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Aetna Life Insurance Co. v. Guerrera

United States District Court, D. Connecticut

March 13, 2018

AETNA LIFE INSURANCE COMPANY, Plaintiff,
v.
NELLINA GUERRERA, et al., Defendants.

          RULING RE: MOTION TO DISMISS (DOC. NO. 36) AND CROSS-MOTION TO AMEND COMPLAINT (DOC. NO. 38)

          Janet C. Hall, United States District Judge.

         This case comes before the court pursuant to a Complaint (Doc. No. 1) filed by the plaintiff, Aetna Life Insurance Company (“Aetna”), against the defendants, Nellina Guerrera (“Guerrera”); Carter Mario Injury Lawyers (“Carter Mario”); Attorney Sean Hammil (“Hammil”); Attorney Danielle Wisniowski (“Wisniowski”); and Big Y Foods, Inc. (“Big Y”). The case arises out of a dispute regarding payment for medical services received by Guerrera following an injury that Guerrera sustained at a Big Y retail location.

         On July 5, 2017, the defendants filed a Motion to Dismiss (Doc. No. 26) pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6), arguing that the case does not belong in federal court, either because this court lacks subject matter jurisdiction or because Aetna has not stated a plausible claim with respect to their federal cause of action. On July 26, 2017, Aetna filed a Cross-Motion to Amend its Complaint (Doc. No. 38). In a Memorandum filed in support of the Cross-Motion and in opposition to the Motion to Dismiss, Aetna clarified that it is opposing the Motion to Dismiss, but is cross moving to amend its Complaint “should this Court determine that Aetna's Complaint, as it is currently drafted, fails to create subject matter jurisdiction over Aetna's claims, or fails to state viable claims against Defendants.” Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss and In Support of Cross-Motion for Leave to Amend its Complaint (“Pl.'s Response”) (Doc. No. 39) at 17.

         For the reasons that follow, the defendants' Motion to Dismiss (Doc. No. 36) is granted in part and denied in part, and Aetna's Motion to Amend (Doc. No. 38) is denied.

         I. STANDARD OF REVIEW

         When deciding a motion to dismiss pursuant to Rule 12(b)(1), the plaintiff bears the burden of proving subject matter jurisdiction by a preponderance of the evidence. See Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005). However, the allegations of the complaint should be construed in the plaintiff's favor. A plaintiff need not show a likelihood of success on the federal claim, but need only adequately raise a federal question for the court to adjudicate. See id. (district court erred in dismissing civil rights claim where the plaintiff had “sufficiently raised the question of whether Title VII of the Civil Rights Act of 1964 is applicable in this instance” which was “a federal question over which the district court has subject matter jurisdiction”). Federal question jurisdiction exists if the complaint sets forth a cause of action under federal law that is neither clearly “immaterial and made solely for the purpose of obtaining jurisdiction, ” nor “wholly insubstantial and frivolous.” Lyndonville Sav. Bank & Tr. Co. v. Lussier, 211 F.3d 697, 701 (2d Cir. 2000) (quoting Bell v. Hood, 327 U.S. 678, 682-83 (1946)).

         With respect to a motion to dismiss pursuant to Rule 12(b)(6), the court must determine whether the plaintiff has stated a legally cognizable claim by making allegations that, if true, would show that the plaintiff is entitled to relief. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (interpreting Rule 12(b)(6), in accordance with Rule 8(a)(2), to require allegations with “enough heft to ‘sho[w] that the pleader is entitled to relief” (alteration in original)). The court takes all factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. Crawford v. Cuomo, 796 F.3d 252, 256 (2d Cir. 2015). However, the tenet that a court must accept a complaint's allegations as true is inapplicable to “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).

         To survive a motion pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

         II. ALLEGED FACTS[1]

         Defendant Guerrera is a resident of Monroe, Connecticut. Complaint (“Compl.”) at ¶ 5. Defendant Big Y is a Massachusetts corporation with a location in Monroe, Connecticut. Id. at ¶ 9. On or about February 20, 2015, Guerrera allegedly sustained personal injuries at the Big Y location in Monroe, for which she subsequently sought and received medical care. Id. at ¶ 12. Aetna is a Medicare Advantage Organization (“MAO”) and operates a Medicare Advantage health insurance plan (“MAO Plan”). Id. at ¶¶ 4, 10. At all relevant times, Guerrera was Medicare-eligible and was enrolled in and maintained health insurance coverage through Aetna's MAO Plan. Id. at ¶ 10. Following the February 20, 2015 accident, Aetna paid approximately $9, 854.16 in medical expenses on behalf of Guerrera. Id. at ¶¶ 15-16. Guerrera retained the services of the law firm Carter Mario and Attorneys Hammil and/or Wisniowski to represent her in a claim against Big Y for the injuries she sustained on February 20, 2015. Id. at ¶ 22. Guerrera settled her claim against Big Y for $30, 000.

         Aetna made multiple attempts to place the defendants on notice that it had a lien on the medical expenses resulting from Guerrera's injuries at Big Y, and to recover those expenses from one or more of the defendants, beginning on September 22, 2015, a year before the settlement agreement was made. Id. at ¶¶ 26-35. On March 10, 2016, Big Y agreed that it would not send the full amount of any settlement to Guerrera, Carter Mario, Hammil, and/or Wisniowski without first dealing with Aetna's lien. Id. at ¶ 31. Nevertheless, Big Y subsequently sent the full $30, 000 settlement payment to Guerrera, Carter Mario, Hammil, and/or Wisniowski on or about September 15, 2016. Id. at ¶ 32.

         III. RELEVANT HISTORY OF THE MEDICARE SECONDARY PAYER ACT

         In light of the complex nature of the statutory framework at issue in this case, it is worthwhile to sketch a brief history of the Medicare Secondary Payer Act (“MSP”), title 42, section 1395y(b) of the United States Code.

         Congress enacted the Medicare Act in 1965 as a “federally funded health insurance program for the elderly and disabled.” Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 506 (1994). The Medicare Act consists of five parts, the first two of which “create, describe, and regulate traditional fee-for-service, government-administered Medicare.” In re Avandia Mktg., 685 F.3d 353, 357 (3d Cir. 2012). The third part, Part C, outlines the Medicare Advantage Program, described further below. The fourth and fifth parts are not at issue here.

         In 1980, Congress amended the Medicare Act to add the Medicare Secondary Payer Act (“MSP”), in an effort to reduce the escalating costs of Medicare to the federal government. Omnibus Reconciliation Act of 1980, Pub. L. No. 90-499, 94 Stat. 2599. “As its title suggests, the statute designates Medicare as a ‘secondary payer' of medical benefits, and thus precludes the program from providing such benefits when a ‘primary plan' could be expected to pay.'” Taransky v. Sec'y of HHS, 760 F.3d 307, 310 (3d Cir. 2014). The MSP is codified at section 1395y of title 42 of the United States Code. The MSP provides that Medicare cannot pay medical expenses when “payment has been made or can reasonably be expected to be made under a workman's compensation law or plan of the United States or State or under an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance.” 42 U.S.C. § 1395y(b)(2)(A)(ii).

         In subsection 1395y(b)(2)(B) of the MSP, Congress gave “[t]he Secretary” authority to make conditional payments “if a primary plan . . . has not made or cannot reasonably be expected to make payment with respect to such item or service promptly, ” but such payment “shall be conditioned on reimbursement.” Id. at (b)(1)(B)(i). Congress further provided an enforcement mechanism for the “United States” in cases where conditional payment has been made. Subsection 1395y(b)(2)(B)(ii) provides that “a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate Trust Fund for any payment made by the Secretary under this subchapter with respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or service.” 42 U.S.C. § 1395y(b)(2)(B)(ii). Subsection (2)(B)(ii) also contains a responsibility-triggering provision, which explains that responsibility for repayment “may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items or services included in a claim against the primary plan or the primary plan's insured, or by other means.” Id. Finally, subsection (2)(B)(iii) creates a cause of action for “the United States, ” which provides, in relevant part:

In order to recover payment made under this subchapter for an item or service, the United States may bring an action against any or all entities that are or were required or responsible (directly, as an insurer or self-insurer, as a third-party administrator, as an employer that sponsors or contributes to a group health plan, or large group health plan, or otherwise) to make payment with respect to the same item or service (or any portion thereof) under a primary plan. The United States may, in accordance with paragraph (3)(A) collect double damages against any such entity. In addition, the United States may recover under this clause from any entity that has received payment from a primary plan or from the proceeds of a primary plan's payment to any entity.

42 U.S.C. § 1395y(b)(2)(B)(iii).

         Congress also created a private right of action, codified at section 1395y(b)(3)(A) of title 42 of the United States Code, and described herein as the “Private Cause of Action” provision. In comparison to the cause of action created for the United States, the Private Cause of Action provision is relatively sparse. It provides as follows:

There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs [(b)](1) and [(b)](2)(A).

42 U.S.C. § 1395y(b)(3)(A). That is the entirety of the Private Cause of Action provision; it does not make explicit who may bring suit or against whom, or even under what conditions precisely suit may be brought. Paragraph (b)(1) governs situations in which group health plans must provide payment, while paragraph (b)(2)(A) governs situations including liability insurance settlements. 42 U.S.C. §§ 1395y(b)(1), (b)(2)(A).

         In 1997, Congress once again amended the Medicare Act to add Part C, which “afford[s] beneficiaries the option to receive their Medicare benefits through private organizations” known as Medicare Advantage Organizations (“MAOs”). Collins v. Wellcare Healthcare Plans, Inc., 73 F.Supp.3d 653, 659 (E.D. La. 2014). “Pursuant to these amendment, most Medicare beneficiaries can now elect to receive their benefits through Original Medicare or through an MAO.” Id. at 659-60. Part C provides that the Center for Medicare and Medicaid Services (“CMS”) pays MAOs a fixed amount per enrollee, and the MAOs assume the risk of insuring each enrollee. See 42 U.S.C. §§ 1395w-21, 1395w-23.

         Part C does not contain an enforcement provision equivalent to either the government enforcement provision, subsection (b)(2)(B)(iii), or the Private Cause of Action provision, paragraph (b)(3)(A). Absent an enforcement mechanism in Part C, disputes have arisen as to whether Part C created an implied right of action, see, e.g. Parra v. PacifiCare of Arizona, Inc., 715 F.3d 1146, 1154 (9th Cir. 2013); Konig v. Yeshiva Imrei Chaim Viznitz of Boro Park, Inc., No. 12-CV-467, 2012 WL 1078633 (E.D.N.Y. Mar. 30, 2012), or--at issue in this case--whether the Private Cause of Action is available to MAOs, see, e.g., Avandia, 685 F.3d at 359-65; Collins, 73 F.Supp.3d at 666.

         IV. SUBJECT MATTER JURISDICTION

         In its Complaint, Aetna alleges claims pursuant to the Medicare Act, title 42, section 1395y of the United States Code, as well as common law claims arising out of Aetna's insurance contract with Guerrera. See generally Compl. The defendants move to dismiss the Medicare Act claims for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), or, in the alternative, for failure to state a claim pursuant to Rule 12(b)(6). See generally Defendants' Memorandum of Law in Support of their Motion to Dismiss (“Def.'s Mem.”) (Doc. No. 36-1). The defendants also urge the court to decline to exercise supplemental jurisdiction over Aetna's state law claims. See id. at 11.

         The defendants vigorously assert that this court lacks subject matter jurisdiction over Aetna's claims because Aetna's Medicare Act claims are improper for a variety of reasons, and because this case arises, “if at all, under state contract law.” Def.'s Mem. at 10. Aetna asserts that its Medicare Act claims raise federal questions, which are properly decided by this court, and accuses the defendants of “conceptually and organizationally conflat[ing] the jurisdictional issue (i.e., whether the Court can hear Aetna's claims) with the pleading issue (i.e., whether Aetna's Complaint asserts a viable claim).” Pl.'s Response at 8-11.

         The court agrees with Aetna that it has adequately alleged federal claims to give this court federal question jurisdiction pursuant to section 1331 of title 28 of the United States Code. Indeed, in the case relied on most heavily by the defendants, Parra, the Ninth Circuit rejected a virtually identical subject matter jurisdiction challenge. Parra, 715 F.3d at 1151-52. The Parra court concluded that, “‘[b]ecause interpretation of the federal Medicare Act presents a federal question, ' the district court had subject matter jurisdiction to determine whether that act created a cause of action in favor of Pacificare against the [defendants].” Id. (quoting Avandia, 685 F.3d at 357) (internal citation omitted); see also Plante v. Dake, 621 Fed.App'x 67, 68 (2d Cir. 2015) (summary order) (rejecting subject matter jurisdiction challenge because “Plante asserts claims under the [Medicare Act], which is a federal statute”); id. at 68 n.4 (“Federal question jurisdiction exists . . . over a claim stating a cause of action under federal law unless the allegation was clearly immaterial, or the claim was made solely for the purpose of obtaining jurisdiction.” (quoting Parra, 715 F.3d at 1152)).

         In short, Aetna has adequate pled a federal question such that this court may exercise subject matter jurisdiction over Aetna's Complaint. The defendants' arguments to the contrary are more appropriately addressed as challenges to the pleadings than jurisdictional challenges.[2]

         V. PRIVATE CAUSE OF ACTION PROVISION

         As stated above, Aetna brings claims pursuant to the Medicare Act and state law. See generally Compl. The defendants have not raised substantive challenges to Aetna's state law claims, but rather urge the court to dismiss Aetna's federal claims and decline to exercise supplemental jurisdiction over Aetna's state law claims. The questions before the court, therefore, revolve around the Medicare Act, specifically the Private Cause of Action provision.

         The parties dispute who may bring an action pursuant to this provision, against whom they may bring it, and under what circumstances it may be brought. The court will address each of these arguments in turn.

         A. Who May Sue

         The first question the court must answer is whether Aetna, an MAO, may bring suit pursuant to the Private Cause of Action provision. Aetna asserts that the Private Cause of Action provision “provide[s] a private cause of action to private entities, specifically MAOs.” Pl.'s Response at 12; see also Pl.'s Reply (Doc. No. 44) at 5-6 (“MAOs do have a private right of action under the MSP Private Cause of Action ...


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