MHA LLC v. HealthFirst, Inc., 111715 FED3, 15-1715

Docket Nº:15-1715
Opinion Judge:SHWARTZ, Circuit Judge.
Party Name:MHA LLC, D/B/A Meadowlands Hospital Medical Center, Appellant v. HEALTHFIRST, INC.; HEALTHFIRST HEALTH PLAN OF NEW JERSEY, INC.; SENIOR HEALTH PARTNERS, INC.; MANAGED HEALTH, INC.; HF MANAGEMENT SERVICES, LLC; HEALTHFIRST PHSP, INC.; ABC COMPANIES 1-100; JOHN DOES 1-100
Judge Panel:Before: CHAGARES, SHWARTZ, and RENDELL, Circuit Judges.
Case Date:November 17, 2015
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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MHA LLC, D/B/A Meadowlands Hospital Medical Center, Appellant

v.

HEALTHFIRST, INC.; HEALTHFIRST HEALTH PLAN OF NEW JERSEY, INC.; SENIOR HEALTH PARTNERS, INC.; MANAGED HEALTH, INC.; HF MANAGEMENT SERVICES, LLC; HEALTHFIRST PHSP, INC.; ABC COMPANIES 1-100; JOHN DOES 1-100

No. 15-1715

United States Court of Appeals, Third Circuit

November 17, 2015

         NOT PRECEDENTIAL

          Submitted Pursuant to Third Circuit L.A.R. 34.1(a) November 9, 2015

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. No. 2-13-cv-06036) District Judge: Hon. Susan D. Wigenton

          Before: CHAGARES, SHWARTZ, and RENDELL, Circuit Judges.

          OPINION [*]

          SHWARTZ, Circuit Judge.

         MHA, the owner of Meadowlands Hospital Medical Center, appeals the dismissal with prejudice of its suit against HealthFirst, Inc. and other related companies for reimbursement for medical services provided to HealthFirst's Medicare and Medicaid enrollees. Because the federal courts lack subject matter jurisdiction, we will vacate the District Court's dismissal order and remand with instructions to remand the case to state court.

         I

         HealthFirst is the parent company of HealthFirst Health Plan of New Jersey, Inc., a privately owned insurance company that offers health insurance plans under Medicare Part C. It is also a licensed Medicaid health management organization and managed care organization. Between 2010 and 2013, Meadowlands Hospital billed HealthFirst for medical care provided to HealthFirst's Medicare and Medicaid enrollees. Because MHA did not have a contract with HealthFirst specifying agreed-upon rates, Medicare and Medicaid law governed both whether reimbursement was available for the care provided and the reimbursement rate. MHA asserts that because it was an out-of-network provider, HealthFirst delayed and/or denied reimbursements to pressure MHA into signing a contract with HealthFirst to become an in-network provider. To this end, MHA claims that HealthFirst improperly asserted that certain services were not authorized or did not qualify as emergency care, wrongly denied claims as untimely, and/or ignored or refused to process them. In total, MHA was reimbursed for only $2.5 million out of the $28.9 million it claims that it was owed.

         MHA filed a complaint in state court alleging that HealthFirst violated New Jersey regulations governing reimbursements to out-of-network providers under Medicaid. MHA also brought claims for unjust enrichment and "quantum meruit-implied contract."1 App. 51-53. HealthFirst removed the suit to federal court and MHA moved for remand, but withdrew that motion before it was decided.

         HealthFirst moved to dismiss the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6) and MHA cross-moved for leave to file an amended complaint. The District Court dismissed MHA's Medicaid-based claims because it failed to exhaust administrative remedies before bringing suit and MHA's Medicare-based claims because they were preempted by federal Medicare law. The District Court denied MHA's motion to amend the complaint as futile. MHA appeals.

         II2

         Federal courts are courts of limited jurisdiction, and a case can only be removed to a federal district court if the case could have originally been filed there.3 28 U.S.C. § 1441(a). This requires a showing that the federal court has subject matter jurisdiction.

         Where, as here, no diversity jurisdiction is alleged, jurisdiction ordinarily rests on the presence of a federal cause of action on the face of the complaint. See Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986). When a complaint alleges only state law claims, federal jurisdiction may also exist where federal law completely preempts a state law claim or where a state law claim raises a substantial embedded federal issue that can be addressed by the federal courts without disturbing congressional intent.4 See Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 313-14 (2005) (narrow exception for certain embedded federal issues); Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003) (jurisdiction based on complete preemption).

         HealthFirst asserts three possible grounds for subject matter jurisdiction: (1) that HealthFirst is entitled to "federal officer removal" under 28 U.S.C. § 1442(a)(1); (2) that MHA asserts a federal cause of action under 42 U.S.C. § 1983; and (3) that MHA's Medicare-based state law claims "arise under" federal law based on the framework set forth in Grable.

         We will not entertain HealthFirst's assertion of federal officer removal, as this was not a basis for removal claimed in the notice of removal. While it may be permissible to add further detail to jurisdictional allegations, a defendant may not rely on an entirely new basis for jurisdiction not set forth in the removal petition. See USX Corp. v. Adriatic Ins. Co., 345 F.3d 190, 203-05 (3d Cir. 2003) (determining that jurisdiction was proper because amendment to notice of removal "did not add new jurisdictional facts . . . [or] rely on a basis of jurisdiction different from that originally alleged"); see also In re Blackwater Sec. Consulting, LLC, 460 F.3d 576, 590 n.8 (4th Cir. 2006) (defense contractor could not assert federal officer removal on appeal because it had "failed to raise this issue before the district court").

         Jurisdiction also cannot be asserted here on the basis of 42 U.S.C. § 1983. While the complaint cites § 1983, this language appears in a background section, 5 and none of the six counts assert a claim based on it. Moreover, the fact that HealthFirst did not move to dismiss a claim under § 1983, and MHA did not seek to avoid dismissal based upon the existence of a § 1983 claim, further reveals that no party viewed the complaint as seeking...

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