Aranki v. Burwell

151 F. Supp. 3d 1038, 2015 U.S. Dist. LEXIS 180302, 2015 WL 9311661
CourtDistrict Court, D. Arizona
DecidedOctober 19, 2015
DocketNo. CV-15-0668-PHX-SMM
StatusPublished
Cited by1 cases

This text of 151 F. Supp. 3d 1038 (Aranki v. Burwell) is published on Counsel Stack Legal Research, covering District Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aranki v. Burwell, 151 F. Supp. 3d 1038, 2015 U.S. Dist. LEXIS 180302, 2015 WL 9311661 (D. Ariz. 2015).

Opinion

ORDER

Stephen M. McNamee, Senior United States District Judge

Rachel Aranki’s Motion to Amend Complaint (Doc. 14), and Plaintiffs Request for Order to Amend Complaint (Doc. 17). The parties have responded and the motions are fully briefed. Having reviewed the parties’ briefing, the Court will grant Defendant’s motion to dismiss and deny both of Plaintiffs pending motions.

[1040]*1040I. Background and Procedural History

A. Medicare and “Set-Aside Agreements”

Medicare, a program enacted by the U.S. federal government to provide health insurance benefits to eligible aged and disabled persons, is administered by the- Centers for. Medicare and Medicaid Services (“CMS”), a component of the U.S. Department of Health and Human Services (“HHS”). See Title XVIII of the Social Security Act; 42 U.S.C.A. § 1395-1395ccc (West 2015). Due to the strain on the federal budget- from increased Medicare claims, Congress enacted the Medicare Second Payer (“MSP”) statute, 42 U.S.C. § 1395y. The MSP statute ensures that Medicare payment obligations are subro-gated to other payment plans, such as automobile or liability insurance or workers’ compensation. Id.; see Zinman v. Shalala, 67 F.3d 841, 843 (9th Cir.1995). Simply put, “Medicare serves as a back-up insurance plan to cover that which is not paid for by a primary insurance plan.” Thompson v. Goetzmann, 337 F.3d 489, 496 (5th Cir.2003); see Estate of Ethridge v. Recovery Mgmt. Sys., Inc., 235 Ariz. 30, 33, 326 P.3d 297 (App.2014), review denied (Nov. 6, 2014), cert. denied, — U.S.-, 135 S.Ct. 1517, 191 L.Ed.2d 433 (2015).

To comply with the provisions outlined in the MSP statute, in workers’ compensátion cases CMS mandates the creation of a Medicare “set aside” (“MSA”) account. 42 C.F.R. § 411. The purpose of a MSA is to allocate a portion of a workers’ compensation award to pay potential future medical expenses resulting from the work-related injury so that Medicare does not have to pay. Workers’ Compensation Medicare Set Aside Arrangements, Center for Medicare & Medicaid Services, http://www.cms. gov/Medicare/Coordination-of-Benefits/ Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSAP-Overview. html (last visited Sept. 30, 2015); see In re Arellano, 524 B.R. 615, 624 (Bankr. M,D,Pa.2015); Sipler v. Trans Am Trucking, Inc., 881 F,Supp.2d 635, 638 (D.N.J. 2012). However, no federal law or CMS regulation requires the creation of a MSA in personal injury settlements to cover potential future medical expenses.1 Id.

B. Plaintiffs Arizona Superior Court Case

In 2009, Plaintiff Rachel Aranki,sa Medicare beneficiary, was injured in a medical malpractice incident that left her partially paralyzed and in chronic pain. (Doc. 1) Plaintiff filed a medical malpractice action in Arizona state court against the doctors who treated her. (Id.)- A settlement agreement was reached in that case. (Doc. 10) The final consummation of that settlement agreement was stalled, however, because the issue arose whether CMS would mandate the creation of á' MSA. (Doc. 1.) Plaintiff petitioned CMS, who did not respond. (Id.) The Arizona Superior Court Judge presiding over that case, nonetheless, enforced the settlement agreement and also ordered Plaintiff to file a declaratory judgment action in federal court on the MSA -issue. . (Id.) Plaintiff subsequently brought this action against Defendant Ms. Burwell, the current United States Secretary of HHS.

II. Standard of Review

A. Declaratory Judgment Act and Subject Matter Jurisdiction

The Declaratory Judgment Act provides that “[i]n a case of actual contro[1041]*1041versy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The phrase “actual controversy” refers to “cases and controversies” that are justicia-ble under Article III of the Constitution. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 L.Ed. 617 (1937). Plaintiffs carry the burden to prove the existence of an actual controversy such that subject matter jurisdiction exists. Cardinal Chem. Co. v. Morton Int’l Inc., 508 U.S. 83, 95, 113 S.Ct. 1967, 124 L.Ed.2d 1 (1993).

Before it entertains a declaratory judgment, the district court must examine “whether there is an actual case or controversy within its jurisdiction.” Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir.2005). If not, then the case is not ripe for review and the court lacks subject matter jurisdiction. Id. Second, if “an actual case or controversy exists, the court must decide whether to exercise its jurisdiction by analyzing the factors set out in [Brillhart], and its progeny.” Id.; see Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942). Those factors include, “[1) ] the district court should avoid needless determination of state law issues; [2) ] it should discourage litigants from filing declaratory actions as a means of forum shopping; and [3) ] it should avoid duplicative litigation.” Principal Life Ins. Co., 394 F.3d at 6721

While the Act authorizes the Court to provide declaratory relief, the Court is not required to do so. Brillhart, 316 U.S. at 494, 62 S.Ct. 1173. There is no presumption in favor of abstaining from, nor is there a presumption in favor of exercising this remedial power. See Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 803 (9th Cir.2002); see also Wilton v. Seven Falls Co., 515 U.S. 277, 289, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (stating that appellate court reviews the district court’s decision to grant or refrain from granting declaratory relief for abuse of discretion “because facts bearing on the usefulness of the declaratory judgment remedy, and the fitness of the case for resolution, are peculiarly- within their grasp”). “In the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration,” Id. at. 288, 115 S.Ct. 2137.

B.

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Bluebook (online)
151 F. Supp. 3d 1038, 2015 U.S. Dist. LEXIS 180302, 2015 WL 9311661, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aranki-v-burwell-azd-2015.