CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH DISTRICT
STATE OF CALIFORNIA
Plaintiff and Appellant, E022431
v. (Super.Ct.No. INC 002337)
PACIFICARE OF CALIFORNIA et al., OPINION
Defendants and Respondents.
APPEAL from the Superior Court of Riverside County. Douglas P. Miller, Judge.
Shernoff, Bidart, Darras & Arkin; Shernoff, Bidart, Darras & Dillon and Sharon J.
Arkin for Plaintiff and Appellant.
Konowiecki & Rank, Jon N. Manzanares and Keith A. Weaver for Defendants and
Respondents PacifiCare of California and PacifiCare Health Systems, Inc.
Bonne, Bridges, Mueller, O’Keefe & Nichols, Richard J. Ryan, Nancy Flores;
Greines, Martin, Stein & Richland, Robert A. Olson and Laura Boudreau for Defendant
and Respondent Empire Physicians Medical Group.
Plaintiff Gilbert Levy appeals from an adverse judgment entered after defendants’
demurrers to the first amended complaint were sustained without leave to amend. The
complaint contains nine causes of action, all based upon plaintiff’s claim that he was
wrongfully denied access to a second medical opinion concerning a cancer diagnosis and
was then denied coverage for corrective surgery. The trial court found it lacked
jurisdiction to hear plaintiff’s claims since he failed to exhaust administrative remedies
mandated by the Medicare Act. (42 U.S.C. § 1395 et seq.) Plaintiff asserts none of his
causes of action were subject to administrative review and therefore the trial court erred.
We disagree with the plaintiff and affirm.
FACTS AND PROCEDURAL HISTORY
Plaintiff filed his original complaint on June 10, 1997. In response, PacifiCare of
California, doing business as Secure Horizons, and PacifiCare Health Systems, Inc.
(collectively PacifiCare), filed a notice of removal to federal court. The parties later
stipulated to remand the case to superior court.1 Both PacifiCare and Empire Physicians
Medical Group (Empire) (collectively Defendants) demurred. The court overruled both
1 Plaintiff argues the stipulation to remand is an admission that there is no federal
jurisdiction over these claims. But removal of a case involving a federal question is at the
election of the defendant. (28 U.S.C. § 1441.) We decline to draw any conclusions about
PacifiCare’s reasons for stipulating to have the case heard in a state forum. Further,
subject matter jurisdiction cannot be waived, nor can it be “created” by the parties where
it does not exist. (Cowan v. Superior Court (1996) 14 Cal.4th 367, 372.)
demurrers as to certain causes of action and sustained the demurrers as to other causes of
action, with leave to amend.
On November 26, 1997, plaintiff filed a first amended complaint including nine
causes of action against PacifiCare and Empire.2 Plaintiff alleges: The Department of
Labor through the Health Care Financing Agency (HCFA) contracts with health
maintenance organizations (HMO’s) including PacifiCare, to provide medical care to
Medicare-eligible senior and disabled citizens. In Southern California, HCFA pays the
HMO approximately $570 per month for each enrollee, whether any medical treatment is
provided or not. The HMO’s must allow dissatisfied members to disenroll at any time,
effective on the first of the month following the election. Those members may choose
another HMO or the standard Medicare entitlement. Therefore, it is in the best interest of
the HMO to enroll healthy persons, and then cause them to be dissatisfied and disenroll as
soon as they require significant levels of treatment.
PacifiCare, a provider of medical benefits with duties equivalent to those of an
insurance company, contracts with independent doctor groups, such as Empire, to supply
medical services to its enrollees. PacifiCare managed and controlled the activities of
Empire, and vice versa, as a result of a contract between them by which Empire agreed to
2 Alleged against PacifiCare and Empire were breach of the duty of good faith and
fair dealing, breach of contract, breach of fiduciary duty, intentional and negligent
infliction of emotional distress, as well as requests for injunctive and restitutionary relief.
Plaintiff also alleged against Empire intentional and negligent interference with a
contractual relationship. Against PacifiCare alone plaintiff alleged a cause of action for
provide medical care, benefits determination and utilization review services to PacifiCare
insureds. The contractual arrangement between PacifiCare and Empire created a financial
disincentive for Empire to refer patients to practitioners or facilities not under contract
with PacifiCare. PacifiCare paid Empire according to the number of plan enrollees, not
the amount of medical services provided. Further, Empire had to cover the cost of
outside referrals for treatment it could not provide. These types of covenants often result
in the delay and/or denial of necessary medical care for plan enrollees. PacifiCare
required Empire to keep these arrangements a secret from the patients.
PacifiCare was the benefits administrator and underwriter of a health insurance
policy issued to plaintiff as an alternative to the Medicare program. Prior to his enrolling,
PacifiCare represented to plaintiff that he would be entitled to everything Medicare
offered and more, would be able to choose his own primary care physician and would be
entitled to all treatment recommended by that doctor. As part of its contractual agreement
with HCFA, under 42 United States Code section 1395mm, PacifiCare was required to
provide the same level of care and benefits provided under Medicare, without premiums
or copayments. In addition, PacifiCare promised to provide many additional services and
benefits not covered by Medicare.
In October 1996, plaintiff was diagnosed with lung cancer. Dr. Frankel, his
primary care physician, referred him to PacifiCare’s treating oncologist, Dr. George. On
November 15, 1996, Dr. George told plaintiff that the location of the tumor (near his
heart) made it inoperable, leaving chemotherapy and radiation as the only treatment
available. Since Dr. George was not a surgeon, plaintiff wanted a second opinion from
Dr. Morton, a thoracic surgeon at the John Wayne Cancer Institute. Dr. Frankel
processed the required paperwork requesting the second opinion. On November 20,
1996, Empire denied the request on the ground that plaintiff had to see the local, in-
network oncologist. On November 21, 1996, plaintiff consulted Dr. Morton at his own
expense. Dr. Morton concluded plaintiff’s only chance to survive was immediate surgery,
as the tumor would double in size within 30 days. Dr. Frankel submitted a request for a
referral authorization to allow Dr. Morton to perform the needed surgery. On November
27, 1996, Empire denied the referral stating plaintiff must be seen by an in-network
surgeon, even though Dr. George had already determined no plan surgeon would perform
the surgery. Plaintiff determined the surgery would be covered under Medicare. He
therefore immediately disenrolled from the PacifiCare plan. His Medicare coverage was
effective December 1, 1996, and Dr. Morton performed successful surgery to remove the
cancer on December 2, 1996.
Plaintiff alleges PacifiCare unreasonably withheld medical benefits under its
contract with him. By unreasonably withholding referrals, denying authorization for
testing, failing to provide diagnosis, testing and treatment, and failing to make and
withholding benefit payments, among other things, PacifiCare and Empire breached the
duty of good faith and fair dealing they owed to plaintiff, breached their contracts with
him, and negligently and intentionally inflicted emotional distress upon him. By
engaging in conduct that it knew would result in a denial of benefits to plaintiff, Empire
negligently and intentionally interfered with plaintiff’s contractual relationship with
PacifiCare. By having and failing to disclose financial incentives to deny benefits and by
failing to provide authorization for medical treatment, among other things, Defendants
breached their fiduciary duty to plaintiff. By telling plaintiff he would receive all
medically necessary treatment with the intention of denying that treatment when
financially expedient, PacifiCare intentionally misrepresented facts to plaintiff.
Defendants should be enjoined from, among other things, willfully denying medically
necessary treatment to senior citizens and from failing to disclose their financial
incentives to deny such treatment. Plaintiff prayed for damages for failure to provide
benefits, emotional distress, pain and suffering, economic and punitive damages, as well
as equitable relief.
On January 22, 1998, the trial court sustained PacifiCare’s demurrer to the first
amended complaint without leave to amend. On January 26, 1998, plaintiff stipulated
that Empire’s demurrer be “sustained without leave to amend based on the same issues
that the Court addressed and ruled on as to [PacifiCare’s] demurrer.” Based upon the
stipulation, on February 5, 1998, the trial court issued an order sustaining Empire’s
demurrer without leave to amend and dismissed plaintiff’s first amended complaint in its
Preliminarily, we dispense with Empire’s argument that plaintiff waived his right
to appeal as against Empire by stipulating to the entry of judgment. While generally a
party may not appeal from a judgment to which he or she has agreed, an appeal may be
taken when assent to judgment is given to facilitate appeal after an adverse determination
on a critical issue. (County of San Bernardino v. Pacific Indemnity Co. (1997) 56
Cal.App.4th 666, 678, fn. 7.) Despite Empire’s contrary argument, we conclude the trial
court’s finding that it lacked subject matter jurisdiction because plaintiff failed to exhaust
his administrative remedies was indeed an adverse determination on a critical issue.
Given that decision, plaintiff could not hope to survive demurrer on any of his causes of
action against Empire. Thus, we decline to dismiss plaintiff’s appeal as to Empire.
“On appeal from a judgment dismissing an action after sustaining a demurrer
without leave to amend, we give the complaint a reasonable interpretation, and treat the
demurrer as admitting all material facts properly pleaded, but do not assume the truth of
contentions, deductions or conclusions of law. A trial court errs in sustaining a demurrer
when the plaintiff has stated a cause of action under any possible legal theory, and abuses
its discretion in sustaining a demurrer without leave to amend if the plaintiff shows there
is a reasonable possibility any defect identified by the defendant can be cured by
amendment. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967 . . . .)”
(Palm Springs Tennis Club v. Rangel (1999) 73 Cal.App.4th 1, 4-5.) On appeal, “‘. . .
Plaintiff must show in what manner he can amend his complaint and how that amendment
will change the legal effect of his pleading. . . .’ [Citation.]” (Goodman v. Kennedy
(1976) 18 Cal.3d 335, 349.) Plaintiff having made no attempt to indicate how his
complaint may have been amended to state a cause of action under any theory, if we
decide the demurrer was properly sustained, we must conclude that plaintiff has failed to
establish that the trial court abused its discretion in denying leave to amend.
This case is determined by a single issue: whether plaintiff’s state law causes of
action are based upon claims governed by the Medicare Act’s (the Act) exclusive
administrative review provisions. There is only one California case on this topic,
Redmond v. Secure Horizons, PacifiCare, Inc. (1997) 60 Cal.App.4th 96.3
Redmond holds, citing Heckler v. Ringer (1984) 466 U.S. 602 [104 S.Ct. 2013, 80
L.Ed.2d 622], that claims “arising under” the Act are subject to the exclusive
administrative review procedures of 42 United States Code section 405(g) and (h), made
applicable to the Act by 42 United States Code sections 1395ii and 1395mm(c)(5)(B). In
Redmond, the defendant HMO denied plaintiff benefits for life-saving surgery, but later
reimbursed her for her expenses. Plaintiff sued for breach of contract, breach of the
implied covenant of good faith and fair dealing, and infliction of emotional distress, based
upon the initial denial of her claim and subsequent delay in reimbursement. (Redmond v.
Secure Horizons, PacifiCare, Inc., supra, 60 Cal.App.4th at pp. 98-99.) The Court of
Appeal for the Sixth District concluded plaintiff’s state law claims did arise under the Act
3 Just prior to oral argument on this case, the Court of Appeal for the Fourth
District, Division Three, decided McCall v. Pacificare of Cal., Inc. (1999) 74 Cal.App.4th
257. Plaintiff relied heavily on McCall at oral argument. However, during the pendency
of this appeal, on December 1, 1999, the California Supreme Court granted review of the
McCall decision. The case may not, therefore, be cited as precedent.
and affirmed the dismissal of her complaint for lack of subject matter jurisdiction. (Id. at
The courts of our sister states have not examined this issue in a published decision
and the federal circuit courts are in disagreement. (Compare Ardary v. Aetna Health
Plans of California, Inc. (9th Cir. 1996) 98 F.3d 496 [state law tort claims for wrongful
death, negligence, infliction of emotional distress and misrepresentation do not arise
under the Act] with Midland Psychiatric Associates, Inc. v. United States (8th Cir. 1998)
145 F.3d 1000 [state law claim for tortious interference with contract would entangle
court in redeciding the Medicare claims decision and therefore arose under the Act] and
Bodimetric Health Services, Inc. v. Aetna Life & Casualty (7th Cir. 1990) 903 F.2d 480
[claims for fraud, negligence, breach of contract, breach of implied covenant of good
faith and fair dealing and breach of fiduciary duty arose under the Act].)4
4 At oral argument, plaintiff pointed out that Midland and Bodimetric involved
fiscal intermediaries rather than HMO’s, as in the instant case. However, plaintiff
provided no explanation why this is a distinction of import. Both cases analyze whether
the state law claims advanced therein arose under the Act as that term was defined in
Ringer. (Midland Psychiatric Associates, Inc. v. United States, supra, 145 F.3d at p.
1004; Bodimetric Health Services, Inc. v. Aetna Life & Casualty, supra, 903 F.2d at pp.
483-487.) We see no reason why Ringer should be applied differently depending on the
nature of the parties involved.
In response to plaintiff’s observation, Empire cited Grijalva v. Shalala (9th Cir.
1998) 152 F.3d 1115, as a case that did involve an HMO. However, Grijalva did not
address the issue of exclusive administrative review of state law claims “arising under”
the Act. In addition, the United States Supreme Court granted a writ of certiorari in
Grijalva, vacated the judgment, and remanded the case. (Shalala v. Grijalva (1999) ___
U.S. ___ [119 S.Ct. 1573, 143 L.Ed.2d 669].)
Claims arise under the Act when their basis is a request for the payment of benefits
under the Act, when they are inextricably intertwined with the payment of benefits, or if
the standing and substantive basis for the presentation of the claim are the Act. We are to
define the term “arising under” broadly. (Heckler v. Ringer, supra, 466 U.S. at pp. 614-
615, 620.) A claim may arise under the Act, even if it also arises under some other law as
pleaded. (Cf. Weinberger v. Salfi (1975) 422 U.S. 749, 760-761 [95 S.Ct. 2457, 45
L.Ed.2d 522].) On the other hand, a claim does not arise under the Act if it is “wholly
‘collateral’ to [the] claim for benefits” and the injury cannot be remedied through the
administrative appeals procedure. (Heckler v. Ringer, supra, 466 U.S. at p. 618.)
For plaintiff to prove breach of the duty of good faith and fair dealing, breach of
contract, negligent and intentional interference with a contractual relationship, breach of
fiduciary duty and negligent and intentional infliction of emotional distress, plaintiff
would have to show that a second opinion and surgery were unreasonably and/or
wrongfully denied. This would necessarily require the court to review the merits of
Defendants’ Medicare claims decisions. The Act provides that such review is within the
sole province of the Secretary of Health and Human Services, thus ensuring a uniformity
of determinations nationwide, rather than the disparate findings that would inevitably
result if each state court could determine entitlement to benefits under the Act. (42
U.S.C. §§ 1395ff, 1395mm.) The above listed causes of action claim, at bottom, that
Defendants should have allowed benefits that they denied. Thus, while the standing for
these claims may be in state law, as the Ardary court observed, we nevertheless conclude
the claims are inextricably intertwined with the payment of benefits and arise under the
Plaintiff’s causes of action for misrepresentation and injunctive and restitutionary
relief give rise to a slightly different analysis, since at first blush, claims of this nature
would not appear to have much to do with requests for benefits. (See, e.g., Solorzano v.
Superior Court (1992) 10 Cal.App.4th 1135 [plaintiffs’ request for injunctive relief for
HMO’s alleged deceptive advertising methods not preempted by federal law].)5 Still, as
pleaded, the alleged misrepresentation is based upon Defendants’ assertions that benefits
available through Medicare would not be denied and that treatment options would not be
limited. As compensation for the alleged misrepresentation, plaintiff seeks to recover for
unreimbursed medical expenses for the second opinion and for emotional distress.
Similarly, plaintiff’s cause of action for injunctive relief, at bottom, seeks to prevent
Defendants from denying claims for benefits, and to prevent Defendants from engaging in
conduct that results in the denial of benefits. “A party cannot avoid the Medicare Act’s
jurisdictional bar simply by styling its attack as a claim for collateral damages instead of a
challenge to the underlying denial of benefits. If litigants who have been denied benefits
could routinely obtain judicial review of these decisions by recharacterizing their claims
5 The Solorzano court’s analysis focused solely on federal preemption and did not
consider the potential effect of the exclusive administrative remedies for claims for
benefits under the Act. We do not believe a preemption analysis is appropriate in this
case. (See discussion, infra.)
under state and federal causes of action, the Medicare Act’s goal of limited judicial
review for a substantial number of claims would be severely undermined. [Citations.]”
(Bodimetric Health Services, Inc. v. Aetna Life & Casualty, supra, 903 F.2d at p. 487.)
Thus, we conclude the trial court correctly found that plaintiff’s complaint is inextricably
intertwined with his claim for benefits under the Act. If the denial of his claim for
benefits under the Act was not allegedly wrongful, plaintiff would have no causes of
action. The Act’s exclusive provision regarding claims for benefits deprives the state
courts of subject matter jurisdiction over plaintiff’s claims.
On appeal plaintiff seeks primarily to convince this court to find the Ninth Circuit
opinion in Ardary v. Aetna Health Plans of California, Inc., supra, 98 F.3d 496
controlling, and distinguish Redmond v. Secure Horizons, PacifiCare, Inc., supra, 60
Cal.App.4th 96. Plaintiff would also have us distinguish Bodimetric Health Services, Inc.
v. Aetna Life & Casualty, supra, 903 F.2d 480. Initially, we note that we are not bound to
follow any of these opinions, which are merely of persuasive effect. (See La Com v.
Pacific Gas & Electric Co. (1955) 132 Cal.App.2d 114, 118; Rohr Aircraft Corp. v.
County of San Diego (1959) 51 Cal.2d 759, 764, revd. on other grounds (1960) 362 U.S.
628, 636 [80 S.Ct. 1050, 4 L.Ed.2d 1002].) Further, we find Ardary, Redmond and
Bodimetric distinguishable from the instant suit in both their facts and their analysis.
Empire correctly observes that Heckler v. Ringer, supra, 466 U.S. 602, controls, and it is
the authority upon which we base our decision.
Our application of Ringer and our analysis of Redmond and Ardary cause us to
conclude that plaintiff’s claims are more akin to those in Redmond than those in Ardary.
Viewed superficially, Redmond could be interpreted to merely conclude that the essence
of Redmond’s claim was a denial of benefits, albeit for delayed reimbursement rather
than the cost of medical care. However, it should not be overlooked that the plaintiff in
Redmond had already received her benefits at the time she filed her suit. Her claims, as
are plaintiff’s herein, were for consequential damages flowing from the denial of benefits,
not for reimbursement of the benefits themselves. But because those consequential
damages could not be awarded without the trial court second-guessing the benefits
determination, they were found to be inextricably intertwined with a claim for benefits,
and therefore subject to exclusive administrative review. (Redmond v. Secure Horizons,
PacificCare, Inc., supra, 60 Cal.App.4th at pp. 102-103.)
Ardary is factually distinguishable from the instant case as it involved an action by
surviving family members for a wrongful death allegedly occasioned by a failure to
provide medical services, and not, as here, a claim by the enrollee. (Ardary v. Aetna
Health Plans of California, Inc., supra, 98 F.3d at pp. 497-498.)6 Further, in deciding
Ardary, the Ninth Circuit applied the exception to exclusive administrative review that
was mentioned by the United States Supreme Court in Ringer, for “special cases” where
6 Wartenberg v. Aetna U.S. Health Care, Inc. (E.D.N.Y. 1998) 2 F.Supp.2d 273,
cited by plaintiff, relied heavily on Ardary and also involved a claim for wrongful death
by the survivors of an enrollee. It is therefore distinguishable on the same grounds.
the claim is “‘wholly “collateral” to [the] claim for benefits, and where . . . [the] injury
could not be remedied by the retroactive payment of benefits . . . .’” (98 F.3d at p. 500,
citing Heckler v. Ringer, supra, 466 U.S. at p. 618.)
Assuming the Ninth Circuit’s analysis was correct (Empire argues it was not), the
special circumstances it found brought Ardary into the Ringer exception are not present
here. As shown above, throughout his complaint plaintiff bases his claims of wrongdoing
on the decision to deny benefits, and requests compensation for the denial of benefits.
Ergo, plaintiff’s claims are not wholly collateral to a claim for benefits. In addition,
though plaintiff argues his case is “special” because he has already been compensated and
therefore his claims cannot be remediated through the administrative review process, we
conclude he has “no colorable claim that an erroneous denial of . . . benefits in the early
stages of the administrative process [injured him] in a way that [could not] be remedied
by the later payment of benefits.” (Heckler v. Ringer, supra, 466 U.S. at p. 618.) In this
regard his claims are no different than those of the plaintiffs in Ringer and Redmond.
In Ardary, the court held that the complaint did not arise under the Act because it
contained no “‘. . . claims in which “both the standing and the substantive basis for the
presentation” of the claims’ is the Act. [Citations.]” (Ardary v. Aetna Health Plans of
California, Inc., supra, 98 F.3d at p. 499, italics in original.) However, the “standing and
substantive basis” test, originally formed in Weinberger v. Salfi, supra, 422 U.S. 749, was
only one part of the Supreme Court’s analysis in Ringer. The court also found dispositive
the fact that the plaintiffs’ claims were “inextricably intertwined with what [it held was]
in essence a claim for benefits . . . .” (Heckler v. Ringer, supra, 466 U.S. at p. 624.) The
Ardary court’s consideration of whether the claims were essentially for benefits or were
inextricably intertwined with a claim for benefits was irreversibly caught up in its
determination that it was dealing with a special case that was an exception to the rule.
Since this is not a special case Ardary contains a significant analytical gap that affects
how Ringer applies here. When that gap is filled, we conclude a different result ensues.
In addition to his heavy reliance on Ardary, plaintiff argues that 42 United States
Code section 1395ff, which is one of two sections of the Act from which the exclusive
administrative review of benefits claims is derived, does not apply in this case. Plaintiff
argues that section only applies to claims for benefits under parts A and B of the Act. He
continues that since this case involves 42 United States Code section 1395mm, which is
under part D of the Act, section 1395ff is of no effect. Plaintiff’s argument fails. 42
United States Code section 1395mm(c)(2) requires that HMO’s must provide the same
benefits to which members would otherwise be entitled under parts A and B. Thus, 42
United States Code section 1395ff is incorporated into 42 United States Code section
1395mm, and its administrative review requirements do apply.
Plaintiff points out that 42 United States Code section 1395mm(c)(5) provides its
own review procedure for HMO members who are dissatisfied with their HMO because it
denied benefits. He claims that since he ultimately received his benefits, this review
provision does not apply, and he need not exhaust administrative remedies prior to filing
his action. However, plaintiff did not get the benefits to which he believed himself
entitled from the HMO Defendants, and that is exactly why he is dissatisfied with them.
The provision, which vests exclusive review in the Secretary of Health and Human
Services, is applicable.
Plaintiff also suggests on appeal that 42 Code of Federal Regulations section
417.606(b)(1)7 precludes administrative review because his benefit was furnished. We
find this assertion lacking in merit as that regulation merely defines what does and does
not constitute an “organization determination” by an HMO under section 1395mm of the
Act. Subdivision (b)(1) of 42 Code of Federal Regulations section 417.606 refers to
determinations concerning services provided by the HMO for which the enrollee has no
further liability. That is clearly not the case here where it is agreed that Defendants did
not provide the disputed services to plaintiff.
To the extent that plaintiff claims his administrative remedies have been exhausted
because his claim was paid, we agree with the Redmond court that if that were indeed the
case, his only avenue of redress would be with the federal court since the administrative
review procedures do not allow for state court jurisdiction. (Redmond v. Secure
Horizons, PacifiCare, Inc., supra, 60 Cal.App.4th at p. 104; 42 U.S.C. § 405(g), (h).)
7 “(b) Actions that are not organization determinations. The following are not
organization determinations for purposes of this subpart:
“(1) A determination regarding services that were furnished by the HMO or CMP
[competitive medical plan], either directly or under arrangement, for which the enrollee
has no further obligation for payment.” (42 C.F.R. § 417.606(b)(1).)
We disagree with plaintiff that a preemption analysis is necessary and to the extent
such analysis was dispositive in Ardary, it is again distinguishable from this case.8 This
case involves a determination whether plaintiff was required to exhaust administrative
remedies in order to vest jurisdiction in the superior court, and requires analysis no
different than that undertaken in cases governed entirely by state administrative
procedures and law. (See, e.g., Hensler v. City of Glendale (1994) 8 Cal.4th 1; Hood v.
Hacienda La Puente Unified School Dist. (1998) 65 Cal.App.4th 435.)
Even if we were to apply a preemption analysis, it would not assist plaintiff in this
case. In nearly all of his causes of action, plaintiff seeks recovery for Defendants’
involvement in capitation and/or risk sharing contracts, the methods by which plaintiff
claims the Medicare/HMO system allows and/or fosters the wrongful denial of benefits.
However, those types of agreements are specifically authorized by the Act. (42 U.S.C. §
1395mm.) Hence, plaintiff asks that we apply state law to directly conflict with the Act.
His position may not be adopted without an indictment of the Act. We may not proceed
8 Bowen v. Michigan Academy of Family Physicians (1986) 476 U.S. 667 [90
L.Ed.2d 623, 106 S.Ct. 2133], upon which the Ardary court relied in its preemption
analysis, was decided under a superseded version of the Act. In the same year Bowen was
decided, 42 United States Code section 1395ff (the section discussed in Bowen) was
amended to do away with the distinction between parts A and B of the Act that had
previously existed, and which was the subject of the Bowen decision. (See Historical and
Statutory Notes, United States Code Annotated (1992 ed.) § 1395ff, p. 59; Abbey v.
Sullivan (2d Cir. 1992) 978 F.2d 37, 41-43.) Consequently, the Ardary court’s reliance
on Bowen is questionable.
along such lines. That state law may not directly conflict with federal law is a central
tenet of preemption analysis. (Smiley v. Citibank (1995) 11 Cal.4th 138, 147-148.)
Finally, plaintiff complains that the administrative review process cannot
remediate the consequential harms he suffered as a result of the denial of benefits.
Plaintiff provides no authority for that position, which is his burden as the party seeking
to establish jurisdiction. (School Dist. of Okaloosa County v. Superior Court (1997) 58
Cal.App.4th 1126, 1131.) Yet assuming plaintiff’s contentions were true, we recognize
that here there may indeed be no remedy for the wrongs alleged. Congress has
promulgated a system that, through a limited review process, provides the remedies it
deems sufficient to accomplish the purposes of the Act. (Cf. Schweiker v. Chilicky
(1988) 487 U.S. 412 [108 S.Ct. 2460, 101 L.Ed.2d 370].) That this system may not
afford plaintiff all the relief to which his state law claims might have entitled him is a
situation over which this court has no control. This result was implied by the decision in
Heckler v. Ringer, supra, 466 U.S. 602, where the plaintiffs’ consequential damages were
apparently of no moment. Further, if consequential harms were not intended to be
included within the administrative review process, the process itself would cease to
perform its primary function as a limit on judicial review. Any patient whose benefits
were denied or delayed could merely file a common law action claiming consequential
damages thus severely undermining the exclusive remedy provisions of the Act.
The conduct about which plaintiff complains is a serious matter. However, redress
for the disquieting issues raised by the complaint does not lie with this court. The
Legislature has created a scheme by which the senior and disabled citizens of this
country, who are of more modest means, receive their medical care. That scheme leaves
state courts no avenue to rectify the concerns raised by the plaintiff.
Since we decide the demurrer was properly sustained, as stated above, we must
conclude that plaintiff has failed to establish the trial court abused its discretion in
denying leave to amend. Because it is unnecessary to our decision, we decline to examine
whether Defendants, as they have suggested, may be entitled to official immunity for the
acts which plaintiff alleges to have been wrongful.
The judgment is affirmed. Defendants to recover their costs on appeal.
CERTIFIED FOR PUBLICATION