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Click here for the full text of this decision FACTS:The appellants, hospitals, sued the appellees, Aetna Inc. and Aetna Health Inc., for breach of contract, quantum meruit, and breach of fiduciary duty, and to collect on accounts arising from Aetna’s failure to pay the hospitals for health care services they provided to Medicare patients enrolled in an Aetna health maintenance organization. Aetna moved to dismiss for lack of subject matter jurisdiction, arguing that the hospitals failed to exhaust federal administrative remedies provided under the Medicare program. The trial court agreed and dismissed for lack of jurisdiction. HOLDING:Affirmed. The hospitals’ claims arise under the Medicare Act. Though their claims are characterized under state law, such as for breach of contract, they are “inextricably intertwined” with a claim for benefits because, “at bottom,” they are seeking payment for services provided to Medicare patients. Heckler v. Ringer, 466 U.S. 602 (1984). As such, the hospitals were required to first exhaust the administrative process. Though Heckler was decided under Parts A and B of Medicare, at least three other courts have applied this same analysis to claims under Part C, including one involving North America Medical Management, the very same intermediary in this case. The court agrees with their analysis of this issue and concludes that the trial court did not have subject matter jurisdiction over the Hospitals’ claims. The hospitals’ claim that the administrative process does not apply to providers is belied by the plain language of the statute and regulations. Non-contract providers can complain to the Health Care Financing Administration about pure payment disputes. Though the interests of patients is the primary focus of this administrative process, providers have subsidiary interests (such as in being able to provide services and in being paid for them) that are clearly contemplated and specifically provided for in this process. Thus, a contract provider in a payment dispute with a Medicare+Choice organization has an administrative remedy if that dispute is in conjunction with a patient-focused dispute such as coverage. Three other courts considering Medicare+Choice provider payment disputes have also required the providers to exhaust administrative remedies. The hospitals also contend that this is not a coverage dispute but is merely a prompt payment dispute and therefore, as contract providers, they have no administrative remedies to exhaust. Even if Aetna violated its prompt payment obligation, according to the plain wording of the statute, it may still assert a defense to payment if the services are not covered. If coverage issues are even possible, for the important policy reasons promoted by the administrative process and ensuring uniformity of Medicare coverage, the dispute must go through the administrative process. The hospitals assert that since the administrative process is designed for coverage-type issues, other matters, such as contract interpretation, are beyond the HCFA’s expertise, and therefore exhaustion would be futile. Even if some of their claims are not within the typical scope of the HCFA’s review, the agency must first be allowed to consider those issues on which is has expertise before judicial review; otherwise, the exhaustion process would be undermined. The hospitals’ claims “arise under” the Medicare Act, which means the hospitals must exhaust administrative remedies before litigating their claims in court. The hospitals were not excused from exhausting the administrative process, and their failure to do so deprived the trial court of subject matter jurisdiction, the court determines. OPINION:Yates, J.; Yates, Anderson and Hudson, JJ.

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