Roberts v. United Healthcare Servs., Inc. (Aug. 4, 2016, B266393) __ Cal.App.4th __ [2016 WL 4150703].
United Healthcare offers a Medicare Advantage plan to persons who are 65 and over or disabled. (See 42 U.S.C. § 1395c.) Under a Medicare Advantage plan, an eligible beneficiary may obtain both statutory and additional benefits. United Healthcare’s written advertising materials for its plan were pre-approved by the Center for Medicare and Medicare Services. Those materials spoke of “one of the nation’s largest networks, made up of local doctors, clinics and hospitals who know your community.” A “Welcome Book” listed in-network providers and specified that co-payments would be $30 for in-network visits, and $50 for out-of- network visits.
Edward Roberts, a United Healthcare insured, needed urgent care and drove to a nearby out-of-network urgent care center, where he made a $50 copayment. When Roberts later discovered that United Healthcare’s plan had no in-network urgent care centers in California, he filed this class action alleging unfair competition, unjust enrichment and financial elder abuse. He claimed the plan’s marketing materials were misleading as to the availability (and therefore the cost) of in-network urgent care centers, and that the plan’s network was inadequate. The trial court sustained United Healthcare’s demurrer on the grounds that Roberts’ claims were preempted by the Medicare Act and that Roberts had failed to exhaust administrative remedies.
The Court of Appeal affirmed. The court explained that the Secretary of Health and Human Services closely regulates Medicare Advantage health plans—including reviewing and promulgating regulations governing marketing materials. According to the court, those regulations expressly and impliedly preempt state laws and regulations respecting Medicare Advantage plans under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (save for carve-outs for licensing and plan solvency issues). The Court of Appeal disagreed with Cotton v. StarCare Medical Group, Inc. (2010) 183 Cal.App.4th 437 and Yarick v. PacifiCare of California (2009) 179 Cal.App.4th 1158 to the extent they construed the scope of express preemption more narrowly. The court’s preemption holding disposed of Roberts’ claims that United Healthcare used misleading marketing materials and provided inadequate coverage. The Court of Appeal went on to address a third claim that the trial court had believed was implicit in the complaint—a challenge to the co-pay amount for urgent care services. Finding that to be a claim for benefits, the Court of Appeal held that Roberts had failed to exhaust any administrative remedies under the applicable four-tier exhaustion scheme for Medicare beneficiaries participating in a Part C-authorized private health care plan.
