United States: California Court Clears The Way For Express Preemption

Last Updated: August 11 2016
Article by Steven Boranian

Not everyone sees eye to eye on federal preemption, including judges. Take for example the conflicting opinions from the California Court of Appeal applying the express preemption provision of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("2003 Medicare Act").  The statute governs Medicare benefits—a topic not usually within our bailiwick.  But we know and appreciate preemption, and we can see pretty clearly in these cases where two Appellate Districts got it wrong and a third got it right.

First the one that got it right. In Roberts v. United Healthcare Services, Inc., No. B266393, 2016 WL 4150703 (Cal. Ct. App. Aug. 4, 2016), the plaintiff enrolled in a private health plan offering benefits under the federally funded Medicare Advantage program.  The long and the short of it was that the plan advertised that it was "made up of local doctors," but when the plaintiff needed urgent care, it turned out there was no urgent care center anywhere in California. Id. That resulted in an out-of-network co-pay ($20 more than the in-network co-pay) and a class action lawsuit asserting that the plan engaged in misleading conduct and unfair competition, among other state-law claims. Id.

The main issue was preemption, specifically express preemption because of the Act's express preemption provision:

The standards established [by regulation] shall supersede any State law or regulation (other than State licensing laws or State law relating to plan solvency) with respect to [Medicare Advantage] plans which are offered by [Medicare Advantage] organizations under [Part C].

Id. (citing 42 U.S.C. § 1395w-26(b)(3). This is not exactly the same as the "different from or in addition to" language we see in the Medical Device Amendments' express preemption provision, but it is close, and the idea is the same.  State requirements give way to federal requirements established under the authority of the Act.

From this point, the application of express preemption to the facts of the case was straightforward. Because the federal government had promulgated regulations governing both the content of Medicare Advantage advertising and the adequacy of its networks, a state-law lawsuit touching those areas was clearly preempted. Id. For good measure, the court further held that federal law impliedly preempted the state-law lawsuit as "an obstacle to the full accomplishment and execution of congressional objectives." Id. The Act requires the federal government to evaluate marketing materials and the adequacy of the Medical Advantage health plans, so if a state court were allowed to determine that approved marketing materials were misleading, "it would directly undermine [the federal government's] prior determination that those materials were not misleading and in turn undermine [the federal government's] ability to create its own standards." Id.

It is difficult to disagree with that, since the main point of express preemption is to maintain the consistency of regulation. And by the way, those regulations erect a four-tier administrative review systems through which a plan participate can challenge the "entitle[ment] to receive a health service" or "the amount (if any) [he] is required to pay with respect to such service." Id. Because the plaintiff bypassed that review process, the court held that he had not exhausted his administrative remedies either.  It seems like a fairly straight path to affirming a dismissal with prejudice, and it follows the path set by a Ninth Circuit case deciding similar issues, Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010).

So how did two other California courts go in a different direction? We agree with the court in Roberts that those two opinions were wrongly decided.  The cases are Yarick v. PacifiCare of California, 179 Cal. App. 4th 1158 (2009), and Cotton v. StarCare Medical Group, Inc., 183 Cal. App. 4th 437 (2010).  In Yarrick, the California Court of Appeal held that the express preemption of "any State law or regulation" means that federal law preempts only "positive state enactments" such as statutes and regulations, but not the common law. Id.

We have been down this road before, specifically in the landmark Riegel v. Medtronic case.  In Riegel, the U.S. Supreme Court held that the Medical Device Amendments' express preemption provision reached common-law duties, and not only legislative or administrative enactments.  The Supreme Court's holding and rationale apply with equal force to the 2003 Medicare Act.  Whether enacted by statute or imposed by the common law, the result of allowing enforcement of state-law duties is the same:  Absent preemption, the regulated entity has to comply with state law or else be subject to penalty, whether by way of fines, civil damages, or otherwise.  As the Supreme Court held in Riegel, "'[E]xcluding common-law duties from the scope of pre-emption would make little sense' because common-law duties prescribing different standards than those imposed by federal law 'disrupt[ ] the federal scheme no less than state regulatory law to the same effect.'" Id. (quoting Riegel v. Medtronic, Inc., 552 U.S. 312, 324-25 (2008)).

The Cotton opinion is similarly based on shaky reasoning.  In Cotton, the California Court of Appeal echoed the Yarick opinion.  But it also separately held that the 2003 Medicare Act's provision preempting "any State law of regulation . . . with respect to [Medicare Advantage] plans" meant that the statute preempted only those state laws targeted at such plans. Id. Generally applicable statutes and regulations were not preempted. Id. Only Medicare-specific laws would give way to federal regulation.

We have been down this road before, too. In Stengel v. Medtronic, 704 F.3d 1224 (9th Cir 2013), the Ninth Circuit rejected express preemption of state-law tort claims under the Medical Device Amendments in an opinion that we ranked the worst of that year.  In opposing the manufacturer's petition for certiorari in the U.S. Supreme Court, the FDA (in one of its anti-preemption moments) argued that the federal requirements at issue were not "device-specific" and therefore could not have preemptive effect.  Like Cotton, the FDA was wrong to interpret express preemption in such a "specific" way.  The Medical Device Amendments do not limit preemption to "device specific" federal requirements; and the 2003 Medicare Act does not limit express preemption to laws relating specifically to Medicare Advantage Plans.

As the Roberts court correctly explained (relying again on Riegel), "[T]he phrase 'with respect to' does not refer to the specificity or breadth of the 'State law or regulation' to be preempted; instead, it refers to the extent of preemption—those laws of regulations are superseded to the extent of Part C's standards supersede them but no further." Id.  This is about as good a gloss on this particular point as we can think of.

Perhaps the most significant part of Roberts is a product of California's unique stare decisis rules, under which lower courts must follow the opinions of the appellate courts.  If, however, different appellate districts have issued conflicting opinions, trial courts throughout the state can decide which precedent to follow. See Auto Equity Sales, Inc. v. Superior Court, 57 Cal. 2d 450 (1962).  With the filing of the Roberts opinion, California's trial courts statewide can choose to follow it, and ignore the conflicting Yarick and Cotton opinions.  Given the strength of the Court of Appeal's reasoning in Roberts, we think the choice is easy.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions