The Superior Court of San Diego County, California, denied appellant insurer’s petition to compel arbitration of the action filed against it by appellee insured, an incompetent person, by and through her guardian ad litem alleging a number of causes of action. The insurer appealed.
The insurer contended the trial court erred by concluding the federal Medicare Act (Act), 42 U.S.C.S. § 1395 et seq.
, did not preempt application of Cal. Health & Safety Code § 1363.1
to preclude enforcement of the insurance plan’s contractual arbitration provision. The appellate court found that the Act’s express preemption of state standards relating to coverage determinations was not clear and unambiguous under 42 U.S.C.S. § 1395w-26(b)(3)(B)
. Under the statute, “coverage determinations” meant that there was no federal preemption of state standards relating to resolution of state law causes of action that did not seek payment or reimbursement of a Medicare claim or otherwise fall within the Medicare administrative review process. Congress did not intend the Balanced Budget Act, 42 U.S.C.S. § 1395w-21 et seq.
, to preempt state standards relating to resolution of state law causes of action. Because Cal. Health & Safety Code § 1363.1
did not provide an alternative to Medicare’s exclusive review process for coverage determinations, 42 U.S.C.S. § 1395w-26(b)(3)(B)(iii)
did not preempt it. A newly added specific preemption provision in the federal did not apply.
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judgment was affirmed.
HOLDINGS: -The insurer met its burden of showing that the nondiverse defendant was fraudulently joined, so, his citizenship as discounted for purposes of assessing diversity of parties and the case was properly removed; -The insured failed to allege facts plausibly demonstrating its entitlement to recover under the policy’s business income and extra expense coverage as it only plausibly alleged that in-person dining restrictions interfered with the use or value of its property, not that the restrictions caused direct physical loss or damage as required for coverage; -The facts alleged in the complaint did not support recovery under the policy’s civil authority coverage because the complaint pointed generally to the physical action of the coronavirus but did not allege actual cases of “direct physical loss of or damage to property” at other locations as required for coverage.
Insured’s motion to remand denied. Insurer’s motion to dismiss granted.