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Uhm v. Humana Inc. Unfinished Business

July 1, 2011 by in Articles

In 2003, Congress enacted the Medicare Modernization Act (MMA) which, among other things, amended the preemption language of the Medicare Act.2 The amended preemption language seemed to signal Congress’ clear intent to expand the old preemption standard as it applied to Medicare claims to something closer to the “super preemption” found under ERISA. In 2008, the Ninth Circuit in Uhm v. Humana, Inc.3, was presented with the issue of Medicare preemption of a state law claim under the new preemption standard. This case was of particular significance to those whose practice includes defending Medicare Advantage plans because the Ninth Circuit would become the first and highest Court to undertake a complete analysis of the new MMA preemption standard and, presumably, to clarify that standard once and for all.

As far too often is the case, such clarity and simplicity in the Medicare field was not meant to be. After granting a rehearing en banc, the Ninth Circuit withdrew its initial opinion in which it found plaintiff’s claims preempted under the new MMA standard, and issued a new opinion finding the plaintiff’s claims to be preempted under the “old” Medicare preemption standard and specifically declined to explore the precise degree to which the 2003 amendment expanded the preemption provision . . . .” 4 Ironically, in avoiding clarifying the degree to which the MMA expanded Medicare’s preemption and, instead, relying on the pre-MMA preemption standard, the Ninth Circuit may have actually narrowed Medicare’s preemption standard. What follows is an analysis of the Uhm opinion and how the court arrived at, well, somewhere short of where it started.

The Uhm Dispute

In Uhm, the plaintiffs enrolled in Humana’s prescription drug plan offer under Part D of the Medicare Act beginning January 1, 2006. They chose to have their monthly premiums deducted from their social security checks and the premiums were deducted in January and February 2006. In December 2005, Humana told the plaintiffs that they were not recognized as members of the plan. January 1, 2006 came and passed and, notwithstanding that Humana had collected premiums, the plaintiffs still did not receive the materials necessary to obtain drug benefits. The plaintiffs sued Humana for failure to provide benefits under Part D of the Medicare program. They alleged that Humana made representations in its marketing that they would be enrolled in the benefits plan and receive coverage for their prescription drugs beginning January 1, 2006. Claiming breach of contract, violation of several state consumer protection statutes, unjust enrichment, fraud, and fraud in the inducement, the plaintiffs filed the complaint on behalf of themselves and a putative class consisting of All persons who paid and/or were billed by Humana, for enrollment in the Humana Part D PDP and (a) did not receive benefits under the Humana Part D PDP, and/or (b) whom Humana failed to actually enroll in the Humana Part D PDP, and/or (c) whom Humana enrolled in the Humana Part D PDP on a date or dates later than the date or dates promised by Humana.5

Humana moved to dismiss for failure to state a claim arguing that plaintiffs’ claims were preempted by the Medicare Act. The district court granted the motion concluding,

that the standards promulgated by CMS under the Act governed the [plaintiffs’] grievances as alleged in the complaint, that the administrative process established by the Act was the appropriate vehicle for addressing each of the [plaintiffs’] grievances, and that therefore the [plaintiffs] state law claims were preempted by the Acts express preemption provision.6

The Ninth Circuit affirmed, but for different reasons than those articulated by the district court.

First, the Court found that the district court lacked jurisdiction over the Uhms’ breach of contract and unjust enrichment claims because those claims were at bottom merely creatively disguised claims for benefits and classic coverage disputes which must be channeled through the Acts exclusive remedial scheme before any court has jurisdiction.7

The Uhms’ fraud and consumer protection claims were not, however, subject to the Acts exhaustion provisions because the alleged injury was collateral to any claim for benefits and could be proved without regard to any provisions of the Act relating to the provision of benefits. 8 It was here that the Uhm court undertook an extensive analysis of the MMA and its amendment to Medicare’s preemption clause to determine if the fraud and consumer protection claims were expressly preempted.

Medicare’s “Old” Preemption Standard

Prior the enactment of the MMA, state law claims were preempted by the Medicare Act only to the extent the state law conflicted or was inconsistent with a Medicare standard or where the state law claim fell within for areas enumerated as preempted by the Medicare. Specifically, the Medicare Act’s prior or pre-MMA preemption clause read:

(A) In general

The standards established under this subsection shall supersede any State law or regulation (including standards described in subparagraph (b)) with respect to Medicare+Choice plans which are offered by Medicare+Choice9 organizations under this part to the extent such law or regulation is inconsistent with such standards.10

This provision allowed for the possibility of the application of a state law claim relating to a Medicare claim so long as the state law was consistent with Medicare regulations. The pre-MMA preemption clause then went on to enumerate four areas specifically preempted by the Medicare Act:

(B) Standards specifically superseded

State standards relating to the following are superseded under this paragraph:

(i) Benefit requirements (including cost sharing requirement).

(ii) Requirements relating to inclusion or treatment of providers.

(iii) Coverage determinations (including related appeal and grievance processes).

(iv) Requirements relating to marketing materials and summaries and schedules of benefits regarding a Medicare+Choice plan.11

If a state law fell within these four (4) distinct areas, regardless of whether such state law was inconsistent with a Medicare regulation, that law was preempted.

MMA’s “New” Preemption Standard

The Uhm court noted that the MMA specifically modified the preemption language previously found in the Medicare Act. The MMAs express preemption provision, in part, provides:

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 MA plans which are offered by MA organizations under this part.12

Notably, the 2003 amendment eliminated the qualifying clause of the old preemption provision to the extent such law or regulation is inconsistent with such standards. The MMA also eliminated the four (4) specifically enumerated standards in their entirety.13 The argument advanced by the defendant in Uhmwas that with the passage of the MMA, Congress greatly expanded Medicare’s preemption of state law by codifying a presumption of preemption of all state law relating to Medicare claims. The pre-2003 requirement that there be a conflict between the federal and state laws was completely eliminated.

Consistent with that argument, the Conference Report accompanying the Act explained that, in striking the clause, Congress intended to broaden the preemptive effects of the Medicare statutory regime:

The conference agreement clarifies that the MA program is a federal program operated under Federal rules. State laws, do not, and should not apply, with the exception of state licensing laws or state laws relating to solvency. There has been some confusion in recent court cases.14

The Conference Report was adopted by the Secretary of Health and Human Services in the final rule implementing provisions of the MMA: We believe that the Conference Report was clear that the Congress intended to broaden the scope of preemption in the MMA. 15

The CMS closely paraphrased the statutory language when it wrote the implementing regulations for MA plans. The standards established under this part supersede any State law or regulation . . . with respect to the MA plans which are offered by MA organizations.16 Under the MMA, state standards concerning activities governed by Medicare standards are presumptively preempted.The MMA reversed [the old] presumption and provided that state laws are presumed to be preempted unless they relate to licensure or solvency.17 In the end, it seemed clear that the MMA made the preemption test much simpler: If a federal standard exists, any and all state laws relating to subjects governed by that standard are preempted.

Uhm’s Shortfall

The Uhm court set out all of the foregoing in its analysis of whether the Uhms’ consumer protection and fraud claims were expressly preempted by the Medicare Act and, after doing so, acknowledged that it was evident that Congress intended to expand the preemption provision beyond those state laws and regulations inconsistent with the enumerated standards.18 Nevertheless, the Ninth Circuit, sitting en banc, simply refused to take the next step and codify the new preemption standard. Instead, the Court relied on the pre-MMA standard and stated:

For present purposes, however, the precise degree to which the 2003 amendment expanded the preemption provision beyond state laws and regulations inconsistent with the enumerated standards does not matter. Rather it is sufficient for our purposes that at the very least, any state law or regulation within the specified categories and inconsistent with a standard established under the Act remains preempted.19

In taking a pass on codifying a new and more expansive preemption standard and relying on the old standard, the Court may have actually narrowed the old preemption standard.

The specified categories which the Court references are those found in 42 U.S.C. 195w-26(b)(3)(B) which sets out standards that are specifically superseded whether or not they are inconsistent with federal standards. The Uhm court found plaintiffs fraud and consumer protection claims related to marketing materials under 42 U.S.C. 1395w-26(b)(3)(B)(iv) because the claims alleged that Humana made material misrepresentations and engaged in other deceptive acts in the marketing and advertising of their Part D plan. Under the pre-MMA analysis the Court’s conclusion that the claims related to “marketing materials” was sufficient to find such claims preempted. No further analysis was necessary.

Without explanation, however, the Uhm court added a step in the “old” preemption analysis by requiring a determination of whether a state law falling within the four (4) specified categories was also inconsistent with federal regulations. Under the “old” preemption standard, which the Uhm court was applying, the inconsistent analysis was only required under 42 U.S.C. 1395w-26(b)(3)(A) and was not required where the State law was determined to fall neatly within the four (4) specified categories of 42 U.S.C. 1395w-26(b)(3)(B). This new approach requires a finding that the state law falls within the (4) specified categories AND that it be inconsistent with federal regulations. The result is a blending of two separate pre-MMA preemption standards which theoretically narrowed Medicare’s preemption of state law even further.


To date, no court has endeavored to clarify what the Uhm Court termed as Congress’ intent “to expand the preemption provision beyond those state laws and regulations inconsistent with the enumerated standards.” As in Uhm, most courts continue to apply the “old” preemption standard in analyzing whether a claim is preempted. Ultimately, the true value of the Uhm case lies in itsdetailed and thorough analysis of the MMA’s amendment to the preemption standard under the Medicare Act. The Uhmdecision provides the foundation (or road map) for the next court to clarify and explain the “precise degree to which the 2003 amendment expanded the preemption provision” found in the Medicare Act and to create a new and more expansive preemption standard. Until then, attorneys tasked with defending Medicare Advantage plans are left to continue arguing the old preemption standard while advocating the new one.

See original article and footnotes here.

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