Ninth Circuit Holds Fraud and Consumer Protection Claims Preempted by Medicare Modernization Act

by charlesjung

Medicare: Forward NOT Backward
Image by Grant Neufeld via Flickr

The Ninth Circuit Court of Appeals in Uhm v. Humana, Inc., No. 06-35672,  — F.3d —-, 2010 WL 3385546 (9th Cir. Aug. 30, 2010) held that the trial court lacked jurisdiction to consider plaintiffs’ breach of contract and unjust enrichment claims because they were not properly exhausted through the administrative remedial scheme established under the Medicare Prescription Drug Improvement and Modernization Act of 2003.  The court further held that plaintiff’s fraud and consumer protection act claims were not subject to the Act’s exhaustion provisions, but that they are expressly preempted.

Circuit Judge Betty Fletcher wrote a pointed concurrence chastising plaintiff’s counsel for filing the class action “all for the recovery of two months’ prescriptions” where a “bit of common sense and attention to the available administrative remedies should have been applied”:

I concur in the opinion, which carefully and painstakingly analyzes the claims. I add this concurrence simply to vent my frustration. What have Uhms’ counsel accomplished for the Uhms, for justice, or for the law?

The Uhms suffered a frustrating and bureaucratic “snafu” that temporarily cost them two months’ prescription costs. They filled out the forms to receive Part D prescription drug benefits from Humana. The process obviously enrolled them to the point where automatic deductions were made from their social security checks. But the other half of the process failed–their status as beneficiaries was denied and, as a consequence, the Uhms had to pay for their prescriptions. Frustrating indeed. But what to do? Make a federal case of it–start a class action where simply following the administrative appeal process would suffice? A class action all for the recovery of two months’ prescriptions?

Today the Uhms receive the prescription drug benefits to which they are entitled. But not as a result of this lawsuit. The cost to the court system and to the Uhms is unconscionable. A bit of common sense and attention to the available administrative remedies should have been applied. Instead we have an opinion with endless pages of legal analysis, months of study and delay, and a determination that no benefit can be awarded to the Uhms. Counsel particularly should take heed.

Id. *17-18.

Judges and Attorneys

Before Circuit Judges Betty B. Fletcher, Richard A. Paez, and Marsha S. Berzon.  Circuit Judge Paez wrote the opinion for the court.

Appeal from the United States District Court for the Western District of  Washington, Ricardo S. Martinez, District Judge, Presiding. D.C. No. CV-06-00185-RSM.

Scott C. Breneman and Joseph A. Grube, Ricci Grube Aita & Breneman, PLLC, Seattle, WA, for the appellants.

Brian D. Boyle, Mark Davies, Samuel Brown, and Meaghan McLaine, O’Melveny & Myers, LLP, Washington, D.C., for the appellees.

William A. Helvestine and Carri L. Becker, Epstein Becker & Green, P.C., San Francisco, CA, for amicus curiae American Health Insurance Plans.

Andre Mura, Center for Constitutional Litigation, P.C., Washington, D.C., for amicus curiae American Association of Justice.

Sarang Vijay Damle, United States Department of Justice, Washington, D.C., for amicus curiae United States of America.

Rochelle Bobroff, National Senior Citizens Law Center, Washington, D.C., for amici curiae California Health Advocates, Medicare Rights Center, National Senior Citizens Law Center, and The Center for Medicare Advocacy.