X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:RenCare appeals the district court’s dismissal of RenCare’s claims for failure to exhaust administrative remedies and the district court’s partial denial of RenCare’s motion to remand its claims to state court. Humana is a Texas HMO under contract with the Center for Medicare and Medicaid Services to provide medical care to Medicare + Choice beneficiaries. Under its contract with CMS, Humana receives a fixed amount per month for each enrolled M+C patient regardless of the value of services the patient actually receives. In October 2000, Humana contracted RenCare to provide kidney dialysis services to Humana’s enrollees, including its M+C enrollees. Humana and RenCare later became embroiled in a dispute over reimbursement for end-stage renal dialysis services that RenCare provided to Humana enrollees. As a result, RenCare sued Humana in Texas state court for breach of contract, detrimental reliance, fraud and violations of state law. Humana moved for removal of the claims to federal district court, arguing that RenCare’s claims were preempted by the Medicare Act and thus properly belonged only in federal court. After the district court granted Humana’s motion, RenCare requested that the case be remanded to state court. The district court retained jurisdiction over RenCare’s claims as they related to M+C enrollees and remanded to state court RenCare’s claims relating to the Humana commercial enrollees. Subsequently, the district court dismissed the claims that remained in federal court, finding that RenCare had failed to exhaust its administrative remedies under the Medicare Act. RenCare now appeals the district court’s partial denial of its motion to remand its claims to state court and the dismissal of its claims for failure to exhaust administrative remedies. RenCare argues that its claims do not arise under federal law and thus are not subject to federal jurisdiction or federal administrative remedies. HOLDING:The court reverses the district court’s dismissal of RenCare’s claims and its partial denial of RenCare’s motion to remand its claims to state court. Because RenCare’s claims are based on state law, the standing and substantive basis for its claims is clearly not the Medicare Act. Thus, RenCare must exhaust its administrative remedies and appeal the resulting administrative decision in federal court only if RenCare’s claims are inextricably intertwined with a claim for Medicare benefits. However, a review of relevant case law and Medicare regulations reveals that RenCare’s claims fall outside of the category of cases that arise under the Medicare Act and, furthermore, that the administrative appeals mechanism for Part C of the Medicare Act excludes claims such as RenCare’s. Under Part C, the government transfers the risk of providing care for M+C enrollees to the M+C organization. Humana bears the ultimate responsibility for providing services to its M+C enrollees. It has chosen to fulfill its obligations by contracting RenCare to provide services to enrollees. With the government’s risk extinguished, any dispute over payment to RenCare is solely between RenCare and Humana. With neither M+C enrollees nor the government having any financial interest in the resolution of this dispute, RenCare’s claims are not intertwined, much less “inextricably intertwined,” with a claim for Medicare benefits. At bottom, RenCare’s claims are claims for payment pursuant to a contract between private parties. The administrative review process focuses on enrollees, not health care providers, and is designed to protect enrollees’ rights to Medicare benefits. Here, Humana’s failure to pay RenCare is not an organization determination subject to the mandatory exhaustion of administrative remedies. No enrollee has requested an organization determination or appeal. No enrollee has been denied covered service or been required to pay for a service. Rather, the M+C enrollees in this case bear no financial risk inasmuch as they have already received the services for which RenCare seeks reimbursement. In fact, there is a complete absence of M+C beneficiary interest in this dispute. The only interest at issue is RenCare’s interest in receiving payment under its contract with Humana. Humana argues that RenCare is acting as an assignee of Humana’s M+C beneficiaries and thus may be a party to an organization determination under 42 C.F.R. 422.574(b), which allows providers to be parties to an organization determination as assignees of beneficiaries. However, the M+C beneficiaries in this case do not have a claim to assign to RenCare. As discussed above, no M+C enrollee has been denied benefits or payment required under the Medicare Act. RenCare is pursuing its own claims against Humana. Thus, Humana’s failure to pay RenCare is not an organization determination that RenCare could appeal within the mandatory administrative review mechanism. OPINION:Benavides, J.; Benavides, Dennis and Clement, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.