United States District Court, W.D. Kentucky, Louisville Division
MEMORANDUM OPINION & ORDER
N. Stivers, Judge
matter is before the Court upon Defendant's Motion to
Dismiss (DN 9), which is ripe for adjudication. For the
reasons discussed below, the motion is DENIED AS MOOT and the
matter is REMANDED to Jefferson Circuit Court.
Neal Morrison (“Morrison”), a Medicare
beneficiary, filed this action in Jefferson Circuit Court
seeking compensation for an unpaid hospital bill from his
Medicare provider, Defendant Humana, Inc.
(“Humana”). (Notice Removal Ex. A, at 4, DN 1-2
[hereinafter Compl.]). To understand the parties'
relationship and the nature of this action, a brief review of
the Medicare system is necessary:
beneficiaries can receive their Medicare benefits in one of
two ways: (1) under Medicare Parts A and B, which provide
hospital insurance and coverage to Medicare beneficiaries for
medically necessary outpatient and physician services on a
fee-for-service basis; or (2) under Part C, the
“Medicare Advantage” option, formerly known as
“Medicare Choice.” 42 U.S.C. §
1395w-21(a)(1)(A)-(B). Enrollees of Medicare Advantage
receive their Medicare benefits from private insurance
companies called Medicare Advantage Organizations that
contract with the federal Centers for Medicare and Medicaid
Services (“CMS”). See Id. §§
1395w-21, -27; 42 C.F.R. § 422.4. More particularly, the
applicable regulations provide that a Medicare Advantage
Organization (“MAO”) is “a public or
private entity organized and licensed by a State as a
risk-bearing entity (with the exception of provider-sponsored
organizations receiving waivers) that is certified by CMS as
meeting the [Medicare Advantage] contract
requirements.” 42 C.F.R. § 422.2. For those
Medicare beneficiaries who chose Medicare Advantage and
enroll with an MAO, CMS does not directly pay the
enrollee's Medical provider (e.g., a hospital) for
services provided to the enrollee. See 42 U.S.C.
§ 1395w-27(f)(1). Instead, CMS pays the MAO a fixed,
monthly amount per enrollee and, as a general matter, MAOs
contract with Medicare providers for the provision of
services to those enrollees. Id. §
1395w-21(i)(1)-(2), -22, -23(f), -27.
is an MAO and thus provides Medicare benefits under Part C of
the Medicare Act to beneficiaries who elect to enroll in its
Medicare Advantage plans. (See Compl. ¶ 1;
Def.'s Mem. Supp. Mot. Dismiss 2, DN 9-1). Morrison
elected to receive his Medicare benefits from Humana through
a Humana Choice PPO Medicare Group Plan. (Compl. ¶ 1;
Def.'s Mem. Supp. Mot. Dismiss 2). In September 2012,
Morrison was hospitalized for 18 days. (Compl. ¶ 3).
Humana initially paid the bill for this hospital stay but
later rescinded payment. (Compl. ¶¶ 4-5). Unable to
resolve the matter through Humana's appeal process, and
being on the hook for a $25, 973.25 bill, Morrison filed suit
against Humana for breach of contract and bad faith. (Compl.
¶¶ 6-9, 11-15, 16-21).
removed the case to this Court under the federal officer
removal statute, 28 U.S.C. § 1442(a)(1). (Notice Removal
1, DN 1). Now, Humana moves to dismiss for lack of subject
matter jurisdiction or, in the alternative, failure to state
a claim upon which relief can be granted. (Def.'s Mot.
Dismiss 1, DN 9). In support of its motion, Humana argues,
respectively, that Morrison was required-but failed-to
exhaust administrative remedies available through the
Medicare Act and that his state-law claims are preempted by
the Medicare Act. As will be explained below, the Court
indeed lacks subject matter jurisdiction, but not for the
reason Humana contends. Humana was not entitled to rely on 28
U.S.C. § 1442(a)(1) to remove this case in the first
has not filed a motion to remand. However, “[s]ubject
matter jurisdiction is always a threshold determination[,
]” Am. Telecom Co., LLC v. Republic of Leb.,
501 F.3d 534, 537 (6th Cir. 2007), and, “[i]f at any
time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be
remanded.” 28 U.S.C. § 1447(c) (emphasis added);
Page v. City of Southfield, 45 F.3d 128, 132 n.8
(6th Cir. 1995) (“We recognize that if a district court
determines . . . [it] lacks subject matter jurisdiction over
the case, the court can sua sponte remand the case
to state court at any time prior to final judgment.”).
claims that removal was proper, and that the Court has
subject-matter jurisdiction over this matter, under 28 U.S.C.
§ 1442(a)(1) “because Humana was acting on behalf
of [CMS] as a Medicare Advantage Organization when it
declined to pay claims for medical services rendered to
[Morrison].” (Notice Removal 1). 28 U.S.C. §
(a) A civil action or criminal prosecution commenced in a
State court against any of the following may be removed by
them to the district court of the United States for the
district and division embracing the place wherein it is
(1) The United States or any agency thereof or any officer
(or any person acting under that officer) of the United
States or of any agency thereof, sued in an official or
individual capacity for any act under color of such office or
on account of any right, title or authority claimed under any
Act of Congress for the apprehension or punishment of
criminals or the collection of the revenue.
28 U.S.C. § 1442(a)(1).
Humana is not a federal officer or agency. Rather, it
contends that removal was proper under Section 1442(a)(1)
because, as an MAO, it was “acting under” an
“agency” or “officer of the United States[,
]” namely CMS or the Secretary of Health and Human
Services. (Notice Removal 4-6). In its notice of removal,
Humana cites a string of district court cases, including one
from this Court, for the proposition that “Medicare
Advantage Organizations administering Medicare Advantage
Plans under Part C of the Medicare Act are entitled to remove
under the Federal Officer Statute.” (Notice ...