Do Sung Uhm v. Humana, Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

DO SUNG UHM; EUN SOOK UHM, a 
married couple, individually and
for all others similarly situated,
Plaintiffs-Appellants, No. 06-35672
v.
 D.C. No.
CV-06-00185-RSM
HUMANA, INC., a Delaware
corporation; HUMANA HEALTH OPINION
PLAN, INC., a Kentucky corporation
doing business as Humana,
Defendants-Appellees.

Appeal from the United States District Court
for the Western District of Washington
Ricardo S. Martinez, District Judge, Presiding

Argued and Submitted March 14, 2008
Opinion Filed August 25, 2008
Rehearing Granted and Opinion Withdrawn July 22, 2009

Filed August 30, 2010

Before: Betty B. Fletcher, Richard A. Paez and
Marsha S. Berzon,1 Circuit Judges.

Opinion by Judge Paez;
Concurrence by Judge B. Fletcher

1
Due to the unavailability of Senior District Judge William Schwarzer,
a member of the original panel in this case, Judge Berzon was randomly
drawn as a replacement judge.

12913
12918 UHM v. HUMANA, INC.

COUNSEL

Scott C. Breneman and Joseph A. Grube, Ricci Grube Aita &
Breneman, PLLC, Seattle, Washington, for the appellants.

Brian D. Boyle, Mark Davies, Samuel Brown, and Meaghan
McLaine, O’Melveny & Myers, LLP, Washington, D.C., for
the appellees.

William A. Helvestine and Carri L. Becker, Epstein Becker &
Green, P.C., San Francisco, California, for amicus curiae
American Health Insurance Plans.

Andre Mura, Center for Constitutional Litigation, P.C., Wash-
ington, D.C., for amicus curiae American Association of Jus-
tice.

Sarang Vijay Damle, United States Department of Justice,
Washington, D.C., for amicus curiae United States of Amer-
ica.

Rochelle Bobroff, National Senior Citizens Law Center,
Washington, D.C., for amici curiae California Health Advo-
cates, Medicare Rights Center, National Senior Citizens Law
Center, and The Center for Medicare Advocacy.
 UHM v. HUMANA, INC. 12919
OPINION

PAEZ, Circuit Judge:

Plaintiffs-Appellants Do Sung Uhm and Eun Sook Uhm
(“the Uhms”) appeal the district court’s order dismissing their
complaint against Defendants-Appellees Humana Health
Plan, Inc., and Humana, Inc., (collectively, “Humana”) on the
ground that their claims are preempted by the express pre-
emption provision of the Medicare Prescription Drug
Improvement and Modernization Act of 2003 (“MMA” or
“the Act”). The Uhms also appeal the district court’s order
denying their partial motion for reconsideration in which they
argued that, unlike Humana Health Plan, Inc., Humana, Inc.,
is not regulated under the Act, and therefore the claims
against it cannot be preempted. Having concluded that all of
the Uhms’ claims were preempted by the Act, the district
court declined to reach Humana’s argument that the Uhms
had failed to properly exhaust their claims pursuant to the
Act’s exhaustion requirements. See 42 U.S.C. §§ 405(g), (h).
We affirm.2 We hold that the district court lacked jurisdiction
to consider the Uhms’ breach of contract and unjust enrich-
ment claims because they were not properly exhausted under
the Act. We further hold that the Uhms’ fraud and consumer
protection act claims, while not subject to the Act’s exhaus-
tion provisions, are expressly preempted. Thus, the district
court properly dismissed all of the Uhms’ claims.
2
We revisit this appeal after having granted the Uhms’ Petition for
Rehearing and withdrawing our original opinion in this matter. See Uhm
v. Humana, Inc., 540 F.3d 980 (9th Cir. 2008), reh’g granted, opinion
withdrawn by 573 F.3d 865 (9th Cir. 2009). After we granted rehearing
and at our request, the Centers for Medicare and Medicaid Services filed
an amicus brief in support of Humana. We also received amicus briefs
from America’s Health Insurance Plans, Inc., the National Senior Citizens
Law Center, California Health Advocates, the Center for Medicare Advo-
cacy, the Medicare Rights Center, and the American Association for Jus-
tice. The parties have also filed supplemental briefs. We have carefully
considered the additional briefing and express our appreciation to the par-
ties and amici for their thoughtful briefs.
12920 UHM v. HUMANA, INC.
I. FACTS

The Act established Medicare Part D (“Part D”), a volun-
tary prescription drug benefit program for seniors. See 42
U.S.C. § 1395w-101 et seq. Under the Act, health insurance
providers contract with the Centers for Medicare and Medic-
aid Services (“CMS”),3 part of the Department of Health and
Human Services, to offer Part D prescription drug plans
(“PDPs”) to Medicare beneficiaries. Humana Health Plan,
Inc., is a CMS-approved PDP provider; Humana, Inc., its par-
ent company, is not.4

In late 2005, the Uhms—Medicare beneficiaries—chose
Humana as their Part D provider based in part on the repre-
sentations Humana made in its marketing materials.5 In partic-
ular, the Uhms relied on Humana’s representation that they
would be enrolled in the benefits plan and accordingly receive
coverage for their prescription drugs beginning January 1,
2006, the first day Part D sponsors could provide benefits
under the Act.

Intending to enroll in Humana’s program, the Uhms sub-
mitted the Humana Prescription Drug Plan Enrollment Form.
The Uhms chose “Social Security Check Deduction” as their
method of premium payment. Accordingly, the $6.90 plan
3
Prior to 2001, CMS was known as the Health Care Financing Adminis-
tration.
4
The Uhms allege that Humana, Inc., was involved in marketing and
administering Humana Health Plan, Inc.’s PDP. Because the Uhms do not
distinguish between Humana Health Plan, Inc., and Humana, Inc., with
respect to any specific factual allegations, we refer to them collectively as
“Humana.” In Parts II(B)(1)(a) and II(C)(4), infra, which address the
Uhms’ claim that the Act does not apply to Humana, Inc., we address the
two entities separately.
5
Because this appeal is from an order granting a motion to dismiss, we
take the material facts alleged in the Uhms’ complaint as true and construe
them in the light most favorable to the Uhms. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
 UHM v. HUMANA, INC. 12921
premium was deducted from their January 2006 and February
2006 social security checks.

As their enrollment date approached, the Uhms had not yet
received any information from Humana about their prescrip-
tion drug plan, including their identification cards, mail-order
forms required to order prescription drugs, or instructions on
how to complete the forms and request their drug benefits.
The Humana plan required beneficiaries to allow for at least
two weeks between submission of the request for prescription
drugs and receipt of their medications. Accordingly, the Uhms
became concerned about their ability to obtain their medica-
tions through the plan. They and their son repeatedly
requested pertinent information from Humana. They called,
they sent e-mails—but Humana was unresponsive. In late
December 2005, the Uhms called Humana’s toll-free tele-
phone number to determine their status under the plan and
they were told by a Humana representative that they were
“not recognized as members of the Humana Part D PDP.”

January 1, 2006, came and passed, and the Uhms did not
receive the materials necessary for obtaining their drug bene-
fits. The Uhms were forced to buy their prescription medica-
tions out-of-pocket at costs higher than those provided by
Humana’s plan, despite the fact that the PDP premium was
deducted from their social security checks in both January and
February of that year.

On February 6, 2006, the Uhms filed a complaint against
Humana Health Plan, Inc., and Humana, Inc.,6 in the U.S. Dis-
trict Court for the Western District of Washington, claiming
breach of contract, violation of several state consumer protec-
tion statutes, unjust enrichment, fraud, and fraud in the
inducement. The Uhms filed the complaint on behalf of them-
selves and a putative class consisting of “all persons who paid
6
The Uhms initially sued Humana Medical Plan, Inc., as well, but later
voluntarily dismissed the complaint against that entity.
12922 UHM v. HUMANA, INC.
and/or were billed by Humana, for enrollment in the Humana
Part D PDP and (a) did not receive benefits under the Humana
Part D PDP, and/or (b) whom Humana failed to actually
enroll in the Humana Part D PDP, and/or (c) whom Humana
enrolled in the Humana Part D PDP on a date or dates later
than the date or dates promised by Humana.” They invoked
federal subject matter jurisdiction over the suit under the
Class Action Fairness Act of 2005 and 28 U.S.C. § 1332(d).

Humana responded with a motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6), for failure to state a claim,
which the district court granted. The district court concluded
that the standards promulgated by CMS under the Act gov-
erned the grievances that the Uhms alleged in their complaint,
that the administrative process established by the Act was the
appropriate vehicle for addressing each of the Uhms’ griev-
ances, and that the Uhms’ state law claims were therefore pre-
empted by the Act’s express preemption provision.

The Uhms filed a motion for partial reconsideration, argu-
ing that their claims were not preempted with respect to
Humana, Inc., because Humana, Inc., is not a CMS-approved
PDP provider. The district court denied that motion. The
Uhms timely appealed both orders.

II. ANALYSIS

A. Standard of Review

We review de novo the district court’s dismissal of a case
under Rule 12(b)(6) for failure to state a claim, Marder v.
Lopez, 450 F.3d 445, 448 (9th Cir. 2006), as well as the dis-
trict court’s determination that a federal statute preempts state
law claims, Niehaus v. Greyhound Lines, Inc., 173 F.3d 1207,
1211 (9th Cir. 1999). We review for abuse of discretion the
district court’s denial of a motion for reconsideration. Blies-
ner v. Commc’n Workers of Am., 464 F.3d 910, 915 (9th Cir.
2006). We consider de novo the question of subject matter
 UHM v. HUMANA, INC. 12923
jurisdiction. See Sommatino v. United States, 255 F.3d 704,
707 (9th Cir. 2001).

B. Exhaustion of Administrative Remedies

Humana argues that the Uhms’ claims must be exhausted
through the Act’s administrative remedial scheme before a
federal court may exercise jurisdiction under the Medicare
Act. The issue of exhaustion bears on the district court’s juris-
diction, see Kaiser v. Blue Cross of Cal., 347 F.3d 1107, 1115
(9th Cir. 2003), so we address this argument first.

[1] The Act’s exhaustion requirement, 42 U.S.C. § 405(h),7
makes judicial review under a related provision, 42 U.S.C.
§ 405(g),8 “the sole avenue for judicial review” for claims
“ ‘arising under’ the Medicare Act.” Heckler v. Ringer, 466
7
42 U.S.C. § 405(h) reads in relevant part:
The findings and decision of the Commissioner of Social Secur-
ity after a hearing shall be binding upon all individuals who were
parties to such hearing. No findings of fact or decision of the
Commissioner of Social Security shall be reviewed by any per-
son, tribunal, or governmental agency except as herein provided.
No action against the United States, the Commissioner of Social
Security, or any officer or employee thereof shall be brought
under section 1331 or 1346 of Title 28 to recover on any claim
arising under this subchapter.
8
42 U.S.C. § 405(g) reads in relevant part:
Any individual, after any final decision of the Commissioner of
Social Security made after a hearing to which he was a party,
irrespective of the amount in controversy, may obtain a review of
such decision by a civil action commenced within sixty days after
the mailing to him of notice of such decision or within such fur-
ther time as the Commissioner of Social Security may allow.
Such action shall be brought in the district court of the United
States for the judicial district in which the plaintiff resides . . . .
The court shall have power to enter . . . a judgment affirming,
modifying, or reversing the decision of the Commissioner of
Social Security, with or without remanding the cause for a
rehearing.
12924 UHM v. HUMANA, INC.
U.S. 602, 614-15 (1984).9 The Supreme Court has held that
“the exhaustion requirement of § 405(g) consists of a non-
waivable requirement that a claim for benefits shall have been
presented to the Secretary, and a waivable requirement that
the administrative remedies prescribed by the Secretary be
pursued fully by the claimant.” Id. at 617 (internal quotations
and citation omitted).10 Only once the Secretary has issued a
“final decision” may the individual seek judicial review of
that determination. Id. at 605. A “final decision” is rendered
only after the individual has “pressed his claim” through all
levels of administrative review. Id.; Ardary v. Aetna Health
Plans of Cal., Inc., 98 F.3d 496, 498 (9th Cir. 1996). In sum,
“[j]urisdiction over cases ‘arising under’ Medicare exists only
under 42 U.S.C. § 405(g), which requires an agency decision
in advance of judicial review.” Kaiser, 347 F.3d at 1111.11
9
Although codified elsewhere in the Social Security Act, § 405(g)
applies to Part D of the Medicare Act. Part D’s provision that addresses
judicial review, 42 U.S.C. § 1395w-104(h), incorporates Part C’s judicial
review provision, 42 U.S.C. § 1395w-22(g), which in turn provides for
judicial review under § 405(g), located in the Social Security Act. Section
405(h) is incorporated into the Medicare Act in 42 U.S.C. § 1395ii.
10
A narrow exception to these requirements, not applicable here, exists
where a plaintiff challenges the validity of the Act’s provisions or the Sec-
retary’s implementation of regulations pursuant to those provisions. See
Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 678 (1986).
11
We note that, at first blush, Kaiser’s rule might seem to conflict with
our prior holding that: “[s]ection 405(h) only bars actions under 28 U.S.C.
§§ 1331 and 1346; it in no way prohibits an assertion of jurisdiction under
section 1334.” In re Town & Country Home Nursing Servs. Inc., 963 F.2d
1146, 1155 (9th Cir. 1991). Cf. Midland Psychiatric Assoc., Inc. v. United
States, 145 F.3d 1000, 1004 (8th Cir. 1998) (holding that actions brought
pursuant to § 1332 are also subject to the Act’s exhaustion provisions);
Bodimetric Health Servs., Inc. v. Aetna Life & Cas., 903 F.2d 480, 488-90
(7th Cir. 1990) (same). But upon closer reading, Kaiser and In re Town
& Country can be reconciled. In re Town & Country’s reasoning relies
almost exclusively on the special status of § 1334’s “broad jurisdictional
grant over all matters conceivably having an effect on the bankruptcy
estate . . . .” 963 F.2d at 1155. Thus, its reading of 42 U.S.C. § 405(h) can
reasonably be understood to apply only to actions brought under § 1334,
while not bearing on the relationship between § 405(h) and other jurisdic-
tional provisions such as § 1332.
 UHM v. HUMANA, INC. 12925
Humana contends that the Uhms’ claims are subject to
these provisions and that the Uhms have failed to exhaust
those claims. The Uhms admit they have not pursued any of
their claims through the Act’s administrative processes, but
argue that they need not exhaust their administrative remedies
because their claims do not “arise under” the Medicare Act.
They further contend that because their claims arose before
they were enrolled in the program, they did not have access
to the Act’s remedial mechanisms and therefore cannot be
subject to the exhaustion requirements. We address these
arguments in turn.

(1) “Arising Under” the Medicare Act

[2] The key inquiry in determining whether § 405(h)
requires exhaustion before we can exercise jurisdiction is
whether the claim “arises under” the Act. Ardary, 98 F.3d at
499 (citing Heckler, 466 U.S. at 614-15). Accordingly, we
must determine whether any of the Uhms’ state law claims
“arises under” the Medicare Act. If so, we cannot exercise
subject matter jurisdiction until those claims are properly
exhausted. Id. at 498-99. The Uhms argue that their claims do
not “arise under” the Act because they seek return of their
premiums, not reimbursement for benefits owed under the
Act. These arguments are unpersuasive.

[3] The Supreme Court has identified two circumstances in
which a claim “arises under” the Medicare Act: (1) where the
“standing and the substantive basis for the presentation of the
claims” is the Medicare Act, Heckler, 466 U.S. at 615 (inter-
nal quotations omitted); and (2) where the claims are “inextri-
cably intertwined” with a claim for Medicare benefits, id. at
614. See also Kaiser, 347 F.3d at 1112. One category of
claims that we and other courts have found to “arise under”
the Act are those cases that are “ ‘[c]leverly concealed claims
for benefits.’ ” Kaiser, 347 F.3d at 1112 (quoting United
States v. Blue Cross & Blue Shield of Ala., Inc., 156 F.3d
1098, 1109 (11th Cir. 1998)). For example, in Heckler, the
12926 UHM v. HUMANA, INC.
Supreme Court denied jurisdiction in a case brought by plain-
tiffs seeking Medicare coverage for certain medical proce-
dures. 466 U.S. at 609-10, 627. There, plaintiffs had
formulated their claims under various sources of law other
than the Medicare Act, including claims brought under the
Constitution and under other statutes. Id. at 610. The Supreme
Court held that, despite the various causes of action, the claim
was ultimately one for benefits under the Act, was therefore
“inextricably intertwined” with the Medicare Act, and thus
had to be exhausted under § 405(g). Id. at 614-17. The Elev-
enth Circuit has described Heckler as holding that
“[s]ubsection 405(h) prevents beneficiaries and potential ben-
eficiaries from evading administrative review by creatively
styling their benefits and eligibility claims as constitutional or
statutory challenges to Medicare statutes and regulations.”
Blue Cross & Blue Shield of Ala., 156 F.3d at 1104.

[4] In Kaiser, we held that even a state law claim may
“arise under” the Medicare Act. 347 F.3d at 1113-15. There,
a Medicare provider sued a state’s fiscal intermediary, which
had ceased reimbursing the provider for Medicare services.
Id. at 1110-11. The provider brought a variety of tort and con-
tract claims against the intermediary. Id. at 1111. We con-
cluded that the district court had correctly dismissed some of
the claims—including some of the common law claims—for
lack of subject matter jurisdiction. Id. at 1115. In addressing
whether claims brought under state law can also “arise under”
the Medicare Act, we held that a “ ‘claim may arise under the
Medicare Act even though . . . it also arises under some other
law.’ ” Id. at 1114 (quoting Midland Psychiatric Assoc., Inc.,
145 F.3d at 1004).

Kaiser also forecloses the Uhms’ argument that, because
they are not seeking reimbursement of lost benefits, their
claims do not “arise under” the Act. We held in Kaiser that
whether or not plaintiffs seek reimbursement of benefits is not
“strongly probative” of whether a claim “arises under” the
Medicare Act. Id. at 1112. The plaintiffs there argued that
 UHM v. HUMANA, INC. 12927
their claims did not “arise under” the Medicare Act because
they were seeking damages beyond the reimbursement of ben-
efits. Id. We disagreed, pointing to a number of cases in
which the Supreme Court had refused to treat the remedy
sought as dispositive of the “arising under” question. Id.; see
also Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S.
1, 14 (2000) (refusing to “accept a distinction that limits the
scope of § 405(h) to claims for monetary benefits”); Marin v.
HEW, Health Care Fin. Agency, 769 F.2d 590, 592 (9th Cir.
1985) (holding that a suit seeking extra-Medicare monetary
damages may also be a suit arising under Medicare because
“[t]he substantive cause of action [was] anticipated by the
statute” and the plaintiff’s argument to the contrary “would
render meaningless the jurisdiction restriction of § 405(h)”).
For example, we noted that in Heckler, “the Court found that
suits for injunctive relief not available under Medicare may
still be found to arise under Medicare.” Id. (citing Heckler,
466 U.S. at 615). In light of those authorities, we held that the
“fact that [plaintiffs] seek damages beyond the reimbursement
payments available under Medicare does not exclude the pos-
sibility that their case arises under Medicare.” Id.

Our opinion in Ardary, 98 F.3d 496, is also instructive.
There, the heirs of a deceased Medicare beneficiary sought
damages in a state wrongful death action against Aetna, alleg-
ing that Aetna improperly denied emergency medical services
and misrepresented its managed care plan to the beneficiary.
Id. at 497-98. We held that the wrongful death action did not
“arise under” the Medicare Act, and was therefore not subject
to the exhaustion provisions, because it was “at bottom not
seeking to recover benefits” and because the injury com-
plained about could not have been redressed at all via the
Medicare Act’s administrative review process. Id. at 500.

[5] In sum, contrary to the Uhms’ argument, our case law
establishes that where, at bottom, a plaintiff is complaining
about the denial of Medicare benefits—here, drug benefits
12928 UHM v. HUMANA, INC.
under Part D—the claim “arises under” the Medicare Act. We
accordingly assess the Uhms’ various claims under this rule.

(a) Breach of Contract and Unjust Enrichment

[6] The Uhms’ primary complaint, and the basis of their
breach of contract and unjust enrichment claims, is that,
despite having paid their monthly premiums and having filed
the appropriate enrollment documents, Humana failed to pro-
vide them with drug benefits. See, e.g., Compl. ¶ 4.12
(“Plaintiffs Uhm bring this action against Defendants on
behalf of themselves and all persons who paid and/or were
billed by Humana, for enrollment in the Humana Part D PDP
and (a) did not receive benefits under the Humana Part D PDP
. . . .”); ¶ 6.4 (“Defendants breached each contract with Plain-
tiffs and with each Class member when they failed to provide
prescription drug benefits as promised.”); ¶ 8.2 (“Defendants
received monies as a result of payments made by Plaintiffs
and Class members for prescription drug benefits that Defen-
dants failed to provide to Plaintiffs and Class members.”).
More specifically, the Uhms’ breach of contract claim is
premised on the fact that Humana “failed to provide prescrip-
tion drug benefits as promised.” Likewise, the Uhms’ unjust
enrichment claim alleges that “[Humana] received monies as
a result of payments made by [the Uhms] and Class members
for prescription drug benefits that [Humana] failed to pro-
vide.”

[7] After a careful review of these claims, we conclude that
they are, at bottom, merely creatively disguised claims for
benefits. While the Uhms assert that they are not seeking to
remedy a denial of benefits due under the Act, we find this
argument unconvincing. Indeed, the Uhms have not alleged
that Humana promised anything more than to abide by the
requirements of the Act. Nor did they identify or describe in
their complaint any provision creating obligations above and
beyond Humana’s obligations under the Act. Thus, there is no
claim that the alleged contract imposed upon Humana any
 UHM v. HUMANA, INC. 12929
duties above and beyond compliance with the Act itself.
Instead, the Uhms’ breach of contract claim is a backdoor
attempt to enforce the Act’s requirements and to secure a rem-
edy for Humana’s alleged failure to provide benefits. For
example, the Uhms claim that Humana promised to provide
them with benefits beginning January 1, 2006—the date that
the Act’s implementing regulations set. See 42 C.F.R.
§ 423.40(a) (2005)12 (setting effective dates of enrollment
which would have required the Uhms’ coverage to begin Jan-
uary 1, 2006). The Uhms’ unjust enrichment claim fares no
better, as it seeks to vindicate the same alleged injury, based
upon the same alleged promises, and thereby to enforce the
benefit requirements of the Act via an implied contract, rather
than an express one.13

[8] Nor do the Uhms allege any injury that could not be
remedied through the retroactive payment of Medicare drug
benefits. The mere fact that the Uhms no longer wish to
receive those benefits—and instead seek return of their
premium—is of no consequence. This court consistently has
held that claimants cannot circumvent the § 405(h) exhaustion
requirement by restyling the remedy sought. See Kaiser, 347
F.3d at 1112 (“[T]he type of remedy sought is not strongly
probative of whether a claim falls under § 405(h).”).
12
Since CMS initially promulgated the Act’s implementing regulations
in 2005, they have been amended on a number of occasions. See, e.g., 75
FR 19825 (Apr. 15, 2010); 73 FR 54208-01 (Sept. 18, 2008). In this opin-
ion, we refer to the regulations in place at the time of the Uhms’ alleged
injury. Where the regulations have been subsequently amended or rede-
signated, we will so note for ease of reference. As discussed below, how-
ever, none of the amendments or redesignations affect our analysis.
13
Assuming that there was a valid express contract between the Uhms
and Humana, we further note that under Washington state law, “[a] party
to a valid express contract is bound by the provisions of that contract, and
may not disregard the same and bring an action on an implied contract
relating to the same matter, in contravention of the express contract.”
Chandler v. Wash. Toll Bridge Auth., 137 P.2d 97, 103 (Wash. 1943).
12930 UHM v. HUMANA, INC.
[9] Furthermore, the Uhms’ claim for benefits could have
been remedied through the Act’s administrative review pro-
cess. Cf. Ardary, 98 F.3d at 500 (holding that a claim did not
“arise under” the Act in part because “[the beneficiary]’s
death . . . cannot be remedied by the retroactive authorization
or payment of [benefits].”). As we explain in greater detail in
the following section, at the time their claims arose, the Uhms
were enrollees, and thus the Act’s administrative remedial
mechanisms—including the coverage determination and
grievance processes—were available to them. See 42 U.S.C.
§§ 1395w-104(f),(g) (providing for the coverage determina-
tion and grievance processes). The coverage determination
process, in particular, would have allowed the Uhms to secure
the benefits to which they were entitled as enrollees. The cov-
erage determination process is meant for disputes arising from
“[a] decision not to provide or pay for a Part D drug.” 42
C.F.R. § 423.566(b)(1) (2005). Although the Uhms do not
allege that Humana affirmatively denied any request for bene-
fits, its failure to make benefits available to the Uhms on Jan-
uary 1, 2006, was tantamount to such a denial. Furthermore,
we note that CMS, in its amicus brief, specifically represents
that, “[e]ven if the Uhms were belatedly enrolled in Humana’s
plan, so that they were required to pay for drugs out of pocket
for some initial period, once retroactively enrolled, they could
have still taken advantage of this congressionally mandated
review scheme to try to obtain benefits.”

[10] In sum, because the Uhms’ contract and unjust enrich-
ment claims arise under the Medicare Act, they should have
exhausted their claims for benefits through the coverage
determination or grievance process and then sought judicial
review under 42 U.S.C. § 405(g). The Uhms do not allege that
they did so, and until they do, the federal courts may not
assert jurisdiction over these claims.

[11] The Uhms, however, argue that, even if the exhaus-
tion requirements apply to them, they should be excused from
those requirements because pursuit of administrative remedies
 UHM v. HUMANA, INC. 12931
would be futile. See S.E.C. v. G.C. George Sec., Inc., 637
F.2d 685, 688 n.4 (9th Cir. 1981) (discussing a number of
exceptions to the general rule requiring exhaustion, including
where exhaustion would be futile). More specifically, the
Uhms argue that, even assuming they are required to exhaust
administrative remedies against Humana Health Plan, Inc.,
there is no analogous administrative scheme for pursuing their
claims against Humana, Inc., and thus no exhaustion is
required. We disagree. As we concluded above, the Uhms’
breach of contract and unjust enrichment claims are, at bot-
tom, claims for benefits. That they have also brought those
claims against a non-Part D sponsor does not change the con-
clusion that those claims “arise under” the Act. In Illinois
Council, the Supreme Court reaffirmed that 42 U.S.C.
§§ 405(g) and (h) preclude federal court review of claims
“arising under” the Medicare Act before administrative reme-
dies have been exhausted. 529 U.S. at 10. In doing so, the
Court noted that, “[t]he fact that the agency might not provide
a hearing for [a] particular contention, or may lack the power
to provide one is beside the point because it is the ‘action’
arising under the Medicare Act that must be channeled
through the agency.” Id. at 23 (internal citations omitted).
Similarly, in Kaiser, we noted that the mere fact that an
administrative remedy is not available for a particular claim
does not mean that the claim does not “arise under” the Medi-
care Act. 347 F.3d at 1116 n.4. We reasoned that:

Exhaustion is generally required as a matter of pre-
venting premature interference with agency pro-
cesses, so that the agency may function efficiently
and so that it may have an opportunity to correct its
own errors, to afford the parties and the courts the
benefit of its experience and expertise, and to com-
pile a record which is adequate for judicial review.
If a court were to prematurely tackle a question inex-
tricably intertwined with an issue properly resolved
by an agency, the court would defeat the purposes of
12932 UHM v. HUMANA, INC.
§ 405(g) and (h) even if the question was not one
that the agency has the authority to answer fully.

Id. (internal citation and quotation omitted). Despite the fact
that administrative remedies may not be available against
Humana, Inc., claims “arising under” the Act must be brought
before the Secretary before judicial review can be sought.
Thus, we hold that the Uhms cannot circumvent § 405(h)’s
requirements by suing Humana, Inc. To allow otherwise
would “defeat the purposes of” the Act’s exhaustion require-
ment.

[12] We thus conclude that the district court lacked juris-
diction over the Uhms’ breach of contract and unjust enrich-
ment claims.

(b) Fraud and Consumer Protection Act Claims

[13] The Uhms’ consumer protection act and fraud claims
allege that Humana made material misrepresentations and
engaged in other systematic deceptive acts in the marketing
and advertising of their Part D plan to induce the Uhms and
putative class members to enroll. Specifically, the Uhms
allege that Humana misrepresented that their prescription
drug coverage would begin on January 1, 2006, and that
Humana is committed to providing “reliable customer ser-
vice” and “has been a trusted Medicare insurer for more than
20 years, helping the Medicare population with their health
insurance needs.” We hold that these claims do not “arise
under” the Act and therefore are not subject to its exhaustion
requirements. The basis of these claims is an injury collateral
to any claim for benefits; it is the misrepresentations them-
selves which the Uhms seek to remedy. The Uhms may be
able to prove the elements of these causes of action without
regard to any provisions of the Act relating to provision of
benefits. To the extent that is the case, the Uhms claims are
not subject to the Act’s exhaustion provisions. See Heckler,
466 U.S. at 618 (noting that where a claim is “wholly ‘collat-
 UHM v. HUMANA, INC. 12933
eral’ ” to a claim for benefits, it is not subject to § 405(h)); see
also Kaiser, 347 F.3d at 1115 (suggesting that the plaintiff’s
defamation and invasion of privacy claims were not subject to
the Medicare Act’s exhaustion requirements because they
were “largely independent of the underlying Medicare law”).

(2) The Uhms’ Enrollment Status When the Claims Arose

The Uhms argue that, even assuming our analysis of
exhaustion is correct, the Act’s exhaustion provisions do not
apply to them because they were not enrolled in the program
at the time their claims arose. We find that the pertinent ques-
tion is not whether the Uhms were “enrolled,” but rather
whether they were “enrollees” within the meaning of the Act
and its regulations. We conclude that they are properly classi-
fied as “enrollees.”

The Uhms allege that Humana “failed to actually enroll”
them in the PDP, and therefore that the Act’s terms do not
apply to them. They maintain that Humana representatives
explicitly told them that they were “not recognized as mem-
bers of the Humana Part D PDP” when they called Humana’s
toll-free line in late December 2005. At oral argument, coun-
sel for the Uhms argued that we must accept the Uhms’ asser-
tion that they were not enrolled in the PDP because their
claims were dismissed under Rule 12(b)(6). As far as purely
factual assertions are concerned, that is correct. However,
insofar as “enroll” (or its derivative forms—enrollee,
enrolled, enrollment, etc.) has a legal meaning under the stat-
ute, our task is to determine the meaning of that term, and
whether the facts as alleged by the Uhms comport with it or
not.

The relevant section of the implementing regulations in
force at the time of the alleged injury, titled “Enrollment pro-
cess,” provides:

A Part D eligible individual who wishes to enroll in
a PDP may enroll during the enrollment periods
12934 UHM v. HUMANA, INC.
specified in § 423.38, by filing the appropriate
enrollment form with the PDP or through other
mechanisms CMS determines appropriate.

42 C.F.R. § 423.32(a) (2005). Thus, according to this regula-
tion, an eligible individual “enrolls” by “filing the appropriate
enrollment form with the PDP.” That is precisely what the
Uhms allege they did. Their complaint alleges that “Plaintiffs
Uhm signed the Humana Prescription Drug Plan Enrollment
Form (for Medicare Part D prescription drug plan benefits)
that Humana drafted and presented to Plaintiffs Uhm.” The
regulations also required, however, that the “PDP sponsor
must timely process an individual’s enrollment request in
accordance with CMS enrollment guidelines and enroll Part
D eligible individuals who are eligible to enroll in its plan
under § 423.30(a) and who elect to enroll or are enrolled in
the plan during the periods specified in § 423.38.” Id.
§ 423.32(c) (emphasis added).

“Enroll,” therefore has two distinct (if related) usages. An
eligible individual “enrolls” by filing the enrollment form
with the PDP sponsor. See id. § 423.32(a). The PDP sponsor,
in turn, “enrolls” the individual “during the periods specified”
by “process[ing]” the individual’s “enrollment request in
accordance with CMS enrollment guidelines.” Id. § 423.32(c).
The question remains, therefore, at which point an eligible
individual is enrolled in the PDP: when that individual sub-
mits an enrollment form, or only after the PDP sponsor has
processed it?14
14
The regulations also required that “[t]he PDP sponsor must provide
the individual with prompt notice of acceptance or denial of the individu-
al’s enrollment request, in a format and manner specified by CMS,” id.
§ 423.32(d). This requirement suggests that an individual is not enrolled
simply by filing the enrollment form, which in this provision is styled as
an enrollment “request.” And yet, the regulations require the Part D spon-
sor to enroll all eligible individuals who elect to enroll (i.e. who submit
a completed form). See id. § 423.32(c).
 UHM v. HUMANA, INC. 12935
Although the Uhms allege, and we accept, that a Humana
customer service representative told the Uhms that they were
“not recognized as members of the Humana Part D PDP,” the
Uhms do not allege that Humana issued them a “notice of . . .
denial of [their] enrollment request, in a format and manner
specified by CMS.” See id. § 423.32(d). Moreover, on the
facts alleged in the complaint, we can reasonably infer that
Humana engaged in some “processing” of the Uhms’ enroll-
ment request because Humana managed to obtain premium
deductions from their social security checks.

Fortunately, this case does not require us to discern the
exact moment at which a Medicare beneficiary becomes “en-
rolled” in a PDP.15 That is because, as will be discussed in
greater detail below, the operative term for our purposes is
“enrollee.” The exhaustion provision of the Act applies to
“enrollees.” Part D’s provision on appeals, 42 U.S.C.
§ 1395w-104(h), incorporates Part C’s provision on appeals,
42 U.S.C. § 1395w-22(g). The Part C provision states, in rele-
vant part, that “[a]n enrollee . . . shall . . . be entitled to judi-
cial review of the Secretary’s final decision as provided in
section 405(g) of this title . . . .” 42 U.S.C. § 1395w-22(g)
(emphasis added).16
15
We note that reading sections 423.32(a), 423.32(c), and 423.32(d)
together suggests that an individual is not “enrolled” until the plan sponsor
provides her with “notice of acceptance . . . of the individual’s enrollment
request.”
16
42 U.S.C. § 1395w-104(h) provides:
An enrollee with a Medicare+Choice plan of a Medicare+Choice
organization under this part who is dissatisfied by reason of the
enrollee’s failure to receive any health service to which the
enrollee believes the enrollee is entitled and at no greater charge
than the enrollee believes the enrollee is required to pay is enti-
tled, if the amount in controversy is $100 or more, to a hearing
before the Secretary to the same extent as is provided in section
405(b) of this title, and in any such hearing the Secretary shall
make the organization a party. If the amount in controversy is
$1,000 or more, the individual or organization shall, upon notify-
ing the other party, be entitled to judicial review of the Secre-
tary’s final decision as provided in section 405(g) of this title, and
both the individual and the organization shall be entitled to be
parties to that judicial review.
12936 UHM v. HUMANA, INC.
[14] According to the regulation, “[e]nrollee means a Part
D eligible individual who has elected or has been enrolled in
a Part D plan.” 42 C.F.R. § 423.560 (2005). That is, the Uhms
were enrollees if they “elected . . . a Part D plan.” Although
the term “elected” is not defined, we discern from the above
regulations that an eligible individual “elects” a Part D plan
when he submits an enrollment form to the Part D sponsor.
See id. § 423.32(c) (“A PDP sponsor must timely process an
individual’s enrollment request in accordance with CMS
enrollment guidelines and enroll Part D eligible individuals
who are eligible to enroll in its plan under § 423.30(a) and
who elect to enroll or are enrolled in the plan during the peri-
ods specified in § 423.38.” (emphasis added)); id. § 423.32(a)
(“A Part D eligible individual who wishes to enroll in a PDP
may enroll during the enrollment periods specified in
§ 423.38, by filing the appropriate enrollment form with the
PDP or through other mechanisms CMS determines are
appropriate.”); see also Webster’s New Universal Unabridged
Dictionary 731 (1993) (defining elect as “to pick out, choose,
select”).17 Because the Uhms’ complaint alleges that they filed
17
The Uhms argue that the term “elected” means someone who is auto-
matically enrolled in a PDP (i.e., dual-benefit individuals who are entitled
to both Medicare and Medicaid coverage). In support of this argument,
they point to a passage in the Act’s implementing regulations, which pro-
vides:
Comment: We received one comment requesting that the defini-
tion of enrollee be revised to include people who are automati-
cally enrolled in a PDP or MA-PD.
Response: We agree with the commenter and have revised the
definition of enrollee in this final rule to mean a Part D eligible
individual who has elected or has been enrolled in a Part D plan.
70 Fed. Reg. 4194, 4344 (Jan. 28, 2005). The Uhms’ reading of the term
“elected” is not persuasive. The plain text of the regulation permits only
one reading—that a person who has “elected . . . a Part plan” is one who
has chosen or selected it; a person who has “been enrolled” is one who has
been automatically enrolled. The proposed regulation provides further
support for this reading. Before it was amended to clarify the inclusion of
dual-benefit individuals, it read: “Enrollee means a Part D eligible individ-
ual, or his or her authorized representative, who has elected a prescription
drug plan offered by a PDP sponsor.” 69 Fed. Reg. 46632, 46841 (Aug.
3, 2004).
 UHM v. HUMANA, INC. 12937
an enrollment form with Humana, the Uhms are properly clas-
sified as “enrollees” for purposes of the Act, and therefore
their contract and unjust enrichment claims are subject to its
exhaustion provisions.18

C. Preemption

(1) The Preemption Provision

Humana contends, and the district court ruled, that each of
the Uhms’ state law claims is preempted by the Act’s express
preemption provision. As we have concluded that the Uhms’
breach of contract and unjust enrichment claims fall within
the Act’s exhaustion requirements and have yet to be
exhausted, we turn to the Uhms’ fraud, fraud in the induce-
ment, and consumer protection act claims.

[15] The Supreme Court has made clear that Congress may
displace state law through express preemption provisions.
Altria Group, Inc. v. Good, 129 S. Ct. 538, 543 (2008). Our
task is to “identify the domain expressly pre-empted by that
language.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 484 (1996)
(internal quotation marks omitted). That task must “in the first
instance focus on the plain wording of the clause, which nec-
essarily contains the best evidence of Congress’ pre-emptive
intent.” CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664
(1993). We may find preemption only where it is the “clear
and manifest purpose of Congress.” Rice v. Santa Fe Elevator
Corp., 331 U.S. 218, 230 (1947).

[16] Medicare Part D incorporates the express preemption
provision contained in Part C, the Medicare Advantage
18
The Uhms also argue that the Act’s preemption provisions do not
apply to them because they were not enrolled in the program at the time
their claims arose. For precisely the same reasons that this argument fails
as applied to the exhaustion provision, it also fails as applied to the pre-
emption provisions.
12938 UHM v. HUMANA, INC.
(“MA”) program, which provides medical benefits to seniors
through managed care.19 The Part D preemption provision
states:

The provisions of sections 1395w-24(g) [(prohibi-
tion of premium taxes)] and 1395w-26(b)(3) [(pre-
emption)] of this title shall apply with respect to
PDP sponsors and prescription drug plans under this
part in the same manner as such sections apply to
MA organizations and MA plans under part C of this
subchapter.

42 U.S.C. § 1395w-112(g).

The Part C preemption provision in turn provides:

The standards established under this part shall super-
sede any State law or regulation (other than State
licensing laws or State laws relating to plan sol-
vency) with respect to MA plans which are offered
by MA organizations under this part.

42 U.S.C. § 1395w-26(b)(3); see also 42 C.F.R. § 423.440(a)
(2005) (adopting the same language in the Part D implement-
ing regulation: “The standards established under this part
supersede any State law or regulation (other than State licens-
ing laws or State laws relating to plan solvency) for Part D
plans offered by Part D plan sponsors.”). The plain language
of the statute therefore provides that CMS “standards”20
19
Prior to the Act, Medicare Advantage was called “Medicare+Choice.”
See 42 U.S.C. § 1395w-21.
20
Although the term “standard” is not defined in the Act, at the narro-
west cut, a “standard” within the meaning of the preemption provision is
a statutory provision or a regulation promulgated under the Act and pub-
lished in the Code of Federal Regulations. Humana points to a broad defi-
nition of the term “standard” in Black’s Law Dictionary, which reads
“criterion for measuring acceptability, quality, or accuracy.” Black’s Law
 UHM v. HUMANA, INC. 12939
supersede “any State law or regulation . . . with respect to” a
“prescription drug plan” offered by a “PDP sponsor.”21

[17] The issue here is precisely which claims fall within
the ambit of this provision. In other words, what qualifies as
a state law or regulation “with respect to” a PDP? The phrase
“with respect to” is not defined in the Act, but the Act’s legis-
lative history provides guidance as to its meaning. Prior to the
2003 amendments, the preemption clause provided that fed-
eral standards would supersede state law and regulations
“with respect to” MA plans only “to the extent such law or
regulation is inconsistent with such standards” and specified
several “[s]tandards specifically superseded.” 42 U.S.C.
§ 1395w-26(b)(3)(A) (2000).22 The 2003 amendments struck

Dictionary 1441 (8th ed. 2004); see also Webster’s New Universal
Unabridged Dictionary 1857 (1996) (defining a standard as “something
considered by an authority or by general consent as a basis of comparison;
an approved model . . . ; a rule or principle that is used as a basis for judg-
ment”). Under those definitions, Humana contends that the Act’s adminis-
trative remedial mechanisms are “standards” with preemptive effect. We
decline to take such a broad view of the term. Cf. Gorman v. Wolpoff &
Abramson, LLP, 584 F.3d 1147, 1171 (9th Cir. 2009) (holding that a statu-
tory provision creating a private cause of action to seek redress for viola-
tions of other portions of a state statute does not impose any “requirement
or prohibition,” but instead “merely provide[s] a vehicle for private parties
to enforce other sections”).
21
CMS replaced the phrase “PDP sponsor” in its implementing regula-
tions with “Part D sponsor,” because it “believe[d] that the preemption of
State law . . . should operate uniformly for all Part D sponsors.” 70 Fed.
Reg. 4194, 4319 (Jan. 28, 2005). A PDP provides “prescription drug cov-
erage that is offered under a policy, contract, or plan that has been
approved . . . and that is offered by a PDP sponsor that has a contract with
CMS . . . .” 42 C.F.R. § 423.4 (2005). Part D plans also include MA-PD
plans (which are offered through Medicare Advantage organizations), Pro-
grams of All-Inclusive Care for the Elderly (PACE) plans offering quali-
fied prescription drug coverage, and cost plans offering qualified
prescription drug coverage. See id.
22
In full, that prior preemption clause read:
12940 UHM v. HUMANA, INC.
both that qualifying clause and the enumerated standards from
the provision. See 42 U.S.C. § 1395w-26(b)(3)(A) (2003).
The Conference Report accompanying the Act explains that,
in striking the clause, Congress intended to broaden the pre-
emptive effects of the Medicare statutory regime:

The conference agreement clarifies that the MA pro-
gram 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. There has been some confu-
sion in recent court cases.

H.R. Rep. No. 108-391, at 557 (2003) (Conf. Rep.).23 That

(A) In general
The standards established under this subsection shall supersede
any State law or regulation (including standards described in sub-
paragraph (B)) with respect to Medicare+Choice plans which are
offered by Medicare+Choice organizations under this part to the
extent such law or regulation is inconsistent with such standards.
(B) Standards specifically superseded
State standards relating to the following are superseded under this
paragraph:
(i) Benefit requirements (including cost-sharing requirements).
(ii) Requirements relating to inclusion or treatment of providers.
(iii) Coverage determinations (including related appeals and
grievance processes).
(iv) Requirements relating to marketing materials and summa-
ries and schedules of benefits regarding a Medicare+Choice
plan.
42 U.S.C. § 1395w-26(b)(3) (2000) (emphasis added).
23
The Secretary adopted the same reading of the Conference Report in
promulgating the final rules: “We believe that the Conference Report was
clear that the Congress intended to broaden the scope of preemption in the
MMA.” 70 Fed. Reg. 4588, 4663 (Jan. 28, 2005).
 UHM v. HUMANA, INC. 12941
passage indicates that Congress intended to expand the pre-
emption provision beyond those state laws and regulations
inconsistent with the enumerated standards.

For present purposes, however, the precise degree to which
the 2003 amendment expanded the preemption provision
beyond state laws and regulations “inconsistent” with the enu-
merated standards does not matter. Rather, it is sufficient for
our purposes that, at the very least, any state law or regulation
falling within the specified categories and “inconsistent” with
a standard established under the Act remains preempted.24
That limited scope, it turns out, is sufficient to decide this
appeal.25 To explain why, we turn to evaluating the Uhms’
claims.
24
We stress that, in using the term “inconsistent,” we do not mean to be
incorporating the same standards used in implied preemption cases. Cf.
Gade v. Nat’l Solid Wastes Mgmt. Assoc., 505 U.S. 88, 98 (1992) (plural-
ity) (stating that conflict preemption applies “where state law stands as an
obstacle to the accomplishment and execution of the full purposes and
objectives of Congress”).
25
Amicus American Association of Justice argues that because con-
sumer protection laws are laws of general applicability, they should not be
considered laws “with respect to” Part D plans. That same argument was
specifically rejected in Riegel v. Medtronic, Inc., 552 U.S. 312 (2008).
There, the Supreme Court considered the meaning of the phrase “with
respect to” in the preemption clause of the Medical Device Amendments
to the Federal Food, Drug, and Cosmetic Act. Id. at 315-16. That preemp-
tion provision read, in relevant part: “no State or political subdivision of
a State may establish or continue in effect with respect to a device
intended for human use any requirement—(1) which is different from, or
in addition to, any requirement applicable under this chapter to the device,
and (2) which relates to the safety or effectiveness of the device or to any
other matter included in a requirement applicable to the device under this
chapter.” Id. at 316 (quoting 21 U.S.C. § 360k(a)). The petitioners argued
that their negligence, strict liability, and implied warranty claims were not
preempted because “common-law duties are not requirements maintained
‘with respect to devices.’ ” Id. at 327. The Court rejected that argument,
reasoning that “[n]othing in the statutory text suggests that the pre-empted
state requirement must apply only to the relevant device . . . and not to all
products and all actions in general.” Id. at 328. Similarly, we hold that
nothing in the statutory text of the Act suggests that a state law or regula-
tion must apply only to a PDP in order to constitute a law “with respect
to” a PDP.
12942 UHM v. HUMANA, INC.
(2) State Consumer Protection Statutes

[18] To recall, the Uhms’ consumer protection act claims
allege that Humana violated the consumer protection statutes
of various states in which Humana operates by “systemati-
cally represent[ing] . . . that prescription drug coverage would
begin January 1, 2006 for those Class members who enrolled
by December 31, 2005, when in fact [Humana] knew, or
should have known, that Defendants would not be providing
prescription drug coverage” beginning on that date. Accord-
ing to the Uhms’ complaint, these misrepresentations were
both written and oral: written in the Humana Prescription
Drug Plan Enrollment Form and orally stated by Humana’s
employees in the course of marketing the plan. We hold that
the Uhms’ claims are preempted by the extensive CMS regu-
lations governing PDP marketing materials.

[19] The Act provides that CMS must approve all PDP
marketing materials before they are made available to Medi-
care beneficiaries. See 42 U.S.C. § 1395w-101(b)(1)(B)(vi)
(incorporating id. § 1395w-21(h)). The Act requires that each
Part D sponsor “shall conform to fair marketing standards,”
id. § 1395w-21(h)(4), and that CMS “shall disapprove (or
later require the correction of) such material or form if the
material or form is materially inaccurate or misleading or oth-
erwise makes a material misrepresentation,” id. § 1395w-
21(h)(2). In 2005, CMS promulgated detailed regulations
governing how Part D sponsors market their plans. See 42
C.F.R. § 423.50(a)-(f) (2005).26 Under those regulations, Part
D sponsors were not to “distribute any marketing materials
. . . or enrollment forms, or make such materials or forms
available to Part D eligible individuals” unless they had been
CMS-approved. Id. § 423.50(a)(1).27 Moreover, under both
26
These regulations have since been amended and renumbered. See 73
FR 54208-01 (Sept. 18, 2008). These amendments added a number of new
regulatory provisions regarding the marketing process of PDP plans, none
of which affect our analysis.
27
As amended in 2008, these regulations mandate a slightly different
process for approval of Part D marketing materials. Part D sponsors must
 UHM v. HUMANA, INC. 12943
the 2005 version of these provisions and their most recent
amendment in 2008, CMS is required to screen marketing
materials or enrollment forms to ensure they are not “materi-
ally inaccurate or misleading” and do not “otherwise make
material misrepresentations.” Id. § 423.50(d)(4) (redesignated
as id. § 423.2264(d) (2008)). CMS must also ensure that all
marketing materials and enrollment forms provide adequate
descriptions of all rules, an explanation of the grievance and
appeals process, and “[a]ny other information necessary to
enable beneficiaries to make an informed decision about
enrollment.” Id. § 423.50(d)(1) (redesignated as id.
§ 423.2264(a) (2008)).

The regulations define marketing materials as “any infor-
mational materials targeted to Medicare beneficiaries which—
(1) Promote the Part D plan. (2) Inform Medicare beneficia-
ries that they may enroll, or remain enrolled in a Part D plan.
(3) Explain the benefits of enrollment in a Part D plan, or
rules that apply to enrollees. (4) Explain how Medicare ser-
vices are covered under a Part D plan, including conditions
that apply to such coverage.” Id. § 423.50(b) (redesignated as
id. § 423.2260 (2010)). Examples of marketing materials
include “brochures, newspapers, magazines, television, radio,
billboards, yellow pages, or the Internet,” “[m]arketing repre-
sentative materials such as scripts or outlines for telemarket-
ing,” and “[l]etters to members about contractual changes.”
Id. § 423.50(c) (redesignated as id. § 423.2260 (2010)).28

now submit materials to CMS for review at least 45 days prior to distribu-
tion (or 10 days, in certain cases), and are allowed to distribute those
materials if CMS does not object. See 42 C.F.R. § 423.2262 (2008).
28
Under the 2005 version of the regulations, “marketing materials” also
included “membership or claims processing activities,” id., although the
current version of the regulations has revised that category to include only
“membership activities (for example, materials on rules involving non-
payment of premiums, confirmation of enrollment or disenrollment, or
nonclaim-specific notification information),” id. § 423.2260 (2010).
12944 UHM v. HUMANA, INC.
[20] The Humana Prescription Drug Plan Enrollment Form
on which the Uhms base their misrepresentation claim is
“marketing material” as defined by the regulations. The vague
oral misrepresentation that the Uhms allege as the basis for
their state consumer protection act claim—that Humana’s rep-
resentatives “systematically represented” to them that they
would receive Medicare Part D prescription drug plan cover-
age and benefits beginning January 1, 2006—is also pre-
empted. Those representations appear to have been made
pursuant to “marketing representative materials such as
scripts or outlines for telemarketing,” and, in any event, were
identical to the representations made in the marketing materi-
als. Thus, those oral representations also fall within the defini-
tion of “marketing materials.”29

[21] Standards relating to these materials therefore fall
within a category—“Requirements relating to marketing
materials”—specified under the 2000 preemption clause as
“superseded.” 42 U.S.C. § 1395w-26(b)(3)(B) (2000). The
state consumer protection acts on which the Uhms base their
claims are “inconsistent” with these standards in that they are
much less specific and also in that they do not provide for
CMS review. Take, for instance, the New York consumer pro-
tection statute. It provides that “[d]eceptive acts or practices
in the conduct of any business, trade or commerce or in the
furnishing of any service in this state are hereby declared
unlawful.” N.Y. Gen. Bus. Law § 349(a) (McKinney 2009).
Any court attempting to evaluate a claim based on that statute
must determine whether the particular action in question is
29
We note, however, that in the most recently amended version of the
implementing regulations, the term “marketing materials” excludes “ad
hoc enrollee communications materials, meaning informational materials
that . . . (iv) Apply to a specific situation or cover member-specific claims
processing or other operational issues.” Id. § 423.2260(6)(iv) (2010).
Although oral representations might fall within that exclusion, the Uhms
allege that Humana’s oral misrepresentations were made “systematically”
and to the entire class. We therefore cannot surmise how they could have
been “ad hoc” communications.
 UHM v. HUMANA, INC. 12945
“[d]eceptive.” To do so, the court must determine whether
“the defendant made misrepresentations or omissions that
were likely to mislead a reasonable consumer in the plaintiff’s
circumstances . . . and that as a result the plaintiff suffered
injury.” Solomon v. Bell Atl. Corp., 777 N.Y.S.2d 50, 52
(N.Y. App. Div. 2004). Yet, under the Act, CMS is charged
with reviewing marketing materials and determining whether
they are “materially inaccurate or misleading or otherwise
make[ ] a material misrepresentation.” 42 U.S.C. § 1395w-
21(h)(2). If the materials are misleading, CMS is instructed to
disapprove them or later require their correction. Id.

Thus, allowing a suit to proceed based on a state statute
such as New York’s consumer protection law risks the possi-
bility that materials CMS has deemed not misleading—and
therefore allowed to be distributed—will later be determined
“likely to mislead” by a state court. In other words, applica-
tion of these state laws could potentially undermine the Act’s
standards as to what constitutes non-misleading marketing.30
That is precisely the situation that both the current version of
the Act’s preemption provision as well as its previous incar-
nations contemplated and sought to avoid. As noted, in enact-
ing Title VI of the Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA), Pub. L. No.
106-554, 114 Stat. 2763, Congress amended 42 U.S.C.
§ 1395w-26(b)(3) by specifically including “[r]equirements
relating to marketing materials” as “[s]tandards specifically
superseded” by the preemption provision. Because the reach
30
The same result is possible under the other state consumer protection
statutes on which the Uhms rely. For example, Washington’s consumer
protection law prohibits “[u]nfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce.”
Wash. Rev. Code § 19.86.020. According to Washington courts,
“[i]mplicit in the definition of ‘deceptive’ under [§ 19.86.020] is the
understanding that the practice misleads.” Holiday Resort Cmty. Ass’n v.
Echo Lake Assoc., LLC, 135 P.3d 499, 507 (Wash. App. 2006). Thus,
material deemed not to be misleading by CMS may subsequently be
declared “unfair or deceptive” under Washington state law.
12946 UHM v. HUMANA, INC.
of the 2003 provision is at least as broad as that of the 2000
version, it follows that state causes of action inconsistent with
the CMS’s role in reviewing and approving marketing materi-
als distributed by Part D sponsors are preempted.

[22] Therefore, we hold that the Uhms’ cause of action
premised on these state consumer protection statutes is incon-
sistent with the standards established under the Act and there-
fore is expressly preempted.

(3) Fraud and Fraud in the Inducement

[23] As to the Uhms’ common law claims for fraud and
fraud in the inducement, the parties dispute whether the
phrase “any State law or regulation” in the preemption provi-
sion also refers to common law actions. At first blush, the
scope of that phrase would appear to be controlled by the
Supreme Court’s interpretation of a similar phrase—“a law or
regulation”—in Sprietsma v. Mercury Marine, 537 U.S. 51
(2002). There, the Supreme Court interpreted the phrase “a
law or regulation” in the Federal Boat Safety Act’s (FBSA)
express preemption clause as indicating Congressional intent
to expressly preempt only positive state enactments and not
common law. Id. at 63.

In reaching that conclusion, however, the Court relied on
three statutory features of the FBSA, two of which the Act
does not share. First, the Court reasoned that “the article ‘a’
before ‘law or regulation’ implies a discreteness—which is
embodied in statutes and regulations—that is not present in
the common law.” Id. Medicare Part D, by contrast, uses the
phrase “any State law or regulation.” 42 U.S.C. § 1395w-
26(b)(3) (emphasis added). The use of “any” negates the “dis-
creteness” that the Court identified in Sprietsma. See Ali v.
Fed. Bureau of Prisons, 552 U.S. 214, 218-19 (2008) (use of
the word “any” “suggests a broad meaning” because “[r]ead
naturally, the word ‘any’ has an expansive meaning, that is,
one or some indiscriminately of whatever kind” (internal quo-
 UHM v. HUMANA, INC. 12947
tation marks omitted)); Fleck v. KDI Sylvan Pools Inc., 981
F.2d 107, 115 (3d Cir. 1992) (“The word ‘any’ is generally
used in the sense of ‘all’ or ‘every’ and its meaning is most
comprehensive.” (internal quotation marks and citation omit-
ted)).

Second, and critically, the Court noted that the FBSA con-
tains a savings clause which states that “[c]ompliance with
this chapter or standards, regulations, or orders prescribed
under this chapter does not relieve a person from liability at
common law or under State law.” Sprietsma, 537 U.S. at 59
(citing 46 U.S.C. § 4311(g)). The Court reasoned that such a
clause “ ‘assumes that there are some significant number of
common-law liability cases to save [and t]he language of the
pre-emption provision permits a narrow reading that excludes
common-law actions.’ ” Id. at 63 (quoting Geier v. Am.
Honda Motor Co., 529 U.S. 861, 867-68 (2000)). Indeed, in
Geier, the Court also relied heavily on the presence of a sav-
ings clause to read common law claims out of a preemption
provision superseding state “standard[s].” See 529 U.S. at
867-68. Importantly, there is no parallel savings clause in the
Act, nor any similar indication that Congress intended to save
any common law claims.

Third, the Sprietsma Court reasoned that:

[B]ecause “a word is known by the company it
keeps,” Gustafson v. Alloyd Co., 513 U.S. 561, 575
(1995), the terms “law” and “regulation” used
together in the pre-emption clause indicate that Con-
gress pre-empted only positive enactments. If “law”
were read broadly so as to include the common law,
it might also be interpreted to include regulations,
which would render the express reference to “regula-
tion” in the pre-emption clause superfluous.

Id. at 63 (emphasis added). While this observation provided
additional justification for Sprietsma’s narrow construction of
12948 UHM v. HUMANA, INC.
the FBSA’s preemption clause, we are not convinced that, on
its own, this reasoning—using the word “might”—could jus-
tify completely excluding common law claims from the scope
of the Act’s preemption clause. “[O]ur hesitancy to construe
statutes to render language superfluous does not require us to
avoid surplusage at all costs.” United States v. Atl. Research
Corp., 551 U.S. 128, 137 (2007). Moreover, given the tenta-
tive nature of Sprietsma’s superfluity point—using the word
“might”—as well as the key differences we have identified
between the FBSA and the Act, we hold that Sprietsma does
not control here.

If Sprietsma does not control, we are still left to determine
whether the Act’s preemption clause encompasses common
law claims. Having found no clear congressional intent on the
face of the statute, we turn to the legislative history of the Act.
Medtronic, 518 U.S. at 485-86 (noting that, to divine Con-
gressional intent as to the scope of a preemption clause, a
court may look to the legislative history and purpose of the
statute as a whole). The Part C preemption provision, upon
which Part D’s preemptive force relies, was created in 1997.
See 42 U.S.C. § 1395w-26(b)(3) (1997). That provision was
largely similar to the current preemption provision, and also
used the phrase “any State law or regulation.”31 Id. Pursuant
31
The Medicare Part C preemption provision created in 1997 read:
In general
The standards established under this subsection shall supersede
any State law or regulation (including standards described in sub-
paragraph (B)) with respect to Medicare+Choice plans which are
offered by Medicare+Choice organizations under this part to the
extent such law or regulation is inconsistent with such standards.
(B) Standards specifically superseded
State standards relating to the following are superseded under this
paragraph:
(i) Benefit requirements.
(ii) Requirements relating to inclusion or treatment of provid-
ers.
 UHM v. HUMANA, INC. 12949
to this former version of the statute, CMS promulgated the
following interim final rule in 1998:

(a) General preemption. Except as provided in para-
graph (b) of this section, the rules, contract require-
ments, and standards established under this part
supersede any State laws, regulations, contract
requirements, or other standards that would other-
wise apply to M+C organizations and their M+C
plans only to the extent that such State laws are
inconsistent with the standards established under this
part.

42 C.F.R. § 422.402(a) (1998). In CMS’s request for com-
ments on this interim final rule, the Secretary stated that nei-
ther the statute nor the regulation “preempt[ed] State remedies
for issues other than coverage under the Medicare contract
(i.e. tort claims or contract claims under State law are not pre-
empted).” 63 Fed. Reg. 34968, 35013 (June 26, 1998). Subse-
quently, in promulgating the final version of the rule in 2000,
the Secretary noted the following comment:

Comment: A commenter asked that we revisit our
position that State tort or contract remedies may be
available to beneficiaries whose coverage determina-
tion dispute goes through the Medicare appeals pro-
cess. This commenter believes that coverage
determination cases are contract disputes, and there-
fore should be the sole province of the Medicare
appeals process.

65 Fed. Reg. 40170, 40261 (June 29, 2000).

(iii) Coverage determinations (including related appeals and
grievance processes).
42 U.S.C. § 1395w-26(b)(3) (1997).
12950 UHM v. HUMANA, INC.
In response, CMS retreated from its former position that
“tort claims or contract claims under State law are not pre-
empted”:

Response: In some cases, a case that is cast as a State
contract claim may amount to a claim that services
are covered under an organization’s M+C contract.
We agree with the commenter that in that case, the
claim would be pre-empted. However, there are
other tort or State contract law, or consumer
protection-based claims that would be entirely inde-
pendent of the issue of whether services are required
under M+C provisions.

Id.

[24] Obviously, CMS’s revised interpretation of the pre-
emption clause admits that some common law claims may be
preempted. While we emphasize that the Secretary’s interpre-
tation of the statute does not speak to congressional intent, it
is important in helping to divine Congress’s subsequent intent
when it amended the Part C preemption clause in December
200032 and again in 2003 when it passed the Medicare Mod-
32
Again, in enacting Title VI of the Medicare, Medicaid and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA), Pub. L. No.
106-554, 114 Stat. 2763, Congress amended subsection (B) of § 1395w-
26(b)(3) by adding the following italicized words:
(B) Standards specifically superseded
State standards relating to the following are superseded under this
paragraph:
(i) Benefit requirements (including cost-sharing requirements).
(ii) Requirements relating to inclusion or treatment of providers.
(iii) Coverage determinations (including related appeals and
grievance
processes).
(iv) Requirements relating to marketing materials and summaries
and schedules of benefits regarding a Medicare+Choice plan.
 UHM v. HUMANA, INC. 12951
ernization Act. Because, as early as June 2000, the Secretary
had interpreted the phrase “any State law or regulation” to
include some common law claims, we may reasonably pre-
sume that Congress was aware of that interpretation while
crafting the two subsequent amendments to the Part C pre-
emption provision. See Abebe v. Gonzales, 493 F.3d 1092,
1101 (9th Cir. 2007) (“Congress is presumed to be familiar
with the background of existing law when it legislates . . . .”).
In fact, it is well established that “ ‘Congress is presumed to
be aware of an administrative or judicial interpretation of a
statute and to adopt that interpretation when it re-enacts a stat-
ute without change.’ ” Forest Grove Sch. Dist. v. T.A., 129
S. Ct. 2484, 2492 (2009) (quoting Lorillard v. Pons, 434 U.S.
575, 580 (1978)). Thus, as there were no contrary administra-
tive interpretations and no federal court had yet confronted
the issue, we also may presume that Congress adopted CMS’s
interpretation in leaving the statutory language unchanged.
Thus, we conclude that Congress intended the Part C preemp-
tion provision—as incorporated into Part D—to preempt at
least some common law claims.

CMS’s interpretations of the Part D preemption provision,
while requiring no deference, further bolster our conclusion.
See Wyeth v. Levine, 129 S. Ct. 1187, 1201 (2009) (“While
agencies have no special authority to pronounce on pre-
emption absent delegation by Congress, they do have a unique
understanding of the statutes they administer and an attendant
ability to make informed determinations about how state
requirements may pose an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress.”
(internal quotation marks and citations omitted)). In the pro-
posed rulemaking pronouncements following the Act’s enact-
ment, CMS noted, “We continue to believe that generally
applicable State tort, contract, or consumer protection law
would not be preempted under [the Act].” 69 Fed. Reg.
46866, 46913 (Aug. 3, 2004). That position attracted a num-
ber of critical comments,33 and CMS responded by retreating
33
For example, “[a] commenter expressed concern that while State con-
tract and tort law principals [sic] may have general application, State stan-
12952 UHM v. HUMANA, INC.
from that position in the pronouncements on the final rule,
declaring that “all State standards, including those established
through case law, are preempted to the extent they specifi-
cally would regulate MA plans, with exceptions of State
licensing and solvency laws.” 70 Fed. Reg. at 4665 (emphasis
added). In other words, CMS’s latest position on the “any
State law or regulation” language of the preemption clause is
that it includes a subspecies of common law causes of action
—here, those common law causes of action specifically appli-
cable to Part D plans.34 Again, while CMS’s position does not
bind this court, we note that it accords with our reading of the
Part D preemption provision.

[25] Having concluded that some common law claims fall
within the ambit of the Act’s preemption clause, the remain-
ing question is whether the Uhms’ fraud and fraud in the
inducement claims do. The Uhms allege that Humana made
misrepresentations “that were material to the subject transac-
tions” and that Humana “knew of the false representations of
fact and intentionally entered into contracts with Plaintiffs and
Class members with knowledge of these misrepresentations.”
For substantially similar reasons as those discussed in refer-
ence to the Uhms’ state consumer protection claims, these
common law claims are preempted.

In the same way that an action brought under the auspices

dards developed through case law based on interpretations of State
contract and tort law may be specific to health plans, and may apply State
standards that would otherwise be preempted under Section 232(a) of the
[Act].” 70 Fed. Reg. 4588, 4665 (Jan. 28, 2005).
34
In its amicus brief to this court, CMS took the position that, under
Sprietsma, the Act’s express preemption provision does not contemplate
common law claims (although such claims can, argued CMS, be impliedly
preempted). We accord that position no deference here. See United States
v. Trident Seafoods Corp., 60 F.3d 556, 559 (9th Cir. 1995) (“No defer-
ence is owed when an agency has not formulated an official interpretation
of its regulation, but is merely advancing a litigation position.”).
 UHM v. HUMANA, INC. 12953
of a state consumer protection statute would be inconsistent
with those standards established under the Act, so too could
these tort actions pose such a problem. Indeed, the Supreme
Court has indicated, and we agree, that both positive state
enactments and liability under state common law may be
inconsistent with standards imposed by federal statutes. See
Geier, 529 U.S. at 868 (considering whether “standards
imposed in common-law tort actions, as well as standards
contained in state legislation or regulations” might interfere
with standards imposed by the National Traffic and Motor
Vehicle Safety Act). Cf. Riegel, 552 U.S. at 323-24 (“In Lohr,
five Justices concluded that common-law causes of action for
negligence and strict liability do impose ‘requirement[s]’ and
would be preempted by federal requirements” under the Med-
ical Device Amendments to the Federal Food, Drug, and Cos-
metic Act (citing Lohr, 518 U.S. at 512)).

[26] Here, in order to determine whether Humana commit-
ted a fraud or fraud in the inducement, a court would neces-
sarily need to determine whether the written and oral
statements were misleading. See W. Coast, Inc. v. Snohomish
Cnty., 48 P.3d 997, 1000 (Wash. App. 2002) (“The nine ele-
ments of intentional misrepresentation, or fraud, are: (1) rep-
resentation of an existing fact; (2) materiality; (3) falsity; (4)
the speaker’s knowledge of its falsity; (5) intent of the speaker
that it should be acted upon by the plaintiff; (6) plaintiff’s
ignorance of its falsity; (7) plaintiff’s reliance on the truth of
the representation; (8) plaintiff’s right to rely upon the repre-
sentation; and (9) damages suffered by the plaintiff.”); Peder-
sen v. Bibioff, 828 P.2d 1113, 1120 (Wash. App. 1992)
(“Fraud in the inducement . . . is fraud which induces the
transaction by misrepresentation . . . .” ). Were a state court
to determine that Humana’s marketing materials constituted
misrepresentations resulting in fraud or fraud in the induce-
ment, it would directly undermine CMS’s prior determination
that those materials were not misleading and in turn under-
mine CMS’s ability to create its own standards for what con-
stitutes “misleading” information about Medicare Part D.
12954 UHM v. HUMANA, INC.
Thus, the Uhms’ fraud and fraud in the inducement claims
must be preempted.35

(4) Preemption of Claims Against Humana, Inc.

The Uhms argued in their motion for reconsideration that
regardless of whether the Act preempts their claims against
Humana Health Plan, Inc., their claims against Humana, Inc.,
are not preempted because Humana, Inc., is not a CMS-
approved PDP sponsor, and the Act’s preemption provision
applies only to PDP sponsors. Humana, Inc., argues that pre-
emption under the statute is determined by whether federal
standards exist with respect to the prescription drug plan, not
by the identity of the defendant. We assess this argument with
respect to the claims against Humana Health Plan, Inc., that
we have found preeempted—the fraud and consumer protec-
tion claims—and conclude that the Uhms’ claims against
Humana, Inc., are also preempted.

To recall, the Act’s preemption provision provides:

The standards established under this part shall super-
sede any State law or regulation (other than State
licensing laws or State laws relating to plan sol-
vency) with respect to [PDPs] which are offered by
[Part D sponsors] under this part.

42 U.S.C. § 1395w-26(b)(3)36; see also 42 C.F.R.
§ 423.440(a) (2005).
35
We emphasize that this holding does not mean that all common law
fraud and fraud in the inducement claims would be preempted under the
Act. The preemption inquiry turns on the specific allegations forming the
basis of those claims, not their labels.
36
See 42 U.S.C. § 1395w-112(g) (providing that “[t]he provisions of
sections 1395w-24(g) and 1395w-26(b)(3) of this title shall apply with
respect to PDP sponsors and prescription drug plans under this part in the
same manner as such sections apply to MA organizations and MA plans
under part C of this subchapter”).
 UHM v. HUMANA, INC. 12955
[27] Section 1395w-26(b)(3) provides that standards pre-
empt state laws with respect to PDPs; the language about PDP
sponsors modifies or describes what a PDP is—it does not
shift the locus of preemption from the prescription drug plan
to the sponsor. Here, the fraud and consumer protection
claims against Humana, Inc., are entirely derivative of its rela-
tionship with Humana Health Plan, Inc. The Uhms allege that
Humana, Inc., participated alongside its subsidiary Humana
Health Plan, Inc., in marketing the PDP. As we discussed
above, the conduct underlying these allegations is directly
governed by federal standards. Therefore the Uhms’ state law
claims, with respect to the PDP, are preempted. This case
does not require us to consider whether allegations related to
a third party’s involvement with a PDP that differ from those
alleged here might be preempted under the Act.

III. CONCLUSION

Because the Uhms’ state consumer protection claims and
fraud claims fall within the ambit of the federal standards pro-
vided for in the Act and its implementing regulations, those
claims are preempted. Because the breach of contract and
unjust enrichment claims fall squarely within the Act’s
exhaustion provision, the district court lacked jurisdiction
over those claims. Accordingly, the judgment of the district
court is AFFIRMED.

B. FLETCHER, Circuit Judge, concurring.

I concur in the opinion, which carefully and painstakingly
analyzes the claims. I add this concurrence simply to vent my
frustration. What have Uhms’ counsel accomplished for the
Uhms, for justice, or for the law?

The Uhms suffered a frustrating and bureaucratic “snafu”
that temporarily cost them two months’ prescription costs.
12956 UHM v. HUMANA, INC.
They filled out the forms to receive Part D prescription drug
benefits from Humana. The process obviously enrolled them
to the point where automatic deductions were made from their
social security checks. But the other half of the process failed
— their status as beneficiaries was denied and, as a conse-
quence, the Uhms had to pay for their prescriptions. Frustrat-
ing indeed. But what to do? Make a federal case of it — start
a class action where simply following the administrative
appeal process would suffice? A class action all for the recov-
ery of two months’ prescriptions?

Today the Uhms receive the prescription drug benefits to
which they are entitled. But not as a result of this lawsuit. The
cost to the court system and to the Uhms is unconscionable.
A bit of common sense and attention to the available adminis-
trative remedies should have been applied. Instead we have an
opinion with endless pages of legal analysis, months of study
and delay, and a determination that no benefit can be awarded
to the Uhms. Counsel particularly should take heed.