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Winterbottom v. Underriner

United States District Court, D. Hawaii

December 3, 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 in anticipation of losing his 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 Catherine A. Kortzeborn, in her official capacity as Deputy Regional Administrator of U.S. Centers for Medicare and Medicaid Services, Region 9 - San Francisco (“CMS”), moves to dismiss this action for lack of subject matter jurisdiction and failure to state a claim. For the following reasons, the Court GRANTS CMS's Motion to Dismiss Complaint. ECF No. 26.


         I. Factual History

         Plaintiff, who recently turned 65 years old-and is now Medicare eligible- was a member of Kaiser's Health Maintenance Organization since September 14, 1996. See Compl. ¶ 7. In April 2019, Plaintiff learned that once he turned 65 on November 26, 2019, he would 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 Hawai‘i 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 CMS. Id. ¶ 17.

         II. Procedural History

         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.

         On October 31, 2019, the Court issued an Order Granting Defendant David T. Underriner, in His Official Capacity as President of Kaiser Foundation Health Plan and Hospitals of Hawaii's Motion to Dismiss Complaint (“Order”). ECF No. 37. The Court determined that Plaintiff lacked standing, failed to exhaust administrative remedies, and failed to assert any viable claims. Id. Plaintiff sought reconsideration of the Order, ECF No. 40, which the Court denied. ECF No. 43.


         I. 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. County 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).

         II. 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).


         CMS argues that dismissal is appropriate because Plaintiff lacks Article III and prudential standing to bring the present challenges; his claims are barred by the doctrine of sovereign immunity; and he otherwise fails to assert a viable cause of action. Mem. in Supp. of Mot., ECF No. 26-1 at 1.

         I. Judicial Notice

         As a preliminary matter, the Court addresses CMS's request for judicial notice of its MMCM. Reply, ECF No. 34 at 3 n.1 (requesting judicial notice and providing website where the MMCM can be found: Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c17f.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. The MMCM contains 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 and Opposition. The Court takes judicial notice of the MMCM “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. Standing

         CMS first challenges Plaintiff's standing to bring his claims. In every federal case, standing is a threshold matter that the plaintiff must establish. See Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004), abrogated on other grounds by Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014). “[S]tanding jurisprudence contains two strands: Article III standing, which enforces the Constitution's case-or-controversy requirement, and prudential standing, which embodies ‘judicially self-imposed limits on the exercise of federal jurisdiction.” Id. (citations omitted).

         A. Article III / Constitutional Standing

         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).

         1. 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.

         CMS argues that Plaintiff has not alleged an injury in fact because although he prefers to continue receiving coverage from Kaiser, he does not allege that he would experience access to care issues once he becomes eligible for Medicare benefits, or that he would be worse off due to the lack of Kaiser coverage in his geographic area.[1] Mem. in Supp. of Mot., ECF No. 26-1 at 10. Plaintiff characterizes his injury as being forced to change medical care providers after 23 years while undergoing treatment for a life-threatening disease, particularly when the unavailability of Kaiser coverage is based on unlawful discrimination. Opp'n, ECF No. 32 at 4. He relies on MMCM Chapter 17f, section 120.6[2] to support his entitlement to continuity of care. But section 120.6 does not mandate retention and/or continuity of medical insurance coverage with an individual's current provider when he or she enrolls in Medicare. Rather, it concerns Medicare enrollees and pertains to continuance of coverage when an HMO becomes insolvent. See 42 C.F.R. § 417.407(f) (identifying as one of the requirements for a competitive medical plan the protection of enrollees against the risk of insolvency and the loss of benefits); id. § 417.122(b) (describing protection against loss of benefits if an HMO becomes insolvent and ways in which benefits must be continued).

         Indeed, 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] ...

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