N.C. Ins. Guaranty Ass'n v. Becerra
| Decision Date | 14 December 2022 |
| Docket Number | 21-2185 |
| Citation | 55 F.4th 428 |
| Parties | NORTH CAROLINA INSURANCE GUARANTY ASSOCIATION, Plaintiff - Appellant, v. Xavier BECERRA, in his official capacity as Secretary of the United States Department of Health and Human Services; United States Department of Health and Human Services; Center for Medicare and Medicaid Services, Defendants - Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Christopher J. Blake, NELSON MULLINS RILEY & SCARBOROUGH LLP, Raleigh, North Carolina, for Appellant. Neal Fowler, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina, for Appellees. ON BRIEF: Joseph W. Eason, NELSON MULLINS RILEY & SCARBOROUGH LLP, Raleigh, North Carolina, for Appellant. Michael F. Easley, Jr., United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina, for Appellees.
Before THACKER, and HEYTENS, Circuit Judges, and Lydia K. GRIGGSBY, United States District Judge for the District of Maryland, sitting by designation.
Affirmed by published opinion. Judge Thacker wrote the opinion, in which Judge Heytens and Judge Griggsby joined.
This case stems from a request by the North Carolina Insurance Guaranty Association ("Appellant") to the Center for Medicare and Medicaid Services ("CMS") seeking an advisory opinion about whether Appellant is required to reimburse Medicare for certain medical bills that Medicare pays on behalf of insured individuals. CMS declined to issue the requested opinion. Dissatisfied with this response, Appellant filed this action against Alex M. Azar, II, in his official capacity as Secretary of the United States Department of Health and Human Services ("HHS"), HHS, and CMS (collectively, "Appellees").1
In this appeal, Appellant challenges the district court's determination that Appellant lacked standing to bring this action because it failed to plausibly allege that it suffered an injury-in-fact. Additionally, Appellant challenges the district court's conclusion that it did not possess jurisdiction over the action because Appellant failed to exhaust its administrative remedies.
For the reasons below, we affirm.
Appellant is a statutorily created association whose members consist of insurers permitted to conduct business in North Carolina and to write insurance policies pursuant to the Insurance Guaranty Association Act (the "Guaranty Act"), N.C. Gen. Stat. § 58-48-1 et seq. Appellant does not issue insurance policies or collect premiums. Instead, this association was created to "provide a limited form of protection to North Carolina claimants and insureds that certain liability claims will be paid in the event of the insolvency of a member insurer." J.A. 8.2 However, Appellant is obligated to step into the shoes of an insolvent insurer only when the claimant asserts a covered claim.
The Medicare Secondary Payer Act ("MSPA"), 42 U.S.C. § 1395y(b), prohibits the Government -- specifically CMS -- from footing the bill for an insured individual's medical care when payment could be made by a "primary plan." Prior to the MSPA, Medicare paid for services regardless of whether a private insurer was also responsible. See Netro v. Greater Balt. Med. Ctr., Inc. , 891 F.3d 522, 524 (4th Cir. 2018) (). Pursuant to the MSPA, "primary plan" means:
a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen's compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.
42 U.S.C. § 1395y(b)(2)(A)(ii). This case centers on the issue of whether Appellant qualifies as a "primary plan," and, as such, may be required to reimburse Medicare for medical bills that it pays on behalf of insured individuals.
To help Medicare keep track of expected reimbursements, in 2007, Congress added reporting requirements via Section 111 of the Medicare, Medicaid, and State Children's Health Insurance Program Extension Act of 2007 ("Section 111"). Pub. L. No. 110-173, § 111, 121 Stat. 2492, 2497–500 (2007), codified at 42 U.S.C. § 1395y(b)(7)-(8). Section 111 requires primary plans to submit periodic reports to CMS identifying when they have a responsibility to pay for the medical care of a Medicare beneficiary. In addition to this reporting requirement, Section 111 also includes a penalty provision, which authorizes CMS to impose a penalty of up to $1,000 per day for non-compliance.
On January 10, 2013, President Obama signed into law the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (the "SMART Act"). SMART Act of 2012, Pub. L. No. 112-242, 126 Stat. 2374. The SMART Act included several amendments to the MSPA, two of which are relevant here. First, the SMART Act instructed the Secretary to begin rulemaking on the "practices for which sanctions will and will not be imposed." SMART Act § 203. However, nearly a decade later, a final rule outlining the circumstances warranting Section 111 sanctions remains pending, and it is unclear when this rule may become effective. In any event, CMS has indicated that if enacted, the proposed rule would only be imposed prospectively. See Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties, 85 Fed. Reg. 8,793 (proposed Feb. 18, 2020).
Second, the SMART Act required the Secretary to "promulgate regulations establishing a right of appeal and appeal process," SMART Act § 201, for plans when Medicare pursues a Medicare Secondary Payer recovery claim directly from that plan. On April 28, 2015, a final rule establishing an appeals process for insurers who want to challenge Medicare's request for repayment became effective. See Medicare Program; Right of Appeal for Medicare Secondary Payer Determinations Relating to Liability Insurance (Including Self-Insurance), No-Fault Insurance, and Workers' Compensation Laws and Plans, 80 Fed. Reg. 10,611 (Feb. 27, 2015) (). This process includes four levels of review before such a challenge is entitled to judicial review in federal district court.
First, the insurer may seek reconsideration of Medicare's decision through a process called "redetermination." 42 C.F.R. § 405.940. "In conducting a redetermination, the contractor [3 ] reviews the evidence and findings upon which the initial determination was based, and any additional evidence the parties submit or the contractor obtains on its own." 42 C.F.R. § 405.948. Second, if the insurer is dissatisfied with the result of the redetermination, it can seek reconsideration of the contractor's determination through a separate qualified independent contractor. 42 C.F.R. § 405.960. At the reconsideration stage, "a party should present evidence and allegations of fact or law related to the issue in dispute and explain why it disagrees with the initial determination, including the redetermination." 42 C.F.R. § 405.966. Third, if the insurer is not satisfied with the outcome of the reconsideration, it may request a hearing before an Administrative Law Judge ("ALJ"). 42 C.F.R. § 405.1000. Fourth, if the insurer is not satisfied with the ALJ's decision, it can request that the Medicare Appeals Council (the "Council") review that decision. 42 C.F.R. § 405.1100. Only after the Council renders a decision can the insurer seek review by the federal courts. 42 C.F.R. § 405.1136.
On June 1, 2020, Appellant sent a letter to CMS ("Appellant's Letter"), requesting a written opinion stating that Appellant is not a primary plan within the meaning of the MSPA, and, as a result, is not required to comply with the reporting requirements of Section 111. In support of this position, Appellant's Letter cited the Ninth Circuit's decision in California Insurance Guarantee Ass'n v. Azar (CIGA ), 940 F.3d 1061, 1063 (9th Cir. 2019), which held that the insurance association in that case was not a primary plan within the meaning of the MSPA. After the CIGA decision, CMS provided a letter to the CIGA plaintiff confirming that in accordance with the Ninth Circuit's ruling, the CIGA plaintiff was not required to comply with Section 111.
On August 12, 2020, CMS responded to Appellant's Letter. In its response, CMS declined to issue the requested opinion and further stated that it does not believe CIGA applies to Appellant. Thereafter, Appellant brought this action. In the complaint, Appellant asserts the following three claims: (1) a declaratory judgment claim pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a declaration that Appellant is not a primary plan pursuant to the MSPA; (2) a claim pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 500 et seq. ; and (3) a claim seeking judicial review of CMS's response to Appellant's Letter, pursuant to 42 U.S.C. § 405(g), as incorporated into the Medicare Act4 through 42 U.S.C. § 1395ii.
On January 29, 2021, Appellees moved to dismiss Appellant's complaint on two grounds. First, Appellees argued that Appellant did not have standing. Second, Appellees maintained that even if Appellant had standing, dismissal was required because Appellant did not establish a basis for the district court to conclude that it had federal question jurisdiction over the action.
On September 21, 2021, the district court granted Appellees' motion to dismiss. The district court determined that Appellant lacked standing because it failed to sufficiently allege an injury-in-fact, and even if Appellant did have standing, the court did not have federal question...
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