McCall v. PacifiCare of California, Inc.

BAXTER, J., Dissenting.

The Medicare Act ( 42 U.S.C. § 1395 et seq.) (hereafter sometimes referred to as Medicare or the Act) is a massive federally insured program that covers health services for the elderly and disabled. Congress has decreed that any enrollee of a Medicare health maintenance organization (HMO) plan who wishes to challenge the HMO’s denial of health services under Medicare must do so through Medicare’s administrative review process; if that process yields a final decision that is adverse to the enrollee, then judicial review must be sought in federal court. (42 U.S.C. § 1395ff.)

Disregarding that congressional mandate and key United States Supreme Court authority, the majority opinion allows virtually any Medicare HMO plan enrollee to bring suit in state court to challenge an HMO’s denial of Medicare benefits. Enrollees may bypass Medicare’s exhaustion requirements simply by styling their challenges as claims for tort damages. As a result, questions regarding which medical procedures are or should be covered by Medicare may now be decided outside of Medicare’s exclusive review process by California judges and juries on an ad hoc basis.

Congress acted deliberately to ensure uniform administrative and federal accountability for Medicare HMO decisionmaking. Yet today’s decision sets the stage for potential conflict between an award of state law tort damages following a determination in a state court that Medicare benefits were wrongly denied, on the one hand, and the possibility that an exhaustive administrative appeal, followed by federal court review, would determine that Medicare benefits were not wrongly denied in the particular case and in other comparable cases, on the other. The two cannot be squared; accordingly, I dissent.

I.

The Medicare Act is a part of the Social Security Act that establishes a federally subsidized health insurance program for elderly and certain disabled persons. ( 42 U.S.C. § 1395 et seq.) In the year 2000, the program provided health insurance coverage for 39 million persons, or one in seven Americans, and paid benefits in the total amount of approximately $217 billion. (The Henry J. Kaiser Family Foundation, Medicare at a Glance (Feb. 2001) p. 1.)

To ensure the orderly and efficient functioning of this enormous federal program, Congress has entrusted its administration to the Secretary of Health *428 and Human Services (the Secretary), who manages the program through the Health Care Financing Administration (HCFA). Pursuant to congressional authorization, the Secretary has established an extensive set of regulations to govern the program. (42 U.S.C. § 1395hh.)

Briefly, the Medicare system works like this. Eligible patients may obtain Medicare benefits in two ways. Where a patient elects to receive health care on a fee-for-service basis, the patient first consults with a physician and receives the recommended health services. The health care provider submits the bill for payment to a Medicare fiscal intermediary, typically a private company that has contracted with the Secretary to act as an adjuster. The intermediary then determines whether the services in question are covered by Medicare and the amount due for the services. (See Bodimetric Health Services v. Aetna Life & Cas. (7th Cir. 1990) 903 F.2d 480 , 482 & fn. 3 (Bodimetric).) Alternatively, an eligible patient may elect to receive Medicare benefits through enrollment with an HMO that has contracted with the Secretary through HCFA to be reimbursed for services rendered to enrollees. In such situations, the patient receives treatment either from the HMO’s own physicians or from physicians who have contracted with the HMO, as in the case of defendant PacifiCare of California, Inc. (PacifiCare), here. When HCFA contracts with an HMO, there is no separate fiscal intermediary and the HMO makes an “organization determination” (an initial determination) whether health services requested on behalf of an enrollee are covered under Medicare and whether they should be furnished, arranged for, or reimbursed. ( 42 C.F.R. § 417.606 (2000).)

Health services covered under Medicare, whether or not provided through an HMO, are subject to the following important limitation: “Notwithstanding any other provision of this subchapter, no payment may be made under part A or part B of this subchapter for any expenses incurred for items or services— [1D • • • which ... are not reasonable and necessary for the diagnosis or treatment of illness or injury . . . -” 1 (42 U.S.C. § 1395y(a)(1)(A), italics added; see Roen v. Sullivan (D.Minn. 1991) 764 F.Supp. 555, 557 .) Thus, if an HMO plan enrollee requests a health service that is not medically reasonable and necessary, the enrollee generally is not entitled to the benefit and the HMO is not obligated to provide for it.

Under the Act, an individual’s entitlement to Medicare benefits must be determined in the manner provided for by the Secretary: “The determination *429 of whether an individual is entitled to benefits . . . , and the determination of the amount of benefits . . . , and any other determination with respect to a claim for benefits . . . shall be made by the Secretary in accordance with regulations prescribed by him.” (42 U.S.C. § 1395ff(a).) The Secretary is authorized to impose, in addition to “any other remedies authorized by law,” civil monetary penalties and to suspend payment to or enrollment of a contracting HMO or fiscal intermediary where, among other things, such an organization “fails substantially to provide medically necessary items and services that are required (under law or under the contract) to be provided to an individual covered under the contract, if the failure has adversely affected (or has substantial likelihood of adversely affecting) the individual” (42 U.S.C. § 1395mm(i)(6)(A)(i)) or “misrepresents or falsifies information that is furnished— [^] ... to the Secretary . . . or— [IQ . . . to an individual” (id., § 1395mm(i)(6)(A)(v)). (See also 42 C.F.R. § 417.500 (2000).)

Integral to the Medicare scheme is a thorough administrative review process for an individual “dissatisfied with a determination regarding his or her Medicare benefits.” ( 42 C.F.R. § 417.600 (a)(1) (2000); see id., § 417.600 et seq.; 42 U.S.C. § 1395ff(b)(1).) Judicial review of claims arising under the Medicare Act is available only in federal court, and only then if the amount in controversy is at least $1000 and the Secretary has rendered a “final decision” on the claim, in the same manner as is provided for old age and disability claims arising under title II of the Social Security Act. ( 42 U.S.C. §§ 405 (g), (h), 1395ff(b)(1)(C).)

Pursuant to rulemaking authority granted by Congress, the Secretary has provided that a final decision is rendered on a Medicare claim only after the individual claimant has presented the claim through all designated levels of administrative review, including review by HCFA or its agent, an administrative law judge (ALJ), and the departmental appeals board. (Heckler v. Ringer (1984) 466 U.S. 602, 606-607 [ 104 S.Ct. 2013, 2017-2018 , 80 L.Ed.2d 622 ] (Ringer); 42 C.F.R. § 417.600 et seq.) Portions of the administrative review process must be expedited where the usual time frames “could seriously jeopardize the life or health of the enrollee or the enrollee’s ability to regain maximum function.” ( 42 C.F.R. §§ 417.609 (b), 417.617(b) (2000).) As the legislative history explains, “[i]t is intended that the remedies provided by these review procedures shall be exclusive.” (Sen.Rep. No. 404, 89th Cong., 1st Sess. (1965), reprinted in 1965 U.S. Code Cong. & Admin. News, pp. 1943, 1995, italics added.)

The broad scope of Medicare’s exclusive review process was emphasized in Ringer, supra, 466 U.S. 602 , the United States Supreme Court’s seminal decision on the issue. In Ringer , four individual Medicare beneficiaries filed *430 a federal court action for declaratory and injunctive relief that challenged the Secretary’s formal policy of denying Medicare coverage for a surgical procedure known as bilateral carotid body resection (BCBR). Three of the plaintiffs had undergone BCBR surgery but were denied reimbursement for the surgery by fiscal intermediaries. Although some of the levels of the administrative review process had been completed, none of the three had received a final decision on their benefit claims from the Secretary. (466 U.S. at pp. 609-610 [104 S.Ct. at pp. 2018-2019].) The fourth plaintiff, who did not have the surgery because he could not afford it, had not submitted a claim for reimbursement. (Id. at p. 610 [ 104 S.Ct. at p. 2019 ].) The four plaintiffs contended in federal court that the Secretary had a constitutional and statutory obligation to provide payment for BCBR surgery and that the Secretary’s formal ruling refusing to find the BCBR surgery “reasonable and necessary” under the Act was unlawful. ( Ringer, supra, 466 U.S. at pp. 610-611 [ 104 S.Ct. at p. 2019 ].)

In Ringer , the Supreme Court considered whether the plaintiffs, who were not seeking an award of benefits, could bring an action directly in federal court without pursuing administrative remedies. In analyzing the issue, the court initially observed that judicial review is unavailable for “ ‘claimfs] arising under’ ” the Medicare Act, and that claims arise under Medicare if they are “ ‘inextricably intertwined’ ” with claims for Medicare benefits. ( Ringer, supra, 466 U.S. at pp. 614-615 [ 104 S.Ct. at p. 2021 ].) Noting that the phrase “claim arising under” had been judicially construed “quite broadly,” the high court concluded that a claim arises under Medicare where “ ‘both the standing and the substantive basis for the presentation’ ” of the claim is the Medicare Act. (Ringer, supra, 466 U.S. at p. 615 [ 104 S.Ct. at p. 2022 ].)

Turning to the facts of the case, the Supreme Court first noted that the Secretary’s formal ruling was inapplicable to the claims of the first three plaintiffs due to timing. But their claims, which did not seek an actual award of benefits, nonetheless “[arose] under” the Medicare Act because the Act furnished both the standing and the substantive basis for their claims. (Ringer, supra, 466 U.S. at p. 615 [ 104 S.Ct. at p. 2021 ].) As for the fourth plaintiff, whose claim was in fact subject to the Secretary’s ruling, the Supreme Court viewed him as clearly seeking “to establish a right to future payments should he ultimately decide to proceed with BCBR surgery.” (Id. at p. 621 [ 104 S.Ct. at p. 2025 ].) That the fourth plaintiff was not seeking the immediate payment of benefits was of no importance; his claim “must be construed as a ‘claim arising under’ the Medicare Act,” the court reasoned, “because any other construction would allow claimants substantially to undercut Congress’ carefully crafted scheme for administering the Medicare *431 Act. flO If we allow claimants ... to challenge in federal court the Secretary’s determination . . . that BCBR surgery is not a covered service, we would be inviting them to bypass the exhaustion requirements of the Medicare Act by simply bringing declaratory judgment actions in federal court before they undergo the medical procedure in question.” (Ibid.) As part of its analysis, the court found that the administrative review process provided an adequate remedy for challenging both the Secretary’s decision that a particular medical service was not reasonable and necessary, and the means by which the Secretary implemented such a decision. (Id. at p. 617 [ 104 S.Ct. at p. 2023 ].)

In holding that a claim may arise under Medicare while also arising under some other law (i.e., the federal Constitution), the Ringer decision looked to Weinberger v. Salfi (1975) 422 U.S. 749 [ 95 S.Ct. 2457 , 45 L.Ed.2d 522 ] (Salfi), for guidance. (Ringer, supra, 466 U.S. at p. 615 [104 S.Ct. at pp. 2021-2022].) In Salfi , a claimant who had been denied Social Security benefits based on “duration-of-relationship” requirements of the Social Security Act filed an action in federal court on behalf of herself, and others similarly situated, challenging the constitutionality of the statutory requirements. 2 In response to the claimant’s argument that the action arose under the Constitution and not under the Social Security Act, the high court stated: “It would, of course, be fruitless to contend that appellees’ claim is one which does not arise under the Constitution, since their constitutional arguments are critical to their complaint. But it is just as fruitless to argue that this action does not also arise under the Social Security Act. For not only is it Social Security benefits which appellees seek to recover, but it is the Social Security Act which provides both the standing and the substantive basis for the presentation of their constitutional contentions.” ( Salfi, supra, 422 U.S. at pp. 760-761 [ 95 S.Ct. at p. 2464 ].) The Supreme Court ultimately concluded in Salfi that compliance with the administrative review process was required, even though the claims had a constitutional basis and even though the Secretary had no power to affect an unconstitutional denial of benefits. (Salfi, supra, 422 U.S. at p. 764 [ 95 S.Ct. at p. 2466 ].)

Taken together, Ringer and Salfi make clear that claims challenging an HMO’s denial of reasonable and necessary health services covered by Medicare must undergo an administrative review for a final decision prior to any judicial review to ensure Medicare’s efficient and orderly functioning. As the Supreme Court emphasized in both decisions, “the purpose of the exhaustion requirement is to prevent ‘premature interference with agency *432 processes’ and to give the agency a chance ‘to compile a record which is adequate for judicial review.’ ” (Ringer, supra, 466 U.S. at p. 619, fn. 12 , quoting Salfi, supra, 422 U.S. at p. 765 .) That purpose is frustrated substantially when HMO plan enrollees are permitted to bypass the administrative process. As one court aptly summarized, “[t]he lack of a developed record means that plaintiffs in effect call upon the court to play doctor in their cases. The prescribed HMO and agency decisionmaking procedures were designed to avoid that problem.” (Roen v. Sullivan, supra, 764 F.Supp. at pp. 560-561.)

In California, Ringer’s analysis was followed in Redmond v. Secure Horizons, Pacificare, Inc. (1997) 60 Cal.App.4th 96 [ 70 Cal.Rptr.2d 174 ] (Redmond). In that case, a Medicare HMO plan enrollee underwent a “lifesaving” surgery after the HMO initially denied coverage. The enrollee subsequently requested reimbursement for the surgery and the HMO ultimately acquiesced. The enrollee then sued the HMO in state court for breach of contract, breach of the implied covenant of good faith and fair dealing, and negligent and intentional infliction of emotional distress. The HMO demurred, contending that the tort and contract causes of action were inextricably intertwined with the denial of Medicare benefits and were therefore subject to Medicare’s administrative procedures.

On review, the Court of Appeal ruled in favor of the HMO: “[Wjhile plaintiff’s causes of action are not actually a claim for benefits, since she has already obtained reimbursement of her medical expenses, her causes of action are ‘inextricably intertwined’ with a claim that she was entitled to the reimbursement she received. Plaintiff argues that her complaint was not based on her entitlement to benefits but on defendant’s ‘conduct’ with respect to her claim for benefits. This argument fails because the alleged wrongfulness of defendant’s conduct depends on whether plaintiff was entitled to payment of her claim.” (Redmond, supra, 60 Cal.App.4th at p. 102 ; accord, Wilson v. Chestnut Hill Healthcare (E.D.Pa., Feb. 22, 2000, Civ. A. No. 99-CV-1468) 2000 WL 204368 , at p. *4 [“courts must discount any ‘creative pleading’ which may transform Medicare disputes into mere state law claims, and painstakingly determine whether such claims are ultimately Medicare disputes”].)

Additionally, federal decisions arising in analogous contexts have followed Ringer in foreclosing state law claims by health care providers pertaining to the withholding of Medicare benefit reimbursements. 3 For example, in Bodimetric, supra, 903 F.2d 480 , a provider filed suit against a *433 Medicare fiscal intermediary, alleging state law claims for fraud and for wrongful misconduct in the processing of its reimbursement claims. Although the action sought recovery of tort damages, not benefit reimbursements, the Seventh Circuit Court of Appeals concluded that the plaintiff could not avoid the Medicare Act’s review process “simply by styling its attack as a claim for collateral damages instead of a challenge to the underlying denial of benefits.” (Bodimetric, at p. 487.) While recognizing that the federal administrative process might not afford the provider all the relief it sought pursuant to its state law claims, the appeals court nonetheless emphasized that “Congress, through its establishment of a limited review process, has provided the remedies it deems necessary to effectuate the Medicare claims process.” (Id. at p. 486, fn. 5; see also Marin v. HEW, Health Care Financing (9th Cir. 1985) 769 F.2d 590 .)

Similarly, in Midland Psychiatric Associates, Inc. v. U.S. (8th Cir. 1998) 145 F.3d 1000 (Midland), a health care provider sued a Medicare fiscal intermediary for tortiously interfering with its contracts with hospitals by denying the hospitals’ payment claims for services rendered by the provider to Medicare beneficiaries. In affirming dismissal of the provider’s action, the Eighth Circuit Court of Appeals reasoned that the intermediary could not be held liable for tortious interference if it had a right to deny the hospitals’ payment claims and that hearing the tortious interference claim would mean reviewing the merits of the intermediary’s Medicare claims decisions. (Midland, at pp. 1002, 1004.) Relying on Ringer and Salfi , the Eighth Circuit concluded that the tortious interference claim arose under the Medicare Act and was therefore subject to the exclusive federal administrative review procedures, even though, as pleaded, the claim also arose under state law. 4 (Midland, at p. 1004; see also Jamaica Hosp. Nursing Home v. Oxford Health *434 Plans (S.D.N.Y., Sept. 26, 2000, No. 99 Civ. 9541 (AGS)) 2000 WL 1404930 [where nursing home alleged that an assignment of insurance rights from a treated patient entitled it to payment from an HMO for the cost of treatment, claim arose under the Medicare Act even though it was presented as a contract claim].)

II.

Under the foregoing authorities, it is evident that what plaintiffs have asserted in this action are “claims arising under” the Medicare Act. Specifically, plaintiffs allege that (1) PacifiCare breached its duty to comply with state and Medicare regulations governing the provision of health care services and failed to secure for plaintiff George McCall “reasonably necessary” health care services to which he was entitled (negligence, willful misconduct, unfair business practices); (2) PacifiCare misrepresented to government officials and to its own enrollees that it would comport with California Health and Safety Code provisions and with Medicare regulations, yet failed to do so after having secured HMO licensure through the state and an HMO contract through HCFA, and after having induced enrollment by individuals entitled to Medicare benefits (fraud, constructive fraud, unfair business practices); and (3) PacifiCare wrongfully denied plaintiff George McCall the level of health services to which he was entitled under both state law and Medicare by refusing surgical intervention to save his life (a lung transplant) and instead providing a much less expensive course of treatment (intentional and negligent infliction of emotional distress, unfair business practices).

At bottom, plaintiffs challenge PacifiCare’s failure to furnish or arrange for “reasonable and necessary” health services covered by Medicare. (42 U.S.C. § 1395y(a)(1)(A).) Critically, plaintiffs’ ability to prevail on their state law causes of action inevitably turns upon a determination that plaintiff George McCall was entitled to a Medicare benefit, i.e., a lung transplant, and that PacifiCare had no right to deny such benefit because it was reasonable and necessary for treatment of his condition. (See Ringer, supra, 466 U.S. at pp. 610-611 [104 S.Ct. at pp. 2019-2020]; Redmond, supra, 60 Cal.App.4th at p. 102 .) The consequential damages sought by plaintiffs also are dependent upon such a determination. That being the case, plaintiffs’ claims are *435 “inextricably intertwined” with a Medicare benefits determination and are subject to Medicare’s administrative review process.

As Ringer instructs, it matters not that plaintiffs carefully avoid any formal claim for reimbursement of sums they expended to obtain the services otherwise covered under Medicare. (Ringer, supra, 466 U.S. at p. 621 [104 S.Ct. at pp. 2024-2025].) Nor does it make a difference that plaintiffs’ claims are based in part on state law, for it is the Medicare Act that furnishes both the standing and the substantive basis for the presentation of their state law contentions. (See Ringer , at p. 620 [ 104 S.Ct. at p. 2024 ]; Salfi, supra, 422 U.S. at pp. 760-761 [95 S.Ct. at pp. 2464-2465].) Distilled to their essence, the state law causes of action necessarily rely upon plaintiff George McCall’s status as an individual entitled to Medicare benefits and upon the Medicare Act itself to define the benefits and health services to which he was legally entitled but wrongly denied. Consequently, such claims do not, as the majority suggests, only “incidentally” refer to a denial of benefits under Medicare. (See maj. opn., ante, at p. 425.)

The Supreme Court, I note, has suggested that an exception to exhaustion may arise when a claim is “wholly ‘collateral’ to [a] claim for benefits,” but that such exception will not apply where there is “no colorable claim that an erroneous denial of . . . benefits in the early stages of the administrative process will injure [the claimant] in a way that cannot be remedied by the later payment of benefits.” (Ringer, supra, 466 U.S. at p. 618 [ 104 S.Ct. at p. 2023 ].) As discussed, however, plaintiffs’ state law claims are not wholly collateral to a claim for benefits because, at bottom, they ultimately derive from the contention that plaintiff George McCall was entitled to a lung transplant and other reasonable and necessary medical services denied him by PacifiCare. Moreover, nothing in the record (limited as it may be) suggests plaintiffs could not have overcome PacifiCare’s denial of such services through the administrative process if in fact Medicare coverage existed. Indeed, had George McCall initially elected to receive health care on a fee-for-service basis and consulted a physician of his choice for purposes of receiving a lung transplant, and had he been denied reimbursement for the physician’s services by a Medicare fiscal intermediary, there would be no question that he would have been required to seek reconsideration of the denial through Medicare’s administrative review process. The fact that a Medicare HMO denied his request for a transplant in a managed care setting should make no difference in the legal analysis.

At oral argument on this matter, counsel for plaintiffs could not and did not dispute that the claims concerning PacifiCare’s alleged wrongful refusal to arrange for a lung transplant would necessitate a determination whether *436 the transplant was a reasonable and necessary medical treatment to which plaintiff George McCall was entitled under Medicare. Counsel instead argued, and the majority evidently agrees, that no benefit determination would be involved in deciding whether PacifiCare fraudulently induced plaintiff to enroll in PacifiCare, whether PacifiCare wrongfully withheld information regarding treatment options, and whether PacifiCare wrongfully forced plaintiff to disenroll from PacifiCare.

That argument fails to convince. Essentially all of plaintiffs’ claims are predicated on the central theory that PacifiCare, as a Medicare HMO, was required to comply with all Medicare rules and regulations, that reasonable and necessary health services covered by Medicare would not be denied, and that all available Medicare treatment options would be discussed and provided. As a result of PacifiCare’s alleged misconduct, plaintiff George McCall enrolled in PacifiCare and allegedly was harmed thereby. Moreover, to the extent plaintiffs allege that PacifiCare made fraudulent misrepresentations to Medicare in order to obtain a Medicare HMO contract and to induce enrollment, such claims are, as plaintiffs apparently recognize, barred under the reasoning of Buckman Co. v. Plaintiffs’ Legal Committee (2001) 531 U.S. 341 [ 121 S.Ct. 1012 , 148 L.Ed.2d 854 ] (finding similar fraud claims preempted by the Federal Food, Drug, and Cosmetic Act, as amended by the Medical Device Amendments of 1976). As for the disenrollment claim, plaintiff George McCall allegedly had to disenroll in order to get the lung transplant he sought. Since the harm resulting from all of PacifiCare’s alleged misconduct is inseparable from the harm resulting from its denial of the lung transplant, there appears no basis for finding any of the claims exempt from the administrative review process.

In purporting to analyze plaintiffs’ complaint, the majority suggests that malpractice may be committed under state law based on a provider’s failure to properly advise of treatment options or its failure to provide appropriate referrals to specialists, whether or not such options or referrals were covered by Medicare, and that malpractice as such may prevent a beneficiary from seeking noncovered services at his own expense. (Maj. opn., ante, at p. 425.) This sort of malpractice claim, the majority asserts, would not implicate.a coverage determination or fall within the scope of the Medicare review process.

Even assuming the majority states the law correctly in the abstract, the complaint here lacks such a claim. The allegations make no specific reference to any “noncovered” medical treatment about which plaintiff George McCall should have been advised. Nor do they suggest that plaintiff would have undergone a particular noncovered treatment at his own expense but for *437 PacifiCare’s alleged misconduct, or that any harm flowed from his ignorance of noncovered treatments. Rather, the crux of the complaint is that plaintiff was harmed by PacifiCare’s failure to secure the lung transplant and other reasonable and necessary medical treatment to which he was entitled under Medicare.

To support its contrary conclusion, the majority invokes the Ninth Circuit Court of Appeals’ decision in Ardary v. Aetna Health Plans of California, Inc. (9th Cir. 1996) 98 F.3d 496 (Ardary). In Ardary , the heirs of a deceased Medicare beneficiary brought state law claims for wrongful death against a private Medicare provider seeking compensatory and punitive damages on the basis that the provider improperly denied medical services (an emergency airlift transfer) and misrepresented its managed care plan to the beneficiary. The provider removed the action to federal court, arguing, among other things, that relief was limited to federal administrative remedies under Ringer . The Ninth Circuit disagreed.

Notably, the Ninth Circuit acknowledged that the heirs’ state law claims were all predicated on the provider’s failure to authorize the emergency airlift transfer. (Ardary, supra, 98 F.3d at p. 498 .) Yet the court determined their complaint did not arise under the Medicare Act because it did not “ ‘include any claims in which “both the standing and the substantive basis for the presentation” of the claims’ is the Act.” (Ardary, at p. 499.) In its view, standing for the heirs’ claims was provided by state common law (e.g., negligence, infliction of emotional distress, misrepresentation, and professional negligence), not the Act. (Id. at pp. 499-500.) The court also concluded the claims were not “inextricably intertwined” with a benefits claim because the heirs were not seeking to recover benefits. (Id. at p. 500.) Finally, the court emphasized the inappropriateness of relegating the wrongful death claims to the administrative process because the injury complained of—the beneficiary’s death—could not be remedied by the retroactive authorization or payment of the airlift transfer. (Ibid.)

Ardary is analytically flawed and cannot support the majority’s disregard of the principles articulated by the Supreme Court in Ringer and Salfi . Contrary to Ardary’& reasoning, those decisions affirm that claims may arise under the Medicare Act and be subject to its administrative review process, even though the claims also arise under some other law. Thus, even where claims have a state law basis, as exemplified in Ardary and in the instant case, they also arise under the Medicare Act where, at bottom, they challenge the correctness of the defendant’s denial of health services covered by Medicare. (See Ringer, supra, 466 U.S. at p. 615 [104 S.Ct. at pp. 2021-2022]; Redmond, supra, 60 Cal.App.4th at p. 102 ; Wilson v. Chestnut Hill *438 Healthcare, supra, 2000 WL 204368 , at p. *4; see also Salfi, supra, 422 U.S. at pp. 760-761 [95 S.Ct. at pp. 2464-2465]; Midland, supra, 145 F.3d 1000 ; Bodimetric, supra, 903 F.2d 480 .) Moreover, the high court firmly rejected the notion that the absence of a formal request for payment of benefits is controlling. (Ringer, supra, 466 U.S. at p. 621 [104 S.Ct. at pp. 2024-2025].) In any event, the result in Ardary was largely influenced by the fact that it was a wrongful death action brought by the heirs of a Medicare beneficiary. (Ardary, supra, 98 F.3d at p. 500 .) Here, of course, the action was brought by the Medicare beneficiary himself and contains no wrongful death component.

The majority also supports its holding with the observation that the Secretary has no authority to assess the validity or merit of plaintiffs’ tort claims or to grant relief for such claims. (Maj. opn., ante, at pp. 421-422, fn. 7, citing Kelly v. Advantage Health, Inc. (E.D.La., May 11, 1999, Civ. A. No. 99-0362) 1999 WL 294796 .) The Secretary, however, is authorized to impose civil monetary penalties and to suspend payment to or enrollment of a contracting HMO if the HMO “fails substantially to provide medically necessary items and services that are required” to be provided to an individual covered under the contract, where “the failure has adversely affected (or has substantial likelihood of adversely affecting) the individual.” (42 U.S.C. § 1395mm(i)(6)(A)(i); see also 42 C.F.R. § 417.500 (2000).) The Secretary may also impose such penalties if the HMO “Misrepresents or falsifies information that is furnished” to the Secretary or to an individual. ( 42 C.F.R. § 417.500 (a)(5) (2000).) Accordingly, it appears the Secretary has been amply armed by Congress to address the type of wrongdoing alleged here.

More to the point, Congress has determined that questions regarding a claimant’s entitlement to benefits under the Medicare Act must be decided through Medicare’s administrative process to ensure the efficient and even administration of the federally insured program. An individual who is “dissatisfied with [an HMO’s] determination regarding his or her Medicare benefits” ( 42 C.F.R. § 417.600 (a)) should not be permitted “to undercut Congress’s carefully crafted scheme for administering the Medicare Act” (Ringer, supra, 466 U.S. at p. 621 [ 104 S.Ct. at p. 2025 ]) by making state law contentions that necessitate a state court’s review of an HMO’s decision to deny benefits covered by Medicare. Where, as here, such contentions are central to a plaintiff’s claims for recovery, they remain properly subject to the Act’s mandatory administrative process where they may receive a thorough and expedited review. (See Ringer, supra, 466 U.S. at p. 619 & fn. 12 [ 104 S.Ct. at p. 2024 ]; see also Salfi, supra, 422 U.S. at p. 765 [95 S.Ct. at pp. 2466-2467]; Redmond, supra, 60 Cal.App.4th at p. 102 ; Wilson v. Chestnut Hill Healthcare, supra, 2000 WL 204368 , at pp. *3, *6.)

*439 The majority also justifies its decision by invoking the general presumption that Congress, in enacting laws, does not intend to preempt state regulation of the same subject matter unless a contrary intent appears, and by relying on title 42, section 1395 of the United States Code, 5 and on the Medicare Act’s requirement that HMO’s and other Medicare providers be state licensed (42 U.S.C. § 1395mm(b)). (Maj. opn., ante, at pp. 422-424.)

It is inconceivable that Congress did not intend to oust state courts of jurisdiction to review the merits of an HMO’s denial of Medicare benefits. Not only are the provisions of the Act crystal clear on the point (42 U.S.C. §§ 1395ff(a), (b)(1), 405(g), (h)), but the legislative history expressly indicates that the remedies provided by the administrative review procedures are intended to be exclusive. (Sen.Rep. No. 404, 89th Cong., 1st Sess., supra, reprinted in 1965 U.S. Code Cong. & Admin. News, pp. 1943, 1995.) The legislative declaration codified at title 42, section 1395 of the United States Code (ante, fn. 5) and the state license requirement (42 U.S.C. § 1395mm(b)) offer no support for a contrary inference.

Nor is the majority’s holding supported by the Balanced Budget Act of 1997 (the BBA), which added a provision to the Medicare Act expressly preempting state standards relating to benefit requirements, coverage determinations, and requirements relating to the inclusion or treatment of providers. (42 U.S.C. § 1395w-21 et seq.) As the HCFA comments quoted by the majority explain (maj. opn., ante, at pp. 422-424), even though the Medicare Act did not previously contain an express preemption clause, preemption of state laws and standards was proper “based on general constitutional Federal preemption principles.” (63 Fed.Reg. 35012 (June 26, 1998).) The quoted comments also clarify the following: that while a claim regarding a Medicare + Choice 6 organization’s “denial of care that a beneficiary believes to be covered care is subject to the Medicare appeals process,” “the matter may also be the subject of a tort case under State law if medical malpractice is alleged, or of a state contract law claim if an enrollee alleges that the [Medicare + Choice] organization has obligated itself to provide a particular service under State law without regard to whether it is covered under its [Medicare + Choice] contract.” (63 Fed.Reg., supra, p. 35013.)

Contrary to the majority’s assertion, HCFA’s comments do not “strongly imply that state law claims such as those involved in the present case were *440 not preempted under then applicable law.” (Maj. opn., ante, at p. 424.) If anything, both the comments and the BBA itself settle any doubt regarding Medicare’s preemptive scope over claims that essentially rely on state standards and requirements to establish coverage of benefits. Indeed, as HCFA elucidates, “[s]tate laws requiring, for example, a second opinion from non-contracted physicians” would be superseded by the BBA preemptions “because these requirements in essence mandate the ‘benefit’ of access to a particular provider’s services even where the services of that provider would not otherwise be a covered benefit.” (63 Fed.Reg., supra, p. 35013.) Although HCFA further explains that preemption does not extend to all medical malpractice and contract claims, that has always been the case where the claims were not inextricably intertwined with a benefits determination. As discussed, however, the claims asserted here do not fall within those long acknowledged categories of exempted claims.

III.

The Medicare Act represents a “carefully crafted scheme” for administering a massive federally insured program (Ringer, supra, 466 U.S. at p. 621 [ 104 S.Ct. at p. 2025 ]). Central to that scheme is Congress’s determination that administrative remedies, followed by federal court review if necessary, are appropriate to fully and consistently address the claims of those who seek to challenge an HMO’s benefits decision, and that administrative sanctions are appropriate to address certain misconduct by errant HMO’s. While the system may not afford the range of relief available under state law, it is designed to provide that coverage decisions are reviewed in a thorough and expeditious manner by HCFA or its agent, and by ALJ’s and departmental review boards that have special expertise in such matters. It is not the prerogative of this court to second-guess the measured trade-offs enacted by Congress.

Today’s decision all but assures that Medicare’s administrative review process will cease to function as a meaningful limit on judicial review. I cannot, and will not, join in its undoing.

Brown, J., concurred.

Part A of Medicare is a mandatory hospital insurance program covering the cost of hospitalization and related expenses. (42 U.S.C. § 1395c et seq.) Part B establishes a voluntary supplemental medical insurance program covering specified medical services, devices, and equipment. (Id., § 1395j et seq.)

Claims seeking payment of ordinary Social Security benefits are subject to the same administrative exhaustion provisions as those seeking Medicare benefits. (Maj. opn., ante, at p. 418.)

The United States Supreme Court subsequently invoked Ringer in a decision holding that damage claims arising from decisions concerning payment of ordinary Social Security *433 benefits are foreclosed by the Secretary’s exclusive administrative jurisdiction over such decisions. In Schweiker v. Chilicky (1988) 487 U.S. 412 [ 108 S.Ct. 2460 , 101 L.Ed.2d 370 ], claimants whose Social Security disability benefits were improperly terminated during disability reviews but were later restored, sued federal and state program administrators for alleged violations of their Fifth Amendment right to due process, and sought recovery of damages for emotional distress and for loss of food, shelter, and other necessities proximately caused by the denial of benefits without due process. In that case, the high court determined that since the harm resulting from the alleged constitutional violation was inseparable from that resulting from the denial of benefits, both claims were remediable, if at all, only through the federal administrative review process. (487 U.S. at pp. 428-429 [108 S.Ct. at pp. 2470-2471].)

In a footnote, the majority expresses awareness of Bodimetric, supra, 903 F.2d 480 , Midland, supra, 145 F.3d 1000 , and Marin v. HEW, Health Care Financing, supra, 769 F.2d 590 . (Maj. opn., ante, at p. 426, fn. 11.) The majority does not dispute those courts’ conclusions that claims “arising under" the Medicare Act, as that phrase was defined in Ringer, supra, 466 U.S. 602 , may encompass state law claims seeking tort damages for harm allegedly sustained as a result of improper denial of claims. (Maj. opn., ante, at p. 426, fn. 11.) Rather, the majority attempts to distinguish the instant case on the basis that it involves *434 “claims arising from violations of duties separate from the duty to pay Medicare benefits.” {Ibid.) Contrary to the majority’s suggestion, and as I explain in part II, post, plaintiffs here similarly seek tort damages arising from the alleged improper denial of a benefit, i.e., a lung transplant, to which plaintiffs claim entitlement under Medicare. Although the complaint also alleges violations of “duties” that purport to extend beyond PacifiCare’s alleged duty to pay Medicare benefits, the harm supposedly resulting from those violations appears inseparable from the harm resulting from PacifiCare’s denial of the lung transplant. (See pt. II, post.)

That section provides: “Nothing in this subchapter shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person.” ( 42 U.S.C. § 1395 .)

HMO’s contracting with Medicare, such as PacifiCare here, automatically became Medicare + Choice plans effective January 1, 1999. (See 42 U.S.C. § 1395mm(k).)