1 2 JS -6 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 SILVER PEAKS, LLC, Case No. 8:21-cv-1115-FLA (PDx)

12 Plaintiff, RULING (1) GRANTING 13 v. PLAINTIFF’S MOTION TO 14 REMAND [DKT. 22], (2) DENYING DEFENDANT CAREMORE’S 15 CAREMORE HEALTH PLAN, et al., MOTION TO DISMISS [DKT. 15], 16 Defendants. AND (3) DISCHARGING ORDER TO SHOW CAUSE [DKT. 21] 17 18 19 20 RULING 21 Before the court are two motions: (1) Plaintiff Silver Peaks, LLC’s (“Plaintiff” 22 or “Silver Peaks”) Motion to Remand (Dkt. 22) (“MTR”); and (2) Defendant 23 CareMore Health Plan’s (“Defendant” or “CareMore”) Motion to Dismiss Plaintiff’s 24 Complaint (Dkt. 15) (“MTD”). CareMore opposes Plaintiff’s Motion to Remand. 25 Dkt. 25 (“Opp. to MTR”). Plaintiff opposes CareMore’s Motion to Dismiss. Dkt. 24 26 (“Opp. to MTD”). On August 5, 2021, the court found these matters appropriate for 27 resolution without oral argument and vacated the hearing set for August 13, 2021. 28 Dkt. 29; see Fed. R. Civ. P. 78(b); Local Rule 7-15. 1 On July 15, 2021, the court additionally ordered the parties to show cause 2 (“OSC”) in writing why the court has subject matter jurisdiction over this action. Dkt. 3 21. The parties filed timely responses on July 30, 2021. Dkts. 27, 28. 4 For the reasons stated herein, the court GRANTS Plaintiff’s Motion to Remand 5 and DENIES Defendant CareMore’s Motion to Dismiss as moot. The OSC is 6 DISCHARGED. 7 BACKGROUND 8 Plaintiff filed this action on April 29, 2021 in Orange County Superior Court 9 against Defendants CareMore, Country Villa Plaza Convalescent Center (“Healthcare 10 Center”), Country Villa Plaza, a CA Ltd. Partnership (“Country Villa Plaza”), and 11 Rockport Healthcare Support Services, LLC (“Rockport”) (collectively, 12 “Defendants”). See Dkt. 1-4 (“Compl.”). Plaintiff is a home care organization that 13 provides non-medical services, including supervisory “sitter services,” to patients that 14 reside in their home or live in an elderly care facility. Compl. ¶ 1. 15 Defendant CareMore is a “medical group health plan, care delivery system and 16 insurer that works with a subscriber member’s insurance plan to deliver needed care to 17 subscribing members.” Id. ¶ 2. Defendants Country Villa Plaza and Rockport 18 allegedly are parent companies to Healthcare Center, operating in California. Id. ¶¶ 4- 19 5, 19-20. Plaintiff seeks damages against Defendants for (1) fraud, (2) breach of 20 contract, (3) breach of contract as third-party beneficiary, (4) breach of implied 21 contract, (5) account stated, (6) quantum meruit, and (7) unjust enrichment.1 Compl. 22 ¶¶ 21-62. 23 Plaintiff alleges Country Villa Plaza and CareMore entered into a Letter of 24 Agreement (“LOA”) through which Plaintiff would provide sitter services for patient 25 26 27 1 The Complaint asserts different causes of action in the body of the Complaint than in the caption on its first page. The court refers to the causes of action asserted in the 28 body of the Complaint. 1 J.A. (“Patient”),2 who was enrolled in a Medicare Advantage plan administered by 2 CareMore.3 Compl. ¶ 10; Opp. to MTR 1. According to Plaintiff, it rendered these 3 sitter services for Patient in Healthcare Center’s facility from January 24, 2020 to 4 February 3, 2020. Compl. ¶ 14. Plaintiff states the LOA outlines the following 5 business practice for payment between Country Villa Plaza and CareMore. MTR 4. 6 First, Country Villa Plaza must bill CareMore for the services Patient received within 7 sixty calendar days from the dates of service. Id. Next, CareMore issues a check for 8 those services to either Country Villa Plaza or Rockport. Id. Finally, Country Villa 9 Plaza or Rockport reimburses Plaintiff for its services. Id. 10 In February 2020, Plaintiff sent Country Villa Plaza an invoice for the sitter 11 services it performed for Patient in the amount of $4,383. Compl. ¶ 15, Ex. 2. 12 According to Plaintiff, it still has not received payment for the sitter services, despite 13 sending an additional letter to Country Villa Plaza demanding payment. Id. ¶ 17. 14 Plaintiff further alleges a representative from Country Villa Plaza stated Rockport had 15 the funds and would be resolving the payment issue, but Rockport continues to refuse 16 to release the funds to Plaintiff. Id. ¶¶ 19-20. 17 18

19 2 Patient is identified by his initials for privacy purposes. 20 3 Medicare Advantage allows individuals to receive Medicare benefits through private 21 health-insurance plans instead of Medicare Parts A and B, the government’s fee-for- service program. See 42 U.S.C. § 1395w–21. “To participate, insurers referred to as 22 Medicare Advantage Organizations (MAOs) contract with the federal Centers for 23 Medicare & Medicaid Services (CMS).” Ohio State Chiropractic Ass’n v. Humana Health Plan Inc., 647 Fed. App’x 619, 620 (6th Cir. 2016) (citing 42 U.S.C. § 1395w– 24 27;

). As the Sixth Circuit has explained, “CMS makes monthly 25 per-beneficiary payments to MAOs, which take on the prospective financial risk of serving Medicare beneficiaries. Generally speaking, MAOs have latitude to ‘select 26 the [health-care] providers from whom the benefits under the plan are provided.’ To 27 that end, MAOs often contract with physicians and hospitals. But to cover the full panoply of Medicare benefits, [Medicare Advantage] plans include services that are 28 sometimes furnished by non-contract providers.’”

(citations omitted). 1 Defendant CareMore removed this action from state court on June 25, 2021, 2 arguing removal is proper under the “federal officer” removal statute, 28 U.S.C. 3 § 1442(a)(1), and that the court has federal question jurisdiction pursuant to 28 U.S.C. 4 § 1441(c). Dkt. 1. On July 2, 2021, Defendant CareMore filed its Motion to Dismiss, 5 arguing, inter alia, that Plaintiff’s state law claims are preempted under the Medicare 6 Act and that the court lacks subject matter jurisdiction because Plaintiff did not 7 comply with the Medicare Act’s exhaustion requirements. Dkt. 15. The court 8 Ordered the parties to Show Cause why the court has subject matter jurisdiction in this 9 matter on July 15, 2021. Dkt. 21. The next day, Plaintiff filed the instant Motion to 10 Remand. Dkt. 22. The parties filed their responses to the court’s OSC on July 30, 11 2021. Dkts. 27, 28. 12 DISCUSSION 13 Federal courts have subject matter jurisdiction only as authorized by the 14 Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v. 15 Guardian Life Ins. Co. of Am.,

(1994). A suit filed in state court 16 may be removed to federal court only if the federal court would have had original 17 jurisdiction over the suit.

(a). The party seeking removal bears the 18 burden of establishing federal jurisdiction by a preponderance of the evidence. Gaus 19 v. Miles, Inc.,

(9th Cir. 1992) (citing McNutt v. Gen. Motors 20 Acceptance Corp. of Ind.,

(1936)). 21 In ruling on a motion to remand, jurisdiction is generally determined from the 22 face of the complaint. Miller v. Grgurich,

(9th Cir. 1985). The 23 court may remand the action sua sponte “[i]f at any time before final judgment it 24 appears that the district court lacks subject matter jurisdiction.”

(c); 25 United Invs. Life Ins. Co. v. Waddell & Reed Inc.,

(9th Cir. 2004). 26 Here, Defendant CareMore argues the court has subject matter jurisdiction 27 pursuant to

(a)(1) (the federal officer removal statute) and 28 U.S.C. 28 § 1331 (federal question jurisdiction). See Opp. to MTR. 1 I. The Federal Officer Removal Statute,

(a)(1) 2 A. Legal Standard 3 Under the federal officer removal statute, a civil action may be removed to 4 federal court by “any officer (or any person acting under that officer) of the United 5 States or of any agency thereof, in an official or individual capacity, for or relating to 6 any act under color of such office….”

(a)(1) (“§ 1442”). In the 7 Ninth Circuit, federal officer removal is available to a defendant under § 1442(a) if: 8 (1) the removing defendant is a “person” within the meaning of the statute; (2) there is 9 a causal nexus between the removing party’s actions, taken pursuant to a federal 10 officer’s directions, and plaintiff’s claims; and (3) the removing party can assert a 11 colorable federal defense. Stirling v. Minasian,

(9th Cir. 2020). 12 The federal officer removal statute is an exception to the “well-pleaded 13 complaint” rule, which requires a federal question to appear on the face of the 14 complaint for jurisdiction to be proper, rather than raised as an anticipated or actual 15 defense. Jefferson Cnty. v. Acker,

(1999), superseded by statute on 16 other grounds as discussed in Sawyer v. Foster Wheeler LLC,

(4th 17 Cir. 2017). In other words, the statute allows removal of suits against federal officers 18 and people acting under them so long as: (1) a “connection or association” exists 19 between the act in question and the federal office; and (2) their defense depends on 20 federal law.

21 B. Analysis 22 CareMore argues this case was properly removed to federal court because 23 Patient was enrolled in a Medicare Advantage plan that CareMore administered, and 24 “Medicare coverage determinations and reimbursements are predicated on a purely 25 federal scheme involving federal Medicare Act statutes, its implementing regulations, 26 and policy determinations from the Centers for Medicare and Medicaid Services 27 (“CMS”)….” Opp. to MTR 1 & n.1. Thus, according to CareMore, removal under 28 the federal officer statute is appropriate for private entities like itself because it 1 administers Medicare benefits under the direction of the federal government. Id. 4-11. 2 The court disagrees for two reasons. 3 First, Plaintiff submits evidence of a CMS document that acknowledges sitter 4 services are not covered by Medicare. Dkt. 22-5 (MTR, Ex. 5). CareMore does not 5 dispute that these services are not covered by Medicare. See Opp. to MTR 5-8. Thus, 6 the Medicare Act and its implementing regulations are irrelevant here. 7 CareMore responds that whether the services are covered under Medicare is 8 “wholly irrelevant” to the question of whether the court has subject matter 9 jurisdiction. Opp. to MTR 7. To the contrary, if sitter services are not covered by 10 Medicare pursuant to the LOA, CareMore cannot assert either: (1) a “causal nexus” 11 between its actions, taken pursuant to a federal officer’s directions, and plaintiff’s 12 claims; or (2) a “colorable federal defense.” See Stirling,

. CareMore, 13 thus, fails to establish removal is appropriate. 14 Second, even if Medicare covered sitter services here, the court is not persuaded 15 CareMore was “acting under” any federal officer or agency under Supreme Court 16 precedent interpreting § 1442(a)(1).4 CareMore quotes Watson v. Philip Morris Cos., 17

(2007), to argue that a private entity is “acting under” a federal 18 officer when it is involved in “an effort to assist, or to help carry out, the duties or 19 tasks of the federal superior,” and that the term “acting under” is broad and must be 20 liberally construed. Opp. to MTR 5 (italics in Watson). The Supreme Court, 21 however, also emphasized that “broad language is not limitless. And a liberal 22 construction nonetheless can find limits in a text’s language, context, history, and 23 purposes.” Watson,

. 24 25 26 27 4 As the court concludes Defendant does not meet its burden to show it was “acting under” a federal official or agency for purposes of the removal statute, it need not 28 address the parties’ arguments regarding the additional requirements of § 1442. 1 As Watson explained, the “basic purpose” of federal officer removal is to 2 prevent interference with the federal government’s operations caused, for example, by 3 a state’s prosecution of federal officers and agents acting within the scope of their 4 authority. Id. at 150. It also serves to protect federal officers and agents from “local 5 prejudice” against federal laws or officials, and to ensure “federal officials [access to] 6 a federal forum in which to assert federal immunity defenses.” Id. 7 Here, CareMore’s interpretation of the federal officer removal statute stretches 8 it too far from its original purpose. CareMore is not at a significant risk of state-court 9 “prejudice” because it administers Medicare benefits. See id. at 152. A state-court 10 lawsuit brought against CareMore is not likely to disable federal officials from taking 11 necessary action to enforce federal law. Id. Nor is a state-court lawsuit in this action 12 likely to deny a federal forum to an individual entitled to assert a federal claim of 13 immunity. Id. Accordingly, neither the language, nor history, nor purpose of the 14 removal statute leads the court to believe Congress intended to expand the scope of 15 federal officer removal to entities such as CareMore. See id. at 147-53 (reviewing the 16 history and purpose of the federal officer removal statute). 17 To be sure, a private contractor may “act under” a federal officer or agency 18 when it “helps [federal] officers fulfill … basic governmental tasks” and “perform[s] a 19 job that, in the absence of a contract with a private firm, the Government itself would 20 have … to perform.” Id. at 153. This requires a showing that the government 21 formally delegated its legal authority to the private entity to act on its behalf. Id. at 22 156. 23 Although CareMore argues it performs government tasks by administering 24 Medicare benefits under Medicare Advantage plans, it fails to submit any evidence 25 showing Congress, CMS, or any other federal agency formally delegated legal 26 authority to CareMore. See id. at 157 (noting that without evidence of formal 27 delegation, the defendant was merely subject to government regulation, which is not 28 sufficient for removal purposes). For example, CareMore does not submit evidence of 1 a contract between itself and the government or point to a statute or regulation that 2 explicitly delegates legal authority from the government to CareMore. See id. 3 (holding plaintiff failed to establish it was “acting under” a federal officer where there 4 was “no evidence of any delegation of legal authority” from a government agency nor 5 “evidence of any contract, any payment, any employer/employee relationship, or any 6 principal/agent arrangement”). 7 CareMore, thus, has failed to demonstrate by a preponderance of the evidence 8 that it has anything more than an arms-length relationship with CMS, or that the 9 control to which CareMore is subject is the type of close relationship necessary for a 10 private contractor to “act under” a federal agency. See Vaccarino v. Aetna, Inc., No. 11 5:18-cv-02349-JGB (SHKx),

, at *6 (C.D. Cal. Nov. 29, 2018) 12 (holding that “[b]ecause Removing Defendants have not explained the nature of 13 CMS’s control over coverage decisions or elaborated on the government’s interest in 14 such decisions, they fail to meet their burden of showing that their actions were ‘taken 15 pursuant to a federal officer’s directions.’”). 16 Accordingly, CareMore is not entitled to remove this action as a “person acting 17 under” an officer of the United States. 18 II. Federal Question Jurisdiction,

19 A. Legal Standard 20 Federal district courts have original jurisdiction over all civil actions “arising 21 under the Constitution, laws, or treaties of the United States.”

. 22 “The presence or absence of federal-question jurisdiction is governed by the ‘well- 23 pleaded complaint rule,’ which provides that federal jurisdiction exists only when a 24 federal question is presented on the face of the plaintiff’s properly pleaded 25 complaint.” Caterpillar, Inc. v. Williams,

(1987). “This rule 26 makes a plaintiff the ‘master of his complaint’: He may generally avoid federal 27 jurisdiction by pleading solely state-law claims.” Valles v. Ivy Hill Corp.,

(9th Cir. 2005). 1 As an exception to the well-pleaded complaint rule, the court has subject matter 2 jurisdiction when a federal question is necessarily embedded in the state law claims 3 asserted in a complaint. For a state law claim to provide federal question jurisdiction, 4 the “state law claim [must] necessarily raise a stated federal issue, actually disputed 5 and substantial, which a federal forum may entertain without disturbing any 6 congressionally approved balance of federal and state judicial responsibilities.” 7 Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg.,

(2005). 8 “That is, federal jurisdiction over a state law claim will lie if a federal issue is: 9 (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of 10 resolution in federal court without disrupting the federal-state balance approved by 11 Congress.” Gunn v. Minton,

(2013). 12 B. Analysis 13 CareMore argues the court has federal question jurisdiction because Plaintiff’s 14 state law claims depend upon an interpretation of a Medicare reimbursement 15 mechanism. Opp. to MTR 12-13. Thus, according to CareMore, “Plaintiff’s claims 16 necessarily raise the issue of whether Defendant administered Plaintiff’s claim in 17 accordance with the Medicare Act.” Id. at 12. 18 The court, however, finds Plaintiff’s state law claims do not raise a substantial 19 and disputed federal issue. Plaintiff does not seek reimbursement for services it 20 claims were denied under the Medicare Act. See Ardary v. Aetna Health Plans of 21 Cal., Inc.,

, 500 (9th Cir. 1996) (holding an action does not raise a federal 22 issue under the Medicare Act when “at bottom [it is] not seeking to recover 23 [Medicare] benefits”). Nor do Plaintiff’s claims require interpretation of Medicare 24 laws, as it is undisputed sitter services are not covered by Medicare. See City of 25 Oakland, 969 F.3d at 906-07 (finding no federal jurisdiction under the “slim category” 26 articulated in Grable where the claim “neither require[d] an interpretation of a federal 27 statute nor challenge[d] a federal statute’s constitutionality” (citation omitted)). 28 Rather, Defendant raises the Medicare Act as a shield to liability. See Opp. to MTR 1 | 9-11 (arguing the Medicare Act provides CareMore with a “colorable defense” in this 2 | action). It is well-established that federal issues raised as a defense are not sufficient 3 | to support subject matter jurisdiction. See Caterpillar,

(“[A] case 4 || may not be removed to federal court on the basis of a federal defense, ... even if the 5 | defense is anticipated in the plaintiff's complaint, and even if both parties concede that 6 | the federal defense is the only question truly at issue.”) (italics in original). 7 Because Plaintiffs state law claims do not raise a substantial federal issue, the 8 | court lacks subject matter jurisdiction. See Grable,

. Thus, Plaintiff's 9 | Motion to Remand is GRANTED, and the OSC is DISCHARGED. 10 CONCLUSION 11 For the foregoing reasons, the court GRANTS Plaintiff's Motion to Remand 12 | (Dkt. 22) and DISCHARGES the OSC (Dkt. 21). Defendant CareMore’s Motion to 13 | Dismiss (Dkt. 15) is DENIED as moot. 14 IT IS SO ORDERED. 15 16 | Dated: August 31, 2021

18 FERNANDO L. AENLLE-ROCHA 19 United States District Judge

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