NYU Langone Hospitals v. Aetna Health, Inc.

Background

NYU Langone Hospitals brought two actions in New York Supreme Court, New York County. One action names Aetna Health, Inc.; the other names UnitedHealthcare Insurance Company, UnitedHealthcare of New York, Inc., and Oxford Health Plans (NY), Inc. The defendants removed the actions to federal court. The complaints assert state-law claims for breach of contract, unjust enrichment, and quantum meruit. The opinion states that the parties did not dispute that private contracts governed the furnishing of certain pharmaceuticals and related products and services to patients covered by the defendants’ Medicare Advantage plans.

Those contracts incorporated by reference a reimbursement scheme used by the Centers for Medicare and Medicaid Services to reimburse certain hospitals known as 340B hospitals. NYU Langone is not a 340B hospital for purposes of these actions and does not seek reimbursement from the federal agency. Instead, the dispute concerns whether the reimbursement rates and methodology used by the agency were incorporated as pricing mechanisms into NYU Langone’s private contracts with Aetna and UnitedHealthcare.

Jurisdictional Issues

The defendants argued that the state-law claims presented a federal question under the exception for state-law claims that necessarily turn on federal law. The court applied the four-part test requiring that a federal issue be necessarily raised, actually disputed, substantial, and capable of resolution in federal court without disrupting the federal-state balance approved by Congress.

The court concluded that the federal issue was not substantial. It explained that the claims arose under state law, would not have a binding effect on future interpretations of federal statutes or rules, and involved federal Medicare reimbursement laws and rules only tangentially. The court also noted that federal law prevents the Secretary of Health and Human Services from requiring a Medicare Advantage organization to contract with a particular hospital or use a particular price structure, subject to the Secretary’s statutory authority.

The defendants separately invoked the federal-officer removal statute, 28 U.S.C. § 1442(a)(1). They argued that the unjust-enrichment and quantum-meruit claims could expose them to an effort to impose federal reimbursement rates and the federal remedy rule. The court rejected that argument because NYU Langone’s stated position was that those state-law theories would be used to fill contractual gaps if the contracts were silent. Whether those theories could fill gaps was, in the court’s view, a purely state-law question. The court stated that the complaints did not allege direct liability under federal law and therefore did not further analyze the defendants’ federal-officer argument.

Ruling and Disposition

The court held that it lacked subject-matter jurisdiction over both actions. It remanded both actions to the Supreme Court of the State of New York, County of New York, from which they had been removed. The Clerk was directed to transfer the actions and close the federal cases. Judge P. Kevin Castel did not decide the merits of NYU Langone’s contract, unjust-enrichment, or quantum-meruit claims.