Ninth Circuit Holds Medicare Act’s Exhaustion Requirements And Preemption Provision Bar Plaintiffs’ Common Law Claims


At long last, the Ninth Circuit Court of Appeals issued its second opinion in the Uhm v. Humana, Inc., -- F.3d -- (9th Cir. 2010), matter, which found the Medicare Act's exhaustion requirements and preemption provision barred all of the plaintiffs' common law claims. Last summer, the court vacated the original opinion (which issued on August 25, 2008), requested amicus assistance from the Centers for Medicare and Medicaid Services, and took the matter under submission.

The Uhms alleged causes of action for breach of contract, unjust enrichment, fraud and violation of state consumer protection laws. The appellate court's first opinion affirmed the district court's judgment, finding the Medicare Act preempted the plaintiffs' claims against Humana for recovery of Medicare prescription drug benefits based on implied conflict preemption principles. The original panel found the Medicare Act's coverage determination process [42 U.S.C. sections 1395w-104(f) and (g)] preempted causes of action for breach of contract and unjust enrichment claims because they were "classic" coverage disputes or subject to the Act's grievance procedure. The Court of Appeals similarly found the extensive CMS regulations governing marketing materials and practices preempted the plaintiffs' consumer protection law and fraud claims.

Although the Ninth Circuit again affirmed the district court's judgment, its new opinion reflects a completely different analysis, which likely was formulated after receiving not only CMS' amicus brief but several others, too. This time, the Court of Appeals found that federal courts lack jurisdiction to address the plaintiffs' breach of contract and unjust enrichment claims because the plaintiffs failed to exhaust their remedies under the Medicare Act [42 U.S.C. sections 405(g) and (h)], and further held that the Medicare Act expressly preempted the plaintiffs' fraud and consumer protection law claims under its preemption clause [42 U.S.C. section 1395w-26(b)(3), incorporated into Part D via 42 U.S.C. section 1395w-112(g)].

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