Care Choices Hmo v. Engstrom, No. 01-2682.

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: Kennedy
• Citation: 330 F.3d 786
• Parties: CARE CHOICES HMO, Plaintiff-Appellant/Cross-Appellee, v. Elizabeth ENGSTROM, Defendant-Appellee/Cross-Appellant.
• Docket Number: No. 01-2717.,No. 01-2682.
• Decision Date: 30 May 2003

330 F.3d 786 CARE CHOICES HMO, Plaintiff-Appellant/Cross-Appellee,
v.
Elizabeth ENGSTROM, Defendant-Appellee/Cross-Appellant. No. 01-2682. No. 01-2717. United States Court of Appeals, Sixth Circuit. Argued: May 8, 2003. Decided and Filed: May 30, 2003.

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Graham K. Crabtree (argued and briefed), Thaddeus E. Morgan (briefed), Fraser, Trebilcock, Davis & Dunlap, Lansing, MI, for Appellant.

Charles Gottlieb (argued and briefed), Gottlieb & Goren, Bingham Farms, MI, for Appellee.

Before: KENNEDY, SILER, and GILMAN, Circuit Judges.

OPINION I.

KENNEDY, Circuit Judge.

Over the last two decades, Congress has struggled to reduce the cost of the Medicare program. One effort in this struggle is 42 U.S.C. § 1395mm, which permits the Center for Medicare and Medicaid Services ("CMS"),¹ the administrator of Medicare, to contract with private health maintenance organizations ("HMOs") to provide replacement coverage for Medicare-eligible individuals.

Plaintiff Care Choices HMO is licensed by CMS to provide replacement Medicare coverage. Defendant Elizabeth Engstrom is a Medicare-eligible insured covered by Care Choices HMO. In 1998, Engstrom slipped and fell in a supermarket, sustaining serious injuries. Care Choices HMO paid $56,745.19 in health care expenses resulting from Engstrom's injuries. Engstrom brought a personal injury lawsuit against the supermarket, which she settled for $105,000. That settlement award was paid by the supermarket's third-party liability insurer.

On May 8, 2001, Care Choices HMO filed suit in federal district court seeking a declaration that it was entitled to recoup the medical expenses it had paid out of the settlement money.² Care Choices HMO

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argues that it has a private right of action under 42 U.S.C. § 1395mm(e)(4), which provides that Medicare-substitute HMOs are permitted to seek reimbursement when an insured receives benefits from another source of insurance. The statute is silent as to an HMO's remedies for obtaining reimbursement.

The district court granted Engstrom's motion to dismiss based on lack of subject matter jurisdiction. Care Choices HMO v. Engstrom, 170 F.Supp.2d 741 (E.D.Mich. 2001). We are asked in this case to decide whether 42 U.S.C. § 1395mm(e)(4) contains an implied private right of action in federal court for Medicare-substitute HMOs.³ We hold that it does not, and affirm the district court's decision.

II.

We review the district court's decision regarding subject matter jurisdiction de novo. American Fed'n of State, County, and Mun. Employees Local 506 v. Private Indus. Council of Trumbull County, 942 F.2d 376, 378 (6th Cir.1991).

The statute at issue in this case, 42 U.S.C. § 1395mm(e)(4), provides that:

Notwithstanding any other provision of law, the eligible organization may (in the case of the provision of services to a member enrolled under this section for an illness or injury for which the member is entitled to benefits under a workman's compensation law or plan of the United States or a State, under an automobile or liability insurance policy or plan, including a self-insured plan, or under no-fault insurance) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy —

(A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or

(B) such member, to the extent that the member has been paid under such law, plan, or policy for such services.

Absent an express private right of action, federal courts may in certain circumstances find an implied right of action. In Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), the Supreme Court outlined four factors to consider when determining the existence of an implied statutory cause of action:

First, is the plaintiff one of the class for whose especial benefit the statute was enacted, that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? And finally, is the cause of action one

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traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?

The "central inquiry" is "whether Congress intended to create, either expressly or by implication, a private cause of action." Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). The Supreme Court has admonished, however, that implying a private right of action "is a hazardous enterprise, at best." Id. at 571, 99 S.Ct. 2479.

HMOs are an intended beneficiary of 42 U.S.C. § 1395mm(e)(4). The plain language of this statutory provision establishes that HMOs may obtain reimbursement where the beneficiary is eligible for coverage under some other insurance policy.⁴ This fact alone, however, is not sufficient to imply a private right of action. See Alexander v. Sandoval, 532 U.S. 275, 286, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001) (noting that the statute must manifest an intent "to create not just a private right but also a private remedy."); California v. Sierra Club, 451 U.S. 287, 294, 101 S.Ct. 1775, 68 L.Ed.2d 101 (1981) ("The question is not simply who would benefit from the Act, but whether Congress intended to confer federal rights upon those beneficiaries."). There is no evidence here that Congress intended to create an affirmative right to reimbursement that is enforceable in federal court. Reading the statute as a whole, it is clear that § 1395mm(e)(4) is intended to permit Medicare-substitute HMOs to create a right of reimbursement for themselves in the context of their own insurance agreements with Medicare beneficiaries. The statute does not confer any affirmative rights to reimbursement, much less contain an implied private right of action.⁵

1. The Purposes and Structure of § 1395mm

The legislative history of this statutory provision neither provides any support for implying a private right of action, nor provides any definitive indication of congressional intent to withhold such a right. Section...