                                                 130 Nev., Advance Opinion 55
                       IN THE SUPREME COURT OF THE STATE OF NEVADA


                LOUIS MORRISON,                                        No. 61082
                Appellant,
                vs.
                HEALTH PLAN OF NEVADA, INC.;                              FILED
                SIERRA HEALTH SERVICES, INC.;
                SIERRA HEALTH AND LIFE INSURANCE
                                                                          JUL 1 0 2014
                COMPANY, INC.; SIERRA HEALTH-CARE                        TRACIE K. LINDEMAN
                                                                                              RT

                OPTIONS, INC.; UNITED HEALTHCARE
                INSURANCE COMPANY; AND UNITED
                HEALTHCARE SERVICES, INC.,
                Respondents.



                           Appeal from a district court order dismissing a tort action.
                Eighth Judicial District Court, Clark County; Rob Bare, Judge.
                           Affirmed.



                Kemp, Jones & Coulthard, LLP, and Will Kemp and Eric M. Pepperman,
                Las Vegas,
                for Appellant.

                Holland & Hart, LLP, and Constance L. Akridge and Matthew T. Milone,
                Las Vegas; Bryan Cave LLP and Lawrence G. Scarborough, J. Alex
                Grimsley, and Meridyth M. Andresen, Phoenix, Arizona,
                for Respondents.

                McDonald Carano Wilson LLP and Debbie A. Leonard and Seth T. Floyd,
                Las Vegas; Crowell & Moring LLP and Arthur N. Lerner and April N.
                Ross, Washington, D.C.,
                for Amicus Curiae America's Health Insurance Plans, Inc.




SUPREME COURT
       OF
     NEVADA


(0) 1947A   e                                                                         Z 2 35c)
                 Matthew L. Sharp, Ltd., and Matthew L. Sharp, Reno; Gillock & Killebrew
                 and Gerald I. Gillock and Nia C. Killebrew, Las Vegas; Edward M.
                 Bernstein & Associates and Patti S. Wise and Gary W. Call, Las Vegas;
                 Friedman Rubin and Richard H. Friedman and William S. Cummings,
                 Bremerton, Washington,
                 for Amid Curiae Dolores J. Cappetto, Carole Grueskin, James London,
                 Rodolfo Meana, and Dorothy Rogers.

                 Fennemore Craig Jones Vargas and James L. Wadhams and Alexis L.
                 Brown, Las Vegas,
                 for Amicus Curiae Nevada Association of Health Plans.




                 BEFORE THE COURT EN BANC.'

                                                   OPINION
                 By the Court, HARDESTY, J.:
                              In this appeal, we are asked to determine whether a Medicare
                 beneficiary's state common law negligence claim against his private health
                 insurance company, through which he is receiving his Medicare benefits,
                 is preempted by the federal Medicare Act. Because we conclude that state
                 common law negligence claims regarding the retention and investigation
                 of contracted Medicare providers are expressly preempted by the Medicare
                 Act, we affirm the district court's order.
                                   FACTS AND PROCEDURAL HISTORY
                              Respondents Health Plan of Nevada, Inc.; Sierra Health
                 Services, Inc.; Sierra Health and Life Insurance Company, Inc.; Sierra



                      'The Honorable Ron Parraguirre, Justice, voluntarily recused
                 himself from participation in the decision of this matter.

SUPREME COURT
        OF
     NEVADA
                                                        2
(0) 1947A    e
                Health-Care Options, Inc.; United Healthcare Insurance Company; and
                United Healthcare Services, Inc. (collectively, HPN) are health insurance
                businesses that specialize in health maintenance and/or managed care.
                They are engaged in the joint venture of providing insurance, including
                providing medical services to Medicare beneficiaries through the
                administration of Medicare Advantage (MA) Plans. Appellant Louis
                Morrison is a Medicare beneficiary who received his Medicare benefits
                through an MA Plan offered by HPN. Under HPN's insurance contract,
                Morrison was required to seek medical care from providers chosen by
                HPN. Since at least 2004, HPN had contracted with the Endoscopy
                Center of Southern Nevada, the Gastroenterology Center of Nevada, and
                the doctors employed or associated with the Gastroenterology Center of
                Nevada (collectively, the Clinic) 2 In 2006, Morrison was treated by the
                Clinic based on its status as a contracted provider for HPN; as a result of
                his treatment there, he became infected with hepatitis C.
                             Morrison's second amended complaint alleged that HPN
                breached its duty to "use reasonable care to select its health care
                providers" and "to inquire into the medical practices at the clinic" and was
                negligent in directing him to seek treatment at the Clinic. 3 The complaint


                      2 It
                         appears that HPN contracted with the Clinic prior to 2004, but
                the record fails to reveal the commencement date of the contract.

                      3 Morrison's  original complaint contained allegations that HPN failed
                to monitor medical practices at the Clinic and that it violated NRS
                Chapter 695G, which establishes Nevada's quality assurance program.
                HPN filed a motion to dismiss the claim as preempted by federal law. The
                district court agreed the claim was preempted, but it granted Morrison
                leave to amend the complaint. In his first amended complaint, Morrison
                still alleged a failure to monitor the Clinic but removed any references to
                the Nevada statutes. HPN filed another motion to dismiss based on
                                                                     continued on next page...
SUPREME COURT
        OF
     NEVADA

                                                      3
(0) I947A
                  alleged that HPN failed to properly investigate the Clinic and knew or
                  should have known that since at least 2004 the Clinic engaged in unsafe
                  medical practices causing a high risk of transmission of blood borne
                  pathogens, such as hepatitis C, to patients at the Clinic The district court
                  ultimately dismissed Morrison's second amended complaint with
                  prejudice, finding that Morrison's claim was preempted by the federal
                  Medicare Act pursuant to this court's decision in Pacificare of Nevada, Inc.
                  v. Rogers, 127 Nev. , 266 P.3d 596 (2011). Morrison argues on appeal
                  that the district court erred in applying Rogers to dismiss his claim
                  because the Medicare Act's preemption statute does not apply to his state
                  common law negligence claim.
                                                 DISCUSSION
                               To resolve this appeal, we must determine whether state
                  common law negligence claims against Medicare plan providers are
                  preempted by the federal Medicare Act. 4 The Medicare Act, enacted as
                  Title XVIII of the Social Security Act and codified at 42 U.S.C. §§ 1395-
                  1395kkk (2012), "creates a federally subsidized nationwide health


                  ...continued
                  preemption. The district court again agreed that the claim was preempted
                  because, despite the removal of references to the Nevada statutes, the
                  claim was still one for negligent implementation of a quality assurance
                  program. But the district court once again allowed Morrison to amend his
                  complaint.

                        4The  dissent discusses at length, and cites to cases as well as the
                  Restatement (Second) of Torts, the proposition that one can sue an HMO
                  for negligence in its selection and retention of its providers. However, the
                  majority of the cases cited by the dissent involve a hospital's duty of care,
                  not an HMO's duty of care. Moreover, none of these cases involve
                  Medicare preemption, which is the issue in this case.

SUPREME COURT
      OF
    NEVADA
                                                        4
(C) 1947A 94e4o
                insurance program for elderly and disabled individuals." Rogers, 127 Nev.
                at , 266 P.3d at 598. Pursuant to Part C of the Act, beneficiaries may
                receive Medicare benefits through MA plans provided by private entities
                called MA organizations. Id. (citing 42 C.F.R. § 422.2 (2010)).
                             "MA Organizations and their plans contract with, and are
                subject to extensive regulation by, the Centers for Medicare and Medicaid
                Services (CMS)."      Id.; see, e.g., 42 U.S.C. § 1395w-26(b)(1) (2012).
                Importantly, each MA organization that maintains one or more MA plans
                is required to adhere to a federally regulated quality improvement
                program. 42 C.F.R. § 422.152(a) (2013). The regulations specifically
                require that the MA organization "[Inlake available to CMS information
                on quality and outcomes measures that will enable beneficiaries to
                compare health coverage options and select among them."                  Id.
                § 422.152(b)(3)(iii). The quality improvement program also requires that
                each MA organization "have written policies and procedures for the
                selection and evaluation of providers."       Id. § 422.204(a). An MA
                organization must also ensure that each physician or other health care
                professional be initially credentialed by review of verified "licensure or
                certification from primary sources, disciplinary status, eligibility for
                payment under Medicare, and site visits as appropriate."                 Id.
                § 422.204(b)(2)(i).
                             Although CMS does not directly select the physicians or
                facilities that are included in an MA plan's network, federal regulations
                require an MA organization to select and retain only those providers that
                meet the qualifications specified in the Medicare Act. See id. § 422.204(b).
                Furthermore, CMS has specified "requirements for relationships
                between ... MA organizations [ I and the physicians and other health care

SUPREME COURT
        OF
     NEVADA
                                                     5
(0) 1947A
                  professionals and providers with whom they contract to provide services to
                  Medicare beneficiaries enrolled in an MA plan." Centers for Medicare &
                  Medicaid Services, Medicare Managed Care Manual, Ch. 6, § 10 (Rev. 24,
                  June 6, 2003).
                  Morrison's common law negligence claim is expressly preempted by the
                  Medicare Act
                              The Medicare Act contains an express preemption clause
                  which states that
                              [t]he standards established under this part shall
                              supersede any State law or regulation (other than
                              State licensing laws or State laws relating to plan
                              solvency) with respect to MA plans which are
                              offered by MA organizations under this part.
                  42 U.S.C. § 1395w-26(b)(3) (2012). The scope of this preemption statute is
                  very broad, and the "MA standards set forth in 42 CFR 422 supersede any
                  State laws, regulations, contract requirements, or other standards that
                  would otherwise apply to MA plans," with the exception of laws relating to
                  licensing and plan solvency.   Medicare Managed Care Manual, Ch. 6, §
                  30.1 (Rev. 101, August 18, 2011). "In other words, unless they pertain to
                  licensure and/or solvency, State laws and regulations that regulate health
                  plans do not apply to MA plans offered by MA organizations." Id.
                              When Congress explicitly conveys its intent to preempt in a
                  statute, express preemption exists. Rolf Jensen & Assocs., Inc. v. Eighth
                  Judicial Dist. Court, 128 Nev. „ 282 P.3d 743, 746 (2012) ("The
                  preemption doctrine emanates from the Supremacy Clause of the United
                  States Constitution, pursuant to which state law must yield when it
                  frustrates or conflicts with federal law."). "When a federal act contains an
                  express preemption provision, this court's primary task is to 'identify the
                  domain expressly pre-empted by that language." Rogers, 127 Nev. at ,

SUPREME COURT
        OF
     NEVADA
                                                        6
(0) 1947A    ce
                  266 P.3d at 600 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 484 (1996)).
                  In doing so, we must 'focus on the plain wording of the clause, which
                  necessarily contains the best evidence of Congress' pre-emptive intent."
                  Id. (quoting CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993)).
                  Even when there is no statutory language expressly preempting state law,
                  preemption may be implied if Congress intended to thoroughly occupy the
                  field or when the federal law conflicts with state law.     Rolf Jensen, 128
                  Nev. at , 282 P.3d at 746. "Whether state law claims are preempted by
                  federal law is a question of law that we review de novo, without deference
                  to the findings of the district court." Id.
                               With respect to Medicare Act preemption, we previously
                  considered this clause in Rogers. 127 Nev. at , 266 P.3d at 600. In that
                  case, the plaintiff filed suit against Pacificare, her Medicare provider, for
                  injuries resulting from treatment she received at a Pacificare-approved
                  facility under its MA plan. Id. at , 266 P.3d at 598. Similar to this
                  case, the plaintiff asserted that Pacificare was liable for her injuries
                  because it neglected to employ a proper quality assurance program          Id.
                  We did not address whether her claims were preempted by the Medicare
                  Act, however, because Pacificare argued that an arbitration provision
                  included in the parties' contract governed, necessitating dismissal of
                  plaintiffs claims, and thus the question before us was whether Nevada's
                  common law unconscionability doctrine is preempted by the Medicare Act.
                               In resolving that issue, we considered the express language
                  and legislative history of the Medicare Act's preemption provision. Id. at
                     , 266 P.3d at 600-01. We stated that "[p]rior to 2003, Congress
                  recognized a presumption against preemption unless a state law was in
                  conflict with a Medicare requirement or fell within one of four express

SUPREME COURT
      OF
    NEVADA

                                                          7
(0) 1947A e(9.•
                categories of preempted standards." Rogers, 127 Nev. at         , 266 P.3d at
                601. We then noted, however, that the 2003 amendment of the Act
                broadened the preemption coverage by stating that state laws are
                presumed to be preempted unless the law in question falls within two
                specific categories: state licensing requirements or state laws related to
                plan solvency. Medicare Program; Establishment of the Medicare
                Advantage Program, 69 Fed. Reg. 46866, 46904 (proposed Aug. 3, 2004) (to
                be codified at 42 C.F.R. pt. 417 and 422); see Rogers, 127 Nev. at , 266
                P.3d at 601. Thus, we concluded that the "legislative history shows that
                the Act's preemption provision has been specifically amended to include
                generally applicable common law." Rogers, 127 Nev. at          , 266 P.3d at
                601; see Estate of Ethridge v. Recovery Mgmt. Sys., Inc.,      P.3d     ,
                No. 1 CA-CV-12-0740, 2014 WL 1911006, at *4 (Ariz. Ct. App. May 13,
                2014) ("The amendment was intended to 'clarif[y] that the MA program is
                a federal program operated under Federal rules. State laws, do not, and
                should not apply, with the exception of state licensing laws or state laws
                related to plan solvency." (alteration in original) (quoting H.R. Rep. No.
                108-391, at 557 (2003), reprinted in 2003 U.S.C.C.A.N. 1808, 1926)).
                            Thus, as we concluded in Rogers, the Medicare preemption
                statute "demonstrates a legislative intent to broaden the preemption
                provision beyond those state laws that are simply inconsistent with
                enumerated categories of standards." Rogers, 127 Nev. at 266 P.3d at
                601. Therefore, 'all [s]tate standards, including those established through
                case law, are preempted to the extent they specifically would regulate MA
                plans.'" Id. (alteration in original) (quoting Do Sung Uhm v. Humana,
                Inc., 620 F.3d 1134, 1156 (9th Cir. 2010) (internal quotations omitted)).



SUPREME COURT
         OF
      NEVADA


(0) 1.947A
                          Federal standards exist regarding the conduct at issue in Morrison's
                          common law negligence claim
                               Morrison argues that Congress intended for state laws and
                 regulations to be preempted only when an express Medicare standard
                 exists. And because no published Medicare standard exists that would
                 supersede his common law negligence claim that HPN negligently directed
                 him to receive treatment at the Clinic, he contends, the district court erred
                 in concluding that it was expressly preempted. We disagree.
                               We have already concluded that a state law need not be
                 "inconsistent" with the federal standard to be preempted, but rather, as
                 long as a federal standard exists regarding the conduct at issue "all fs] tate
                 standards, including those established through case law, are preempted to
                 the extent they specifically would regulate MA plans." Rogers, 127 Nev. at
                    , 266 P.3d at 601 (alteration in original) (emphasis omitted) (quoting
                 Do Sung Uhm, 620 F.3d at 1156). But even if we accepted Morrison's
                 argument that state law claims are preempted only where express
                 Medicare standards exist, Morrison's claim would be preempted. "While
                 the term 'standard' is not defined in the Act, 'a "standard" within the
                 meaning of the preemption provision is a statutory provision or a
                 regulation promulgated under the Act and published in the Code of
                 Federal Regulations." Id. at 600 (quoting Do Sung Uhm, 620 F.3d at 1148
                 n.20).
                               As noted above, CMS has promulgated regulations for MA
                 organizations to adhere to when selecting and contracting with providers
                 for its MA plans. See, e.g., 42 C.F.R. § 422.4(a)(1)(i) (2013) (providing that
                 CMS will approve the network of providers to confirm that all federal
                 standards, including quality of care, are being met); id. § 422.204 (setting
                 forth the general standards for MA organizations regarding "[pirovider
SUPREME COURT
        OF
     NEVADA

                                                        9
(0) 1947A    e
                selection and credentialing"); id. § 422.152(a) (requiring MA organizations
                to maintain quality improvement programs for each MA plan, which must
                include ongoing evaluation and quality assessment); id. § 422.152(f)(3)
                (requiring that "[for each plan, the organization must correct all problems
                that come to its attention through internal surveillance, complaints, or
                other mechanisms")
                            CMS has specified "requirements for relationships
                between. . . MA organizations H and the physicians and other health care
                professionals and providers with whom they contract to provide services to
                Medicare beneficiaries enrolled in an MA plan." Centers for Medicare &
                Medicaid Services, Medicare Managed Care Manual, Ch. 6, § 10 (Rev. 82,
                April 27, 2007). In particular,
                            Fain MA organization's site visit policy must
                            include procedures for detecting deficiencies and
                            have mechanisms in place to address those
                            deficiencies.. . . The MA organization must
                            develop and implement policies that address the
                            ongoing monitoring of sanctions and grievances
                            filed against health care professionals. . In the
                            event that an MA organization finds an incidence
                            of poor quality or any type of sanction activity
                            against a health care professional, it should
                            intervene and correct the situation appropriately.
                Id. § 60.3. Furthermore, in interpreting its regulations, CMS has stated
                that state laws which "set forth ongoing marketing, quality assurance, or
                network adequacy requirements for MA plans" are preempted. Id., Ch. 10,
                § 30.1.
                            Thus, federal law provides standards that MA organizations
                must adhere to in conducting the relationship with their contracted
                providers. A state law action asserting that HPN was negligent in
                directing its insureds to the Clinic could result in the imposition of
SUPREME COURT
        OF
     NEVADA

                                                    10
(0) 1947A
                additional state law requirements on the quality assurance regime
                regulated by CMS. Thus, we conclude that even if the Medicare
                preemption provision applied only when express Medicare provisions exist,
                Morrison's state common law negligence claims would still be preempted.
                See Rogers, 127 Nev. at , 266 P.3d at 601.
                            The dissent argues that the federal regulations we cite do not
                immunize providers from liability and "fain ] to touch on the generally
                applicable negligence claim at issue here." Dissenting opinion post. at 7.
                The dissenting justices' argument maintains that the minimum standards
                do not immunize providers from liability without exploring why they are
                not standards that "supersede any State law or regulation (other than
                State licensing laws or State laws relating to plan solvency) with respect
                to MA plans." 42 U.S.C. § 1395w-26(b)(3) (2012).
                            Furthermore, the dissent mischaracterizes the nature of
                Morrison's claim, referring to it as a "negligent selection claim."
                Dissenting opinion post. at 2. Certainly, Morrison's second amended
                complaint stated that HPN failed "to use reasonable care to select its
                health care providers" and "to inquire into the medical practices at the
                clinic." But our review of the record reveals that Morrison argued to the
                district court and to this court that he sought damages for HPN's
                negligence in directing its insureds to the Clinic after HPN became aware
                that patients undergoing procedures at the Clinic had contracted hepatitis
                C. Thus, Morrison's claim was not one of negligent selection, but rather,
                was based on HPN's failure to monitor its provider. This is a negligent
                quality assurance claim that is specifically covered by the federal
                regulatory scheme. Interestingly, the dissent admits that the Medicare
                standards we cite "might preempt Nevada's quality assurance standards,

SUPREME COURT
        OF
     NEVADA
                                                    11
(0) 1947A
                 established by NRS 695G.180," dissenting opinion post. at 6, yet the
                 dissenting justices fail to distinguish why a common law claim based upon
                 the same conduct would not be preempted. Even assuming that the claim
                 is not directly related to quality assurance, as we noted earlier in this
                 opinion, supra at 10, Medicare has established standards that broadly
                 regulate an MA organization's conduct and relationship with the providers
                 to whom it sends its insureds, and such regulations preempt Morrison's
                 claim related to that relationship.        See, e.g., 42 C.F.R. § 422.152(0(3)
                 (requiring that "[for each plan, the organization must correct all problems
                 that come to its attention through internal surveillance, complaints, or
                 other mechanisms").
                       The Medicare Act's preemption clause applies to claims against MA
                       organizations
                             Morrison also argues that even if the Medicare Act's
                 preemption provision applies to state common law negligence claims, it
                 does not apply in this matter because his claim is asserted against his MA
                 organization, not his MA plan. He claims that the Medicare Act
                 preemption clause only expressly preempts "any State law or
                 regulation . . . with respect to MA plans," and therefore the preemption
                 statute does not apply to his claim against his MA organization. 42 U.S.C.
                 § 1395w-26(b)(3) (2012). In addition, he argues that this court has already
                 held in Munda v. Summerlin Life & Health Insurance Co., 127 Nev. ,
                 267 P.3d 771 (2011), that a plaintiffs identical negligence claim is not
                 preempted by ERISA and that the "with respect to" language in the
                 Medicare Act should be interpreted in the same way as the language in
                 ERISA which preempts state laws that "relate to" employee benefit plans.
                 See 29 U.S.C. § 1144(a) (2012).


SUPREME COURT
        OF
     NEVADA
                                                       12
(0) 1947A    e
                            First, we look to the plain language of the Medicare Act's
                preemption provision which states that "[t]he standards established under
                this part shall supersede any State law or regulation . . . with respect to
                MA plans which are offered by MA organizations under this part."          42
                U.S.C. § 1395w-26(b)(3) (2012) (emphasis added). In looking at the plain
                language of the provision as a whole, we determine that because MA plans
                can only be offered by MA organizations, the two are linked such that a
                claim regarding one is necessarily a claim regarding both. Morrison would
                have no claim against HPN if not for the MA plan. Moreover, in Rogers
                we failed to see a distinction between a claim brought against the MA
                organization and a claim brought against the MA plan. 127 Nev. at
                n.4, 266 P.3d at 601 n.4 (IN] othing in the statutory text of the Act
                suggests that a state law or regulation must apply only to [an MA plan] in
                order to constitute a law "with respect to" an MA plan." (second alteration
                in original) (quoting Do Sung Uhm, 620 F.3d at 1150 n.25)). Finally,
                reading the statute in the way Morrison urges would lead to an absurd
                result, as the insured could simply name its MA organization, and not the
                MA plan, as the defendant in order to avoid preemption. We thus
                conclude that Morrison's argument regarding the language of the
                Medicare Act fails. 5 Las Vegas Taxpayer Accountability Comm. v. City



                      5 Morrison  additionally argues that his case is distinguishable from
                Rogers because the negligence common law under which he is bringing his
                claim does not regulate MA plans, only the corporate choices of his
                insurer. We reject this argument, as the conduct identified in Morrison's
                common law negligence claim is the same conduct that is specifically
                regulated by the Medicare Act. As such, if Morrison is allowed to argue
                that a different state standard should be applied to the MA organization,
                the federal regulation of MA plans would be frustrated, and we must yield
                                                                    continued on next page...
SUPREME COURT
        OF
     NEVADA

                                                     13
(0) 1947A
                   Council of Las Vegas, 125 Nev. 165, 177, 208 P.3d 429, 437 (2009)
                   ("[W hen interpreting a statute, the language of the statute should be
                   given its plain meaning. . . .").
                                We also conclude that Morrison's argument regarding our
                   interpretation of the preemption clause in ERISA fails to support his
                   position. Morrison relies upon Munda v. Summerlin Life & Health
                   Insurance Co., 127 Nev. , 267 P.3d 771, 776 (2011), where this court
                   ultimately determined that the insureds' claim that their insurer was
                   negligent in failing to comply with quality assurance standards was not
                   preempted by ERISA. In Munda, we discussed that generally "ERISA
                   preempts [state] suits that are predicated on administrative decisions
                   made in administering an ERISA plan," which include decisions regarding
                   the selection and retention of providers. 127 Nev. at , 267 P.3d at 775.
                   However, we concluded that the plaintiffs' claim was not preempted
                   because they alleged facts to show that their insurer/managed care
                   organization (MCO) was not acting in its capacity as an administrator of
                   the ERISA plan when it selected and oversaw its providers, but rather, in


                   ...continued
                   to the federal law. See Rolf Jensen & Assocs., Inc. v. Eighth Judicial Dist.
                   Court, 128 Nev. „ 282 P.3d 743, 746 (2012).

                          Finally, Morrison argues that this case is distinguishable from
                   Rogers because there is no risk of an inconsistent result by allowing his
                   negligence claim to survive. Morrison reasons that if HPN is found
                   negligent, it would not run afoul of any Medicare standard because there
                   is no standard that allows an HMO to direct an insured to a provider it
                   knows or should know uses unsafe practices. This argument is
                   unavailing. The concern in Rogers, that federal and state standards will
                   differ and lead to inconsistent results, is applicable here. See Pacificare of
                   Nev., Inc. v. Rogers, 127 Nev. , 266 P.3d 596, 601 (2011).

SUPREME COURT
        OF
   ' NEVADA
                                                        14
(C9 1947A    Tem
                its independent role as an insurer. 127 Nev. at        , 267 P.3d at 776.
                Thus, the duty on which the claim was based existed outside of the
                insurer's relationship with the ERISA plan. Id.
                            Morrison contends that his case is analogous to Munda
                because HPN contracted with its providers in its independent role as
                insurer, not in its special capacity as an MA organization. All of its
                insureds were directed to use its providers, whether they were under a
                Medicare plan or not. However, Morrison's argument fails because ERISA
                and Medicare are fundamentally different programs and cannot be
                analyzed in the same way. Unlike ERISA, the Medicare Act has
                established standards that regulate an MA organization's selection of
                providers and implementation of a quality assurance regime. No state law
                may intercede in that regime. The ERISA program does not have
                analogous standards regulating the insurers for quality assurance.
                                             CONCLUSION
                           The Medicare preemption provision contained in 42 U.S.C. §
                1395w-26(b)(3) is very broad, and we have previously determined that it
                applies beyond those state laws that are simply inconsistent with the
                express standards set out in the Medicare Act: it preempts all state
                standards to the extent that they would regulate MA plans, other than
                laws and regulations related to licensing and plan solvency, including
                those established through case law. Rogers, 127 Nev. at , 266 P.3d at
                601. Morrison's state law negligence claim would seek to regulate how
                contracted providers for MA plans are monitored, and thus, Morrison's
                claim is expressly preempted by 42 U.S.C. § 1395w-26(b)(3). And
                Morrison's arguments on appeal do not provide any basis for finding that
                his claims fall outside of the Medicare preemption provision. Accordingly,

SUPREME COURT
          OF
       NEVADA
                                                    15
(c)   1947A
                  for the reasons set forth in this opinion, we affirm the district court's order
                  dismissing Morrison's state common law negligence action.




                                                                                        J.
                                                        Hardesty




                                                   J.




                                                   J.




                                                   J.




SUPREME COURT
        OF
     NEVADA
                                                         16
(0) 1947A    e.
                   CHERRY, J., with whom GIBBONS, C.J., agrees, dissenting:

                               Today the majority holds that federal statutes and regulations
                   preempt a Medicare recipient's claim against his Medicare Advantage
                   organization for negligently selecting and retaining a contracted provider
                   who infected the Medicare recipient with hepatitis C. It does so for two
                   reasons: (1) Medicare regulations already set forth standards covering
                   Medicare Advantage organizations' selection of contracted providers; and
                   (2) any state tort law imposing a duty of care in selecting contracted
                   providers would constitute a state law "with respect to" Medicare plans,
                   which is expressly preempted under 42 U.S.C. § 1395w-26(b)(3). I
                   respectfully dissent because I disagree with both rationales.
                   Medicare Advantage
                               As explained by the majority, Medicare Part C created the
                   Medicare Advantage program, whereby health insurance organizations
                   may contract with Medicare to provide federally subsidized health plans to
                   Medicare enrollees. Medicare's regulatory agency, CMS, refers to these
                   health insurance organizations (which can be health maintenance
                   organizations, preferred provider organizations, religious fraternal benefit
                   plans, or other organizations) as Medicare Advantage (MA) organizations.
                               MA organizations can be private entities that also offer health
                   plans apart from the Medicare plans. MA organizations operate just as
                   any non-Medicare health insurance organization would operate. For
                   example, MA HMOs, like non-Medicare HMOs, contract with a network of
                   providers to provide medical services. Health Plan of Nevada (HPN) is an
                   HMO that also offers a Medicare Advantage plan.
                               CMS comprehensively regulates the MA plans offered by MA
                   organizations. It approves the MA organizations' advertising materials,
SUPREME COURT
        OF
     NEVADA


(0) 1947A    es,
                the providers with whom the organizations contract, and the terms of
                those contracts. It requires that MA organizations implement quality
                improvement programs. And it also requires that MA organizations
                establish grievance procedures, which enrollees may use to complain about
                the services offered by an MA organization and its providers.
                Negligent selection claims
                            As an HMO, HPN contracted with and directed its insureds to
                a particular provider that, appellant Louis Morrison asserts, HPN knew or
                should have known was dangerous and unsafe. Morrison's claim against
                HPN for negligent selection and retention of a contracted provider is not a
                novel claim. 1 The following analysis of negligent selection claims will
                provide a useful background for preemption analysis.
                            Negligent selection and retention claims are based on the
                theory that, when an HMO holds out a physician as competent by making
                that physician a contracted provider, the HMO's failure to investigate the
                physician's skill and qualifications creates a foreseeable and unreasonable
                risk of harm to patients.
                            An HMO's duty of care in selecting and retaining contracted
                providers evolved out of the hospital context, where hospitals must
                determine which physicians may practice at their facilities.     See Barry R.

                       'The majority states that "Morrison's claim was not one of negligent
                selection, but rather, was based on HPN's failure to monitor." Majority
                opinion ante at 11. But the second amended complaint alleges that
                "Defendants owed a duty to Plaintiff. . . to use reasonable care to select its
                health care providers" and that "Defendants breached this duty by failing
                to direct the Plaintiff to seek medical care at reasonably safe facilities." In
                these statements Morrison clearly alleges the duty and breach elements of
                a negligent selection claim.



SUPREME COURT
        OF
     NEVADA
                                                       2
(0) 1947A
                    Furrow, Managed Care Organizations and Patient Injury: Rethinking
                    Liability, 31 Ga. L. Rev. 419, 457, 461-62 (1997). Courts have held that
                    "the failure to investigate a medical staff applicant's qualifications for the
                    privileges requested gives rise to a foreseeable risk of unreasonable harm
                    and. . . a hospital has a duty to exercise due care in the selection of its
                    medical staff." Johnson v. Misericordia Cmty. Hosp., 301 N.W. 2d 156, 164
                    (Wis. 1981). In Moore v. Board of Trustees of Carson-Tahoe Hospital, 88
                    Nev. 207, 495 P.2d 605 (1972), this court recognized both the changing role
                    of the hospital and the concept of a hospital's "corporate responsibility for
                    the quality of medical care." Id. at 211-12, 495 P.2d at 608.
                                The Missouri Court of Appeals in Harrell v. Total Health Care,
                    Inc., No. WD 39809, 1989 WL 153066, at *4-5 (Mo. Ct. App. Apr. 25, 1989),
                    affirmed, 781 S.W.2d 58 (Mo. 1989), determined that HMOs have assumed
                    a role sufficiently similar to that of a hospital to justify extending liability
                    to HMOs. In that case, the court agreed with arguments that HMOs owe
                    a duty of care to properly vet their contracted providers. The court
                    reasoned that, in order for patients to realize the benefit of their health
                    insurance, they must be treated by physicians approved by their plan. Id.
                    at *5. In this arrangement "there is an unreasonable risk of harm to
                    subscribers if the physicians listed ... include doctors who are unqualified
                    or incompetent." Id. The court held that the presence of this risk gives
                    rise to a duty owed by the insurance company to ensure that contracted
                    physicians are qualified and competent. Id.
                                 Other courts have since upheld a plaintiffs ability to bring a
                    negligent selection claim against an HMO. See Petrovich v. Share Health
                    Plan of Ill., Inc., 696 N.E.2d 356, 360-61 (Ill. App. Ct. 1998) (holding that
                    HMOs can be liable for "corporate negligence as a result of negligent

SUPREME COURT
       OF
     NEVADA
                                                            3
(0) 1947A (Agela,
                 selection and control of the physician who rendered care"); McClellan v.
                 Health Maint. Org. of Pa., 604 A.2d 1053, 1059 (Pa. Super. Ct. 1992)
                 ("HMOs have a non-delegable duty to select and retain only competent
                 primary care physicians."). Some courts have also found that HMOs owe a
                 duty of care in selecting contracted providers under the Restatement
                 (Second) of Torts § 323 (1965), which states that
                              [o]rie who undertakes, gratuitously or for
                              consideration, to render services to another which
                              he should recognize as necessary for the protection
                              of the other's person or things, is subject to
                              liability to the other for physical harm resulting
                              from his failure to exercise reasonable care to
                              perform his undertaking, if (a) his failure to
                              exercise such care increases the risk of such harm,
                              or (b) the harm is suffered because of the other's
                              reliance upon the undertaking.
                 See, e.g., McClellan, 604 A.2d at 1059.
                              In this case, HPN is a Nevada-licensed HMO that selects and
                 contracts with medical providers. Morrison should not be prevented from
                 enforcing the duty of care that HPN may owe to him simply because
                 Morrison is a Medicare recipient, while HPN's non-Medicare customers
                 may do so. As explained below, no such unequal treatment is created by
                 the Medicare Act's preemption clause.
                 Preemption
                              "When a federal act contains an express preemption provision,
                 this court's primary task is to 'identify the domain expressly pre-empted
                 by that language." Pacificare of Nev., Inc. v. Rogers, 127 Nev.
                 266 P.3d 596, 600 (2011) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470,
                 484 (1996)). Under the Medicare Act, the standards established by the
                 federal Medicare statutes and regulations "supersede any state
                 law .. . with respect to MA plans which are offered by MA organizations,"
SUPREME COURT
        OF
     NEVADA
                                                       4
(0) 1947A    e
                except for licensing and solvency requirements. 42 U.S.C. § 1395w-
                26(b)(3) (2012); 42 C.F.R. § 422.402 (2013). Thus, to determine whether
                the domain is expressly preempted, one must consider (1) if there are
                federal standards superseding state negligent selection and retention law
                and (2) if negligent selection claims may result in laws "with respect to"
                MA plans
                      Federal standards
                             The majority states that lailthough CMS does not directly
                select the physicians . . . federal regulations require an MA organization to
                select and retain only those providers that meet the qualifications
                specified in the Medicare Act." Majority opinion ante at 5. The majority
                goes on to list several federal regulations that the majority contends
                preempt negligent selection claims. It reasons that such claims, although
                not necessarily inconsistent with the federal standards, "could result in
                the imposition of additional state law requirements on the quality
                assurance regime regulated by CMS." Id. at 10-11. I do not believe that
                those regulations create standards regulating the negligent selection of
                providers.
                             The majority first points to 42 C.F.R. § 422.4(a)(1)(i), which
                states that an MA organization's "network [of providers] is approved by
                CMS to ensure that all applicable requirements are met, including access
                and availability, service area, and quality." Nevertheless, the fact that
                CMS approves of a provider's inclusion in the network does not mean that
                negligent selection claims against the MA organization are preempted.
                For instance, 42 C.F.R. §§ 416.1-200 creates standards regulating certain
                providers, but the existence of those standards does not make the
                providers immune to negligence suits. In fact, Medicare regulations
                specifically acknowledge that a Medicare provider may be sued for
SUPREME COURT
        OF
     NEVADA
                                                      5
(0) 1947A
                 malpractice. 42 C.F.R. § 424.530(a)(3)(i)(C) (2013) (stating that CMS may
                 deny a provider's Medicare reenrollment if the provider is convicted of
                 "[a]ny felony that placed the Medicare program or its beneficiaries at
                 immediate risk (such as a malpractice suit that results in a conviction of
                 criminal neglect or misconduct)"). Just as CMS's provider standards do
                 not preempt providers' malpractice liability, CMS's approval of an MA
                 organization's provider selection does not preempt MA organizations'
                 negligence liability.
                              The majority then considers 42 C.F.R. § 422.204(a), which
                 states that "[a]n MA organization must have written policies and
                 procedures for the selection and evaluation of providers. These policies
                 must conform with the credential and recredentialing requirements set
                 forth in paragraph (b) of this section and with the antidiscrimination
                 provisions set forth in § 422.205." But the existence of minimum
                 requirements for participation in Medicare Advantage does not preempt
                 MA organizations' tort liability. Despite the existence of minimum
                 procedural requirements, it is still the MA organization that "select[s] the
                 practitioners that participate in its plan provider networks." 42 C.F.R. §
                 422.205(a) (2013). It is that discretionary selection that Morrison alleges
                 HPN negligently performed—a selection that an HMO such as HPN may
                 also make in a non-Medicare capacity.
                              Finally, the majority refers to the quality improvement
                 program that CMS requires MA organizations to implement.             See 42
                 C.F.R. 422.152(a) (2013). I agree that this program might preempt
                 Nevada's quality assurance standards, established by NRS 695G.180.
                 And CMS's interpretation of its regulations says that states may not set
                 forth ongoing quality assurance requirements.     Medicare Managed Care

SUPREME COURT
        OF
     NEVADA
                                                      6
(0) 1947A    e
                Manual, ch. 10, § 30.1 (Nov. 4, 2011). Yet CMS states in the same text
                that "[o]ther State health and safety standards, or generally applicable
                standards, that are not specific to health plans are not preempted."        Id.
                § 30.2. A general duty of care is just such a generally applicable
                standard. 2
                              Thus, each federal standard cited by the majority fails to touch
                on the generally applicable negligence claim at issue here. In addition,
                any concern that tort liability may indirectly increase costs to MA
                organizations, thereby impacting their ability to comply with regulations,
                is irrelevant. The Supreme Court of the United States has stated, in the
                ERISA context, that state laws that are otherwise not preempted and that
                "affect only indirectly the relative prices of insurance policies, a result no
                different from myriad state laws in areas traditionally subject to local
                regulation," are not preempted.      N.Y. State Conference of Blue Cross &
                Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 668 (1995). The
                same logic applies to this case.
                      "With respect to"
                              Even if federal regulations provided standards governing the
                negligent selection of providers, it is not clear that negligent selection


                      2 The majority argues that we do not distinguish conduct violating
                quality assurance requirements from conduct that might violate a duty of
                care. The distinction is obvious. An insurance organization violates NRS
                695G.180's quality assurance standards when it fails to establish the
                procedures and record-keeping that constitute a quality insurance
                program. An insurance organization breaches a general duty of care when
                it commits tortious acts against its customers. One set of conduct
                concerns procedures and paperwork; the other concerns actual negligent
                acts that cause injury.


SUPREME COURT
        OF
     NEVADA

                                                       7
(0) 1947A
                liability creates state law "with respect to" MA plans. This court has
                interpreted similar language in the ERISA context. Under ERISA, all
                state laws that "relate to" certain employee benefit plans are expressly
                preempted. 29 U.S.C. § 1144(a) (2012). In Munda v. Summerlin Life &
                Health Insurance Co., 127 Nev. „ 267 P.3d 771, 773 (2011), the
                appellants argued that federal ERISA regulations did not "relate to" their
                claim for negligence, which alleged that the respondent "failed to identify
                the unsafe practices of or terminate its contract with the" provider. This
                court agreed, stating that ERISA's express preemption provision "does not
                preempt claims that are brought against Summerlin in its capacity as [a
                managed care organization], instead of in its capacity as an ERISA plan
                administrator." Id. at , 267 P.3d at 776. I believe that this case is
                analogous.
                             Here, Morrison alleges that HPN committed negligence in its
                capacity as an HMO. In other words, Morrison alleges that HPN
                negligently selected an unsafe provider—an activity that an HMO may
                perform without any connection to Medicare Advantage. The fact that
                Medicare contracted to compensate HPN on behalf of Morrison does not
                change the fact that HPN, exercising the discretion afforded it under
                federal regulations, chose the provider.
                             The majority contends that Munda is distinguishable because,
                in that case, "the plaintiffs' claim was not preempted because they alleged
                facts to show that their insurer. . . was not acting in its capacity as an
                administrator of the ERISA plan when it selected and oversaw its
                providers, but rather, in its independent role as an insurer." Majority
                opinion ante at 14-15. Yet this case is identical: HPN functions as a
                Nevada-licensed HMO by contracting with providers for medical care,

SUPREME COURT
     OF
   NEVADA
                                                      8
(0) 1947A cem
                regardless of whether Medicare is involved. 3 See NRS 695C.030(6), (7)
                ("Health maintenance organization' means any person which provides or
                arranges for provision of a health care service or• services and is
                responsible for the availability and accessibility of such service or services
                to its enrollees." "Provider' means any physician, hospital or other person
                who is licensed or otherwise authorized in this state to furnish health care
                services."). It shouldn't matter whether HPN is compensated by Medicare,
                by the enrollee, or by other sources.
                            In sum, Medicare's standards do not cover general health and
                safety issues like negligence claims. Furthermore, under              Munda,
                Morrison's claim for negligent selection of a provider is not "with respect
                to" Medicare and is therefore not expressly preempted. The Medicare




                      'The majority also argues that, "[u]nlike ERISA, the Medicare Act
                has established standards that regulate an MA organization's selection of
                providers." Majority opinion ante at 15. As stated above, I do not agree
                that there are standards governing the selection of providers. CMS
                regulations state that "an MA organization . . . select[s] the practitioners
                that participate in its plan provider networks," subject only to
                nondiscrimination rules and the satisfaction of procedural requirements.
                42 C.F.R. § 422.205(a) (2013).


SUPREME COURT
        OF
     NEVADA

                                                        9
(0) 1947A
                Act's text does not show that Congress intended the unequal result that
                Medicare enrollees cannot have legal recourse against a negligent HMO
                while non-Medicare patients may. Accordingly, I respectfully dissent.


                                                                                 J.




                Gibbons




SUPREME COURT
        OF
     NEVADA
                                                    10
(0) 1947A
