United States District Court, D. Oregon
ATRIO HEALTH PLANS, INC., an Oregon corporation; MID VALLEY IPA, INC., an Oregon nonprofit corporation dba Health Autho rity; CASC ADE COMPREHENSIVE CARE, INC., an Oregon Corporation; and UMPQUA HEALTH, LLC, an Oregon limited liability company, Plaintiffs,
PERFORMANCE HEALTH TECHNOLOGY, LTD., an Oregon Corporation dba PERFORMANCE HEALTH TECHNOLOGY, INC.; and OPTIMA, LLC, an Oregon limited liability company dba INTELIGENZ Defendants.
Michael McShane United State District Judge
action arises from a contract dispute between Plaintiff ATRIO
Health Plans, Inc. (ATRIO) and Defendants Performance Health
Technology, Ltd. (PH TECH) and Optima, LLC (Optima).
Plaintiff brings breach of contract and negligence claims
against Defendants based on alleged actions (or inactions) by
Defendants causing Plaintiff to submit incorrect information
to the Centers for Medicare and Medicaid Services (CMS). PH
TECH removed this action from state court citing federal
question jurisdiction. ATRIO moves to remand back to Marion
County Circuit Court based on lack of federal jurisdiction.
ATRIO's motion to remand, ECF No. 13, is GRANTED.
operates a Medicare Advantage plan in Oregon, providing
insurance plans to Medicare beneficiaries within the state.
ATRIO works with Service Area Contractors (hereinafter
“SACs”), independent physician associations and
hospital organizations, to provide medical care for
ATRIO's members. ATRIO's SACs include Plaintiffs Mid
Valley IPA, Inc., Cascade Comprehensive Care, Inc., and
Umpqua Health, LLC. In exchange for providing its members
with Medicare benefits, ATRIO receives monthly payments from
CMS based on a calculation of certain factors. Compl. ¶
15. CMS provides a higher payment amount to ATRIO for its
enrolled members that meet certain high-risk conditions or
are diagnosed with specific serious diseases. Compl. ¶
16. In order to receive these higher payouts from CMS, ATRIO
must submit member medical information to the CMS Risk
Adjustment Processing System (“RAPS”). Compl.
¶ 17. If the information submitted to RAPS meets certain
criteria, then ATRIO is allotted the more substantial
payments to supplement the increased cost of providing care
to its higher-risk members.
2011, ATRIO has contracted with PH TECH to perform
administrative duties and to process claims from ATRIO's
members. Compl. ¶ 26. Within these contractual duties,
PH TECH was responsible for “filtering” claims
that did not qualify for risk adjustment based on the RAPS
criteria. To synthesize the complaint, ATRIO claims that PH
TECH failed to properly perform this filtering
responsibility, resulting in misinformation being submitted
to CMS. Submission of this misinformation regarding the risk
status of some of ATRIO's members resulted in overpayment
to ATRIO by CMS of allegedly $30, 791, 181. Compl. ¶
106. ATRIO alleges similar claims of failure to perform
contractual duties against Optima. ATRIO seeks reimbursement
from the Defendants for the overpayment amount that is due
for repayment to CMS and monetary damages for ATRIO's
lost revenue and other harms from Defendants' alleged
defendant may remove a civil action from state court to
federal district court if the federal court would have had
original jurisdiction over the matter. 28 U.S.C. §
1441(a). In other words, when the court lacks diversity
jurisdiction, removal is proper only when the court has
federal-question jurisdiction over the subject matter of the
complaint. Caterpillar Inc. v. Williams, 482 U.S.
386, 392 (1987). “The presence or absence of
federal-question jurisdiction is governed by the well-pleaded
complaint rule, which provides that federal jurisdiction
exists only when a federal question is presented on the face
of the plaintiff's properly pleaded complaint.”
Id. (internal quotations and citation omitted). In
the context of the well-pleaded complaint rule,
federal-question jurisdiction means that the complaint itself
“establishes that the case ‘arises under'
federal law.” Franchise Tax Bd. v. Constr. Laborers
Vacation Trust, 463 U.S. 1, 10 (1983). In order to arise
under federal law, “[a] right or immunity created by
the Constitution or laws of the United States must be an
element, and an essential one, of the plaintiff's cause
of action.” Id. at 10-11 (quoting Gully v.
First Nat'l Bank, 299 U.S. 109, 112 (1936)).
is a narrow exception to the well-pleaded complaint rule
where federal jurisdiction may be asserted over strictly
state law claims which pose a disputed federal issue.
Grable & Sons Metal Products, Inc. v. Darue
Engineering & Mfg., 545 U.S. 308, 313-14 (2005). The
applicability of this exception is governed by a four-factor
test set forth by the Supreme Court in Gunn v.
Minton, 568 U.S. 251, 258 (2013). Federal jurisdiction
can be exerted over strictly state law claims only if
“a federal issue is: (1) necessarily raised, (2)
actually disputed, (3) substantial, and (4) capable of
resolution in federal court without disrupting the
federal-state balance approved by Congress.”
following removal, the court determines it lacks original
jurisdiction, it must remand the matter to state court. 28
U.S.C. § 1447(c); Franchise Tax Bd., 463 U.S.
at 8. “Federal jurisdiction must be rejected if there
is any doubt as to the right of removal in the first
instance.” Gaus v. Miles, Inc., 980 F.2d 564,
566 (9th Cir. 1992). “The ‘strong
presumption' against removal jurisdiction means that the
defendant always has the burden of establishing that removal
is proper.” Id. (quoting Nishimoto v.
Federman-Bachrach & Assoc., 903 F.2d 709, 712 n.3
(9th Cir. 1990)).
bring claims of breach of contract and negligence against
Defendants in connection with alleged failures to perform
contractual obligations. Although Plaintiffs bring no claims
under federal law, Defendants removed this action citing
federal question jurisdiction. Federal jurisdiction exists
here only if the Plaintiffs' claims fall within the
narrow exception to the well-pleaded complaint rule
established in Grable. To be within this slim
category, the Defendants must show that the claims meet the
four factors set forth in Gunn. Failure to meet any
of the factors will result in remand.
This Court Lacks Federal Jurisdiction Over Plaintiffs'
federal issue is “necessarily raised” if it must
be resolved in the determination of the case. Gunn,
568 U.S. at 259.The claims here necessarily raise federal
issues. As noted above, ATRIO alleges its contract with PH
TECH required PH TECH to comply with certain CMS regulations
and federal laws. For example, ATRIO alleges:
125. The Administrative Services Agreements required PH TECH
to comply with all applicable Medicare laws, regulations, ...