Earlier this week, in Uhm v. Humana, Inc., — F.3d — , 2008 WL 3891592, No. 06-35672 (9th Cir. Aug. 25, 2008), the Ninth Circuit upheld a lower court ruling that the express preemption provision of the Medicare Prescription Drug Improvement and Modernization Act preempted state law claims arising from the plaintiffs’ prescription drug benefits provided by a Medicare supplement insurer.
On behalf of a putative class, plaintiffs asserted claims for breach of contract, violation of state consumer protection statutes, unjust enrichment, and fraud arising from allegations that the class enrolled in a plan for prescription drug coverage but the insurer failed to cover their prescription medication purchases as promised. But the Act specifies that for Medicare prescription drug plans and sponsors, “[t]he standards established under this part shall supercede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA [“Medicare Advantage”] plans which are offered by MA organizations under this part.” 42 U.S.C. § 1395w-26(b)(3).
Based on this statutory express preemption clause, the Ninth Circuit affirmed that the “plain language of the statute” meant that CMS “standards” will supercede state law or regulations that are ” ‘with respect to’ a ‘prescription drug plan’ offered by a ‘[prescription drug plan] sponsor.’ ” Id. at p. 11557-58. Because the plaintiffs’ claims boiled down to a question of whether they were properly enrolled in the insurer’s prescription drug plan and then afforded the promised coverage, their claims were explicitly governed by procedures and remedies contained in the Act only, and their civil lawsuit was preempted.
Notwithstanding the relatively straightforward statutory analysis employed by the court, the case contains additional observations with implications for preemption in other contexts.
For one, the court noted that while express preemption provisions may reach beyond positive enactments to embrace common law duties (see, e.g., Bates v. Dow Agrosciences L.L.C., 544 U.S. 431, 443 (2005)), the court noted that it also was not “categorically precluded” from applying implied preemption principles to determine what Congress intended to preempt – in other words, would the state law action differing from federal standards stand as an obstacle to the accomplishment and execution of a federal scheme? Id. at p. 11559. At the same time, the court discounted the possibility of field preemption since the express preemption provision itself contains reference to exceptions to the Act’s preemption reach (i.e., state licensing laws or state laws relating to plan solvency).
In addition, the court’s analysis of the claims involving deceptive marketing could be relevant to other preemption contexts, such as with prescription drug advertising where the FDA’s Division of Drug Marketing, Advertising, and Communications often pre-screen drug promotional materials to ensure they are not false and misleading. In Uhm, the plaintiffs’ deceptive marketing claims centered on the alleged deceptive marketing and advertising that allegedly induced the plaintiffs to enroll in the prescription drug plan. Id. at p. 11570. The Ninth Circuit held that these claims were preempted, noting that “the Act provides that [the agency overseeing the Medicare and Medicaid Services] must approve all [prescription drug plan] marketing materials before they are made available to [M]edicare beneficiaries.” Therefore, because the regulations will not permit approval of marketing materials or enrollment forms that are “materially inaccurate or misleading or otherwise make material misrepresentations,” claims based on the materials’ alleged deceptiveness were preempted. Id.