MHA, LLC v. Amerigroup Corp.
| Decision Date | 21 January 2021 |
| Docket Number | Civ. No. 2:18-cv-16042 (KM)(JAD) |
| Parties | MHA, LLC, Plaintiff, v. AMERIGROUP CORPORATION, AMERIGROUP NEW JERSEY, INC., d/b/a AMERIGROUP COMMUNITY CARE, ABC COMPANIES 1-100, and JOHN DOES 1-100 Defendants. |
| Court | U.S. District Court — District of New Jersey |
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Before the Court are the submissions of the parties in response to my order to show cause why this case should not be remanded. (DE 41.) I requested that the parties address whether defendants could properly invoke jurisdiction under the Officer Removal Statute, 28 U.S.C. § 1442(a)(1), because federal question jurisdiction appears doubtful in light of MHA, LLC v. Healthfirst, Inc., 629 F. App'x 409 (3d Cir. 2015), (id.)1 For the reasons described below, I conclude that I have jurisdiction over this case.
Plaintiff MHA, LLC, ("MHA") is a New Jersey LLC which previously owned Meadowlands Hospital, a licensed general acute care hospital with a 230-bed capacity. (Compl. ¶ 10.) MHA sold the hospital, but continues to retain all of its accounts receivable, including monetary claims for unpaid services. (Id. ¶ 9.)
Defendant Amerigroup New Jersey, Inc., d/b/a Amerigroup Community Care (together with its parent company, Amerigroup Corporation, "Amerigroup") is a managed care organization ("MCO") which offers Medicaid and Medicare managed health care services through a New Jersey FamilyCare3 program. (Id. ¶ 11-12.) Amerigroup provides access to publicly funded healthcare for New Jersey Medicare enrollees via a Medicare Advantage Plan. Pursuant to a contract with the Centers for Medicare and Medicaid Services ("CMS"), a division of the United States Department of Health and Human Services ("HHS"), Amerigroup administers Medicare Advantage plans on CMS's behalf. 42 U.S.C. §§ 1395w-27, 1395w-27a.
Medicare is broken into four parts: A, B, C, and D. Part A provides inpatient and hospital coverage, Part B provides outpatient and medical coverage, Part C offers an alternate way to receive Medicare benefits through a private insurer, and Part D provides prescription drug coverage. What's Medicare?, Medicare.gov, The Official U.S. Government Site for Medicare, https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare (last visited January 20, 2021). Parts A and B aretogether known as "Traditional Medicare" or "fee-for-service," in which the government pays providers directly for the healthcare services they provide to enrollees. The Parts of Medicare (A, B, C, D), Medicare Interactive, Medicare Rights Center, https://www.medicareinteractive.org/get-answers/medicare-basics/medicare-coverage-overview/original-medicare (last visited January 20, 2021). Part C, which is also known as Medicare Advantage, is where Amerigroup comes in. Part C functions as a private alternative to Medicare Part A and B, in which an organization like Amerigroup receives a capitation fee from the government and then uses that money to pay providers for covered services rendered to individuals enrolled in its Medicare Advantage plan. (Compl. ¶ 63); The Parts of Medicare (A, B, C, D). Enrollees still pay Medicare premiums to the government, but that money, instead of being paid by the government to providers, is paid to the MCO, which then pays providers according to its own reimbursement plan. The Parts of Medicare (A, B, C, D).
MCOs have a great deal of autonomy in how they structure their provision of benefits. For instance, they have "free rein" to decide the network of providers with whom they contract, 42 C.F.R. § 422.4, the benefits they provide beyond traditional Medicare, id. § 422.102(b), the out-of-pocket costs they may charge enrollees, id. § 422.111(f)(5), and the care that enrollees can obtain from out-of-network providers, id.
They are, however, limited by a number of rules. Medicare regulations set out a basic set of benefits which MCOs must cover, and obligate them to reimburse providers and suppliers with whom they have not contracted under certain circumstances. 42 C.F.R. § 422.100(a)-(b). MCOs are obligated to comply with CMS's national coverage determinations, general coverage guidelines set out in Medicare manuals and instructions, and written coverage decisions of local Medicare contractors with jurisdiction for claims in the relevant geographic area. 42 C.F.R. §§ 422.101(b), 405.1060. CMS reviews and approves MCO benefit and cost sharing plans, 42 C.F.R. § 422.100(f), and can limit the cost of certain services to ensure that they do not exceed the costsharing under Original Medicare, id. § 422.100(j). If the government determines that an MCO has committed any of a number of violations, including failing to substantially provide medically necessary items, imposing premiums in excess of certain limits, or expelling enrollees in violation of the Medicare laws, the government is empowered to impose penalties, suspend the MCO's authority to enroll individuals, or suspend payments to the MCO. 42 U.S.C. § 1395w-27(g).
The theory behind the creation of Medicare Advantage is that private companies like Amerigroup might be able to administer Medicare benefits in a cheaper and more efficient manner than the federal government. In re Avandia Marketing, Sales Practices and Products Liability Litigation, 685 F.3d 353, 363 (3d Cir. 2012). The hope was that such organizations would be able to innovate in order to "contain costs and expand healthcare delivery options," thereby allowing Medicare recipients to receive greater benefits at an equal or lesser cost to the government. Id.
MHA filed a Complaint in the Superior Court of New Jersey, Law Division, Hudson County on May 25, 2018, alleging that Amerigroup had downgraded and underpaid for services MHA's hospital rendered to Amerigroup clients. (Compl. at 2.) Specifically, MHA alleged (1) violations of New Jersey regulations governing payment for emergency services rendered by non-participating providers; (2) violations of the New Jersey Healthcare Information Networks and Technologies Act and Healthcare Claims Authorization, Processing and Payment Act; (3) fraudulent and negligent misrepresentation; (4) unjust enrichment and quantum meruit; (5) breach of a network agreement; and (6) a third-party beneficiary claim. (Compl. ¶¶ 94-173.) MHA in part seeks to recover payments for medical claims under Amerigroup's Medicare Advantage health plan; for instance, it alleges that there were "a number of patients which MHA treated that were covered by Amerigroup in the form of a Medicare Advantage plan that Amerigroup likewise failed to adequately pay for services rendered by the plaintiff, MHA during the out-of-network period" and "patients that MHA treated that were covered by Amerigroup either in the formof a Medicare Advantage plan or as a Medicaid recipient whose benefits were to be administered pursuant to a Network Agreement during the in-network period and were properly adjudicated under New Jersey law." (Id. ¶¶ 25-26.)
Amerigroup removed the matter to this Court on November 12, 2018, (DE 1), asserting that there was jurisdiction under 28 U.S.C. § 1442(a)(1) (the "Officer Removal Statute") and 28 U.S.C. § 1331 (federal question jurisdiction). In the notice of removal, Amerigroup asserted that it was entitled to jurisdiction under the Officer Removal Statute due to its participation in the Medicare program as a government contractor. (Notice ¶ 17.) I concluded that federal question jurisdiction was doubtful in light of MHA, LLC v. Healthfirst, Inc., 629 F. App'x 409 (3d Cir. 2015), and requested briefing on the issue of federal officer jurisdiction.
Amerigroup argues that it satisfies the elements of the Officer Removal Statute. I agree.
The relevant portion of the Officer Removal Statute provides:
28 U.S.C. § 1442(a)(1).
"[The Officer Removal Statute] is an exception to the well-pleaded complaint rule, under which (absent diversity) a defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case arises under federal law." In re Commonwealth's Motion to Appoint CounselAgainst or Directed to Def. Ass'n of Phila., 790 F.3d 457, 466 (3d Cir. 2015) (quotation and citation omitted) ("Defender"). Under this section, "a colorable federal defense is sufficient to confer federal jurisdiction." Id.
The Third Circuit draws a distinction between removal under § 1441, which is "to be strictly construed against removal and all doubts should be resolved in favor of remand," Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quotation and citation omitted), and the Officer Removal Statute, which is to be "broadly construed," Sun Buick, Inc. v. Saab Cars USA, Inc., 26 F.3d 1259, 1262 (3d Cir. 1994); see Defender, 790 F.3d at 467. Still, Watson v. Philip Morris Cos., 551 U.S. 142, 147 (2007).
In order to establish a proper basis for removal under the Officer Removal Statute, the removing party must show that "(1) it is a 'person' within the meaning of the statute; (2) the [plaintiff's] claims are based upon the [re...
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