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Winterbottom v. Underriner

United States District Court, D. Hawaii

October 31, 2019

DAVID T. UNDERRINER, in his official capacity as President of Kaiser Foundation Health Plan and Hospitals of Hawaii; CATHERINE A. KORTZEBORN, in her official capacity as Deputy Regional Administrator of U.S. Centers for Medicare and Medicaid Services, Region 9 - San Francisco, Defendants.



         Plaintiff Glen M. Winterbottom (“Plaintiff”) initiated this action for disability discrimination because he will lose Kaiser Foundation Health Plan, Inc. (“Kaiser”) medical benefits upon turning 65, as Kaiser does not offer Medicare coverage in the zip code area where he resides. Defendant David T. Underriner, in his official capacity as President of Kaiser, [1] moves to dismiss this action because Plaintiff lacks standing, failed to exhaust administrative remedies, and fails to state a claim. For the following reasons, the Court GRANTS Kaiser's Motion to Dismiss Complaint. ECF No. 6.


         Plaintiff, who is currently 64 years old, has been a member of Kaiser's Health Maintenance Organization since September 14, 1996. Compl. ¶ 7. In April 2019, Plaintiff learned that upon turning 65 on November 26, 2019, he will be unable to obtain Medicare coverage through Kaiser's Medicare Advantage (“MA”) plan because the zip code in which he resides is one of the zip codes in the District of Ka‘u on the Big Island-96718, 96772, and 96777-excluded from coverage. Id. ¶¶ 10, 15.

         Plaintiff sought clarification from Kaiser administrators, and during a conference call, Kaiser employees informed Plaintiff that Kaiser cannot offer him its MA plan due to contractual obligations with the Centers for Medicare and Medicaid Services (“CMS”). Id. ¶ 17.

         Plaintiff initiated this action on July 9, 2019. He asserts the following claims: (1) violation of Title III of the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12182 (Counts 1 and 2); (2) violation of CMS's Medicare Managed Care Manual (“MMCM”) § 10.5.2 (Count 3); (3) violation of 48 C.F.R § 1.602-1 (Count 4); and (4) violation of “at least spirit of” 42 C.F.R. § 422.2 (Count 5). Plaintiff requests declaratory and injunctive relief. Id. at 12-14.

         The parties timely filed their briefing. However, at 10:16 a.m. on the day of the hearing, Plaintiff filed a document titled “Plaintiff's Oral Statement in Opposition to Defendant David T. Underriner's Motion to Dismiss Complaint.” ECF No. 35. This is an unauthorized surreply. See Local Rule 7.2 (authorizing opposition and reply memoranda but prohibiting further or supplemental briefing without leave of court). The Court nonetheless elects to consider it because Plaintiff is self-represented and because it does not change this Motion's disposition. However, Plaintiff is cautioned that in the future, he may not file supplemental briefing without leave of court. Any such briefing will be stricken.


         A. Rule 12(b)(1)

         Under Federal Rule of Civil Procedure (“FRCP”) 12(b)(1), a district court must dismiss a complaint if it lacks subject matter jurisdiction to hear the claims alleged in the complaint. Fed.R.Civ.P. 12(b)(1). A jurisdictional attack pursuant to FRCP 12(b)(1) may be facial or factual. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (citation omitted). A facial attack challenges the sufficiency of the allegations contained in a complaint to invoke federal jurisdiction, while a factual attack “disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id. District courts may review evidence beyond the complaint to resolve a factual attack on jurisdiction without converting a motion to dismiss into a motion for summary judgment. See Id. (citation omitted). In such instances, courts “need not presume the truthfulness of the plaintiff's allegations.” Id. (citation omitted); see also Courthouse News Serv. v. Planet, 750 F.3d 776, 780 (9th Cir. 2014) (“A factual challenge ‘rel[ies] on affidavits or any other evidence properly before the court' to contest the truth of the complaint's allegations.” (alteration in original) (citation omitted)). “Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction.” Safe Air, 373 F.3d at 1039 (citation omitted).

         FRCP 12(b)(1) also requires a district court to dismiss a complaint for lack of subject matter jurisdiction where a plaintiff lacks standing to sue. See Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011) (“[L]ack of Article III standing requires dismissal for lack of subject matter jurisdiction under [FRCP] 12(b)(1).” (citations and emphasis omitted)). When a plaintiff lacks constitutional standing, a suit “is not a ‘case or controversy,' and an Article III federal court therefore lacks subject matter jurisdiction over the suit.” City of Oakland v. Lynch, 798 F.3d 1159, 1163 (9th Cir. 2015) (quoting Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004)); City of Los Angeles v. Cty. of Kern, 581 F.3d 841, 845 (9th Cir. 2009).

         In determining constitutional standing, the trial court has the authority “to allow or to require the plaintiff to supply, by amendment to the complaint or by affidavits, further particularized allegations of fact deemed supportive of plaintiff's standing.” Maya, 658 F.3d at 1067 (citations omitted). Courts “must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party” when “ruling on a motion to dismiss for want of standing.” Warth v. Seldin, 422 U.S. 490, 501 (1975) (citation omitted).

         B. Rule 12(b)(6)

         FRCP 12(b)(6) authorizes dismissal of a complaint that fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). On a Rule 12(b)(6) motion to dismiss, “the court accepts the facts alleged in the complaint as true, ” and “[d]ismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged.” UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (alteration in original) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). However, conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a motion to dismiss. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (citation omitted); Nat'l Ass'n for the Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000) (citation omitted). Furthermore, the court need not accept as true allegations that contradict matters properly subject to judicial notice. See Sprewell, 266 F.3d at 988 (citation omitted).

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The tenet that the court must accept as true all of the allegations contained in the complaint does not apply to legal conclusions. See Id. As such, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (citing Fed.R.Civ.P. 8(a)(2)) (some alterations in original). If dismissal is ordered, the plaintiff should be granted leave to amend unless it is clear that the claims could not be saved by amendment. See Swartz v. KPMG LLP, 476 F.3d 756, 760 (9th Cir. 2007) (citation omitted).


         Kaiser seeks dismissal under both FRCP 12(b)(1) and 12(b)(6). As for FRCP 12(b)(1), Kaiser contends that Plaintiff lacks standing to complain about Medicare benefits because, at age 64, he is not yet eligible for Medicare benefits and even if he has standing, his claims are preempted by the Medicare Act.[2] Mem. in Supp. of Mot., ECF No. 6-1, at 6.

         Alternatively, Kaiser argues that Plaintiff's claims against Kaiser must be dismissed because its service area is controlled by CMS and can only be expanded through CMS's regulatory approval process. Id. The Court addresses each argument in turn.

         I. Judicial Notice

         As a preliminary matter, the Court addresses Kaiser's request for judicial notice of CMS's MMCM and of its Expansion Application. Id. at 10 n.5 (requesting judicial notice and providing website where the MMCM can be found: mc86c04.pdf). Pursuant to Federal Rule of Evidence (“FRE”) 201, courts can take judicial notice of facts not subject to reasonable dispute because they are generally known or “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201. The Court finds that judicial notice is appropriate. Both these documents contain facts that can be readily determined from accurate sources and Plaintiff himself asserts a violation of the MMCM and includes relevant portions of it in his Complaint. The Court takes judicial notice of the documents “without converting the motion to dismiss into a motion for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (citations omitted).

         II. Whether Plaintiff Has Standing

         Kaiser first challenges Plaintiff's standing to bring his claims. Article III of the Constitution limits the jurisdiction of the federal courts to certain “Cases” and “Controversies.” U.S. Const. art. III, § 2, cl. 1; see Clapper v. Amnesty Int'l USA, 568 U.S. 398, 408 (2013) (“[N]o principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies.” (citation omitted)). A plaintiff is required to demonstrate three elements to establish that he or she has “standing” to sue in federal court: (1) “injury in fact” that is “concrete and particularized” and “actual and imminent”; (2) the injury must be fairly traceable to defendant's conduct; and (3) the injury likely will be redressed through adjudication. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Spokeo, Inc. v. Robins, __ U.S. __, 136 S.Ct. 1540, 1547 (2016) (citing id.) (other citation omitted). As the party invoking federal jurisdiction, the plaintiff must establish these elements. See Spokeo, __ U.S. __, 136 S.Ct. at 1547 (citing FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990)). At the pleading stage of a case, “the plaintiff must ‘clearly . . . allege facts demonstrating' each element.” Id. (quoting Warth, 422 U.S. at 518) (footnote omitted). A plaintiff exclusively seeking declaratory and injunctive relief is required to additionally “show a very significant possibility of future harm.” San Diego Cty. Gun Rights Comm. v. Reno, 98 F.3d 1121, 1126 (9th Cir. 1996) (citation omitted).

         A. Injury in Fact

         “To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Spokeo, __ U.S. __, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560); see Maya, 658 F.3d at 1069. Allegations of possible future injury are insufficient; the “threatened injury must be certainly impending to constitute injury in fact.” Clapper, 568 U.S. at 409 (citation omitted). A plaintiff may comply with the injury-in-fact requirement by alleging a future injury, but only if he or she “is immediately in danger of sustaining some direct injury as the result of the challenged . . . conduct and the injury or threat of injury is both real and immediate, not conjectural or hypothetical.” Krottner v. Starbucks Corp., 628 F.3d 1139, 1142 (9th Cir. 2010) (emphases and citation omitted).

         Kaiser argues that Plaintiff has not suffered any injury because he is not yet eligible for Medicare. Mem. in Supp. of Mot., ECF No. 6-1, at 7-8. Enrollment in Medicare part C-the part implicated in this case-requires entitlement to benefits under part A and enrollment under part B, 42 U.S.C. § 1395w-21(a)(3), both of which apply to individuals age 65 and older. See 42 U.S.C. § 1395c; Mem. in Supp. of Mot., ECF No. 6-1, at 8. Because Plaintiff is not yet entitled to Medicare benefits, Kaiser contends that he is not impacted by the scope of its MA service areas.

         Plaintiff asserts that the quickly approaching possibility that he will be forced to change healthcare providers constitutes a “‘concrete' and actionable threat” to his health because he is undergoing treatment for prostate cancer. Opp'n, ECF No. 12, at 2, 5. The Court disagrees.

         Medicare is a federal health insurance program administered by CMS benefitting those aged 65 and older, individuals under age 65 with certain disabilities, and individuals of all ages with End-Stage Renal Disease. See Parra v. PacifiCare of Ariz., Inc., 715 F.3d 1146, 1152 (9th Cir. 2013); United States v. Scan Health Plan, No. CV 09-5013-JFW (JEMx), 2017 WL 4564722, at *1 (C.D. Cal. Oct. 5, 2017). Eligible Medicare beneficiaries may select coverage under Medicare Part A (Hospital Insurance) and Part B (Medical Insurance), or Medicare Advantage, which is a private plan option under Part C. See Scan Health Plan, 2017 WL 4564722, at *1 (citing 42 U.S.C. § 1395w-21(a)).

         Here, Plaintiff is currently ineligible for Medicare and does not become eligible until November 26, 2019, his sixty-fifth birthday. Therefore, he has yet to suffer any injury. A threat of injury can satisfy this prong but not under the present circumstances. Plaintiff merely alleges that he will be forced to change healthcare providers because he does not reside within Kaiser's service area, not that he will lose medical coverage altogether. Although deprivation of medical coverage could constitute an injury in fact, Plaintiff does not face such an injury here. See, e.g., Ability Ctr. of Greater Toledo v. Lumpkin, 808 F.Supp.2d 1003, 1017 (N.D. Ohio 2011) (finding an injury in fact where the plaintiff was “unable to get needed treatment and medication without the medical coverage to which she may be entitled” due to the defendant's “failure to make a timely determination as to [her] eligibility for Medicaid, ” and “[t]he prospect of a lengthy (and apparently ongoing) disability determination process pose[d] an imminent risk to her well-being”).

         At the hearing, Plaintiff identified switching doctors and discrimination under the ADA as his injuries, and admitted he will not lose medical coverage. Under the present circumstances, switching doctors and discrimination do not, separately or together, constitute an “injury in fact” for standing purposes. That Plaintiff may be deprived of his preferred insurer and physician is not a sufficient injury for standing purposes, even if immediate.[3]

         Accordingly, Plaintiff has not sufficiently asserted an injury in fact. Even if he had, he fails to satisfy the redressability requirement.

         B. Fairly Traceable to Kaiser's Conduct

         Plaintiff sufficiently asserts that his alleged injury is traceable to Kaiser's conduct. The causation inquiry focuses on “whether the alleged injury can be traced to the defendant's challenged conduct, rather than to that of some other actor not before the court.” See Ecological Rights Found. v. Pac. Lumber Co., 230 F.3d 1141, 1152 (9th Cir. 2000) (citations omitted). In other words, “the causal connection put forward for standing purposes cannot be too speculative, or rely on conjecture about the behavior of other parties, but need not be so airtight at this stage of the litigation as to demonstrate that the plaintiffs would succeed on the merits.” Id. (citation omitted); see Canyon Cty. v. Syngenta Seeds, Inc., 519 F.3d 969, 974 n.7 (9th Cir. 2008) (identifying “less rigorous” causation threshold at the dismissal stage of the proceedings (citations omitted)). When a “chain of causation ‘involves numerous third parties' whose ‘independent decisions' collectively have a ‘significant effect' on plaintiffs' injuries, the Supreme Court and [the Ninth Circuit] have found the causal chain too weak to support standing at the pleading stage.” Maya, 658 F.3d at 1070 (citations omitted).

         Plaintiff blames Kaiser for his anticipated inability to obtain Medicare plan C coverage through its MA plan. Pursuant to 42 U.S.C. § 1395w-21(b)(1)(A), Plaintiff is precluded from electing Kaiser's MA plan because the plan does not serve Plaintiff's geographic area. Although CMS considered and approved the current coverage areas, 42 C.F.R. § 422.2, it did so in response to Kaiser's request for coverage of a partial county service area.[4] Therefore, Plaintiff's alleged injuries are traceable to Kaiser's conduct.

         C. Re ...

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