Remove, Then Dismiss: The Medicare Advantage Jurisdictional Two-Step and the Limits of § 405(h) Channeling

By Matthew Macklin, Managing Attorney, Stratagem Law Group. When a Medicare Advantage recoupment dispute must go through Medicare appeals, and when it need not.

Key takeaways

• 42 U.S.C. § 405(h) channels claims that “arise under” the Medicare Act into Medicare appeals. The rule was written for parties seeking benefits, not for the targets of a plan’s collection demand. A dispute is not channeled merely because it involves a Medicare Advantage plan.
• Whether a Medicare Advantage recoupment dispute is channeled turns on four facts: contract status, an executed assignment, an enrollee with something at stake, and a determination anyone can appeal.
• The circuits disagree. The Eleventh Circuit (Tenet) treated a recoupment from non-contract hospitals with hold-harmless waivers as an appealable determination. The Fifth Circuit (RenCare, Caris) found nothing to exhaust where no enrollee has any interest. The Ninth Circuit has not decided the recoupment question, and its district courts have applied RenCare unevenly.
• For thirty years carriers have run the same sequence: remove the state-court suit, then move to dismiss for failure to exhaust. Courts have accepted it when the provider pursued an enrollee’s benefits as assignee, and the Fifth Circuit has rejected it when the provider enforced a private contract or resisted a clawback in which no enrollee had a stake. Either way, delay can do the work of a merits decision.
• A plan must also live with its own characterization of its notice. If the notice is an organization determination, subpart M’s obligations bind the plan. If it is not, there is nothing to exhaust. The plan may choose either position, but not both.
• Request reconsideration within the plan’s deadlines, and document its silence as a regulatory default rather than predicting futility. The forum question is the first fight, not the last.

The jurisdictional two-step

Medicare Advantage organizations have used the same procedural sequence for thirty years: invoke federal law to leave state court, then invoke administrative exhaustion to close the federal courthouse. Sometimes the law supports it. Often it does not. Either way, the provider pays for the trip.

Law reviewed through September 15, 2026.

There is a procedural sequence that recurs in Medicare Advantage litigation often enough to deserve a name.

A provider sues a Medicare Advantage organization in state court on state-law theories: breach of a provider agreement, unjust enrichment, conversion. The plan then removes the case to federal court. It asserts that the claims arise under the Medicare Act or are completely preempted by it. Or it invokes the federal-officer removal statute, because the plan administers a federal program. Once in federal court, the plan moves to dismiss. No court may hear the dispute at all, it argues, because the provider has not exhausted Medicare’s administrative appeal process.

Call it the jurisdictional two-step. Federal law is substantial enough to take the provider out of its chosen forum. Then administrative exhaustion is invoked to close the federal courthouse behind it. If the plan also characterizes its clawback as an internal payment-integrity matter rather than an appealable organization determination, the provider is left between two incompatible positions. The court is told to wait for an appeal, yet the plan’s own process supplies no appeal to wait for.

Thirty years of the same sequence

The sequence is not hypothetical, nor is it new. The reported decisions run from Aetna in 1996 through Humana in 2004 and 2016, Kaiser in 2022, and UnitedHealthcare and its affiliates in 2023, 2024, and 2025. The last of them arose in Washington, where United removed a solo optometrist’s small-claims case over roughly $480 to federal court, and the case stayed there for seventeen months. Those decisions are discussed in detail below. They do not all come out the same way, and that is the point. Whether the channel exists depends on questions the two-step is designed to skip.

Does a Medicare Advantage recoupment claim “arise under” the Medicare Act?

The channeling rule is 42 U.S.C. § 405(h), a Social Security Act provision that 42 U.S.C. § 1395ii incorporates into Medicare. Its third sentence bars any action “brought under section 1331 or 1346 of title 28 to recover on any claim arising under” the Act. Section 405(g) then supplies the only route around that bar: judicial review after a “final decision” of the Secretary of Health and Human Services.

The Supreme Court has defined the category. A claim arises under the Medicare Act in two situations. Either the Act supplies “both the standing and the substantive basis” for the claim, or the claim is “inextricably intertwined” with a claim for Medicare benefits. Heckler v. Ringer, 466 U.S. 602, 614–15 (1984). Likewise, the Ninth Circuit applies that two-part test, and applies it broadly. Global Rescue Jets, LLC v. Kaiser Foundation Health Plan, Inc., 30 F.4th 905, 917 (9th Cir. 2022); Do Sung Uhm v. Humana, Inc., 620 F.3d 1134, 1141 (9th Cir. 2010).

Nor does the test turn on the caption, the remedy, or whether counsel pleads only state-law causes of action. As the Supreme Court explained in Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 13–14 (2000), and the Ninth Circuit reiterated in Sensory NeuroStimulation, Inc. v. Azar, 977 F.3d 969, 975 (9th Cir. 2020), § 405(h) forecloses distinctions between “general legal” and “fact-specific” challenges, between “collateral” and “noncollateral” issues, and between monetary and nonmonetary relief.

Broad is not boundless

A dispute does not arise under Medicare merely because it involves a Medicare Advantage plan. Nor does it arise under Medicare because it uses claims data or requires the parties to consult Medicare regulations. Instead, the question is what right the plaintiff seeks to enforce and whether deciding the claim requires a court to determine entitlement to Medicare benefits.

Three decisions from courts in the Ninth Circuit mark the line. The court of appeals channeled a non-contracted air-ambulance provider that sued as the assignee of two enrollees to revisit the rate at which Kaiser had already paid. Resolving that suit, after all, meant deciding what the enrollees’ plans covered. Global Rescue Jets, 30 F.4th at 909–10, 918. In contrast, it refused to channel a wrongful-death suit by a deceased enrollee’s heirs. They sought damages, not benefits, and no retroactive payment could remedy the injury. Ardary v. Aetna Health Plans of California, Inc., 98 F.3d 496, 500 (9th Cir. 1996).

Similarly, the Western District of Washington refused to channel a contracted optometrist’s $480 claim under his participation agreement. Washington contract law supplied the substantive basis for the claim, and nothing in the case required the court to construe Medicare benefits. Wang v. United Healthcare of Washington, Inc., No. 2:23-cv-01434-LK, 2025 WL 593094 (W.D. Wash. Feb. 24, 2025). Each is discussed further below.

“Medicare-related” describes the context. It is not, however, a jurisdictional conclusion.

Channeling, exhaustion, and “no review at all” are three inquiries, not one

Providers and courts sometimes fold three distinct questions into a single “must exhaust” reflex. Ninth Circuit law, however, keeps them separate, and the sequence matters.

First, arising under. Suppose Medicare does not supply the claim’s standing and substantive basis, and the claim is not inextricably intertwined with a claim for benefits. Then § 405(h) does not channel it. In that case, the inquiry ends there.

Second, presentment and exhaustion. If the claim does arise under the Act, § 405(g) imposes two prerequisites of what the Ninth Circuit calls “jurisdictional stature.” The first is a nonwaivable requirement that the claim be presented to the plan. The second is a waivable requirement that the claimant pursue each available level of administrative review. Global Rescue Jets, 30 F.4th at 912–15; Mathews v. Eldridge, 424 U.S. 319, 328 (1976). A court may excuse exhaustion if three conditions are met. The claim must be wholly collateral to a claim for Medicare benefits, the plaintiff must make a colorable showing of irreparable harm, and exhaustion must be futile. Global Rescue Jets, 30 F.4th at 919; Bowen v. City of New York, 476 U.S. 467, 483–85 (1986).

The “no review at all” exception

Third, no review at all. Even a claim that arises under the Act escapes § 405(h) if applying the bar “would not lead to a channeling of review through the agency, but would mean no review at all.” Illinois Council, 529 U.S. at 17; see id. at 19. Even so, the exception is narrow. Hardship in an isolated case is therefore not enough. The question is whether, applied generally, the requirement amounts to “complete preclusion of judicial review.” Id. at 22–23. Moreover, the Ninth Circuit treats the inquiry as objective. It has held the exception unavailable where a beneficiary could carry the same issue through the agency on the plaintiff’s behalf. Consequently, a particular plaintiff’s difficulty in recruiting that proxy does not change the analysis. Sensory NeuroStimulation, 977 F.3d at 983–84.

The exception therefore presupposes that someone holds a live claim the process is built to hear. Suppose no enrollee has a pending claim, and the provider’s own appeal rights, on the plan’s account, attach only when the plan elects to begin offsetting. Then there is no proxy and no gateway act the provider can perform. Channeling does not postpone review; it postpones it until after the money is gone.

The sequencing has consequences, too. A claim’s “collateral” character does not, by itself, take it outside § 405(h). Rather, it is one element of the separate argument for excusing exhaustion. Likewise, a slow appeal that is actually moving is not “no review at all.” And a plan’s silence should be pleaded as what the regulations make it: a default with assigned consequences, not a bare prediction of futility. More on that below.

Who is the claimant? Provider status, assignment, and enrollee interest decide whether a channel exists

The text of § 405(h) supplies the first sorting question. The bar reaches actions brought “to recover on any claim arising under” the Act. In other words, it channels claimants, meaning parties pursuing the Act’s benefits, into the Act’s remedies. The Supreme Court’s formulations presuppose the same thing. They describe a party whose claims are “inextricably intertwined” with its own claims for benefits, “at bottom, a claim that they should be paid.” Ringer, 466 U.S. at 614.

Global Rescue Jets was such a party. It sued as the assignee of two enrollees’ benefit claims after Kaiser paid at Medicare rates. Its contract claims were “predicated on” its status as assignee. Without that status it would have had no basis for demanding payment. 30 F.4th at 918. By comparison, a provider resisting a plan’s recovery of money the plan already paid is in a different posture. It demands payment of nothing. The only party seeking to recover on a claim is the plan.

The regulations then supply the rest of the map. They turn on three facts. Is the provider contracted? Does it hold an actual assignment of an enrollee’s claim? And does any enrollee retain a stake in the outcome?

Contract status

The Part C appeal regulations have long said that a determination on services for which the enrollee has no further liability is not appealable. In the Contract Year 2026 rule, however, CMS rewrote that exclusion to confine it to contract providers’ adjudicated claims. The text now reads: “If a contract provider’s request for payment has been adjudicated and the enrollee is determined to have no further liability to pay for the services furnished by the MA organization, the claim payment determination is not subject to the appeal process in this subpart.” 42 C.F.R. § 422.562(c)(2); see 90 Fed. Reg. 15792, 15842 (Apr. 15, 2025).

CMS’s rationale rests on agency and on the statute’s non-interference clause. A contract provider furnishes covered services “as an agent of the MA organization.” 90 Fed. Reg. at 15840. And CMS has long read the non-interference clause, 42 U.S.C. § 1395w-24(a)(6)(B)(iii), to keep contract-provider payment disputes out of the appeals process. That exclusion applies once no enrollee has an interest in the dispute. Id. at 15842. Those disputes are left to the contract and other applicable law rather than to Part C enrollee appeals.

The regulation describes the appeal process, not the reach of § 405(h), and Ninth Circuit district courts have divided on contract disputes. Where letters of agreement incorporated Medicare payment rules, one court found contracted hospitals’ underpayment claims “inextricably intertwined” with Medicare benefits. Prime Healthcare Services, Inc. v. Humana Insurance Co., 230 F. Supp. 3d 1194, 1204 (C.D. Cal. 2017); 298 F. Supp. 3d 1316, 1321–22 (C.D. Cal. 2018). Where the contract required no Medicare determination, others followed RenCare. Liberty Dialysis-Hawaii LLC v. Kaiser Foundation Health Plan, Inc., No. CV 17-00318 JMS-RLP, 2017 WL 4322385, at *5 (D. Haw. Sept. 28, 2017); Wang, 2025 WL 593094, at *7.

Assignment

Non-contract providers can enter the enrollee-appeal system, but not automatically. A non-contract provider is a party to an organization determination as an “assignee” when it has furnished a service and “formally agrees to waive any right to payment from the enrollee for that service.” 42 C.F.R. § 422.574(b). And, as the Fifth Circuit put it, “an enrollee must actually have a claim to assign for § 422.574(b) to apply.” Caris MPI, Inc. v. UnitedHealthcare, Inc., 108 F.4th 340, 351 (5th Cir. 2024).

Accordingly, a provider that executed such waivers and is pursuing the enrollees’ unpaid claims stands in their shoes. That is Global Rescue Jets, which sued as the enrollees’ assignee. It is also the reasoning of Tenet Healthsystem GB, Inc. v. Care Improvement Plus South Central Insurance Co., 875 F.3d 584, 588–91 (11th Cir. 2017). There, the Eleventh Circuit required non-contract hospitals that had signed hold-harmless waivers to exhaust a challenge to the plan’s recoupment. Some plans, however, argue that any provider who treated an enrollee is that enrollee’s assignee whether or not the enrollee has a claim to assign. That reads the condition out of the regulation altogether. It converts a channeling statute written for claimants into a jurisdictional immunity for the plan’s own collection activity.

Enrollee interest in a Medicare Advantage recoupment

The Fifth Circuit first stated the rule in RenCare and later applied it to a post-payment audit in Caris: the Part C review process “does not extend to claims in which an enrollee has absolutely no interest.” RenCare, Ltd. v. Humana Health Plan of Texas, Inc., 395 F.3d 555, 559 (5th Cir. 2004); Caris, 108 F.4th at 343, 349. In Caris, the services had been preauthorized, furnished, covered, and paid, and no enrollee had requested a determination, been denied a service, or been asked to pay. On those facts the court held that the plan’s recoupment “is not an organization determination” the provider could appeal. 108 F.4th at 350–51 (quoting RenCare, 395 F.3d at 560).

That conclusion held whether Caris was a contract or non-contract provider. In either case Caris could not seek additional payment from enrollees if it lost, so the enrollees bore no risk. Id. at 350.

Courts in the Ninth Circuit have not embraced that rule, however. Two district courts channeled non-contract providers that sued plans for reimbursement. One described the Ninth Circuit as “at odds” with RenCare; the other declined to apply the Caris exception without circuit authority. Prime Healthcare Huntington Beach, LLC v. SCAN Health Plan, 210 F. Supp. 3d 1225, 1232–33 (C.D. Cal. 2016); QuickMed Diagnostic, Inc. v. Anthem Blue Cross Life & Health Insurance Co., No. 25-cv-2902-BAS-JAC, at n.13 (S.D. Cal. Aug. 26, 2026). Both plaintiffs, though, were suing to collect. The enrollee-interest question remains the “at bottom” inquiry approached from the other direction: whose claim is this? When the services were rendered, covered, and paid, no benefits claim is at the bottom, and nothing remains for five levels of review to do. Whether the Ninth Circuit will agree is an open question.

The practical map for a Medicare Advantage recoupment dispute

Dispute posture	Likely procedural consequence
Contract provider; adjudicated payment request; no further enrollee liability	Outside subpart M under § 422.562(c)(2). Governed by the provider agreement, its dispute-resolution clause, and otherwise applicable law. RenCare; Wang; Liberty Dialysis. But see Prime Healthcare v. Humana (agreements incorporating Medicare rates).
Non-contract provider holding executed waivers, pursuing enrollees’ unpaid or underpaid claims	Inside the Part C organization-determination and appeal process. Global Rescue Jets controls in the Ninth Circuit.
Coverage decision made before or during care, including whether, how long, or at what level an enrollee receives services	An organization determination with enrollee appeal rights. The enrollee’s interest in such a decision “extends beyond” cost-sharing. 42 C.F.R. § 422.566(b)(3); 90 Fed. Reg. at 15842.
Plan recoups paid claims from non-contract hospitals that had signed hold-harmless waivers	The Eleventh Circuit in Tenet treated the recoupment as an organization determination and required exhaustion; the executed waivers made the hospitals assignees.
Plan recoups paid claims for completed, preauthorized services; no executed waiver, no pending enrollee claim, no enrollee stake	The Fifth Circuit in Caris held the recoupment was not an organization determination and there were no administrative remedies to exhaust. The Ninth Circuit has not decided the question.

Two further points about Medicare Advantage recoupment

First, the contract line cannot be turned into a wedge against non-contract providers. Plans sometimes argue that because a contract provider has a remedy outside subpart M, a provider with no contract must be channeled. The result, however, is perverse. The provider with a negotiated agreement may defend a clawback in court. The provider with no relationship to the plan at all, no contract, no negotiated terms, no agreed process, gets self-help collection and no forum. In short, the absence of a contract narrows the plan’s rights against the provider; it does not enlarge them.

Second, a plan that characterizes its clawback has to live with the characterization. Either the recoupment notice is an organization determination, or a revised determination on reopening under 42 C.F.R. § 422.616, or it is not. If it is, subpart M attached the moment the provider requested reconsideration, and the obligations that followed belonged to the plan. Specifically, the plan owed a reconsidered determination within the regulatory timeframe. 42 C.F.R. § 422.590(a)–(c). It also owed transmittal of the file to the independent review entity if it affirmed the determination. Id. §§ 422.590(a)(2), (b)(2), 422.592(a). And if it believed the request defective or the requester an improper party, it owed a written dismissal. That dismissal had to state the reason and the right to independent-entity review. Id. § 422.582(f)–(g).

Therefore, a plan that did none of those things cannot convert its own regulatory defaults into the provider’s failure to exhaust. Suppose instead the notice was not an organization determination, and appeal rights attach only when the plan elects to begin offsetting. Then no determination exists, nothing has been decided, and there is nothing for the five levels to review. That is Caris. A plan may choose either position, but not both.

Medicare Advantage recoupment and the two-step in the reported cases

The history matters because the same sequence has recurred across carriers, circuits, and three decades. It also matters because the courts have not treated every dispute alike. Here is the pattern as it appears in the public record.

Aetna and Humana, 1996 to 2016

Aetna, 1996. In Ardary, the plaintiffs sued in California state court. Aetna removed on the theory that the claims related to denied Medicare benefits and were preempted. It then moved to dismiss because the administrative process was the exclusive remedy. 98 F.3d at 498. The Ninth Circuit, however, held that the claims did not arise under the Act and that the action had been improperly removed. It directed the district court to send the case back to state court. Id. at 501–02.

Humana, 2004. In RenCare, a contracted dialysis provider sued in Texas state court for nonpayment under its provider agreement. Humana removed and obtained dismissal for failure to exhaust. 395 F.3d at 557. The Fifth Circuit, however, reversed. The claims were “at bottom” claims for payment under a contract between private parties. There was “a complete absence” of enrollee interest, and there were no administrative remedies to exhaust. Id. at 559–60.

Humana, 2016. In Ohio State Chiropractic Ass’n v. Humana Health Plan, Inc., 647 F. App’x 619 (6th Cir. 2016), Humana removed a provider association’s state-court suit under the federal-officer statute and obtained dismissal for nonexhaustion. The Sixth Circuit, though, reversed on a threshold ground. A Medicare Advantage organization has an arm’s-length relationship with CMS and does not “act under” a federal officer. The case should never have been in federal court, and the court ordered it remanded to state court.

Care Improvement Plus and the Eleventh Circuit, 2017

Care Improvement Plus, 2017. Tenet is not a removal case, but it belongs in the history because it is the plan-side authority on recoupment. Eleven non-contract hospitals that had signed hold-harmless waivers sued in federal court. The plan had determined it overpaid them and had recouped by offset. 875 F.3d at 586, 588. The Eleventh Circuit affirmed dismissal for failure to exhaust. The hospitals, as assignees under § 422.574(b), were parties to an organization determination. Id. at 588–91. The Fifth Circuit later acknowledged Tenet as contrary authority in Caris and went the other way. 108 F.4th at 346, 351.

Kaiser and the Ninth Circuit, 2022

In Global Rescue Jets, Kaiser removed under both the federal-question and federal-officer statutes and moved to dismiss for lack of jurisdiction. 30 F.4th at 911. The Ninth Circuit affirmed the dismissal because the non-contracted provider, standing in the enrollees’ shoes, was asking the court to decide the scope and amount of Medicare Advantage benefits. Id. at 917–19.

Three features of the opinion also deserve attention. The provider had, in fact, satisfied presentment by submitting its claims to Kaiser. It lost on exhaustion because it sought reconsideration for only one of the two enrollees and did not pursue further review after Kaiser denied it. Id. at 910, 915. The court also expressly declined to decide “whether a different conclusion would be warranted in a case involving a contract provider.” Id. at 915 n.4. And it reserved whether Medicare Advantage organizations may invoke the federal-officer removal statute at all. Id. at 917 n.5. That contract-provider question therefore remains open in the Ninth Circuit.

UnitedHealthcare, 2023 and 2024

2023. In Trinity Home Dialysis, Inc. v. WellMed Networks, Inc., No. 22-10414, 2023 WL 2573914 (5th Cir. Mar. 20, 2023) (unpublished), a subcontractor of UnitedHealthcare’s Medicare Advantage organization removed a provider’s state suit under the federal-officer statute and obtained dismissal for failure to exhaust. The Fifth Circuit affirmed, because the suit challenged organization determinations the provider had not appealed.

2024. In Caris, United audited claims it had paid between February 2016 and July 2018 and concluded that Caris had used incorrect billing codes. It then declared an overpayment of $1,276,711.29 and began recovering it by offsetting against Caris’s new claims. Caris disputed the recoupment through United’s internal process. It then sued in Texas state court for breach of implied contract, unjust enrichment, conversion, and estoppel. United removed under the federal-officer statute, and the district court dismissed for failure to exhaust. 108 F.4th at 345.

The Fifth Circuit affirmed federal-officer jurisdiction, a conclusion the Sixth Circuit had rejected for Humana in its unpublished Ohio State Chiropractic decision, but reversed the dismissal. Id. at 345–48, 351. After all, the services had been preauthorized and performed. No enrollee had requested a determination, been denied a service, or been asked to pay. United’s recoupment “is not an organization determination,” and “there [were] no administrative remedies for [Caris] to exhaust.” Id. at 350–51. United also argued that Caris was an “assignee” under § 422.574(b) whether or not any enrollee had assigned anything. The court rejected the argument, because an enrollee must actually have a claim to assign. Id. at 351. Caris filed suit in 2021, yet it received a ruling on the sufficiency of its pleadings only in March 2025. Caris MPI, Inc. v. UnitedHealthcare, Inc., No. 3:21-cv-3101-X (N.D. Tex. Mar. 21, 2025).

UnitedHealthcare in Washington, 2025

2025. In Wang, a solo optometrist filed a pro se small-claims notice against United in King County District Court in June 2023 over approximately $480. United removed to federal court that September, invoking federal-question jurisdiction and § 405, and moved to dismiss for failure to exhaust. Seventeen months later, the court remanded. It held that the provider’s claim arose under his participation agreement and rejected United’s argument that RenCare was outdated. United’s contrary authorities, the court observed, all involved non-contracted providers or preemption. It also applied Global Rescue Jets and quoted Caris. United had failed to show how a billing dispute between a plan and a provider over past services had any direct impact on enrollees. The motion to dismiss was accordingly denied as moot.

What the record shows about Medicare Advantage recoupment litigation

The public record does not establish a single corporate motive, and it need not. What it establishes is that “remove first, demand exhaustion second” is a recurring litigation position across the industry. Courts have accepted it when the provider was pursuing an enrollee’s benefits claim as assignee. The Fifth Circuit has rejected it when the provider was enforcing a private contract or resisting a recoupment in which no enrollee had a stake, and the Eleventh Circuit has gone the other way for hospitals that signed hold-harmless waivers. A provider who concedes the point without testing it has therefore surrendered its strongest procedural ground.

Indeed, the Ninth Circuit itself has said why the stakes are all-or-nothing. In Global Rescue Jets it explained that dismissal rather than remand was proper because “the federal law that deprives the federal court of jurisdiction also deprives the state court of jurisdiction.” 30 F.4th at 920 n.6. When the channel exists, it is exclusive. If it does not exist, there is nothing to defer to.

When an appeal channel becomes an attrition mechanism

To be sure, administrative exhaustion has legitimate purposes. It lets an expert agency apply its expertise, correct its own errors, and build a record for judicial review. Those purposes assume three things: an appealable determination, a party entitled to appeal it, and a process capable of reaching a final decision. Remove any one of them and channeling stops postponing review and starts preventing it.

Consider, then, how a plan’s own process can remove all three at once. Some plans take the position that a recoupment notice is not itself an organization determination. On that view, formal appeal rights attach only when the plan begins offsetting on a remittance advice. The provider should wait for that event before requesting reconsideration. In that design, review does not precede the taking; instead, it is triggered by it. Before the offset there is nothing to appeal. After the offset, the harm the provider needed review to prevent has already occurred.

A remedy that begins only at the plan’s election, which the plan may elect against indefinitely, is not a remedy the provider failed to exhaust. It is, rather, a remedy withheld. Some plans go further and tell the provider that Part C reconsideration and independent review are “misapplied” to recoupment. Then, on the plan’s own account, there is no process at all. A court asked to dismiss for failure to complete it should therefore ask what, exactly, the provider was supposed to complete.

The regulations assign consequences to silence

The Part C regulations answer that design, at least in part. If a plan fails to give timely notice of an organization determination, “this failure itself constitutes an adverse organization determination and may be appealed.” 42 C.F.R. § 422.568(f). If a plan fails to issue a reconsidered determination within the required time, sixty days for a payment request, the failure “constitutes an affirmation of its adverse organization determination.” The plan then “must submit the file to the independent entity.” 42 C.F.R. § 422.590(b)(1), (d); see id. § 422.592(a). And a plan that regards the request as defective, or the requester as an improper party, is directed to dismiss it in writing, stating the reason and the right to independent-entity review. 42 C.F.R. § 422.582(f)–(g).

In short, the regulations do not contemplate a provider held in reconsideration indefinitely. Silence moves the file to the independent entity, and a dismissal must be in writing with reasons. Consider a provider that made its request, renewed it within the plan’s deadlines, and received no decision, no dismissal, and no transmittal. That provider is not predicting futility; rather, it is documenting a default.

On the other side, the regulations strip out the escalation rights a traditional Medicare appellant uses to force a stalled process forward. Specifically, section 422.562(d)(2) makes several Part 405 provisions inapplicable to Part C. Gone are the timeframes for redeterminations and reconsiderations. So is the option to escalate a stalled appeal to the Office of Medicare Hearings and Appeals or from there to the Medicare Appeals Council. Also gone are the Council’s decision deadlines and the right to escalate to federal court under § 405.1132. A Part C appellant whose case stalls at the later levels has fewer levers than a Part A or Part B appellant.

The economics of Medicare Advantage recoupment

Medicare Advantage plans recover alleged overpayments by offset against the provider’s current, unrelated claims. They do not need a judgment or a final decision, because they control the payment stream. Indeed, CMS’s rulemaking record reflects the concern. Commenters on the 2026 rule told the agency that plans “strategically focus on using post-payment review to deny contract provider claims with minimal clinical justification because contract providers may only receive external review of the denials through judicial action.” 90 Fed. Reg. at 15841. Still, CMS did not adopt that characterization as its own finding. Nor did it create a Part C appeal for contract-provider payment disputes; it confirmed that, once no enrollee has an interest in the dispute, they remain outside subpart M. Id. at 15842.

That choice, however, sharpens the jurisdictional point. If CMS has placed a category of disputes outside the process, a court asked to dismiss for failure to exhaust should first identify the process the provider was supposed to use. After all, exhaustion of a channel that does not exist is not exhaustion. It is a cul-de-sac with a federal caption.

The structural imbalance does its work regardless of anyone’s intent. The plan holds the money while the provider searches for the forum. A small practice can run out of receivables or runway long before a national carrier runs out of process. Caris sued in 2021 and waited more than three years for a ruling on its pleadings. Dr. Wang, similarly, spent seventeen months in federal court over roughly $480. No plan needs to set out to wear a provider down. A system that pays one side during the dispute and not the other produces that result on its own. The provider who understands that will therefore treat the forum question as the first fight, not the last.

What a provider should test before choosing a forum in a Medicare Advantage recoupment dispute

The forum analysis should be built before the first offset, not after it. The questions that decide it are these.

Contract status. Is the provider in network, out of network, or subject to a delegated or downstream agreement? Which contract, and which dispute-resolution clause, governs?

Enrollee interest. Could any enrollee lose coverage, incur liability, or receive a different benefit depending on the outcome? A hold-harmless clause is relevant but does not settle the question.

The nature of the plan’s action. Is the demand an organization determination, a revised determination on reopening, a contractual audit finding, or an internal payment-integrity decision? Ask the plan to identify in writing the legal classification of its action, the decision date, the appeal right, the deadline, and the next reviewer. In either case, the answer, or its absence, is evidence.

Presentment and the regulatory defaults. Presentment is the nonwaivable element, and it requires presentation to the decision-maker, not completion of the process. Request reconsideration in writing within whatever deadline the plan’s notice sets. Renew it if the plan reissues the demand, and preserve the pending request expressly. If the plan goes silent, invoke §§ 422.568(f), 422.590(d), and 422.582(f)–(g). Demand either a decision, a written dismissal, or transmittal to the independent review entity, and ask the entity in writing whether it has received anything. Every act the framework assigns to a provider should be on the record, so that what remains is visibly the plan’s move.

Source of the claim. Can the state-law claim be decided from the provider agreement or generally applicable law without determining Medicare coverage or payment entitlement? If so, RenCare and Wang are the closest authorities. Otherwise, Global Rescue Jets is.

Preemption

Channeling and preemption are different defenses, and they can come out differently for the same claim. A claim that does not arise under Medicare may still face the Medicare Advantage express-preemption provision, 42 U.S.C. § 1395w-26(b)(3). That provision displaces state law only when a federal “standard” governs the subject. In Uhm, the Ninth Circuit held that fraud and Consumer Protection Act claims about a Part D sponsor’s marketing were not channeled. 620 F.3d at 1145. It then held them expressly preempted, because federal standards govern Part D marketing materials and CMS had reviewed and approved the materials the claims attacked. Id. at 1148–57. Neither the label on a claim nor the fact that it escapes channeling decides preemption. Instead, what decides it is whether a federal standard actually governs the conduct at issue.

Removal posture, diversity, and interim injury

Removal posture. Expect federal-question, complete-preemption, and federal-officer arguments. Courts of appeals have reached different results on whether a Medicare Advantage organization may invoke the federal-officer statute at all. Compare Caris, 108 F.4th at 345–48 (published), with Ohio State Chiropractic, 647 F. App’x 619 (unpublished). The Ninth Circuit, meanwhile, reserved the question in Global Rescue Jets. There, the provider contested the asserted bases for jurisdiction but did not move to remand. 30 F.4th at 911, 917 n.5. Even where removal succeeds, the exhaustion defense can still fail, as Caris demonstrates.

Diversity deserves its own sentence. Section 405(h)’s third sentence is written in terms of two enumerated grants, §§ 1331 and 1346. The Supreme Court has not held that the bar reaches diversity actions, and the Ninth Circuit has not squarely addressed the question. Two circuits, however, have extended it by relying on the recodification history of the Social Security Act. Bodimetric Health Services, Inc. v. Aetna Life & Casualty, 903 F.2d 480, 488–90 (7th Cir. 1990); Midland Psychiatric Associates, Inc. v. United States, 145 F.3d 1000, 1004 (8th Cir. 1998).

The Global Rescue Jets panel affirmed dismissal of an amended complaint that pleaded diversity without discussing the point. 30 F.4th at 911. A provider that has diversity should therefore plead it and should expect the plan’s motion to address it. A motion that seeks dismissal of the whole action without engaging the only pleaded basis of jurisdiction has left the plaintiff’s showing unanswered.

Interim injury. Document the offsets, the cash-flow consequences, threatened closures, patient-access effects, and why later money damages would be inadequate. Those facts matter not only to waiver but also to equitable relief and settlement.

The analysis is forum-specific

Caris and RenCare bind courts in the Fifth Circuit, and Tenet binds courts in the Eleventh. The two lines disagree, though. The First Circuit has since distinguished both Fifth Circuit cases on their facts. Specifically, it channeled foreign hospitals’ suits for payment of plan benefits. No contract was alleged, the plan’s non-coverage decision was an organization determination, and the enrollees remained liable for their care. Hospital Amerimed Cancun S.A. de C.V. v. Martin’s Point Health Care, Inc., 149 F.4th 82, 93–94 (1st Cir. 2025). Outside the Eleventh Circuit, the line the cases draw is consistent. Providers pursuing plan benefits are channeled. Providers resisting extraction of their own funds, where no enrollee has a stake, are not. Tenet is the exception, and it turned on the hospitals’ status as assignees under § 422.574(b).

Global Rescue Jets binds courts in the Ninth Circuit. But it involved a non-contracted provider pursuing assigned benefit claims against a determination the plan had already made, and it expressly reserved the contract-provider question. The district decisions discussed above fill some of that space, and they do not all point the same way. Prime Healthcare v. Humana channeled contracted hospitals whose agreements incorporated Medicare rates. Prime Healthcare v. SCAN and QuickMed channeled non-contract providers suing for reimbursement. Liberty Dialysis and Wang, on the other hand, refused to channel contract disputes that required no Medicare determination, and Wang applied Global Rescue Jets and Caris together. Each of those channeling decisions, however, involved a provider suing to be paid. We have found no decision of the Ninth Circuit Court of Appeals, published or unpublished, that channels a provider’s challenge to a plan’s recoupment of claims the plan itself adjudicated and paid.

Closing Thought

Section 405(h) is a channeling rule, not a talisman. When a provider’s claim arises under the Medicare Act, presentment is mandatory and exhaustion is ordinarily required. Nor will relabeling the claim change that. The analysis is different when the plan is the only party seeking to recover anything. It is different when the provider holds no assignment and no enrollee has a stake in the outcome. And it is different when the plan’s own account is that no determination has been made. The same is true when CMS’s own regulations place the dispute outside the Part C appeal process. Then a plan’s assertion that “this must go through the administrative process” is a legal position to be tested rather than a fact to be accepted.

The precise question, then, is not whether a dispute “involves Medicare.” It is whether the claim arises under the Act and, if so, whether Congress and CMS built an administrative channel that this plaintiff can actually use. A channel has to lead somewhere. Federal law should not be both the hook that pulls a provider out of state court and the wall that keeps every court from hearing the claim.

Medicare Advantage recoupment disputes are time-sensitive, and the characterization adopted in the first response can shape jurisdiction months later. If your practice has received a Medicare Advantage overpayment demand or offset notice, Stratagem Law Group’s payer dispute and clawback defense practice can help. We will identify the governing process and preserve the arguments before the plan begins collecting. Our healthcare regulatory team works with providers throughout Washington State and, in federal matters, nationwide.

Medicare Advantage Recoupment: Frequently Asked Questions

Does a Medicare Advantage recoupment demand have to go through the five-level Medicare appeals process before a provider can sue?

Not automatically. Section 405(h) channels claims that “arise under” the Medicare Act. A non-contract provider that holds assignments of enrollees’ claims and sues a plan for payment is channeled under Global Rescue Jets. But a provider resisting a plan’s recovery of claims the plan already adjudicated and paid is not seeking to recover anything. The only party seeking to recover on a claim is the plan. For that reason, the Fifth Circuit held in Caris that such a recoupment is not an organization determination and that there were no administrative remedies to exhaust. The Ninth Circuit, however, has not decided the question, and district courts within it have declined to extend the Fifth Circuit’s reasoning to providers suing plans for reimbursement.

What is the difference between presentment and exhaustion?

Presentment is the nonwaivable element: the claim must have been presented to the decision-maker. Exhaustion, in contrast, means completion of every available level of review. It can be excused where the claim is wholly collateral to a claim for benefits, the plaintiff makes a colorable showing of irreparable harm, and exhaustion would be futile. A provider that requested reconsideration in writing within the plan’s own deadlines has presented. What remains after that is the plan’s move.

Is a Medicare Advantage recoupment an “organization determination”?

Courts disagree. The Eleventh Circuit treated a recoupment from non-contract hospitals that had signed hold-harmless waivers as an organization determination requiring exhaustion (Tenet). The Fifth Circuit, however, reached the opposite result for a recoupment of paid claims for completed, preauthorized services. No enrollee had any interest, so there was no organization determination (Caris). The plan’s own characterization matters, too. If it says the notice is a determination, subpart M’s obligations bind it. If it says appeal rights attach only when it begins offsetting, then on its own account no determination exists and nothing can be reviewed.

Does it matter whether the provider has a contract with the plan?

Yes, but not in the way plans sometimes argue. A contract provider’s adjudicated payment dispute is expressly outside the Part C appeal process under 42 C.F.R. § 422.562(c)(2) and is left to the contract and other applicable law. A non-contract provider enters the enrollee-appeal system as an assignee by waiving any right to bill the enrollee, and even then an enrollee must actually have a claim to assign. Overall, the absence of a contract narrows the plan’s rights against the provider. It does not create a jurisdictional immunity for the plan’s collection activity.

What should a provider do when it receives a Medicare Advantage recoupment demand?

Note the date and every deadline the notice sets. Dispute in writing and request reconsideration within the plan’s own timeframe. Renew the request if the plan reissues the demand. Ask the plan to identify in writing the legal classification of its action, the appeal right, and the next reviewer. If the plan goes silent, invoke 42 C.F.R. §§ 422.568(f), 422.590(d), and 422.582(f)–(g). Demand a decision, a written dismissal, or transmittal to the independent review entity, and confirm with the entity in writing whether it has received anything. Also document offsets and their operational consequences. And involve counsel before the first offset, because the forum question is decided by the record you build now.

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This article is provided by Matthew Macklin and Stratagem Law Group for general informational and commentary purposes only. It is not legal advice, does not address any specific facts or circumstances, and does not create an attorney-client relationship between the reader and Stratagem Law Group or any of its attorneys. Laws, regulations, and enforcement priorities change. Readers should consult qualified counsel regarding their specific situation before acting on any information contained here.

Sources

Statutes, regulations, and rulemaking

• 42 U.S.C. § 405(g), (h); 42 U.S.C. § 1395ii; 42 U.S.C. § 1395w-24(a)(6)(B)(iii); 42 U.S.C. § 1395w-26(b)(3)
• 42 C.F.R. §§ 422.562, 422.566, 422.568, 422.574, 422.582, 422.590, 422.592, 422.616 (eCFR, Part 422, Subpart M)
• Medicare and Medicaid Programs; Contract Year 2026 Policy and Technical Changes, 90 Fed. Reg. 15792 (Apr. 15, 2025) (Federal Register)

Cases

• Heckler v. Ringer, 466 U.S. 602 (1984); Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000); Bowen v. City of New York, 476 U.S. 467 (1986); Mathews v. Eldridge, 424 U.S. 319 (1976)
• Global Rescue Jets, LLC v. Kaiser Foundation Health Plan, Inc., 30 F.4th 905 (9th Cir. 2022) (opinion)
• Sensory NeuroStimulation, Inc. v. Azar, 977 F.3d 969 (9th Cir. 2020) (opinion)
• Do Sung Uhm v. Humana, Inc., 620 F.3d 1134 (9th Cir. 2010); Ardary v. Aetna Health Plans of California, Inc., 98 F.3d 496 (9th Cir. 1996)
• Caris MPI, Inc. v. UnitedHealthcare, Inc., 108 F.4th 340 (5th Cir. 2024) (opinion); Caris MPI, Inc. v. UnitedHealthcare, Inc., No. 3:21-cv-3101-X (N.D. Tex. Mar. 21, 2025); RenCare, Ltd. v. Humana Health Plan of Texas, Inc., 395 F.3d 555 (5th Cir. 2004); Trinity Home Dialysis, Inc. v. WellMed Networks, Inc., No. 22-10414, 2023 WL 2573914 (5th Cir. Mar. 20, 2023) (opinion)
• Tenet Healthsystem GB, Inc. v. Care Improvement Plus South Central Insurance Co., 875 F.3d 584 (11th Cir. 2017) (opinion)
• Ohio State Chiropractic Ass’n v. Humana Health Plan, Inc., 647 F. App’x 619 (6th Cir. 2016) (opinion)
• Hospital Amerimed Cancun S.A. de C.V. v. Martin’s Point Health Care, Inc., 149 F.4th 82 (1st Cir. 2025); Bodimetric Health Services, Inc. v. Aetna Life & Casualty, 903 F.2d 480 (7th Cir. 1990); Midland Psychiatric Associates, Inc. v. United States, 145 F.3d 1000 (8th Cir. 1998)

District court decisions

• Wang v. United Healthcare of Washington, Inc., No. 2:23-cv-01434-LK, 2025 WL 593094 (W.D. Wash. Feb. 24, 2025) (order)
• District decisions in the Ninth Circuit: Prime Healthcare Services, Inc. v. Humana Insurance Co., 230 F. Supp. 3d 1194 (C.D. Cal. 2017) (opinion), and 298 F. Supp. 3d 1316 (C.D. Cal. 2018) (opinion); Prime Healthcare Huntington Beach, LLC v. SCAN Health Plan, 210 F. Supp. 3d 1225 (C.D. Cal. 2016) (opinion); Liberty Dialysis-Hawaii LLC v. Kaiser Foundation Health Plan, Inc., No. CV 17-00318 JMS-RLP, 2017 WL 4322385 (D. Haw. Sept. 28, 2017) (opinion); QuickMed Diagnostic, Inc. v. Anthem Blue Cross Life & Health Insurance Co., No. 25-cv-2902-BAS-JAC (S.D. Cal. Aug. 26, 2026) (opinion)