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Alston v. United Healthcare Services, Inc.

United States District Court, D. Montana, Butte Division

March 19, 2018





         Plaintiff filed a Verified Complaint and Jury Demand in the Montana Eighteenth Judicial District Court on October 4, 2017.[1] Defendants removed to this Court on November 3, 2017.[2] An Amended Complaint was filed on November 30, 2017.[3]

         Allegations in the Amended Complaint included: (1) that Plaintiff obtained supplemental "Medicare Part D Benefits" from Defendant United Healthcare Services ("UHS"), and its administrator, OptumRx ("Optum");[4] (2) that UHS, Optum, and unnamed Defendants (collectively "Defendants") failed to make a timely decision denying or approving coverage for the drug Zyvox, thereby exacerbating Plaintiffs infections and leading to the partial amputation of his feet;[5] and (3) that Defendants improperly denied coverage for Zyvox when it should have been apparent that it was covered under the Part D plan.[6]

         The Amended Complaint pleaded five causes of action: (1) Negligence; (2) Intentional/negligent infliction of emotional distress; (3) Professional negligence; (4) Respondeat superior; and (5) Breach of Contract.[7] Defendants moved to dismiss on December 14, 2017.[8] The motion is opposed.[9]


         Federal Rule of Civil Procedure 12(b)(6) provides for dismissal if a plaintiff lacks a "cognizable legal theory" to support a legal claim.[10] A state law claim is to be dismissed for failure to state a claim if it is preempted by federal law.[11] The Court must "assume the facts alleged as true" when deciding a rule 12(b)(6) motion to dismiss.[12] Claims are to be dismissed if pleaded allegations are insufficient on their face to invoke federal jurisdiction.[13] Failure to exhaust administrative remedies may be asserted as a barrier to jurisdiction.[14]

         Plaintiffs state law claims are expressly preempted

         The Part D Voluntary Prescription Drug Benefit Program ("Part D") is provided for in 42 U.S.C. § 1395w-101 et seq. It was implemented by the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the "Medicare Act"). Under Part D, insurers contract with the Centers for Medicare and Medicaid Services ("CMS") to provide prescription drug coverage for medicare beneficiaries.[15]

         The Medicare Act applied an existing express preemption provision from Part C to Part D plans:[16]

(3) Relation to State laws The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to [Part D] plans which are offered by [Part D] organizations under this part.[17]

         The Ninth Circuit has interpreted 42 U.S.C. § l395w-26(b)(3) to preempt state common law and statutory claims, [18] particularly if the state standard: (1) falls within a specified category of Medicare Act standards; and (2) is inconsistent with the federal standards.[19]

         In Uhm, plaintiffs enrolled in Part D coverage with defendant and paid premiums.[20] When the coverage start-date arrived, defendant informed plaintiffs that they were not recognized members.[21] Plaintiffs sued, inter alia, for violation of state consumer protection statutes and for common law fraud.[22] The circuit held both claims were preempted.[23] It emphasized that application of state law standards would "undermine CMS's ability to create its own standards for what constitutes 'misleading' information about Medicare Part D."[24] In this case, Plaintiffs state common law claims grounded upon claimed lack of timeliness of Defendants' determination of coverage are, likewise, preempted by the Medicare Act.

         Negligence claim expressly preempted.

         Plaintiffs first cause of action, negligence, is summed up by the allegation that "defendants breached their duty to conduct a reasonable investigation based on all available information and affirm or deny coverage within a reasonable time under the circumstances after the prior approval request."[25] The claim is preempted.

         Medicare regulations govern the timeliness of coverage determinations for prescription drugs.[26] Part D establishes specific time limits for decisions on particular types of drug coverage requests.[27] A process for redetermination and for grievance procedures if insurers fail to comply is also provided for by regulation.[28]

         A state law-based decision, turning on reasonableness under the circumstances, would be inconsistent with the specific federal standards.[29] Any state law claim requiring such a decision is expressly preempted.

         Plaintiffs negligence claim is based on an untimely coverage decision. It is grounded in the concept of what a "reasonable time under the circumstances" would be under Montana law.[30] It conflicts with the Medicare Act's applicable regulation program. The negligence claim is expressly preempted.

         Professional Negligence and Respondent Superior claims expressly preempted.

         Plaintiffs third cause of action, professional negligence, is grounded in allegations against unnamed defendants, who are pharmacists employed by UHS and Optum. It asserts the unnamed defendants had "a duty to use the ordinary care and diligence usually exercised and possessed by members of the profession."[31] It further alleges that the unnamed "defendants failed to make a timely decision on coverage ... in a situation they knew [or] should have known was an emergency based on the type of medication prescribed and other information that was available."[32] Whether a defendant breached a professional duty depends, under Montana law, on the standard of care applicable to the profession, as established by an expert witness in that field.[33]

         The professional negligence claim, based in part on the timeliness of unnamed defendants' coverage decisions, is preempted by the Medicare Act for the same reasons as the general negligence claim. Standards specifically established by the Medicare Act regulations are inconsistent with the state common law. A ruling based on the state law standard would be at variance with the standards applicable to Part D insurers across the states and undermine CMS's ability to regulate Part D insurers and enforce Medicare Act regulations. The professional negligence claim is preempted.

         Plaintiffs respondeat superior cause of action, based solely on the professional negligence of the unnamed defendants, is likewise subject to dismissal due to preemption of the underlying negligence claims.

         Infliction of emotional distress claims preempted.

         Plaintiffs second cause of action, intentional/negligent infliction of emotional distress, alleges "deliberate indifference to the high degree of harm that would befall Alston if an immediate decision was not ...

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