Ramtin Massoudi MD Inc v. Alex Azar, et al

Filing 33

MINUTE ORDER IN CHAMBERS by Judge Christina A. Snyder: RE ORDER TO SHOW CAUSE WHY PRELIMINARY INJUNCTION SHOULD NOT ISSUE (Dkt. 21). The Court DISMISSES without prejudice plaintiffs complaint for lack of subject matter jurisdiction. (lc). Modified .on 4/24/2018 (lc).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

Present: The Honorable 
Catherine Jeang 
Deputy Clerk 

CHRISTINA A. SNYDER 

N/A 

Tape No.

Attorneys Present for Defendants: 

Not Present 
Court Reporter / Recorder

Attorneys Present for Plaintiffs: 

Not Present 
Not Present 
(IN CHAMBERS) - ORDER TO SHOW CAUSE WHY
Proceedings:  
PRELIMINARY INJUNCTION SHOULD NOT ISSUE (Dkt. 21)

I.

INTRODUCTION

On February 8, 2018, plaintiff Ramtin Massoudi MD Inc. filed the instant action
against Seema Verma, Administrator of the Centers for Medicare and Medicaid Services,
and Alex Azar, Secretary of the United States Department of Health and Human Services
(collectively, “defendants”). Dkt. 1 (“Compl.”). Plaintiff is a Medicare provider that
seeks a temporary restraining order, preliminary injunction, and permanent injunction to
prevent defendants from recouping approximately $1.1 million as a result of a billing
dispute. See Compl. Plaintiff simultaneously filed an ex parte application for a
temporary restraining order. Dkt. 6. On March 12, 2018, the Court denied plaintiff’s
application for a temporary restraining order, finding that plaintiff failed to provide proof
of service, and set a hearing on March 12, 2018 for an order to show cause as to why a
preliminary injunction should not issue. Dkt. 21.
On February 14, 2018, plaintiff filed proof of service with respect to all
defendants. Dkt. 23. On February 26, 2018, defendants filed an opposition. Dkt. 24
(“Opp’n”). Plaintiff filed a reply on March 5, 2018. Dkt. 26 (“Reply”).
After carefully considering the parties’ arguments, the Court finds and concludes
as follows.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

II.

BACKGROUND
Plaintiff alleges the following facts.
A.

Plaintiff’s Billing Dispute

Ramtin Massoudi, M.D., is a board-certified physician who specializes in family
medicine and venous and lymphatic medicine. Compl. ¶ 14. He is the sole owner of
plaintiff Ramtin Massoudi MD Inc., a personal medical corporation based in Los Angeles
County, California. Id. ¶ 15. Plaintiff has offices in Beverly Hills, Encino, Glendale, and
Irvine, California, though plaintiff alleges that Dr. Massoudi recently closed the Irvine
office and will be closing the Beverly Hills office as a result of the recoupment at issue.
Id.
Plaintiff alleges that it serves a patient population consisting primarily of elderly,
low-income patients, and that approximately 90% of its gross revenue is derived from
Medicare reimbursements. Id. ¶ 16. In or about 2015, Dr. Massoudi began using the
Clarivein procedure in order to treat patients with venous reflux, a disease affecting
“superficial axial veins.”1 Id. ¶¶ 2, 17. Plaintiff asserts that Clarivein is the only
minimally-invasive catheter-based hybrid technique available for occlusion after
embolization, and asserts that this procedure uses the “Seldinger technique” to access the
vein, in which a catheter is inserted into a vessel using radiological ultrasonographic
image guidance. Id. ¶¶ 2–3. Plaintiff contends that the Clarivein procedure differs from
other vascular occlusion procedures because it involves “precise localization” and
application of mechanical and chemical occlusion. Id. ¶ 5.
The billing dispute central to plaintiff’s complaint concerns the propriety of its use
of billing code 37241 for the Clarivein procedure. Id. ¶ 6. Plaintiff alleges that it is “one
of a number of providers” who use that code for the Clarivein procedure in treating
venous reflux disease, and that it does so in part based on assurances from the device
manufacturer. Id. ¶ 7.
Plaintiff alleges that the billing dispute arose from a recent determination by
Noridian Healthcare Solutions, LLC (“Noridian”), a for-profit corporation that contracted

1

Venous reflux disease is a medical condition in which blood does not properly
circulate back from the legs, resulting in the pooling of blood in the legs and distension of
veins. Dkt. 8, Declaration of Ramtin Massoudi MD (Massoudi Decl.) ¶ 6.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

with Center for Medicare and Medicaid Services (“CMS”) to act as a fiscal intermediary
for California, that the Clarivein procedure should have been billed under a different code
providing lower reimbursements.2 Id. ¶ 8. CMS contracts with private insurance
companies to perform administrative functions for Medicare, and these Medicare
Administrative Contractors (“contractors”) process claims, determine whether services
are covered by Medicare, and determine the amount of payment for services furnished.
Id. ¶ 21. Plaintiff alleges that Noridian is now in the process of recouping over $1.1
million in Medicare payments from plaintiff, and that all of the alleged overpayment
relates to plaintiff’s use of the Clarivein procedure and billing code 37241. Id.
Absent injunctive relief, plaintiff contends that it is on the verge of financial
collapse and will be “forced out of business.” Id. ¶ 9. Plaintiff alleges that it is no longer
being paid for the services it is rendering to Medicare patients. Id. Though plaintiff
asserts that it is not requesting the Court to usurp the power of the Administrative Law
Judge (“ALJ”) to decide the merits of the billing dispute, plaintiff requests the Court to
maintain the status quo pending completion of the administrative appeals process. Id. ¶
10.
B.

Jurisdiction

Plaintiff asserts that this action arises under the Social Security Act, which
implicates the Medicare Act, 42 U.S.C. §§ 1395 et seq., as well as the Fifth Amendment
to the Constitution. Id. ¶ 23. Plaintiff contends that the Court has jurisdiction pursuant to
mandamus, 28 U.S.C. §§ 1331, 1361, the all writs act, 28 U.S.C. § 1651, and under the
Court’s general equity powers, 42 U.S.C. §§ 405, 1395ii. Id. ¶ 24. Plaintiff further
contends that the ALJ of CMS has no authority to issue an injunction regarding the $1.1
million recoupment and lacks the power to maintain the status quo pending a final
decision. Id. ¶ 25.
C.

The Administrative Appeals Process

Plaintiff asserts that there are four levels of administrative appeals applicable to a
billing dispute. Pursuant to 42 C.F.R. § 405.371(a)(3), a Medicare contractor—here,

2

In plaintiff’s application for a temporary restraining order, it argues that “the sheer
frequency with which Clarivein has been used…has prompted an aggressive and
systematic attempt by the Medicare contractor, Noridian, to force the downcoding of
Clarivein to other, less remunerative bill codes.” Motion at 7.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

Noridian—may offset or recoup Medicare payments to a provider upon a determination
that the provider has been overpaid after written notice to the provider of its
determination. Id. ¶ 45. A provider who wishes to challenge this determination may
request a redetermination (“Redetermination Request”) of the claim pursuant to 42 C.F.R.
§ 405.940, which is the first level of administrative appeals. Id. ¶ 46.
After a Redetermination Decision is issued, a provider may engage in the second
level by making a Request for Reconsideration from a qualified independent contractor
pursuant to 42 C.F.R. § 405.960. Id. ¶ 47.
Once a provider has exhausted the first two levels of administrative appeals, and
once a Reconsideration Decision becomes final, the Medicare contractor is immediately
permitted to recoup any overpayment it is entitled to collect. Id. ¶ 48 (citing 42 C.F.R. §
405.379(f)).
The third level of administrative appeals allows a provider to request a hearing
before an ALJ. Id. 49 (citing 42 C.F.R. § 405.1000 et seq.). Upon the filing of a timely
request, the provider has a right to a hearing within 90 days. Id. (citing 42 U.S.C. §
1395ff(d)(1)(A); 42 C.F.R. § 405.1016). Plaintiff alleges that, despite this right to a
speedy hearing, an enormous backlog of undecided appeals means that a provider
typically waits three-and-a-half years before obtaining a hearing before an ALJ. Id. ¶¶
49, 57, 59, 61.
The fourth level of administrative appeals is review before the Medicare Appeals
Council (“Council”). Id. After the Council issues a decision, a provider may file suit in
federal district court. Id. ¶ 54 (citing 42 C.F.R. § 405.1136 et seq.).
D.

“Escalation” Proceedings within the Administrative Process  

With respect to the third level, if an ALJ has not held a hearing and rendered a
decision within 90 days, a provider may bypass the ALJ level and “escalate” its claim
directly to the Council, which then has 180 days to act on the escalation request. Id. ¶ 50
(citing 42 U.S.C. § 1395ff(d)(3)(A); 42 C.F.R. § 405.1104). Under these circumstances,
the Council may conduct additional proceedings and a hearing, though it is not required
to do so. Id. (42 C.F.R. § 405.1108(d)(2)). Plaintiff asserts that, typically, the Council
will not hold a hearing or conduct oral argument unless there is an extraordinary question
of law or fact, and instead will review the qualified independent contractor’s decision—
from the second level—de novo. Id. If the Council fails to render a decision within 180

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

days, a provider may bypass the Council and seek judicial review. Id. ¶ 53 (citing 42
C.F.R. §§ 405.1132, 405.1100(d)).
With respect to the fourth level, if the Council has not rendered a decision
regarding its review of the ALJ’s decision within 90 days, a provider may also bypass the
Council and seek judicial review. Id. ¶ 53 (citing 42 U.S.C. ¶ 1395ff(d)(3)(B); 42 C.F.R.
§ 405.1132).
E.

Plaintiff’s Administrative Exhaustion

Plaintiff alleges that it submitted and received reimbursement for the Clarivein
procedure after using billing code 37241. Id. ¶ 63. Plaintiff asserts that, at the end of
2016, Safeguard Services LLC—a Zone Program Integrity Contractor (“ZPIC”)—
completed a review of plaintiff’s claims and issued an overpayment notification
concerning the use of code 37241 in connection with the Clarivein procedure.3 Id. ¶ 64.
In response, plaintiff made Determination Requests to Noridian, which plaintiff
alleges relied on non-binding policy articles in upholding the ZPIC’s overpayment
determination. Id. ¶ 65. Plaintiff timely appealed Noridian’s Redetermination Decisions
to a qualified independent contractor, C2C Innovative Solutions (C2C). Id. ¶ 68. On
October 5, 2017, C2C issued its first Reconsideration Decision and affirmed the initial
overpayment determination in part. Id. ¶ 69. Id. Subsequent to this decision, plaintiff
received five more Reconsideration Decisions from C2C; three on October 6, 2017, and
two on October 11, 2017. Id. ¶ 70.
Now that plaintiff has received decisions regarding its reconsideration appeals,
Noridian is in the process of recouping over $1.1 million pursuant to these decisions. Id.
¶ 71. Plaintiff is no longer receiving payment for services rendered to Medicare
beneficiaries. Id. ¶ 71.
III.

LEGAL STANDARD

A “preliminary injunction is an extraordinary and drastic remedy.” Munaf v.
Geren, 553 U.S. 674, 689–90 (2008). Thus, a district court should enter a preliminary

3

In its application for a temporary restraining order, plaintiff asserts that Safeguard
was awarded a $300 million contract by the CMS to detect Medicare fraud, and that it has
a strong incentive to aggressively seek “fraud” by any means possible. Motion at 7, n.6.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

injunction only “upon a clear showing that the plaintiff is entitled to such relief.” Winter
v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008). Such a showing
requires that the plaintiff establish he or she “is likely to succeed on the merits, that he is
likely to suffer irreparable harm in the absence of preliminary relief, that the balance of
equities tips in his favor, and that an injunction is in the public interest.” Id. at 20; see
Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009); see also Johnson v.
Couturier, 572 F.3d 1067, 1081 (9th Cir. 2009); American Trucking Associations, Inc. v.
City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009).
Following Winter, the Ninth Circuit articulated an alternate formulation of the
sliding scale test. Post-Winter, serious questions going to the merits and a balance of
hardships that tips sharply in favor of the plaintiff can support issuance of a preliminary
injunction if plaintiff also shows that there is a likelihood of irreparable injury and the
injunction is in the public interest. Alliance for the Wild Rockies v. Cottrell, 632 F.3d
1127, 1135 (9th Cir. 2011) (“To the extent prior cases applying the ‘serious questions’
test have held that a preliminary injunction may issue where the plaintiff shows only that
serious questions going to the merits were raised and the balance of hardships tips sharply
in the plaintiff’s favor, without satisfying the other two prongs, they are superseded by
Winter, which requires the plaintiff to make a showing on all four prongs. But the
‘serious questions’ approach survives Winter when applied as part of the four-element
Winter test. That is, ‘serious questions going to the merits’ and a balance of hardships
that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so
long as the plaintiff also shows that there is a likelihood of irreparable injury and that the
injunction is in the public interest” (citation omitted)). A “serious question” is one on
which the movant “has a fair chance of success on the merits.” Sierra On–Line, Inc. v.
Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984).
Plaintiff here expressly seeks to proceed under the “serious questions” formulation
of the preliminary injunction standard, and requests the Court to enjoin defendants from
recouping payments from plaintiff prior to completion of the administrative process. See
Compl.
IV.

DISCUSSION

As an initial matter—before reaching the inquiry of whether a preliminary
injunction is warranted—the Court must resolve whether it has subject matter

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

jurisdiction, given that plaintiff concedes that its complaint for injunctive relief implicates
the Medicare Act.
The Medicare Act, 42 U.S.C. §§ 1395 et seq., is a federally subsidized health
insurance program for elderly and disabled persons administered by the Secretary of the
Department of Health and Human Services (the “Secretary”), through CMS. The Act
consists of four main parts. Part B, as relevant here, is a supplemental insurance program
that covers the cost of professional medical services, treatment, and equipment. See 42
U.S.C. §§ 1395–j to 1395–w.
The Medicare Act’s exhaustion requirement, 42 U.S.C. § 405(h), makes judicial
review under a related provision, 42 U.S.C. § 405(g), “the sole avenue for judicial
review” for claims “‘arising under’ the Medicare Act.” Heckler v. Ringer, 466 U.S. 602,
614–15 (1984). As applicable here under Part B, a claim arising under the Medicare Act
may be brought in federal district court only after a plaintiff has obtained a “final
decision” from the Secretary by exhausting the aforementioned four-step administrative
review process. See 42 U.S.C. §§ 1395ii (incorporating 42 U.S.C. § 405(h)),
1395ff(b)(1)(A) (incorporating 42 U.S.C. § 405(g)). A claim “arises under” the Medicare
Act if the Act provides “both the standing and the substantive basis” for the claim, or if
the claim is “inextricably intertwined with a claim for benefits.” Ringer, 466 U.S. 602 at
614–15. The Court in Ringer noted that exhaustion may not be appropriate where a
plaintiff’s claim is “wholly ‘collateral’ ” to a claim for benefits and his “injury could not
be remedied by the retroactive payment of benefits after exhaustion of his administrative
remedies.” Id.
Plaintiff concedes that it has only exhausted two of the four levels of
administrative review. Motion at 8. Nevertheless, it argues that the Court has
jurisdiction to grant injunctive relief pursuant to (1) the waiver doctrine as set forth in
Mathews v. Eldridge, 424 U.S. 319 (1976); (2) mandamus jurisdiction under 28 U.S.C. §
1361; and (3) the “no review” exception set forth in Shalala v. Illinois Council on Long
Term Care, Inc., 529 U.S. 1, 19 (2000). Id. at 12, 14–6. The Court shall address each
argument in turn.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

A.

Waiver Doctrine

Plaintiff argues that the waiver doctrine set forth in Eldridge is applicable here
because the instant action involves an alleged violation of plaintiff’s constitutional
procedural due process rights. Motion at 12.
Eldridge provides that a “final decision of the Secretary”—central to whether
subject matter jurisdiction exists—consists of two separate elements: (1) a nonwaivable
requirement that a claim be “presented to the Secretary,” and (2) a waivable element that
“the administrative remedies prescribed by the Secretary be exhausted.” Eldridge, 424
U.S. at 328.
Plaintiff asserts that it has satisfied the nonwaivable element of presentment to the
Secretary by diligently pursuing its administrative appeals. Motion at 13. Defendants do
not appear to contest that plaintiff has satisfied the nonwaivable element of presentment.
Despite defendants’ failure to contest the issue of presentment, the Court observes
that the Ninth Circuit has addressed a similar issue concerning presentment in Haro v.
Sebelius, in which Medicare beneficiaries sought injunctive relief regarding “upon front”
reimbursement to the Secretary. 747 F.3d 1099, 1102 (9th Cir. 2014). In particular, the
beneficiaries argued before the district court that the Secretary’s practice of ordering
reimbursement before a final determination on any alleged overpayment was beyond the
Secretary’s regulatory authority and violated due process. Id.
In its analysis of whether the district court had subject matter jurisdiction to enjoin
the Secretary from collecting debts pending administrative appeal, the Ninth Circuit
noted that the purpose of presentment is to allow an agency “greater opportunity to apply,
interpret, or revise policies, regulations, or statutes without possibly premature
interference by different individual courts applying ‘ripeness’ and ‘exhaustion’
exceptions,” and that this purpose is not fulfilled if plaintiffs are permitted to raise claims
in federal court that were not raised before the agency. Id. at 1113. The Ninth Circuit
reasoned that the case before the district court did not involve a claim for benefits, and
instead concerned the lawfulness of the Secretary’s policy of demanding up-front
reimbursement. Id. In contrast, the beneficiaries’ requests for determination before the
Secretary concerned the “respective amounts of reimbursement.” Id. Because the
beneficiaries “did not provide an opportunity for the Secretary to consider the claim” that
the Secretary’s interpretation of applicable law exceeded applicable authority, the Court

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

concluded that the beneficiaries failed to present their challenge to the collection
procedures to the Secretary, and thus failed to satisfy the presentment requirement. Id.
Like the beneficiaries in Haro, the Court finds that nothing in the record indicates
that plaintiff presented its claim concerning the unlawfulness of the recoupment process
to the Secretary. Accordingly, it appears that plaintiff has failed to satisfy the
presentment requirement concerning its requested injunctive relief, which is a “purely
jurisdictional” requirement. See Haro, 747 F.3d 1099 at 1112.
Assuming arguendo that plaintiff has presented its due process claim to the
Secretary, the Court addresses the requirements necessary for plaintiff to demonstrate
appropriate waiver of exhaustion of administrative remedies.
For waiver of the exhaustion requirement to apply, “[t]he claim must be (1)
collateral to a substantive claim of entitlement (collaterality), (2) colorable in its showing
that denial of relief sought will cause irreparable harm (irreparability), and (3) one whose
resolution would not serve the purposes of exhaustion (futility).” Kaiser v. Blue Cross of
California, 347 F.3d 1107, 1115 (9th Cir. 2003).
1.

Irreparability

Because the Court finds that the facts in this case show that plaintiff has not
properly demonstrated irreparable harm—such that plaintiff is not entitled to waiver of
the administrative exhaustion requirement—the Court addresses this issue first.
Plaintiff argues that denial of relief would result in economic harm that is not
compensable. Motion at 14. In particular, plaintiff contends that it has already closed
two offices and fired two of eight employees because it cannot afford to pay them. Id. at
20. Moreover, plaintiff argues that deprivation of its constitutional due process rights
“unquestionably constitutes irreparable harm.” Id. (quoting Rodriguez v. Robins, 715
F.3d 1127, 1144 (9th Cir. 2013)). Plaintiff contends that the threatened irreparable harm
cannot be mitigated through the administrative process. In this regard, plaintiff asserts
that the “escalation” procedures cannot mitigate the harm, as the decision that becomes
subject to review is the qualified independent contractor’s decision, which was made
without a hearing. Id. at 20–21.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

In opposition, defendants note that if a provider believes it would face significant
financial hardship due to recoupment, the provider may request an Extended Repayment
Schedule (“ERS”), which allows a provider to repay the overpayment over a term of up
to 60 months, subject to certain qualifications. Opp’n at 4 (citing 42 U.S.C §
1395ddd(f)(1)(A); 42 C.F.R. § 401.607(c)(2)(vi)). For example, a qualifying provider
must demonstrate through financial documents that repayment within 30 days would
constitute a hardship because the amount of repayment is greater than or equal to 10
percent of the total Medicare payments made to the provider for the previous calendar
year. Id. (citing 42 U.S.C. § 1395ddd(f)(1)(B)(i); 42 C.F.R. § 401.607(c)(2)(i)).
Moreover, defendants argue that monetary harm alone is often insufficient to
establish irreparability, and that the Supreme Court has recognized that the ability to
recover denied benefits through the administrative process is an adequate legal remedy.
Id. at 8–9 (citing Ringer, 466 U.S. at 618). Defendants assert that if plaintiff prevails on
its administrative challenges, it will be repaid all unnecessarily recouped amounts plus
interest. Id. at 9 (citing 42 U.S.C. § 1395ddd(f)(2)(B)). Defendants further contend that
plaintiff’s argument regarding irreparable harm fails because even in cases where
Medicare providers allege that they will lose their businesses, those losses do not
constitute irreparable harm. Id. (citing Ivanchenko v. Burwell, 2016 WL 6995570 at *1
(N.D. Ill. Nov. 30, 2016); Great Rivers Home Care, Inc. v. Thompson, 170
F. Supp. 2d 900, 906 (E.D. Mo. 2001)).
In reply, plaintiff asserts that the ERS would “not help plaintiff with respect to the
monies already recouped” and that “it is not entirely clear that plaintiff would even be
entitled to an ERS at this stage,” given that “a request for ERS needs to be made within
30 days.” Reply at 2. Plaintiff further contends that the financial harm it faces is
irreparable insofar as plaintiff will be forced to go out of business altogether. Id. at 5. It
argues that the Ninth Circuit has determined that the “threat of being driven out of
business is sufficient to establish irreparable harm.” Id. (citing American Passage Media
Corp. v. Cass Communications, Inc., 750 F.2d 1470, 1474 (9th Cir. 1985)). Moreover,
plaintiff asserts that deprivation of constitutional rights constitutes irreparable harm. Id.
at 5–6.
“A colorable claim of irreparable harm is one that is not wholly insubstantial,
immaterial, or frivolous.” Kildare v. Saenz, 325 F.3d 1078, 1083 (9th Cir. 2003) (citation
and quotation omitted). Although plaintiff argues that it will “likely” be forced to close
its four offices, plaintiff offers little supporting documentation for this assertion that its

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

financial hardship results only from the recoupment. In addition, occasional individual
hardship resulting from the requisite exhaustion of the multi-level administrative process
was anticipated by Congress in enacting section 405(h), which bars federal question
jurisdiction over Medicare claims brought pursuant to 28 U.S.C. § 1331. The Supreme
Court remarked on this point and noted that Congress intended 405(h) to
assure[] the agency a greater opportunity to apply, interpret, or revise policies,
regulations, or statutes without possibly premature interference by different
individual courts applying ‘ripeness and exhaustion’ exceptions case by case ....
but this assurance comes at a price, namely occasional individual, delay-related
hardship.
Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 13 (2000).
Moreover, plaintiff’s asserted delay-related hardship does not appear to rise to the
level of irreparable harm. Ninth Circuit authority holds that monetary injury is normally
not considered irreparable, and plaintiff provides no argument or evidence demonstrating
why its alleged irreparable harm is not compensable through money damages. See L.A.
Mem’l Coliseum Comm’n v. Nat’l Football League, 634 F.2d 1197, 1202 (9th Cir. 1980).
In addition, in a case regarding a Medicare provider’s request for injunctive relief, the
Eleventh Circuit considered an appeal concerning the efforts of a Medicare provider to
restrain collection on alleged overpayment. V.N.A. of Greater Tift County, Inc. v.
Heckerl, 711 F.2d 1020 (11th Cir. 1983). Though the Court found that it had jurisdiction
to decide the claim for injunctive relief, in concluding that appellant had not
demonstrated irreparable injury by arguing that it would be forced out of business, the
Court observed
[t]he problem of bankruptcy is endemic to a system which relies on … cash-poor
providers which are wholly dependent on Medicare reimbursement. Were
irreparable injury the only criteria for exercise of jurisdiction, the courts would be
inundated by claims from other providers whenever they were determined …to
have been overpaid. [Next], providers do not lack notice of these review
provisions. Having chosen to operate within the system on a cash-poor basis, they
take a knowing risk that an intermediary’s determination might delay payment.
Id. at 1034. The Court finds the Eleventh Circuit’s reasoning persuasive and applicable
here. In addition, the Court notes that plaintiff has applied for an ERS to lessen the

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

burden of payments, and is awaiting determination of its application. See dkt. 31. In
light of these considerations, the Court cannot conclude that plaintiff has demonstrated a
showing of irreparable injury.4
Because plaintiff fails to sufficiently demonstrate irreparability, and in light of its
failure to request an ERS, and because irreparability is a prerequisite to determining
waiver, the Court finds that plaintiff fails to demonstrate a basis for waiver of the
administrative exhaustion requirements.
B.

Mandamus Jurisdiction

Plaintiff argues that the Court has jurisdiction under 28 U.S.C. § 1361, the
mandamus statute. Motion at 15. Plaintiff cites Elliot v. Weinberger, 564 F.2d 1219,
1225–26 (9th Cir. 1977) for the proposition that mandamus encompasses suits to compel
the Secretary’s compliance with due process requirements, and further argues that this
holding is nearly unanimous among all Circuits. Id.
The Ninth Circuit’s test concerning when mandamus is appropriate requires that
“(1) the individual’s claim is clear and certain; (2) the official’s duty is nondiscretionary,
ministerial, and so plainly prescribed as to be free from doubt, and (3) no other adequate
remedy is available.” Kildare v. Saenz, 325 F.3d 1078, 1084 (9th Cir. 2003).
With respect to the Ninth Circuit’s test, plaintiff asserts that the Secretary has a
clear and non-discretionary duty to provide plaintiff with a hearing before a neutral ALJ
and to provide an ALJ decision within 90 days of plaintiff’s timely request, pursuant to
42 U.S.C. § 1395ff(d)(1)(A) and 42 C.F.R. § 405.1016. Id. Plaintiff argues that because
the Secretary has admitted that the Office of Medicare Hearings and Appeals is currently
incapable of complying with this statutory mandate, the failure to provide plaintiff with a
timely hearing constitutes a violation of its due process rights. Id. at 16. Furthermore,
plaintiff asserts that because recoupment and refusal to terminate recoupment are not
initial determinations that may be appealed, plaintiff has no other adequate remedy. Id.

4

Moreover, in light of the Court’s analysis infra that plaintiff fails to demonstrate
that its procedural due process rights have been violated, plaintiff has no basis for
invoking “constitutional injury” to demonstrate irreparable harm.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

In opposition, defendants assert that a plaintiff may not use mandamus as a way to
circumvent the administrative appeals process, and that plaintiff’s failure here to exhaust
its administrative remedies is sufficient to deny mandamus jurisdiction. Opp’n at 10
(citing Ringer, 466 U.S. at 616–17). Moreover, defendants argue that plaintiff has not
shown that the Secretary owes it a “clear nondiscretionary duty” to pause recoupment
during the latter two levels of administrative review. Id. Instead, defendants point out
that the Secretary is statutorily authorized to proceed with recoupment while the
administrative review proceeds beyond the first two levels. Id. (citing 42 U.S.C. §
1395ddd(f)(2)(A)). Defendants argue that although plaintiff points to the Secretary’s
duty to provide an ALJ hearing and decision within 90 days of a written request, this duty
is “irrelevant” in light of the Court’s order to show cause, which contemplates an
injunction preventing defendants from “withholding, recouping, or otherwise failing to
pay [Plaintiff] its future Medicare receivables pending the outcome of an administrative
hearing before an Administrative Law Judge.” Id. (citing Dkt. 21 at 2).
Finally, defendants argue that the administrative review process provides plaintiff
with an adequate remedy insofar as plaintiff will be repaid any amounts that were
unnecessarily recouped, plus interest, in the event that plaintiff prevails. Id.
Plaintiff argues in response that defendants attempt to re-characterize the asserted
nondiscretionary duty as a duty to “pause recoupment.” Reply at 6. Yet instead, plaintiff
asserts that defendants have a duty to provide a decision within 90 days of plaintiff’s
timely appeal of the Reconsideration Decision. Reply at 6–7. Plaintiff argues that
defendants wholly fail to address this argument. Id.
As an initial matter, the Court finds that plaintiff may be incorrect in asserting that
the Secretary has a non-discretionary duty to provide a hearing before an ALJ and an ALJ
decision within 90 days of a timely and valid request. In its briefing, plaintiff fails to cite
authority or make argument as to why the Secretary has a clear, non-discretionary duty in
this regard. Yet at the March 12, 2018 hearing, counsel for plaintiff asserted that the
Court of Appeals in the District of Columbia in American Hospital Association v.
Burwell recently ruled on this issue and determined that the Secretary has a clear, nondiscretionary duty to provide an ALJ decision and hearing within 90 days. 812 F.3d 183
(D.C. Cir. 2016). In that case, the court held that the aforementioned 90-day timeframe
was a mandatory deadline in light of the mandatory statutory language, and that the
options for escalation did not “necessarily undermine the force of the command.” Id. at
190. Accordingly, the court held that the Medicare Act imposes a clear duty on the

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

Secretary to comply with statutory deadlines, and that escalation was “inadequate in the
circumstances of this case.” Id. at 192. However, the Court notes that case law from
other courts in other Circuits comes to precisely the opposite conclusion—for example,
the Fourth Circuit recently held that an ALJ’s responsibility to hold a hearing and issue a
decision within 90 days is not a mandatory duty. See Cumberland Cty. Hosp. Sys., Inc.
v. Burwell, 816 F.3d 48, 50, 55 (4th Cir. 2016) (“[T]he Medicare Act does not guarantee
a healthcare provider a hearing before an ALJ within 90 days, as the [plaintiff] claims.
Rather, it provides a comprehensive administrative process…that a healthcare provider
must exhaust before ultimately obtaining review in a United States district court ….
[I]nstead of creating a right to go to court to enforce the 90–day deadline, Congress
specifically gave the healthcare provider a choice of either waiting for the ALJ hearing
beyond the 90–day deadline or continuing within the administrative process by escalation
to the next level of review.”); see also Ivanchenko v. Burwell, No. 16-CV-9056, 2016
WL 6995570, at *5 (N.D. Ill. Nov. 30, 2016) (“Plaintiffs’ failure to exhaust their
administrative remedies cannot be excused here … because the Plaintiffs have alternative
administrative avenues to resolve their claims, and the 90-day deadline for ALJs to render
their decisions is not mandatory.”). In light of this conflicting case law, and given the
apparent lack of controlling authority on this issue, plaintiff fails to articulate a basis for
its assertion that the Secretary’s duty to provide an ALJ hearing and decision within 90
days of a timely request is both clear and non-discretionary.
Assuming arguendo that plaintiff sufficiently demonstrates that the Secretary owes
a clear, non-discretionary duty to provide a hearing before an ALJ within 90 days of
plaintiff’s request, the next inquiry is whether an adequate remedy is available. With
respect to this inquiry, the “common-law writ of mandamus, as codified in 28 U.S.C. §
1361, is intended to provide a remedy for a plaintiff only if he has exhausted all other
avenues of relief,”—in sum, it is intended to provide relief when no other adequate
remedy is available. Ringer, 466 U.S. 602 at 616 (emphasis added). The Court observes
that plaintiff makes a barebones-assertion that it is entitled to review of the recoupment
process; plaintiff argues generally that the recoupment process was initiated before
plaintiff could obtain a hearing, that this violates its procedural due process rights, and
that it has no adequate remedy available with regard to these due process concerns. In
particular, plaintiff contends—without authority—that it is entitled to a pre-recoupment
hearing insofar as plaintiff was “without fault” with regard to the alleged billing mistake.
See Motion at 18–19. Though plaintiff later cites Califano v. Yamasaki, 442 U.S. 682,
696–697 (1979) for the conclusion that due process requires a pre-recoupment hearing for
Social Security beneficiaries, plaintiff does not articulate how this holding extends to

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Page 14 of 16 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

Medicare providers in the context of recoupment proceedings. Motion at 13–14.
Accordingly, plaintiff fails to demonstrate its entitlement to review of the of the
recoupment proceedings insofar as it fails to show that recoupment conducted prior to an
ALJ hearing violates its procedural due process rights. Moreover, the Court observes that
the four-level administrative appeals process provides plaintiff with an adequate remedy
because, should plaintiff prevail in that process, it will be repaid any amounts that were
unnecessarily recouped plus interest. 42 U.S.C. § 1395ddd(f)(2)(B); see also Ringer, 466
U.S. at 618. Therefore, the Court finds that mandamus jurisdiction is not appropriate in
this case.
C.

“No Review” Exception

Plaintiff argues that the Court has jurisdiction under the “no review at all”
exception set forth in Illinois Council, 529 U.S. 1 at 19. In that case, the United States
Supreme Court held that where an administrative appeal process would amount to “no
review at all” of the claim, this process may be bypassed and 28 U.S.C. § 1331 may be
invoked. Motion at 16. Here, plaintiff argues that it has no means of challenging
recoupment of its Medicare payments, and that this recoupment is immediately permitted
upon the issuance of the Reconsideration Decision by the qualified independent
contractor. Id. at 16–17.
In opposition, defendants contend that the “no review” exception is narrow and
applies only when a general hardship amounts to a categorical lack of review. Opp’n at
11 (citing Illinois Council, 529 U.S. at 22–23). Defendants argue that plaintiff cannot
show the necessary lack of review, as it is in the midst of a multi-level administrative
review process and has had two opportunities already to challenge the overpayment
decision and to provide evidence in support of its position. Id. (citing 42 C.F.R. §§
405.946, 405.966). Moreover, plaintiff may seek review before an ALJ, and seek review
of the ALJ’s decision before the Council. Id.  
Plaintiff argues in reply that defendants “miss the point,” and that plaintiff
contends it cannot receive review with respect to the immediate recoupment of the
Medicare payments, which amounts to a denial of its procedural due process rights.
Reply at 7.
The United States Supreme Court has held that there can be no federal question
jurisdiction for any claims arising out of the Medicare process absent exhaustion of

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Page 15 of 16 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:18-cv-1087-CAS(JPRx)
Date April 23, 2018
RAMTIN MASSOUDI MD INC. v. ALEX AZAR ET AL.

administrative remedies. In Illinois Council, the Court held that section 405(h), as
incorporated by 42 U.S.C. § 1395ii, barred federal question jurisdiction over actions
brought pursuant to 28 U.S.C. § 1331, unless the application of the Medicare Act “would
not simply channel review through the agency, but would mean no review at all.” Id. at
19.
“Although [plaintiff] would clearly prefer an immediate appeal to the District
Court rather than the often lengthy administrative review process, exhaustion of
administrative remedies is in no sense futile” for plaintiff, and thus, it “must adhere to the
administrative procedure which Congress has established for adjudicating [its] Medicare
claims.” Ringer, 466 U.S. 602 at 619. Because administrative review can correct the
recoupment errors alleged by plaintiff, and because the Court concludes supra that
plaintiff has not convincingly identified any due process entitlement to a pre-recoupment
oral hearing, the Court finds that the (1) administrative process will afford an adequate
remedy with respect to the alleged recoupment errors, and (2) absent a stronger showing
that plaintiff is entitled to a pre-recoupment oral hearing, the four-level administrative
appeals process appears to afford plaintiff sufficient due process protections.
In light of the Court’s conclusions above, the Court finds that it lacks jurisdiction
to consider plaintiff’s request for injunctive relief. Accordingly, the Court DISMISSES
without prejudice plaintiff’s complaint for lack of subject matter jurisdiction.
V.

CONCLUSION

In accordance with the foregoing, the Court DISMISSES without prejudice
plaintiff’s case for lack of subject matter jurisdiction.
IT IS SO ORDERED.
Initials of Preparer

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