, it states: "You [the enrollee] may only be involuntarily disenrolled by (Health Plan Name) for only the following reasons . . . (8) The contract between (Health Plan Name) and HCFA is terminated." (Id. at 89). In their Complaint, the Plaintiffs contend that neither this reason, nor any of the other reasons listed, allowed the Defendant to "selectively terminate some Ohio residents from the Plan while maintaining coverage for other Ohio residents." (Doc. #1, at Exh. A, ¶ 23).
None of the other listed reasons for involuntary disenrollment appears remotely applicable in the present case.
As noted above, however, the federal government authorized the Defendant to reduce its service area. It also informed the Defendant that the HCFA "views service area reductions as partial contract terminations or nonrenewals" of the government's contract with the Defendant. (Gross affidavit, Exh. 5, at § 3004.1). The government also supplied, verbatim, the model member contract language that the Defendant used to inform the Plaintiffs that they could be "involuntarily disenrolled" if the Defendant "terminated" its contract with the federal government. Therefore, to the extent that the Plaintiffs raise breach of contract claims, based upon the "termination of coverage" language in their Anthem Senior Advantage member contracts, these claims arise from contract language suggested and approved by the federal government. In short, the record establishes that the Defendant was complying with specific government direction when it utilized the contract language upon which the Plaintiffs base their contract claims.
The critical inquiry under the federal officer removal statute is the extent to which the Defendant "acted under federal direction" at the time it engaged in the acts underlying the Plaintiffs' lawsuit. Ryan v. Dow Chemical Co., 781 F. Supp. 934, 946 (E.D.N.Y. 1992). In the present case, the Court agrees that the government did not "direct" the Defendant to reduce its service area and terminate the Plaintiffs' Anthem Senior Advantage member contracts. The Defendant need not have acted pursuant to a direct order, however. It is sufficient for purposes of federal officer removal jurisdiction if the acts underlying the Plaintiffs' lawsuit were performed pursuant to comprehensive and detailed regulations. Id. at 947; Fung, 816 F. Supp. at 572. In the present case, the HCFA extensively regulated all aspects of the Defendant's operations. In particular, it specifically authorized the Defendant to engage in service area reductions, and the Plaintiffs are suing based upon contract terms that the Defendant drafted in compliance with the HCFA's "model" contract termination language. Under these circumstances, the Court finds that the Defendant "acted under" the Secretary of the Department of Health and Human Services.
For purposes of the federal officer removal statute, the narrow issue before the Court is simply whether the government authorized the Defendant's service area reduction, and specified the termination of coverage language that the Defendant used in its enrollee contracts with the Plaintiffs, such that a causal nexus exists between the HCFA's directions and the Plaintiffs' breach of contract claims. Based upon the analysis set forth above, the Court is persuaded that the Defendant notified the Plaintiffs of its service area reduction, using authority granted by the HCFA, with the approval of the HCFA, and in accordance with the HCFA's specific instructions and recommended contract language. Consequently, to the extent that the Plaintiffs allege breach of contract, arising from the Defendant's service area reduction, the Court finds a causal nexus between the conduct charged in the Plaintiffs' Complaint and the Defendant's actions under the color of federal office.
To the extent that the Plaintiffs allege fraud and other tortious conduct by the Defendant, the Court may exercise supplemental jurisdiction over these claims, if any of the Defendant's actions were performed under the color of federal law and the other requirements of 28 U.S.C. § 1442(a)(1) are satisfied.
In opposition to this conclusion, the Plaintiffs suggest that case law allowing Medicare "fiscal intermediaries" or "carriers" to remove under 28 U.S.C. § 1442(a)(1) is distinguishable, because the Defendant herein is not a "fiscal intermediary" or "carrier." This distinction, however, does not preclude the Defendant from removing the present Complaint. In Grijalva, the District Court thoroughly analyzed and rejected the Plaintiffs' argument, finding no significant distinction between "fiscal intermediaries," "carriers," and HMOs that provide "risk-based" managed care. The District Court reasoned:
"Defendant's argument that HMOs are . . . private providers ignores the Medicare scheme. In risk-based, managed care, the HMO performs two functions: direct provider of medical care and insurer. In the fee-for-service system, separate entities perform these functions: medical providers, i.e., doctors, and insurance companies, e.g. Blue Cross Blue Shield. This case questions the performance of the latter function by private provider HMOs.
"There is really nothing new about a private, non-governmental entity being involved in the administrative arena of Medicare.
"`The determination and review procedures for claims arising under the two parts of the Act [Parts A and B] are similar. Both are administered primarily through non-governmental organizations, usually insurance companies, pursuant to contracts with the Department. . . . Claims for payment or reimbursement are submitted to the carrier, which makes an initial determination as to the claim and sends a notice of its action together with any payment to the claimant. If the claimant is dissatisfied, a request for review may be made. . . .'
Gray Panthers v. Schweiker, 652 F.2d 146, 149 (D.C. Cir. 1980) (emphasis added). These fiscal intermediaries act as agents for the Secretary. [citations omitted].
"There is nothing unique about the performance of these same duties by HMOs which warrants a contrary finding here. Even if HMOs' performance of administrative duties is somehow distinguishable from those authorized by 42 U.S.C. § 1395(h), the Court finds that HMO denials of Medicare services are properly held state action. . . ."Grijalva v. Shalala, 946 F. Supp. 747, 752-753 (D.Ariz. 1996),aff'd, 152 F.3d 1115 (9th Cir. 1998). In Grijalva, the District Court found no significant basis for distinguishing the actions of "fiscal intermediaries," "carriers," and HMOs that provide individuals with Medicare "risk" plans. The Ninth Circuit subsequently affirmed the District Court's judgment, accepting its "cogent analysis and conclusion" that the government's regulation and delegation of authority to HMOs constituted federal action. In the present case, the government's equally rigorous regulation and delegation of authority to the Defendant support a finding that the Defendant acted, at all relevant times, under the direction and control of the Secretary of the Department of Health and Human Services. Third, the Defendant has asserted a colorable federal defense to the Plaintiffs' claims. In its Answer (Doc. #2), the Defendant asserts, inter alia, an immunity defense. The Defendant reasserts this federal law defense in its memorandum opposing the Plaintiff's remand request. (Doc. #11 at 11). In support of this defense, the Defendant cites case law for the proposition that "Medicare intermediaries and carriers can be governmental agents for immunity purposes." Bushman v. Seiler, 755 F.2d 653, 655 (8th Cir. 1985); Anderson v. Occidental Life Ins. Co., 727 F.2d 855, 856 (9th Cir. 1984); see also Pani v. Empire Blue Cross and Blue Shield, 152 F.3d 67, 72 (2nd Cir. 1998) (recognizing that several District Courts have found fiscal intermediaries and carriers entitled to official immunity for discretionary acts undertaken within the scope of their authority under the Medicare Act).
"Under Part A of Medicare, the organizations are called `intermediaries.' Under Part B, the organizations are called `carriers.'" Grijalva, 946 F. Supp. at 752 n. 7.
In opposition to this conclusion, the Plaintiffs suggest that the Ninth Circuit's decision in Ardary, 98 F.3d at 496, forecloses the possibility that the Defendant acted under the direction of the Secretary of Health and Human Services for purposes of the federal officer removal statute. To the contrary, the Court first notes that Ardary did not address 28 U.S.C. § 1442(a)(1). Rather, the court considered whether the plaintiff's claims "arose under" the Medicare Act and, therefore, were subject to exclusive administrative review under 42 U.S.C. § 405. Significantly, as this Court will explain, infra at 20-23, 42 U.S.C. § 405(h) prohibits District Courts from exercising 28 U.S.C. § 1331 original jurisdiction over claims against "the United States, the Secretary, or any officer or employee thereof," if the claims "arise under" the Medicare Act. In Ardary, the plaintiff's claims were brought against Aetna Health Plans of California, which, like the Defendant in the present case, was a private Medicare HMO provider, and not the United States, the Secretary, or any officer or agent thereof. Nevertheless, the Ninth Circuit presumed that 42 U.S.C. § 405(h) would apply if the claims "arose under" the Medicare Act, without even questioning § 405's applicability to claims brought against Aetna, a private entity, as opposed to the federal government. Therefore, Ardary lends no support to the Plaintiffs' claim that the Defendant fails to qualify as a government agent for purposes of the federal officer removal statute.
For purposes of determining whether this action was properly removed under 28 U.S.C. § 1442(a)(1), the Court need not decide whether the Defendant will prevail on its federal defense of official immunity. Indeed, the test for removal is broader than the test for official immunity. Willingham, 395 U.S. at 407. The Defendant "need not win his case before he can have it removed."Id. The defense raised must only be "colorable," and its ultimate validity is not to be determined at the time of removal.Mesa, 489 U.S. at 129; Winters, 149 F.3d at 400. In the present case, the Defendant has raised a "colorable" immunity defense, for purposes of removal, based upon the case law set forth above.
In reaching this conclusion, the Court makes no determination regarding the merits of the Defendant's immunity argument. The Court merely notes that, in some instances, other courts have found immunity applicable to entities contracting with the government to provide Medicare services. Whether the present circumstances are analogous is a determination that the Court need not, and should not, make when ruling upon a motion to remand.Mesa, 489 U.S. at 129.
In opposition to this conclusion, the Plaintiffs insist that preemption, as opposed to immunity, is not a "colorable" defense sufficient to justify removal. (Doc. #14 at 8). In the present case, however, the Defendant plainly asserts official immunity, and not preemption, as the basis for its federal defense under 28 U.S.C. § 1442(a)(1). (Doc. #11 at 11). The Plaintiffs have presented no argument against the Defendant's immunity defense or the case law cited in support of thereof. Furthermore, the Court finds unpersuasive the Plaintiffs' citation to Arnold, 973 F. Supp. at 730, for the proposition that preemption does not satisfy the "colorable defense" requirement for removal. In reality, theArnold court determined that preemption does satisfy the "colorable defense" requirement under the federal officer removal statute. See Arnold, 973 F. Supp. at 739 ("With respect to the fourth requirement [a colorable defense], Blue Cross clearly has raised a colorable federal defense of preemption to [p]laintiff's claims."). The passage cited by the Plaintiffs notes that mere preemption, as opposed to complete preemption, will not justify removal under 28 U.S.C. § 1331. Id. at 730. It says nothing about preemption operating as a "colorable defense" under 28 U.S.C. § 1442(a)(1). For the foregoing reasons, the Court finds that the Defendant has raised a colorable defense sufficient to justify removal under 28 U.S.C. § 1442(a)(1). Therefore, this action was properly removed under the federal officer removal statute.
2. Original Jurisdiction under 28 U.S.C. § 1331
The Defendant also argues that the Court possesses original jurisdiction over this action pursuant to 28 U.S.C. § 1331, which provides District courts with original jurisdiction over claims that "arise under" federal law. More specifically, the Defendant insists that the Plaintiffs' various state-law claims "arise under" the Medicare Act. The United States Supreme Court has devised two tests to determine whether a plaintiff's claims "arise under" the Medicare Act. Those two tests were articulated inHeckler v. Ringer, 466 U.S. 602, 614, 615 (1984), and have been widely applied. Under Ringer, a plaintiff's claims "arise under" the Medicare Act if the Act provides "`both the standing and the substantive basis for the presentation' of the claims." Id. at 615, quoting Weinberger v. Salfi, 422 U.S. 749, 760-61 (1975). A plaintiff's claims also "arise under" the Act if they are "inextricably intertwined" with a claim for Medicare benefits. Id. at 614.
In the present case, the parties vigorously contest whether the Plaintiffs' claims "arise under" the Medicare Act, within the meaning of 28 U.S.C. § 1331. Given the Court's conclusion, supra, that removal of the Plaintiffs' Complaint was proper under 28 U.S.C. § 1442(a)(1), however, the Court need not decide whether the claims at issue "arise under" the Act. Nevertheless, the Court notes that if the Plaintiffs claims do "arise under" the Medicare Act, then original jurisdiction under 28 U.S.C. § 1331 does not exist.
The Medicare Act provides an exclusive administrative review process for all claims that "arise under" its provisions. Only after seeking administrative review may plaintiffs obtain judicial review, which is authorized by 42 U.S.C. § 405(g). Ardary, 98 F.3d at 498-499. In Heckler v. Ringer, 466 U.S. 602 (1984), the Supreme Court noted that 42 U.S.C. § 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395ii, "provides that [42 U.S.C.] § 405(g), to the exclusion of 28 U.S.C. § 1331 , is the sole avenue for judicial review for all `claim[s] arising under' the Medicare Act." Id. at 615 (Emphasis added). More recently, in United States v. Blue Cross and Blue Shield of Alabama, Inc., 156 F.3d 1098, 1102 (11th Cir. 1998), the court noted that "[t]he third sentence of subsection 405(h) clearly revokes federal-question jurisdiction in the district courts under 28 U.S.C. § 1331 over all cases `arising under' the Medicare Act." Other federal courts, including the Sixth Circuit, also have recognized that 28 U.S.C. § 1331 is not a viable basis upon which to bring claims that "arise under" the Medicare Act. See Livingston Care Center, Inc. v. United States, 934 F.2d 719, 722 (6th Cir. 1991); Good Samaritan Medical Center v. Secretary of Health and Human Services, 776 F.2d 594, 597 n. 6 (6th Cir. 1985); Ancillary Affiliated Health Services, Inc. v. Shalala, 165 F.3d 31, 1998 WL 847028 (7th Cir. 1998) (unpublished table decision) ("Section 405(h) of Title 42 of the United States Code precludes federal question jurisdiction for all `claim arising under' the Medicare Act, except as provided in § 405(g)."). Given that Congress has explicitly revoked the Court's original jurisdiction under 28 U.S.C. § 1331 for all claims "arising under" the Medicare Act, the Defendant may not remove the Plaintiffs' Complaint on that basis. Furthermore, if the Plaintiffs' claims do not "arise under" the Medicare Act, then jurisdiction under 28 U.S.C. § 1331 does not exist, because the Defendant has failed to identify any other federal law or constitutional provision under which the Plaintiffs' claims do "arise."
The Eleventh Circuit noted that "[n]othing in subsection 405(h), however, or in the rest of section 405, suggests that the third sentence of subsection 405(h) eliminates federal-question jurisdiction over all actions implicating the Medicare Act, regardless of the availability[,] or unavailability[,] of administrative and judicial review within the Medicare administrative scheme." Id. at 1104. The court reasoned that if "administrative and judicial review is unavailable under section 405, then federal-question jurisdiction under section 1331 is not precluded by operation of subsection 405(h) . . . [because] the claim does not `arise under' Medicare. In U.S. v. Blue Cross and Blue Shield, the plaintiff had filed a qui tam action against his former employer, a Medicare fiscal intermediary. Id. at 1099. The Eleventh Circuit concluded that the claim did not "arise under" the Medicare Act, because the plaintiff could not have obtained administrative review pursuant to section 405. Rather, it "arose under" the False Claims Act, and federal-question jurisdiction existed on the basis of that statute. Id. at 1110.
In the present case, however, the Defendant argues that the Plaintiffs' claims do "arise under" the Medicare Act. If so, exclusive original jurisdiction is vested in the administrative review process. See Central States, Southeast and Southwest Areas Pension Fund v. T.I.M.E.-D.C., Inc., 826 F.2d 320, 326 (5th Cir. 1987) (recognizing that 42 U.S.C. § 405(h) is a "statutorily mandated jurisdictional prerequisite rather than an acknowledgment of the `prudential,' judicial doctrine requiring such exhaustion: That the third sentence of § 405(h) is more than a codified requirement of administrative exhaustion is plain from its own language, which is sweeping and direct and which states that no action shall be brought under § 1331 . . ."). On the other hand, if the Plaintiffs' claims merely touch upon, or implicate, the Medicare Act, but do not "arise" thereunder, then § 405(h) does not preclude the Court's exercise of federal-question jurisdiction. Unlike the former employee in Blue Cross and Blue Shield, however, the Defendant cites no other federal statute under which the Plaintiffs' claims might "arise" for purposes of conferring original jurisdiction on the Court. Consequently, if the Plaintiffs' claims do not "arise under" the Medicare Act, then removal pursuant to 28 U.S.C. § 1331 remains improper.
3. Original Jurisdiction under 28 U.S.C. § 1346
The Defendant's Notice of Removal also alleges that this action was properly removed under 28 U.S.C. § 1346. In their Motion for Remand (Doc. #8), however, the Plaintiffs note that the Defendant has failed to identify any particular subsection of 28 U.S.C. § 1346 upon which it relies. The Plaintiffs then argue that none of the statute's numerous subsections apply under the facts of the present case. (Id. at 8-11). In response, the Defendant has not even mentioned 28 U.S.C. § 1346 in its Memorandum in Opposition to a remand (Doc. #11). The Court's own cursory review of the statute reveals no obvious provision that would justify removal. Given the Defendant's failure to identify any particular section of 28 U.S.C. § 1346 upon which it relies, and its failure to provide any argument supporting the statute's applicability, the Defendant has not established that removal was appropriate under 28 U.S.C. § 1346. See Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 948 (6th Cir. 1994) ("The burden to establish federal jurisdiction in this case is clearly upon the defendants as the removing party.").
III. Plaintiff's Request for Costs, Expenses, and Attorney's Fees
Having found that the Defendant properly removed this action pursuant to 28 U.S.C. § 1442(a)(1) from the Common Pleas Court of Greene County, Ohio, the Court denies the Plaintiffs' request for an award of costs and actual expenses, including attorney's fees, incurred as a result of the Defendant's removal.
IV. Conclusion
The Plaintiffs' Motion for Remand to the Court of Common Pleas for Greene County, Ohio (Doc. #8), is hereby OVERRULED.
The parties will take note that a telephone conference call has been set for Friday, March 12, 1999, at 3:00 p.m., for the purpose of establishing a trial date and other dates leading to the resolution of this litigation.
March 3, 1999