Main & Assocs., Inc. v. Blue Cross & Blue Shield of Ala. (In re Blue Cross & Blue Shield of Ala.)

• Citation: 90 So.3d 158
• Decision Date: 17 February 2012
• Docket Number: 1101464.
• Court: Alabama Supreme Court
• Parties: Ex parte BLUE CROSS AND BLUE SHIELD OF ALABAMA. (In re Main & Associates, Inc., d/b/a Southern Springs Healthcare Facility v. Blue Cross and Blue Shield of Alabama).

90 So.3d 158

Ex parte BLUE CROSS AND BLUE SHIELD OF ALABAMA.

(In re Main & Associates, Inc., d/b/a Southern Springs Healthcare Facility

v.Blue Cross and Blue Shield of Alabama).

1101464.

Supreme Court of Alabama.

Feb. 17, 2012.

Cavender C. Kimble and Jason B. Tompkins of Balch & Bingham LLP, Birmingham, for petitioner.

J. Matthew Stephens, Phillip W. McCallum, Robert G. Methvin, Jr., and Rodney E. Miller of McCallum, Methvin & Terrell, P.C., Birmingham; and Myron C. Penn and L. Shane Seaborn of Penn & Seaborn, Union Springs, for respondents.

Richard Brockman, Angela Cameron, Monica Nelson Fischer, and Zachary Trotter of Johnston Barton Proctor & Rose, LLP, Birmingham, for amicus curiae Alabama Nursing Home Association, in support of the respondent.

WOODALL, Justice.

Main & Associates, Inc., d/b/a Southern Springs Healthcare Facility (“Southern Springs”), filed an action in the Bullock Circuit Court, on behalf of itself and a putative class of Alabama nursing homes, against Blue Cross and Blue Shield of Alabama (“BCBS”), asserting claims of breach of contract, intentional interference with business relations, negligence and/or wantonness, and unjust enrichment and seeking injunctive relief. BCBS removed the case to the United States District Court for the Middle District of Alabama, Northern Division (“the federal court”), pursuant to 28 U.S.C. §§ 1331 and 1441(b), arguing, among other things, that SouthernSprings' claims arose under the Medicare Act and that the Medicare Act, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“the MMA”), Pub.L. No. 108–173 (Dec. 8, 2003), 117 Stat. 2066, completely preempts Southern Springs' state-law claims. Southern Springs moved the federal court to remand the case to the circuit court, arguing that the federal court did not have jurisdiction over its claims. The federal court granted the motion and remanded the case to the Bullock Circuit Court.

After remand, BCBS moved the circuit court for a judgment on the pleadings, arguing that Southern Springs had not exhausted its administrative remedies and that, therefore, the circuit court did not have subject-matter jurisdiction over the case. Specifically, BCBS argued that Southern Springs had “fail[ed] to state a claim upon which relief [could] be granted because all of [its] claims, which are ostensibly based on state law, are expressly preempted by the Medicare Act.” BCBS also argued that Southern Springs could challenge BCBS's “alleged conduct only under the Medicare Act and federal standards promulgated thereunder[,] standards [that] are subject to a detailed administrative review process and, if applicable, to subsequent judicial review in federal court.” (Emphasis in original.) The circuit court denied BCBS's motion, and BCBS timely petitioned this Court for a writ of mandamus directing the circuit court to dismiss Southern Springs' claims. We conclude that Southern Springs' claims are inextricably intertwined with claims for coverage and benefits under the Medicare Act, 42 U.S.C. § 1395 et seq., and that, therefore, pursuant to Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984), the claims arise under the Medicare Act and are subject to the mandatory administrative procedures and limited judicial review set forth in 42 U.S.C. § 405. Southern Springs has not exhausted its administrative remedies, and the circuit court does not have jurisdiction over its claims. Therefore, we grant BCBS's petition and issue a writ of mandamus directing the circuit court to dismiss the claims against BCBS.

Facts and Procedural History

The following facts are from the opinion of the federal court remanding the case to the Bullock Circuit Court:

“Medicare is a social security program that provides federally subsidized health insurance for the aged and disabled. The Department of Health and Human Services, acting through[ ] the Centers for Medicare and Medicaid Services [,] administers the Medicare program. Benefits available through Medicare are prescribed by law and divided into four ‘parts.’ Part A provides hospital care, skilled nursing care, home health care, and hospice care benefits. Part B provides coverage for services of physicians and out-patient services. Part D provides benefits for prescription drugs. Part C gives Medicare beneficiaries the option to contract with private health insurance plans to obtain the benefits normally available under Parts A and B, as well as other coverage. Such privately administered plans are known as Medicare Advantage Plans.

“BCBS is a private health insurance company. In addition to its regular health insurance plans and products, BCBS offers a Medicare Advantage Plan specifically tailored for Medicare beneficiaries seeking insurance under Part C. At issue in this lawsuit is a BCBS Medicare Advantage Plan known as Blue Advantage. When Medicare recipients enroll in Blue Advantage, Medicareno longer pays providers of covered services directly when the recipients receive covered medical treatment. Medicare pays BCBS a set monthly fee called a capitation rate to administer and manage the enrollee's healthcare insurance. In order to obtain medical treatment, the enrollee must visit and use health care providers who are willing to accept the Blue Advantage's terms of payment or health care providers who have contracted with the insurer to accept Blue Advantage's terms or who are a part of the Blue Advantage's network of healthcare providers.

“Southern Springs ... offers skilled nursing services at a nursing home healthcare facility that treats and cares for patients. In August of 2008, Southern Springs and BCBS entered into a contract. Under the terms of the contract, Southern Springs was to provide healthcare services to Blue Advantage enrollees seeking treatment at its facilities and BCBS would compensate Southern Springs for providing these services. Because the enrollees in the Blue Advantage plan are Medicare beneficiaries, the contract between Southern Springs and BCBS provided that BCBS was to provide the same basic benefits and coverage to an enrollee in the Blue Advantage plan as would be provided to that patient if he was enroll[ed] in Part A or B of Medicare. Southern Springs alleges that this means that if Medicare would cover it, then BCBS must also cover it for patients enrolled in Blue Advantage. Southern Springs further alleges that Medicare has developed guidelines and payment schedules for skilled nursing facilities known as Resource Utilization Group Guidelines (‘RUG Guidelines'). The RUG Guidelines dictate if there is coverage and the length of coverage available.

“Southern Springs alleges that BCBS has wrongfully and tortiously failed to provide coverage and benefits for Medicare-covered services it has performed for Blue Advantage enrolled patients despite having a legal and contractual duty to do so. Specifically, Southern Springs alleges that BCBS refuses to follow the RUG Guidelines and instead uses a different system to determine whether claims are covered. BCBS allegedly does this to reduce costs and boost profits. According to Southern Springs, this means that BCBS has not been providing the same coverage to Blue Advantage enrollees as they would have received under Medicare Part A. Because BCBS allegedly breached its legal and contractual duties to Southern Springs, it has suffered lost income and revenue.”

Main & Assocs., Inc. v. Blue Cross & Blue Shield of Alabama, 776 F.Supp.2d 1270, 1273–74 (M.D.Ala.2011) (footnote omitted).

Analysis

“ ‘Mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.’ Ex parte Integon Corp., 672 So.2d 497, 499 (Ala.1995). The question of subject-matter jurisdiction is reviewable by a petition for a writ of mandamus.”

Ex parte Liberty Nat'l Life Ins. Co., 888 So.2d 478, 480 (Ala.2003).

BCBS argues that Southern Springs' claims “arise under and are expressly preempted by the Medicare Act, as amended by the MMA, which mandates administrative appeal prior to judicial review only in the federal courts.” BCBS's petition, at 8. BCBS goes on to argue that “[t]he Medicare Act's administrative review process is mandatory and requires presentment [of claims] and exhaustion” of administrative remedies. BCBS's petition, at 8.

The United States Supreme Court has stated: “The third sentence of 42 U.S.C. § 405(h), made applicable to the Medicare Act by 42 U.S.C. § 1395ii, provides that § 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.” Ringer, 466 U.S. at 614–15.Section 405(g) provides, in pertinent part:

“Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice on such decision or within such further time as the Commissioner of Social Security may allow. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or his principal place of business.... The [district] court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a hearing.... The judgment of the court shall be final except that it shall be subject to review in the same manner as a judgment in other civil actions.”

The MMA specifically provides that the judicial review of Medicare Advantage claims must be pursuant to § 405...